Appeals court last year awarded insurance money to local taxing bodies.
MEADVILLE — The company that operated the Beach Club at Conneaut Lake Park is suing park trustees for almost $500,000 in insurance proceeds.
A federal court this past spring awarded $478,261 of the $611,000 settlement on the club to local taxing authorities to cover the park’s delinquent property tax debt.
The money rightfully belongs to Park Restoration LLC, which paid for the fire insurance and was not obligated to pay any property taxes under its management agreement with Conneaut Lake Park trustees, said John Mizner, lawyer for Park Restoration.
Park Restoration operated the Beach Club from November 2008 until it burned down in August 2013.
Conneaut Lake Park trustees were responsible for paying park property taxes and had no fire insurance on the club or other park structures, Mizner said in a new complaint in Crawford County Court.
“Our money was taken for taxes on the entire 55 acres and not the less than one acre that we sat on,” Mizner said. “And we did not have any obligation to pay property taxes, not even on the spot we occupied. We wound up paying property taxes we had no obligation to pay, and Park Restoration is out of business.”
The new lawsuit claims trustees were “unjustly enriched” by the settlement paying taxes that they were obligated to pay.
The lawsuit also claims that Park Restoration is entitled to indemnity, or protection from loss, since proceeds from the insurance that it paid for were awarded by a court to pay Conneaut Lake Park debt.
The 3rd U.S. Circuit Court of Appeals in May awarded the bulk of the insurance settlement to local taxing bodies.
The decision reversed a May 2016 U.S. District Court ruling awarding the entire $611,000 insurance settlement to Park Restoration.
The 2016 ruling overturned a December 2015 U.S. Bankruptcy Court decision awarding the bulk of the insurance settlement to local taxing authorities.
The case came under the jurisdiction of the federal courts when Conneaut Lake Park trustees filed for Chapter 11 bankruptcy protection for the park in December 2014. The court in September approved trustees’ financial reorganization plan for the park.
“We went through the federal courts simply because (Conneaut Lake Park) trustees were in bankruptcy and were under the protection of bankruptcy court,” Mizner said. “Now that the park’s (financial reorganization) plan has been approved, lawsuits can be brought where they originally would be heard, in common pleas court in Crawford County.”
Original Article By: Valerie Myers can be reached at 878-1913 or by email. Follow her on Twitter at twitter.com/ETNmyers.