Wewa hires bankruptcy lawyer amid fire house litigation

After the former contractor for Wewahitchka’s new fire station filed for bankruptcy last month, the city has hired a bankruptcy attorney to represent them in pending litigation between them and the contractor.

The decision came at the recommendation of the city’s attorney, Michelle Jordan, who said that she did not have the expertise to represent the city in matters related to the bankruptcy.

“This is problematic for the city because the bankruptcy court will now take jurisdiction over our litigation against Tommy (Hamm) and Tommy versus the city, and to some extent down to our claim with the surety,” Jordan told the commissioners. “I don’t practice in bankruptcy… and so you need specialized counsel for that.”

“We don’t have any choice about being subject to the bankruptcy court’s jurisdiction.”

Winterfell Construction, the former contractor for Wewahitchka’s new fire station filed for chapter 11 bankruptcy amidst complex litigation and already lengthy delays surrounding the project.

The company’s owners, Bay County Commissioner Tommy Hamm and his wife, Jamie Hamm, also filed for chapter 11 personal bankruptcy in the North Florida District Bankruptcy Court on Jan. 31.

U.S. statute automatically halts most civil lawsuits when an involved party files for bankruptcy. 

The automatic stay stops creditors from continuing their collection actions against the debtor. This includes stopping their attempts to get a money judgment in a civil lawsuit pending against the debtor.

This statute applies to several pending lawsuits regarding Wewahitchka’s fire station.

“Are we going to be able to recoup this money if we win the lawsuit?” Asked Wewahitchka Mayor Phillip Gaskin on Feb. 23.

“You should be able to. A chapter 11 is a reorganization of debt,” Jordan responded. “If it were a chapter 7, I would say no, there’s no chance, but I do anticipate you will still be able to collect your fee. It’s just going to be on a payment plan.”

“… Another question — how long is this going to take?” Gaskin asked.

“A long time,” Jordan said.

But even prior to the bankruptcy filings, the project was likely to be tied up in litigation for quite some time.

Starting with the termination of Winterfell as the project’s contractor in January, 2022, the fire station project has become embedded in a complex web of lawsuits involving the city, the contractor and the company acting as the surety over the project, the Fair American Insurance and Reinsurance Company. 

In April of 2022, Winterfell sued the city for breach of contract in Bay County court. Wewahitchka counter-sued.

In late 2022, FAIRCO filed lawsuits against Winterfell and Wewahitchka in the United States District Court North Florida Division, seeking to have the contractor pay the collateral due in the sum of $460,000 and a declaratory judgment in disputes between the surety and city.

According to Hamm, these legal complications contributed significantly to his decision to file for bankruptcy.

“My business remains embroiled in a contentious legal dispute with both the city of Wewahitchka and the bond company on a fire station project for which I was wrongfully terminated in 2022,” read a statement from Hamm last month.

“Despite my multiple efforts to reach a settlement with creditors, I have been forced to make the difficult business decision to enter into a strategic, reorganizational bankruptcy. At the end of the day, the best interests of my family and employees must always come first.”

The Hamms’ bankruptcy filing cited an “unknown” amount of debt being owed to the fire station’s surety for a “possible personal guarantee for obligations incurred by Winterfell Construction INC.” It also lists potential debts to attorney Mitch Dever, who is representing Winterfell in cases involving the fire house.

But these listings are among several others not relating to the fire station, which make up the majority of the company and owners’ suggested liabilities.

At the Feb. 23 meeting, the commissioners also asked Jordan whether there would be legal ramifications to moving forward with the fire station’s construction amidst the lawsuits.

“What are the repercussions of us going ahead and rebuilding the fire station?” Gaskin asked Jordan.

“There are serious consequences to violating the bankruptcy court’s stay on these,” Jordan responded.

County Administrator Michael Hammond, who was present at the Feb. 23 meeting, offered the county’s assistance in loaning the city the money required to finish the project, interest free, should that be a viable option for the city.

No final decisions were made regarding future steps during the meeting.

Wewahitchka’s legal counsel in proceedings dealing with Winterfell and the Hamms’ bankruptcy filings will be provided by Clark Partington, a law firm out of Tallahassee and Pensacola.