Businessman Jeremy Beck has filed a US$2 million lawsuit against MV Advisory Ltd., the company that previously owned the rights to the Margaritaville resort brand in Cayman.
In the civil suit, which was filed before the Grand Court in March this year, Beck petitioned the court to rule in his favour and order MV Advisory Ltd. to comply with an ‘option agreement’ clause of an original contract between the two parties – which would require MV Advisory to buy back the nine hotel rooms from Beck at their original US$2 million price tag.
The contract stems from a 2016 business venture between Beck and MV Advisory Ltd. as well as its sister company MV Cayman Ltd. At the time of the agreement, MV Advisory Ltd. was used to secure the then Treasure Island Resort, as well as the franchise rights for the Margaritaville hotel chain. MV Cayman was the company used to develop the property.
“The original agreement between my client and the respondents was that the rooms which he purchased would be rented out alongside the remaining rooms as a general stock of hotel rooms,” said Beck’s attorney Ben Tonner. “A portion of the revenue generated form the rooms which belonged to my client, would be used for the upkeep of the rooms and the rest was to be paid to him.”
The court heard that, since December 2020, Beck has not been allowed access to his rooms. In a separate lawsuit from March 2020, Beck and 11 other people who purchased rooms with MV Cayman Ltd., successfully sued the developers for more than a million dollars worth of unpaid rent.
Triggering the ‘option agreement’
As part of the original contract, the ‘option agreement’ could be triggered if the rights to the Margaritaville hotel brand were lost fewer than 10 years after its acquisition, and if, after a reasonable time, a brand of a similar calibre had not replaced the Margaritaville brand.
After losing the rights to Margaritaville in March 2020, the hotel reopened as Palmar Beach Resort Grand Cayman in October of that year.
“The Margaritaville brand was lost well within the 10-year limit,” said Tonner. “We say the new brand is nowhere near the calibre of the Margaritaville hotel brand which was synonymous with Jimmy Buffet. That brand has presence outside of Cayman, it has a chain of restaurants, bars and hotels around the world, its name is iconic with ‘Cheeseburgers in Paradise’ and the fact that ‘It’s Five O’Clock Somewhere’.”
Tonner added, “The new brand has no other hotels or restaurants or bars outside of Cayman; there is no merchandise associated with it. It doesn’t even have a website. There is a Facebook page, but that’s about it.”
Lawyers for the respondents have urged Justice Margaret Ramsay-Hale against siding with Beck and ordering MV Advisory Ltd. to buy back the rooms, on the grounds that “a reasonable amount of time for rebranding had not occurred” and such an order would be an exercise in futility and impossibility because the company was not in a position to repurchase the rooms.
In a preemptive response, Tonner told Ramsay-Hale, “given the difference in the calibre of the hotel brands, no amount of additional time for rebranding would ever place the two on equal levels”.
Tonner told the court this was a business venture between two “commercially astute and sophisticated parties, that understood the implications of the option agreement”.
“Now my client wants out,” said Tonner. “It’s only fair that given the circumstances he be allowed to exercise the rights under that option agreement.”
The two-day hearing wrapped up last week, and Ramsay-Hale is expected to return a verdict in the coming weeks.