Iron Hill in Rehoboth Beach has filed suit against its landlord for what the brewpub says are unpaid construction reimbursements.
The suit, filed in New Castle County, pits Iron Hill against Coastal Station LLC, owner of the property. According to court documents, the two sides entered into a 15-year lease agreement May 10, 2017, for Iron Hill to build a brewpub at the site on Route 1 at Holland Glade Road.
Before Iron Hill could open, improvements had to be made to the property. Court documents state that Iron Hill and Coastal Station agreed that Iron Hill would make the improvements and later be reimbursed by Coastal Station. There was an allowance of $1.6 million for reimbursements, to be paid in three installments.
These improvements included installing a concrete slab, storefront, walls, insulation, drywall, plumbing, a boiler room and a kitchen, which Iron Hill says in its court filing were Coastal Station’s responsibility but Iron Hill paid for out-of-pocket.
The first installment was for $414,000 to be paid 90 days after Iron Hill took over the property. The second payment, again for $414,000, was payable 120 days after Iron Hill took over. The final installment of $828,000 would be paid after Iron Hill opened.
Iron Hill officially opened May 24, and, court documents say, delivered an invoice for the third round of improvements on June 15. The payment was due July 15, but, Iron Hill’s suit says, no payment was received.
Court documents say Iron Hill gave Coastal Station a new deadline for reimbursement, Sept. 9. Although they were owed $1 million - which included additional improvements beyond the original agreement - Iron Hill says only $549,000 was received.
Iron Hill then filed suit Dec. 7, alleging breach of contract and seeking to be paid the $466,000 the brewpub says it is owed.
In a statement, Iron Hill says, “We’re working to resolve the issue and are confident this matter will be resolved in the near future.”
But Coastal Station’s attorney says Iron Hill did not repay money advanced by the landlord for work on the building.
Charles Brown, attorney for Coastal Station, said Iron Hill agreed to an aggressive construction schedule that would build the new brewpub in 12 months to open by Memorial Day 2018.
Brown said after construction began, Iron Hill requested a complete redesign of the building, resulting in additional costs and the potential to delay opening by three months. He said both parties agreed that Iron Hill would absorb the new construction costs. Coastal Station lent Iron Hill the money for the new building costs, with the understanding that Iron Hill would ultimately reimburse them, Brown said.
“Coastal Station moved heaven and earth so that Iron Hill could be open by Memorial Day weekend,” he said. “And now they are reneging on this agreement and suing the landlord for these expenses.”
Brown said Iron Hill was responsible for permit and tapping fees, which were advanced by Coastal Station under the condition that Iron Hill reimburse them. He said Iron Hill never reimbursed the money and is now claiming these costs in its lawsuit.
“Coastal Station Co. has made every effort to be responsive to the needs of Iron Hill Brewery and to completely live up to the lease agreement,” Brown said.