The Arizona Court of Appeals has set a date to hear oral arguments in the long-running Ahwatukee Lakes Golf Course case.
Lawyers for two residents suing for the course’s restoration and The True Life Companies will each get 20 minutes to make their respective case before the court on May 22.
The hearing’s scheduling this month may be a sign that a ruling could come in a matter of weeks, although it had not been expected before summer. The losing side is sure to ask the state Supreme Court to weigh in.
At issue is Superior Court Judge John Hannah’s January 2018 decision that the January 2018 ruling that the covenants, conditions and restrictions (CC&R) governing the 101-acre site mandate the reconstruction of the course, which owner Wilson Gee closed in 2013.
True Life is still a party in the case even though it failed to pay the $8.2 million note it had signed with Gee when it bought the course in 2015. Gee foreclosed last fall and he too is covered by Hannah’s ruling.
True Life in 2016 rolled out a plan to replace the barren site with an “agrihood” consisting of about 270 single and duplex homes, a five-acre farm, a new school for Desert Garden Montessori, a café and various amenities.
But it had to secure the approval of half the approximate 5,600 homeowners plus one to change the CC&Rs to do it.
When it only obtained about 2,000 signatures despite an aggressive year-long campaign, True Life offered to install a “fun course” if it could also build the houses.
That offer also was rejected.
During a non-jury trial before Hannah, True Life asserted that no one could ever recoup the estimated $15 million cost of restoring the course – an estimate disputed by Tim Barnes, the attorney representing residents Linda Swain and Eileen Breslin in the lawsuit.
Their experts estimated it would cost around $6 million to restore the executive-style course.
Both Gee and True Life have maintained there was a reason for closing the course in the first place: that the golf industry is dying and that Ahwatukee Lakes Golf Course had been losing money for several years.
The plaintiffs’ experts dispute that assertion, saying that not only is the industry slowly coming back but that Ahwatukee Lakes was operated poorly under Gee and that it can be revived to run profitably.
Earlier this year, Gee offered to pay all the legal costs of Save the Lakes, Swain and Breslin, give the two plaintiffs 1 percent of any profit from selling the land and hand over 18 percent of the profit to the Ahwatukee Board of Management for projects that would benefit the community.
In return, he wanted the lawsuit dropped.
That offer was rejected by Swain and Breslin.
The argument before the appellate court likely will involve less about golf and more about the law.
One of the arguments laid out by True Life attorney Chris R. Baniszewski in his initial brief to the court is that forcing the landowner to restore the course is a violation of the 13th Amendment of the U. S. Constitution, which prohibits involuntary servitude.
“Because a contract for personal services cannot be specifically enforced, the court cannot enjoin (his client) and require it to operate a business on the property,” he wrote.
He also argued that “the only realistic funding mechanism for a new golf course on the property is for a new golf course to be built in conjunction with a new home development” and urged the court to vacate both Hannah’s order and the deed restriction that prevents housing construction on the site.
In a subsequent brief, Baniszewski called the notion of restoring the course without the houses “is nothing but a pipe dream.” True Life attorney Chris R. Baniszewski has stated in one of his briefs filed with the court.
“The overwhelming evidence presented in the case, even based upon (the homeowners’) own expert’s analysis, shows that the property will never again be a stand-alone golf course,” he wrote, contending that the case “goes far beyond the fact that a golf course on the property will not be profitable.”
“The simple truth is that there is no realistic opportunity for the Property to ever again operate as a stand-alone golf course. Unless the sale of additional houses to fund the construction of the course is permitted, hoping that someone will put up the money to reconstruct the golf course is nothing but a pipe dream,” he added.
Barnes has countered that the CC&Rs are iron-clad and require a golf course.
He noted that True Life Executive Vice President Aiden Barry had testified in the trial that the company agreed to the $9 million purchase price because it “was based on the value defendant placed on the golf course to redevelop the property into a residential community.”
“Because defendant did not intend to reconstruct and operate a stand-alone golf course on the golf course, the condition of the golf course when defendant purchased the golf course was not a material consideration from the defendant’s point of view,” Barnes stated.
He also disputed True Life’s attempt to persuade the judge that there had been “material changes” to the course warranting a change in the CC&Rs, stating the company bought the land “knowing if it lost the court battle, it could turn on its heel and walk away.”
Barnes said that Gee’s companies – including one named Bixby Village – had started to let the course fall into disarray long before its 2013 closure.
“The condition of the golf course progressively deteriorated between 2005 (one year after Bixby purchased the property) and 2017,” he wrote, citing photographs taken at various intervals over that time period. “Mr. Gee denied Bixby intentionally failed to maintain the course, but the photographic evidence contradicted his denial.”
Barnes argues that True Life gambled on getting homeowners’ approval to change the CC&Rs and that there was “indisputable” evidence the company considered the land-use regulations “superfluous and a mere hurdle to clear so TTLC could get on with the business of redeveloping the golf course.”
He also noted that even the county recognized the CC&Rs’ iron-clad requirement for a golf course when it gave the Lakes a special tax exemption lowering its property taxes.
Baniszewski also said that the 1992 deed restriction governing the use of the land is a “restrictive covenant” that requires the site can be used only for certain purposes and “not to compel the owner to put the property to a particular use.”
“Consequently, the intended benefits of the restrictive covenant that the property would not be used for any purpose other than a golf course dooms the property to no use at all under the circumstances that now exist,” the lawyer wrote.