Friday, June 15, 2007 | News
06/17/07 NEWS: Fighting over the Winecoff

Fighting over the Winecoff
Legal battle continues over fate of notorious downtown hotel
By Josh Clark

Before it was engulfed in flames that claimed the lives of more than 100 people in 1946, the Winecoff Hotel was outfitted in marble, velvet and brass. It boasted a café and a bar beloved by jet-setters and local reporters alike. And during Prohibition, the main basement served as a speakeasy.

Courtney Dillard stands in front of the Winecoff Hotel, where 119 guests died in a fire on Dec. 7, 1946. CREDIT: Kevin Daniel

Fighting over the Winecoff
Legal battle continues over fate of notorious downtown hotel
By Josh Clark

Before it was engulfed in flames that claimed the lives of more than 100 people in 1946, the Winecoff Hotel was outfitted in marble, velvet and brass. It boasted a café and a bar beloved by jet-setters and local reporters alike. And during Prohibition, the main basement served as a speakeasy.

Taking up only 4,500 square feet of pavement at the corner of Peachtree and Ellis Streets, the glamorous 15-story hotel stood as the crown jewel of bustling downtown Atlanta. And because it was built of brick and stone, the hotel’s founder and namesake, William Winecoff, surmised that the building was fireproof—a notion he often shared with others, including prospective guests.

Since he considered his fabulous hotel incapable of burning, he forwent installing fire escapes and sprinkler systems. This would prove to be a fatal miscalculation for Winecoff, who lived in one of the private residences in the hotel.

On December 7, 1946, a fire began on the fourth floor of the hotel in the early hours of the morning. To this day it’s still not clear exactly what caused the fire: Some point to accidental causes, while others speculate it was arson.

What is known is that a bellboy, en route to one of the rooms on the fourth floor with a room-service delivery, blocked an elevator door to keep it open so he could swiftly return to his station. When he reentered the hall after his delivery, however, he found it was quickly becoming engulfed with smoke, and he was forced back into the room to which he had just made a delivery.

With the elevator blocked, there were only two other ways out of the hotel: The central staircase, which began on the second floor and ascended to the top floor, and the windows of the rooms. The staircase, filled with smoke, became a huge chimney, encouraging the fire to grow and spread. Many guests chose to take their chances with the windows, tying bed sheets together to use as impromptu ropes. Others simply jumped.

Rescue efforts were improvised as fire ladders reached their total height, leaving guests trapped on floors that firefighters could not reach. In all, 119 of the 280 guests died in the fire. Both Winecoff and his wife perished in the blaze.

Allegations of fraud

The building, dubbed “Atlanta’s Titanic,” has been a grim reminder of a dark episode in the city’s history for decades.

After standing vacant for several years, the Winecoff reopened as the Peachtree Hotel in 1951. But by the late 1980s, the former luxury hotel stood sagging and abandoned,
in serious risk of being torn down.

Today, plans are under way to restore the property to a portion of its former glory, and construction is currently in progress. But a court case scheduled for next month throws into question just who owns the hotel—and, thus, who has the right to redevelop this significant marker of Atlanta’s past.

It is real estate investor Courtney Dillard’s intent to restore the Winecoff Hotel to its original splendor, reinventing it as a four- to five-star boutique hotel, and he has succeeded—in a way.

Dillard took possession of the Winecoff in August 1998, after entering into an extremely risky loan agreement for $1.8 million with Interbank Participating Income Fund.

As part of the mortgage agreement with Dillard, Interbank allocated one of its sister companies, Interbank Brenner, as exclusive investment advisor for the Winecoff venture. This means that Interbank, not Dillard, had the sole say-so on procuring funding for the project. It could accept or reject any funding sources. Dillard claims Interbank rejected any and all, in a successful attempt to force the mortgage into default.

Dillard’s claims of fraud against Interbank were given some credence in June 2002, when the Federal Securities and Exchange Commission filed suit against three Interbank companies. The SEC suit alleges that Interbank defrauded investors by shuffling money from one corporation to another in order to make it appear that each corporation had more assets than it truly did. The SEC also specified that the Interbank Funding Corporation relied on debt financing, “which involves making high-risk loans and other risky investments.”

Ownership in question

Fulton County Superior Court records show that Interbank sold the note and its deed-to-secured-debt—the right to the money owed on the Winecoff—to Atlantic Bank of New York. But another notarized document obtained by The Sunday Paper indicates that there is no record of the right to secured debt ever being transferred back to Interbank, the corporation that later foreclosed on the Winecoff.

There is a record in Fulton County Superior Court, from September 1999, of a transfer of ownership of the limited warranty deed for the Winecoff from Interbank to RBJF Atlanta, the corporation that eventually became Kelco/FB Winecoff, the current owners of the hotel. But no one, says Dillard, from either Interbank or Kelco has ever produced a bill of sale or a receipt for the transaction. No one with either company could be reached for comment.

Dillard’s corporate counsel, Michael McCray, explains that in Georgia, false deeds can be filed with the county clerk’s office without proof of ownership. “This means that I can go down to the clerk’s office and file a deed saying I own your house and you have to take me to court
and prove to a judge that it is really your house and not mine,” McCray says.

Dillard is claiming that if a false deed was introduced into the record, and his attorneys can prove it, all subsequent claims to the Winecoff after the false deed was introduced are illegitimate. “If you look at the title chain, I am the last legitimate owner,” he says.

Last week, Judge Ural Glanville of Fulton County Superior Court ordered a continuance on Dillard’s lawsuit against Kelco/FB Winecoff. Glanville will hear the case on July 27.

In the meantime, Dillard says he will continue to avoid passing by the Winecoff, where Kelco’s redevelopment of the “Ellis Hotel”—its new, non-disaster-evoking name for the property—is under way. Watching the hotel be repaired and outfitted by another company is like seeing “someone out with your wife,” he says. The nearly $30 million reconstruction is expected
to be completed this year. SP