A federal judge ruled that the club must refund 65 disgruntled members their deposits plus interest after banning them from the property but continuing to charge annual dues. A column in Bloomberg touted the lawsuit loss as a win for Trump, who took on nearly $50 million in debt owed to members who put down refundable deposits when he bought the property, but will now pay only a portion of that sum.
In Florida, a federal judge has ruled that Trump National Golf Club Jupiter (Fla.) must refund members $5.8 million, National Public Radio (NPR) reported.
It’s a case that began in 2012 when Donald Trump bought the struggling golf club from Marriott Vacations Worldwide. He paid just $5 million, a bargain price, but as part of the deal, he had to assume some $50 million in debt, money owed to members who put down refundable deposits and now wanted out of the club, NPR reported.
In a letter and a meeting with club members, the company told those who wanted out, they would have to continue to pay annual dues but couldn’t use the club. Plus, they wouldn’t receive their refunds until new members were found to replace them, a process that might take years, NPR reported.
Disgruntled members said Trump was unfairly changing the rules of their membership contracts and they filed a class action lawsuit. Their lawyer, Brad Edwards, said Trump essentially revoked their memberships while keeping their dues and deposits, NPR reported.
“The most important characteristic of a membership is access to the club,” Edwards said. “Well, there’s no doubt that he took away access to the club and, ergo, he took away membership.”
In a ruling February 1, U.S. District Judge Kenneth Marra agreed with the plaintiffs. He ordered the Jupiter Club to refund 65 members their deposits plus interest, for a total of $5.8 million. Although Trump wasn’t personally named in the suit, his videotaped deposition was played in court. His son Eric testified at the trial, NPR reported.
During the nearly four years of the case, at Trump’s urging, more than half of those who wanted out of the club changed their minds and took their names off the resignation list. That meant Trump could hang on to tens of millions of dollars in deposits, helping turn around the club’s finances. Although Trump lost in court, his hardball business tactics were effective, NPR reported.
“Clearly his interpretation of the contract and what he could do legally were wrong and flawed as we’ve just proven,” Edwards said. “But from a business perspective and purely as a business-minded move, it worked out well for him.”
In a column for Bloomberg News, titled “Trump Wins by Losing a Court Fight Over Debt,” Joe Nocera wrote: “Here’s the key to understanding this deal: $5.8 million is a lot less than the original…liability. Despite this legal setback, Trump essentially gained control of most of the Jupiter members’ deposits. Many of the members who lived or time-shared in the development gave up their rights to the deposits; they didn’t really have a lot of choice. Many others sued individually and wound up settling for 30 or 50 cents on the dollar as they saw their litigation costs rise.
“Whether Trump winds up paying the $5.8 million or not—and his lawyers are vowing to appeal—he has come out way ahead at the expense of the club’s members.”
In his decision, the judge doesn’t refer to Trump as president. In a footnote, the judge says, “At all times relevant to this lawsuit, Donald J. Trump was a private citizen. As a result, the Court will refer to him as such in this decision. In doing so, the Court means no disrespect to him or to the esteemed position he now holds.”
In a statement the Trump organization said it disagreed with the judge’s decision and that, “At the time Trump purchased the club, it was suffering financially, making it unlikely that these members would ever get back their deposits.” And, the president’s company said, it will appeal, NPR reported.
A separate report by NPR highlights the conflicts between Trump’s two roles as president and business owner.
In 2015, under the Obama administration, the EPA and U.S. Army Corps of Engineers finalized the Waters of the United States rule to apply clean water regulations to thousands of new streams, lakes and wetlands. Under the rule, all golf courses in the U.S. would be subject to closer federal regulation, NPR reported.
The rule is opposed by a long list of industries, including manufacturers, farmers and golf course owners like Trump. They have been filing lawsuits that have put the rule on hold. Bob Helland, with the Golf Course Superintendents Association of America, said the average golf course has over 11 acres of streams, ponds and wetlands that could be affected. Under the rule, courses may now need federal permission before applying fertilizer or pesticides, NPR reported.
“Many of our routine activities would be deemed as a discharge into waters of the United States and could not move forward without getting a required permit,” Helland said.
Now, in his role as U.S. president, Trump has pledged to roll back the new environmental rule. His nominee to head the EPA, Scott Pruitt, is also a staunch opponent of the Waters of the U.S. rule. As Oklahoma attorney general, Pruitt filed a lawsuit to overturn it, NPR reported.
For the Trump administration, overturning the rule isn’t something that can be done through executive order. The EPA would have to restart the lengthy rulemaking process, according to Jon Devine, an attorney with the Natural Resources Defense Council.
“Repealing a rule requires a full public process and has to be justified by the law and the evidence available. And in the case of the clean water rule, that’s going to be rough sledding for the Trump administration,” he said.
This month, the Supreme Court decided to weigh in, agreeing to hear a case that will determine which federal court has jurisdiction over the rule. It’s possible Trump’s nominee to the court will hear the case, NPR reported.
Larry Liebesman, a former EPA and Justice Department lawyer, said any further action will likely be put on hold until there’s a Supreme Court ruling on jurisdiction. “It gives the administration a little down time to figure out how to handle the situation. It also suggests that maybe Congress may step in and legislate on this issue as well,” said Liebesman.
With the threat of a presidential veto gone now, opponents of the rule are hoping Congress takes action to kill the rule. This month, Republican Sens. Joni Ernst from Iowa and Deb Fischer from Nebraska introduced a resolution to begin that process, NPR reported.