Jockey Club developer, owners association in legal battle

Wed, Jan 26, 2000 (11:51 a.m.)

A legal battle has erupted between the developer and owners association of the Jockey Club, a large timeshare property on the Strip.

In a recent lawsuit, a family of companies controlled by the Cloobeck family sued the Nevada Jockey Club Interval Owners Association, the association representing the timeshare owners at the Jockey Club. Also named as a defendant was Tricom Management, the current manager of the property.

The Jockey Club is a Strip condominium development south of Flamingo Road near the Bellagio hotel-casino.

The lawsuit alleges improper billings by the association, violation of the association's bylaws and mismanagement of the property. It seeks unspecified monetary damages, new elections for board members and an order forcing compliance with the association's bylaws.

The Cloobeck family first obtained an interest in the property in 1980, when owner Sheldon Cloobeck purchased a 50 percent stake in the the partnership responsible for developing the Jockey Club. In 1995, Cloobeck acquired the remaining 50 percent ownership. Two years later, management of the property was transferred from the family's Polo Resorts to California-based Tricom.

Under agreements made between the family's International Resort Group and the association, the association agreed in 1998 to purchase defaulted timeshare properties during foreclosure sales, the lawsuit said, then sell these properties to IRG. IRG would then resell the properties.

But since this agreement, the association has attempted to drum up outside bidders for foreclosed properties, the lawsuit claims. Many of the properties were sold to outside parties, and others were purchased by IRG at a price higher than would be paid if the agreement were followed, the lawsuit states.

Further, the plaintiffs claim, the association is not licensed to conduct such sales in the state of Nevada.

A second dispute has arisen over the payment of association fees owed by delinquent timeshare owners. Under the 1998 agreement, delinquent fees owed by timeshare owners who do not hold title on their property are supposed to be paid by Jockey Club Resort Properties, the developer of the property.

The association was supposed to provide a list of delinquent accounts as far back as 1997, but the developer claims no such invoice was provided until last September. Jockey Club claims it contained late billing fees and collection charges that would not have been charged if the bill had been presented in a timely fashion. Further, the developer claims it contained double billings.

The association agreed to remove the double billings, but did not drop its demand for late fees. Jockey Club said it sent payment for the amounts owed, less the disputed fees, but that this payment wasn't accepted by the association.

Tricom then recorded a lien against the entire property at the association's request, rather than just the delinquent properties, the lawsuit claims. As a result, Jockey Club said its efforts to sell units in the tower are being delayed.

The lawsuit also accuses association board members of engaging in "numerous self-serving and improper acts" and "numerous actions ... in which direct conflicts of interest were not revealed to members of the association by the directors."

For example, the lawsuit states, association President Forney Smith is not a member of the association, and is thereby prohibited from serving on the board of directors. The suit also claims director Brenda Schmidtberger is "an employee of a competing timeshare operation in Las Vegas."

Jockey Club claims the board is taking measures to deprive it of a voice on the board. Although Cloobeck's companies are permitted to name three directors, Smith recently nominated a slate of directors without informing the plaintiffs, the lawsuit states. Jockey Club provided a list of nominees, but the association did not place these names on the ballot, the lawsuit said.

The defendants could not be reached for comment.

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