I no longer will be updating this page with information about the various legal disputes regarding Coral Mountain Golf Course. My election to the TLQMA Board of Directors appears assured as there are no opposing candidates. Because the board is actively involved in these disputes, I need to maintain confidentiality regarding its legal strategies. I intend to continue to publish on this website news about developments outside Trilogy’s walls. Thank you for understanding and your continued support.
Brown appears in bankruptcy court
(Updated January 17) Tom Brown appeared in federal bankruptcy court today, thereby avoiding possible arrest and jail time for failing to appear at an earlier status hearing on the Chapter 7 case involving Coral Mountain Golf Course.
Attorney wins PLA appeal
(Updated January 6) A state Court of Appeals has ruled in favor of TLQMA attorney Wayne Guralnick in a side dispute with CBGM regarding how the shared agreement to maintain the perimeter landscaping on Coral Mountain Golf Course was carried out. The judges did not rule on the merits of the underlying case, which now returns to Superior Court.
The Appeals Court decision was on the singular issue of whether Guralnick’s statements and actions during negotiations were slanderous. The attorney maintained his actions were conduct protected by law because they concerned matters of public interest. The judges agreed: “He is right that appellate courts have extended protections to conduct that occurred in the context of disputes within a homeowners association.”
The Appeals Court ruling overturns a Superior Court decision on the speech issue. The Appeals Court ordered CBGM to reimburse Guralnick for the costs incurred by the appeal. Guralnick’s law firm, rather than the HOA, funded his appeal.
In the underlying case – which includes Guralnick and former HOA board president Gary Turner as defendants – CBGM alleges the representatives of the board “made false promises concerning their control over the project and its costs that were not subsequently included in the controlling declaration of conditions, covenants, and restrictions which promises had induced them into signing.”
That dispute returns to the lower court for “a determination whether CBGM has a probability of prevailing on the merits of their claims.”
Trustee seeks delay & special litigator
(Updated January 3) The trustee in the CBGM bankruptcy case has requested a four-month extension to May 31 to review the company’s financial and contractual documents, further delaying resolution of the future of Coral Mountain Golf Course.
Case law allows for deadline extensions when the trustee cannot make “an informed determination of the best interests of the estate.”
The motion states: “Upon being appointed, Trustee has made several visits to Debtor’s principal asset (a golf course in La Quinta), and he has spoken with various constituents. Through his discussions with these parties, Trustee has been informed that Debtor did not keep very accurate records and that no single person would have all the necessary information to prepare even an initial version of the bankruptcy schedules and statement of financial affairs. Trustee has further been told that the Debtor’s principal had delegated most of Debtor’s day-to-day activities to a third party, Thomas Brown.”
The federal bankruptcy judge has ordered Brown to personally appear for a status report conference on January 10 to discuss progress toward completing discovery of documentation.
The trustee, on December 30, also filed a motion to employ a special litigation counsel to assist him in prosecuting, defending, and compromising “all pending and potential claims by or against the estate.”
In that motion, the trustee states he has “identified numerous pending and potential causes of action, not including transfers of interests of property of the estate to third parties, which may constitute avoidable transfers.” Avoidable transfers are a distribution of assets prior to or during a bankruptcy. Such transfers may be cancelled by the trustee with the proceeds returned to the estate for distribution to creditors.
Additionally, the trustee stated that he anticipates investigating and, if warranted, pursuing claims relating to:
- The recordation of the Deed of Trust against the Golf Course property by and in favor of Richard Cushman;
- Notices recorded in Riverside County Recorder’s Office purporting to give notice of contract rights to golfing privileges on the Golf Course property;
- Unrecorded contract rights to golfing privileges on the Golf Course property;
- Lien rights asserted by Key Golf against the Golf Course property;
- Potential avoidance power and equitable subordination claims;
- Such other claims affecting the estate’s right, title, and interest in and to the Golf Course property and/or other adjacent properties owned by TTBGM or other third parties.
List of CBGM creditors
A meeting of creditors in the Chapter 7 bankruptcy case of CBGM has been scheduled for January 31. The list of creditors, updated on December 24, does not include amounts owed. The 13 companies or individuals are:
- 24/7 Protection Inc.
- Bridgestone Golf Inc.
- Coral Mountain Golf Club LLC
- DLL Finance LLC
- Imperial Irrigation District Intermedia
- Joshua Grossman
- Key Golf Management LLC
- Richard Cushman
- SoCal Gas
- Stratospheric Holdings #4, LLC
- The Trustee for the Bankruptcy estate of TTBGM
- Thomas Brown
- Trilogy at La Quinta Maintenance Association
HOA town hall January 12
(Updated December 29) The TLQMA board of directors has scheduled a town hall to update homeowners on discussions related to the future of Coral Mountain Golf Course. The announcement can be found here.
Judge limits owners’ liability
(Updated December 23) The federal judge in the CBGM bankruptcy case has refused to include Richard Cushman, Tom Brown and Josh Grossman as individuals liable to pay for maintenance of Coral Mountain Golf Course. Following a hearing on Thursday, the judge ruled that only the owners of record – CBGM and Stratospheric Holdings 4 – are responsible, changing the terms of a preliminary injunction order issued in July by a state court.
“The Court finds that the State injunction does not require any expenditure of funds or payment of expenses by anyone other than the Owners of Record,” the judge ruled. Left unanswered is how those two companies would pay for course maintenance while trustees prepare to sell the properties. CBGM, which owns the land for holes #2-18, is in Chapter 7 bankruptcy protection. Stratospheric owns only hole #1, which includes the driving range and pumps for course irrigation.
The judge also modified his earlier order to allow Grossman additional access to his property, “in the least intrusive manner possible.”
Earlier today, the TLQMA board reported on the hearing and the options outlined by the judge. The Special Dose can be found here.
Trustee reports on course conditions
(Updated December 19) The trustee for Coral Mountain Golf Course has filed his initial report with the federal bankruptcy court. The report follows several inspections of the course along with meetings with TLQMA board members, Pro Turf International and BlueStar, a resort management company owned by Shea, which originally developed and managed the course.
Key findings, as reported by the trustee:
- “The golf course cannot be sold as a going concern unless all parties, especially those with stakeholders with a security interest in the various parcels are willing to take a discount. I do not believe currently that the price for the course will be sufficient to pay all lien-holders in full. However, this opinion could change after talking with different companies that value courses.”
- Ongoing maintenance of the course is approximately $45,000 monthly. The trustee proposes that the party that pays for the maintenance would recoup the money “prior to other estate creditors” should the course be sold. (See Special Dose of 11/28 regard TLQMA approach to maintenance funding)
- Goals within the next 60 days include remediating standing water; undertaking an irrigation audit; watering the course on a consistent frequency; obtain insurance; obtain a valuation of the course in its current condition and another if it were brought back to a playable condition.
- Employing special litigation attorneys, a general counsel and an accountant.
- Working with DLL to provide payments for maintenance equipment.
During the trustee’s visits and discussions, he received conflicting views on course conditions. Blue Star stated the tee boxes and greens would need to be replaced. Pro Turn International stated that the grass was not dead, but dormant. However, they said unless corrective measures were taken immediately, the course would die.
The trustee’s report notes that Tom Brown testified that the standing water was due to the course topography. “BlueStar advised that there existed dry wells throughout the course that needed to be maintained,” but haven’t been. As a result, water remains on the course rather than flowing to ponds on the course that were designed to hold the excess water.
A hearing in bankruptcy court is scheduled for December 22.
HOA, trustee say CBGM has substantial assets
(Updated December 12) Trilogy’s HOA has requested that the clerk for the federal bankruptcy court not dismiss the proceeding against CBGM if the company fails to file its list of creditors in a timely manner. The request also applies to other financial documents ordered by the court. “TLQMA and the Trustee believe Debtor owns substantial assets to administer,” according to the brief motion filed on December 8.
HOA board issues update
The TLQMA Board of Directors issued a lengthy summary of the two Chapter 7 bankruptcy cases involving the Bistro restaurant property and Coral Mountain Golf Course. The summary is available on the Trilogy website.
Trustee warns homeowners: Stay off course
(Updated December 2) The trustee appointed by a federal judge to oversee the potential sale of Coral Mountain Golf Course has warned homeowners to stay off the property. In a letter to homeowners, Trustee Larry Simons wrote:
“When I visited the course this past weekend, I noticed that people were playing golf,
walking and generally invading the course. I must implore you to cease that activity
immediately. This request is being made as a practical matter in that should any of you become
injured, the bankruptcy estate would be liable. That is a risk that I cannot allow to happen.
Candidly, if people continue to play on the course without authorization, I will have to determine
if it is in the best interest of the bankruptcy estate to reduce liability and abandon the course back
to the former Debtors. I don’t believe any of you want this to happen and neither do I.”
Simons also stated:
- It is my current belief that selling the course as a whole is worth more than selling it piecemeal. Given that baseline premise, I will be endeavoring to work with the relevant other parties, including Trustee Cisneros to accomplish that task. If we are unable to achieve such a result, there are likely other viable options to explore at a future time.
- The course will fetch a greater value if it is in playing condition, which it clearly is not at the present time. It is my intention to work on bringing it back to a saleable condition as available funds are allotted to me to further this effort.
- That takes us to what must transpire between now and early spring. During this time, I am going to try and stop any further damage to the course. I will be consulting with independent golf course maintenance companies to get estimates as to what needs be done to correct some of the deficiencies and repair standing water issues where feasible. I will also be soliciting input from those golf course maintenance companies as to the best course of action for watering and mowing of the course (frequency, etc).
CBGM in bankruptcy; owners ordered off property
(Updated November 30) A judge in federal bankruptcy court has barred Tom Brown, Richard Cushman, Josh Grossmen and their agents and employees from entering Coral Mountain Golf Course effective on December 1. The judge also granted Key Golf petition to force CBGM into involuntary Chapter 7 bankruptcy. Trustees for the estates were given the “exclusive right to possess and enter” the course and “remove anyone present without their consent.” The trustees for CBGM and TTBGM will have access to the course to prepare a plan to return the course to playable status. No decision was made on when or if the course would open to golfers. Also unknown is who will pay the trustees to maintain the course.
Those were the key results of the more than five-hour hearing in a Riverside courtroom. The three owners – Brown, Cushman and Grossman – attended in person. Only Brown was called to testify under oath.
Under questioning by attorneys for Cushman and Grossman, and without his own legal counsel, Brown stated under oath:
- He was running his catering business on the restaurant property and using the proceeds to pay for maintenance of the course. He used his own limited liability company for this purpose rather than CBGM.
- Watering of the course was temporarily halted because of a broken valve at the pump, which was eventually repaired. If the watering had continued before the repair was made, the build up of pressure would damage the irrigation system.
- He knows little about a $14 million offer for the course and restaurant by a company called Trinity of New York. (An attorney described the company, and the broker, as shell companies that never provided proof of funds and used a post office box “on a desert road.”)
At the conclusion of the marathon hearing, the bankruptcy judge stated that the trustees cannot be expected to save the golf course. “It’s up to the others in the room whether this course can be saved or die.” He encouraged all the parties who have an interest to “get serious.”
Another hearing on the course is scheduled for December 22.
Cushman’s defense: I’m not responsible
(Updated November 28) Attorneys for Richard Cushman have filed a defense on the eve of a federal court hearing on why he should not be held in contempt of court for CBGM’s failure to maintain Coral Mountain Golf Course in the face of a preliminary injunction to do so.
In a response filed on Monday, November 28, his attorneys claim:
- Cushman, as trustee of the Cushman Family Trust, “is not an owner or officer of CBGM, has no role in the management of CBGM, and thus should not be held in contempt for any violation of the preliminary injunction” issued by Riverside Superior Court.
- Cushman “has not had any meaningful involvement in the management of CBGM since early 2021,” when Tom Brown and his wife purported to “involuntarily disassociate” him from CBGM and subsequently locked him out of the company.
- Cushman had “no prior knowledge of or involvement with the water shutoff to the golf course that took place in or around July 2021 that is the subject matter of this lawsuit. Likewise, Mr. Cushman had no prior knowledge of or involvement with the current water shutoff…”
- Cushman – either individually or as trustee of the Cushman Family Trust – was not named in the preliminary injunction, nor was he even a defendant in this case at the time the preliminary injunction was issued in September 2021.
- Cushman, as trustee of the Cushman Family Trust “provided a $4,625,000 loan to CBGM in connection with the company’s acquisition of the golf course, and the loan was secured by a signed and recorded deed of trust on the parcels of the golf course owned by CBGM. That loan was never repaid … In short, Mr. Cushman (as trustee) is nothing more than a secured creditor of CBGM.”
HOA asks court for course remedies
(Updated November 25) Trilogy’s HOA has filed a supplemental motion in federal bankruptcy court that lists the actions necessary to preserve Coral Mountain Golf Course as seeks to enforce a preliminary injunction against course owners.
Defendants include CBGM, Stratospheric Holdings #4, Richard Cushman, Tom Brown and Josh Grossman. The motion, if approved by the court, would:
- Require defendants to maintain the Coral Mountain Golf Course at Trilogy, and its adjoining areas and related improvements, including but not limited to the Perimeter Landscape Areas.
- Require defendants to maintain and operate the recirculating water pumps and related equipment at the lakes, ponds and other bodies of water on the Golf Course.
- Prohibit defendants from making adverse changes to the Golf Course and prohibiting defendants from allowing any conditions to exist which give rise to a nuisance, such as allowing pooled standing water to exist at the Golf Course.
- Prohibit defendants from locking or rendering inaccessible any areas of the Golf Course previously accessible to Plaintiff and Key Golf Management LLC, including the well station that supplies the water to the Golf Course and PLA. Allow access the pumps, including by removing any lock, for the purpose of ensuring the function of the pump system and for allowing the Golf Course to be watered.
- Require defendants to abate and completely remove the pooled, standing water no later than 5:00 p.m. on November 28, 2022.
- Require defendants to “file declarations from authorized agents setting forth the efforts that have been taken in the past fourteen days to comply with the Preliminary Injunction, as well as the actions each Defendant will take in the coming fourteen days to comply with the Preliminary Injunction.”
The HOA motion asks the court to order the owners to pay for the necessary services to maintain the course. “It should be more than perplexing to the Court (as it is to TLQMA) why the Defendants
would self-inflict wounds on themselves. The Defendants have deep pockets and should easily be
able to fund the necessary actions to comply with the Preliminary Injunction as follows:
- CBGJ owns holes 2-18 “…which it has alleged to be worth millions of dollars.”
- Cushman “…contributed approximately $5 million to acquire the Golf Course and resides at 73 Linda Isle, Newport Beach, CA 92660, that Zillow shows has a value of $8,011,700.”
- “Stratospheric/Grossman allegedly lent approximately $1 million and subsequently
- foreclosed on hole 1, the driving range and land where the pumping station sits.”
- Brown is the sole owner of TTBGM, Inc., which owns the restaurant and cart barn adjacent to and integral to the Golf Course operations. “Trustee Cisneros entered a lease with CBGM that expired in May of 2022 and Debtor has paid no rent since April 2022. Notwithstanding, Trustee Cisneros has taken no action to evict CBGM or Brown from the Restaurant Property which Brown continues to actively utilize generating income Brown claims exceeds $1 million annually.”
Interim trustee named
(Updated November 24) Larry D. Simons has been appointed as interim trustee for the involuntary Chapter 7 case involving CBGM and Coral Mountain Golf Course. As trustee, Simons will be tasked with protecting the assets of the golf course as the bankruptcy proceedings continue in federal court. A specific list of the trustee’s duties has not been released.
Simons is a Riverside attorney who specializes in bankruptcy law. He is a member of the California Bar Association and the Bankruptcy Forum, and a member of the private panel of Chapter 7 bankruptcy trustees for the Central District of California, Riverside Division. He is a former chair of the Bankruptcy Law Advisory Commission, which oversees the certification and recertification of legal specialists with the State Bar of California.
Course owners face contempt charges
(Updated November 23) Tom Brown, Richard Cushman and Josh Grossman face contempt of court violations for failing to follow a preliminary injunction to properly maintain Coral Mountain Golf Course. A federal judge ordered the trio to appear in court in person on November 29 on the show cause order.
The preliminary injunction was issued in Riverside Superior Court in September 2021. Trilogy’s HOA sought the injunction to force owners to properly maintain the course. When owners failed to water the course and Perimeter Landscape Area this month, the HOA asked the federal bankruptcy judge to enforce the injunction “before greater damage is done to the golf course, PLA, and our community.”
In ordering the hearing on the contempt motion, the federal judge stated: “The Court is considering imposing monetary sanctions, evidence limiting sanctions, terminating sanctions and other potential remedies” against the trio and Stratospheric Holding #4, the company that owns hole #1 where the water pumps are located.
Federal judge orders interim trustee
(Updated November 22) A federal judge has ordered the immediate appointment of an interim trustee to oversee protection of Coral Mountain Golf Course. The ruling grants a motion by Key Golf Management that an interim trustee was needed to halt further deterioration of the property by its owners. The motion was supported by the Trilogy HOA.
The ruling does not specify the specific steps it expects the interim trustee to take.
The judge ordered a hearing on November 29 regarding the motion regarding to appoint the interim trustee on a permanent basis: “The interim trustee and a representative of the Office of the United States Trustee are both directed to appear in person at the hearing… Thomas Brown and Richard Cushman are ordered to appear in person in court” on that date. The judge ruled that no appearances shall occur by telephone or by video.
The judge further ordered a status conference regarding the TTBGM, Inc. (Bistro 60) bankruptcy case.
Course, PLA watering resumes
(Updated November 18) The legal counsel for CBGM notified the Trilogy HOA that watering of the golf course and Perimeter Landscape Area was resuming, according to the latest newsletter from the HOA. Several residents have confirmed that sprinklers were on.
Judge wants more information before ruling
(Updated November 17) The judge in the involuntary federal bankruptcy case has ordered that Key Golf Management (KGM) submit additional information before it can rule on the appointment of an interim trustee to preserve the golf course. The order demands that Key Golf submit the following information as soon as possible:
- Lack of Creditor Information and Lack of Notice. “KGM needs to provide evidence regarding creditors in this case … Who are the creditors in this case? … The Court directed KGM to provide notice … to the debtor, all creditors and all other parties in interest no later than November 9. KGM has not supplied evidence that it complied with this requirement.”
- Insufficient Number of Petitioning Creditors. The judge stated that three petitioning creditors are needed. “Although Trilogy has joined in the Trustee Motion and the Motion to Advance, Trilogy
has not joined the involuntary petition. Even if Trilogy does join as a petitioning creditor by the
November 22nd hearing, who will be the third petitioning creditor?”
- Asset Information Required. “With respect to asset information, the evidentiary record needs development… even if the Court appointed an interim trustee, the interim trustee would not have initial evidence regarding assets of CBGM.”
- What Does KGM Expect From An Interim Trustee? KGM asks that the interim trustee “merely take action such as “(i) obtaining possession of files; (ii) evaluating pending cases; (iii) consummate pending settlements; (iv) retain counsel to prosecute or defend cases; and (v) evaluate and analyze claims of both secured and unsecured creditors. The Motion to Advance and the Trilogy joinders appear to go much further and seek to have an interim trustee take more practical steps such as watering, maintaining and overseeding the golf course. How could an interim trustee in an involuntary case do so? There is no evidence that CBGM has funds available to turn over to a trustee and, even if there were, there is no evidence CBGM would promptly do so. Does KGM want a trustee to simply authorize KGM to water, maintain and overseed the golf course (without any guarantee of payment from the trustee or the bankruptcy estate) or does KGM want the trustee to water, maintain and overseed the golf course without any resources to do so? Obviously, as to the latter scenario, no trustee will do so. Any trustee would seek to retain contractors for such a purpose. But how would such contractors be paid?”
In a footnote to the order, the court stated that the joinder motion filed by Trilogy’s HOA “contains facts and arguments more typically found in urgent requests for relief. Had those facts and arguments been presented in the earlier (Key Golf) Motion, it would have made a more compelling case for a hearing on less notice to the involuntary alleged debtor.”
HOA asks federal judge to enforce order
(Updated November 16) The HOA Board of Directors is seeking enforcement of the court-ordered preliminary injunction against golf course owners to prevent further degradation of the course.
In an announcement on November 15, the board is seeking to enforce the order in federal court rather than in Riberside Superior Court where it was issued. Reason given was: “… CBGM’s bankruptcy caused an “automatic stay” of our legal proceedings against it, so TLQMA yesterday (Monday) removed our Superior Court case to the federal bankruptcy court to permit enforcement of the PI in that forum. T
The HOA’s motion stated:
“In addition to the grave risk being posed by the total lack of watering of the Golf Course
and surrounding vegetation of the PLA, Defendants have allowed persistent standing and water to
remain pooled throughout the Golf Course, diminishing the value of the Golf Course and posing
health and safety risks from vector propagation, algae and bacteria blooms and fish kills.”
“Plaintiff seeks an order enforcing the Preliminary Injunction, which will require Defendants to turn the water back on, to water the Golf Course and PLA, to remedy the standing water health and safety issues
that are pervasive on the Golf Course, and to overseed if it is not too late in the season to do so,
among other basic maintenance tasks they are required to perform.”
Key Golf asks for earlier hearing
(Updated November 15) Key Golf has asked the bankruptcy judge to advance the emergency hearing on the golf course. The company declared:
“The hearing is currently set for November 22, 2022. By that date, the damage will have already been irreversibly done. The Golf Course is the primary asset of the estate. Despite that, it appears that the Owners have abandoned the Golf Course, including ceasing all watering on the Golf Course properties. Everything is dying, including the fairways and greens. The watering must be done via the drip irrigation system controlled by the Golf Course Owners. There is no alternative way to achieve this goal in a fast and effective way. It appears the Golf Course owners are content to allow the primary asset to die. That will be catastrophic to all the creditors.”
Trilogy’s HOA filed a motion in support of the request, which was filed on November 14. As of this writing, the bankruptcy court has not ruled on Key Golf’s request.
Browns’ suit against Cushman dismissed
(Updated November 9) Tom and Vanessa Brown’s lawsuit to wrest control of CBGM from Richard Cushman has been dismissed with prejudice, according to a preliminary ruling by an Orange County Superior Court judge. A dismissal with prejudice means that the ruling – once finalized – is the final judgment in the case. The Browns cannot refile the lawsuit, although they can appeal the dismissal.
In their lawsuit, the Browns claimed Cushman violated CBGM’s operating agreement by assigning his interest in the company to his daughter. Cushman countersued, claiming the couple were minority owners who lacked authority to make contractual deals without his knowledge or approval, including the sale of hole #1 to Stratospheric Holdings.
The judge cited the Browns’ repeated failures to comply with court orders and to participate in the discovery process. The court repeatedly extended deadlines for the couple to comply. “However, this approach has failed to produce compliance with the Court’s orders,” the preliminary ruling states.
The judge approved terminating sanctions on the Browns, stating that “one year after the Court issued the November 2021 discovery orders, (the Browns) still have not complied with the orders.” Terminating sanctions are a severe punishment for grossly improper litigation behavior that ends the offending party’s participation in the case.
The Browns were fined $5,208 in September for failing to respond in a timely manner to earlier court orders. No further monetary sanctions were made. The court stated: “Dismissal with prejudice is an appropriate terminating sanction for failure to comply with discovery orders.”
The dismissal of the lawsuit does not change the operating structure of CBGM, with Cushman as principal owner and the Browns as minority owners.
The Orange County Superior Court case is one of several legal actions against CBGM, the company that owns holes 2-18 and recently leased Bistro 60. An involuntary Chapter 7 bankruptcy motion has been filed against the company by Key Golf, joined by Trilogy’s HOA. CBGM is facing other lawsuits for failure to pay vendors. Also, Cushman has filed suit against his own company, claiming he is owed $7.8 million. (See stories below)
Judge approves emergency application; hearing next step
(Updated November 8) A federal bankruptcy judge has approved an emergency application sought by Key Golf to appoint a special trustee to oversee maintenance of Coral Mountain Golf Course. The motion was supported by the Trilogy HOA. However, a hearing on the application must take place before a final ruling. CBGM has until November 18 to respond. A hearing has been scheduled for November 22.
Should the judge rule in Key Golf’s favor, CBGM would be removed from the operation of the golf course while the court considers Key Golf’s additional request to force CBGM into involuntary bankruptcy.
It is unclear what can take place regarding course conditions between now and the final ruling. An interim trustee may not be appointed until Key Golf furnishes a bond to indemnify CBGM for costs, attorney’s fee, expenses, and damages allowable under the federal bankruptcy code. The judge must also:
- Issue an order directing the appointment of an interim trustee, stating the reason the appointment is necessary and specifying the trustee’s duties.
- After the interim trustee is qualified, all the records and property of CBGM must be turned over.
- The interim trustee must file a final report and accounting within 30 days.
HOA joins Key Golf efforts to purge CBGM
(Updated November 7) The Trilogy HOA has joined Key Golf’s legal efforts to force improvements in maintenance of Coral Mountain Golf Course by removing control of the property from CBGM.
In a bankruptcy court filing on Monday, the HOA states that it supports Key Golf’s request for the bankruptcy judge to appoint an interim trustee to preserve the property, avoid devaluation of assets and avert “the irreparable harm that that will result if (CBGM) is permitted to remain in control of its business” pending the court’s ruling on Key Golf’s motion to force CBGM into involuntary bankruptcy.
The HOA states in its filing that it was on the verge of seeking contempt penalties against CBGM in Riverside Superior Court for violating a 2021 preliminary injunction requiring CBGM and other owners to properly maintain and operate the course. That ruling came after course owners shut off the water source for the golf course. The injunction, still in effect, prohibits course owners from “making any material changes to the Golf Course, its business or operations.”
The HOA filing claims “there remains a very small window of time for the Golf Course owners to scalp and overseed the Golf Course with a grass that can grow and survive in the winter months. If this is not done, the Bermuda grass currently covering the Golf Course will go dormant, dry, turn brown and subject the Golf Course to damage and diminution in value … Additionally, there are various water and irrigation issues with the Golf Course and surrounding landscaped areas that require immediate attention to avoid health and safety hazards and to preserve the attractiveness of the Golf Course.”
As of November 7, CBGM has not responded to Key Golf’s emergency motion to force CBGM into an involuntary Chapter 7 bankruptcy. Nor has it replied to the filing by Trilogy’s HOA.
Key Golf seeks to maintain course
(Updated November 4) Key Golf, which filed an involuntary Chapter 7 claim in October against CBGM, has asked the bankruptcy judge to remove the company from managing Coral Mountain Golf Course to prevent further deterioration of property. Key Golf claims the company has abandoned its management obligations to maintain the course.
Using an emergency motion, Key Golf requests that an interim trustee be quickly named to preserve the golf course as an asset by ensuring that the property be maintained until there is final resolution of the bankruptcy. The bankruptcy judge must approve Key Golf’s request before this can happen. As of this writing, CBGM has not responded to the initial Chapter 7 motion or Key Golf’s request for an interim trustee.
Key Golf sites several reasons for the emergency:
- “Due to CBGM’s members fighting among themselves, including over the remaining assets, a history of misrepresentations, and the current refusal of CBGM to care for or treat the Golf Course” an interim trustee is need to preserve CBGM estate and “avert the irreparable harm that that will result if (CBGM) remains at the helm.”
- “To put it bluntly, absent the appointment of an interim trustee, the value of the remaining assets of CBGM are substantially likely to be imminently lost.”
- “CBGM has a substantial amount of debt. The inability and refusal to pay those debts—for instance for the golf carts—imminently threatens the value of the Golf Course.”
- “Nobody is taking responsibility to take care of the Golf Course, including overseeding or watering.”
- CBGM’s principals “have repeatedly abused the Bankruptcy system in the past. The Golf Course was originally managed by Bar Piatto, LLC., then TTBGM, and then finally CBGM – the Debtor. Bar Piatto, LLC., and TTBGM were bankrupted one after another by Debtor’s principals.”
- The golf course “is encumbered by multiple entities or people, claiming ownership, liens, or secured loans on it. One of the largest lienholders on the property is none other than the principal of Debtor, Richard Cushman, alleging that there is a $4.6 million-dollar unpaid secured loan, even though that $4.6 million dollar loan is the result of self-dealing, and was actually Richard Cushman’s capital investment.”
- The other principal, Thomas Brown, “claims ownership of (CBGM) in a percentage greater than what is acknowledged by Richard Cushman. The two are currently engaged in another lawsuit, the HOA matter. This raises the likelihood that the owners/principals of the Debtor will improperly use and/or exhaust (CBGM’s) funds or assets, waste attorneys’ fees to defend meritless, and self-dealing lawsuits to satisfy their personal benefits, thus hurting the vendors/creditors’ interests.”
CBGM sued over leased equipment
(Updated October 28) DLL Finance has filed a lawsuit against CBGM and Richard Cushman claiming it is owed more than $2.1 million for golf course maintenance equipment leased to the owners of Coral Mountain Golf Course.
The lawsuit claims CBGM breached its contracts for equipment leased beginning November 2020 when it halted payments in July 2022. DLL further claims that CBGM refused to surrender the equipment, for which it is owed $1,075,923.54.
Cushman is accused of breaching the continuing personal guarantee he signed in 2020, which required him to be personally responsible for CBGM’s debt in case of default. As a result of his breach of the Continuing Personal Guaranty, DLL claims it has suffered damaged “in an amount no less than $1,075,923.54.”
CBGM and Cushman have yet to respond to the lawsuit, which was filed in September 2022,
Key Golf attempts to force CBGM into Chapter 7
(Updated October 25) As reported in the Special Dose to Trilogy homeowners on this date, Key Golf has petitioned for an involuntary bankruptcy against CBGM for its alleged failure to pay the Nevada company $1.7 million for its past work on Coral Mountain Golf Course.
The filing comes on the heels of Key Golf’s efforts to recover what it is owned through a lawsuit in Riverside County Superior Court. The bankruptcy petition doubles down on Key Golf’s resolve to collect what it claims it is due.
An involuntary bankruptcy petition occurs when a creditor seeks to put a company into federal bankruptcy to collect its debt. It is a different process, in a different legal venue, than a lawsuit.
If the CBGM responds to the petition, the court will set a hearing and decide whether the bankruptcy should go forward. If CBGM fails to respond, the court will allow the case to move forward, and the debtor will be required to participate in the bankruptcy. If the judge finds in favor of CBGM, the case will be dismissed.
Here are the key points as I understand Key Golf’s petition and its impact on the golf course:
- Key Golf has asked the bankruptcy court to rule that CBGM, owner of holes 2-18, is bankrupt in order to collect its debt. The company claims it is owed $1,682,381.
- CBGM can contest the filing.
- The motion does not mean that Coral Mountain Golf Course is in bankruptcy. What it does is set in motion a process for the judge to determine if it should be.
- CBGM remains the owner of holes 2-18 and can continue to operate the course – if it chooses to do so – until the judge rules on the outcome of Key Golf’s filed.
- The Key Golf case is separate from, but related to, the Bistro 60 (TTBGM) Chapter 7 case.
- The process can take a long time.
Here is good explanation from David Mawhinney of Bowditch & Dewey, which has been edited for length and clarity:
Trying to collect money from someone who cannot or will not pay you is frustrating. That old chestnut about throwing good money after bad comes to mind. Placing an individual or firm (your “debtor”) into bankruptcy is a powerful remedy to secure payment. But it should not be undertaken without careful thought and planning.
An involuntary case starts with a petition filed with the bankruptcy court. In order to sign and file that petition you must be a creditor holding a non-contingent, undisputed debt. You will have the burden of proving that your claim is not subject to a bona fide dispute as to liability or amount. If your claim is based on a contract, that should be relatively easier to establish than if your claim is based on a tort for which you have yet to obtain a judgment.
As a petitioning creditor, you have a duty to reasonably investigate the debtor’s affairs prior to filing an involuntary bankruptcy petition. That requires knowing more about the debtor’s operations than just its transactions with your firm. You might not have the luxury of time to learn these facts. If the debtor is engaging asset-depleting transfers, you might need to move fast. But urgency should not excuse making a reasonable effort to learn about the debtor so that you can be prepared to defend the petition if the debtor later disputes that it should be in bankruptcy.
If the debtor has fewer than 12 creditors, then you can file the petition by yourself. If the debtor has more than 12 creditors, you must find 2 creditors to join you in the petition.
WHAT’S THE BEST THAT COULD HAPPEN?
Filing an involuntary bankruptcy case against someone is analogous to suing them. Once the petition is filed, the court will issue a summons requiring the debtor appear and answer the petition. The Bankruptcy Code automatically stays all collection activity against the debtor while the case is pending.
If the debtor does not answer the petition, the bankruptcy court will enter the “order for relief,” which officially starts the bankruptcy case. As a petitioning creditor you have the choice of placing the debtor in liquidation (chapter 7) or reorganization (chapter 11). Involuntary reorganizations are exceedingly rare because the debtor is often defunct (in the case of a corporation) or non-cooperative (in the case of an individual). For this reason, involuntary bankruptcies usually proceed under chapter 7.
Every chapter 7 case is run by a trustee, with a mandate to investigate the debtor’s affairs, collect and liquidate property of the estate, and distribute proceeds to creditors. If the debtor engaged in asset-depleting transfers prior to the bankruptcy, the trustee will invoke the Bankruptcy Code’s “strong arm” powers to sue and recover the property transferred for the benefit of the estate. The pursuit and recovery of pre-bankruptcy transfers will be the predominant focus of most involuntary cases, especially if the debtor is insolvent at the time of filing.
As a petitioning creditor, you will receive a priority claim against the estate assets for the costs of expenses (including attorney fees) of bringing the involuntary bankruptcy. But your underlying claim against the debtor is not given special treatment just because you were the creditor who put the debtor into bankruptcy. Once the order for relief enters, all creditors will have the opportunity to file proofs of claim against the estate.
Even in the best of circumstances, an involuntary bankruptcy process can take a significant amount of time to play out. You will not control the process, and at the end of the day, the assets recovered might be insufficient to pay all creditors in full. On the other hand, the bankruptcy court has nationwide jurisdiction and the trustee can sue third parties located virtually anywhere and bring them into the bankruptcy court to answer fraudulent transfer and preference claims. If someone has “raided” the debtor, and if the claims are sufficiently large, the time and expense of an involuntary bankruptcy might be justified.
WHAT’S THE WORST THAT COULD HAPPEN?
If the debtor contests the petition, the bankruptcy court will hold an expedited trial to determine whether to enter the order for relief. As the petitioning creditor, you must prove that the debtor is “generally not paying” its debts as they become due. (Alternatively, if a custodian has recently taken possession of the debtor’s assets the court will allow the bankruptcy to proceed. The reason for this rule is that if the debtor is already liquidating under state law, creditors are entitled to have that process continue under the watchful eye of the bankruptcy court.) The court will consider the number of debts that the debtor is not paying, the materiality of nonpayment, and/or whether creditors have commenced lawsuits against the debtor. The court will also look at the debtor’s conduct: is the debtor paying insiders or preferred creditors? has it drawn down on credit lines or defaulted under its loan agreements? is it liquidating its assets and winding down? Such inquiries are highly fact determinative and it behooves the petitioning creditor to gather as much relevant information as possible prior to filing the petition.
If it turns out that you are the only creditor the debtor is not paying, the court will probably dismiss the case. Dismissal of an involuntary bankruptcy case can sting. The court can require you to pay the debtor’s costs incurred defending the case. If the court finds that you filed the petition in bad faith (and “bad faith” can mean failure to reasonably investigate the debtor’s affairs prior to filing) you can be liable for any damage that debtor suffered as a result of being put into bankruptcy. Damages may include lost profits, loss of earning capacity, harm to reputation, and interest on monies borrowed to maintain business operations. The court can even award punitive damages if the petitioning creditors behaved particularly recklessly or with intent to injure the debtor. The court might require you to post a bond at the start of the case to indemnify the debtor for these potential damages. Furthermore, you cannot offset a judgment to pay the debtor’s costs and damages against the original debt that the debtor owes you. You must part with actual cash to settle a damages award.
Once the case is filed, you do not have a right to dismiss it yourself, either. If you reach a deal with the debtor, the court may dismiss the petition only after giving notice to all creditors, including those who did not join in filing the petition. Those other creditors can oppose dismissal if they would prefer to see the bankruptcy case proceed. This avoids collusive settlements that favor petitioning creditors at the expense of other creditors.
Involuntary bankruptcy is a strategy for the cases on the extreme ends of this spectrum. If the debtor is completely insolvent, an involuntary bankruptcy might help preserve assets and recover fraudulent transfers. If the debtor is highly liquid but ignoring the creditor, an involuntary bankruptcy might force a quick settlement and consensual case dismissal paying the creditor in full.
For the cases in the middle, however, the costs and risks of involuntary bankruptcy are magnified. Bankruptcy’s strengths are a centralized proceeding, administered by a neutral trustee under court supervision. Its weaknesses are time, costs, and deterioration of the enterprise value of the debtor. While a petitioning creditor bears the risk of filing the bankruptcy, it must share the gains with all creditors according to the Bankruptcy Code’s payment priorities.
Browns miss court-ordered deadline
(Updated Oct. 10) Attorneys for Richard Cushman are requesting once again that a judge impose sanctions against Tom and Vanessa Brown for “willfully” failing to respond to court orders to produce discovery evidence. The court was asked to impose terminating sanctions against the couple and dismiss their lawsuit against Cushman.
The judge in the Orange County Superior Court gave the Browns until October 3 “to allow Plaintiffs a final opportunity to fully comply with the (court’s) November 2021 discovery orders.” According to the new motion, that deadline passed without a response from the Browns.
The couple was fined $5,208 in September for failing to respond in a timely manner to earlier court orders.
Cushman deposed; attorneys spar
(Updated Sept. 25) Key Golf Management has asked a judge in Riverside Superior Court to compel additional testimony from Richard Cushman and place “guardrails” on his attorney’s behavior. The motion comes on the heels of combative exchanges between attorneys for the two parties during a deposition of Cushman on September 15.
Key Golf has sued Cushman’s company, CBGM, along with Stratospheric Holdings 4, Tom Brown and Cushman as trustee of the Cushman Family Trust and as an individual. The Nevada company claims it is owed nearly $1.5 million for maintenance work going back several years. Its lawsuit alleges breach of contract.
Key Golf seeks the following in its motion:
- That a second deposition of Cushman should be scheduled within 10 days of the court’s ruling because of Cushman’s “advanced Parkinson’s disease.”
- That the court issue a “protective order to set reasonable parameters on the conduct of depositions going forward” because of actions by Cushman’s attorney.
- That the court place $7,560 in monetary sanctions against Cushman because of the “disruptive deposition” and time incurred preparing a new motion.
Attorneys for Key Golf complain that Cushman’s counsel “chose not to follow any well-established protocols for California depositions” by:
- Refusing to appear on camera.
- Attempting “to create a false record…”
- Mocking the attorney for Key Golf.
- Answering substantive questions meant for the witness.
- Coaching Cushman on how to answer questions.
- Routinely walking out of the deposition.
- Instructing Cushman not to answer numerous times on non-privileged grounds.
- Making long, narrative speeches taunting opposing counsel with diatribes about everything they had supposedly done wrong.
The deposition itself revealed little additional information about CBGM operations and agreements between Cushman and Tom Brown. Among the statements from Cushman:
- He considers the $4.6 million he gave to CBGM to purchase Coral Mountain Golf Course a loan rather than an investment.
- The $4.6 million was his personal money rather than from the Cushman Family Trust.
- The Cushman Family Trust is not a member of CBGM.
- He affirmed that he is the 100% owner of the company.
- He stated he has no recollection of approving an agreement with Key Golf, but is aware of the promissory note to the company from CBGM and TTBGM. He further stated that “Tom is the one that made the deals with them, so Tom owes them the money.”
Judge fines Browns; no decision on settlement
(Updated Sept. 9) An Orange County Superior Court judge has fined Tom and Vanessa Brown $5,208 for failing to respond in a timely manner to earlier court orders to appear and provide responses to a countersuit filed by Richard Cushman. The judge gave the Browns until October 3 to fully comply with the discovery orders and warned of further sanctions if they failed to do so. The hearing was continued until October 17.
On the matter of the disputed settlement agreement (see story below), the judge stated that Browns’ contention that a settlement had been reached was not a valid excuse for their “continued failure to comply with the November 2021 discovery orders.”
The judge did not rule on the validity of the settlement document, stating only that the court is aware that the Browns contend a settlement has been reached and that Cushman states the signed agreement is invalid because it was the result of undue influence or fraud.
Brown, Cushman settle lawsuit… or did they?
(Updated Sept. 7) The legal battle over control of CBGM, the company that owns most of Coral Mountain Golf Course, has taken a surprising turn. According to documents filed recently in Orange County Superior Court:
- A settlement agreement has been reached between Tom and Vanessa Brown and Richard Cushman that would effectively dismiss the lengthy court case that revealed bitter infighting between the parties.
- Cushman, however, claims the agreement is invalid because he was pressured to sign by the Browns and faced “undue influence” before signing.
- The attorney for the Browns, in filing a copy of the settlement, admits that the agreement was rejected by the legal filing system because document did not contain the date it was filed.
- Cushman continues to pursue his claims against the Browns and is seeking terminating sanctions against the couple for failing to respond to earlier court orders to appear and provide responses to the countersuit. Terminating sanctions is an extremely harsh remedy that can result in the court awarding a default judgment and monetary penalties.
- The court has scheduled a hearing on September 12 on these matters.
A little background
The case in Orange County began in March of 2021 when the Browns filed a lawsuit claiming that Cushman no longer was an owner of CBGM because he violated the corporation’s governing documents by giving his daughter power of attorney on his behalf. Cushman then filed a countersuit claiming the Browns were minority owners who lacked authority to enter into deals without his knowledge or approval, including the sale of hole #1 to Stratospheric Holdings. Trilogy’s HOA is a not a party to the Orange County case.
The settlement agreement
The document, signed by Tom Brown, Vanessa Brown and Richard Cushman states that the parties agree to release each of them from “any and all existing indebtedness, claims, liens, demands, causes of action, obligations, damages, and liabilities of any nature whatsoever, known or unknown, that either party ever had, now has, or may claim to have had that relate to the Disputes.”
The agreement includes language that the agreement is “executed voluntarily and without any duress or undue influence on the part or behalf of the Parties…” and the parties “…have been represented and fully advised in the preparation, negotiation, and execution of this Agreement by legal counsel of their own choice, or, that they have been advised of the opportunity, benefits and importance of doing so and have nonetheless voluntarily declined such legal counsel.”
The first paragraph of the document states that the effective date of the agreement is August 15, 2022. However, the attorney for the Browns states: “After receiving a copy of the executed Settlement Agreement from my client, I filed and served a Notice of Settlement of Entire Case. Today, I received an email from OneLegal indicating (the) Notice of Settlement was rejected because the date on which the complaint was filed was not included on the form.”
The agreement makes no mention the ownership arrangement of CBGM, which was at the heart of Brown’s initial lawsuit and Cushman’s countersuit.
Cushman’s claim of “undue influence”
In a startling admission, Richard Cushman claims he was pressured into signing the agreement at a meeting with the Browns, their six children and associates of Tom Brown. The meeting was, he states, “a situation where he was subjected to undue influence, and he signed a document that purportedly waived his rights to pursue the Browns. This was never Cushman’s intention. Instead, at the signing, Cushman was being told by several parties that he needed to sign or there would be dire consequences.”
Cushman further states he was told the agreement would “allow him to reap a huge benefit.” His statement also claims he was not given time for his attorney to review the document and was “flat out lied to about the contents of the purported settlement agreement document he was influenced to sign.” The motion also states that Cushman, who is 88, suffers from chronic health issues “that exhaust him and wear him down.”
The motion also claims Cushman was told by the Browns, “among other false things, that his 60-year-old daughter (whom Cushman trusts and Cushman has appointed as power of attorney over his business affairs) was against him. Cushman was told his own attorney is against him. Cushman was told his partner of approximately a decade was against him.”
The court filing further alleges that “the Browns also had prepared a Revocation of Power of Attorney to remove Cushman’s daughter from Cushman’s business affairs. Her oversight has been essential to prevent the Browns from taking further advantage of Cushman. The Browns, however, took Cushman … to a Notary Public and had Cushman sign to remove his daughter from his business affairs. Now, the Browns are asking Cushman to subordinate his deeds of trust for an $800,000 loan on the golf course. This is the exact conduct Cushman’s daughter and attorney have prevented in the past. Given that Cushman’s advisors know about this latest demand and that there is nothing in the plan for Cushman other than subordinating his security in the golf course, that plan is being refused by Cushman.”
Motion for terminating sanctions
The court on September 12 will consider applying terminating sanctions against the Browns for failing to comply with court orders. The motion by Cushman states: “Over nine (9) months have passed since the issuance of those orders, yet the Browns still have not provided any responses to Cushman’s discovery requests as they were required to do under the Court’s orders.”
The attorney for the Browns filed an opposition to the motion, stating they “have complied with the November 2021 discovery orders regarding monetary sanctions and they intend to serve responses to the written discovery without objections…”
According to the law offices of Law Offices of Nathan Mubasher (which is not a party to these cases), a terminating sanction is “an extremely harsh remedy that can result in the Court striking the answer of a defendant, or the complaint of a plaintiff and entering a default and even a default judgment against them. Because filing a motion for terminating sanctions is an extremely harsh remedy, they should only be filed when you can show a persistent failure of a party to comply with a court order or orders to respond to discovery.”
“Courts, including the United States Supreme Court and a California Court of Appeal, have stated in published decisions that failing to respond to discovery creates a presumption that the resisting party is admitting a lack of merit in their claim or defense. Terminating sanctions are appropriate when a chronic pattern of delay or evasiveness by the defaulting party is egregious enough to warrant denial of a trial on the merits.”
Cushman seeks dismissal of Brown’s lawsuit
(Updated August 11) An Orange County Superior Court judge has extended to September 12 a hearing on a possible dismissal of Tom and Vanessa Brown’s lawsuit against Richard Cushman. In a recent filing, attorneys for Cushman claim that the Browns “have irrefutably failed to materially participate in the litigation” that was initiated by the couple.
The filing is the latest action between Cushman and the Browns over operation and ownership of CBGM, the company that owns holes 2-18 of Coral Mountain Golf Course. The Browns initial lawsuit claimed that Cushman no longer is an owner of CBGM because he violated the corporation’s governing documents by giving his daughter power of attorney on his behalf. Cushman, in response, claims that the Browns entered into deals without his knowledge or approval, including the sale of hole #1.
In addition to asking the judge to dismiss the lawsuit, Cushman asks the court to impose other sanctions against the couple for their failure to comply with the court’s discovery orders.
Key Golf wins important motion
(Updated May 27) A Riverside Superior Court judge granted a writ of attachment against owners of Coral Mountain Golf Course in a hearing held May 27. The Nevada company sought the prejudgment in a lawsuit against CBGM, Stratospheric Holdings 4, and Richard Cushman as trustee of the Cushman Family Trust. Key Golf claims it is owed nearly $1.5 million for maintenance work going back several years. Its lawsuit alleges breach of contract (see Feb. 3 article below).
A writ of attachment is a temporary remedy that will allow Key Golf to protect its interests or rights in the golf course property before the lawsuit is heard and adjudicated. Normally a party may not create a lien on property or freeze a bank account until that party has won the litigation and secured a judgment. A writ of attachment allows such a lien before the litigation has gone to trial.
A writ of attachment is considered a powerful legal move because it allows a party to exert control over a defendant’s property or bank account at the outset of the litigation. As plaintiff, Key Golf does not get access to the Coral Mountain property or the money it claims it is owed under the writ, but the defendants are prevented from transferring the property while the writ is active. According to legal experts, while a writ of attachment is not a final determination on the merits of a case, it gives the plaintiff incredible leverage at the beginning of the case.
Critical time in bankruptcy, golf course disputes
(Updated May 26) Several deadlines are approaching in the continuing legal battles over the fate of Coral Mountain Golf Course and the Bistro 60 bankruptcy. Below are key dates:
May 27: Key Golf hearing
A hearing on Key Golf Managements lawsuit against CBGM and other golf course owners is scheduled on this date. The Nevada company claims it is owed nearly $1.5 million for maintenance work going back several years. The lawsuit asks Riverside Superior Court to approve a writ of attachment on golf course property. A writ is a form of prejudgment process in which a court orders the attachment or seizure of property described in the writ. The property is seized and held in the custody under court supervision prior to the outcome of the foreclosure process.
Key Golf this week filed a motion asking the judge to quickly approve the writ because of the failure of course owners to respond to the filing. The motion states: “Any opposition was due by May 20, 2022. If Defendants should file a late opposition brief, Plaintiff would suffer prejudice due to the delay. For the above reasons, as well as those set forth in the Applications, Plaintiff respectfully requests that this Court consider the Applications to be consented to by Defendants, and that the Applications shall be granted.” Defendants in the case are CBGM, Coral Mountain Golf Club, Stratospheric Holdings #4, Richard Cushman, Tom Brown and the Cushman Family Trust.
May 31: Bistro lease expires
CBGM’s lease on the Bistro 60 property expires after this date. The company, which operates Coral Mountain Golf Course, has leased the restaurant property under terms of the Chapter 7 bankruptcy case. While the trustee has the discretion to extend the lease on a monthly basis, there is no record of an extension in the court record as of this writing.
Without a lease extension for use of the property, operation of the golf course is called into question. The Bistro 60 property includes the parking lot and golf cart barn, both of which are necessary for continued operation of the course. CBGM and other owners of the course are required to properly maintain and operate the course under terms of a Superior Court order successfully sought by Trilogy’s HOA.
June 16: Bistro 60 foreclosure hearing
A hearing is scheduled on this date on Byline Bank’s motion to proceed with foreclosure on the Bistro 60 property. The bank is the largest creditor for the property, which includes the restaurants, parking lot and golf cart barn. Byline loaned the companies $4.9 million to make improvements to and refinance existing secured debt. The companies ceased making payments in August 2019.
Last May, the bankruptcy court retained a broker with the authority to sell the property at an initial listing price of $6.5 million. No letters of intent or sale contracts for the property have materialized. The property is now valued at $5.7 million on an “as is” basis and $4.85 million in a forced liquidation.
Golf course no longer publicly listed
(Updated May 10) Public websites that promote the sale of golf course properties no longer are listing the Coral Mountain Golf Course. No explanation has been provided by the various parties. The listings were removed following Byline Bank’s motion to foreclose on the Bistro 60 property, which includes the parking lot, golf cart barn and restaurant. Byline Bank last week filed a motion with the bankruptcy court to foreclose on the Bistro 60 property following the trustee’s inability to sell the property. The bank is the largest creditor for the property, which includes the restaurants, parking lot and golf cart barn. A hearing on the motion is scheduled for June 16.
Letter of intent revealed & nullified
(Updated April 30) The TLQMA board of directors revealed on April 29 that in February they presented a letter of intent in the Chapter 7 bankruptcy proceedings for TTBGM and Bar Piatto, the companies that owned the Bistro 60 restaurant and property that includes the parking lot and golf cart barn. The board released a five-page explanation to homeowners after homeowner Rich Parsons revealed the existence of the document at the board’s April 28 meeting. The full document can be found at this link. It is also posted on the TLQMA website under Weekly Newsletters.
Key elements of the board’s explanation:
- The letter of intent was aimed at assets of TTBGM as a means to “potentially have greater control of TLQMA’s future without actually owning the golf course.”
- The letter of intent was non-binding on all parties.
- No formal offer for the assets was made.
- Purchase of TTBGM’s assets would require a vote by Trilogy homeowners.
- The board received unsolicited offers from a third party to jointly purchase the assets of TTBGM, including the liquor license.
- The non-binding letter of intent “excluded any golf course ownership.”
- The board’s proposal was not accepted or countered by the bankruptcy trustees.
- The letter of intent was rendered null and void when Bar Piatto’s assets were abandoned by the trustee.
- Public release of the letter of intent also rendered the non-binding document null and void.
Golf course asking $16 million
(Updated April 20) Coral Mountain Golf Course is being marketed for sale for $16 million. The course was formally placed for sale on March 25, according to a listing by broker Richard Rowland. His LinkedIn profile identifies Rowland as the owner of Link Golf Properties of La Quinta.
The listing information includes photographs of the restaurant on the course and food
& beverage revenues & expenses, but doesn’t specifically state that the restaurant is included in the asking price. Also confusing is a the statement: “Fee simple land, improvements, water rights and personal property of the Coral Mountain Golf Club are being marketed through a Chapter 11, Section 363 Bankruptcy sale process in the U.S. Bankruptcy Court.”
There is no public record of the golf course property or its owners being in Chapter 11 bankruptcy. The only active bankruptcy filing is a Chapter 7 case for TTBGM, owner of the Bistro 60 restaurant and accompanying property, which includes the parking lot and golf cart barn. A related Chapter 7 case involved Bar Piatto, which owns the restaurant equipment, furniture and fixtures. The trustee in that case abandoned the filing earlier this month, declaring the assets were of no value to creditors.
CBGM owner Richard Cushman and his estate have filed a lawsuit in Riverside Superior Court requesting foreclosure of the golf course to satisfy debts. (See related story below).
Other information from the marketing flyer:
- Net Operating Income is listed as $2.4 million. Future projections show revenues of over $7 million in five years. (See infographic below)
- Minimum down payment is $250,000.
- All sales of the Debtors’ assets are subject to Bankruptcy Court Approval. LIGP has been authorized by Debtor and the U.S. Bankruptcy Court to market and offer the assets for sale on behalf of the Debtors. The Court will deliver their assets to the successful bidder(s) free and clear of all liens, claims and interests.
Grossman’s attorney wants out
The legal firm representing Joshua Grossman in the lawsuit brought by Trilogy at La Quinta Maintenance Association has petitioned the court to be excused from the case. In a motion filed March 11, Geraci Law Firm of Irvine, CA, stated: “Without wishing to jeopardize the attorney-client relationship, the attesting attorney can advise that there has been an irrevocable breakdown in the relationship which prevents Geraci Law Firm from continuing to represent the client.”
The Geraci Law Firm has represented Grossman’s company, Strategic Holdings 4, in a lawsuit filed in Riverside County Superior Court by the HOA to ensure that Coral Mountain Golf Course is properly maintained. Owners of the course claimed they did not have the funds to overseed the course in September 2021. The HOA sought and won an injunction to compel the overseeding and watering of the course. Strategic Holdings owns Hole #1, which includes the water source for the course.
The next hearing on the case is scheduled for June 6.
Cushman sues CBGM; threatens to foreclose
(Updated Feb. 2, 2022) In the latest legal twist in the protracted fight over Coral Mountain Golf Course, owner Richard Cushman has filed suit against his own company, CBGM, in the amount of $7.8 million. The lawsuit further states that Cushman is entitled to foreclose on the golf course property to satisfy the debt.
The lawsuit, filed in Riverside Superior Court, comes on the heels of legal action in Orange County between Cushman and Tom Brown and Vanessa Brown, who partnered with Cushman to purchase the course in 2015 and to operate it under CBGM.
The new Riverside court case was filed in December on behalf of the Cushman Family Trust, with Richard Cushman as its trustee. Among the lawsuit’s claims:
- Cushman loaned CBGM $4.6 million in January 2017. CBGM pledged the golf course property as security in a deed of trust recorded the following month.
- CBGM has failed to pay “all requisite amounts owed on the loan,” including interest. On April 9, 2021, Cushman issued a written notice to CBGM “declaring the entire outstanding balance … to be immediately due and payable,” which was estimated to be over $7.8 million.
- A second notice was issued in November 2021 with the additional demand for CBGM to assign Cushman “all rents, revenues, and profits” from the golf course operation and apply the amount toward the outstanding balance. “However, once again, CBGM failed to pay any of the outstanding balance” or assign rents, revenues and profits.
- The amended complaint, filed January 28, 2022, also asks the court to bar “any creditor, claimant, or other person claiming an interest under a junior deed of trust or other lien.” The complaint specifies Key Golf as having a mechanics lien. California law provides protection to contractors, subcontractors, laborers and suppliers who furnish labor or materials to a project. (See related story below).
- The amended complaint asks the court to foreclose on the deed of trust and that the golf course properties be sold and the proceeds be used “to satisfy the debt owed” to the Cushman Family Trust.
- The complaint states that CBGM is the owner of holes 2 through 18 as well as the equipment facility at the end of hole 4.
Key Golf sues course owners; threatens foreclosure
(Updated Feb, 3, 2022) Key Golf Management has filed a lawsuit against the owners of Coral Mountain Golf Course, claiming the Nevada company is owed nearly $1.5 million for maintenance work going back several years. The lawsuit asks Riverside Superior Court to foreclose on golf course property with the proceeds used to satisfy the debt. It is the second lawsuit seeking foreclosure on the course (see story above).
The Key Golf lawsuit names as defendants CBGM, Stratospheric Holdings 4, and Richard Cushman as trustee of the Cushman Family Trust. The suit, which claims breach of contract by the defendants, alleges:
- Beginning in 2013, Key Golf entered into a contract with TTBGM, an affiliate of CBGM now in chapter 7 bankruptcy, to perform seeding, sodding and other landscape services for the course. The contract called for payment of services within 30 days. “All invoices have been submitted and substantial sums remain unpaid … payments on invoices have been sporadic at best but over the course of the last six months have been essentially non-existent.”
- Since June of 2021, Key Golf claims it has received only $25,000 in payments for services that run $15,000 per week.
- In January 2020, CBGM, “through another affiliated entity Coral Mountain Golf Club LLC … engaged Key Golf Management to provide seeding, sodding, planting and landscaping services.” Key Golf claims the services benefited CBGM, Stratospheric and Cushman pursuant to terms of an agreement.
- Key Golf scalped and overseeded the course this year “at the direction of CBGM and Stratospheric, and with the knowledge of Cushman, in an effort to comply with that certain court order issued on October 29, 2021 … for which Key Golf Management is owed $150,000 within 75 days of the court order (January 12, 2022), at which point this charge will be added to the outstanding balance due.”
- Key Golf claims that CBGM and TTBGM executed a secured promissory note on December 26, 2019 in the amount of $588,916. “This note acknowledged the existence of the debt owed to Key Golf Management and was an effort to create a plan of repayment … The Defendants have failed to make any payments on this note despite being well past due.”
- As a result of default, Key Golf claims it is entitled to foreclose upon the golf course, with the proceeds used to satisfy the debt. The lawsuit further claims that its services “predate the secured interests alleged by other parties and is thus superior to any other liens, some or all of which may be legally invalid.”
PTI no longer maintaining course
(Updated December 20) The TLQMA board of directors issued the following report: “It is our understanding that PTI has exited their golf course maintenance activities at Coral Mountain Golf Club. In response to homeowner inquiries, PTI has confirmed to TLQMA their continued obligation to maintain the PLA under our separate contract with PTI. The golf course remains a private business. Accordingly, it is not our place at this time to comment on golf course operations on a day-to-day management basis unless we believe those activities violate the Golf Course CCRs, Court Orders, or threaten the health/safety of the community.”
CBGM to sell golf course
(Updated December 14) CBGM, the company that owns holes 2-18, says it intends to sell the golf course once the dispute with the homeowners’ association is resolved. In a memo to charter members, Jim Wanless wrote: “My portfolio from CBGM’s owners has been to stabilize club operations by rationalizing expenses with revenues, resolve the arbitration issues (hopefully by a settlement), and then sell the Club when these first two objectives are accomplished.”
The memo also included an explanation of the new “trail fee” charges for lifetime members and a recent court ruling allowing the lawsuit against Gary Turner and Wayne Guralnick to move forward. The Wanless memo raises two immediate questions:
- Who is currently managing golf course operations, CBGM or PCM? The latter company was allowed to operate the club and recoup the cost of the reseeding under an agreement with CBGM and Stratospheric Holdings, which owns hole #1.
- How does CBGM intend to sell the golf course when it does not own hole #1?
Judge refuses to rule on merits of Turner & Guralnick case
(Updated December 14) A Riverside Superior Court judge has denied a motion to issue an immediate ruling in a lawsuit filed by the principal owner of Coral Mountain Golf Course against Wayne Guralnick, the attorney who represents the Trilogy Homeowners Association, and Gary Turner, former president of the Trilogy HOA. The ruling was on a singular motion rather than on the merits of the lawsuit itself.
The ruling was on the defendants’ request for a Motion on Judgment on the Pleadings. The motion by Guralnick and Turner asked the court to rule in their favor based on pleadings on file, without accepting evidence, as when the outcome of the case rests on the court’s interpretation of the law. The intent of a motion for judgment is to dispose of baseless claims or defenses when the formal pleadings reveal their lack of merit. When the pleadings do not resolve all factual issues, judgment on the pleadings is generally inappropriate.
The judge in November refused to accept Guralnick’s contention that the negotiations he conducted on behalf of TLQMA for the Perimeter Landscape agreement with CBGM was protected speech. A California law called SLAPP allows defendants to file a special motion to strike a complaint based on an “act in furtherance of [your] right of petition or free speech under the United States or California Constitution in connection with a public issue.” That ruling has been appealed.
As a result of these two rulings, the lawsuit against Guralnick and Turner will move forward. The lawsuit, filed by CBGM in December, alleges that Guralnick as TLQMA counsel and Turner as board president made misrepresentations during negotiations and discussions regarding each party’s responsibilities in the rehabilitation and maintenance of the 61 acres of land between the golf course and Trilogy homes.
The companion dispute between TLQMA and CBGM is scheduled for arbitration early in 2022.
Does ruling jeopardize course management deal?
(Updated December 7) An Orange County judge has issued a tentative ruling in favor of Richard Cushman that prevents Tom and Vanessa Brown from entering into any contracts on behalf of CBGM without his consent. A temporary order to that effect was issued on November 19.
The ruling calls into question the business agreement that allowed Precision Club Management to temporarily manage the golf course. In the ruling the judge cites the following:
“Cushman declares the Browns have executed agreements and are planning to execute additional
agreements on behalf of CBGM without Cushman’s consent, despite Cushman being at least a 50%
owner of CBGM. Specifically, Cushman declares the Browns are seeking to enter an agreement to turn
over management of the golf course owned and operated by CBGM to a third party and allow the third
party to collect revenues from operation of the golf course.”
What is not clear as of this writing is whether or how the agreement between CBGM and Precision is affected by the ruling. The agreement was announced at a “town hall” meeting at the Irons Club on November 12 – one week prior to the judge’s temporary restraining order.
The action is part of an ongoing suit and countersuit between Cushman and the Browns over operation and ownership of the company that owns holes 2-18 of Coral Mountain Golf Course. Cushman claims that the Browns entered into deals without his knowledge or approval, including the sale of hole #1. The Browns claim that Cushman no longer is an owner of CBGM because he violated the corporation’s governing documents by giving his daughter power of attorney on his behalf.
The court’s December 6 ruling favors Cushman’s argument. The order states:
“Cushman has presented evidence that he has at least a 50% ownership interest in CBGM, which entitles him to at least a 50% vote regarding management of the LLC under Corporations Code section 17704.07. Cushman further declares that the Browns have made decisions regarding management of CBGM without his vote and consent in violation of the operating agreement(s) and Corporations Code section 17704.07. Therefore, Cushman has shown a likelihood of prevailing on the merits of at least some of his causes of action in the Cross-Complaint.”
“Cushman has also shown that if the preliminary injunction does not issue, he will suffer substantial harm, including CBGM turning over its operations and revenues to a third party without Cushman’s consent. Cushman may be further harmed if CBGM, without his consent, enters an agreement which prejudices Cushman’s right to enforce his promissory note and deed of trust secured by CBGM’s properties.”
Course, restaurant to resume operations
(Updated November 13) At a “town hall” golf course meeting, held at the outdoor patio at the Irons Club on November 12, managers of Precision Club Management announced the following:
- PCM has an agreement to manage Coral Mountain Golf Course and the two restaurants. PCM is a California subsidiary of a Nevada LLC, and PTI, which has maintained the course for several years. The agreement is temporary and will last through the season, concluding in May, according to Angel Martinez, Director of Golf Operations.
- The golf course will re-open on November 21. Opening of the restaurant depends on the transfer of the liquor license and other legal transactions. Seating in the formal restaurant, including the patio overseeing the driving range, will be by reservation. Seating at the Irons bar and patio will be open.
- Tom Brown is not involved with PCM or the management of the course and restaurants. Brown remains one of the owners of the golf course. His restaurant company, TTBGM, remains in Chapter 7 bankruptcy protection.
- Golf course play will be cart path only for the first 10 days.
- Despite a significant increase in the cost of seed, overseeding of the course was at the same level as past years.
- Charter and lifetime memberships will be honored.
- Club play will be limited to Mondays. The mens’ and ladies’ 18-hole clubs will tee off in the mornings. The mens’ and ladies’ 9-hole clubs will tee off at 1:30 in the afternoons.
CBGM lawsuit dismissed
(Updated November 1) A Riverside Superior Court judges has dismissed a lawsuit filed by the principal owner of Coral Mountain golf course against several investors over ownership of hole #1. The lawsuit was dismissed because CBGM failed to provide defendants with proper legal documents. CBGM’s attorney, Edwin Robert Cottone, was earlier fined $150 for the failure.
CBGM, the California company that owns holes 2 through 18, filed a lawsuit in April claiming that manager Tom Brown misled and defrauded its owner, Richard Cushman, in several financial transactions, including the sale of hole #1. The lawsuit sought to invalidate loan agreements on that property. Brown was not a defendant in the case, according to court documents. Defendants are investors who helped finance the contested property acquisition. (See article below: Cushman files lawsuit)
During a lawsuit, certain legal documents must be served on an opposing party, in addition to a signed proof of service affidavit which must be filed with the court. The signed proof of service affidavit validates the fact that proper notice was rendered upon the opposing party in the pending legal matter.
The CBGM lawsuit is unrelated to the case and preliminary court injunction filed by Trilogy HOA against the owners of hole #1.
Agreement to reseed and water course
Owners of the golf course and PTI have reached an agreement to immediately begin to reseed and water the course. PTI will bill the two parties the $150,000 cost. If the owners fail to repay PTI within 75 days, the agreement allows PTI to assume management of course operations to recover the cost. The agreement was reached after the Trilogy HOA filed a motion claiming the course owners were failing to comply with a court injunction to properly maintain the course. Because of the agreement, the judge determined the HOA motion for contempt was moot. Ruling below:
HOA ask court to enforce preliminary injunction
(Updated October 28) Attorneys for the Trilogy homeowners association have filed a motion asking the court to enforce its preliminary injunction against owners of Coral Mountain Golf Course for failing to maintain the course. The latest action was prompted by the lack of overseeding and watering, which the HOA claims is harming the course and property values within the community. The motion asks the court to require the owners to take immediate action. The motion also asks the court to consider finding the owners in contempt of court. A hearing was held on October 28, in Riverside Superior Court. The hearing was continued to Friday, Oct. 29.
The HOA sent an email to homeowners with the motion and attached court documents. Those documents can also we accessed below. Also attached is the response from Stratospheric, which claims that a) the overseeding process is outside the scope of the court’s injunction to maintain the course and its operations; and b) the injunction order is vague and thus should be resolved in favor of Stratospheric.
Course owners say they lack funds to overseed
(Updated October 22) In an unsigned note to charter members issued on Friday, operators of Coral Mountain Golf Course claim that they don’t have the funds to overseed the course. The statement, included in a lengthy commentary on recent court rulings reads:
|“… the Club has applied for a government Economic Injury Disaster Loan (EIDL loan). But, this loan has not yet been funded and may not be funded in time to successfully complete the overseeding before a weather change makes it impossible. “|
Preliminary injunction issued against course owners
(Updated Sept. 16) A Riverside Superior Court judge has issued a preliminary injunction against owners of Coral Mountain Golf Course. The order prohibits them from:
- Refusing to provide water service, sprinklers and irrigation to the Coral Mountain Golf Course at Trilogy and its adjoining areas and related improvements including but not limited to the so-called Perimeter Landscape Areas (collectively, the “Golf Course”) at normal levels as previously performed prior to the inception of this dispute;
- Refusing to maintain and operate the recirculating water pumps and related equipment at the lakes, ponds and other bodies of water on the Golf Course property; and
- Making any material changes to the Golf Course, its business or operations (collectively, the “Prohibited Acts”).
The judge further ordered owner’s “affiliates, officers, agents, servants, and employees and all those acting in concert with them, shall be and hereby are restrained and enjoined from performing any of the prohibited acts.”
The injunction is effective immediately and applies to Stratospheric Holdings 4, LLC, a
Michigan limited liability company; CBGM, LLC, a California limited liability company; and individuals Joshua Grossman and Thomas Brown.
The judge rejected last-minute arguments by the owners, who filed a motion objecting to restrictions. The injunction was sought by the Trilogy HOA, which is required to post a $100,000 bond to cover damages that a defendant “may sustain” if the final decision of the court is that an injunction is not proper.
The court order was preceded by the judge’s minute order backing her decision to grant a preliminary injunction. The order supports the contention by Trilogy’s HOA that both Stratospheric and CBGM are obligated to do so under the Restated Declaration of Covenants, Conditions and Restrictions and Reservation of Easements.
Key statements in the minute order:
- “It appears that there is a reasonably probability that Plaintiff (TLQMA) will prevail on its breach of declaration of conditions, covenants and restrictions and nuisance causes of action.”
- “… it appears that both CBGM, LLC and Stratospheric are Course Owners under the Restated Declaration are obligated to maintain the landscaping and lake facilities in the golf course. Stratospheric has failed to provide any authority or evidence to the contrary. While Stratospheric only owns one parcel of property that makes up the golf course, there is nothing in the Restated Declaration that indicates there is a minimum number of parcels an entity has to own before it can be considered a golf course owner. The Restated Declaration indicates that successors to CBGM constitute Course Owners. Since Stratospheric is a successor to CBGM to one of the properties that makes up the golf course, it appears that it is one of the Course Owners.”
- “CBGM and Stratospheric have breached the Restated Declaration by failing to maintain the golf course (the dying plants and stagnant water). Since these issues have created a health and safety problem, it appears that Plaintiff has been damaged. The conduct also appears to fit within the elements of nuisance. The Defendants’ conduct is interfering with Plaintiff’s comfort and enjoyment of its property; an ordinary person would be annoyed or disturbed by Defendants’ conduct…”
- “Stratospheric appears to be bound by the Restated Declaration, if CBGM is not paying for its share of the water used for the golf course, this is not Plaintiff’s fault. Stratospheric has legal recourse against CBGM.”
HOA: Shutdown would violate court order
(Updated Aug. 28) Attorneys for the Trilogy HOA responded to a threat by golf course owners to shut down the course on Friday. In a letter to the various owners, attorneys said the Temporary Restraining Order prevents “making any material changes to the Golf Course, its business or operations.”
In a notice to homeowners, the Trilogy Board of Directors said that “TLQMA would be interested in a global resolution that is fair and reasonable to TLQMA.” The notice also stressed the trustee’s words that any agreement “would result in a new and acceptable ownership and management of the golf course.”
Golf course intends to halt operations
|(Updated Aug. 27) The following letter was sent to charter members today.|
Dear Charter Members and Friends,
As many of you have been aware, this summer has been a difficult financial struggle for the Club, much more than the usual summer crunch faced by all businesses in the Valley each year. Significant and mounting legal and accounting fees relating to the Arbitration, Bankruptcy, Fraud Lawsuit against Messrs. Guralnick and Turner have drained the Club’s reserves.
As mentioned previously, Mr. Cushman’s family is no longer willing to subsidize Club operations. And the Government loans applied for many months ago have not yet been funded nor have the significant payroll credits which the Club is entitled been reimbursed yet. The Club’s vendors and suppliers who have graciously worked with the Club for many, many months can no longer extend credit.
Therefore, the Club has decided to keep pursuing its claims in arbitration and litigation but cannot also keep operating the Club. It is our current understanding that this will mean the following:
* The Bankruptcy Trustee will close the Clubhouse and parking lot sometime in the next several weeks.
* The Golf Carts will be moved to the Maintenance yard for safe keeping.
* Unless Key Golf (PTI) receives prepayment for the seeds for overseeding by September 1st there will be no overseeding this coming season.
* PTI will by the end of the month terminate its contract because it’s no longer being paid and will remove its maintenance crew from the golf course.
* Lenders’ on Hole Number 1 and the Driving Range will put up a fence surrounding their property to block any use.
The Club and its team are very sorry that this has happened and continues to believe that sometime in the near future these matters can be resolved.
Trustee floats sale of golf course
(Updated August 27) Operators of the golf course released the following letter from Leonard M. Shulman, who represents the bankruptcy trustee in the Bistro 60 Chapter 7 case:
We hope this finds you in good health and spirits. This office represent A. Cisneros, as the duly appointed and acting Chapter 7 Trustee over the estate and assets of TTBGM. As such, the Trustee has dominion and control over the marketing and sale of 3 lots adjacent to the Golf Course and a residential real property occupied by Mr. Brown. The Trustee is actively marketing these properties by and through a Court approved real estate broker, copied here. In an effort to effectuate a sale of the 3 lots, the Trustee has prevailed upon Mr. Brown to consent to the marketing and sale of the entire Golf Course together with the 3 lots.
The Trustee believes that a sale of the entire project would be in the best interest of all factions copied here in that a sale would result in a new owner and new management. With that said, all factions will need to make some concessions in order to attract a new buyer/operation of the Golf Course. For example, a new owner/operator might be willing to address concerns of the TLQMA and Mr. Besone and his clients, but would not likely assume alleged claims to “credits” or some form of “gift cards”. In other words, if the goal is to procure a new owner/operator of the Golf Course and 3 lots, then the Trustee can effectuate that goal. If however the goal is to saddle a new owner/operator with monetary concessions on top of the purchase price procured then a sale is not likely to be closed.
The Trustee believes that the continued and protracted litigation is going to result in the ultimate closure and likely foreclosure of the Golf Course and the 3 lots; this benefits no faction.
Assuming each of you agree with the Trustee that a sale of the entire project is in the best interest of all concerned, then we could address issues and choices regarding marketing, pricing, allocation of purchase price, etc. and how to deal with pending litigation.
The Trustee and I have administered bankruptcy estates for over 30 years. I can assure everyone copied that if a unified approach is not adopted to the sale of the Golf Course and adjacent lots then the parties will continue to litigate to little avail with the subject properties likely to result in foreclosure and Mr. Brown likely to file a personal bankruptcy.
So in sum, here are the overriding questions that need to be answered by the various constituents:
1. TLQMA- do you desire new and acceptable ownership and management of Trilogy and if so, can you see clear to resolution of the pending and disputed Arbitration proceeding?
1. CBGM/Cushman- wouldn’t the sale of the Golf Course and thus, the payment of Mr. Cushman’s secured claims be preferred over continued litigation?
1. Mr. Besone/Goodrich- shouldn’t you be willing to waive any and all of your and your client’s disputed claims in order to have new ownership and management of the Golf Course?
Once we answer these questions hopefully in the affirmative, we can work on mechanical issues, for example, retention of marketing and sales professionals, allocation of purchase price and distribution of funds. Please either reply all or if you would prefer, please email or call me to discuss further. Time is short here. Its time to take advantage of this opportunity to move on positively for the future.
Hole #1 sold by Tom Brown for CBGM
(Updated August 14) Tom Brown sold the property containing hole #1 to Stratospheric Holdings #4 for $224,559, according to Riverside County records. The sale occurred on July 13 and was recorded on August 2. The sale amount is equal to the amount of unpaid debt on the foreclosed property.
Documents on the county website indicate that Brown signed the transfer as a managing member of CBGM, the company that owns the remaining 17 holes. An earlier post on the deal stated that CBGM was not listed as a seller on one of the documents. That is accurate. However, additional documentation shows that Brown was representing CBGM. However, the hole #1 property is the subject of a lawsuit between CBGM and several parties that acquired interest in the parcel. The lawsuit claims that Brown lacked the authority to enter into such agreements. (See article below).
Stratospheric Holdings is a Michigan limited liability company formed in 2018. It registered with the California Secretary of State’s office on July 22 of this year. Joshua Grossman is listed as its manager, with an office in Palm Desert.
Cushman files lawsuit;
claims he was victim of fraud
(Updated August 6) CBGM, the California company that owns Coral Mountain Golf Course, has filed a lawsuit claiming that Tom Brown misled and defrauded its owner, Richard Cushman, in several financial transactions. The lawsuit, filed April 1 in Riverside Superior Court, seeks to invalidate loan agreements and prevent foreclosure on CBGM’s property.
In the complaint, CBGM accuses Brown of engaging in “a calculated scheme to divest Cushman from his wealth” by falsely representing himself as a member of CBGM, entering into loan agreements without authority, and pledging golf course property as collateral for the loans. The lawsuit further alleges that Brown “syphoned off millions of dollars from CBGM for his own personal use and to satiate his own consumption habits.”
The complaint alleges that when CBGM purchased the golf course in 2015, Brown “was given the opportunity to become a 50% Member of CBGM upon paying 50% of the approximately $4.625 million” paid for the property. “Brown never satisfied this contingency, and thus he was never a member of CBGM … and did not have the authority or consent to unilaterally act on behalf of CBGM to bind the company to any contracts.”
The lawsuit references several loans using as collateral the 24-acre tax parcel that includes Hole #1 and the practice range. At least nine financial transitions — loans, mortgages and foreclosure — have been recorded on the tax parcel since Cushman purchased the golf course.
The case filed in Riverside Superior Court does not show — as of Sept. 22 — any response from Brown or the defendants. A case management conference has been scheduled for October 13.
Brown is not listed as a defendant in the lawsuit. Instead, the defendants are individuals, trusts and companies that had financial transactions with CBGM. Among the complaints in the lawsuit:
- In September 2018, using Hole #1 as collateral, Brown agreed to a loan of $675,000 from several creditors, including $75,000 from Debra Schoenlein, as trustee of the Debra Schoenlein Living Trust; $300,000 from Chet Needelman, as trustee of the Needelman #1 Revocable Intervivos Trust; $250,000 from Michael Bennett, as trustee of the Bennett Living Trust; and $50,000 from Stratospheric Holdings #4, which is owned by Joshua Grossman. The lawsuit claims Brown never had the authority to encumber the property, and the transaction occurred “without the requisite consent of Cushman.” The deed of trust was recorded with Brown listed as the “Managing Member of CBGM,” according to the complaint.
- In December 2018, using Hole #1 as collateral, Brown agreed to a loan of $140,000 from creditors including $30,000 from Schoelein; $20,000 from Jeremiah Lynn; $30,000 from Alam Assett Management; and $60,000 from Stratospheric.
- In May 2020, Brown obtained a loan from Paramaze, a Michigan company owned by Grossman. A notice of default was placed on the tax parcel, which said the balance owed by CBGM was $125,896. The complaint claims Brown was not authorized to act on behalf of the company.
CBGM’s lawsuit claims that Cushman became aware of the loans “within approximately the past two years, and well after Brown improperly took out these loans and encumbered the subject property without authorization or consent from Cushman. Moreover, Cushman has made multiple demands to Brown to provide documentation and information regarding these loans, including but not limited to where the proceeds for these loans funded, and/or if they even funded at all. However, Brown refuses to answer and provide any information.”
The lawsuit alleges the loans appear to be “a series of interrelated insider transactions designed to defraud Cushman. In particular, the leader and/or organizer of all of the aforementioned creditors that purportedly invested in the Coral Mountain Golf Course and encumbered the subject property … is an individual named Josh Grossman, who has business ties with Brown.”
CBGM alleges that the loans “appear to be insider transactions and suspicious. Notably, none of these loans (nor the funds therefrom) were identified or listed on financial records for CBGM that Cushman has been able to obtain. Likewise, none of these loans were identified or listed on CBGM’s tax returns (which listed a number of other loans made to CBGM among the company’s liabilities).”
The California Secretary of State’s website shows that when CBGM’s articles of organization were filed in 2015, the document was signed by Tom Brown as the organizer. An LLC organizer is a designated person who is responsible for filing a limited liability company’s formation paperwork. No liability, ongoing duties, or other significance is attached to being the organizer of an LLC, according to legal experts. Generally speaking, once an LLC is set up and filed, the organizer has no other responsibilities or duties related to the LLC.
The 2018 and 2020 statements of information for CBGM lists Brown under “manager or member.” A member is an owner of the LLC. A manager is an individual, group, or entity chosen by LLC members to manage the day-to-day operation of the company.
During the bankruptcy proceedings for TTBGM, the company that owns and operates Bistro 60, Brown testified that he and his wife own 50 percent of CBGM. Brown also signed as managing member of CBGM the deed of trust in securing a $125,000 loan on June 11 using hole #1 property as collateral. The agreement with FCI Lenders Service Inc. (the trustee) and LTR Holdings LLC (the beneficiary) was recorded by the county on July 12. Neither entity is registered with the state of California.
Court halts water cutoff
(Updated July 24) The TLQMA Board of Directors has issued the following statement:
On Thursday, July 22, 2021, TLQMA filed a motion for a Temporary Restraining Order (TRO) with the Riverside Superior Court to ensure that no person or entity interferes with TLQMA’s water rights to the Perimeter Landscape Areas and the Golf Course.
This morning, the Court ruled in TLQMA’s favor and granted our motion and set a further hearing on August 25, 2021 where it will consider issuing a longer term Preliminary Injunction. Accordingly, we are now working to re-establish normal water services throughout the PLA and golf course and evaluating all other long-term issues.
Other than asking the Association’s counsel to speak with KESQ-TV to clarify, correct and update some errors in their reporting, TLQMA did not share information or go to the press on this matter, nor are we obligated to. Although there may be circumstances when we will need to respond to the press, TLQMA’s primary duty to communicate is with the homeowners of this Association.
As you know, this is a constantly evolving situation, and as such, we will continue to do our best to keep homeowners updated on the appropriate facts in a timely manner. We appreciate your patience.
Parcel sale? Water dispute deepens
(Updated July 21) The TLQMA Board of Directors has issued the following statement:
In the last 24 hours, significant developments have arisen related to the golf course and we are informing the community of what we currently know.
Late last Thursday afternoon, July 15, we received an email communication from Mr. Josh Grossman, as representative of Stratospheric Holdings #4, LLC (“SH4”) that he had become the new owner of Parcel #141 (Hole #1 and practice areas) and the associated water rights. We have been unable to independently confirm those facts. We believe that Mr. Grossman was part of various investor groups who had loaned money on Parcel #141 in 2018.
As part of his email, Mr. Grossman stated his intention to stop providing water to the TLQMA common areas and the PLA unless TLQMA agreed to pay an upfront security deposit of $30,000 and $15,000 a month thereafter. Mr. Grossman also stated his belief that CBGM, the golf course owner, would not be able to afford water for the golf course and stated that in order to avoid a disruption of service, TLQMA could purchase water for the golf course from SH4 with an additional $60,000 deposit and $30,000 per month thereafter.
In total, the financial commitment would have been $90,000 upfront and $45,000 per month. Mr. Grossman gave us until Monday, July 19th to respond to either himself or his legal counsel, Mr. Brendan Ozanne. Mr. Ozanne also represents CBGM in our Arbitration proceedings.
On July 19th, outside counsel responded to Mr. Ozanne reminding him and SH4, among other things, of the obligation of any golf course owner to supply water to TLQMA for the PLA and their obligations to maintain the golf course under the Golf Course CC & R’s. We made it explicitly clear TLQMA would not pay for water and that we possessed easement and other rights to ensure water would be provided without charge and that we intended to enforce any and all rights, including claims for damages, should SH4 elect to terminate water to either the PLA or the golf course. As of this communication, we have not received a substantive response from SH4’s counsel.
Sometime on July 20th, a representative of SH4 entered the golf course and shut down the pumps providing water to the PLA and golf course. In addition, SH4 has locked access to the pumps and posted a warning notice at the site to any and all parties who might seek to turn the pumps back on without the consent of SH4. The warning indicates any such action may result in criminal and or civil prosecution. It also appears that SH4 has stopped operating other pumps that circulate water to the lakes and ponds around the golf course.
We are now working our way through the various local and state authorities with whom we had kept abreast of the situation. We are also pursuing all legal avenues to avoid any public nuisance and to ensure the PLA is not harmed or damaged and the Golf Course CC & R’s are enforced.
Brian Mooney, President
on behalf of the TLQMA Board of Directors
CBGM lawsuit hearing delayed to Oct. 19
(Updated July 7) A Superior Court judge has threatened to dismiss the lawsuit brought by CBGM against the attorney representing Trilogy in the dispute over the perimeter land agreement. The motion, filed April 29, claims the company failed to provide “proof of service,” the method by which documents are delivered to other parties in the lawsuit as well as to the court. CBGM representatives have been ordered to appear at a hearing on October 19 to show cause why the case should not be dismissed. The hearing was originally scheduled for July 7.
CBGM, the company that owns the golf course property, sued attorney Wayne Guralnick and then board president Gary Turner in December. CBGM claims that the two — as well as other undisclosed defendants — “fraudulently induced” the company into transferring control over 61 acres of golf course property during negotiations over the perimeter. CBGM claims the misrepresentations “have cost (the company) millions, created an excessive annual maintenance and irrigation burden as well as placed onerous easements on (the company’s) property in perpetuity.”
(Updated 5/19) The PLA dispute is also the subject of a separate arbitration between TLQMA and CBGM. The judge in that case ruled on May 10 that the dispute will be heard in full on June 1. He dismissed a motion by TLQMA to limit the number of issues. The ruling can be found here.
HOA board issues history & dispute document
At its meeting on June 24, the Trilogy HOA board of directors issued an 8-page report on the golf course history and disputes, along with answers raised by homeowners. The full document can be found here.
Golf course proposes new PLA funding plan
On May 26, owners of the golf course proposed a 2.5% assessment on the sale of homes to pay for ongoing maintenance of perimeter landscaping. The current PLA agreement is the subject of a dispute between course owners and the Trilogy HOA that is scheduled for arbitration. The HOA board of directors have issued a response to the new proposal. Below is a summary of the proposal. The HOA response was provided in an email to homeowners on June 18. In part, it stated:
“…This ‘new arrangement’ does not address how it might solve the existing dispute between the parties related to our allegation of CBGM’s failure to pay for their 50% share of the PLA project. As estimated by Mr. Wanless in this proposal, approximately $1.1. million annually, would be contributed by TLQMA homeowners to support the golf course. The subsidy does not have an expiration date in the proposal and no equitable additional benefits would accrue to TLQMA homeowners. In the Board’s view any such arrangement is unacceptable.”
Golf course to end water-sharing agreement
The following information was published June 17 by the TLQMA board of directors:
Irrigation – Keeping the Community Updated
This week, Mr. Thomas T. Brown notified TLQMA that CBGM and the Coral Mountain Golf Club no longer intend to honor the 2009 water sharing agreement between TLQMA and the Golf Course Owner which has been in effect for the past twelve (12) years. This potentially impacts some of TLQMA common areas.
The agreement was originally executed by the former golf course owner TLQ Partners and contains a 30 day notification exit clause. Mr. Brown has given us notice he intends to exercise this clause.
Mr. Wanless has followed up the notification letter from Mr. Brown with an email expressing the view any new agreement between the parties will require multiple years of upfront payment by TLQMA to ensure TLQMA will meet any future financial obligations to CBGM or the golf course. Mr. Brown was copied on the email but TLQMA has not heard directly from him on this provision.
The Board will comment more on this during next week’s TLQMA Board meeting on June 24, 2021, or sooner if there are additional significant developments on this topic.
Is golf course floating sale to residents?
The owners of Coral Mountain golf course seemingly are floating the idea of a sale to the Trilogy HOA or residents. The idea was included in a letter to charter members. The letter is published below, with the sale idea highlighted.
We would like to offer our congratulations to TLQMA’s newly elected HOA Board members, Brian Mooney, Mark Reider and Mike Wiener. In fact, congratulations to all the candidates that ran for the HOA Board, each willing to commit their time and talent to the betterment of the Trilogy community.
The Golf Club looks forward to working with the new HOA Board. We’re hopeful this election represents a fresh opportunity to resolve the issues between the two entities. We are open to that process immediately.
The three newly elected Board members each stated in their candidates’ statements that resolving the differences between the Golf Club and TLQMA was one of their top priorities. It is ours, as well.
We believe this election – with new members, new attitudes and new problem-solving approaches – represents a wonderful opportunity to find solutions that benefit the entire community.
Let’s take advantage of this opportunity.
You have our commitment to work with you in a spirit of solving problems and achieving our mutual objectives – making Trilogy La Quinta among the most attractive and desirable premier country club communities in the Valley.
In that regard and in the hopes that it may encourage thoughtful preparation let us respectfully suggest a framework for consideration. Let’s both consider a solution based upon as if the Golf Club was owned either by the HOA or some other entity owned by the homeowners in the community.
In that case, the question resolves upon a fair allocation of costs between the members and patrons of the Golf Club and the whole community through the HOA. Neither would expect that they would contribute the entire cost of maintaining the Landscape Perimeter Area or the maintenance of the golf course.
Indeed, all homeowners and their home values benefit from maintaining the beauty of the golf course on which many have their homes and which fronts Trilogy Parkway and Avenue 60. In fact, before the turnover of the HOA to resident control, Shea Homes through the TLQ Community Services, contributed each year to the maintenance costs of the perimeter landscape area and golf course. We remain ready to take the next step and create a win, win for the HOA and the Golf Club.
Congratulations again, and all the best to you.
CBGM files suit on PLA
TLQMA files motion contesting claims
Coral Mtn Group gets large federal loan
Coral Mountain Group LLC, which lists its address as the same as TTBGM, received approval for a federal PPP loan of between $350,000 and $1 million on April 30, two days after TTBGM filed for Chapter 11 bankruptcy. Coral Mountain filed as an LLC in August 2019 and lists Josh Grossman as its Chief Executive Officer and Vanessa Brown as a manager.
The Paycheck Protection Program is a federal loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. It was approved by Congress to help offset the economic impact of the COVID-19 pandemic. Such loans will be forgiven if all employee retention criteria are met, and the funds are used for eligible expenses.
Brown has lease/option to buy golf course
(Updated August 14, 2020)
In bankruptcy documents filed on August 4, is this statement on page 86: “Recently Tom has leased with an option to purchase The Golf Club at La Quinta.” There is no additional information on the lease/option in the document.
Golf course transaction history:
- November 25, 2008 — Shea La Quinta LLC sold deed to TLQ Partners Inc for $8,650,000.
- November 8, 2013 — Ronald M. Lee sold his partial holdings to TLQ Partners for $300,000.
- March 31, 2015 — TLQ Partners sold deed to CBGM for $5,001,000.
- February 14, 2017 — Cushman Family Trust loaned CBGM $4,625,000 for construction/financing.
- September 14, 2018 — Debra Schoenlein loaned Thomas Brown and CBGM $675,000 for stand-alone financing.
- December 31, 2018 — The Debra Schoenlein Living Trust loaned $140,000 to Thomas Brown and CBGM for stand-alone financing.
- February 6, 2019 — Paramaze LLC loans CBGM $70,000 for stand-alone financing.
- May 29, 2020 — Paramaze LLC records a notice of default against Thomas Brown and CBGM.
- May 20, 2020 — Paramaze records agreement to substitute California TD Specialists as the trustee on the $70,000 loan.