A $5 million lawsuit against the real owners of the hotel

The city of Marysville is seeking $5 million from the member-owners of a limited liability company that failed to maintain or demolish a fire-damaged Marysville hotel.

In the lawsuit, which also seeks an injunction against the owners from demolishing the hotel, the city of Marysville says owner-members of Feather River LLC can’t hide behind the protections typically afforded limited liability companies.

The lawsuit was filed in Yuba County Superior Court on Tuesday against Feather River LLC and Does 1-100. The city will provide the names of the “Activists” when they are known during the discovery process, the lawsuit states.

“Each owner of real property, and each occupant, tenant, property manager or owner of any interest in the property, shall maintain his property so as not to violate the (City of Marysville) Nuisance Abatement Code,” the lawsuit states. .

“(The city) has incurred nuisance abatement costs to date … and will continue to incur such costs totaling $5 million,” the lawsuit states.

The lawsuit alleges that there is no separation between the limited liability company and the owners, that there is a unity of interest between the company and the individual owners.

“Upholding the fiction of the separate existence of Feather River Plaza LLC as a legal entity distinct from (participating owners) would allow an abuse of the limited liability partnership privilege and would permit sanctions for fraud and would promote injustice in that . . . property is encapsulated into a limited liability company which was initially undercapitalized/undercapitalized apart from the purchase price and remains undercapitalized/undercapitalized, without insurance or other provisions for its operation or management and without provision of cover for foreseeable risks such as fire occurring … destroying the roof and most of the interior structure of the Marysville Hotel…”, the lawsuit states.

“Defendants made no commitment to rehabilitate or demolish Hotel Marysville and appear to have employed delaying tactics in hopes that a third party (including (the city)) would obtain title to the property,” the suit continues.

The lawsuit said the panel found the hotel owners had not acted in good faith in delaying the sending of correction notices, violation notices and penalty notices.

Mayor Chris Branskam announced last week that the city intends to file a lawsuit in an attempt to break through the veil of protection from personal liability typically afforded to member-owners of a limited liability corporation.

A fire on June 15 destroyed the roof and damaged the integrity of the structure. The northbound lanes of Highway 70 in front of the hotel were closed after the fire, as officials fear the building could collapse.

Attempts to reach attorney Dan Katz, who says he represents the original owners, were unsuccessful Friday. He previously stated that the hotel owners had no comment. He also declined multiple requests from the Appeal-Democrat to identify who the real owners are.