A September 2018 image of the Jamestown Brewing Company from Google Maps.

JAMESTOWN – The owner of a building that houses a new brewery in downtown Jamestown is trying to evict the business for failing to keep up with rent.

GPatti Enterprises – owned by local developer George Patti – owns the building that houses the Jamestown Brewing Company (JBC) at the southeast corner of Third and Washington Streets. According to a petition filed in State Supreme Court in Erie County on Tuesday, GPatti is claiming it’s received less than 20 percent of four months worth of rent, dating back to Sept. 30, 2019.

The complaint says that JBC owes a total of $85,000, but has only paid $15,000 so far. It also says that the brewing company – which is co-owned by John McLellan Sr. and John McLellan Jr. – has been unable to pay various debts it owes various lenders. Under its lease agreement with the business, GPatti argues it has the right to evict the operation if it fails to pay rent owed after 10 days of its due date.

A hearing for the case is scheduled for Thursday, March 5, in Buffalo.

Meanwhile, the lawsuit is not the first one that’s been filed between GPatti and JBC. In December 2018, JBC filed a lawsuit against GPatti, claiming a Breach of Contract, Fraudulent Inducement, Fraudulent Misrepresentation, and Negligent Misrepresentation when it entered into a lease agreement in 2017. At the time of signing its lease, JBC claims GPatti had said work on the building would be completed in time for an April 2018 opening. However, numerous delays in construction – including an environmental abatement mandated by the state – pushed that opening date back for more than a year. As a result JBC felt GPatti was misleading when it provided the timeline for when the operation could open. It is suing GPatti for compensatory and punitive damages.

In April 2019 the court dismissed three of the claims, while the issue of breach of contract is still playing out in the court.

That case is currently in the discovery phase, with a deadline of April 30 for both sides to present their evidence. The next scheduled court date in that matter is a discovery compliance meeting set for July 10.

According to the Post-Journal, the total project cost for renovating the property and preparing it specifically for JBC was estimated at $3.84 million. Financing for the project included a $475,000 state Main Street grant that was awarded through the Regional Economic Development Council program in December 2015 and $830,000 from the Downtown Revitalization Initiative in 2017. The Jamestown Local Development Corporation has a $180,000 loan attached to the project. The IDA also offered tax abatements for the property.

The day after WRFA reported the civil suit filed by the JBC against GPatti Enterprises, GPatti sent out a press release/statement from its legal counsel – Rupp Baase Pfalzgraf Cunningham LLC – to local media vehemently denying any wrongdoing in the multi-million dollar effort to prepare the building for the brewery operation.

GPatti, owned and operated by George Patti of Jamestown, is the owner of the former Lillian V. Ney Renaissance Center (and previously known as the Grant Building) on the corner of Washington and W. Third Streets in Jamestown. The operation is renovating and leasing the property to JBC, owned and operated by Jon McLellan Sr. and Jon McLellan Jr. from Buffalo.

In December JBC filed a civil complaint in New York State Supreme Court – Erie County claiming GPatti failed to live up to its end of its lease agreement to have the building prepared for a grand opening by April 2018. Instead, several environmental setbacks have resulted in the operation still not being open – with a new date set for mid March of this year.

“If JBC had been made aware of the environmental issues in a timely fashion, it would not have entered into the lease agreement with GPatti,” the lawsuit contends

In its response to the lawsuit, the statement from Rupp Baase Pfalzgraf Cunningham said GPatti was disappointed to learn of the legal action by its tenants and it would have preferred the brewery work with it to resolve any issues or concerns, rather than filing a lawsuit. The statement also said that JBC was aware of the potential for delays and took on that business risk as part of its lease, adding that the business was made aware of the progress of the work at all times.

And it said that if the lawsuit does move forward, GPatti will vigorously defend against the allegations, and it will assert claims of its own.

JBC is being represented by Ryan Cummings from the Buffalo law firm Hodgson Russ.

He told WRFA via email on Tuesday that the lawsuit was only filed after JBC tried unsuccessfully for months to resolve its issues with GPatti privately.

“The delays discussed in the complaint have presented challenges to Jamestown Brewing Co. and those challenges continue to mount,” Cummins said.

The brewery is seeking damages in excess of a million dollars as a result of the project being 11 months behind schedule.

Cummins also said despite the lawsuit, the brewery continues to work diligently to open the restaurant and brewery.

According to the Post-Journal, the total project cost for renovating the property and preparing it specifically for the JBC business was estimated at $3.84 million. Financing for the project included a $475,000 state Main Street grant that was awarded through the Regional Economic Development Council program in December 2015. The Jamestown Local Development Corporation has a $180,000 loan attached to the project. The IDA also offered tax abatements for the property.

Last week City Development Director Vince DeJoy said JBC was expecting to open in mid-March.  Once open the business is expected to employ between 30 and 40 people. The restaurant will seat 280 guests in five different areas.

BUFFALO, NY – The long-delayed opening of a new downtown brewery has led to the business suing the building owner and project developer.

According to a legal complaint filed in State Supreme Court in Erie County in late December 2018, Jamestown Brewing Co., Inc. (JBC) is the plaintiff in a case against GPatti Enterprises, LLC, (GPatti) the defendant.

JBC is suing for breach of contract, negligent misrepresentation, and fraud.

The complaint was filed by JBC legal counsel Hodgson Russ LLP, based out of Buffalo.

• READ FULL LEGAL COMPLAINT FILED BY JBC

JBC is based out of Buffalo and is being operated by the father-son duo John McLellan Sr. and John McLellan Jr. GPatti is owned and operated by Jamestown-area resident George Patti. Because the McLellan’s business is based out of Buffalo, the complaint was filed in State Supreme Court in Erie County rather than Chautauqua County.

As part of its complaint, JBC says it entered into a lease agreement with GPatti without being fully informed of environmental issues that could have delayed its opening. It also claims GPatti breached its contract by failing to meet the original construction schedule and performing work as required under the lease.

UNDISCLOSED ENVIRONMENTAL ISSUES FORCE RECURRING DELAYS IN OPENING

In August 2017 JBC entered into a lease contract with GPatti and moved forward with an initial plan of opening in April 2018.

GPatti purchased the former Lillian V. Ney Renaissance Center on the corner of W. Third and Washington Streets from the Gebbie Foundation in December 2017 for $330,000 as part of its plan to redevelop the property for JBC. The purchase took place after the brewery project was awarded $830,000 from the $10 million Downtown Revitalization Initiative (DRI) Grant (announced in the spring of 2017).

As part of its business plan and in coordination with the timeline provided by GPatti, JBC purchased and stored long lead items for the brewery and also hired employees in preparation for the installation of the brewing equipment and the pending grand opening. The JBC Grand Opening was intended to take place in advance of the opening of the National Comedy Center in August 2018. However, the April opening did not occur and in June, GPatti presented an updated timeline that said work would be completed by October 2018. Once October arrived, the completion date was pushed back another month and again another month until it eventually was pushed back to mid January 2019. At that time the lawsuit was filed.

The recurring delays in the development timeline were reportedly due to environmental remediation required by the state due to the property being located at a former dry cleaning facility, as well as asbestos abatement that had to take place.

According to the legal complaint filed by JBC, GPatti had attributed the delays to a Phase II environmental study from the Department of Environmental Conservation from the fall of 2017. Because a Phase II study only occurs after a Phase I study has been done and indicates that there is a potential problem, JBC says it appears that the Phase I strudy was done before the lease was signed, but they were not informed of the results of the Phase I study prior to signing the lease.

JBC also feels GPatti was aware of the environmental issues in advance of the 2017 Phase II or Phase I study because the Gebbie Foundation had a Phase II study done in 2007 when it owned the building. At that time the Jamestown Renaissance Corporation (JRC) was a tenant in the Lease Premises. JBC believes GPatti knew of the Gebbie Foundations’ 2007 Phase II study before the lease was signed because an executive who worked for JRC at the time of the 2007 study began working for GPatti prior to August 2017.

“If JBC had been made aware of the environmental issues in a timely fashion, it would not have entered into the lease agreement with GPatti,” the lawsuit contends.

JBC also states that its principles and employees quit their jobs in anticipation of the original April 2018 grand opening date and the principles contributed significant personal funds to bridge the period of time between the original grand opening date and the new anticipated opening dates, and the company has incurred carrying costs including bank loan repayments and insurance.

JBC received several loans and funding grants in order to get the operation off the ground. As a result of the delays in opening, all lending sources – both public and private –  made an effort to restructure their respective loans to accommodate the McLellans and ensure they have enough startup capital for the business once it finally opens.  But the delays in loan repayments have lead to additional interest being added until the loans can be fully repaid.

As part of its claim, JBC says it has suffered damages of at least $1,000,000 and is also seeking compensatory damages, interest, attorney’s fees, and costs as a result of the alleged breaches by GPatti.

Also, As part of its lawsuit, JBC claims that even though GPatti has received DRI funds that were earmarked for the brewery project and it is a joint beneficiary of those DRI funds, GPatti has not identified the DRI funds it has received, nor identified what those funds have been spent despite numerious requests. As a result, JBC is requesting GPatti be compelled to account for the DRI funds and their expenditure.

WRFA reached out to the parties involved on Tuesday. A representative for GPatti didn’t want to make an immediate comment.  However, the attorney for JBC – Ryan Cummings from Hodgson Russ, sent a statement late Tuesday afternoon.

“The lawsuit was only filed after Jamestown Brewing Co. Inc. tried unsuccessfully for months to resolve its issues with GPatti privately. The delays discussed in the complaint have presented challenges to Jamestown Brewing Co. and those challenges continue to mount as just [Monday] one of GPatti’s subcontractors filed a lien against the property, claiming that they have not been paid for work and materials provided to GPatti. Notwithstanding the lawsuit and delays occasioned by GPatti, Jamestown Brewing Co. continues to work diligently to open the restaurant and brewery,” Cummins wrote.

Cummings also said that the lawsuit is in its infancy, but a typical commercial case takes approximately 18 months to resolve.

WRFA also reached out to city development director Vince DeJoy, who tells WRFA the city is aware of the lawsuit and is hoping for a quick resolution, adding that it remains committed to seeing the business open in the near future.

According to the Post-Journal, the total project cost was estimated at $3.84 million. Financing for the project included a $475,000 state Main Street grant that was awarded through the Regional Economic Development Council program in December 2015. The Jamestown Local Development Corporation has a $180,000 loan attached to the project. The IDA also offered tax abatements for the property.

Last week DeJoy said JBC was expecting to open in mid-March.  Once open the business is expected to employ between 30 and 40 people. The restaurant will seat 280 guests in five different areas.

The Chautauqua County Industrial Development Agency is considering granting the exemption to the business, but must first hold a public hearing. The hearing will take place at 10 a.m. on Friday, May 19 in the IDA offices, located at 201 W. Third St., second floor of the BWB Building.

Jamestown Brewing Company is a proposed $4.8 million microbrewery and restaurant business being developed by John McLellan Sr. and John McLellan Jr., both from the Buffalo area.  As part of the project, the Lillian V. Ney Renaissance Center building is being purchased by local developer George Patti of GPatti Brew and will be transformed into a three-floor brewery and restaurant.

Financing for the project also includes a $1 million request in state funding from the Downtown Revitalization Initiative and a $475,000 state Main Street grant that was awarded through the Regional Economic Development Council program.

More details on the project, including the costs and benefits (as presented by the applicant), can be found online at the IDA website.

Image courtesy of Jamestown Mayor Sam Teresi.

JAMESTOWN – City leaders and local development officials are hoping a $3.5 million renovation project in Jamestown will yield new business opportunities for the downtown.

On Friday afternoon, officials with the city development office and the Jamestown Renaissance Corporation joined local businessman and property owner George Patti to break ground at the newly named “Signature Center” – the now vacant M&T Bank building that sits on the corner of Third and Main Streets.

According to city officials, the groundbreaking was held to highlight the $3.5 million purchase and renovation of the three-story building.

Officials say the project is being financed by Patti with the help of local grant funding and tax credits, which are the result of the project taking advantage of the Downtown Jamestown Historic District. According to JRC officials, more than 100 buildings in Jamestown are on the state and federal list of historic places. The designation allows projects the ability to access federal income tax credits of up to 20 percent of the project cost.

One of the businesses already expected to move into the building once renovation work is complete is Digitell.