Owner Wilson Gee’s company must pay $3.5 million in cumulative penalties if he does not have an 18-hole Ahwatukee Lakes Golf Course and all amenities restored and ready for duffers by Aug. 31, 2022, a Superior Court judge decreed on Monday.
In a blistering and detailed 24-page opinion, Judge Theodore Campagnolo set three deadlines with accompanying penalties for Gee to meet in order to end two homeowners’ six-year legal fight to reopen the course he closed in 2013.
The judge ruled Gee’s company, ALCR, must pay $500,000 if he has not finished design and other pre-construction work by June 21, fork over another $1 million if construction has not started by Sept. 1, 2021, and cough up another $2 million if the course is not open a year from that date.
Campagnolo’s order is not clear on whether ALCR would get the money back if it eventually completes the work but misses those deadlines. The judge alternatively used the words “fines” and “sanctions” in his ruling.
Regardless, however, Campagnolo’s ruling makes it clear that Gee must obey his directive – and so must anyone who might happen to buy the 110-acre site.
Campagnolo swept aside Gee’s contention that the 2018 judgment by another judge to restore the course was too vague and didn’t say what kind of course can be built.
“The judgment was clear and unambiguous as to ALCR’s obligation to restore and operate an 18-hole executive golf course,” Campagnolo wrote.
“ALCR knows exactly what needs to be restored and operated,” he added. “There is nothing in the judgment that places any burden on plaintiffs to dictate the design of a golf course. ALCR’s claims are baseless, and further demonstrate its contemptuous behavior.”
Campagnolo’s order came only a few days after the U.S. Supreme Court rejected Gee’s request to hear his contention that ordering him to run a business that he calls unprofitable was tantamount to violating the U.S. Constitution’s prohibition of slavery.
Campagnolo said he framed the penalties in a way to ensure that Gee had the money to bring the site back to life.
Citing ALCR’s “history of failing and refusing to comply with the Judgment entered on May 31, 2018,” Campagnolo wrote:
“Because ALCR has demonstrated its ability to expend hundreds of thousands of dollars in delaying its obligations under the CCR, and because ALCR has consciously chosen to rid itself of financial resources, the Court concludes that ALCR will be able to obtain the necessary funds and/or financing to actually comply with the judgment.”
The “CCR” refers to the covenants, conditions and restrictions governing the site and that require a golf course there unless 51 percent of the Lakes’ approximate 5,100 homeowners agree to a land use change.
Stating monetary penalties were necessary to “provide ALCR with sufficient motivation to meet the deadlines,” Campagnolo also outlined his reasoning for the steep amounts.
“First, the cost of building a golf course, based on Mr. Gee’s testimony, is in the neighborhood of $5 million, so the specter of sanctions should be relatively high,” he wrote.
“Second, ALCR’s history, as magnified by Mr. Gee’s historical involvement with the Golf Course, strongly indicates that ALCR will do all it can to stall and delay its obligations under the judgment. Third, it makes more economic sense for ALCR to spend its funds for the building of the golf course rather than using that money to pay a civil fine that will only require it to expend additional amounts of money to comply with the judgment.”
As for setting up the three deadlines, each with a separate penalty, Campagnolo said he wanted to “avoid the possibility that ALCR completes its pre-construction duties, but then fails to commence construction.
“Also, the Court wants to avoid the possibility that ALCR puts one shovel in the dirt simply to meet its construction commencement deadline, and then does nothing more. It is also important to ensure completion of the golf course, so that the construction continues apace, and so that ALCR can begin operating the golf course.”
Campagnolo said his order does not prevent Gee from making a deal with a company called Suntereo, which Gee said has offered to build the course if it can use 10 acres to build an assisted living center.
Expressing skepticism about Suntereo’s proposed terms for the deal, Campagnolo said Gee nonetheless would have to adhere to the deadlines established in the order.
Campagnolo’s detailed the long legal history of the lawsuit filed by Lakes homeowners Linda Swain and Eileen Breslin as well as the history of Gee’s operation of the course, which he bought through another company, Bixby Village, in 2006.
He said both Bixby and ALCR “have been employing baseless reasons to stall and delay their obligations under the CCR for seven years” and said ALCR “must stop its hemming-and-hawing charade and get to work.”
“The Court cannot dictate the business decisions made by ALCR in shedding itself of any assets so that it is nothing more than a shell company. The Court cannot dictate the business decision that be creating a shell company, ALCR has no money to comply with the CCR.
“The Court, however, an determine whether those business decisions have resulted in sanctionable activity.”
He said ALCR knew the CC&Rs required a golf course on the site but instead Gee “believed that the shell company could thereby avoid restoring and operating a golf course because it was penniless.”
Stating “every contingency” in Suntereo’s letter of intent to buy the course “does nothing more than allow ALCR to delay its obligations for years,” Campagnolo ripped Gee’s testimony on several key points.
The bottom line, he said, is that “ALCR’s only desire is to build residential or commercial properties on the golf course and then sell the golf course (without a golf course) for a quick profit.”
“ALCR’s primary endeavor, as driven by Mr. Gee since 2013, was to purposefully maintain the golf course as a barren stench-filled wasteland,” Campagnolo wrote.
“By doing so, ALCR hoped to hold this eyesore as ransom against the property owners to convinced them that their only alternative to a continued dirt pile was to modify the CCR so that ALCR could theoretically make millions by building houses and/or office buildings on the golf course.”
“The Court concludes that Mr. Gee, through the Bixby Group and now ALCR has wagered everything on an empty hand that this years-long desolate view would ultimately cause the property owners to relent and give in to ALCR’s demands.”
“Despite staring at this eyesore for years,” he wrote, “it is clear the property owners have called ALCR’s bluff and refused to fold their hand. ALCR must now make good on its lost wager.” ′