Lake Wales official: City will seek maximum damages after ruling on Walesbilt lawsuit

A judge’s ruling in favor of Lake Wales does not mean that the city will immediately recapture ownership of the Walesbilt Hotel.

Four days after a judge issued an order granting a motion for partial summary judgment in Lake Wales’ lawsuit against the property’s owner, Deputy Mayor Robin Gibson provided an update at Tuesday night’s City Commission meeting.

“I should also mention that a summary judgment is not a final judgment,” Gibson said during an explanation of legal challenge. “A summary judgment is something that's entered while the lawsuit is in progress. And the lawsuit continues, and particularly in this case, there are 14 more counts, and the lawsuit does continue.”

Lake Wales and its Community Redevelopment Agency filed suit in January 2022 against Dixie-Walesbilt LLC, a Winter Haven company headed by Raymond E. Brown. The city’s CRA transferred ownership of the 1920s-era structure to Brown’s company in 2011, after he submitted a redevelopment proposal that promised to restore the vacant building and convert it into private apartments.

Brown has only made limited renovations to the 10-story building since taking ownership, and it remains unoccupied. The structure at 5 Park Ave. W. is listed on the National Register of Historic Places.

In its lawsuit, Lake Wales listed 16 counts in its complaint against Dixie-Walesbilt LLC – nine for breach of contract and seven for fraud. Among the most significant, the city alleged that Brown submitted fraudulent details in the proposal that convinced city officials to sign a redevelopment agreement with him.

The city’s lawyer, Kevin Ashley, argued that Brown falsely claimed he had begun pre-sales of units in the building and was on track to meet sales goals. Statements from Brown under oath in another lawsuit contradicted that.

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Ashley also cited Brown’s claim that an Indian entrepreneur was providing financial support for the project. Brown acknowledged in depositions that the man had not contributed any capital to the company.

Last June, Ashley filed a motion for summary judgment on two counts of Lake Wales’ complaint. Such a motion asks a judge to rule on an aspect of a lawsuit prior to a trial. In the order released Friday, Circuit Judge William D. Sites decisively affirmed the city’s request.

Gibson, the chair of the Lake Wales CRA, said that he was assigned to handle communications on the matter as part of a three-member executive committee that also includes Ashley and Lake Wales City Manager James Slaton. Gibson told the audience at the meeting that some aspects of the case remain confidential, including details of mediation sessions with Brown.

The next phase of the legal action will involve a determination of damages, Gibson said. He noted that Brown, in the redevelopment agreement, promised to pay $50,000 for sidewalk and street improvements and $30,000 to what is now the Lake Wales History Museum. Brown never paid any of that money, Gibson said.

Brown also claimed that the redevelopment project would create a new tax base for Lake Wales in excess of $9 million. Based on property tax rates, Gibson calculated that the city would receive about $124,000 in taxes a year. That would add up to more than $1.3 million over 11 years, he said.

In its complaint, Lake Wales sought not only damages but also an award of attorney fees. Ashley had accumulated more than $185,000 in fees through February, Gibson said, yielding a total of more than $1.6 million in potential damages. The city will move for a finding of personal liability in a final judgment, he said.

Sites has been reassigned within Polk County Circuit Court, and Judge Jennifer Swensen has taken over the Walesbilt case.

“The ultimate determination of what the damages will be and the attorney fees will, of course, be up to the court,” Gibson said.

Addressing the prospect of an appeal, Gibson said that Brown would have to put up a surety bond covering the amount of damages. If Lake Wales prevailed upon appeal, that money would go to the city, he said.

Gibson said he could not guess how long the next stages of the legal process might take.

Gary White can be reached at gary.white@theledger.com or 863-802-7518. Follow on X @garywhite13.

This article originally appeared on The Ledger: Lake Wales turns attention to damages in lawsuit over Walesbilt