Tenant cries foul over marketing lower Main Street
February 7, 2010
John Sutton, owner of Mulligan’s Irish Pub at 804 Main Street, is refusing to pay rent monies used to promote The Shops at The Village on Lower Main.
The landlord, NNN Summit Watch, is seeking his eviction. Thursday in 3rd District Court, Judge Robert Hilder said the dispute puts him in an awkward situation. The tenant, Sutton, agreed he’s in arrears on rent monies, so it’s appropriate to allow his eviction. But Hilder also said he’s not ready to rule on whether Sutton’s reasons are justified.
Recently, Judge Bruce Lubeck agreed with Mulligan’s neighbor, The Alpine Internet Café, on a similar issue. Hilder appeared to be favoring Sutton on Thursday when he told NNN Summit Watch that the lease did not allow them to charge Mulligan’s for promoting the shopping center.
At issue is a paragraph in Sutton’s lease that requires him to be a member of the "Town Lift Merchants Association" and pay a portion of joint marketing costs.
But there is no merchant association at the Marriott Summit Watch and that isn’t in dispute.
What is, however, is if NNN Summit Watch can use that paragraph to justify charging tenants extra "Common Area Maintenance" (CAM) fees to pay the company Strategic Communications to market The Shops at the Village on Lower Main.
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Sutton said the association was formed by the previous landlords so tenants could give input on how the center was advertised. Eventually, the members decided their individual efforts were more effective than their joint efforts. When Thompson National Properties purchased the complex in 2006 (of which NNN Summit Watch is a subsidiary), it never recreated the merchants association. Instead, Sutton said, it dubbed the area The Shops at The Village on Lower Main and hired a marketing firm without the input of the tenants.
Attorney for the landlord, David Scofield, told Judge Hilder that because the merchants were not organized, the responsibility to promote the complex fell upon the landlord. The input from tenants was supposed to be between them and Park Silly Sunday Market founder Kimberly Kuhn of Strategic Communications to jointly promote the complex.
Since Sutton wished to have no dealings with Kuhn because he said Mulligan’s was not well served by the firm’s joint marketing, Sutton had violated the terms of his lease requiring him to be a member of the Town Lift Merchant’s Association.
Lubeck previously disagreed with that line of reasoning, and Hilder told Scofield it wasn’t how he read the lease.
"It’s not the most perfect paragraph that’s ever been drafted," Scofield conceded.
Still, Hilder said, Sutton knew he owed CAM fees but didn’t pay them. That warrants eviction.
Sutton told The Park Record he didn’t pay any fees because, "I couldn’t rely on any figures at that point the amounts were so astronomical."
Sutton and his attorney Natalie Segall argued NNN Summit Watch has irregular accounting methods resulting in monthly invoices that are unclear, inconsistent and full of charges not required by his lease.
"All I asked for was the same thing you get when you get your car repaired: they show you the part they fixed," Sutton said. "I want to see it in real terms – concrete accounting terms amounts that don’t disappear and change."
It was that point Hilder said he needed more time to decipher, but it was also a complaint of The Alpine Internet Café (also represented by Natalie Segall). Because of the difficulty in determining what exactly is owed under the lease, the café is still in litigation over the issue and owner Bryan Markkanen wished not to comment.
Talisker attorney David Smith confirmed that the company left the complex last July over disagreements involving CAM fees, and CODA Gallery owner Connie Katz said she, too, had a legal dispute with the landlord over suspicious CAM charges a few months ago, but worked it out with them.
Segall said invoices from NNN Summit Watch total an amount twice that reported as Mulligan’s share of total expenses in a separate document. Sutton told The Park Record he was asked to pay $32,000 a few years ago and discovered he only owed $700.
Sutton said he’s asked for more detailed accounting from NNN Summit Watch, and did not receive anything until litigation was already underway.
Scofield and Thompson National Properties vice president of asset management Darryll Goodman told Hilder the defendant was not reading the documents correctly.
"Our staff knows what needs to be done, the (accounting) software is automatic," Goodman said.
Sutton told the court repeatedly he is ready and willing to pay the amount he owes just as soon as NNN Summit Watch can prove he owes it under his lease with appropriate documentation.
Scofield said the amount is around $50,000. Segall believes it to only be $13,000.
Sutton told The Park Record that he hopes and plans to be in the space for many more years and looks forward to working with NNN Summit Watch in the future – so long as the accounting is rectified.
Segall asked Hilder for a forensic accounting to settle the matter for both parties.
Another issue at play, as revealed in Judge Lubeck’s decision, is NNN Summit Watch wants future tenants to split the revenue from subleasing during the Sundance Film Festival.
Many landlords on Main Street, including the Sweeneys, try to help their tenants capitalize on the festival because it aids them in making rent payments.
Scofield said he was not authorized to speak to The Park Record on behalf of his client and no one from Thompson National Properties could be contacted.