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Coral Casino Private Club.Org Website Introduction   The purpose of this website is to serve as a source of information for members of the Coral Casino Beach and Cabana Club who believe the Club should maintain its distinguished 69 year history of operations as a private club.   We are committed to working with the membership and the owner in a cooperative manner to achieve this goal.  However, cooperation with the owner does not mean acquiescing to the Owner’s every demand to reduce Members’ long-held rights to the continued use of the private Club.   If you agree that your rights to the Club have been compromised, hopefully you will actively participate in opposing and blocking the transformation of the Club into a public, or quasi-public facility, under the rubric of the so-called “guest card” program that has been proposed.   For those who may doubt that this is the ultimate goal of the owner, please see the August 14, 2005, London Sunday Times article that will be posted on this website in the coming days, quoting Greg Rice on this issue.  The article quotes Mr. Rice as having said that Mr. Warner had spent millions trying to reach a deal with the “elitists” who want to keep the club private.  Mr. Rice has also publicly stated that, “It’s a misconception that the Coral Casino is a private club; it never was a private club and if that’s what you believe, we can give you your money back.”  One interpretation of this remark is that Mr. Warner would like to see all the Members agree to be bought out so that the Members’ rights that are an obstacle to the transformation of the Club into a public facility can thereby be eliminated.   Legal Opinions: The legal opinion posted on this website provides ample legal evidence that the Coral Casino is in fact a private club and each member is urged to download the opinion and read it carefully to become fully educated on your rights.   Referendum Results:  The results of the referendum will be posted here immediately upon completion of the count and members will also receive notification by mail shortly thereafter.   Contributions:  Mailings to the membership are costly.  Members who wish to participate in funding the cost of future mailings are encouraged to send a contribution to the following address:   Coral Casino Private Club c/o Larry Woolever C.P.A. 100 North Hope Ave., Suite 12 Santa Barbara, CA 93110   Emails:  Your emailed comments and suggestions are welcome and each will receive a response.   Website Under Development:  At present, the website is under development.  In the coming days a number of articles and letters will be posted on the website for the review of Club members.  Please visit the website again to see these postings.

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                                                                                            See summary below:

SUMMARY OF KEY POINTS OF THE BROWN RAYSMAN LEGAL OPINION RELATING TO THE LEGAL RIGHTS OF MEMBERS OF THE CORAL CASINO   This summary touches on the major issues raised in the above-mentioned opinion, but of necessity leaves out many significant points raised therein.  Members are encouraged to read the complete opinion, and to consult their own legal counsel, to fully understand their rights.   Members are advised that the Brown Raysman opinion was written when the Member Agreement between members and the owner had only recently been proposed.  Many, but not all, Members subsequently signed that agreement.  The legal rights of those who have not signed the Agreement have not been diminished; for those who have signed it, some, but by no means all, of your rights have been curtailed.   A PRIVATE CLUB:  The private nature of the Club is confirmed by its history and organizational documents and is, in fact, mandated by the zoning entitlements associated with its original development as well as past hotel expansions.   Violation of the use restrictions attendant to the Club could thus subject the hotel and Club to either enforcement or permit revocation proceedings by the County.   THE CONDITIONAL USE PERMIT:  The 1979 Settlement Agreement with Marriott Corporation called for the insertion into the Conditional Use Permit (CUP), a provision requiring that the owner consult with a Member Committee composed of 7 Members, on all substantial changes in major Coral Casino policies, including, but not limited to, hours of operation, dues, staffing level, conditions of membership and membership applications.”   Most likely a court would interpret the CUP condition as requiring that the Club owner obtain prior input from the Committee on such substantial matters and consider that input in good faith.  Were the owner to simply ignore the CUP requirements, or demonstrate through a series of incidents its lack of good faith in reconciling with its proposals reasonable input from the Committee, then it would appear that a showing of Club owner non-compliance could be made.   A BINDING CONTRACT BETWEEN MEMBERS AND THE OWNER:  Each time a prospective Club member’s application is accepted and his or her initiation fee paid, legally speaking, a binding contract arises between the Club owner and the new member.   TERMS OF THE CONTRACT:  We think that a court would view the common material terms of the contracts applicable to the members to include (without limitation) the following:   In return for the payment of a specific initiation fee and monthly dues, the Club owner will provide member use of the Coral Casino facilities as a “private club” with “exclusive facilities.”    Members have a legitimate expectation that their input, expressed through the Member Committee, will be considered in good faith by the Club owner on all “substantial changes in major Coral Casino policies.”   MODIFICATION OF THE RULES: To some extent the Club owner may unilaterally modify each member’s contract simply by its amendment of the Rules and Regulations.  However, we believe a court would be disposed to apply a standard of good faith and/or reasonableness to this otherwise unfettered discretion.   To the extent that a change (or proposed change) in the Rules and Regulations served to work a forfeiture of a material right of a member, or frustrated or served to deprive a member of a material element of the consideration for which the member paid (their initiation fee and dues), a court would likely impose limits upon such unfettered discretion.  A similar analysis may be applied to the apparently unfettered right of the Club owner under the Rules and Regulations to increase dues or close the facility.   STATUTE OF LIMITATIONS:  Members who are aware of actual breaches of their rights who merely sit on their rights without instituting legal action to enforce same, may find enforcement of their rights to be time-barred under the applicable statute of limitations, at least insofar as those particular defaults or other actionable conduct may be concerned.   POWERS OF THE MEMBER COMMITTEE:  The Member Committee has no general power or authority either to bind the members to anything or to waive any contract rights of members. (In fact, were the Committee to purport to do so, technically speaking the Committee members could be liable in tort to Club members for interference with advantageous contract rights, and/or breach of a duty to represent in good faith the best interests of Club members as a whole.   LEGAL PRECEDENT:  Common ownership of a hotel and an adjoining private club creates an inherent conflict of interest, which, since 1979 in the case of the Club, naturally gives rise to periodic tensions.  Where, as in the case of the Coral Casino, the ability of the hotel owner to consolidate amenities is encumbered by pre-existing contractual rights of Club members, a predictable clash of interests occurs.   A similar situation evolved in San Diego and was the subject of a California Court of Appeals decision, P.M. Martin et al V. Town and Country Development 230 Cal. App. 2d 422 (1964) Town and Country owned the Town and Country Hotel as well as the adjoining Town and Country Club (an athletic and social private club). After selling a number of “lifetime memberships” and operating the club for several years, the hotel owner decided to convert the club to hotel use.  Two members sued and obtained a judgment for damages in trial court for breach of contract.  The Court of Appeals affirmed.   HISTORY:  A review of the history of the Biltmore Hotel demonstrates that as each sequential change in ownership of the hotel and Club has occurred, the new owner has attempted to avail itself of potential benefits associated with expanding the envelope of Club usage.   THE MEMBER AGREEMENT:  The “Member Agreement” (signed by many, but not all of the membership) authorized and empowers the Member Committee to enter into the “Member Committee Agreement.”  Prior to the execution of the “Member Agreement” the Member Committee had no right, to represent to the County a position that would compromise or prejudice the material contract rights of any member. Each member who has executed the Member Agreement has, insofar as support for the Renovation is concerned, empowered the Member Committee to compromise or prejudice such rights, at least insofar as those specific members are concerned.   THE RESTAURANT:  The Member Committee Agreement has the effect of providing (for the first time in the Club’s history) that a portion of the Club (the renovated restaurant) is not an exclusive member facility, but rather a Hotel facility as to which Club members will up to a point, receive only preferential reservation rights.   The remaining use rights would extend to hotel guests as well as to persons admitted under the “Restaurant Guest Card” policy.  As solely the owner develops that policy, qualifications for cards could be diluted to the point where virtually any member of the public could obtain one.   Members who signed the agreement have agreed to the creation of “a club within a club” the exclusiveness of which would be dependent upon the owner’s whim at any given time.   LIMITATIONS ON DUES AND CHARGES:  The Agreement contains a general commitment on the part of the owner to limit increases in dues in frequency (once a year) and in amount (CPI-based increases) for a limited time (through 2013).  For those members who enter into the Agreement, the Club owner agrees not to charge any regular or special assessments “for the purpose of recovering the cost of the Restoration.”   In point of fact, historically dues increases have taken place less frequently than annually and have frequently been less than the CPI increases.   Establishment of the agreed upon formula would likely ensure that increases would annually occur in lock-step fashion;   The right and ability of the Member Committee to be consulted thereon and influence determinations would be neutered.   The agreement calls for CPI increases to be compounded rather than being based on the aggregate increase.  For example, assume the cost of an item is $100 today and cost increases are 5% per year.  At the end of ten years, instead of the item cost being $150, under the compounding approach it would be $158.   Dues increases to pay for any “upgrades” in service or facilities can be made by the Club owner in addition to formula increases – a potentially large and ambiguous loophole.   Although it is promised that there will be no regular or special assessments to recoup the cost of the project, in fact there is no provision in the Rules for such assessments.  The unfortunate implication of this provision is that, in the owners view, “regular or special” assessments for other improvements may be appropriate regardless of the limits set forth in the agreement.   Most importantly, substantial doubt exists as to whether the Club owner could enforce collection of assessments to recoup the cost of improvements which are either not requested by the Club members or are not for the direct benefit of the members.   Finally, we do not think the owner can legally implement a two-tier discriminatory membership dues and charges structure with the obvious intent of “punishing” those members who do not support the proposed project.  We speculate that this concept has not been fully thought out by the Club owner’s advisors, or more likely, that they are fully aware that this cannot be done and have no intention of charging non-signing members higher dues and charges.     MEMBERS SUNDECK AND LOUNGE:  The Club owner has agreed to use “good faith reasonable efforts” to obtain a permit for a new members’ only sundeck on the roof of the proposed restaurant and a new members only lounge to replace the lounge proposed to be destroyed.  If these features of the project were dropped from the plan, it would have no effect on the continued obligations of the signing members.  In other words, it does not become null and void as it does in the case of frustration of the owner’s expectations.   THE MISSING ISSUE:  The Member Agreement fails to address the critical issue of the Club owner’s observance of the specific CUP limitations upon use of the Club facilities by hotel guests.   THE MEMBER COMMITTEE QUAGMIRE:  The Member Agreement and the Member Committee Agreement place the members of the Member Committee in a very awkward position.  What if the owner seeks to obtain entitlements beyond the construction of the proposed project?  How can a Committee member discharge his or her duty to represent the interests of members as a whole in the context of the Agreement (which presumably creates members with two categories of rights)?  We suggest that an agreement of this nature, which has the potential for pitting one member’s interests against another’s, has no business being created in the context of a social club.   CHARACTERIZATION OF MEMBERS AS AN “ASSOCIATION”: The Member Committee Agreement contains curious reference to Club members as “the unincorporated association comprising the members.”  This is an inaccurate characterization, as nothing in the Club’s history creates such an entity.  Such a characterization could represent an attempt to create a foundation for hereafter arguing that member contract rights can be relinquished or modified by majority vote or by alleged representatives of such an “association.”