Insurer Refuses Payment, Alleging Fire at North Carolina Inn Was Set

The company that insured a historic inn in western North Carolina is refusing to pay for damages from a fire, saying someone associated with the owners is responsible for the blaze.

The owner has accused former employees of the Richmond Hill Inn of setting the fire last year that destroyed the inn’s centerpiece mansion as it faced a scheduled foreclosure auction.

Harleysville Mutual Insurance Co. filed a letter with the court in January saying it wouldn’t pay the claim seeking at least $6 million. In turn, owner William Gray posted a note on the inn’s Web site saying he wouldn’t be able to reopen because of vandalism, theft and arson by former employees.

Harleysville, based in Pennsylvania, maintains in a lawsuit that The Hammocks LLC, an ownership group of which Gray is a member, “had the opportunity and the motive to commit this arson.”

“The fire was started by a party acting on behalf of The Hammocks,” Harleysville said.

The investigation into who started the March 19 fire remains stalled, said Buddy Thompson, who heads the Asheville-Buncombe Arson Task Force.

He confirmed that someone turned off the sprinkler system before the fire.

“Obviously, there’s somebody out there that knows what occurred, and they’ve not come forward,” Thompson said. “We don’t have the information that we need to be able to bring charges.”

Gray has declined to speak with investigators, Thompson said.

The inn will remain closed for the foreseeable future, Gray said on the inn’s Web site.

“Due to vandalism, theft and arson by former employees, Richmond Hill Inn is unable to reopen on April 1, 2010, as planned,” the site states. “We hope to reopen in the future after extensive repairs caused by these problems. We are sorry to disappoint all of the guests who have supported us through the years.”

Thompson said that water lines in the newer portion of the inn burst during a freeze in December, causing substantial damage.

Harleysville’s lawsuit asks a court to void an insurance claim filed by The Hammocks seeking at least $6 million. It says the company won’t pay for “loss caused by or resulting from criminal, fraudulent, dishonest or illegal acts committed alone or in collusion with another.”

The inn was closed at the time of the fire, and Gray was the only person on the grounds that evening, the lawsuit said.

Gray said in his deposition that he didn’t cause the fire or instruct anyone to set it.

The inn’s foreclosure had been finalized March 16, 2009, with an auction scheduled a month later. But on March 19, an early morning fire destroyed the mansion.