West Charlotte brewery fights off eviction for now as landlord dealt a legal setback
A west Charlotte brewery staved off eviction for now as a legal case involving its out-of-town landlord moves forward.
Late last month, Mecklenburg County District Court Judge Paulina Havelka denied a motion by the landlord, Atlanta-based developer Portman Holdings, for an order that would have paved the way for the landlord to take possession of the premises. Portman’s lawyer was seeking relief for, among other things, a breach of the lease, and denied in court records the brewery had any right to stay in the property.
The judge’s denial means the case will move forward to a full hearing, likely held for now in District Court.
The brewery, which sits at the end of the Stewart Creek Greenway, remains open.
Blue Blaze Brewing has been in a lease dispute with Portman Holdings after the two sides couldn’t reach an agreement several months ago on what constituted the prevailing market rate for a renewed lease.
Portman Holdings, which bought the property where the brewery sits two years ago, is redeveloping the 27-acre site with office, retail and more than 600 apartments.
The brewery has become a community staple since opening six years ago. Late last year, Portman Holdings proposed what would be a 376% rent hike for the brewery as it sought to renew its lease for another four years, court documents show.
A subsequent eviction case has left some in the community wondering what will happen to the brewery.
Fighting over prevailing market rate
Attorneys for both sides appeared for a virtual hearing in December.
The “prevailing market rate” term in the lease is vague and undefined, argued Portman attorney John Floyd, who works with Moore & Van Allen. The lease doesn’t provide any way for the two sides to figure out what that rate should be, Floyd said.
Blue Blaze’s Asheville-based attorney, Derek Allen, disagreed. He pointed the judge to a specific number in the lease which stated the renewed lease rate can’t be less than 114% of the initial term.
It’s unclear when the next hearing will be held. The case remains in District Court, although Blue Blaze attorneys have filed a motion to move it to Superior Court.
“We want it resolved as soon as possible,” Allen told The Charlotte Observer. “Our client simply wants to continue running their brewery and serving their locals.”
Portman Holdings declined to comment, citing the ongoing legal matter.
Blue Blaze argues it’s being bullied out
Floyd said in court there was enough evidence in the case to pave the way for the landlord to be given possession of the property.
The Blue Blaze lease offered an option for the brewery to renew its lease for another four years, Floyd argued, but that it did not provide a “clear mechanism” for determining what the rent price would be.
He pointed to a section of the lease that says the landlord and tenant have 10 days to negotiate the base rent after the tenant expresses a wish to extend.
If the two sides can’t agree, the rent will be equal to the prevailing market rate, the lease states, according to court records. The lease states that amount can’t be less than 114% of the previous lease term.
There is no formula to determine the new rent or language that says a third party will come in and determine it, Floyd said.
“What the tenant wants is for the court to rewrite the contract and determine what the prevailing market rate should be based on some court-selected methodology, not by reference to the language of the lease” Floyd said during the December hearing. “That’s not the role of the court.”
Allen told the court there is language in the lease that helps the parties. The inclusion of the 114% figure gives context to what the landlord and tenant intended for that lease term to be.
It serves as a floor for someone like an appraiser — or potentially a jury — to figure out the term, Allen said.
“This case is really about the landlord trying to bully this particular tenant out of this space so they can go forward with their large construction project,” Allen said Tuesday. “They need this tenant out.”
What the redevelopment looks like
Portman Holdings is redeveloping the historic textile mill on the property called Savona Mill. Plans call for 651 apartments, close to 200,000 square feet of office and retail space, and building out other parts of the property with a walking trail and amphitheater.
The project, which will keep the historic mill on site, is expected to take three years to complete.
Apartment construction is underway and will happen in phases, Portman Holdings has said. The cost of the project has not been disclosed.
Background on the brewery case
In late 2021, Blue Blaze owner Craig Nunn expressed interest in renewing the lease for another four years, according to court records. Portman proposed a rent that represented a hike of 376%, documents show.
Through a broker, Blue Blaze then proposed a longer-term lease with a considerably lower rent that increased annually. It couldn’t afford the Portman proposal unless improvements were made to add retail seating capacity, court documents show.
The two sides have a set period of time to negotiate the rent but if they don’t agree, the annual base rent for the renewal period “shall be equal to the prevailing market rate,” the lease states.
Negotiations stalled from there, leading Portman to say the brewery had not exercised its right to extend its lease, according to court documents. It eventually said the brewery’s lease expired on June 30 of last year.
Portman filed to evict the brewery over the extension of the lease and nonpayment of rent. That case was dismissed by a small claims magistrate in August. Portman then appealed to district court.
This story was originally published January 9, 2023 at 5:55 AM.
