BAY COUNTY, Fla. (The Port St. Joe Star) — The former contractor for Wewahitchka’s new fire station has filed for bankruptcy amidst complex litigation and already lengthy delays surrounding the project.
Winterfell Construction Inc. and its owners, Bay County Commissioner Tommy Hamm and his wife, Jamie Hamm, filed for chapter 11 bankruptcy in the North Florida District Bankruptcy Court on Jan. 31.
“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,” Hamm said in a statement. “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 move has the potential to create further delays in lawsuits involving the city, the contractor and the surety for the fire station.
“Relief was ordered on January 31, 2023,” reads a suggestion of bankruptcy filed in a pending cases involving the contractor and city.
“WHEREFORE, the defendant (Winterfell) suggests that this action has been stayed by the operation of 11 U.S.C. § 362.”
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, which make up the majority of the company and owners’ suggested liabilities.
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. But even prior to the bankruptcy filings, the project was likely to be tied up in litigation for quite some time.
“The Decision to file for Bankruptcy relief is not one that is made lightly. For the Hamms and their business, it was the result of mounting costs from litigious creditors who were burdening them to the point that reorganization became the only feasible way to ensure creditors received what they were legally entitled to, while also allowing the Hamms to continue to provide for their family and their community,” wrote Hamm’s attorney, Michael Wynn, in a statement.
Lawsuits lead to potentially lengthy delays
“Based on these estimations that are being laid out for how long we are going to be in litigation, … you all need to prepare to deal with the fire station on your own,” Wewahitchka’s attorney, Michelle Jordan, told the city commissioners at their Jan. 26 regular session meeting.
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 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, which they had not received as of Nov. 29.
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.
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.
As of now, FEMA has granted an extension through October.
“I think they’ll extend the timeframe if we show that we’re actually doing something. FEMA’s not going to just wait around and let us litigate this for years,” Jordan said.
City seeks out alternatives to fund construction
At the Wewahitchka City Commissioners’ Jan. 26 meeting, the city commissioners unanimously voted to seek appropriations from the state legislature to help fund the fire station project.
The city’s move comes after City Attorney Michelle Jordan informed the commissioners that the city would no longer be participating in mediation with two other involved parties.
According to Jordan, the mediation was terminated after the city learned that not all involved parties had been invited to the table.
“I learned when I had reached out to one of Tommy Hamm’s attorneys about addressing a specific issue at mediation that the attorney for the bond company had cut out Tommy and his two attorneys and had not even coordinated with (City Engineer) Jack (Husband)’s attorney on what was supposed to be global mediation,” she told the commissioners.
“We declined to participate further if the mediation was just going to be with the surety.”
Wewahitchka’s mayor, Philip Gaskin, stated that he would oppose any further attempts towards mediation.
“We will not be doing any mediation,” he said.
The city and surety have struggled to find an engineering firm willing to take on the redesign of the fire station, according to Jordan. Down the line, the city anticipates it will be difficult to secure a contractor to finish the building’s construction.
“We have to prepare for what is our worst case scenario, which is that the building has to come down because we can’t get people to work on the building,” she told the commissioners.”You all don’t have the money to build this fire station on your own. That’s why it was funded through grant money in the first place.”
“The grant money that you have is tied up in litigation. You have to find another mechanism to fund your worst-case scenario.