Bay City Country Club 12 Year Long Financial Tangle Ends with Art Dore Deal
Entrepreneur Takes Ownership of Golf Club, Preserves Community Asset
January 17, 2010
By: Dave Rogers
New owner of the Bay City Country Club, entrepreneur Art Dore, wrecking magnate.
Tim Ernst, Arizona real estate investor, held interest in Country Club until Friday.
Arthur P. Dore, Bay City entrepreneur, has rescued the Bay City Country Club from a tangled web of financial and legal dealings reaching back more than a decade.
Dore, 73, took ownership of the 178-acre layout, rambling clubhouse, pool and outbuildings on Friday by meeting a $1.6 million debt and making an operational agreement with the club, terms of which were not disclosed.
The circuitous route to a final deal between Dore and the Country Club ran through a large Michigan bank, an Arizona real estate investor, and circuit and federal courts in Bay City.
Along the way amidst a blizzard of legal paperwork was high anxiety among the club's 209 members about the fate of the historic and prestigious non-profit 112-year-old organization.
The Bay City Country Club was founded in 1898 at the height of the Victorian Age, although its non-profit designation dates to the Roaring Twenties, Aug. 29, 1927.
The club's golf course originally was located east of Green Avenue, soon moving to Euclid Avenue between Fisher and Ionia Streets, now the site of Labadie auto dealership. The first clubhouse was built there about 1902.
Anxiety is warranted as country clubs and other private social organizations across the nation lately have been losing members and falling into financial difficulties in the wake of an economic decline not seen since the 1920s.
Twelve years ago officers of the Country Club signed a $3.1 million mortgage with National City Bank to provide funds for a major renovation.
On July 21, 2008 the bank cancelled $1,510,115 of the Country Club's debt for an unknown reason, filing separate IRS 1099-C forms for $1,210,115 and $300,000.
By that debt cancellation action, the Country Club total debt was reduced to about $1.6 million.
Seven days later, on July 28, 2008, the bank assigned the mortgage to a real estate investment broker in Arizona named Tim Ernst, CCIM, listed variously as president/owner and director of marketing for Terra Marketing, Inc., of Phoenix, Arizona.
Other officers of Terra are Tim Coury, CCIM, senior vice president, and Larry Walth, CCIM, director of operations at Terra Marketing with offices at 2355 E. Camelback Road, Phoenix, AZ 85016.
According to court documents, after about a year and without notice Ernst then proceeded to file foreclosure against the Country Club, claiming the amount owed to Terra was $3,159,619, plus interest at $431 per day.
A legal notice of the foreclosure sale of the Bay City Country Club was published in the Bay City Democrat by Terra on Jan. 15, 2009.
The Country Club filed suit Feb. 6, 2009 against Terra in the Bay County Circuit Court of Judge Kenneth W. Schmidt, seeking an injunction against the foreclosure and sale by Terra.
On Feb. 9, 2009, Terra by Detroit lawyer C. David Bargamian then removed the suit to the U.S. Federal Court of the Eastern District of Michigan before Judge Thomas Ludington in Bay City. Grounds for the removal to federal court were that the case was a civil action between citizens of different states.
In Federal Court, the Country Club filed pleadings seeking an exparte temporary restraining order and further relief enjoining a sale of the property by the defendant, Terra, until a determination of the amount owing on the plaintiff's mortgage could be determined by the court.
In its federal court pleadings, the Country Club asserted the amount of debt was over-stated and the foreclosure time period of one year was under-stated by Terra at six months.
The Country Club's lawyers, Keith Shofner, John E. Gannon and Susan Cook, of the Bay City firm of Lambert, Leser, Isackson, Cook & Guinta, P.C., asserted in pleadings that Terra "refused to correct the errors" and was insisting on payment of the full $3.2 million allegedly owed.
On May 20, 2009, the court held a settlement conference during which the parties represented to the court that a settlement had been reached. On Sept. 30, 2009, Judge Ludington denied as moot a plaintiff's motion for declaratory judgment and a motion for preliminary injunction.
By terms of the settlement, the Country Club had to make payment of the $1.6 million to Terra by Friday, Jan. 15, 2010. After CPA Jerome Yantz, board chair Jim Gerding and others were successful in securing pledges from members for a portion of that amount, believed in excess of $500,000, the club still found itself short. That's when Mr. Dore agreed to meet the principal amount owed, thus preserving the property for community use.
Had Mr. Dore or other investors not have come forward to meet the full obligation, presumably Terra would have been legally able to proceed with foreclosure. Then the property and buildings would have been subject to other development including a wide variety of allowable business uses under the Frankenlust Township zoning ordinance covering so-called "open space" properties.
Terra Marketing's website states:
"Mr. Ernst has enjoyed a distinguished career as a real estate investment broker. He earned the prestigious designation of CCIM in 1985 and has been active in many real estate organizations, including serving as the Chairman of the Professional Standards Committee and President of the Commercial Division of the Phoenix Association of REALTORS®.
"He graduated cum laude from Case Western Reserve University with a Bachelors Degree in Accounting. For over 25 years, his focus has remained on investment real estate, where he specializes in property analysis and performance enhancement to maximize value for Terra clients and partners."
Founded in 1982, Terra Marketing, Inc. specializes in investment properties. "We target income producing properties with upside potential," states the firm's website. "Whether Terra participates as a principal with investor partners, represents investors in a buyer-broker capacity or markets properties for sale, our primary focus is to maximize value and profit for our clients and partners."
The Terra website also states the following business goals:
"Creating Wealth for our Partners and Clients; Commercial real estate investment expertise; Redevelopment specialists; Local and national investment experience; Investments in non-performing commercial loans nationwide; Terra Funding, LLC, a wholly owned mortgage banking firm."