HAZEL PARK, Mich. (FOX 2) - The owners of Cellarmen's believed they had it all when they opened a mead, cider and beer business in 2015 in Hazel Park.
They say they found the perfect spot on John R because the business was unique to the area and their monthly rent was affordable.
"Originally negotiated it at $2,800," said co-owner Dominic Calzetta.
But as business continued to flow and volume picked up, their 3-year lease came to an end. That's when they say their landlord dropped a bombshell.
"It was raised to initially $5,000," Calzetta said.
The owners say they tried to work things out with their landlord, even offering to buy the building. They were rejected.
"Then there was litigation and through litigation it ended up at $7,500," Calzetta said. "That crippled us entirely.
But the landlord, Michael Scheid, has a different story. In a statement to Fox 2 he says in part: "I told them I would rent them part of the building for three years at well below market. After that time, the rent would adjust to market rate. I gave them 6 months of free rent to help them get started. I also worked with them through rent being late almost every month."
When the rent wasn't paid in March, an eviction notice was filed. Months later, in June, a settlement was reached, under which the company is allowed to occupy the building until the end of August. But the owners of Cellarmen's say they've been forced to call it quits because they can't afford the higher rent.
"We're going to operate until the end of July, until the 27th, and then shut down operations," Calzetta said.
For now, they're working to sell off equipment and cater to their customers, who they say have been incredibly supportive.
"We've got two more weeks. Come on in, we have everything special for you that we've been pulling out of barrels," he said.
The owners of Cellarmen's say they have no plans to move elsewhere for now, but they hope their story sends a strong message to landlords.
"It's all up to person who owns building, and they can either work with you or not," Calzetta said.
WEB UPDATE: Michael Scheid, the managing member of the group that owns the building released a statement:
"I am the managing member of 24310 John R, LLC that owns the building that Cellerman’s rented. I purchased a former lumberyard that was in total disrepair. I spent several hundred thousand dollars fixing up the building.
"Four years ago I was approached by Ian Radogest-Givens and Jason Petrocik, the owners of Cellerman’s, asking me to rent them part of the above referenced building to start a winery and brewery.
"They told me a story about Jason having been fired for cause by their previous employer, Bee Nektar Meadery in Ferndale, and Ian being fired for ‘no good reason’. Ian said he was suing his former employer over the termination. They were looking for a place to start their own business but they had little capital and needed a break. I told them I would rent them part of the building for three years at well below market. After that time, the rent would adjust to market rate.
"I rented them 11,298 sq ft of my building for three years. I gave them 6 months of free rent to help them get started.
"The first year they paid $1,550.00 per month plus NNN charges (the NNN charges were approximately $900.00 per month to cover real estate taxes and base building insurance in addition to the base rent). The second year they paid $1,680.00 per month NNN. The third year they paid $1,810.00 per month NNN.
"As a reference to what market is, the property located at 24107 John R, a couple blocks away, is for rent now. It is only 3,500 sq ft (which is the size of the tasting room in the front of the cellarmans business) and they are asking $18.00 per sq foot NNN. That would be $5,250 per month NNN for the entire 3,500 sq ft building compared to the 11,298 sq ft that Cellermans rented from me for $1,810 per month during the last year of the 3 year lease.
"I worked with them thru rent being late almost every month. Thru their inability to follow the rules set out in the lease.
"From May to December, 2018 I met with the Cellermans group including Ian’s father/ Attorney (Terry Givins) in an effort to work out a way for them to stay as a tenant in my building. In the end, They said they could only afford to pay $3,000 per month in rent. In a meeting in December I thanked them for their efforts to make a go of it in my building and asked how long they needed to move out. I was told that they would be out by the end of March, 2019. I reduced the $5,000 NNN per month rent to $3,500 per month for those three months. My attorney confirmed with their attorney that this was the agreed upon plan.
"They paid the rent in January and February. March came and no rent was received. After several inquiries went unanswered we filed for eviction and we met with the Hazel Park Judge for pre-trial. The Judge ordered facilitation and mediation which were both scheduled. During facilitation, the Cellermans people asked to be able to stay in the space until August 30, 2019. We agreed to their request and rent of $6,500 per month during that time period was also agreed to by both parties. In the event that they did not leave by August 30th, the end of the time period they had requested to remain in the property, the rent would go up again to $7,500 per month.
"Cellermans made complaints to the city AFTER WE WERE UNABLE TO COME TO AN AGREEMENT AS TO RENT MOVING FORWARD that there were mice in the building although nothing about this claim was ever presented to me directly. Keep in mind that they had 50 pound bags of grains and sometimes large amounts of rotting sweet potatoes all around the main floor.
"I am currently waiting for them to move out by August 30, 2019 so that I can take back my building. This below market lease to a start up company was another example of “Let no good deed go unpunished."