20:55 | News
In Conversation With: Donald Trump
By Michael McCann
Friday, February 03, 2017

In a class action lawsuit linked to President Donald Trump, U.S. District Judge Kenneth Marra ruled on Wednesday that the Trump National Golf Club Jupiter must pay $5.7 million to 65 golfers whose membership contracts were breached by the club. Trump National Golf Club Jupiter, which was purchased by a Trump-owned company in 2012 for $5 million, is expected to appeal the ruling to the U.S. Court of Appeals for the Eleventh Circuit.

Although President Trump is not a party to Norman Hirsch et al. v. Jupiter Golf Club, a video of his deposition, recorded in April 2015, was shown in court. Further, a letter sent by Trump to club members in December 2012 served as a key piece of evidence. The video, letter and other witness statements and written documents were examined during the trial, which was held in August 2016. The trial was a “bench trial,” meaning there was no jury. Instead, Judge Marra was charged with determining if the law was broken. Unfortunately for Trump, Judge Marra found that the golfers proved their breach of contract claim against the club.

A case about new club ownership and existing membership obligations

The case centers on club members, who individually paid between $35,000 to $210,000 for membership deposits and who collectively paid $4.9 million in those deposits, insisting that (1) their refundable membership contracts authorized them to receive refunds and (2) the club, at the behest of Trump, unilaterally and impermissibly changed membership rules. Both the club and Trump—who at the time was a private citizen—categorically rejected the golfers’ interpretation and refused to reimburse them. The dispute was thus about interpretation of a membership contract and the fallout of two sides anchored to opposing views about that contract. The dispute led to a federal lawsuit that began in May 2013 and, with a likely appeal, could remain in court for years.

The origin of the dispute predates both the filing of the lawsuit and Trump’s purchase and renaming of the club, which was previously known as the Ritz-Carlton Golf Club & Spa Jupiter. It stems from the club, under the previous ownership group, offering refundable memberships. These memberships contractually empowered club members to use the club’s facilities and receive various benefits. Further, these memberships expressed that members were entitled to a return of their deposit within 30 days if certain circumstances arose. One such authorizing circumstance was if the club issued a recall of the membership, a condition the plaintiffs assert occurred after Trump purchased the club and reconfigured membership rules. When his company bought the club in 2012 for $5 million, Trump legally assumed these membership contracts and their accompanying obligations worth approximately $41 million.

In the lawsuit, the plaintiffs are those who wanted out of the club, in some cases long before Trump bought the club. For instance, in 2009, one of the plaintiffs wrote a handwritten letter to the club saying, “Please accept my intention to resign my golf membership effective today, January 6, 2009.” Quitting a golf club is often not an immediate process and that was certainly true with Trump Jupiter. Per the terms of their refundable memberships, members who sought refunds would only be refunded within 30 days of the re-issuance of their memberships. Testimony indicated that re-issuance required a very long wait—sometimes 10 years or longer. This reflected both the mechanics of how the club sold new memberships and the large number of existing members who wanted out: only every fifth membership sold by the club would come from what became a long waiting list of resignations. But as would prove important in the lawsuit, under the terms of the membership contract, resigning members would continue to enjoy the benefits of the membership and would continue to pay dues until re-issuance occurred.

Trump takes over the with club with a new vision and new membership rules

Trump’s purchase of the Jupiter Golf Club led to changes to the course and its membership policy. Trump viewed the club as woefully underutilized and poorly run. He pledged numerous improvements, including lengthening the course, renovating the bunkers and modernizing the childcare facility, which he renamed “Trumpeteers.” By many accounts, the quality of club under Trump’s direction would improve substantially over the next few years.

On Dec. 14, 2012, Trump would meet club members as a group for the first time on in a “town hall.” Three days later, he sent them a letter. In his letter, Trump explained that membership options would change under the new ownership. One such option, Trump explained, was that members could gain access to the Mar-A-Lago Club and other desirable Trump golf courses if they voluntarily eliminated the “refundability” aspect of the membership.

Trump was less embracing of members who sought to continue their intent to resign. Citing “overwhelming applause” at his meeting with members, Trump expressed that he only wanted members who shared his enthusiasm for the club’s future. To that end, he bluntly wrote:

“[I]f a person is on the resignation list, the membership does not want them to be an active member of the club --- likewise as the owner of the club, I do not want them to utilize the club nor do I want their dues. In other words, we are committed to seeing Trump National Golf Club - Jupiter on the list of the best clubs in the world and if you choose to remain on the resignation list, you’re out.”

Trump’s frustration with members who refused to drop their intent to resign soon led the club to deny those members’ access to the club. The legal problem with such a plan was contractual: per their membership agreements, members were authorized to use the club until their resignations went into effect—a wait that could take years. Even more problematic, the club continued to charge these members dues despite Trump’s letter expressly saying “nor do I want their dues.” Frustrated, a group of members sued the club for breach of contract.

The entrance into Trump National Jupiter.
Getty Images

Trump’s deposition

On April 15, 2015 – two months before he stood in Trump Tower and announced his campaign for the Presidency of the United States – Trump complied with a video deposition where he testified from Trump Tower. GOLF.com has obtained a transcript of the deposition. During the deposition, Trump was asked about the statement from his letter where he wrote, “[I]f a person is on the resignation list the membership does not want them to be an active member of the club. Likewise, as the owner of the club, I do not want them to utilize the club, nor do I want their dues.” Despite Trump’s pledge to not want dues, members on the resignation list (as explained above) continued to be charged.

During his deposition, Trump, didn’t interpret his statement as necessarily meaning that there would not be charges. He also repeatedly claimed that his son, Eric, ran the club and would be more familiar with the meaning of Donald Trump’s letter.

Consider the following exchanges from the deposition:

Attorney Seth Lehrman: Wouldn't you agree that you expected that members of the club, when they read that sentence [from Trump’s Dec. 17, 2012 letter], that they would understand that if they stayed on the resignation list, then you don't want their dues?

Trump: I don't really know exactly what it means. You'd have to ask Eric. I believe we allowed people to stay and pay dues. So I know this might say that; it might not. I really don't know because Eric is much more familiar with this club. He runs it. But I believe we have numerous people that were on the list, paid their dues, and were able to stay.

Lehrman: You would expect --

Trump: Because we made different deals with different people.

--

Lehrman: And from your letter, you are communicating to the members that if they stayed on the resignation list Trump National would not collect ongoing dues from them. Correct?

Trump: I think that's what the letter says. I don't know what they did because, you know, there were lots of different negotiations on this club because it's very complex. But you'd have to ask Eric that question.

Judge Marra ruling in favor of the members

While it is certainly possible that Trump’s letter, although in his name, was written by someone else, Judge Marra noted that the letter “bore the signature of Donald J. Trump as owner of the club” and that Trump “at all times material to this lawsuit . . . held the top position of authority at Defendant’s company.” Therefore, Trump’s assurance that he did not want dues for those who choose to remain on the waiting list was legally binding. In addition, Judge Marra highlighted testimony by Eric Trump, who clearly expressed that paying dues meant access to the club. In fact, Eric Trump went so far as to testify that paying dues without access “would violate a fundamental principle of life.”

The extent to which the club members’ legal victory impacts Trump is uncertain. In January, Trump announced that, while serving as President, he would step aside from any involvement in the various businesses he owns. Trump, however, signaled that his sons, Donald Jr. and Eric, would take over control, which means control remains in the Trump family. In an appeal, Trump’s sons would presumably help to direct strategy in consultation with the golf club’s attorneys.

Other Presidents embroiled in civil litigation over private matters

Trump is not the first occupant of the White House to encounter litigation over non-governmental matters. In 1997, Paula Jones sued President Bill Clinton for sexual harassment stemming from an alleged incident at a Little Rock, Ark., hotel in 1991. At the time of the alleged incident, Jones worked as a state employee and was staffing a registration desk for a conference. During the conference, Jones claimed that a state trooper asked her to visit Clinton, then the Governor of Arkansas, in a hotel business suite. She agreed and, upon seeing Clinton in the suite, Clinton, according to Jones, made unwanted sexual advances.

Jones’ lawsuit triggered a legal controversy over whether a sitting president is immune from civil litigation. Clinton argued that defending lawsuits would require substantial time and prevent the president from effectively carrying out the duties of the office. After review by federal district and appeals courts, the U.S. Supreme Court disagreed with Clinton and ruled that Jones could proceed in her lawsuit. While the Supreme Court observed that immunity for Presidents from lawsuits concerning their official conduct is defensible—otherwise Presidents might need to spend substantial amounts of their very valuable time in court—such immunity does not extend to acts that occurred outside of the scope of President’s official duties. Jones and Clinton would not go to trial, however, as they reached a settlement in 1998. Clinton agreed to pay Jones $850,000 in exchange for her dropping the lawsuit.

More than three decades before Clinton faced a civil lawsuit, President John F. Kennedy similarly pursued an unsuccessful effort to dismiss a lawsuit over a private incident that predated his presidency. In 1960, Hugh Lee Bailey, a Mississippi State senator, was injured in an automobile accident near the Democratic Convention, which was being held in Los Angeles. At the time, Kennedy was a U.S. Senator from Massachusetts and a candidate for President. According to published accounts, Bailey was waiting at a taxi stand in front of a hotel when Kennedy told Bailey that he could use Kennedy’s car and driver. Bailey accepted Kennedy’s offer and entered the car.

Shortly thereafter, the car crashed, causing Bailey injuries. Although Kennedy was not in the car at the time, Bailey thought that Kennedy was nonetheless at fault. Bailey was upset since the injuries prevented him from riding on donkeys—a loss that might not bother most, but according to the New York Times, was devastating for Bailey since he had achieved acclaim for being known as the “Donkey-Riding Senator.” Bailey and Kennedy would settle the lawsuit out of court, with Kennedy reportedly paying Bailey $17,500 (which, if adjusted for inflation, would today be worth around $140,000).

Unlike Presidents Clinton and Kennedy, President Trump’s setback in court on Wednesday is not one where he is a party in the lawsuit. Still, it serves as another illustration that even the immense power of the Presidency does not immunize the President from responsibility for his or her actions as a private citizen.

Michael McCann is SI’s legal analyst. He is also an attorney and a tenured law professor at the University of New Hampshire School of Law.

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