Though it lost a federal court case over almost a half million dollars in insurance proceeds, the former operator of Conneaut Lake Park's Beach Club night club now is suing the park's Trustees in county court to recoup the money.

Last May, Park Restoration LLC, the former operator of the Beach Club, lost on appeal a U.S. District Court case that awarded $478,260.75 in fire insurance proceeds to pay back real estate taxes, interest and penalties Trustees owed on the Beach Club property. Trustees is the nonprofit corporation that oversees the amusement park's operations.

Park Restoration operated the night club under a long-term lease with Trustees since 2008, but the Beach Club was destroyed in an Aug. 1, 2013, fire. Park Restoration had paid for a fire insurance policy on the Beach Club, even though it didn’t own the property.

A 3-0 ruling by the federal appeals court ruling found that under Pennsylvania law, the taxing authorities have first claim to the insurance money if taxes are owed.

While the money first went to Conneaut School District, Crawford County and the townships of Summit and Sadsbury townships to pay delinquent real estate taxes, the appeals court's ruling also didn't stop Park Restoration from "seeking an accounting or any other equitable relief in the future."

In a new lawsuit filed with Crawford County Court of Common Pleas, Park Restoration LLC claims Trustees of Conneaut Lake Park was "unjustly enriched" at Park Restoration's expense when the U.S. Third Circuit Court of Appeals ruled fire insurance proceeds were to pay off the delinquent tax debt on the Beach Club.

"It would be inequitable, unjust and contrary to public policy for the Trustees to escape responsibility for their real estate taxes and to retain the benefit of the payment of its delinquent real estate taxes by PRL (Park Restoration LLC)," the suit claims.

The suit claims Park Restoration didn't own the Beach Club and had no obligation to pay real estate taxes on it; that since 1996 Trustees failed to pay property taxes a 55.33 acre parcel on Conneaut Lake, not just the Beach Club's approximate one acre portion of it; Trustees failed to maintain fire insurance on the Beach Club under terms of its mortgage; and Park Restoration should receive fire insurance proceeds that were used to pay the Trustees’ delinquent real estate taxes.

The suit also wants indemnity, or protection from loss, from Trustees "to prevent injustice because PRL's (Park Restoration LLC's) insurance policy proceeds were taken by operation of law to pay the Trustees' delinquent real estate taxes."

In a statement to the Tribune, John Mizner, Park Restoration's attorney, said, if Trustees had kept taxes current, the proceeds from the fire insurance that Park Restoration had paid to protect the Beach Club never would have been seized.

"Because of the Trustees' shocking disregard for their obligations towards Conneaut Lake Park, Park Restoration has lost hundreds of thousands of dollars and is out of business," Mizner said. "Now, it merely seeks to recover its own insurance proceeds, which were taken to pay the Trustees’ 17-year-old tax bill."

Jim Becker, executive director of Trustees of Conneaut Lake Park, said late Monday afternoon he was unaware of Park Restoration's filing and declined comment.

Tribune calls late Monday afternoon to John Swick, Trustees' attorney, were not returned.

The initial legal fight between Park Restoration and Trustees over the Beach Club fire insurance proceeds goes back more than two years within the federal court system.

In January 2016, Park Restoration filed suit against Trustees in U.S. District Court for Western Pennsylvania to appeal a previous U.S. Bankruptcy Court for Western Pennsylvania ruling on the $611,000 insurance settlement.

Bankruptcy court awarded $478,260.75 to the school district, county and two townships for past real estate taxes and interest and penalties Trustees owed on the Beach Club property and the remaining $132,739.25 to Park Restoration LLC.

A federal District Court judge ruled Park Restoration should get all $611,000, but the school district, county and townships then appealed that ruling to the U.S. Third Circuit Court of Appeals. The federal appeals court ruled 3-0 in May 2017 that the school district, county and two townships had first claim to the money because of the back taxes owed to them.

No date in court has been set for the lawsuit.

Keith Gushard can be reached at 724-6370 or by email at kgushard@meadvilletribune.com.

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