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Lease flaws come to light

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The original lease for a Scotty’s restaurant in downtown Columbus was between a company that never existed and a city-owned corporation the mayor is dismantling.

The ongoing dispute between Columbus city officials and MSCB Group, parent company of the restaurant leaseholder for the space at The Commons, stems from a contract that both sides acknowledge was flawed when it was written.

On Thursday, the city presented MSCB Group with a letter notifying the company that it was in breach of its lease. The letter, written by City Attorney Kelly Benjamin and Redevelopment Commission Attorney Stan Gamso, gives the tenant 15 days to fix the breach, but it also cautions that opening as a Detour American Grille & Bar on Monday would not meet the requirement that the company operate a Scotty’s franchise.

In June 2011, Meredith “Mert” Shipman, co-owner of MSCB Group LLC, and Ann DeVore, then a Columbus City Council member, signed a lease to bring a Scotty’s restaurant to Columbus. Shipman signed representing Scotty’s Greenhouse LLC as president, and DeVore signed representing Columbus Downtown Inc. as president.

Specifically, the lease says the space was being rented “for the purpose of creating and operating a ‘Scotty’s Greenhouse’ restaurant on the property ... several establishments, each operating under the ‘Scotty’s Greenhouse’ brand, are currently located throughout Indiana. ... Such an establishment is of the specific nature contemplated by the term ‘restaurant’ as that term is used in this sublease.”

An amendment approved Sept. 28, 2011, changed the sublessee’s name from Scotty’s Greenhouse LLC to Greenhouse Restaurant LLC (doing business as) Scotty’s Burger Joint.

But there is no such thing as a “Scotty’s Greenhouse LLC” operating a restaurant in The Commons, and there never was, said Kerry Mann, attorney for MSCB Group.

In an interview after Thursday’s Redevelopment Commission meeting, Mann said he believes that the amendment changed all the references in the document, meaning that all of the Scotty’s Restaurant references and requirements were now Greenhouse Restaurant references.

“Because this is potentially going to be litigated, we have to be careful not to spill all of our cards at this time, but we would simply state that if you change the name in a lease, that you changed it everywhere in a lease, not just the one portion,” Mann said. “So if it was Scotty’s Brewhouse signed and you amended it to Greenhouse Restaurants, then everywhere it should be Greenhouse Restaurants, not just the one you want to apply. The whole contract should be changed, not just one word.”

Mark Maddox, co-owner of MSCB Group LLC and an attorney, told the Redevelopment Commission that since CDI drafted the original lease, the responsibility for any errors fall on the drafter.

“Mayor (Kristen) Brown, we just strongly disagree with you, your suggestion, that the lease provision is clear-cut, when it talks about we have operated a Scotty’s Greenhouse,” Maddox told the commission. “We think that language is unclear and ambiguous, nonsensical. We didn’t draft it, CDI did. The drafters get stuck with those issues. We think that provision, as you interpret it, is potentially unenforceable, and we certainly intend to enforce our rights.”

Gamso said earlier this month that he suspects that, after the lease was signed, it was discovered that a business with the Scotty’s Greenhouse name was already operating in Trafalgar, as a greenhouse. However, Mann said he did not know if that discovery was the impetus to change the lease.

On the city side, officials under Brown’s direction have been working to dismantle Columbus Downtown Inc., the nonprofit company set up by city officials under Mayor Fred Armstrong to sign leases and otherwise facilitate downtown development.

Transferring the lease for the Scotty’s space from CDI to the Columbus Redevelopment Commission was one of the last pieces needed to fall into place.

On Thursday, the Redevelopment Commission resolved to sign a master lease with The Commons Board for maintenance of all the subleases at The Commons and approved an authorization to accept assignment of subleases under the master lease and for The Commons Board.

“This resolution was the final okay to sign the paperwork authorizing (Columbus Redevelopment Commission) as the manager of the subleases,” Benjamin said Friday in an email.

“The transfer of the subleases to the CRC was contingent upon all the sublessees allowing the assignment. The last sublessee to agree was Greenhouse on Dec. 17 when they signed the acceptance of the assignment to The Commons.”

Benjamin said The Commons Board signed the assignment at its meeting Monday, and the Redevelopment Commission formally accepted them with the resolution.

Mann and Maddox protested the resolution, saying the city had not properly notified the public of the agenda item. But Mann apologized after Thursday’s meeting for suggesting that Benjamin had not communicated with MSCB Group because she had, in fact, updated him by email.

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