Jury Rules That Owner Of Historic NC Inn Set Fire

5:14 PM, Dec 23, 2012   |    comments
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Asheville, NC -- A federal jury ruled that the former owner of the Richmond Hill Inn participated in the intentional burning of the historic structure nearly four years ago, according to News 2's sister newspaper the Asheville Citizen-Times

The judgment in a lawsuit means the ownership group, The Hammocks LLC, won't be able to collect on a $6 million insurance policy taken out on the property overlooking the French Broad River.

U.S. District Court Judge Martin Reidinger also ruled this month the company must pay the legal bills incurred by Harleysville Mutual Insurance Co. in fighting the suit.

The mansion, once the home of former congressman and ambassador Richmond Pearson, was destroyed on March 19, 2009, in a fire set by an arsonist, according to investigators.

Harleysville refused to pay the insurance claim, prompting The Hammocks to sue for breach of contract. The insurance company countersued, claiming the owners violated the terms of the policy.

A jury found at the conclusion of a trial in Asheville that The Hammocks was responsible for setting the fire. It also found the company did not willfully make false representations on its insurance policy application.

"Based on the foregoing facts as found by the jury," Reidinger wrote in his ruling, "the court concludes as a matter of law that the defendant has no duty to provide coverage for the claim of loss tendered by the plaintiff and that the insurance policy at issue is null and void, under the terms and conditions of the policy, as a result of the plaintiff's intentional participation of the burning of the insured property."

William Gray, managing member of The Hammocks, declined to comment on the ruling.

While investigators determined the fire that destroyed the inn was intentionally set, no arrests have been made in the case.

The property was in foreclosure at the time of the blaze, and investigators said the sprinkler system had been turned off and they found evidence that a petroleum product was used to start the fire.

Buddy Thompson of the Asheville-Buncombe Arson Task Force said he doesn't know if there ever will be an arrest.

"All of our leads have been run at this point," he said. "We really have nothing else to go on unless someone comes up with some new information."

Thompson said the jury's conclusion in the civil trial doesn't mean there's enough evidence to bring criminal charges.

"There's a difference in the way that evidence is looked at in a civil and a criminal case," he said. "In a civil trial it's the preponderance of the evidence. In a criminal trial you have to find guilt beyond a reasonable doubt."

Three days before the fire, Buncombe County officials finalized the property's foreclosure and set the auction for a month later.

Harleysville's claim stated it wouldn't pay for "loss caused by or resulting from criminal, fraudulent, dishonest or illegal acts committed alone or in collusion with another."

The insurance company maintained that the inn was closed at the time of the fire and that Gray was the only person on the grounds that evening.

Gray said in a deposition that he didn't cause the fire or instruct anyone to set it. He told the Citizen-Times in 2010 that he believes former employees set the fire.

The lawsuit also claimed the insurance policy should be voided because the application didn't disclose allegations of sexual abuse.

Gray, a child psychiatrist, entered into an agreement in 1993 in Virginia in which he agreed to surrender his medical license in exchange for prosecutors dropping charges of sodomy and sexually abusing young men and patients.

That same year the Virginia Board of Medicine revoked Gray's license, finding that he had "unethically exploited the physician/patient relationship by engaging in sexual activities with patients" and had traded housing, food, money and transportation for sexual favors. At the time Gray said the charges were a conspiracy by a group of boys from dysfunctional families.

"Had Harleysville known the truth about the claims for sexual misconduct against The Hammocks' managing member, it would not have accepted the risk on the same terms as it did, if at all," the company said in a court filing.

The Hammocks bought the inn in 2005 from Albert and Marge Michel, of Guilford County, for $10.2 million.

The Michels had owned the property since 1986 and restored the mansion, which housed the four-star Gabrielle's restaurant and 12 guest rooms. They added a lower garden and more buildings to house guest rooms and another restaurant.

The Michels owner-financed the sale, but Gray failed to pay most of the debt, so they began foreclosure proceedings.

Oshun Mountain Sanctuary Inc. bought the property last year for $4.5 million. The nonprofit group plans to develop it into a wellness center.

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