Lake Tahoe coffee shop/cafe and landlord in dispute over building sale
January 12, 2018
South Shore coffee shop and café MoonHouse Brewhouse is in danger of closing after an attempt to purchase the building fell through — and who's to blame for the failure of the sale depends on who you ask.
MoonHouse Brewhouse opened its doors for business in the former Grass Roots Natural Foods Market location near the Y in April 2016, two years after leasing and moving into the space.
The building, previously multiple units, was in dire need of repair, so then-partners Andrew Horejs, Justine Martin and Matthew White (who has since left the business) arranged a lease that committed to $60,000 in improvements over three years in exchange for reduced rent from $4,000 to around $2,500.
The second story, four-bedroom apartment upstairs was home for members of the café, which operated as an employee-owned co-op.
"The intent was always — is still — to purchase the building. We only signed a three-year lease because the intent was to buy," said Martin.
On Sept. 23, 2016, Moonhouse Group LLC, of which Horejs is the managing member, entered into a purchase agreement with the building's owner, Sharon Kennett, for $565,000. With a $30,000 deposit, escrow was set to close on July 31, 2017.
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However, Moonhouse Group was unable to secure a loan for the building.
Martin says they were unable to secure the loan because they could not get the necessary documentation to prove that the coffee shop had access to the parking lot that it shares with Grass Roots. The parking lot is a separate parcel owned by Kennett and used by the two businesses.
"There was a lot of flip flopping on her part that essentially made it impossible for us to get a loan and misrepresentation to the loan people that devalued the property and made it impossible for us to get a loan," she explained.
In a GoFundMe campaign online, which is seeking $10,000 to take Kennett to court, Martin goes as far as to claim that Kennett "expressed that she wanted more money for the property because 'That price was agreed before you merged with Tahoe Moonshine and you are going to be millionaires and I want a piece of that.'"
Tahoe Moonshine Distillery owner Jeffrey VanHee could not be reached by the Tribune to confirm that the merger was still in place.
Ted Long, attorney for Kennett, said the parking lot was never a part of the deal.
After examining the purchase agreement, the Tribune found no mention of the parking lot in the "items included in sale."
"[The parking lot] has got nothing to do with anything," said Long. "[The purchase agreement] was like any other real estate deal; it's contingent on a loan and they couldn't get the loan so the deal fell apart."
Long explained that the lease agreement for the building has since expired, and MoonHouse Brewhouse owes $6,460 in court-ordered back rent and other fees.
Horejs did not respond to a request to mediate through the California Association of Realtors Real Estate Mediation Center on Dec. 6, according to a letter from the mediation coordinator dated Dec. 28.
An eviction notice was served on Jan. 9 requiring Martin and Horejs to vacate the premises by Jan. 17.
"The owner of that property, Sharon, is an elderly widow with zero business experience," said Long, who took the case pro-bono. "[Horejs] had his day in court and lost. The court gave her judgment for possession. We'd love to sell it to him — we'd love to sell it to somebody — but he couldn't get the loan."
But MoonHouse Brewhouse is not ready to give up yet.
"We are suing her for breach of contract as well as misrepresentation," said Martin. "We are currently filing an injunction to stay essentially because this is our house and home and we can't effectively pay our debts to her if we don't have a way to do so."
In addition to the GoFundMe campaign, MoonHouse Brewhouse is hosting a three-day event through Jan. 14 to raise funds for their legal fees.
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