City to sue Hotel Marysville owners as dispute continues over landmark destroyed by fire

The city of Marysville plans to sue the owners of Hotel Marysville to reclaim money city officials say was lost after fire destroyed the shuttered downtown landmark , including the potential cost of demolishing the building.

The decision comes amid an ongoing dispute between the city and the Feather River Plaza LLC, which owns the historic Marysville property, that has continued for more than four months.

Mayor Chris Branscum said the lawsuit, which City Council members decided to pursue during a closed session meeting Tuesday night, enables the city to reclaim dollars it lost in the aftermath of a June 15 blaze that destroyed the historic building, which had been out of use for decades.

He said that the city has “six-figure” damages to claim and could also seek the cost of demolishing the hotel, if the city ultimately tears it down. Demolition has been estimated to cost about $3 million.

The lawsuit could also serve as a bargaining chip to incentivize hotel owners to settle a deal with the city.

“It’s a significant event in the problems the city’s been having with the owner of the hotel,” Branscum said of the lawsuit. “We’re hoping that leads the owner of the hotel to come to the table and do something meaningful so we can resolve this problem.”

Imminent threat to public

By seeking damages, Branscum said, the lawsuit may compel discovery, a legal exchange of information before a case goes to trial. Hotel owners, through their LLC, have financial protections that Branscum said the city hopes to break through with its new lawsuit, targeting the people behind the company directly.

“This is a situation where you have a naked asset,” Branscum said. “When I say naked asset, I mean undercapitalized, no insurance, basically an asset sitting by itself in a shell company and hoping for the protection from liability, and is susceptible to the liability veil being pierced.”

The proposed lawsuit comes after a 10-day window closed for hotel owners to prove their plans to demolish what’s left of the building, in compliance with a decision handed down earlier this month by a panel of building experts. It sided with the city in an ongoing dispute that escalated between the two sides in the aftermath of the fire.

The condition of the building made it a public nuisance, the panel found, and presented an imminent threat to the public and nearby properties. The city has raised concerns about the stability of the building, the presence of asbestos and its ongoing effects on downtown Marysville.

A section of northbound lanes on E Street , a main thoroughfare through town, and a section of Fifth Street bordering the hotel have been closed due to safety concerns, causing traffic back-ups, particularly for people driving north into town from Highway 70.

The panel gave ownership 10 days to prove it would demolish the building, 20 days to appeal its decision and 60 days to tear the building down. Branscum said that the city has not heard from hotel ownership since the panel’s decision.

“They’ve been radio silent which is consistent with the delay tactic,” he said.

Attorneys for Feather River Plaza LLC did not respond to a request for comment by the time of publication.

Demolition on the horizon?

The panel shifting responsibility for the building’s demolition to hotel ownership came after a Yuba County judge in July denied the city’s request to declare an emergency and approve a warrant, which would have allowed it to knock down the hotel without the owner’s permission.

Hotel ownership’s lawyers have claimed that city officials have stood in the way of solving problems related to the hotel and accused them of harassment, according to a September news release , which came out days before the panel’s decision.

The lawyers claimed the city had demanded ownership fix cited problems while standing in the way of its attempts to make repairs, and included an alternative timeline of events between the city and ownership dating back to the time of the fire.

The panel’s decision gave the city the right to demolish the hotel and post the cost to do so as a property lien, if its owners don’t comply with the order. But city officials have not said whether they intend to knock down the building. The new lawsuit could give the city a more direct path to reclaiming demolition costs by claiming them as damages.

“It’s inequitable for another person to have to bear the burden of the problems associated with that company,” Branscum said. “We will discover who the owners of the property are, the history of the owners, financial history. It can be a complicated, expensive lawsuit or they can come to the table and we can work something out that’s beneficial to the city of Marysville.”