The court got it wrong.
That’s what lawyers for The True Life Companies and Wilson Gee told the Arizona Supreme Court in appeal the decision rendered by the state Court of Appeals in the lawsuit by two Ahwatukee Lakes homeowners who want the golf course restored.
“The Court of Appeals misconstrued the plain meaning of the CC&Rs that permitted the owner of the property to cease operating a golf course on the property when the CC&Rs provide that the property owner could ‘abandon, demolish cease the use of’ any golf-related activities on the 101-acre site, lawyers said.
In their appeal, attorneys Daniel Maynard and Douglas Erickson said the Covenants, Conditions & Restrictions governing the course are “restrictive” rather than “affirmative” – meaning that they prevent the land from being used for a purpose other than golf.
That doesn’t mean, they argue, the site must be operated as a golf course. It can simply lay fallow, they say.
The 18-hole executive course was closed in 2013, by Gee, who said it was losing money. He also has maintained that the site will never be used as a golf course again and has intimated that he would simply walk away if he was ordered to resurrect the facility.
Estimates vary wildly on the restoration cost.
True Life, which had an agreement to buy the course for $9 million if it could create an agrihood with about 164 homes, a private school, a five-acre farm and other amenities, said its expert estimated $14 million.
Experts presented by homeowners Eileen Breslin and Linda Swain, who filed the suit in 2014, estimate the cost would be between $5 million and $6 million.
While the Supreme Court ponders the appeal, Breslin and Swain have asked Superior Court to hold Gee and True Life in contempt – which could involve thousands of dollars in fines.
But action on that request may be delayed by the appeal, according to Superior Court records.
A ruling issued on Oct. 23, by Superior Court Judge Theodore Campagnolo referred the contempt request to a trial commissioner – who cannot act on contempt requests. Campagnolo’s order noted the case was still in appeal.
Meanwhile, it may not be until next year before the Supreme Court decides whether it will even take the case for consideration.
Attorney Tim Barnes, representing Swain and Breslin, has roughly until mid-December to file a response to the appeal request.
Lawyers for Gee and True Life told the Supreme Court that the appellate panel’s decision “turns the law concerning restrictive covenants on its head.”
“Property all over Arizona contains restrictive covenants that limit how property can be used but now, based on this decision, if one buys a property containing a restrictive covenant, they may be affirmatively mandated to operate a business when the CC&Rs do not require it,” they wrote.
The lawyers said Bixby Village, Gee’s company that owns the course, invested $400,000 after buying the course with money it earned from the sale of a course in California.
“By early 2007, however, the (Lakes) started losing money and Bixby began using profits from its other golf courses to subsidize” Ahwatukee Lakes, they say.
Gee owns all four courses in Ahwatukee, though he is trying to sell two of them – Ahwatukee Country Club and Club West.
The lawyers also say their experts have testified “it would be impossible to fund a reconstruction of the golf course without selling homes around the property.”
They also note he testified he had taken into account “the revenue it would generate once it was operational and concluded that it would take 29 years for a person to recover the initial investment in waiting that long to realize a profit on their investment.”
“No bank would provide lending for such a project,” they add.
The lawyers told the Supreme Court that the implications of the Court of Appeals ruling are dire because it “would require unprofitable businesses to continue to operate unprofitably for an indefinite period.”
Stating “an important issue of law has been incorrectly decided,” the lawyers further state:
“The fundamental question, which no Arizona decision controls, is whether the court can force a property owner to run a business on his or her property if they do not want to and whether this mandatory injunction violates numerous laws,” they say.
“Under the Court of Appeals’ ruling,” they added, “the owners of the property encumbered by CC&Rs could be forced to build a golf course and operate it” even if it doesn’t turn a profit.
“This cannot be the law in Arizona nor anywhere in the United States,” they say.