Investing • Couple say Jack Nicklaus' tie to Mount Holly Resort led them to buy in.
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A Colorado couple are suing Jack Nicklaus and his golf course design company in Utah's federal court, contending their implicit trust in the sports icon led them to lose a $1.5 million investment in the bankrupt-before-it-started Mount Holly Resort.
E. Jeffrey Donner, an orthopedic surgeon, and his wife, Judee, said Nicklaus' association with the proposed ultra-exclusive resort outside of Beaver convinced them to become charter members. But after the envisioned $3.5 billion community went bust, the Donners said Nicklaus walked away from the mess, claiming he had no responsibility for the debts or obligations of the resort's primary developers, Mount Holly Partners LLC.
"The Nicklaus 'branding' necessarily implied that Nicklaus and Jack Nicklaus Golf Club had investigated the club and, based on their own due diligence, were confident that it had the qualities they advertised and lived up to their high standards," said the civil suit filed May 31 in U.S. District Court for Utah.
Not until it was too late, the Donners alleged, did they find out that Nicklaus' Mount Holly Club partners had mischaracterized the status of their regulatory approvals, as well as their financial and public support, and not disclosed that the club's chief marketing officer, Marc Jenson, was convicted of a 1991 felony for failing to file a federal tax return.
The Donners are asking the court to require Nicklaus and the Jack Nicklaus Golf Course to repay the $1.5 million plus other damages.
Jacque Ramos, one of the Salt Lake City attorneys representing Nicklaus, said Monday the suit's allegations were "without merit" and that the Donners should have done their own due diligence before investing.
"Jack Nicklaus and his golf club weren't parties to the property or the [Donners'] investment in Mount Holly," she said. "His limited involvement was with respect to the design of the golf course and not with the business transaction with the Donners."
After the suit was filed, Nicklaus' attorneys asked Judge Brooke Wells to seal the file, claiming the allegations included "defamatory, confidential and/or proprietary information."
The Donners' attorneys, led by George Haley of Salt Lake City, responded that "being a sports icon is not sufficient grounds to seal a court record. Jack Nicklaus should be treated like every other defendant."
Wells agreed, denying the motion.
The lawsuit said "the Donners were very impressed by the Nicklaus name and brand," noting that "Nicklaus is a golfing legend. Nicklaus has parlayed his sporting success into a big empire."
They were attracted to the Utah development because of its description as the Jack Nicklaus Golf Club/Mount Holly and the opportunity they would gain, as charter members, of having reciprocal playing rights at two dozen other Jack Nicklaus golf courses.
The suit said they saw videos of Nicklaus touring the site and read a brochure issued by Mount Holly Partners touting Nicklaus' involvement and containing a quote from Nicklaus saying, "I am so impressed with the Mount Holly Club and its management team." The brochure also called Nicklaus a charter member, so the Donners assumed he had invested $1.5 million in the property, as well.
In addition, the lawsuit cites the existence of a licensing agreement and a set of rules and regulations that allegedly tied Nicklaus closely into resort management with Mount Holly Partners. Those documents are evidence Nicklaus "approved, ratified, permitted, condoned and/or affirmed the marketing and sales practices" of the Nicklaus/Mount Holly Club partnership, it said.
Those sales practices were scurrilous, the Donners alleged, contending Marc Jenson erroneously told them in November 2007 that the resort was not encumbered in debt or facing other problems which it was.
Instead, Mount Holly Partners filed for bankruptcy in July 2009. The resort was acquired by New York City-based AMDS Holdings in a foreclosure proceeding. Eventually, new owners reopened the area's ski runs this past winter as a public resort known as Eagle Point.
"That's about the dumbest lawsuit I have heard about in months," said Greg Skordas, Marc Jenson's attorney. "These people and their lawyer have far too much time on their hands. They should have done their homework."
In Jack we trust
A Colorado couple contends in a federal lawsuit that their high regard for golfer Jack Nicklaus led them to lose a $1.5 million investment in the contentious Mount Holly Club proposed outside of Beaver.