Real Estate News

Callawassie Club lawsuit continues ‘musical arguments’ on way to SC Supreme Court

Callawassie Island Club members are stuck in legal limbo while the S.C. Court of Appeals considers a petition for rehearing filed by the club earlier this month.

The three-judge panel of the appeals court unanimously ruled against the club on Aug. 3, overturning a lower court decision. This decision would have allowed club members to resign their memberships, relieving them of thousands of dollars in annual club dues.

But the club’s lawyers filed a petition asking the appeals court to reconsider the decision. That means the appeals ruling is not final, Jenny Abbott Kitchings, clerk of court for the S.C. Court of Appeals, said last week.

Callawassie Island Club is a separate entity from the property owner’s association and is classified as a nonprofit organization.

State law says members can leave at any time and forgo dues accrued after resignation, some club members contend.

The club disagrees and sued several of its members.

Even though the club was responsible for initiating legal action, club manager Jeff Spencer said Tuesday that it’s unfortunate the contract dispute has to be resolved in the court system.

“Their (members’) stance appears to be that they will not pay until the legal system tells them otherwise,” he said. “And the club’s position is that their contract requires them to contribute until their membership is transferred, which can be done with the sale of their property. But the club documents require them to pay, and the club feels they should until the legal system tells them otherwise.”

A ‘musical’ smackdown

The appeals court used an Eagles’ song lyric to compare the trapped club members to proverbial guests in “Hotel California” — “you can check out any time you like, but you can never leave.”

In the petition, the club argued that a more appropriate song verse — “We are all just prisoners here of our own device” — explains that “if the defendants cannot leave (the Callawassie Island Club), it is not the result of anything (the club) unfairly did to them or imposed upon them.”

Ian Ford, a Charleston-based lawyer representing some club members, continued the musical smackdown, opting for the catchy hit single “Shake it Off” to explain the “nasty” email exchanges between club members that have arisen since litigation began.

“Quoth Taylor Swift: Haters gonna hate,” he wrote in the response petition.

In one email, attached as an exhibit in Ford’s response, a club member who supports the club wrote to one of the defendants, “Everyone is entitled to be an idiot ... but you really abuse that privilege.”

“This is essentially a civil war,” Ford said. “And I wish we could work it out.”

But the “war” shows no sign of ceasing.

The appeals court can take a couple of months to rule on the petition for rehearing, Kitchings said.

If the petition is denied, the club will have 30 days to appeal to the S.C. Supreme Court, an action the club has already announced it will take.

“Unless and until the South Carolina Supreme Court definitively rules on all relevant issues, the club will continue to enforce the governing documents according to their terms,” club board president Michael MacGee wrote in a letter sent to members following the appeals ruling.

Filing a petition for rehearing is a prerequisite in moving the case on to the state Supreme Court, according to the state’s judicial rules.

“It’s dragged on for years,” said Jim Short, one of the club members being sued. “This will only prolong the legal battle, create more uncertainty over the community, and continue to keep Callawassie property values depressed for the foreseeable future.”

$365,27327 homes in 2013

$383,25721 homes in 2014

$371,190 26 homes in 2015

$499,078 18 homes in 2016 (through June 30)

The club says claim that ongoing litigation has affected home sales and property values is not true. Real estate data provided by Spencer, the club’s general manager, shows that the average sale price for a lot of land hovered around $100,400 in 2014 and has risen to $170,000 in the first half of 2016. Home prices follow this same upward trend, increasing from $365,273 in 2013 to almost $500,000 for 2016.

Still, eight lots of land on Callawassie Island are on the market for $10,000 or less, according to a real estate database.

Club members seeking resignation of their membership must sell their property and have their membership reissued to the purchaser, but that’s not an easy sell, some club members said.

Nationwide, property values within gated golf communities sunk during the Great Recession.

The popularity of golf has also waned. The number of Americans who played at least one round of golf in the past year has fallen from a high of 30.6 million in 2003 to about 25 million in 2015, according to the National Golf Foundation.

To overcome these circumstances, some Callawassie Island property owners have tried selling at deeply discounted prices.

One seller is even offering a 1992 Corvette convertible to sweeten the deal, according to Mark Devers of Ocean Broker Real Estate Co. After being on the market for a year, the owner dropped the price $30,000 to $199,000 last month.


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Kelly Meyerhofer: 843-706-8136, @KellyMeyerhofer