Homeowners’ $21M verdict nixed in Georgia country club fight

A $21 million verdict awarded to homeowners of a North Georgia country club in their fight against the property’s developers is excessive and cannot stand, the Georgia Court of Appeals has ruled.

The jury verdict was awarded in 2024 to the owners of 11 homes within the Overlook at Kingwood resort in Rabun County in their case alleging they were overcharged fees by developers who were also reducing new home sizes in violation of the gated community’s rules.

Jurors found that Kingwood International Resort LLC, which bought the subdivision’s vacant lots and common areas in 2015, and several people behind the company are liable to the homeowners for civil fraud and racketeering claims.

In its decision Monday, written by Judge Sara Doyle, the Court of Appeals upheld the jury’s award of around $151,000 in compensation to the homeowners, citing evidence that the developers had intentionally flouted the rules and improperly billed and threatened homeowners.

But the court wiped out the jury’s additional award of $21.2 million in damages designed to punish the developers, finding it was too high in proportion to the compensation.

“The ratio of the amount awarded for compensation and punitive damages, even given the defendants’ wealth and repeated instances of bad behavior, is excessive,” Doyle wrote, adding it violated part of the U.S. Constitution.

The case has been remanded to the Rabun County Superior Court for the amount of punitive damages to be decided again, likely by a new jury.

The homeowners’ lawyer, Michael Cummings, said he’s confident another jury would award a large verdict against the developers.

“The Court of Appeals felt like we won too much, which, of course, we disagree with,” he told The Atlanta Journal-Constitution.

Lawyers for the developers did not comment Tuesday on the ruling.

Case records show the country club was created in 2006 and four years later became subject to foreclosure after most lots failed to sell amid the 2008 financial crisis. The corresponding homeowners’ association was administratively dissolved in 2011.

Several years later, Kingwood International Resort bought the interest to the subdivision’s unsold lots and common areas from another company, Great Oak Owner LLC, which had bought them from United Community Bank.

In 2020, several homeowners sued Kingwood International Resort and affiliates, claiming in part that the developers were improperly trying to assert the rights of the defunct homeowners’ association and change the subdivision’s governing documents.

The homeowners challenged the resulting property fees, penalties and assessments, as well as the developers’ decision to build new homes under the 1,200-square-foot minimum for the community.

A Rabun County judge ruled in the homeowners’ favor, halted construction of the smaller homes and allowed a trial on fraud and racketeering claims. Judge B. Chan Caudell then signed off on the jury’s verdict, including the $1.9 million in punitive damages awarded to each of the 11 homeowners.

On Monday, the appeals court said there was ample evidence suggesting the developers knew they weren’t authorized to act as the homeowners’ association but did so anyway and “avoided following any legal requirements until forced to do so.”

Evidence showed the developers improperly threatened and billed homeowners and reported them to credit agencies, repeatedly attempted to evade rules for electing a board and removed large amounts of money from the association’s coffers without explanation or evidence of subdivision improvements, the court said.