Iron Duke, WestMass dispute terms of leaseDate: 1/27/2017 LUDLOW – What’s in a name?
That’s what appears to be at the crux of the disagreement between Iron Duke Brewing Company and WestMass Area Development Corporation, the owner of the Ludlow Mills property, including Stockhouse 122 in which the brewery has garnered a considerable regional following.
Iron Duke is facing possible eviction over a difference of opinion on what constitutes acceptable use of the space according to the lease agreed upon by the two entities in December 2013.
According to Iron Duke co-owner Michael Marcoux, Iron Duke’s lease allows operations for “microbrewery business purposes” and co-owner and head brewer Nick Morin said it is their belief that running a “taproom” that includes additional services such as live music, food trucks and events such as yoga classes falls within that definition.
“All of the promotional things that we do on a regular basis, it was our feeling, and still is our feeling, that if you walk into 95 out of 100 taprooms, you’re going to see something very similar to what we do on a day-to-day basis. The language says we can do what microbrewies do,” Morin said.
WestMass, however, has a different interpretation – one that defines the allowed use for the space as a “tasting room.”
In their official statement regarding the highly publicized issue, WestMass said they hoped to keep Iron Duke as a tenant, but indicated a clear difference in interpretation of the lease.
“At issue are the parameters of the lease that allow for a tasting room where the public can sample the popular local brews created by local entrepreneurs,” the statement said in part. “The tasting room has evolved into a taproom with significantly more traffic and occupying additional space in the complex, all operations that are not covered by the current lease.”
In response to what they see as the realistic prospect of receiving an eviction notice at the end of the month after receiving a notices of default citing what WestMass believes to be violations of their lease and an outstanding balance for a contested water bill, Morin and Marcoux took a proactive step and filed a preliminary injunction in Superior Court on Jan. 20.
“We felt like we had to do something to defend ourselves,” Marcoux said.
Iron Duke’s common victualer’s license granted by the Board of Selectmen, the town of Ludlow’s licensing board, stated it “will be a tasting room and manufacturing brewery,” however, its license through the town allows for entertainment including live entertainment.
The Board of Selectmen did not respond to a request for comment regarding Iron Duke’s standing with the town.
Morin insists that the aspects of the business WestMass is prohibiting are vital to the survival of the small business. Iron Duke has not hosted food trucks for some time and recently cancelled its most recent live musical act after receiving a letter from WestMass. If the prohibition of these activities continues, he said he feels it will “hamstring” the company and eventually put them out of business.
The prohibition of food trucks at the location has had an adverse effect on those companies’ operations as well. While unable to connect for a full interview, Debbie Affricano, owner of Uncle Benny’s Kitchen food truck, told Reminder Publications in a message, “WestMass Development put Uncle Benny’s out of business.”
The Facebook page for Uncle Benny’s, which was a regular fixture outside the main door at Iron Duke, indicated it received a letter from WestMass in September 2016 notifying them that operation at the Ludlow Mills was prohibited. By the end of October, Uncle Benny’s announced its truck was up for sale.
Morin added an eviction would be a crippling blow to the brewery.
“We have to push back a little because they’re going to push us out of business,” he said. “If we got the eviction letter, we wouldn’t have enough time to take this business and move it somewhere else and keep it up and running before they could kick us out. If that happens, essentially, we’re all looking for other jobs and the business may not be able to survive shutting down for six months.”
The case for Iron Duke’s suit for an injunction was postponed until Jan. 30. In the meantime, Marcoux said the lawyers for the two sides are meeting.
“We think there are creative ways for us and Westmass to work together to solve these issues,” he said.
According to court documents, WestMass claims in multiple letters sent first by WestMass and later its attorney, A. Craig Brown, that Iron Duke has been in violation of its lease due to the use of food vendors outside the building, food service in the building, live music, and storage in areas of the Mills property, both common areas and other building space, not currently under lease. Parking by patrons that exceeds the 20 spaces and in areas not agreed upon in the lease was also noted as a violation.
The letters also claim Iron Duke owes $1,124.54 in water usage fees, which Iron Duke disputes due to a disagreement over a change in metering practices that occurred in March 2015. According to the lease, Iron Duke was expected to pay a portion of water utilities from a shared meter from a calculation “based on employee count divided by actual cost.” In March 2015, however, WestMass installed a separate meter for Iron Duke, which it said in an Oct. 27, 2016 letter would “correctly and accurately measure water usage for Iron Duke's Brewery production process.” WestMass claims the brewery must pay the outstanding amount, representing metered usage from March 2015 to Oct. 28, 2016.
“It says we have continued to violate the terms of our lease. Basically it says we have unpaid bills, which, let me just say we pay every bill we owe and time will show that to be true and if they say otherwise, then we’re going to have that conversation with their attorneys,” Morin said. “They say we have an open bill that is outstanding and we are in violation of the lease and unless we rectify that within 30 days, they can start the eviction process.”
Since its opening on Thanksgiving Eve night in 2014, in addition to beer production for distribution to local bars, restaurants and package stores, Iron Duke has included a retail space within the mill building in which it sells beer, including a 16 seat bar. The brewery’s seating areas also have one three-seat table and four four-seat tables. In the past, the brewery has hosted live musical acts, food trucks and even yoga sessions in the brew house.
Morin and Marcoux insisted and their attorneys AiVi Nguyen and Jennifer Gamer of the Worcester law firm Bowditch and Dewey, LLP, reiterated in the company’s court filing that WestMass has always been aware of the happenings at Iron Duke and had not expressed any concerns until recently. According to the brewers, former WestMass CEO Kenneth DeLude, with whom Iron Duke worked until his retirement in 2016, and then-property manager Edward Jodoin were aware that Morin and Marcoux’s business plan included activities including food trucks and live music. Court documents contend the WestMass officials “embraced Iron Duke's business plan wholeheartedly.”
Morin said, “We had open dialogue with them about the fact these things would be going on. Kenn and I sat face-to-face and he would ask about what food truck we would have this week. It wasn’t a bone of contention at all. It was something that was accepted as part of our business.”
Iron Duke also claims they were storing equipment and brewing supplies in the unoccupied portion of the building as part of a “gentlemen’s agreement” while in the midst of a lengthy negotiation for a lease for that side of the building that were at a standstill.
Morin said there was a lack of meaningful conversation regarding the lease that was holding up the brewery’s expansion.
“We’re like, ‘We’re busting at the seams here, we want to start building out the other space, where is the lease? I can’t start investing money into the building until I have it under contract. Why would I spend 50 grand to gut the place if I don’t even know if I have a lease for it? Glad I didn’t,” Morin said.
Iron Duke has since removed all of their materials from that portion of the building at WestMass’ request.
Iron Duke’s court filing also asserts WestMass “breached its obligation to act in good faith” by installing a separate water meter, claiming the action and resultant invoicing was not consistent with the lease.
Morin noted the shift in WestMass’ stance appeared to take place around the same time DeLude retired and was replaced by current CEO Eric Nelson in June 2016.
In July 2016, Iron Duke sent Nelson a detailed letter outlining their hopes for expansion over the next five years and a reiteration of the company’s desires to work out a lease to move that expansion forward. Morin said the tentative plans represented an investment of between $500,000 and $1.5 million over that span, including infrastructure improvements to WestMass facilities. Iron Duke also hoped to employ more than 15 people by the end of year four. There was no immediate response from WestMass.
“Which was strange, because to that point they had been pretty good about responding,” Marcoux said. “They usually got back to us within 24 hours. Crickets on this email. Literally no response at all.”
The next thing Iron Duke said they received regarding a lease was the first certified letter from WestMass outlining what they felt were violations. As the months went on, more letters with stronger language were delivered and Iron Duke was instructed to direct all conversations to the attorneys representing WestMass.
“We were growing, we hit a ceiling and we were looking for the conversation and it stopped. And not only did it stop, but that’s when lawyers got involved,” Morin said.
Around the time the company received its letter of default, it released a new black IPA, called Eviction Notice and an online petition was launched by the Friends of Iron Duke, spearheaded by former Ludlow Selectman and former candidate for State Senate Chip Harrington.
Since Jan 17, more than 3,500 people have signed the petition.
“These are two entrepreneurs who have put considerable time, effort and money into that space, which was not in great shape when they got there,”?Harrington said. “Speaking from a local Ludlow perspective, they have been passionate about this community and have been contributing to the local economy.”
Harrington, who hosted multiple campaign events at Iron Duke, said he started the petition to make WestMass aware of the high level of community support the brewery has received and to make the public aware of the issue.
“The fact I’m talking to you right now says the petition is working,”?he said.
Marcoux said Iron Duke was not aware of the petition until they started getting phone calls and said he and Morin were “completely humbled” by the outpouring of support.
The two brewers said they are open and willing to have a dialogue with WestMass and would ultimately prefer to work out an agreement.
“We wanted to invest in this building, in this community, in this space basically until the day I drop dead because I don’t think I’m ever going to be able to retire. We still honestly want to work something out here,” Morin said. “Is it likely? Probably not. We’ve tried to open the lines of communication on a consistent basis and we still keep getting directed back to their attorney and we still keep getting letters from their attorney.”
If they do have to leave, Morin added he hopes it can be in a fashion that allows the business to survive.
“We only have three years and 10 months left on our lease. At that point, we have to leave; we can’t force them to give us another lease,” he said. “If they just let us live out our days here, that would give us sufficient time to come up with a plan B, although that would cost of a fortune and it would be a pretty sad day to walk out of here and never come back.”
Representatives of WestMass had no additional comment following Iron Duke’s court filing when queried.
WestMass CEO Eric Nelson did not respond to a direct request for comment regarding this story.
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