Conneaut Lake Park trustees have sued the company that operated the park Beach Club.
The lawsuit filed in U.S. Bankruptcy Court in Erie on Monday contends that Park Restoration LLC, which operated the club from November 2008 until the club burned down in August 2013, did not properly secure the club or leave it operational and “broom clean.”
Trustees are seeking at least $611,000, the estimated pre-fire value of the club, in damages.
Trustees also will file a preliminary injunction by week’s end to stop payout of a $611,000 insurance settlement on the club to Park Restoration, said Jeanne Lofgren, lawyer for the trustees, during a Tuesday hearing on the disbursement in U.S. Bankruptcy Court in Erie.
“We’d like to see a potential asset not dissipated,” Lofgren said.
The hearing was continued without a decision on disbursement by U.S. Bankruptcy Court Chief Judge Jeffery Deller.
Park trustees, in their lawsuit, said Park Restoration breached its 2008 management agreement with trustees by not vacating the Beach Club “in broom clean condition without damage” and not securing and maintaining the club “in a commercially reasonable manner or to insure the Beach Club was fully operational.”
The lawsuit also contends that “had the Beach Club remained vacant and unused during the term of the management agreement, no fire would have occurred on Aug. 1, 2013.”
Park Restoration lawyer John Mizner called the lawsuit “ridiculous.”
“The trustees of Conneaut Lake Park are doing what they do best, wasting more money,” Mizner said. “It’s ridiculous to think that a building that burned to the ground can be returned to its owner in ‘broom clean’ condition. Trust ought to be removed from the word trustee when referring to these individuals.”
Mizner also took issue with trustees’ claim that the Beach Club would not have burned if it had been vacant.
“Nobody has said or can prove that Park Restoration was the cause of that fire. Park Restoration needed (the club) to provide income. It would never have been to their benefit to burn it -- never, ever, ever,” Mizner said.
The cause of the fire was not determined by investigators.
Mizner on Tuesday withdrew his motion for disbursement of the entire $611,000 insurance settlement to Park Restoration, pending resolution of an appeal by local taxing authorities of a U.S. District Court decision awarding the settlement to the company. The May 4 ruling overturned a U.S. Bankruptcy Court decision that awarded $478,261 of the settlement to the taxing authorities toward Conneaut Lake Park’s roughly $1 million property tax debt.
Taxing authorities filed a motion in U.S. District Court on May 18 asking the court to stop payout of the settlement until their appeal is decided.
Mizner agreed that the court should continue to hold the $478,261 claimed by the taxing authorities but asked Deller to release the remainder of the settlement to Park Restoration.
“It’s now been three years that my clients have been denied the use of all $611,000,” Mizner said. “No person or organization would be willing to wait any longer to use that money, which is properly due them and for which no appeal has been taken.”
The disbursement hearing will be reconvened in four weeks.
Original Article By: Valerie Myers can be reached at 878-1913 or by email. Follow her on Twitter at twitter.com/ETNmyers.