May 26--The owner of the oceanfront Sandpiper Golf Course is being sued for more than $50 million in damages by its neighbor, the luxurious Bacara Resort & Spa. 

Bacara's owners accuse the Golf Trust of America of illegally scheming to prevent them from buying the 18-hole course five years ago, then failing to honor a commitment to spend millions on course upgrades to help boost room sales at the 360-room resort. 

As a result, Bacara is losing out on thousands of room bookings a year and millions in revenue, the lawsuit suggests. The $220 million resort that opened in September prominently features Sandpiper in its promotional materials, treating the course as an essential element. 

The complaint also alleges that Golf Trust of America fraudulently induced Bacara's owners to invest in development of a new clubhouse. 

The civil lawsuit filed in Santa Barbara Superior Court is the second legal squabble to hit financially struggling Golf Trust of America as it attempts to sell Sandpiper. 

Course operator Environmental Golf Inc. is in a standoff with Golf Trust of America, claiming it is excused from paying rent as a result of breaches of the lease by GTA, including failure to make course improvements. That suit is in arbitration. 

Already, Virginia-based Golf Trust of America has sold about half of its approximately 42 courses. It went through a big growth spurt in 1998 and 1999, but its fortunes have plummeted. Its stock has dropped from $35 a share in 1998 to close Friday at $7.60. 

Representatives for both sides did not return phone calls Friday seeking comment. 

Bacara's lawsuit does not mince words. 

"Their conduct has been willful, oppressive and malicious," the lawsuit charges. The company "had no intention of investing the agreed sums into the golf course improvements." 

The lawsuit further asserts that Golf Trust of America had a "scheme to liquidate" the course, and defrauded both the owners of Bacara and Environmental Golf by failing to live up to its promises to make renovations. 

The hotel's owners are demanding a jury trial. 

They want Golf Trust of America ordered to spend $13 million upgrading the course. They also want the company to pay $50 million in damages, an amount they claim would have been generated by extra room sales if the course had been upgraded. 

The lawsuit discloses that, in 1997, Bacara's owners started negotiations to buy the golf course so they could develop it for use by the resort's guests. It says Golf Trust of America then told Bacara's owners it would buy the course and, together, each group would "simultaneously develop their respective properties to world-class stature, for the benefit of each other." 

The lawsuit states that the golf company told Bacara's ownership that if the course were developed to world-class status, it would generate an additional 10,000 room nights per year for the resort -- about $5 million in additional annual revenue. 

The golf company agreed to buy the course and invest $6 million for upgrades, and grant access to Bacara's guests. Relying on these representations, Bacara's owners ceased purchase negotiations with the former owners. 

Lawsuits have plagued Golf Trust of America, an ailing real estate investment trust, according to Crittenden Golf, an industry magazine. As of March 27, the company had declared defaults by the lessees of 16 of its golf courses since the company began in 1997. The magazine reported many of those defaults resulted in court actions and eviction proceedings. 

GTA has said that as many as 25 of its golf courses have seen financial drops recently, the magazine said, which could cause lessees to default on payments. 

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(c) 2001, Santa Barbara News-Press, Calif. Distributed by Knight Ridder/Tribune Business News.