Canadian developer's quashed PGA golf course plans in Cuba sparks lawsuit

A quashed deal to build PGA-branded golf courses in Cuba has prompted the Canadian developer behind the project to file a $25.5-million lawsuit against the Professional Golfers’ Association of America for allegedly interfering and blocking it from using the trademark in the communist country.

360 Vox Corp., an international real estate developer based in Montreal, signed a 10-year licensing deal in 2011 with Professional Golfers’ Association Limited (PGAL) in the U.K. to use the PGA brand exclusively in golf-related facilities across Cuba, according to the lawsuit filed earlier this month.

The lawsuit alleges the PGA of America — because of the longstanding U.S. economic embargo against Cuba — “intentionally and unjustifiably interfered”, causing PGAL to terminate the agreement with 360 Vox.

Because the deal was struck between a Canadian firm and the U.K.-based PGAL, the Americans’ trade stance should have no bearing, said 360 Vox’s lawyer Glen H. Waldman.

“The PGA of England, blinked, got scared and listened to the PGA of America and screwed my guys out of a lot of money and a lot of opportunity,” said Mr. Waldman.

360 Vox is publicly listed on the TSX, and its largest investor is Dundee Capital Markets, with a 43% stake, according to Bloomberg data.

360 Vox is asking for damages of $25.5-million, including $5.5-million for project expenses and feasibility studies and lost profits of $20-million, said the lawsuit filed in Palm Beach County, Fla., where PGA of America is based.

“We believe that having had a PGA brand associated with these things, that we could have commanded a premium on the market sales,” said Colin Yee, 360 Vox Corp’s chief financial officer.

A PGA of America spokesperson told the that it is an independent organization, separate from the U.K.-based PGAL, and 360 Vox Corp is suing “the wrong party.”

“From their allegations, 360 VOX incorrectly alleges that the PGA of America and  PGAL are affiliates or subsidiaries of each other, which is not the case,” the PGA of America said in an email, declining to comment further.

The first in Cuba PGA-branded golfing resort was to be built in Jibacoa, located about 65 kilometres east of Havana.

360 Vox Corp., formerly known as Leisure Canada, planned to invest $1.2-billion to develop a 5.5 square-kilometre ocean front property featuring high-end condos and 45 holes of premium golf.

After the licensing deal was made public in March 2011, it came under criticism in the U.S. — particularly from a blog called Capitol Hill Cubans which accused the PGA of using its U.K. brand to “skirt sanctions.”

The blog, cited in the lawsuit, later that same month quoted the PGA of America as saying it was exploring “whether we have the legal ability to block the use of this mark in Cuba or Canada and intend to pursue all legal avenues to prevent the use of this mark for this project in Cuba.”

PGA of America officials met with the PGAL sometime in August 2011 about the matter, the lawsuit added.

In December 2012, PGAL sent 360 Vox a letter stating it was terminating the licensing agreement.

“Anytime you make any investment in a country that’s communist or unstable, you obviously understand that there are risks,” said Mr. Waldman. “But the anticipation was not that there would be a risk from the U.S. PGA interfering and quashing the contract.”

PGAL has also “refused to refund” the $130,000 paid by 360 Vox under the agreement, the lawsuit alleges.

The Canadian company is assessing its options for the project, possibly seeking out a licensing deal with another firm, or to simply proceed without a brand, said Mr. Waldman.

The PGA stamp isn’t necessary on a golf course, but most avid golfers opt to play on a course with PGA standards, he added.

“When you have the chance to play PGA or not, you usually play the PGA course. There’s a status there, and usually the course is much better,” he said.

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