Hermitage ordered to pay member $1M

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NEWFANE — Hermitage Club founder Jim Barnes and Hermitage Inn Real Estate Holding Company LLC have been ordered to pay a club member more than $1 million for breach of contract.

Judge Robert Gertey issued the order for default judgement for Douglas Hollenbeck of Rhode Island to receive about $1,000,975. Gerety said the evidence shows Hollenbeck paid $1 million for a club membership then bought five memberships as an investment with "a promise by defendants to convey one of two parcels of real estate."

Hollenbeck sought damages for the five memberships, which the court said "have no value today." The Hermitage's private ski resort, golf course and establishments have been closed since last year following a foreclosure complaint brought upon by Berkshire Bank and the state's shutdown of properties for failure to pay taxes.

"The measurement of damages is difficult in this case," Gerety wrote in a decision issued late last month.

Gerety said a "reasonable way" to look at the case is to subtract $10,000, which Hollenbeck used in "credits" for Hermitage activities from the membership before the Hermitage went out of business, from the $1 million spent on the initial membership, then add about $10,975 in attorney's costs and fees. Exemplary damages were not granted since the evidence presented in the claim for consumer fraud was deemed "not sufficient to show malice, ill will, or wanton conduct."

Hollenbeck asked the court to transfer property to him through an injunction. But the court found that "the defendants do not have the present ability to convey either of the referenced parcels."

"One referenced parcel has been sold to an apparently bona fide purchaser," Gerety wrote. The other "was not described in a manner that permits the court to make a finding of precisely what parcel of property was promised."

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According to testimony from a previously reported hearing in March, the deal included an undeveloped parcel in High Country Trailside with the stipulation that if permitting fell through, Hollenbeck could get property in Stag's Leap, which is below the Clubhouse on the lower mountain and also offers ski in/ski out abilities. Hollenbeck said the Stag's Leap lot had already been sold.

He asked the court to consider making a monetary judgement related to the property issue. But the court said it could not "make a finding of fact regarding the value of one of the two parcels because the parcel did not exist at the time of the contract and the parcel described was never in existence."

Hollenbeck's opinion on the value of the properties, Gerety said, "is not persuasive or credible because no specific information about the nature of the parcel was provided."

The other parcel was sold "to an apparently innocent third party for $525,000," Gerety wrote, noting that the sale price represents the fair market value of the property in June 2017.

His decision and order, signed by Assistant Judge Patricia Duff and Assistant Judge Lamont Barnett, notes that the defendants did not appear at a hearing on the motion for default judgment held in Windham Superior Court, Civil Division in March.

"The court finds that the defendants failed to disclose the poor financial condition of the defendants at the time and the poor financial condition of the development project and that the information withheld about financial condition was material to the transactions with plaintiff which involved investments of substantial sums of money in the recreational development project," Gerety wrote. "The failure to disclose known material information constituted an unfair or deception act by defendants within the meaning of the Consumer Fraud Act."

Reach staff writer Chris Mays at cmays@reformer.com, at @CMaysBR on Twitter and 802-254-2311, ext. 273.


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