LUTSEN — A fire Feb. 6 destroyed the state’s oldest operating resort, the historic Lutsen Lodge, leaving only memories of what once was a place of celebration, gathering and tradition for guests.

Bryce Campbell, the colorful and controversial owner since 2018, has vowed to rebuild the lodge. But will insurance cover millions of dollars in damages? Whether this northern Minnesota gem will return is uncertain as the State Fire Marshal’s investigation continues.

Campbell’s grandiose vision for the lodge was unraveling for some time before a fire resulted in its complete loss. According to public records from the State of Minnesota and Cook County, the multimillion-dollar plan was plagued by Minnesota liquor tax delinquencies, state fees for unpermitted work, unresolved fire code violations and multiple lawsuits in Minnesota District Court from contractors, employees and property owners who say they were never paid.

Is it unreasonable to expect the Lutsen Resort to rise from the ashes, despite his promise to rebuild?

Campbell didn’t respond to the News Tribune’s multiple requests for an interview for this story.

2001: Campbells start acquiring properties

Campbell, 39, is the owner of North Shore Resort Co., which falls under the Campbell Hospitality Group, an Ontario-based company he founded with his late mother, Sheila Campbell.

In 2001, Campbell and his mother bought the Reston Creemee Drive-In in Manitoba, Canada. It was sold in 2013.

In 2007, Campbell Hospitality Group bought Main Street Inn and Suites and Rest’n Inn, both in Manitoba. According to Empire Advance, a Manitoba-based weekly publication, both properties were renovated under the Campbells’ ownership.

On July 22, 2010, a kitchen fire at the Rest’n Inn caused irreparable damage to the hotel, according to the Reston Recorder, a since-closed newspaper in Manitoba.

At the time, Pipestone-Albert Fire Department Chief Jack Berry told the Recorder that the fire commissioner believed the incident was caused by a faulty electrical system in the grill area. According to the Office of the Fire Commissioner’s report, it appeared the fire originated from a deep-fat fryer and was deemed accidental.

Rest’n Inn also included two restaurants: Brycington’s and Aurora Bar & Grill. Eighteen employees were displaced after the fire and the Campbells sold the hotel in 2014.

The four-unit Main Street Inn and Suites, still owned by Campbell, is home to three apartments/condos and a chiropractic clinic.

Campbell Hospitality Group acquired the Roadrunner Motel in Rainy River, Ontario, in 2010. The Campbells planned to physically relocate six of its 18 units to the Rest’n Inn in Manitoba.

The motel was renamed “Walla Walla Inn” and reopened in 2011 with the help of Patti Diebel and her parents, John and Mary Sanderson, according to the Rainy River Record newspaper. Rainy River town records show that Campbell sold the Walla Walla Inn in early 2022 to 13805921 Canada Inc., a federally incorporated business.

In February 2014, Campbell Hospitality Group bought the 70-room Copper River Inn and Event Centre in Fort Frances, Ontario, with the help of the Rainy River Future Development Corp. and two other lenders. The Copper River Inn underwent a complete remodel with plans to reopen in March 2014, according to the Fort Frances Times. The addition of the inn’s new Copper Taphouse and Grill opened in June 2018.

Campbell told the Northern Ontario Business news site that the hospitality group invested $3 million into the inn’s renovations, earning him recognition from the Fort Frances Chamber of Commerce as 2015 Entrepreneur of the Year.

2016: Lawsuits begin

Under Campbell’s ownership, the Copper River Inn and Event Centre were involved in several lawsuits with the United Food and Commercial Workers Canada Local 175. The union holds bargaining rights for the inn’s housekeeping, hospitality and front desk employees.

A court board had dismissed two applications, on March 28, 2017, and March 9, 2018, to decertify the union. These efforts followed the filing of two lawsuits by the union involving cases where two probationary employees at the inn were both found to be wrongfully terminated by Arbitrator Dana Randall in Ontario Court of Justice.

On Dec. 19, 2016, a 17-year-old probationary employee was wrongfully terminated after reporting workplace harassment, according to Ontario Court of Justice. A second grievance was filed Feb. 17, 2017, regarding the same employee, who alleged she had been sexually assaulted by a hotel guest on Nov. 6, 2016.

Both grievances were awarded by arbitration on May 17, 2019, including $1,000 in damages regarding the employer’s failure to respond to the sexual assault allegations, according to the law, and compensation for lost wages.

The case regarding the employer’s response to the sexual assault allegations was raised again in Ontario Superior Court of Justice Divisional Court . On July 19, 2021, the court ruled in favor of the union, which claimed the awarded damages were not enough, for a new hearing to be held before a new arbitrator, as well as awarding it $10,000 in associated costs.

On April 27, 2018, Copper River Inn employee Cindy Baker slipped and fell at work during her fourth probationary shift and suffered a significant Workplace Safety and Insurance Board-recognized injury. Baker was paid for three weeks of lost employment and returned to work with restrictions.

Originally hired as a part-time employee, Baker was then scheduled for a 48-hour workweek. After Baker complained to her supervisor, she was still required to work the hours, which resulted in “agonizing pain” and immobility.

On June 15, 2018, the Safety and Insurance Board instructed Baker to undergo an appointment, which determined she could return to work with numerous physical restrictions and with modified shifts limited to four hours. This was not accommodated by the employer, according to Ontario Court of Justice.

Then, according to Ontario Court of Justice, Baker was wrongfully terminated June 19, 2018, at the direction of Campbell. On Nov. 9, 2020, Ontario Court of Justice ruled in favor of the union on a damage award of $20,000 in Baker’s case.

Randall stated in the arbitration decision that Baker “had to put up with being portrayed as lacking charisma and flair in circumstances where she was fighting through pain that the employer willfully turned a blind eye.”

Under oath, Campbell said employees were upset that the union was spending their dues on arbitration. According to Ontario court documents, Board Vice Chair Mary Anne McKellar found that Campbell “either did not appreciate or did not care what representative authority the union held with respect to the employees.”

The court document also alleged that under Campbell’s management, the hotel was “chronically delinquent” in forwarding membership documentation to the union for new hires, and in forwarding dues it had remitted.

Further, McKellar stated, “The facts of this case support an inference that Mr. Campbell either was behind the initiation of the termination campaign, or that he created a climate in the workplace in which employees would perceive that a (union) termination application was desirable.”

2018: Campbells buy Lutsen Resort

In 2018, the Campbells purchased the Lutsen Resort. That August, Campbell took out mortgages on Lutsen Resort with Republic Bank, Inc. for $4.73 million and from North Shore Land Co. for $675,000, which matured in July 2023.

At that time, there were 150 employees, previous owners Scott Harrison and Nancy Burns stated during an interview with the WTIP radio station.

Then, the Campbells bought Superior Shores in Two Harbors from Joe Re on Jan. 1, 2020, for nearly $15 million. The record-high resort sale included 131 of the total 184 units of its lodge, lakehomes and Burlington Bay condos, according to Minneapolis/St. Paul Business Journal.

While Campbell’s Canadian businesses were reported to have suffered greatly during the pandemic, he said his Minnesota businesses thrived — thanks to Twin Cities tourists, according to an article titled “COVID-19 recovery vastly different in Canada vs. the U.S.” published Sept. 16, 2020, in the Fort Francis Times.

Meanwhile, Campbell said the programs offered by the federal and provincial governments during COVID-19 covered half of his losses. According to the U.S. Small Business Administration, North Shore Resort Co. received over $1.8 million in forgivable Paycheck Protection Program loans between 2020 and 2021, retaining roughly 130 jobs.

In 2021, Bryce Campbell served as treasurer of Visit Cook County Board of Directors. He was appointed to a three-year term by the Lutsen-Tofte-Schroeder Tourism Association.

On Aug. 12, 2021, Sheila Campbell died. She and her husband, Kendon Campbell, operated a 600-acre cattle farm near Reston.

2023: Projects encounter challenges

The Campbells planned to transform Lutsen Resort into a luxury boutique lodge with the addition of a $4 million Nordic spa.

During the Cook County Board of Commissioners meeting Dec. 17, 2019, Campbell expressed concern that a newly proposed tax classification of short-term rental properties would impact his investments, such as the development of the spa, which he planned to submit building applications for the following year.

Campbell told commissioners he needed the ability for 60% occupancy on the property, but under the proposed classification, most of the resort’s units would be limited to 50% occupancy. In that case, Campbell said he would move the spa to Two Harbors.

A conditional use permit application dated July 11, 2023, for the proposed Nordic spa stated it would replace the resort’s saunas, hot tubs and pools. Upon review of the permit application, the Minnesota Department of Natural Resources recommended denial, citing concerns about the potential of runoff contamination into the Poplar River and Lake Superior. The DNR also noted that changing the area’s topography would negatively impact the environment.

Lutsen Resort’s lodge was located at the mouth of the Poplar River and Lake Superior. It hosted lodging, two restaurants, events, a pool and massage services, and nearby on-site housing for its staff. Its eastern property boundary is the Poplar River, which hosts the Poplar River Condo Association on the opposite shoreline. To the west is the Lutsen Resort Townhome Association, under separate ownership.

Several nearby property owners heavily scrutinized plans to expand the resort. Cook County received numerous letters of opposition.

On Aug. 9, 2023, Campbell appeared before the Cook County Board of Adjustment to request a variance for an expansion of the Lutsen Lodge and for the construction of a separate three-story, 32-rental unit chalet.

The proposed construction of the spa would have included the removal of the bluff north of the parking lot. The request was tabled, pending completion of an Environmental Assessment Worksheet.

The following month, Campbell hired McMillan Tree Service to clear trees in this area.

At the Board of Adjustment meeting Aug. 9, 2023, Campbell requested a variance to replace the pedestrian bridge destroyed by the Poplar River flood in 2022. However, there would be no pedestrian easement. “It’s always been a viewing bridge more than an actual accessory bridge,” Campbell said.

The bridge request was approved under conditions that the resort obtain the proper permits from the Department of Natural Resources and the Army Corps of Engineers and an easement agreement from the Poplar River Ridge Condominium Association.

During the planning commission’s public hearing, Ann Sullivan, ex-officio planning commission member and county commissioner, commented publicly as a private citizen, stating that in addition to the Environmental Assessment Worksheet, she believed the issues with the resort’s prior public waters violation with the DNR should be resolved.

Sullivan was referring to the cease-and-desist order that was issued by the DNR to Lutsen Resort on Sept. 7, 2022, to halt unpermitted work on the pedestrian bridge on the Poplar River during fish spawning season.

Two days later, the DNR authorized limited emergency work, which expired Sept. 15, 2022. However, a DNR officer observed ongoing work that was beyond the limited emergency authorization and ordered all work stopped at that time.

The investigation into this matter is ongoing by the Minnesota DNR, Cook County Soil and Water Conservation District and U.S. Army Corps of Engineers, according to Gail Nosek, DNR communications director.

Grand Portage Reservation Water Quality Specialist Margaret Watkins also voiced concern about the resort’s application to place a salt spa next to a trout stream without a plan for wastewater treatment.

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Former employees speak out

“(Bryce) had a very specific vision on how he wanted things done, and it was not necessarily in line with the market that’s in this direct area,” said Quinton McCorquodale, former facilities director for Lutsen Resort’s housekeeping and maintenance department.

McCorquodale was hired Oct. 3, 2022. “It was significantly slower than other properties that I’ve worked in this field,” he said. He was among other employees laid off after the fire.

McCorquodale claimed Campbell was marketing the resort to “DINKS,” an expression referring to households with “dual income, no kids.”

“The majority of business in Lutsen prior to that had been kind of built on the Duluth area and locals,” McCorquodale said. “With the loss of that, he was not able to pull in as many people from Minneapolis as he had relied on.”

Former staff members recounted that just months before the fire, Campbell changed the menu at The Strand, a high-end restaurant in the main lodge, to a single five-course meal option at $125 a person.

“I effectively saw the dining room almost dead in a month or so,” McCorquodale said.

Alex Hilterbrand was hired by Lutsen Resort in January 2023. “I had responded to a recreation manager position,” she said. “They put me at the front desk.”

In her position, Hilterbrand said she fielded many calls from people complaining that the resort was “pushing out the community.”

“Neither Edward nor Bryce are from the North Shore area,” Hilterbrand said. “They were trying to turn the resort into something that didn’t really match the vibe of what the people of Minnesota are like.”

From $3,000 bottles of wine to charging roughly $1,000 for a three-night stay, several residents, longtime guests and staff claimed the resort was out of touch with the local hospitality market, Hilterbrand said.

Further, Hilterbrand described the resort’s employee residences as being “disgusting” and “moldy,” with one of the two buildings having a cockroach infestation.

Improper inspection and maintenance was also alleged to be the root of a 2022 personal injury lawsuit filed with Minnesota’s Sixth Judicial District Court on July 20, 2022, by a guest, Jessica Meli, who was significantly injured Dec. 24, 2020, due to icy parking lot conditions at the resort.

Hilterbrand quit after five months working for the resort due to the working environment. She now works for the Virginia Parks and Recreation Department.

“I knew in my heart of hearts working there that something was going on below the surface,” Hilterbrand said. “And I just couldn’t put my finger on it.”

According to McCorquodale, he began covering the front desk after Hilterbrand quit.

“It was just a slow attrition and we didn’t have the finances to replace those people,” McCorquodale said.

Resort mourns 2 employee deaths on same day

Staff and residents have raised questions about the drowning death of 20-year-old Saunder Strong.

Strong was hired as a dishwasher and was later offered a position as an activities guide for summer 2023.

Given her past experience as a park ranger, naturalist and outdoor educator with a degree in wilderness management and recreation programming, as well as a two-year certification in backcountry guiding, Hilterbrand believed Strong was unqualified.

“Mind you, people from the Twin Cities, they’re a little bit different from the people up north in that a lot of them don’t have the outdoor experience to really know what they’re contending with when it comes to the cold, the lack of service, how harsh and unforgiving being outdoors can be,” Hilterbrand said.

She recalled warning Strong on May 9, 2023, about the dangers of whitewater kayaking during snowmelt runoff season.

Later that afternoon, the resort’s accountant, Kay Spielman, died in what is said to be a freak accident when a rock went through her windshield while she was driving near Two Harbors.

“The interesting thing is we only really acknowledge Saunder’s death,” Hilterbrand said. “After that, it was really just like, ‘Leave it alone. We don’t talk about it again. We’re going to move on.’ ”

Homeowners demand payments

In July 2023, Campbell reportedly put the Superior Shores Burlington Bay condos on the market, offering a $100,000 Home Depot or Wayfair gift card to the first 20 buyers to close on a condo before September of that year.

On Nov. 20, 2023, Superior Shores condo unit owner David Kuiti, of Hermantown, initiated a civil lawsuit with the State of Minnesota’s Sixth Judicial District Court in Lake County for over $100,000 against North Shore Resort Co. containing three counts: tortious interference with a business opportunity, willful breach of fiduciary obligation and duty to act in good faith, and civil theft.

According to the court document filed on March 12, after Kuiti refused to sell his condo unit to Campbell at a price significantly lower than its market value, Campbell, serving as president of the Superior Shores II Condominium Association, removed the unit from the rental pool. Kuiti went on to act as his own rental lease agent and alleged that Campbell, through his employees and agents, “continued a pattern of harassment” by refusing to allow reasonable access to renters of Kuiti’s property, according to the lawsuit.

A court case involving the operation of Superior Shores is ongoing in Lake County.

In March, the nearby Lutsen Resort also suffered a significant revenue loss when it offloaded the Poplar River Condos in what McCorquodale described as a “semi-amicable split” in partnership with the homeowners association.

In fall 2023, HOA members of Cliffhouse Townhomes and Lutsen Log Cabins, managed by Lutsen Resort, claimed they began seeing payments lapse even as their properties had bookings.

Cabin owner Bob Nagel is among the 10 vacation rental property owners who filed individual lawsuits in Sixth District Court against North Shore Resort Co. for non-payments from around August through December 2023.

“About five years ago or so, Bryce took it over,” Nagel said. “It wasn’t very long afterwards the payments would be late and late and late. There were just all kinds of excuses. They wouldn’t answer the phones. They wouldn’t answer emails. Eventually, then you would get paid.”

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Since the News Tribune last reported on Lutsen Resort’s lawsuits with various rental property owners in February, six more Cliffhouse Townhome owners filed conciliation court claims. North Shore Resort Co. submitted a motion to dismiss each of the overall nine claims, arguing that the property owners had no legal right to an individual claim as members of larger homeowners associations.

The court ruled against North Shore Resort Co. in eight of the conciliation cases on April 28, totaling $113,792. One of the property owners voluntarily dismissed his case at the advice of his attorney.

“Let’s say you have something inside that needs to be replaced,” Nagel explained of the property management arrangement. “You’re supposed to be able to call him. Then he goes out and finds people to do it, and he bills you for it.”

Cliffhouse Townhomes, Lutsen Log Cabins and Poplar River Condos, all previously managed by Lutsen Resort, switched to Cascade Vacation Rentals, a separate North Shore property management company unaffiliated with Campbell, by the end of 2023.

Lutsen Sea Villas, which broke ties with Lutsen Resort three years ago, is now managed by Odyssey Resorts.

Lack of revenue reaches boiling point

The dwindling number of guests at the resort and restaurant had become apparent to the public. Revenue declined and debt continued to mount for the resort as contractors, concessionaires and employees alleged they went unpaid:

After several attempts to collect what he claimed were overdue payments for services, Mike McMillan, owner of McMillan Tree Service, said Campbell promised to pay him after Nov. 1, 2023, as the resort awaited a financing package to come through for its remodel. On March 7, 2024, McMillan Tree Service filed a lawsuit against North Shore Resort Co. in Sixth District Court alleging failure to pay for over $37,000 in completed services and late fees. “It’s a small community,” McMillan said. “Everybody knew that things weren’t quite right over there.”

Former employees alleged they were unpaid as well. On Oct. 23, 2023, Arda Koc and Mert Aytan filed a conciliation court complaint for $6,460 in Sixth District Court against the Lutsen resort for withholding their final paychecks and housing deposits. Koc and Aytan requested to dismiss their case May 28 after making a settlement when Vanegas paid each $1,000 via the Venmo app.

In addition, several contractors filed mechanic’s liens:

On Jan. 29, 2024, Double Jack Design Workshop PLLC filed a mechanic’s lien of $84,664 with Cook County against North Shore Resort Co. for architectural services for the overall master planning of the Lutsen Resort. Work completed from May 11 through December 2023 for the project included the west wing addition, lodge and ballroom renovation, Nordic spa, parking lot, site work, chalet hotel, gatehouse and the bridge.
On Feb. 13, 2024, a mechanic’s lien of $270,965 was filed by Highmark Builders Inc. for work on the third floor performed between August 2022 and December 2023.
On March 12, 2024, a mechanic’s lien of $8,918 was filed by McKeever Well Drilling, Inc. for water well drilling, repair and testing work performed between May 2023 and January 2024.

Resort can’t make payroll

“There’s an overall lack of revenue,” McCorquodale recalled. “(Bryce) blamed winter for it, but it was more so his decision-making process.”

When the resort’s management staff were notified that it would run out of payroll in six weeks, McCorquodale said he began seeking employment elsewhere.

“I asked when we were going to tell the front-line employees. Edward said to hold off on that and to trust him,” McCorquodale said.

A series of emails provided to the News Tribune offers insight into the level of awareness that the resort’s management, accounting department, owner and staff had regarding the strenuous financial circumstances in the days leading up to the fire.

On Feb. 1, 2024, Vanegas emailed Campbell to notify him the resort couldn’t fund payroll for the period ending Feb. 4.

“We need to let our company’s managers and line staff know what’s about to happen and how we can assist them with new employment, continued housing in the interim and transportation to the airport and bus stations they might need,” Vanegas wrote to Campbell. “We must suspend guest arrivals and suspend accepting reservations.”

Vanegas warned Campbell that failure to disclose the payroll situation to staff and any work past Sunday could result in a Minnesota labor law violation. Vanegas encouraged Campbell to consider the National Bank of Commerce’s offer of $500,000 in funding, subtracting the mechanic’s liens, for a net of $150,000 to cover one and a half payroll periods.

On Feb. 1, Lutsen Resort Accounting Director Donna McCurdy-Wolke said in an email to Vanegas that she expected a negative balance in the coming days due to automatic fees.

Vanegas responded that weekend food and beverage sales might cover both of their paychecks and indicated that Campbell was aware there was no bank balance.

In a Feb. 2 email, Vanegas instructed McCorquodale not to “continue to advance a resort closing/lose all of our jobs/ missed payroll agenda” to staff or managers as it would be “premature.”

That day, Campbell emailed the accounting department, encouraging them to “ride out this abnormal season and focus on a busy upcoming summer.” In that email, Campbell said there would be no final winter marketing push to fill March bookings. The resort would instead switch to “waterfall marketing” — tourism promotions aimed at attracting guests to the local waterfalls — to fill rooms for April and May.

In a Monday, Feb. 5, email, Vanegas notified the accounting department that he had suspended Sysco orders for the week. McCurdy-Wolke responded that Campbell would meet with bankers in two days and expected there would be enough funds to cover payroll that Friday.

“We are providing a tour for three senior executives from NBC Bank on Wednesday afternoon and they have expressed a need to audit Accounts Payable for Lutsen Lodge,” Vanegas wrote in an email to the accounting department.

McCurdy-Wolke responded that an account review would reveal, “We haven’t paid bills in months.”

Vanegas suggested suspending direct deposits and allowing paychecks to be written to buy time for accounts to come through.

McCorquodale said he asked Campbell in person about his plan to take out a bank loan to secure payroll. McCorquodale said Campbell assured him he would be paid. McCorquodale later notified Vanegas he received a job offer elsewhere.

“That evening, it all just went up,” McCorquodale said.

The fire that ended it all

After the initial 911 call the morning of the fire Tuesday, Feb. 6, McCorquodale said the resort’s night auditor, Tyler Cobb, called him at 12:36 a.m. During a previous interview with the News Tribune, Vanegas identified the reporting party as Tyler Standley.

“(Tyler) said that there was smoke coming up from the floorboards around the electrical outlet,” McCorquodale said. “So he had gone downstairs and he had gone to the laundry room. The basement’s actually split into two parts and the laundry room. There was no fire there or no smoke.”

McCorquodale claimed to be the second person on the scene, arriving after the Cook County Sheriff’s Office. He saw smoke coming from the lodge’s lobby area, starting directly above the water heater. The fire spread laterally through the staircase, McCorquodale said.

Since the fire, McCorquodale spoke several times to agents from Ember Investigations, a Brule-based certified fire investigator specializing in fire causation. He said they seem to be particularly interested in the lodge’s water heater.

Vanegas declined to comment due to the ongoing insurance investigation.

The state fire marshal has not yet released a conclusion of its investigation.

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