City Moves For Summary Judgement of "Fraud in the Inducement" to Reclaim Walesbilt Hotel

Lawyers for the City of Lake Wales are asking a circuit judge to rule that Ray Brown lied to city commissioners about his financing and progress in redeveloping the historic Walesbilt Hotel and that those fraudulent representations led commissioners to deed the hotel to him in 2011.

If Circuit Judge William Sites rules for the city, it would pave the way for returning the partially renovated hotel, dating to 1926, back to the city.

The city is suing Brown's company, Dixie Walesbilt LLC, to get the 10-story hotel back, and the motion filed this week goes to the heart of the city's argument - that the City Commission's decision to release the hotel to Brown was based on fraud.

Winter Haven lawyer Kevin Ashley, with the Peterson & Myers law firm, is asking the court to rule on two of the 16 allegations cited in the lawsuit, filed in January 2022. One relates to financial backing for the hotel renovation project, and the other to the pre-sale of proposed condominiums in it.

In the motion, Ashley cites a 2007 statement by Brown that an investor named Rajesh Kumar was 50% owner of Dixie Walesbilt. Brown later stated during a deposition for an unrelated lawsuit that Kumar was never an investor, according to the motion.

A second count cites a statement by Brown that the company had pre-sold condominium units in the proposed development, which Brown also admitted was untrue in a sworn deposition.

"Dixie Walesbilt LLC should not be allowed to profit from its blatant wrongdoing - obtaining public property under false pretenses," the motion states. "Dishonest conduct should never be rewarded or condoned." The motion follows a principle established in a prior ruling by the Florida Supreme Court, adding weight to the argument.

Deputy Mayor Robin Gibson, a lawyer, said the two issues cited in the motion are pivotal in the city's lawsuit against Brown.

"If we can't win on that, we go to trial," he said.

"It was misappropriated knowingly, to induce the city commission to convey the property. To me that's infuriating," Gibson added.

Dixie Walesbilt LLC has had title to the building for more than a decade but has made only slow progress toward remodeling the building, the interior of which has been partly dismantled by a prior owner. LakeWalesNews.net reached out to Brown, but he was unavailable to comment for this story.

If the matter is settled in the city's favor, commissioners are expected to transfer title to the Community Redevelopment Agency, which can then negotiate a new development agreement with a selected developer, carefully crafted to assure that it will occur in a timely manner.

The historic hotel featured a state-of-the-art "fireproof" design, including even a central vacuum cleaner system, when it opened during the so-called "Gatsby Era" of the Roaring Twenties, almost 100 years ago. Marble floors, coffered ceilings imported from Italy, custom brass railings and Corinthian capitals decorate an ornate atrium lobby. The hotel was a magnet for visitors upon opening prior to the construction of Bok Tower.

Several entities have expressed interest in redeveloping the property as a high-end hotel. Redevelopment is seen as a key part of hopes for an economic revival for the historic downtown. Restored as a hotel it would draw thousands of visitors annually to stays in the heart of the area, filling area dining and shopping establishments.

The CRA is investing millions of dollars to reconstruct aging streets around the building with new brick pavement, street trees, and other amenities. The work, part of the Lake Wales Connected designs, is being funded through a combination of grants and an $18.5 million bond issue. Tax Increment Financing (TIF) will retire the bonds through revenue captured by the CRA as area property values rise.