Cove neighbors face off
over fees dispute
Article Courtesy of the Palm Beach Post
|By Josh Mitchell
Posted Sunday, October 12, 2003
JUPITER -- Life used to be uncommonly good here at Admiral's Cove, one of the nation's most stylish communities with its multimillion-dollar mansions, a 74-yacht marina and $20 million clubhouse where residents such as pop diva Celine Dion could get their hair done at the private beauty salon.
These days, Dion isn't singing the praises of her former neighborhood. Instead, she and 170 other former club members stand to get back as much as $6 million if they win a lawsuit alleging that the country club ripped them off.
It is a classic dispute of money and power, pitting the country club management against a couple who moved out of the neighborhood last year. In a class-action lawsuit pending in Palm Beach County Circuit Court, Michael and Rosalind Skigen say the club did not fully reimburse them -- or any other members who left during the past four years, including Dion -- for their memberships under the terms of their original contracts.
Since then, neighborhood relations have become worthy of a daytime soap opera.
In April, security guards had to break up a club board meeting that turned into a shouting match between board members and a resident who brought an attorney and a court reporter. The resident, who was demanding changes on election procedures, was later suspended from using club facilities.
Flap spills onto golf course
Shortly thereafter, captains of the neighborhood men's and women's golf teams vowed to cancel their annual matchups with the nearby Mirasol community when they saw the Skigens, their former neighbors and teammates, on the opponents' rosters. (Golfers were happy to learn the Skigens would be away on a trip to Hilton Head, S.C., that weekend, allowing the matchups to go on.)
And now, there is talk that some remaining club members will mobilize to oust the club's executive director this winter, when the snowbirds and their votes return.
"This is a very pleasant community, but since this lawsuit there is this cloud hanging over everybody's head," said Fred Cohen, a longtime resident and real-estate lawyer who said he is remaining neutral during the dispute. "It's like an unspoken word that nobody wants to bring up. Litigation does not bring out the best in people."
40 residents cancel
The conflict has been so pervasive that at least 40 residents have canceled their club memberships since the lawsuit was filed last summer, the first time the country club has seen a decline in membership.
Remaining residents, meanwhile, must deal with the reality that they could be assessed millions in legal fees if the Skigens prevail.
The lawsuit has created a somber mood in the 900-home community, whose former residents include Hall of Fame baseball player Mike Schmidt and golf legend Jesper Parnevik. Full membership currently costs $120,000 up front and $12,000 in yearly dues, giving residents access to Admiral's Cove's various amenities: 45 holes of golf designed by the world-renowned course designer Robert von Hagge; 14 tennis courts; marina; and clubhouse featuring a fitness center and 29 hotel-style guest suites.
The conflict began in November 1999, when the developer handed control of the country club over to its members, each of whom has an ownership share.
The newly appointed board members quickly made rule changes intended to bring more money into the club. Among them: designating 40 percent of the initial membership cost as nonrefundable. The rule effectively means that residents are being denied between $5,000 and $48,000 during the process in which they are reimbursed for canceled memberships.
All sides agree that residents approved the rule changes. But some people protested when the club applied the changes retroactively to include membership contracts signed as long as 16 years ago, when the community opened.
"We had a contract," said Michael Skigen, an accountant and a former economics professor at Georgetown University and other colleges. Making new rules "does not change any of the contractual rights received by people who bought membership under the original rules."
Nonsense, said country club Executive Director Craig Martin.
"We feel that every country club here has the authority to change documents" when residents approve changes, Martin said, adding that original contracts include a disclaimer on rule changes. "This would be a major precedent in the whole country-club industry to lose a case like this."
The Skigens, both accountants who moved from the Washington, D.C., area in 1990, say they are owed $24,000, based on the original terms of their contract and how much their membership appreciated during their time at Admiral's Cove.
They allege about 170 other members are owed thousands each, with variations depending on whether they held social, tennis or golf memberships and when they joined the club.
The total amount owed could be between $4 million and $6 million, said the Skigens' attorney, James D. Ryan.
Problems beyond lawsuit
Some residents said the club's problems extend beyond the lawsuit.
Last year, the board agreed to give a nearby hotel access to the clubhouse at a discounted price, thereby opening the club to the public. After members protested vehemently, management rescinded the agreement, although some residents claim the country club is still hosting an outside tennis camp.
The country club also has begun charging members a $400 annual fee earmarked for tips to servers and other employees, even after residents voted down such a rule last year.
But the biggest worry, some residents said, is that the country club is not being upfront about how it spends their money.
The residents contend that the club has not disclosed how much the lawsuit is costing. (Ryan, the Skigens' attorney, estimates the club's legal fees at $300,000 thus far.) They also complain that residents were not made aware of the lawsuit -- and the possibility that club members would be responsible for covering legal fees -- when they voted to spend money on projects such as a $16 million clubhouse renovation.
"They seem to take the attitude that they can do whatever they want," said one resident, who spoke on condition of anonymity.
The country club's attorney, Susan Fleishner Kornspan, denies the club did anything wrong.
Residents remain vexed, with some split over where to direct their anger: the Skigens for filing the lawsuit, the country club, or both.
Home sales affected
And one resident said the lawsuit has affected home sales in Admiral's Cove.
"The main problem here is that homes are not selling the way they should, memberships are being turned back into the board, people who are staying (in the neighborhood) are dropping their memberships to the club," the resident said. "It's a disastrous trend."
The conflict could get even messier if club members are asked to cover the millions of dollars in damages should the club lose the lawsuit, the resident said. In that event, some residents might hold club managers accountable for the costs.
"I keep hearing about people who are just waiting for the first assessment to come through," the resident said. "And if that happens, they want to sue."