Significant Ruling in Walesbilt Lawsuit Favors City of Lake Wales

The year-long lawsuit between plaintiffs the City of Lake Wales and defendants Dixie-Walesbilt LLC of Winter Haven has taken a significant turn. The future potential redevelopment of the 11-story hotel, a Lake Wales landmark, hangs in the balance.

A ruling issued by Circuit Judge William Sites on Wednesday denied the defendant's motion for summary judgement on each of the five points. The suit filed by the city and the Community Redevelopment Agency alleges that Dixie-Walesbilt owner Ray Brown committed "fraud in the inducement" to obtain title to the building.

The city's position is that officials and commissioners at the time of the original "request for proposals" awarded the building to Brown because of statements he made that have since been shown to be false.

Brown had proposed to redevelop the hotel into 40 condominium units, with a health club and retail space on the ground floor. A prior developer had already invested about $125,000 in design work and failed to find a condominium solution that didn't lose money.

In his ruling, Circuit Judge William Sites stated that evidence in the case suggests Brown misled the city when negotiating the redevelopment agreement for the Walesbilt Hotel in 2010.

Sites cited Brown's assertions that he was experienced in hotel restoration, that he had secured the funding to redevelop the Walesbilt and that he had begun pre-selling residential units in the building.

"(Brown) did not provide the Court with or direct the Court's attention to any record evidence that any of the above were not representations made by (Brown) to (the city,) or that any of the above were not representations made by (Brown) to (the city) to induce (the city) into the Redevelopment Agreement or to transfer ownership of the Hotel to (Brown,)" the ruling states.

Furthermore, Sites ruled that Brown has failed to provide evidence to the court that he didn't make those representations to the city.

"(The city) alleges that the fraudulent statements...induced them to enter the Redevelopment Agreement - that is, that all of the false representations were 'made and relied upon in forming the contract.' (Brown) has provided no summary judgment evidence to the contrary," the court ruling states.

Sites also rejected Brown's argument that the city hasn't lost anything by having approved the redevelopment agreement and having transferred the hotel property to Brown.

"On this record, a reasonable jury could conclude that, had (Brown) fulfilled its contractual obligations under the Redevelopment Agreement, (the city) would have enjoyed an increase in the tax base of the Hotel in an amount to be proven at trial." according to Sites' order. "The Court finds that, should the (city) prevail at trial, record evidence of the bases for damages has been pleaded and could be proven."

Reached by telephone, Brown declined to comment on the record.

The case is scheduled for trial in September, but that date is likely to be delayed due to an enormous backlog of cases that developed during the Covid pandemic. The city could avail themselves of an opportunity to file their own motion for summary judgement, given the favorable ruling from the court. That could result in an earlier hearing. In either course, however, Dixie-Walesbilt could appeal, further delaying a final settlement.

In his motion, Brown claimed that his offer "was an effective windfall" to the city because no other qualified redeveloper was willing to take on the project, but Brown was in fact selected to take on the project over proposals from two other development groups.

The long and convoluted history of the Walesbilt, for a period known as the Grand Hotel, has confounded city leaders for decades. The once prospering property was picked clean of assets by prior owners and closed to the public in 1995, standing vacant for years before the city obtained title in 2006, only to assign the restoration to Brown.

The architecturally-beautiful boom-era structure, completed in 1926, opened to the public at a New Year's Eve party at the dawn of 1927, just as the Great Florida Land Boom was collapsing.

If the city regains title, it is likely to transfer ownership to the CRA, which can negotiate a sale with any qualified buyer. Several parties have expressed interest in the building with plans to restore it to its original use as a hotel.