Judge dismisses Rehoboth country club suit

Suspended members had sought breach of contract claims
October 14, 2019

A Delaware Court of Chancery judge has dismissed a lawsuit brought by three members of Rehoboth Beach Country Club against the club’s former leadership.

Judge Joseph Slights dismissed the case with prejudice, meaning the case cannot be refiled. Slights also ruled that neither side has to pay costs.

The suit was filed in March by Thomas Cariota, Robert Dathe and Denis O’Toole, members of the club’s audit committee, against the then-leadership of the club, Board of Governors President Daniel Krausz and Director Richard Berl. According to court documents, Berl and Krausz’s three-year terms as president and director expired on Aug. 31.

In their legal filings, Cariota, Dathe and O’Toole argued that when they raised concerns about the club’s financial status, the board, specifically Berl and Krausz, instigated disciplinary action against them . At the time, the club was considering a $12 million capital improvement plan, and the plaintiffs were concerned the plan could cause the club to go insolvent. The board suspended O’Toole and Dathe’s membership for a year and terminated Cariota’s.

The plaintiffs sought damages for defamation and breach of contract and wanted their membership privileges restored. 

Berl and Krausz’s attorney, Mark Hurd, argued the case should be dismissed because the plaintiffs did not raise any viable breach of contract claims, and there were no allegations that the board’s decisions were made in bad faith. Hurd’s legal filings called the plaintiff’s arguments odd because they were singling out Berl and Krausz when the board consists of 14 people, who all agreed to the disciplinary actions against the plaintiffs. Hurd said the board was well within its authority to remove their membership. 

Following the ruling, Krausz said, “I’m glad it’s over. Both Rick Berl and I and our attorneys thought this was a frivolous lawsuit from the beginning. We’re glad to have put this behind us. We’re sorry these three individuals cost the club substantial legal fees.”

Neither the plaintiffs, nor their attorneys, Daniel O’Brien and Allyson Baker, were available for comment at press time.