Judge loosens resort’s grip on motel

Signs for the Lake Side Motel and Adirondack Motel are seen in May on Lake Flower Avenue on Saranac Lake. A third motel in this row, the Lake Flower Inn, is just past the Adirondack Motel. Developers plan to buy the three motels and demolish them to make room for the Lake Flower Resort. (Enterprise photo — Chris Knight)

SARANAC LAKE — A judge has thrown out a preliminary injunction that prevented Lake Side Motel owner David Manning from selling his property to anyone else while a lawsuit filed against him by Saranac Lake Resort LLC is pending.

However, the developers say they still have control of Manning’s property as the lawsuit moves forward.

Essex County State Supreme Court Justice Martin Auffredou issued an order Wednesday vacating the injunction and a preliminary restraining order against Manning. It was done at the request of resort attorney Matt Norfolk of Lake Placid, after the resort failed to post a six-figure guarantee, representing the amount Manning is due under his contract with Saranac Lake Resort LLC.

The Lake Side Motel is one of three Lake Flower Avenue motels that have been under contract to be sold to the developers since fall 2015. Saranac Lake Resort LLC plans to demolish all three motels to make way for its Lake Flower Resort and Spa, a proposed 90-room, four-story hotel with a spa, conference center and two restaurants.

Manning terminated his contract May 1 when the developers failed to close on the sale of the property, after previously granting the developers three extensions. Manning’s lawyer, Jim Brooks of Lake Placid, has said his client is frustrated with the repeated extensions the developers have asked for and has questioned their wherewithal and willingness to complete the resort project.

The resort is suing Manning for breach of contract in an effort to keep the project alive. Norfolk has said Manning had no right to terminate the contract because he didn’t have clear title to the property and hadn’t made it available for inspection, among other things. If Manning is allowed to sell to someone else, Norfolk has said his clients would lose thousands of dollars they’ve invested in developing the project, including $90,000 paid to Manning over the past year to maintain the deal.

Last month, Auffredou blocked Manning from selling his property while the lawsuit is pending. He said there’s a danger of “irreparable damage” to the resort developers if he doesn’t issue a temporary injunction.

However, the judge also ordered Saranac Lake Resort to post a $545,669 “undertaking” within 10 days of his decision, and that didn’t happen.

“Mr. Norfolk’s client did not come up with the money,” Brooks said Thursday.

He said the fact that the developers didn’t post the guarantee raises questions about their finances and ability to close the deal with the motel owners.

“(Manning) is very disappointed but not surprised that the money didn’t get put up,” he said. “If you’ve read our court papers, we have different thoughts about the bona fides of this entity.”

Norfolk rejected the claim that his clients don’t have the money to carry through with the project.

“Frankly, it makes no sense to suggest a lack of funding when they have been making payments to Mr. Manning over the past year and a half or more, have invested substantial sums of money to get the project approved and Saranac Lake Resort LLC could walk away from this deal at any time, for any or no reason,” Norfolk wrote in an email.

Norfolk said the resort’s purchase of the motel property is still secured through a “notice of pendency” he filed in Essex County on behalf of Saranac Lake Resort. Norfolk said the judge’s order to vacate the preliminary injunction was made at his request “in light of the fact that my client would not be making an undertaking.

“Mr. Manning did not successfully petition or move the Court for such relief,” Norfolk wrote. “In the main, my client commenced the pending lawsuit to nullify Mr. Manning’s attempt to terminate the purchase and sale contract prematurely. At this juncture, Saranac Lake Resort LLC needs to be permitted to conduct a complete environmental inspection of Mr. Manning’s property to address its concerns and the title to the property must be free from defects and marketable before the parties may move forward to a closing.”

Brooks said a court conference is the next step in the lawsuit, but a date for it hasn’t been scheduled yet.

The resort plan gained village Planning Board approval in July 2016 and state Adirondack Park Agency approval in February of this year, but there’s been no groundbreaking on the project yet. It’s the subject of a separate lawsuit Roedel Companies, which owns the Hotel Saranac, has filed against the village Planning Board, now called the Development Board, over its approval of the project.