LUTSEN, Minn. — More than two years after a massive fire destroyed one of the state’s oldest and most iconic lodges, a major question remains unresolved in the tiny, tourism-driven community of Lutsen, Minnesota.
What will come of the picturesque site along Lake Superior where Lutsen Resort had operated since the 1880s?
“This is the most prime piece of undeveloped real estate on the North Shore, bar none,” said Grand Marais attorney Tyson Smith. “You can’t find another one that can be developed like this.”
While “developers are circling,” he said, it appears the property could remain in limbo for years to come as a criminal case and a pair of lawsuits work their way through the courts.
A judge last week halted a civil action that could have forced an auction of the land, ruling that business owner Bryce Campbell should stand trial on arson and insurance fraud charges before his creditors attempt to foreclose.
The decision came as a blow to Smith and his client, a St. Paul architectural firm that has been seeking to recover $84,000 for unpaid services since before the fire even occurred.
“The prejudice for the plaintiffs is financial, and I get the timing,” Judge Theresa Neo said. “But the prejudice to Mr. Campbell and the effect of his criminal case is his liberty, which is greater than the money.”
Neo’s decision was followed days later by a federal judge agreeing to suspend proceedings in a lawsuit Campbell has filed against his insurance company for refusing to pay out a $16.5 million claim.
Mortgages, liens tie up title
The matter involves a complex web of lenders, contractors and insurers, with financial maneuvering playing out both in court and behind the scenes.
Authorities said Campbell’s businesses had more than $14 million in past-due and near-due debts — and just $34,000 in their collective bank accounts — when the historic structure burned to the ground on Feb. 6, 2024.
Campbell, a Canadian citizen who acquired the iconic business for $6.75 million in 2018, had undertaken extensive renovations on the main lodge, which was built in 1952. That included an overhaul of the dining room and the conversion of the long-shuttered third floor into guest rooms.
Records indicate he took out two mortgages to finance the purchase: one through National Bank of Commerce for $4.73 million, and the other held by the resort’s former owners for $675,000.
Both were to be paid off by July 2023, but remain unsatisfied, with the bank first sending Campbell a default letter two weeks before the fire.
Meanwhile, several mechanics’ liens have been filed against the title. Double Jack Design Workshop says it is owed $84,664 for master planning of the lodge renovation; Highmark Builders is seeking $270,965 for construction services; and McKeever Well Drilling has a $8,918 claim for site work.
Additionally, the Minnesota Department of Natural Resources has filed a restoration order against the title, requiring the owner to repair damage done along the Poplar River during unauthorized bridge work in 2022.
Contractors seek to force sale
Smith, who represents Double Jack, explained that the mortgage holders have top priority and that the lien claimants are in third position to collect any funds, which he said is “not a very good spot to be in, admittedly.”
The reason the mortgage holders have not foreclosed, Duluth attorney Bill Burns said, is that they have been negotiating with Campbell’s insurance company.
If an insurer determines the policyholder committed arson, the company does not need to pay for their loss. However, he said, the law does require compensation for the mortgage holders.
Burns was a co-owner of the resort for 30 years, along with partners Scott Harrison and Nancy Burns. He said he is still owed a portion of the unpaid mortgage.
Owners Insurance Co. recently reached a settlement with National Bank of Commerce, which has resulted in the mortgage being transferred to the insurance company, Burns said. And the resort’s former owners are currently in negotiations with Owners.
Double Jack and Highmark have both filed foreclosure claims in the civil lawsuit, seeking a sale of the land to satisfy their debts.
Campbell, 41, has not challenged Double Jack’s figure, but he is disputing their attempt to “pierce the corporate veil” — that is, hold him personally liable for the debts of his North Shore Resort Co. and North Shore Land Co.
The businessman has taken issue with Highmark’s lien. He said he significantly scaled back the proposed construction at the resort, and was assured that the work would remain within a deposit he had already paid.
Debt exceeds value of land
The case had been scheduled for a bench trial before Judge Neo next week. But Campbell’s attorney, Tom Torgerson, filed a late request to suspend the case as a result of the criminal prosecution initiated in December.
Torgerson said his client would be forced to invoke his Fifth Amendment right against self-incrimination, leaving him unable to defend himself and creating “adverse inferences” that the court would likely use in deciding the case against him.
“It appears that Double Jack is seeking to try the entirety of the criminal case in this civil case,” Torgerson told the court. “There can’t be more of an overlap of evidence than that.”
Smith strongly objected to the motion, saying it was untimely, and criticized the court for hastily scheduling a hearing in a manner that he said violates procedural rules.
Double Jack was fully prepared to try the case, he said, and the amount is significant for a small business. The decision will almost certainly push the trial back at least two or three years, Smith said, and it may prevent his client from ever recovering their money.
But he said there are even greater issues at play. He cited extensive, statewide media coverage of the fire and its aftermath, as well as the impact on the Cook County economy, job market and tax rolls.
“It was a gut punch to see this place burned down,” said Smith, who himself was married at the resort. “So why does this matter? Well, it matters because the community has an interest in redevelopment.”
But Burns suggested it may be extremely difficult for the contractors to recover their funds under any circumstances. Cook County in 2025 assessed the value of the market value of the property at $2.54 million — about half of the $4.8 million from a year earlier.
“The debt here is probably in the range of a number that is double what the value of the land is,” Burns said. “So, when there’s a foreclosure, the mechanic’s lien (claimants) are going to have the option of paying off those mortgages or their rights being extinguished. That is the reality.”
Highmark did not object to the stay; attorneys indicated a settlement may be possible on their claims.
Hearing set on criminal charges
Neo said she was sympathetic to Double Jack and the public’s interests, but made clear that Campbell is facing prison time if convicted. She said criminal cases always take priority, and forcing him to plead the Fifth would “greatly impact” his prospects of getting a fair jury.
“The community is listening and paying attention,” the judge said. “They will want to know what happens.”
Smith indicated this week that he intends to appeal the order delaying the trial.
Campbell’s insurance lawsuit, likewise, would require him to invoke the Fifth, and the case contains “overlapping and in many instances identical issues, facts, documents and witnesses,” attorneys wrote in a joint motion.
U.S. Magistrate Judge Leo Brisbois agreed to suspend those proceedings until charges are dismissed, Campbell is acquitted or he is sentenced.
The businessman is set to make a remote appearance in his criminal case on Monday. He remains under supervised release following his December arrest in the Detroit area.
Authorities allege Campbell had a financial motive to burn down the resort, lied about his whereabouts that night, was in the lodge less than an hour before smoke was reported, and that a possible accelerant was found in a basement boiler room.
He has repeatedly denied responsibility. The criminal case remains in its early stages, and he has not yet filed motions or defense arguments.
