Mediation session does not resolve city’s suit against The Oread hotel; judge orders second session

A second mediation session has been ordered in a lawsuit filed by the City of Lawrence against developers of The Oread hotel.

The order for the mediation session was filed in federal court Wednesday, and will be the second between attorneys representing the city and the hotel.

Attorney Brad Russell, who is representing the city, said via email that the first mediation session didn’t resolve the case, but that city officials understand the court’s order to continue mediation and intend to follow it.

“This a complicated matter with many issues,” Russell wrote. “The initial mediation did not resolve all the issues dividing the parties. The Court has directed the parties to continue the mediation to see if the parties can in fact reach a tentative agreement on matters.”

On Nov. 16, the city filed a lawsuit alleging that Oread hotel developer Thomas Fritzel engaged in a fraudulent scheme to generate undue tax rebates from the city. The lawsuit alleges that Fritzel used other companies he controlled to record false retail sales at the hotel for the purpose of collecting additional rebates.

The lawsuit is filed against Fritzel, Oread Wholesale, Oread Inn, DFC Company of Lawrence, as well as any other individuals who may have aided in the alleged scheme. The lawsuit seeks to recoup more than $400,000 in monetary damages and to terminate the multimillion-dollar incentive agreement the city made with The Oread hotel, 1200 Oread Ave.

The mediation order, issued by Judge Gwynne E. Birzer, stated that all parties and their attorneys shall appear at the scheduled mediation, including the city manager and representation of the Lawrence City Commission.

Russell said that according to the City Commission’s regular procedures, any final agreement reached via mediation would also be subject to approval by the governing body in a public meeting. If mediation does not result in a resolution or the commission does not approve the resolution, the case will proceed through the litigation process, he said.

Attorneys representing Fritzel could not be immediately reached for comment.

The judge ordered the second mediation to be held at the U.S. Courthouse in Topeka, and for attorneys to notify the court of the date agreed upon for the mediation by Friday.