Creekside Golf Club owners sue homeowners association over spending

Creekside Golf Club’s owners have asked a judge to remove the board of an adjacent homeowners association and put the HOA into receivership.

It’s the latest volley in a two-year legal battle that will decide whether the club’s owners, developers Larry Tokarski and Terry Kelly, can close the South Salem championship course and turn it into a residential subdivision.

The developers say the six members of the Creekside Homeowners Association Board, all of whom own golf course-view homes, illegally used the association’s reserve account to pay for an April 2016 lawsuit alleging the course must remain open indefinitely.

That bankrupted the association, raising monthly assessments for the many homeowners whose property values would not be affected by the course’s closure, the lawsuit alleges.

More:Creekside Golf Club neighbors appeal loss; club owners want $524,860 in legal fees

A judge ruled against the association in the original lawsuit in May 2017, saying the course can be closed and developed. The board filed an appeal in September 2017.

The developers’ new lawsuit, filed Feb. 8, asks the court to order the board members to personally reimburse the association for its litigation costs, which totaled at least $240,000, as well as the developers’ $525,000 claim for legal fees.

It also asks the court to prohibit association reserves from being further used to finance the appeal. That could effectively end the case.

The lawsuit claims Tokarski and Kelly have the right to sue because they own property in the development, making them members of the homeowners association.

Tokarski and Kelly were out of town and not available for comment Monday, said their lawyer Jim Vick.

HOA board president Don Wildfang referred questions to the board’s attorney, Chris Tingey, who said the lawsuit is too new to comment on.

“We’re trying to sort through it,” he said.  

The other board members are Ben Fetherson, Jr., Richard Fry, Audrey Konold, Joshua Morrow and James West. Creekside Homeowners Association also is named as a defendant.

More:Judge: Creekside Golf Club can close, be turned into housing

The lawsuit alleges that both Oregon law and the association’s covenants, conditions and restrictions prohibit dedicated reserve funds from being used to finance litigation.

And the board never put the matter to a vote of association members, it says.

“Plaintiffs and other lot owners have suffered damage by intentional actions of the board of directors, in that funds for maintenance of the physical assets of the subdivision are depleted, future assessments will be increased to fill this deficit, and lot values are reduced because of the increased future assessments,” the lawsuit reads.

Tokarski developed both Creekside Golf Course and Creekside Estates in the early 1990s.

The course and the neighborhood have no legal connection, and most of the 588 homeowners aren’t club members.

But the association’s lawsuit said the lots they bought were advertised as being in a golf course community. It claimed the original covenants guaranteed that a golf course would continue on the property.

In 2016, Tokarski filed preliminary plans with the city of Salem to turn all 156 acres of the course into a 354-unit planned housing development. At the time, Tokarski said the golf course had been losing money for years.

He since has been working with golf club members to shore up the club’s finances.

tloew@statesmanjournal.com, 503-399-6779 or follow at Twitter.com/Tracy_Loew

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