Avalon course operators sue city of Warren
WARREN – The operators of Old Avalon Golf Course are suing the city of Warren, claiming a breach of contract and a wrongful termination of the seven-year-old contract operators had with City Hall.
The course operators claim their interpretation of the agreement with the city holds Warren responsible for expenses if enough revenue is not generated. And the operators say they’re owed money for capital improvements they already made.
City Law Director Greg Hicks said Tuesday that both sides had been in negotiations until those talks broke off late last week.
”They’re saying they’re owed for work they did. The city is saying you should have come to us first. We were trying to resolve the matter before any lawsuit,” Hicks said, pointing out that ”good faith negotiations were ongoing between the administration and attorneys for the operators.”
He said the city was preparing its own lawsuit to collect on money it felt the city was owed.
”I guess they’re the plaintiffs.We’ll probably countersue. The court will sort it out,” Hicks said.
The operators seek more than $25,000 in damages, including the fact they were deprived from operating the course this year. The case has been assigned to Trumbull County Common Pleas Judge Andrew Logan. No hearing date has been set.
The city announced in January that golf course manager John Kouvas, whose company OAG LLC operated the public course since May 15, 2006, would no longer do so. The two sides disagreed on who should be responsible for several renovations and whether money from the rental agreement could be used to offset money spent by OAG to maintain the course.
Kouvas said city officials were notified last year about an estimated $100,000 worth of capital improvements needed before this season. Safety-Service Director Enzo Cantalamessa has said at least some of the money for the improvements should have come out of a $300,000 maintenance agreement in which the operator is required to make those repairs.
Warren officials claim Kouvas owes the city up to $320,000 in rent that dates back to 2006.
But in the lawsuit filed late Friday, OAG said that after an evaluation by Lou Greco, golf course manager, and based on OAG’s assessment of the course conditions, ”OAG agreed to invest $300,000 of its own money into capital improvements and agreed to make the improvements within the first 30 months of operation. In fact, OAG made far more than that amount of capital improvements in less than two years, and continued to make capital improvements through 2012.”
OAG also points out in the suit that ”$300,000 is the only money that OAG agreed to invest into the course and there is no requirement that OAG invest more than $300,000 of its own money anywhere in the OAG agreement.”
Avalon South Management Inc. (or ASM) operated the course between 1998 and 2005 and the course fell into ”extreme physical disrepair and financial distress due to ASM’s mismanagement and the city’s neglect and because those parties had multiple disputes over management and funding issues,” according to the lawsuit.
”The course also suffered negative publicity from a bribery scandal involving city officials who purportedly accepted bribes from contractors in connection with construction projects at the course site,” the suit states.
OAG said its willingness to assume course management is what finally broke the gridlock in a lawsuit between ASM and the city and the ”adversarial relationship between ASM and the city that had been ruining the course.”
City Council, meanwhile, has been reviewing presentations from at least three other potential owners or managers of the course. The administration stated at least two weeks ago that grounds on the course are being mowed.
Council last week tabled legislation to give authority to the administration to sell the course. Councilman Jim Valesky said Tuesday night he doesn’t have enough information on the lawsuit at this time to say whether or not it will impact the selling of the course.
“I just received the information a couple hours ago,” Valesky said. “These types of litigations should have happened a long time ago. The amount of time that has transpired since 2009 and when we received the last payment has increased the exposure of the city to a potential loss.
“We should have addressed this in 2009, not 2013,” he said.
In early 2005, OAG assumed management of the course and began the ”long and expensive process of reversing the course’s decay.”
OAG hired Tom Ross as course superintendent and improvements were made while the city and ASM continued to negotiate over the payment terms regarding $100,000 that ASM owed the city in connection with the settlement of the ASM lawsuit, according to the new suit.
Instead, the lawsuit states, OAG made the $100,000 settlement payment to the city in four installments to ”hasten the final resolution of the distraction caused by the ASM lawsuit and settlement.”
The current suit states that the course’s revenue shall be the source for the other funding of operating and management costs, including capital improvements. And a section of the agreement provides that the course’s revenues shall be used throughout the year to ”pay all operating costs of the course including but not limited to supplies, equipment, capital improvements, salaries, cart rental fees, insurance premiums, sales or other taxes related to the course operation except real property taxes.”
”Although the OAG agreement does not explicitly address the source of funding for these costs when the course did not generate enough revenue to fund them, that obligation falls upon the city as the owner of the premises and city officials confirmed to OAG over the years that this is the correct interpretation of the OAG agreement,” the suit states.
The suit also states that $55,000 per year was supposed to be paid to the city each Feb. 1 after expenses were paid out to run the course. But the course never had an excess after expenses and ”nowhere does the OAG agreement require OAG to fund the payment when those revenues were less than $55,000,” the suit states.
Operators say in the lawsuit that they alerted the city several times since 2008 that there were insufficient funds to pay the $55,000 but officials ”never expressed any concern until 2012.”
The suit also states that OAG has made $784,000 in capital improvements, mostly to the course’s drainage and irrigation systems. The operators say in the suit that they were never informed that the systems had to be replaced altogether since they were so badly neglected and poorly designed and installed.
Still, the operators said they made improvements with the expectation that the city would reimburse them.