In 1977, Nebraska businessman and avid golfer Dennis Circo developed an exclusive residential neighborhood dubbed Skyline Woods. Its centerpiece was an 18-hole golf course. As the developer, Circo sold lots, built homes, and transformed the golf course into a country club, adding a clubhouse, pool, and tennis courts. With all of its amenities, buyers paid a premium for home lots.
By 1990 Skyline Woods was well established with 90 homes built around the country club, and Circo thought the time was right to sell the club to a golf course management company. Unfortunately, the golf pros ran into financial hazards. They ran out of “green,” and the only course of action was for Skyline Woods Country Club to file for bankruptcy in 2004. To pay off debt, the bankruptcy trustee auctioned off the property in 2005. A group of Skyline Woods homeowners tried to buy the club, but were outbid by Liberty Building Corporation, a development company owned by David Broekemeier.
Here’s where things got sticky. The federal bankruptcy court transferred property to Liberty, free and clear of all obligations. Shortly after, Broekemeier met with homeowners and club members to inform them he had no obligation to honor memberships, offering the option to play the course if they paid fees like anyone else.
If that was bad, what happened next was worse. In spring 2006, Broekemeier closed the club, posted “no trespassing” signs, and began cutting down trees to clear land where he planned to build a condominium complex and water park. Teed off homeowners sued Broekemeier in Nebraska State Court, requesting a restraining order to prevent further damage to the land. They claimed implied covenants as homeowners in the golf community guaranteed the only use of land was as a golf course.
They reasoned Broekemeier might own the golf course free and clear, but only free to use it as a golf course. Homeowners added that no matter how you slice it, Broekemeier was well aware of their covenants, as he had also built a golf community adjacent to Skyline Woods. And, like Circo, he marketed the course’s proximity and views to sell lots. And there were rumors that he was going to redirect the golf course toward his neighborhood, leaving Skyline Woods homeowners with views of condos and a water park.
In response, Broekemeier came out swinging with a motion to dismiss the case. His first argument was that the state court had no jurisdiction to interfere with the federal bankruptcy order. Second, even if the State court did have skin in the game, the covenants were unenforceable because they were never recorded. Finally, he said Nebraska law protects bona fide purchasers from restrictive covenants when there is no notice.
District Court Decision—2008:
Round one was won by homeowners. A Nebraska court found that they did indeed have implied restrictive covenants; Broekemeier was aware of the covenants; and finally, the bankruptcy sale of the property did not discharge the covenants because they belonged to homeowners, not the golf course. The court ordered Broekemeier to either reopen the golf course or maintain it in a fashion that would not devalue the property of homeowners. Brokemeier chose the latter.
Round two: After six years of legal turf wars, the golf course never reopened, eventually becoming an eyesore due to lack of maintenance.
Game over. The land was sold. New owner is spending $7 million to build a premier golf course.