Judge Seeks Review Of Funding For Brewery

The Jamestown Brewing Company pictured at its downtown Jamestown location. A state Supreme Court judge in Erie County has asked to see a breakdown of how state Downtown Revitalization Initiative money was spent on the brewery project. P-J photo by William Mohan

A state Supreme Court judge in Erie County wants to see a breakdown of how state Downtown Revitalization Initiative money was spent on the Jamestown Brewing Company project.

That review won’t take place until the project is complete because the money hasn’t actually been released yet from the state. The project to turn the former W.T. Grant Department Store building into the Jamestown Brewing Company received $1 million from the state through the DRI program and another $475,000 in state Main Street grant money. The project totals $4,835,760.

On Wednesday, Judge Timothy Walker of the state Supreme Court in Erie County denied a motion by G. Patti Inc., the developer that owns the former Grant Building property, to dismiss a breach of contract claim brought by the owners of the Jamestown Brewing Company. Walker dismissed Jamestown Brewing Company’s claims of fraudulent inducement, fraudulent misrepresentation and negligent misrepresentation while ordering a stay on the brewing company’s claim that DRI money has been misspent. The claims that were dismissed by Walker dealt largely with a contested environmental study conducted by the Gebbie Foundation in 2007. Jamestown Brewing Company’s lawyers claimed G. Patti failed to notify the brewers of the study, the results of which ended up delaying construction and harming the brewery. Jamestown Brewing Company was asking for compensatory damages, punitive damages, interest, attorneys fees and costs based on the alleged misrepresentations.

Allowing the first breach of contract claim to proceed means G. Patti could still be compelled by Walker to pay compensatory damages, but there are now fewer claims on which damages could be awarded.

“With respect to the fifth, however, as the court stated already, I’m going to take another look at that once the funds are disbursed,” Walker said according to a court transcript of last week’s court hearing. “The motion is granted with respect to the second, third and fourth causes of action. Basically all of those are, if not duplicative of the breach of contract when read in its entirety, the complaint alleges a breach of the lease. Perhaps, arguably, a violation of the duty of good faith and fair dealing, but again, that’s all a contract case, at best.”

During oral arguments, Walker asked Matthew Miller, the attorney representing G. Patti how far along the renovations were.

Miller said the developer has a walk-through with the city Development Department for either a temporary or full Certificate of Occupancy and that his client is done with its portion of the project. Ryan Cummings, the attorney representing Jamestown Brewing Company, replied, “That’s news to me, judge. Last I heard, there as still work that needed to be done for the (certificate of occupancy) to even be issued.”

Walker replied, “You guys need to be talking more.”

Cummings argued that the brewers contend the breach of contract claim has less to do with specific construction deadlines than it does with G. Patti Inc.’s behavior during the project.

“It’s the conduct, repeatedly, throughout this relationship that constitutes the breach, and to have the defendant argue that, essentially, it has no deadline to complete its contract obviously defeats the very purpose of a construction contract,” Cummings said.

Miller argued that G. Patti Inc. has lived up to its contract despite the construction delays because wording in the contract did not provide guaranteed construction deadlines. Miller also argued that the brewers’ claims that G. Patti Inc. hasn’t dealt fairly or in good faith in regard to the project aren’t backed up by other actions G. Patti Inc. has taken during the lengthy construction process.

“There’s no allegation to show that G. Patti did anything with an intent to deprive JBC of the benefits of the contract,” Miller said. “They worked throughout this time with JBC, providing it with its own loans, helping it with financing, helping them get all along the way to get to the point where they are now, despite JBC’s animosity towards its business partner, long-term landlord, to get it finished.”

Once finished, the restaurant will seat 280 guests in five different areas. The ground level will hold 104 seats for dining, with an additional 18 at the bar. Two tasting areas, one at the bar and another around the brewery viewing area, will also hold 18 seats. The mezzanine level will be a three-season dining area that will seat 140 guests.

The third floor level will have a banquet facility to be operational by the second year of the Jamestown Brewing Company. The banquet area, which is being designed into two sections, will hold a total of 280 guests. An outdoor patio decking system has also been proposed, which will increasing seating by an additional 100 guests.

The project originally included plans for 24 employees, with eight full-time workers and 16 part-time. Projected income for the first full year of the business is expected to be $2.1 million, with projections being $3.6 million in 2019 and $4.4 million in 2020.