The clubhouse of the Palms at Pleasure Island Golf Course
Since it opened in 2003, the Palms at Pleasure Island Golf Course has had to deal with erosion along the greens of the back nine and recurring problems with a series of course managers. Now one of the latest management companies is taking the city of Port Arthur to court over its contract to operate the 18-hole, 72-par course.
On July 5, Intercoastal Golf LLC filed a suit in Jefferson County District Court against the city alleging the Pleasure Island Commission committed fraud and conspiracy that caused Intercoastal to lose at least $287,000.
Pleasure Island, a man-made island on the Port Arthur Ship Channel, is part of the city of Port Arthur. The nine members of the Pleasure Island Commission are appointed by the Port Arthur City Council. The PIC oversee the four dozen or so homes and condominiums, marina, parks and golf course. The Palms, with its pink-stucco club house and palm tree lined drive, is a public course that has become as well-known for its controversy as it has its beauty and challenging holes.
In the lawsuit, Bryan Jackson says he entered into an agreement with the PIC to operate the Palms. The plaintiffs' original petition does not state the date of the agreement.
As the manager of the golf course, Jackson was to "operate, manage, and maintain the golf course, driving range, grounds, clubhouse facilities and equipment storage areas at his own expense," the petition states. He was also to assume the PIC leases for golf course equipment and golf carts and to purchase inventory for the clubhouse and pro shop.
In addition, Jackson says the agreement required him to pay the PIC a $2 fee for each round of golf played during the month.
The agreement noted that the contract could not be transferred or assigned by the manager without prior approval of the Pleasure Island Commission.
It also stated that the manager would remain personally liable for the obligations under the contract and that the PIC had the authority to terminate the agreement if any provisions were breached. In that instance, the manager would have 30 days to remedy the breach after receiving written notification from the PIC.
In April 2006, Intercoastal Golf LLC was formed and managers named under the entity were Jackson and Charles Ahlman. Jackson assigned the management duties of the Palms to Intercoastal Golf on May 1, 2006.
"At that time, Mr. Ahlman was unaware that PIC's prior approval was necessary to effectuate the assignment according to the terms of the Jackson/PIC agreement," the lawsuit states.
Ahlman proceeded to maintain and operate the course, purchasing inventory, fuel and fertilizer. The petition says Ahlman also made large expenditures to improve the bunkers, entered into agreements with vendors and a "substantial" lease for new golf carts.
The suit says that Jimmy Dike, the director of the PIC, assigned the cart and equipment leases to Intercoastal Golf, accepted the green fee payments from Intercoastal and "promised FEMA money for bunker excavation."
"Charles Ahlman, relying on this promise, began excavation of the bunkers at his own expense," the petition states.
Ahlman says Danny Williams, also a member of the Pleasure Island Commission, "physically worked side-by-side" with Ahlman to complete the excavation.
"It was also suggested by Mr. Dike that Intercoastal would assume PIC's insurance payments on the property because Mr. Ahlman was having difficulty finding an insurance company to cover the property," the petition says.
Then on Sept. 21, 2006, Bryan Jackson was notified by the PIC that was in default for failure to pay green fees.
"Unbeknown to Mr. Ahlman, on Oct. 3, 2006, Bryan Jackson informed PIC in writing that he individually was unable to cure his default (on the green fees) and he wished to waive his 30-day notice period. He also noted that he wanted his contract with PIC to terminate immediately," the suit states.
On Oct. 3, Ahlman and his staff were evicted from the Palms Golf Course by the Pleasure Island Commission.
"PIC denies there was any agreement between PIC and Intercoastal Golf LLC to operate and maintain the course," the petition says. "It wasn't until that date that Mr. Ahlman became aware that Jackson terminated his contract with PIC."
According to the petition, PIC assumed operation of the golf course and sold inventory purchased by Intercoastal.
"PIC utlized the golf carts and John Deere equipment while Intercoastal Golf LLC was obligated and continued to pay notes. PIC used the operating accounts established by Intercoastal Golf in its operation of the golf course, charging items against Intercoastal Golf credit," the petition states.
The suit alleges that the Pleasure Island Commission received unjust enrichment and that Intercoastal is entitled to recover money and property because the Pleasure Island Commission obtained benefit from Intercoastal by fraud.
"PIC also exercised undue advantage by forcing Intercoastal out of business and/or taking over its personal property, and utilizing and incurring debt on Intercoastal's operating accounts," the petition states.
Intercoastal claims that even if the court finds that the assignment between Bryan Jackson and Intercoastal Golf is not enforceable, Intercoastal is still entitled to money and property because PIC was unjustly enriched.
In addition, the conduct of the PIC members, including Dike and Williams, "represented to Intercoastal that the operation and maintenance of the Pleasure Island golf course would be performed by Intercoastal," the suit claims.
"The members of the PIC had a meeting of the minds to mislead agents of Intercoastal to operate and maintain the course with no intent to formally accept assignment of the contract with Intercoastal," plaintiff claims. "Intercoastal was misled to operate and maintain the course while PIC was attempting to find another operator to replace Intercoastal without Intercoastal's knowledge. PIC committed overt acts including fraud and conversion of Intercoastal's personal property."
As of April 1, 2007, the Palms of Pleasure Island is under the management of Aquila Golf Inc. Aquila also manages the Babe Zaharias Golf Course in Port Arthur and Bayou Din Golf Course in Beaumont.
The plaintiff claims it is entitled to money damages to recoup large course improvement expenditures, inventory purchases and equipment leases worth $287,000.
Due to the defendant's fraudulent acts and the "wanton malicious nature" of the conversion, the plaintiff is also seeking exemplary damages.
Mitch Toups of Weller, Green, Toups & Terrell LLP of Beaumont is representing Intercoastal Golf. A trial by jury is requested.
The case has been assigned to Judge Donald Floyd in the 172nd District Court.
Case No. E179-606