Challenges Continue for Owner of Lutsen Resort with Superior Shores Property in Two Harbors

By Joe Friedrichs,
The Shore Thing Podcast

Bryce Campbell, the own­er of Superior Shores, faces the possibility of losing the resort following a recent decision and order coming from the lone judge presid­ing over the North Shore.

In a rare “ex parte” order issued by Judge Steven Han­ke on July 24, an appointed and temporary manager will now be in charge of oper­ations at Superior Shores because the “property and its rents and profits are in danger of loss and material impairment.”

According to the order signed by Hanke, under Campbell’s ownership at Su­perior Shores “association dues have not been timely paid, real estate taxes are delinquent, and payments to various local vendors have not been made. Utilities provided by the city of Two Harbors have not been time­ly paid and disconnect notic­es have been sent to (Shores Resort Company/Camp­bell). The (power company) that provides electrical ser­vice to the resort threatened to discontinue service.”

Campbell took control of the resort on a contract for deed in January 2020. At the time, the $15 million price tag Campbell paid for the property was believed to be a record for a North Shore resort. Campbell is also the owner of Lutsen Resort, which burned to the ground earlier this year in Cook County.

Though it varies case to case, in general, an ex par­te order is a court order that a judge signs without first holding a hearing and with­out informing the other par­ty. The “other party” in this instance is Campbell’s busi­ness, Shores Resort Compa­ny. Ex parte orders are often used in emergency situations when there’s an urgent need for something to change or be addressed, according to various legal opinions.

According to the order, Campbell and his company, Shores Resort Company, failed to do the following, which resulted in Hanke’s ruling regarding the contract for deed and appointment of someone new to take over management and operations at Superior Shores:

• Failing to make the bal­loon payment of more than $7.7 million by June 1, 2024, as required by the terms of the Jen­sen-Re Development Contract for Deed;
• Failing to make the bal­loon payment of just over $4 million by June 1, 2024, as required by the terms of the Blue Waters Contract for Deed;
• Failing to make the balloon payment of just over $1.2 million by June 1, 2024, as re­quired by the terms of the Jensen-Re Partner­ship Contract for Deed;
• Failing to pay all real estate taxes as­sessed against Superior Shores;
• Failing to deliver to cer­tificates of insurance for the coverages required under the Contracts of Deed;
• Failing to pay, when due, all assessments im­posed by the Superior Shores II Condomini­um Association, Inc.;
• Failing to pay, when due, all assessments im­posed by the Burlington Bay at Superior Shores Association;
• Failing to maintain and keep the properties in good repair, working order and condition, by, without limitation, failing to maintain and repair at least five units that experienced dam­age due to a water leak and that are currently unavailable for rent as a result;
• Failing to provide un­audited financial state­ments, including a bal­ance sheet, statement of cash flow, profit and loss statement and relat­ed statements prepared by an accountant in ac­cordance with normal and current accounting procedures within 90 days of the end of the fiscal year; and
• Failing, within 30 days after the end of each quarter, to provide a set of internally prepared financial statements for the previous quarter, in­cluding a balance sheet, statement of cash flow, profit and loss statement and related statements prepared by an accoun­tant in accordance with normal and customary accounting procedures.

Meanwhile, Campbell and his legal team were quick to respond to Han­ke’s order. In a letter dated Friday, July 26, Campbell’s current attorney, Scott Wit­ty, asks the court to rescind the ex-parte order “until a hearing can be held” on the matter.

In the letter, Witty says Campbell was “surprised and dismayed” by Han­ke’s order that essentially turns Superior Shores over to new management. The court approved manager (referred to as a “receiver” in the court documents) is Bruce Kinseth of Kinseth Hospitality Companies, Inc, which is based in Coralville, Iowa.

Financially speaking, Witty claims that the terms of the contract for deed were altered regarding Campbell’s ownership of Superior Shores during “COVID-19 stay-at-home orders.” As a result, the balloon payments that to­tal approximately $13 mil­lion were not due until June 2025, according to the mis­sive sent to Hanke and the Lake County court admin­istrator Friday. Regarding a “suggestion of concern that Superior Shores revenues have or will be diverted from the resort are baseless, without evidence and whol­ly speculative,” according to the letter Witty sent Fri­day.

“There is no basis for an emergency appointment of a receiver,” Witty wrote. “This is merely an exam­ple of a seller trying to take advantage of a contract for deed purchaser that has faced some difficult times recently due to catastrophic losses wholly unrelated to this resort.”

Moving forward, if the court is “unwilling to im­mediately rescind the emergency ex parte order,” Campbell and his legal team said they would pre­fer an in-person hearing July 30 or 31. When this reporter spoke on the phone with Witty July 29 about if a hearing will be held as requested, he declined to comment on the case.

In an emailed statement July 29, Judge Hanke said he could not respond to specific questions about the case.

Campbell, meanwhile, did respond to a request for comment from this report­er, though he insisted his statements remain “off the record.”

Campbell’s most re­cent legal woes are among a string of troubles that stretch across two coun­ties on Minnesota’s North Shore. As The Shore Thing reported earlier this month, in the aftermath of the fire at Lutsen Resort, numer­ous community members, property owners in Cook County, and local business­es told us they are owed significant sums of money by Campbell and Lutsen Resort. Court records sup­port the claims. The Shore Thing reviewed 18 different court cases where people or businesses have sued, or are suing, Lutsen Resort, an assumed name for North Shore Resort Company, which Campbell has owned since 2018.

Among the businesses who filed suit against Lut­sen Resort is McMillan Tree Service in Cook County. McMillan was owed more than $37,000 for services provided last fall. Those services included removing and hauling away trees from the property at Lutsen Re­sort. On March 7, McMillan filed suit for lack of pay­ment. On June 26, District Judge Eric Hylden ruled that North Shore Resort Compa­ny (Lutsen Resort) would be required to pay McMil­lan $5,000 per month start­ing July 1 until the amount owed is reconciled.

Other business owners in Cook County told The Shore Thing this month they did not wish to comment on money owed to them by Campbell and Lutsen Re­sort, fearing it would delay any possible payments.

Meanwhile, numerous people who own cabins and condominiums near Lutsen Resort that Campbell previ­ously managed for rental are also suing for lack of pay­ment. Jay Halvorson spoke with The Shore Thing July 8 about a townhouse and a cabin he owns near the Lut­sen Resort property. He said Campbell owed him just un­der $30,000 in rental income from both properties. In conciliation court on April 23, Judge Hanke ruled that Lutsen Resort/North Shore Resort Company owed Hal­vorson $15,000. Halvorson told The Shore Thing earlier this month that he had not yet received any payments from Campbell or Lutsen Resort.