Judge dismisses ‘anti-marijuana’ landlord’s attempt to evict Montana’s Smokehouse from its Avon location
November 13, 2017
AVON — Montana's Smokehouse may continue to operate in its current location in Benchmark Plaza, a judge ruled.
The Benchmark Plaza property was purchased by Chicago-based Hoffmann Commercial Real Estate in 2013, and the purchase came with Montana's lease, which commenced on Jan. 1, 2012, and expires on Dec. 31, 2021.
In 2014, the landlord, known as Benchmark Investors LLC, initiated an attempt to evict Montana's from the property, saying its lease agreement was breached when Montana's hosted a private event for a marijuana vending machine company. Benchmark's attorneys brought up the fact that the lease itself doesn't say the restaurant can hold private events and suggested the event was a demonstration that could injure the reputation of the property and therefore violated the lease agreement.
Locals Thomas Beaver and Andrea Burrows — owners of Montana's — disagreed, and since they had already invested a considerable amount of money into the restaurant at that point, they decided the argument was worth taking up in court when Benchmark Investors decided to pursue litigation.
In early November, Beaver and Burrows received assurance that the battle was indeed worth taking on, as Judge Frederick W. Gannett dismissed Benchmark's claim for possession with prejudice, meaning it can not come back before the court.
"We are grateful to Judge Gannett for his thoughtful rulings and his commitment to uphold the rule of law," Beaver said.
Beaver said the court battle was not an easy one, due to the fact that Hoffmann Commercial Real Estate was "extremely wealthy" in comparison to Montana's Smokehouse and therefore able to weather the court costs for longer.
"Fortunately, at least here in Eagle County, money does not buy an unjust result and the courts follow the law," Beaver said.
One of the central issues in the case was the fact that the lease did not state that Montana's could host private events such as the one that took place on April 12, 2014, with the Zazzz vending machine company.
Montana's had hosted private events in the past, and the court found that the restaurant's course of performance was such that "Montana's had discretion under the lease to book any lawful private event," according to the findings of fact in the case.
While private events weren't specifically outlined in the lease contract, the court cited the 1985 case "KN Energy Inc. v. Great Western Sugar Co.," which found that course of performance "may be used as an aid to interpretation whenever one party accepts repeated performance by the other party with knowledge of the nature of that performance and an opportunity to object to it."
Evidence at trial showed that Montana's had been booking private events before the vending machine event without any objection from Benchmark.
Another issue in the case was whether or not the property's reputation was injured by inviting the vending machine company into the restaurant.
Zazzz machines distribute marijuana in areas where it is legal to do so.
The judge found that since no news reports mentioned Benchmark or Hoffman Commercial Real Estate in any reporting on the Zazzz event, and since Beaver never stated that Hoffman Commercial Real Estate or Benchmark condones marijuana, Benchmark's reputation was not harmed by the Zazzz event.
According to the findings, "Benchmark's reputation before the Zazzz event was as an 'anti-marijuana' landlord, and Benchmark's reputation after the Zazzz event was as an 'anti-marijuana' landlord."
The findings of fact in the case stated that even if the court were to determine it was a technical violation of the lease for Montana's to host a private party, Benchmark cannot prevail because it did not provide any opportunity "for cure." State statue dictates that a landlord seeking to evict a tenant must provide three days notice and must allow a tenant three days to "cure" any alleged violation.
"Benchmark did provide a three-day letter and it did cite the law in its letter," according to the findings of fact in the case. "However, it did not provide Montana's with three days to cure any alleged defaults."
The lease itself contained a "cure provision," stating that any breach of a covenant does not constitute a default unless it continues for 15 days after written notice of same to tenant.
"Benchmark did send a letter on April 23, 2014, and it did cite the 15-day period in the lease," according to Judge Gannett's findings of fact. "However, Benchmark did not ask Montana's to do anything or afford Montana's a 15-day cure period. Fifteen days after Benchmark's letter, the vending machine was gone, the private event was over and there was nothing more to do. As a matter of law, there was no defined default at the time Benchmark filed suit. In sum, Benchmark's claim for possession fails because Benchmark did not perform its obligation to provide notice and an opportunity to cure (as set forth by state statue.)"