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No sale in sight for Grand Palace

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Posted: Friday, October 5, 2012 2:27 pm

Ongoing litigation continues to halt the marketing effort of Branson’s largest theater, and a recent lawsuit against the owners could prolong the issue.

The Grand Palace, the 3,800-seat theater the Federal Deposit Insurance Corporation acquired through foreclosure last year, is in a continuing legal battle with a former manager of the property, Paul Dunn.

Greg Hernandez, spokesman for the FDIC, has previously said they are waiting for ongoing lien issues to be resolved before they actively market the theater.

Additionally, Dunn filed a counterclaim against the FDIC in May, claiming fraud and negligence. He claims the FDIC knowingly allowed him to front the initial cost of repairs following a storm and then intercepted the insurance money, which Dunn says was supposed to go to him based on a lease agreement.

According to the complaint, Dunn claims he was given approval to initiate repair work in 2010, with the understanding he would be reimbursed when the insurance money arrived.

However, Dunn claims the insurance money was instead used by the FDIC toward payment of defaulted loans in the name of the previous owner, Hall Entertainment LLC, knowing they would foreclose in 2011.

“The FDIC used their position to conspire fraud in the attempt to better the marketing position of The Grand Palace by using Paul M. Dunn to increase the value and appearance of the facility in renovation and repairing the vandalized, storm-damaged facility,” the complaint states. “The FDIC should not be held immune from the suit of damages for the misuse of Constitutional powers awarded this government arm.”

Also, Dunn argues the FDIC should never have allowed a lease agreement between himself and Hall knowing the mortgage notes were in multiple-year default.

Dunn is seeking damages “no less than $10 million” on each of 12 counts.

Dunn is known, in part, for an attempt to bring performer Nelly to The Grand Palace in 2010.

Nelly performed at The Mansion Theatre instead.

The FDIC, however, claims Dunn had no legal lease to the theater and continued to occupy the property after the foreclosure sale.

The organization filed a lawsuit in October 2011 along those lines, naming Dunn, Hall Entertainment and others.

A notice dated Sept. 12, 2011, from attorneys representing the FDIC to Dunn, demanded Dunn terminate tenancy by Sept. 22, 2011.

“The decision of my client is final,” the letter reads. “You should make plans to restore possession of the property to my client by completely removing your personal property and delivering possession.”

Similar letters were sent to Hall Entertainment and Branson Theater, a limited partnership.

A bench trial is scheduled in the case for Feb. 19, 2013.

The theater is currently on the multi-list system, with a $5,362,500 price tag for which there are no current bids, Hernandez said.

The Palace was founded by the Herschend Family Entertainment Corporation in 1992. It hosted some of the biggest names in the music industry, including Kenny Rogers, Glen Campbell, George Jones, and Barbara and Louise Mandrell.

The theater closed in 2008 and went up for sale on the steps of the Taney County Courthouse in June 2011. The only bidder, Kingdom Wealth Builders LLC, offered $5.4 million for the property, but failed to close on the sale.

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