Opinion ID: 2780530
Heading Depth: 2
Heading Rank: 1

Heading: The Mount Holly Club

Text: In 2002, a group formed, calling itself “Mount Holly Club L.L.C.,” and set out to develop an exclusive private ski and golf resort in Utah. The club’s showcase would be a golf course designed by legendary golfer Jack Nicklaus. B. Jack Nicklaus’s Anticipated Role in the Development Beginning in 2006, the developer worked with Mr. Nicklaus to develop the golf course and market the club. As part of this effort, the developer entered into a contract with Mr. Nicklaus’s golf-course design company: The design company agreed to build the golf course, and the developer obtained the right to use the Nicklaus brand 1 and promote Mr. Nicklaus’s involvement. With this right, the developer issued Mr. Nicklaus an “honorary Founder Membership” in the club. Shortly thereafter, the developer expanded its relationship with Mr. Nicklaus by entering into a licensing agreement with another company of his, Nicklaus Golf. The licensing agreement allowed the developer to use the Nicklaus brand to advertise and promote membership in the golf club and the development. 1 The Nicklaus brand includes certain trademark rights in the name and phrase “Jack Nicklaus Golf Club™” and its Golden Bear™ logo. Aplt. App. at 69. 4 C. Marketing Materials Following execution of the agreements, the developer joined Mr. Nicklaus and Nicklaus Golf to market the new venture. These marketing efforts included a press release and a brochure.
The press release was issued by the developer and Nicklaus Golf. This document highlighted Mr. Nicklaus’s involvement and included a quotation by Mr. Nicklaus, reflecting his enthusiastic decision to become a “founding charter member”: “When I walked Mt. Holly Club, I was so captured by its potential [that] I thought through all 18 holes. In fact, I have been so impressed with the club and its management team that I became a founding charter member.” Aplt. App. at 88 (emphasis added).
After issuing the press release, the developer and the defendants created a full-color marketing brochure entitled: “Mt. Holly Club and Jack Nicklaus Invite You to Become a Charter Member.” Id. at 105-07. Immediately below this invitation was a quotation from Mr. Nicklaus: Mt. Holly Club enjoys the ideal alpine setting. I knew from my first visit there that we had been given a canvas on which to design a truly spectacular golf course. I am so impressed with the Mt. Holly Club and its management team that I became a founding charter member. I look forward to seeing you there. 5 Id. at 107 (emphasis added). Immediately following that statement, the brochure stated that “Charter Memberships can be acquired for [a] $1.5 million entry fee.” Id. (emphasis in original omitted). D. The Charter Membership Agreement The Donners allegedly saw the press release and brochure and decided to buy a charter membership. For this charter membership, the Donners paid $1.5 million and signed a charter membership agreement. Under this agreement, the developer issued the Donners an estate lot certificate. The certificate could eventually be redeemed for an estate lot when it became available. E. The Filing of Bankruptcy and the Settlement Agreement The developer’s parent company filed bankruptcy. With the filing of bankruptcy, the Donners settled with the parent company, obtaining a lot near the ski area and the right to trade that property for a lot in the development once it is platted. And, if the golf club and ski area are eventually developed, the Donners would be entitled to memberships. F. The Donners’ Lawsuit The Donners sued Mr. Nicklaus and Nicklaus Golf for intentional misrepresentation, negligent misrepresentation, and violation of the Interstate Land Sales Full Disclosure Act. 6 The central claim is that Mr. Nicklaus induced purchase of a charter membership through material misrepresentations and omissions in the marketing materials. The district court concluded that ● the Donners had failed to state plausible tort claims, ● the Donners were not entitled to relief under the Interstate Land Sales Full Disclosure Act, and ● the Donners could not recover damages because they had already elected other remedies through settlement. With these conclusions, the court alternatively dismissed the action under Fed. R. Civ. P. 12(b)(6) and granted summary judgment to the defendants under Fed. R. Civ. P. 56. This appeal followed.