The demise of a village venture

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The Newman-Dean House is a 3,200-square-foot historic Victorian mansion at 11 West Church Street in the heart of the village of Fairport. (Photos by Paul Ericson)

Until it shut down in late 2020, Pamela Renfro and Angela Herrald’s Fairport boutique hotel was lauded as a welcome asset to the picturesque canalside village. It had seemingly prospered and stood as an affirmation of small-town neighborliness. 

But in the wake of the Inn on Church’s shutdown, with the neighbors and former business partners now embroiled in a bitter court fight, it also serves as a cautionary tale. 

As Renfro has described the venture in legal filings and past interviews, it was a smashing success with a charming, feel-good backstory, calling to mind old-fashioned neighborliness and small-town civic pride, which shut down only because Herrald and her husband wanted to claim the property for their family home.  

Herrald contends that the hotel venture, at best financially marginal, fell victim to COVID-19, and as the pandemic raged, the partners mutually agreed to close the hotel and go their separate ways in a deal that Renfro later backed out of. 

In claims and counterclaims, the two women have accused one another of breach of contract, defamation and other wrongful actions.

Across-the-street neighbors in the village of Fairport and friends for more than a decade, the women came up with the idea of starting an inn as they chatted one day, remarking on a for-sale sign they’d noticed on a nearby home. The first step was acquiring the property, the Newman-Dean House, a 3,200-square-foot historic Victorian mansion at 11 West Church Street in the heart of the village. Parts of the house date to 1830. 

Funding a tourist spot

To help get their venture started, the women appealed to Fairport residents’ civic pride, starting a KickStarter campaign to raise money. 

“We are using Kickstarter because we really want you to be a part of this,” the partners stated in their 2016 crowdfunding pitch. “As neighbors, our venture grew from the very spirit of our village, and having this community be a part of this project just makes sense.”

Citing a goal of $45,000, the women asked for donations of $10 to $15. Community members responded, contributing $46,­­­­500 to get the project off the ground. Among the most generous of the 131 donors who swelled the venture’s Kickstarter account was Renfro’s sister, who kicked in $10,000.

The venture’s Kickstarter campaign said: “An inn in the heart of the village would only further Fairport’s image as a charming, friendly destination.”

After closing on their purchase of the historic home, Renfro and Herrald labored to turn the private residence—which until 2010 had been occupied by family members of the last namesake owner, George Dean—into a boutique hotel.

Using the same carpenter and plumber who had worked on updates to the historic property in the 1990s, the women oversaw renovations that Herrald at the time described as involving “less doilies and more outlets.” Work included rewiring and plumbing upgrades, and reconfiguring the upstairs floor plan to turn bedrooms into upscale guest rooms, each with its own new bath. 

As the project advanced, the partners appeared to be on the same page.  

“For 12 years we’ve been across-the-street neighbors and borrowing each other’s tools and watching each other toil in the garages,” Herrald told the Rochester Business Journal in a 2016 interview. “We knew early on that we were sort of cut from the same cloth in that way—(we are) doers.”

Village officials had cited a need for lodging in Fairport. To Renfro and Herrald, filling that need while also preserving a property the Fairport Historic Preservation Commission had designated as a landmark seemed almost a civic duty.

“You have the beautiful architecture and honestly it’s almost like the village is a nod to the past. People in the village live how we used to live and I don’t feel like a lot of people do anymore,” Herrald said in the 2016 interview. 

Others felt similar stirrings, helping the Kickstarter campaign to surpass its $45,000 goal.  

Individuals who contribute to Kickstarter campaigns can be investors in the ventures they help finance but do not have to be. Kickstarter tells contributors that they will be rewarded, but leaves it up to those who mount campaigns to say what the rewards will be. 

“Backers that support a project on Kickstarter get an inside look at the creative process, and help that project come to life. They also get to choose from a variety of unique rewards offered by the project creator,” KickStarter explains to potential donors on its website. “Rewards vary from project to project, but often include a copy of what is being produced (CD, DVD, book, etc.) or an experience unique to the project. Backers can also opt to pledge for a project without selecting a reward.”

The venture’s Kickstarter page lists a variety of rewards—depending on the contribution amount—including Inn on Church t-shirts, notecards, overnight stays and “a custom-painted piece of furniture upcycled by Angela.”

The rewards, partners said, were designed “to bring us together—supporting local artisans and businesses as well as the Inn on Church!”

For a time at least, contributors to the hotel’s Kickstarter campaign seemed to get their money’s worth.

“People stay at the Inn on Church from all over the world. They have had guests from Italy, China and England,” enthused the Fairport-Perinton Chamber of Commerce in a December 2018 statement marking the Chamber’s naming of the inn as business of the month.

Inn on Church guests “rave about their Fairport Village experiences and the new Lyft and Uber operators in Fairport have been highly engaged resources,” noted Chamber board member Kellie Wright.

According to Renfro, in each of the three years following the inn’s 2016 opening, its revenues increased. 

In each month of those years, the business the women set up to run the hostelry, Renfro-Herrald Hospitality LLC, was able to pay the West Church Street property’s $1,400-a-month mortgage, Renfro states in a court complaint she filed against her former partner in February.

According to Renfro’s complaint, in addition to extensively remodeling the historic Fairport home, the venture spent more than $7,000 on upgrades to a barn on the property, turning the barn into an event space that generated extra income for the venture.  

Different takes

As to what caused the inn’s demise, the women tell different stories. 

Herrald and her husband, David Steitz, who co-own the Newman-Dean house, prematurely terminated the venture simply because the couple “decided they wanted to move their family into a larger house,” Renfro asserts in court papers. 

Not so, Herrald argues in an answer with counterclaims filed this week. She and Steitz had no desire to move into the historic house but were forced to do so because the inn, which was never financially viable, was forced by pandemic restrictions to cease operations in 2020. She and Steitz could not bear the burden of carrying two mortgages. 

Letters Herrald sent in late November 2020 canceling upcoming guests’ reservations that came with deposit refunds cited COVID-19 as the culprit behind the venture’s downfall. 

“The pandemic unfortunately is greatly affecting the hospitality industry as well as small businesses. We are unable to survive it,” the cancellation letters stated.

While the hospitality industry and small businesses have indeed suffered reversals in the pandemic, Herrald’s and Steitz’s pronouncement of the inn’s demise was at best disingenuous, Renfro’s court complaint maintains.

“The pandemic was not affecting the Inn as a small guest facility in the same way and to the same extent as it was affecting larger hotel and lodging enterprises, and in fact created new rental opportunities for which a facility like the Inn was suited,” her brief asserts. 

As New York City became an epicenter of infection early in the pandemic’s spread, high-income families were leaving downstate homes and lodgings and desperately seeking accommodations in less severely affected regions—a trend, Renfro’s complaint implies, that could have benefitted the inn.

“New opportunities were emerging for marketing and use of the Inn due to travel restrictions for New York residents and the interest of lodging guests in booking whole-house or longer-term stays,” Renfro’s brief states.

In a May 2020 interview with Spectrum News, Renfro and Herrald discussed their creative approaches to offsetting cancellations due to the pandemic.

“We opened up the barn, which is typically event space for 50 people, and we opened it up for one family at a time and they can have a movie night, they can do a little fire in our fire pit in the backyard and get take-out so that families can get out of the house a little bit,” Harrold said.

She added: “We now do whole house rentals and we have reduced our rates so it is hopefully more accessible and we have hand sanitizer for guests and face coverings available so that people feel safe. I think once we come through this, we are going to back better than ever!”

Pressure to shut down

According to Renfro, Herrald and Steitz started putting pressure on her in spring 2020 to shut the inn down.

“Beginning in the spring of 2020 and continuing through the summer of 2020 Herrald and Steitz initiated conversations with Renfro, arguing that because of the pandemic, the inn was not profitable, did not have adequate revenue and should be discontinued,” Renfro’s court brief states.

At the time, the inn still had advance room and event bookings, had “a positive cash balance at each month end,” and was staying current with mortgage, insurance and property tax payments, the court complaint adds. 

In the complaint, Renfro attributes the couple’s insistence on ceasing operations to their alleged desire to move into the historic home. 

Herrald and Steitz deny Renfro’s allegations as to their reasons for wanting to shut the inn down.  

The couple “did not want to sell their home and move into the Property, in part, because it would have required three of their children to change elementary schools,” their answering papers state.

In late 2020, Herrald and Steitz sold their previous home and moved into the Newman-Dean house. When Renfro hit the couple with a lawsuit in December, alleging breach of contract, breach of fiduciary duty, unjust enrichment and defamation, it came “out of the blue,” says Herrald’s lawyer, Jeffrey Allen, a litigator in Bond, Schoeneck & King PLLC’s Rochester office. Allen said that Herrald, preferring “not to litigate the dispute in the press,” would not comment.

Renfro also declined to comment for this story, referring questions to her attorney, Kevin Cooman of McConville, Considine, Cooman & Morin P.C., who offered no comment beyond legal filings.

Accusing her former partner of “unjust enrichment,” by taking over the historic Fairport property and squeezing her out, Renfro’s complaint seeks to force Herrald and Steitz to sell the historic property and divide the proceeds with her.      

In the answering papers they filed this week, Herrald and Steitz accuse Renfro of improperly pulling money out of the hotel venture without their knowledge. Their filing includes 11 counterclaims—among them breach of contract, breach of fiduciary duty, defamation, unjust enrichment and conversion—and bitterly worded accusations.

“Since agreeing to close the Inn, Renfro has recanted on her agreement, defamed and denigrated Herrald and Steitz in social media, public filings, and throughout the community,” the filing alleges. “People have visited the Property and harassed and intimidated Herrald, Steitz and their children based upon the false claims Renfro has made about them.”

It adds: “Since filing her frivolous lawsuit, Renfro’s husband, Mark, often stands on his front porch, scowling at and intimidating Herrald and Steitz and their young children as they pass by on their way to and from school.”

Herrald and Steitz allege that an ulterior motive explains Renfro’s actions. 

“Renfro’s hostility and the fervor with which she has dogged Herrald and Steitz with her false and surreal account of the simple and unfortunate demise of the Inn was inexplicable—until it became clear that Renfro was attempting to deflect from her gross mismanagement of Hospitality LLC and shore-up a competing hospitality business that she runs, and which she wrongfully operated throughout her commitment to Hospitality LLC.

“As it turns out, Renfro spent much of her time as a member of Hospitality LLC committing improper acts of self-dealing and fraud.”

When the inn shut down, they continued to pay the Fairport property’s expenses while Renfro contributed nothing, Herrald and Steitz maintain. Unable to support both their former home and the Newman-Dean house, they were forced to choose one or the other. When they got an offer on their former home, they reluctantly chose the Newman-Dean property. 

Competing versions

At the heart of the dispute lie competing versions of the very nature of the partnership Renfro and Herrald created. While Renfro insists in legal papers that the inn was a joint venture in which she and Herrald had more or less equal shares and responsibilities, Herrald denies that any such venture existed legally or otherwise.

Herrald and Steitz are the legal owners of the Newman-Dean property and have been from the venture’s start. To operate the Inn on Church, the women formed a limited liability company, Renfro-Herrald Hospitality LLC, which leased the property from Herrald-Steitz Properties LLC, the entity Herrald and Steitz formed to be the legal owner of the Newman-Dean property.

Renfro and Herrald each admit to those basic facts. But Renfro maintains their arrangement amounts to legal joint venture. Herrald denies that any such arrangement exists.

Renfro, Herrald and Steitz memorialized the essential contract terms of their joint venture in a written business plan, Renfro’s court complaint states. 

“Defendants deny that a joint venture was discussed with plaintiff, that a joint venture was formed, that they participated in a joint venture with plaintiff, that a ‘Joint Venture Structure’ was ‘adopted by the Joint Venture Participants’, and that Properties LLC and Hospitality LLC were formed as part of a joint venture,” Herrald’s answering papers counter.

To the contrary, the brief maintains, “Properties LLC and Hospitality LLC were formed, in part, to keep ownership of the Property completely separate from the operation of a business by Hospitality LLC.” 

In a June 5 ruling, state Supreme Court Justice Scott Odorisi partly acceded to Herrald’s and Steitz’s earlier bid to dismiss Renfro’s entire complaint. He granted their motion to dismiss the defamation claim but denied the other motions for dismissal. He also allowed a lien Renfro put on the Newman-Dean property to stand, an encumbrance, Herrald’s and Steitz complain in court papers, that is preventing them from refinancing the $228,000 mortgage they hold on the property.

Odorisi set a mid-December deadline for the parties to complete discovery and turn in depositions, a timeline that seems likely to see the dispute continue into 2022.

In the meantime, the only certainty is that for now and the foreseeable future, any guests looking to book rooms in Fairport will find no room at the Inn on Church. 

Will Astor is Rochester Beacon senior writer.

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