Wewhitchka to attempt mediation in complex fire station litigation

The city of Wewahitchka has once again scheduled mediation in lawsuits surrounding their incomplete fire station after months of delay due to the complexities of a multi-faceted year-long legal battle between the city, the bonding company, and the fire station’s former contractor, Winterfell Construction, Inc.

According to Wewahitchka City Attorney Michelle Jordan, mediation has been scheduled for late August, nine months after the parties’ last attempt to meet over several lawsuits surrounding the project.

“We have mediation scheduled for August 24 and 25,” Jordan told the city commissioners at their June 22 meeting. “It will be in Panama City as well as some folks will be attending by Zoom.”

“It’s everybody involved, except, I think, you guys, who can’t all be there since it’s not a publicly noticed meeting.”

Mayor Philip Gaskin stated that he would be attending, along with City Manager Michael Gortman.

Previous attempts at mediation were derailed in January after it was discovered that Winterfell had not been informed and would not be participating. Shortly afterward, Bay County Commissioner Tommy Hamm, who owns Winterfell Construction, filed for chapter 11 business and personal bankruptcy.

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 applied to several pending lawsuits regarding Wewahitchka’s fire station, which had already been drawn out for about a year.

“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 in February.

“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.”

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, citing concerns with the quality of the fire station’s construction.

In late October, FAIRCO filed a lawsuit against Winterfell in the United States District Court North Florida Division seeking to have the contractor pay the collateral due in the sum of $460,000. 

On Nov.11, Wewahitchka sent a formal notice of default to FAIRCO, claiming that all conditions to trigger FAIRCO’s action on the bond had been met by the city at that time.

It laid out the city’s intent to legally declare FAIRCO in default of the bond should action not be taken by the bonding company to uphold the bond. According to Jordan, these efforts were suspended in order that the parties might come together for mediation.

FAIRCO then filed a federal lawsuit seeking a declaratory judgment in its dispute with the city before Winterfell ultimately filed for bankruptcy.

Delays caused by these legal complications have led the city to seek extensions for the grant funding they have been awarded for the fire station’s construction through the Federal Emergency management Agency. 

The city also sought state appropriations for the project from the 2023-24 budget, which were approved by the state legislature and governor and will go into effect on July 1.

The $1 million Wewahitchka will receive from the state will allow them to proceed with the construction of a new fire station outside of the existing legal complications.