Kensington country club, resigning golf members take feud to arbitration

Article Courtesy of The Naples Daily News

By LAURA LAYDEN

Published September 16, 2010

NAPLES — Lou Altieri wants out.

For years, he’s tried to get out of a membership that his “significant other” bought at Kensington Golf & Country Club in Naples.

They tried to resign in 2007, but the membership just sat on a resign list.

“When I resigned, I was No. 59,” Altieri recalls.

Finally, he stopped paying the monthly dues and other fees, which have been on the rise since his girlfriend, Larissa Sgarlato, joined the club as a golf equity member in 2005.

Now he’s in a legal battle with the club.

On average, it takes more than five years to get out of Kensington’s club. It’s not unusual in these tough economic times. Other clubs in Southwest Florida have even longer waits.

Altieri and Sgarlato are two of more than a dozen residents the club at Kensington has sued during the past year because they stopped paying dues.

All of the lawsuits were dismissed in June after a county judge ruled on the first case that disputes over unpaid fees must go to arbitration based on the club’s own bylaws. An arbiter’s job is to help the two sides negotiate a settlement out of court.

POINT

While Altieri waits for an arbitration hearing, he’s launched his own legal fight against the club, filing a counter-claim that alleges it has illegally required mandatory membership, engaged in unfair and deceptive trade practices and carried out a Ponzi-style scheme that doesn’t allow resigning members to “get out” unless someone else “gets in.”

“I don’t want to fight the battle,” said Altieri, 60. “But I will. I want to get out of the club.”

No one else has gone to such extremes to get out of the club at Kensington, a resort-style community off Pine Ridge Road. The club’s board reports that fewer than 3 percent of its roughly 500 golf, sports and social members aren’t paying dues. The club is vigorously defending itself and denies Altieri’s allegations.

“He’s trying to make up excuses and reasons for not paying his dues,” said Ed Koester, a Naples attorney who represents the club, insisting the facts and law support the club.

“Altieri is improperly making outlandish allegations to create confusion in an effort to avoid his legal obligations,” Koester said.

Altieri’s suit has some of the same claims made in cases brought against the Bonita Bay Group. After seeing a rash of resignations, the Bonita Springs-based developer abruptly stopped honoring its promise to return deposits to resigning club members in November 2008, leading to a flurry of lawsuits. After getting complaints from members, the Attorney General’s Office filed its own lawsuit in Lee Circuit Court earlier this year.

Lindsey LaCroix, the marketing and membership director at

COUNTERPOINT

“He’s trying to make up excuses and reasons for not paying his dues,” said Ed Koester, a Naples attorney who represents the club, insisting the facts and law support the club.

“Altieri is improperly making outlandish allegations to create confusion in an effort to avoid his legal obligations,” Koester said.

Kensington, denies any scheme involving resignations or deposits at her club. The developer is long gone. The club’s rules are set by a board of directors, which is made up of club members, and in many cases changes to the rules are decided by a majority vote of the membership.

At Kensington, members still have the opportunity to get back a percentage of their initiation fee when they get to the top of the resign list. They get 80 percent of the going rate of their membership.

Currently, there are 58 golf members, 25 sports members and 13 social members on separate resign lists, LaCroix said. There’s another list for widows and widowers, giving them an opportunity to get out faster. At the same time, the club has about 15 of its own memberships that it must sell.

Not everybody on a resign list wants to get out of the club right away, but they’ve lined up because they know it can take years to sell their memberships, which is the only way out.

BY THE NUMBERS

Currently, there are 58 golf members, 25 sports members and 13 social members on separate resign lists.

“A number of them put their name on the list because they are starting to get into their mid-70s and they know in the past, up until this point, it has taken a while to get out,” said Don Hurley, 60, a happy golf member who has no interest in resigning.

“We have a wonderful club,” he said. “We have one of the best courses in Southwest Florida.”

Recently, Kensington’s board adopted new rules designed to make it easier for golf, sports and non-resident members to resign, which Hurley describes as “a very positive move.”

Here are the new options, which will roll out on Oct. 1:

•Members can convert to a nonrefundable membership, meaning they don’t get back any of their initiation fee. They must pay their dues for three years, after which they can give a one-year notice of resignation and pay their regular dues for another year.

•Members who still want a refund of their initiation fee can go into a new four-year abatement program by giving up their golf privileges. The first year, they’ll pay 100 percent of their current dues. Over the next three years, they will pay 75 percent of their dues, then 50 percent, and finally 25 percent. If their membership is sold sooner, their dues would drop more quickly.

Under the new programs, even after resigning, golf and sports members have to keep and pay for a social membership as long as they own a home in Kensington.

After Altieri and Sgarlato stopped paying dues more than two years ago, the club dropped them from the resign list. They’ve moved out of the community, though their house is still for sale.

Altieri started looking for ways to resign from the club in 2007 after the board adopted new rules he thought would make it easier for him to sell the membership.

“But it actually made it impossible to resign, unless you sold your house,” Altieri said.

Members voted on a package of changes in 2006 and 2007, but Altieri questioned whether they understood one of those changes would require them to be social members as long as they owned a home in Kensington. “We didn’t know it was in there,” he said. “I didn’t spot it.”

As part of his lawsuit, he argues the club is requiring mandatory membership, which has been declared illegal by Florida courts.

Altieri and Sgarlato were on the losing end of a vote by the membership to renovate the club, which he said led to a monthly assessment of $150 “for life” on top of his regular dues and fees.

“When I joined in 2005, membership was $7,900 a year,” he said. “Now it’s about $12,500, much more than golf is worth to me.”

His yearly estimate is for a golf membership and includes a $600 food minimum for dining at the club and other fees.

The club underwent a $5 million facelift that was completed late last year. The update was designed to make it look better and work better for members.

Since October, the club has sold nearly 30 new memberships and the renovation is a big factor in that, LaCroix said.

She said the $150 monthly assessment that Altieri complains about isn’t just to pay for the club renovation. It’s for a capital improvement plan, which includes redoing the golf course in 2018.

The clubhouse is now sleek and modern. Improvements included combining two kitchens into one to improve the efficiency of the club’s dining operations and adding outdoor seating overlooking the 18-hole golf course, a new “hot spot” for members, LaCroix said.

Altieri questions why the club would spend so much on a renovation in a bad economy. But the club’s board argued a bad economy was actually good because the project ended up costing less.

Altieri said he knows a few other members on the resign list. They include a Michigan man who never lived in the community and has gotten too old to golf, and several others who sold their homes, but couldn’t sell their memberships to the new owners.

“This stuff shouldn’t happen,” Altieri said. “Why would you want to force someone to be a part of your club if they don’t want to be a part of the club?”

Altieri and Sgarlato paid an initiation fee of $45,000. If they could resign today, they’d get back less than $25,000 based on the cost of the membership today.

Some golf members paid more than $85,000 to join the club. The current cost of that same membership is $30,000, but if a new member joins within 60 days of starting a preview, or trial, membership the fee is $19,000.

Today, the club is offering preview memberships that don’t require an initiation fee until Dec. 31, 2011. If trial members choose not to join the club, they’ll never pay the joining fee. Under a similar program last year, LaCroix said most who tried the club out ended up joining it.

In his lawsuit, he seeks damages, including dues and assessments he alleges were improperly charged by the club, plus interest and attorneys’ fees.

Altieri has his home in Kensington listed at $825,000, less than he paid for it. Because of his dispute with the club’s board, he said he’s “not very well-liked in the neighborhood.”

“It’s been on the market for about a year,” he said of the home. “We keep dropping the price.”