Escondido Country Club battle leads to a new $100 million lawsuit

The owner of the 110-acre Escondido Country Club is suing the neighborhood group that is trying to block his 380-home development on the fairways of the former golf course.

Michael Schlesinger’s Stuck in the Rough LLC filed a lawsuit in Vista Superior Court this past week against the five new directors of the Escondido Country Club Homeowners Organization (ECCHO,) seeking at least $100 million in damages.

ECCHO is challenging the city’s approval of the development.

Schlesinger’s attorney, Ronald Richards, claims ECCHO’s lawsuit against the city was filed fraudulently because the group’s nonprofit corporate status was suspended by the state at the time of the filing.

It’s the same argument Escondido made in court papers a few weeks ago. A May court hearing is scheduled, at which time a judge will be asked to dismiss the case against the city.

ECCHO’s lawyer and president both say the lawsuit is designed to intimidate the homeowners group, and that the tactic won’t work.

The lawsuit contends that a corporation not in good standing with the state can’t file a legal action and therefore ECCHO’s lawsuit was fraudulently filed only to delay the execution of a contract between Schlesinger and local development company New Urban West, which a couple years ago agreed to buy the land and build the houses, but only after all legal hurdles had been cleared.

“These board members raised money from members of the community to finance litigation,” Richards said Friday. “The ‘ECCHO Five’ took over this board to advance this litigation. Many of them are commercial landlords that own homes that they rent out commercially on the golf course.”

Listed as defendants in the case are ECCHO board members Gary Johnston, Francis Freyne, Constance Smeyres, Betty Ferrell and Gary Vest.

The five were recently installed as board members in what Richards describes as a “hostile takeover” of the group by those wanting to sue the city.

Everett DeLano, ECCHO’s attorney, called the lawsuit against his clients “frivolous.”

“This is bullying,” DeLano said. “That’s clearly what this is.”

Richards’ response: “Nobody is getting bullied. We didn’t ask them to file a lawsuit with a suspended company.”

Gary Vest, ECCHO’s president, said Schlesinger’s lawsuit will not intimidate the group. “We’re moving forward,” Vest said. “We are not going to drop the lawsuit.”

According to the state franchise tax board, ECCHO’s corporate status was suspended at the time of the December lawsuit filing and remains suspended.

DeLano said it’s not clear why that happened. It appears the group simply did not pay its taxes. Vest said it was a simple paperwork mix. “It was a misunderstanding about what needed to be filed and how often you needed to file,” Vest said. He said the problem will be taken care of shortly.

Richards also sent a letter to the state Bar Association this past week suggesting it should sanction DeLano for continuing to represent ECCHO. He said it was DeLano’s responsibility to make sure he could sue on behalf of the neighborhood group. Had he checked, Richards said, he would have known that the group did not have standing to file litigation.

DeLano said he’s told Richards in a recent letter that “abusing the sanctioning process is itself sanctionable conduct.”

Schlesinger’s Stuck in the Rough company, Richards said, is losing money every day the sale to New Urban West is delayed.

Schlesinger bought the financially strapped country club in late 2012 and shut it down in 2013.

Since then, a series of council votes, public referendums and legal cases have ensued. In November, the council voted to allow the project to be built. ECCHO then sued, putting everything in limbo. Should ECCHO’s lawsuit be dismissed in May, no other lawsuits challenging the council’s decision can be filed because all challenges must be made within 30 days of the council’s decision becoming final.

Richards also says he is reaching out to golf course neighbors who have donated money to pursue litigation in the days since the council approved the project. He said if they contact him, he will sue ECCHO on their behalf to recover the donated funds.

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