What happens if you join a club and pre-pay for services but it then goes out of business?

UPDATED: May 15, 2015

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What happens if you join a club and pre-pay for services but it then goes out of business?

Joined a golf club after being told they were going to remodel. By joining now we would avoid cart expenses, membership fees, when they re-opened. We were also told that we would have reciprocal play on other courses while they remodeled. So we wrote a check for $2996 and purchased range balls for 15 visits. However, after only playing 2 rounds, we found the doors locked; it shut down due to the loss of a loan. I believe that fraud was committed through the deception. There was a sister course and it has also closed.

Asked on May 15, 2015 under Business Law, Florida


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

As a practial matter, you may not be able to do anything: if the club was an LLC or corporation, you can only sue the LLC or corporation, not any owners--but the LLC or corporation most likely doesn't, in a case like this, have enough assets (e.g. money) to pay claims against it. Furthermore, if the club were an LLC  or corporation, it is very difficult--and expensive--to sue the owners or employees. So while if the club were not an LLC or corporation, you may be able to sue the owners, if it was an LLC or corporation, you would most likely not have any recourse. The problem is, it doesnt' matter whether they acted wrongfully or not or would be liable or not if there is no money to collect from them, and if the club and a sister club are both shuttered, there is probably no money. Also, all you could get at most would be $2,996 plus 15 visits worth of range balls in terms of value, less the value or cost of the 2 rounds you; since lawsuits cost money, that is a very marginal amount to sue for in the first place--if you hired a lawyer, for example, you'd spend more on the suit than you'd get back, even if you won and even if they had money to pay.

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