Members of a Beaufort County gated community tried to leave club. So the club sued

Nearly a hundred properties are for sale on Callawassie Island. The question for some owners is this: once you buy there, can you ever leave?

Nestled between Bluffton and Beaufort, the private community has been stuck in legal limbo for years, divided on whether the club's contract stipulates that members must pay club dues even after resigning from the club.

The South Carolina Supreme Court heard oral arguments in the case May 1. Their ruling could take months to be issued.

In several dozen lawsuits filed since 2012, the Callawassie Island Club has taken legal action against its members for resigning from the club and not paying their dues.

Club members argue that the club is separate from the homeowner’s association — unlike many of the county’s other gated communities — and because the club is classified as a nonprofit organization, state law allows members to leave at any time and forgo their dues.

The club's lawyers argue that even when members resign from a nonprofit, it does not relieve members of their obligations, according to court filings.

Earlier this month, the S.C. Court of Appeals ruled in members' favor in three separate suits. That continues the trend of the appeals court reversing a lower court's ruling in the club's favor.

A unanimous, three-judge Court of Appeals decision in 2016 agreed that the club’s practices violated state law, going so far as to compare the trapped club members to proverbial guests in the Eagles’ hit song “Hotel California” — “You can check out any time you like, but you can never leave.”

State Supreme Court justices focused their questions earlier this month on the ambiguity in the club's bylaws that have changed over the years, and which documents applied to members — the contract signed when joining the club or the documents in place at the time of members' resignations.

Previous testimony by club employees, such as the membership director who testified that members cannot resign, further muddied matters.

"Well, (the director) was clearly mistaken," said Andrew Lindemann, an attorney representing the club. Lindemann said members can resign as long as their membership is reissued to the new property owner.

Nationwide, property values within gated golf communities sunk during the Great Recession, leaving some with dues they could no longer afford and property they could not sell.

"Once you’re in this club, you’re in for life?," Chief Justice Donald Beatty asked Lindemann during oral arguments.

Lindemann said no, the option to sell is available to all club members.

Some members have filed for bankruptcy, according to court filings. Others have tried selling at a deeply-discounted price. As of last week, there were 93 Callwassie Island properties for sale, 18 of which were listed for $20,000 or less, according to an MLS real estate database for Beaufort County.

Ian Ford, a Charleston attorney whose firm is representing many club members, said his firm is defending club members in two dozen cases.

"They're the aggressors," Ford said last week, referring to the club's series of suits pursued against its members, including Bill Symons.

Symons and his wife, Pat, bought a house on Callawassie Island in the late 1990s for about $410,000 and paid an additional $24,000 for a club golf membership.

In the roughly 15 years they lived there, the couple invested about $125,000 in upgrades to their home. The Symons' put their home on the market in 2007, but as the years passed, they dropped the price to $410,000. It finally sold in 2014.

When they resigned from the club, the Symons' were informed they owed about $80,000 in club dues. Then the club filed suit against them.

The club's culture was, in part, why the Symons' moved back to Tennessee, their home state.

"We felt the island politics was not healthy or constructive in making Callawassie the place we thought it could be," he said.

Lawyers were divided on the implications of the ruling, with Ford arguing the Callwassie cases are an "extreme one-off" in which the club forces members to remain, even after tendering their resignation.

Lindemann argued the case will affect the viability of community associations and property regimes statewide.

Club manager Jeff Spencer deferred questions to Lindemann, who did not return two calls for comment last week.

This story was originally published May 21, 2018 at 10:01 AM with the headline "Members of a Beaufort County gated community tried to leave club. So the club sued."