News Kenilworth Lodge embroiled in another lawsuit By MARC VALERO Staff Writer Jul 11, 2024 The Kenilworth Lodge in Sebring is at the center of another lawsuit filed by a former owner against two current owners and a third purported owner of the historic hotel that has been closed since 2016. The hotel and parties related to it were in a lengthy legal battle after a lawsuit was filed in 2014 by a bank that claimed two loans were in default and that it was entitled to a judgment foreclosure on two mortgage agreements. The lawsuit was dismissed in January concerning two defendants and dismissed in February for the remaining defendants. But, former owner Mark Stewart, through his attorney, filed a lawsuit on March 27 that was refiled on June 20. Stewart’s complaint, termed a “shareholder derivation action” includes 75 pages and names the defendants as Monier Rahall, Paula Rush and Robert Mueller. Stewart’s complaint states this action is centered around the efforts of the defendants to take over ownership of the historic Kenilworth Lodge following a lengthy and multi-faceted saga that has left the hotel in abject condition. With many promises broken, Rahall and Mueller acquired control of the hotel. The complaint provides a history of Mark and Madge Stewart’s involvement with the hotel starting in 1985 when they were employed by the Wohl family who owned the hotel at that time. By 2009 a combination of unfortunate events, including the recession, impacted the Stewarts and their ability to continue their “transformative project” for the hotel, according to the complaint. In 2009, Mueller and Rahall became involved with the hotel with Rahall being an investor. Stewart’s complaint states, “For his own lucre, Rahall bilked the Stewarts, and then proceeded to self-deal with the goal of obtaining full ownership of the hotel.” “Mueller breached his fiduciary duties by engaging in mismanagement and corporate waste of Kenilworth,” according to the complaint. The complaint claims that Rahall and Mueller wrongfully ejected Mark Stewart from management and terminated him from the hotel, installing Max, Mueller’s son. Rahall and Mueller prevented a sale of the hotel for $1.4 million that would have cleared over $900,000 to pay all debts of the going concern, the complaint states. Also, the complaint states that although Stewart initially believed “Rush’s involvement was limited to doctoring the audits of Kenilworth to hide Rahall’s misconduct, it has since been revealed that Rush is apparently a representative and/or corporate officer of Kenilworth.”On Tuesday, Rush informed Highlands News-Sun that she was a corporate officer during the foreclosure litigation, and has not been an officer since 2020. “I was hired for the sole purpose of attempting to save the Hotel from foreclosure and fight for the insurance proceeds, which were never turned over by the bank,” she said. On May 22, related to the first filing of the lawsuit, Rush filed a motion to dismiss the complaint. She stated none of the alleged acts occurred during the time she was associated in any way with the Hotel of Kenilworth Properties, Inc. “The complaint is essentially a lengthy sad story detailing the business failures of Mark Stewart and Madge Stewart. Funny enough, it is that story that proves they purchased the hotel in 1995, failed at running it and making it profitable, ran out of their own money, borrowed money, borrowed more money and finally sought out and took in investors,” Rush stated. After Rahall saved the hotel, and is moving forward to reopen it, and 15 years after events complained of, plaintiffs bring this lawsuit making wild allegations of fraud and contract claims based on purported oral agreement that they claim was breached 15 years ago, she stated in motion to dismiss. Kenilworth Properties, LLC and Muller filed a motion April 19, related to the first lawsuit, to “strike verified complaint and/or portions of the verified complaint. The motion states in part, “The so-called verified complaint is not a legal document, although it contends to assert causes of action from 2009. The ‘narrative’ is written as though it is a cheap novel ... Nor are 90% of the allegations related to a specific cause of action. “The plain fact of the matter is, all this occurred many, many years ago far before any claim would be actionable, and the plaintiffs failed to anti-up any money towards the Kenilworth Hotel and its expenses since the 2009 meltdown.” Rahall’s motion to dismiss and strike was filed April 26 concerning the first lawsuit filed by the Stewarts. The motion states, Rahall moves to dismiss the complaint and to strike the wholly unrelated allegations of ancient history, non-existent bankruptcies and bankruptcy proceedings for Kenilworth Properties, Inc. and the multi-sentenced paragraphs. Rahall’s motion references the TD Bank versus Kenilworth and Stewarts foreclosure litigation. “During the entire tenure of the foreclosure, at no time did the Stewarts contend that they had an ownership interest or that there were any problems or complaints with Kenilworth or the defendant named in this case. “The foreclosure went on for 10 years before being resolved and now the hotel is poised to be reopened after absolutely no contribution and refusal to do so by the Stewarts for 14 years, this lawsuit was filed out of the blue by attorney John Anthony [Tampa].” Judge Peter Estrada is presiding over the litigation in the 10th Circuit Court, Highlands County.
