Rehoboth Grand hotel tied up in suits

A four-story, 90-room hotel proposed for the corner of Rehoboth Avenue and State Road in Rehoboth has hit a significant roadblock.

The property owner has filed a complaint against the developer claiming breach of contract, while the developer, Milton-based Limitless Development Construction Consulting, has filed a counterclaim accusing the property owner, J.J. Stein III Inc., of tortious interference with contracts.

Limitless Development, a 99-year-lease holder on the property at 33 Rehoboth Ave., unveiled the plans for Rehoboth Grand during a planning commission meeting Jan. 11. In addition to four stories and 90 rooms, the company has proposed an indoor pool, underground parking, and retail and spa space on the ground floor.

The property is split-zoned – 23,067 square feet of C-1 commercial along Rehoboth Avenue and 19,425 square feet of R-1 residential along State Road. The State Road portion of the property is currently a parking lot. There would be a total of 92 parking spaces, 48 underground, below the hotel, and 44 above ground, where the current parking lot is now located. The height would be slightly more than 41 feet.

Attorney David Hutt represented the developer at the Jan. 11 meeting and he said his client would like to be hosting guests as soon as the 2021 season.

Less than a week later, Jan. 15, the planning commission received a letter from attorney Hal Beerman, representing J.J. Stein III Inc., saying the property owner had filed a complaint in Delaware Superior Court Nov. 28, 2018, against Limitless Development asking for termination of the ground lease.

In the letter, Beerman accuses Hutt and Limitless Development of submitting the hotel plan to the planning commission as a concept review because concept review does not require public notice. Had the meeting been noticed, a representative from J.J. Stein Inc. would have appeared at the meeting in opposition.

According to the complaint against Limitless Development, in addition to the termination of the ground lease, Beerman said the property owner has asked for a monetary judgement in an amount less than $2 million.

On behalf of Limitless Development, attorney Richard E. Berl answered the complaint and filed a counterclaim Jan. 23. He argues his client has tried to develop the property, but the property owner has purposely interfered. The actions were willful, malicious, reckless and outrageous, Berl wrote.

Berl seeks to have the complaint dismissed and have judgement entered in favor of Limitless in such an amount to be properly compensated for Stein Inc.’s tortious interference.

Beerman said March 13 that his client was moving forward with the claim, but declined to comment further.

Hutt said March 13 his client’s goals for the property remain the same as the ones presented to the planning commission Jan. 11, but he declined to comment any further.

Editor’s note: The story has been corrected to reflect the name of the attorney who is handling the litigation in Superior Court.