The owner of the Golden Bear Reserve at Summit Rock has filed a lawsuit against the owners of the Summit Rock real estate development in Horseshoe Bay alleging antitrust violations and tortuous interference with business.
In January 2011, the Reserve at Summit Rock, LP, purchased 21 acres out of the 1,600 acre development then known as Skywater Over Horseshoe Bay and named the 21 acre gated development the Golden Bear Reserve. Skywater’s lender, International Bank of Commerce, agreed to the sale and financed approximately $6M of the sale price for Reserve at Summit Rock.
Jay Fertig, one of the partners in Reserve, said he knew IBC was also the lender on the remaining acreage of Skywater at the time his partnership bought the 21 acres. “We knew IBC was a lender on the project, but we didn’t know IBC was in effect a principal in the whole project.”
The lawsuit names four entities as Defendants: Summit Rock Communities, LLC, SummitRock Holdings, LLC, Horseshoe Bay Resort Enterprises, LLC, and Horseshoe Bay Resort, Ltd. According to Llano County District Clerk Joyce Gillow’s office, the Defendants were served with the suit on January 22, 2013 and have not yet filed answers. Telephone calls and emails to executives with Horseshoe Bay Resort seeking comment on the lawsuit have not been answered as of press time.
The petition filed by Reserve outlines a relationship between IBC and Defendants which it alleges amounts to an unlawful monopoly and restraint of trade that has adversely affected Reserve’s ability to market and sell its lots. “Defendants have monopoly power in the market for high-end new single-family and multi-family homes at new golf courses in that they have the power to control prices and exclude competition in that market.”
Reserve also alleges in its lawsuit that Defendants exercised their monopoly power by, among other things, “demanding that IBC Laredo renege on an offer to forbear on collecting interest payments from Plaintiff, increasing the PID fees, instructing security guards to direct potential buyers away from Plaintiff’s property, (and) taking down Plaintiff’s for sale and open house signs.…”
Although the lawsuit complains about increased Public Improvement District (PID) fees in Summit Rock, neither Fertig nor his partners objected to the increase in PID fees during the public hearing held August 2012 by the Horseshoe Bay City Council to evaluate the increase. According to city records, no one objected to the increased PID fee structure. City records state that the increase was sought because the original revenue amount would not be sufficient to “cover actual costs” due to an “omission or mistake relating to the total cost of the Public Improvements to be made by the District….” Fertig said his partnership was aware of the hearing, but thought it best not to object in hopes of “getting activity” going at Summit Rock.
Fertig said Reserve “has real money in the ground” at Summit Rock with installation of infrastructure and with five homes already completed. Two of the homes are occupied, two are being shown as models, and one is used as an office for Reserve. Fertig said the Defendants, however, have not made any progress on developing amenities at Summit Rock, notably the building of a clubhouse.
Reserve filed the lawsuit on December 17, 2012, but waited until last week to issue a press release to area media outlets. Asked why he waited to seek publicity about the lawsuit, Fertig said, “We desperately tried to resolve our differences amicably. But enough is enough.”
Although the lawsuit does not specify an amount of damages being sought, Fertig said Reserve is seeking $6M from the Defendants. Asked how he calculated $6M in damages, Fertig responded, “Not aggressively.” Fertig said Reserve has paid down its loan from IBC in installments and as lots were sold and released, and now owes approximately $3M to IBC.
In February 2011, SW Ownership, LLP, then the owner of Skywater, filed for bankruptcy reorganization. IBC as the secured lender on the project, took ownership of Skywater. In September 2011, IBC deeded the Skywater property to Skywater Communities, LLC. Steve Edlund, as President of IBC, signed the deed from IBC to Skywater Communities. According to the records of the Texas Secretary of State’s Office, Edlund was listed as a manager of Skywater Communities in 2011 along with Dennis E. Nixon, also an IBC executive.
Skywater Communities was re-named Summit Rock Communities, LLC in November 2011, and in July, 2012, the registered agent for Summit Rock Communities was changed from Dennis E. Nixon to Ron Mitchell, an executive with Horseshoe Bay Resort, according to records of the Secretary of State’s Office.
The Jack Nicklaus Signature Summit Rock Golf Course continues to draw rave reviews from local members as well as professional golf publications. Last month, Golf Digest Magazine described Summit Rock as “routed up and down a flint-rock mesa” and crowned it the “best of the new American Bunch.”
The Texas Free Enterprise and Antitrust Act
(a) Every contract, combination, or conspiracy in restraint of trade or commerce is unlawful.
(b) It is unlawful for any person to monopolize, attempt to monopolize, or conspire to monopolize any part of trade or commerce.
Texas Business & Commerce Code, Sec. 15.05