In a significant victory for county government, the owners of the derelict Old Dixie motel have 10 days to provide the Flagler County Clerk of Court a $250,000 deposit they have owed county government for three years as part of an agreement on the rehabilitation of the motel, Circuit Judge Chris France ruled in an order issued today.
The decision follows May 29 hearing before France where the county asked the court for a partial summary judgment on a case the county filed in 2021 against the then-owners of the motel. New owners acquired the property that May, pledging to the county that they would pay off all nuisance and Health Department fines, clean up the property and begin rebuilding it into a viable Hotel Henry, as they called it.
Part of the deal hinged on the owners, an opaque partnership with a Manhattan address, issuing a $250,000 deposit to the county. The county would use the money in case the owners reneged on their pledges–either to demolish the building or to secure the property. The owners, through their lawyer and through a Greg Kong, a local Realtor whom they’ve employed as their point man, have argued that the county’s conditions and timetables were impossible to meet.
The same argument was presented to France, who was dubious: it had been three years. The judge did not see why the partners were not willing to put up the $250,000, especially since they did not appear to be short of money. They have bought numerous and expensive properties surrounding the hotel. When France asked the owners’ attorney whether there was any intention to provide the $250,000, the attorney said, flatly, no. The owners likely lost their case then and there.
“The Defendant is a seasoned commercial investor who stood on an equal footing with the County to negotiate the contract at issue herein,” France’s order reads. “The Defendant was at all times unhindered and able to conduct its due diligence investigating the responsibilities and actions needed to fulfill each prospective term of the prospective contract. The Defendant was at all times an arm’s length purchaser free to walk away without any repercussions. As of then, they had no dog in the hunt. They were not involved in any of the litigation or enforcement actions in process by the County— those were the Co-Defendants Zulali(s),” the previous owners of the property. “If they were, some of the Defendant’s arguments as to the contract being illusory, unconscionable, or impossible may be debatable.”
Those characterizations of the deal had been part of the owners’ arguments to the court as their attorney claimed they did not have to meet the terms of the 2021 contract.
France did not agree. The owners “entered into their agreement and the Defendant refused to fulfill its end of its part of the bargain. The contract is in no way illusory or unconscionable,” he ruled, especially since the terms of the contract had been clear.
The motel at 2251 S Old Dixie Highway has been decaying for a decade and a half. The county declared the property a nuisance a few years ago, when it was collecting graffiti, vandals and errant acts of desperation. The new owners cleaned up the ground of its most obvious debris and fenced in the property, but have yet to give the county building plans for the new hotel.
A few months ago the county issued a demolition order. The owners contested it before a magistrate earlier this month and won a delay: the demolition would be too drastic a move at this point, the magistrate ruled, finding enough room for the owners to try again. But the permission is not open-ended: the magistrate invited the county to renew its case for demolition at a later date, if nothing changes. That demolition order was not part of today’s court ruling, except as a peripheral fact the owners’ attorney mentioned to France during the hearing.
“We’re ver pleased with the judicial outcome. We do believe the judge’s order is correct, and we will proceed accordingly,” County Attorney Al Hadeed said this afternoon. Assistant County Attorney Sean Moylan had handled the case, though the summary judgment motion was argued for the county by Abraham McKinnon.
“It is not a surprise from the standpoint of the law and the facts that we were able to establish through the factual discovery process,” Hadeed said. “The value of the court’s opinion is that the judge fully understood the context of the dispute and the relationship of this development group to the long saga that is the Old Dixe Motel. He understood that they were sophisticated investors, they had the opportunity to not do the deal, they did the deal knowingly in exchange for our forbearance on pending cases that we had filed, specifically the public nuisance cases. The judge did not make reference, explicitly anyway, to the additional property that they purchased in the immediate vicinity of the hotel, which clearly suggests to the casual observer that they could afford the deposit. So there was a bit of an incongruity” between the owners’ implicit claim of poverty and the facts on the literal ground.
There is a continuing incongruity between the lack of noticeable work on the property and the more noticeable, and expensive, counteractions in court and before a local magistrate.
If the owners don’t pay in 10 calendar days–not 10 working days–“we will petition the court to take action to compel the payment, to impose sanctions,” Hadeed said. “We have some discretion on how to apply those funds, including to offset the cost of demolition.”
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