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Shenandoah American Grill Dispute Heads to Court

Ashburn Restaurant Park landlord seeks back rent, locks doors; owner seeks time.

 

A dispute between the owner of the Shenandoah American Grill, which has been locked and chained since July 10, and the landlord of the Ashburn Restaurant Park on Waxpool Road goes to court later this month.

Lance Smith, the owner of Shenandoah Grill acknowledged that the restaurant had fallen behind in rent, but said he was surprised at the decision to shut the business down so soon after opening. A small payment recently made toward the lease was expected to stave off eviction, but failed to keep the landlord from taking action.

“We’re obviously downtrodden and heartbroken,” Smith said. “We’re terribly shocked and want to work it out. It was so fast.”

Terry Pao, the Ashburn Park landlord declined to discuss the case, other than to confirm the July 27 court date and say he continues to try to work with Smith. He characterized Smith’s version of the story as incomplete.

“We are currently working with the tenant to resolve the issues,” Pao said via email.

According to Smith, the lease was signed Oct. 20 at which point one month’s advance rent and a security deposit were given to the landlord. The tenant received six months free rent. The restaurant opened April 11. After April 20, Shenandoah became late on the rent and did not make a payment until July 8.

“We opened up being not as busy as we wanted to be,” Smith said, but the customers were beginning to show up in late June and early July. “We were getting there.”

Smith said he filed the suit for unlawful detainer because he felt the situation was not handled properly.

“It was done without court order," Smith said. “We actually had an agreement to pay our back rent off.”

Smith said the landlord issued a letter of default, giving Shenandoah 5 days to quit and surrender the property. So on July 7, Smith and his attorneys offered a plan to address the back rent as well as plans for moving forward in an attempt to give the restaurant until at least Aug. 31 to get back on track. Smith said he wrote a $1,000 check on July 8 and that on July 10 the doors to the Shenandoah's doors were chained.

Rent for the location is a little more than $18,000, including maintenance fees. The rent was approximately 48 days past due on July 8 and about 50 days past due when the doors were locked.

Pao held a fair at the shopping center last month in an attempt to help all of the restaurants attract new customers and bring attention to the park. Several restaurants have opened and closed at the location, next to the Embassy Suites Hotel. Only the chains Moe’s Southwest Grill and Five Guys Hamburgers have endured for any meaningful amount of time. However, other restaurants have opened, such as Pizza Go Round and the Curry Club, while others are coming soon, including Pollo Factory and Pho Bistro, which is moving from another location at Cameron Chase shopping center.

Another reason Smith had hoped for more time to find a way forward was because of the money spent on the restaurant’s interior. He admits the build out cost more and took longer than expected.

Leesburg attorney Matt Snow has handled commercial leases and said they are not necessarily the same as residential leases in terms of tenant rights.

“Everything’s governed by the lease,” he said.

In the meantime, Smith said, all the work he put into Shenandoah is now inaccessible.

“There’s over $30,000 worth of inventory spoiling,” he said. However, his greatest concern seemed to be about the roughly 60 employees who are now without a job.

More details will likely emerge during the court proceeding July 27.

Related Topics: Court, Lawsuit, ashburn restaurant park, and shenandoah american grill

Jack

8:47 pm on Monday, July 18, 2011

the landlord sounds like a jerk. it's heavy handed to do something so damaging to the anchor restaurant of the complex. sorry, SAG is the prime location there and the american grill and bar concept is proven. hopefully something can be worked out and they can move past this, but i doubt i'll go to any of the restuarants if this is how this goes down....just leaves a bad taste in my mouth. it sounds like the landlord just received the bill for the ferris wheel and is taking it out on a tennant that is late, but certainly willing to work something out.

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Ashburn Mom

5:30 pm on Tuesday, July 19, 2011

In the article it says they got 6 months free rent...that seems pretty generous, no?

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Jack

11:22 am on Thursday, July 21, 2011

the 6 months was for renovation/build out. standard, considering they had to turn a japanese steakhouse into an american grill. the landlord knows that the buisness won't be making money until they open...and i am sure he would have noticed the crowds increasing each day....but chose not to factor that in his controversial decision.

Goldberg

9:45 pm on Monday, July 18, 2011

This is the most ridiculous thing I have ever heard! Clearly a Landlord who does not understand anything about how his property business works! The objective is not to rent to a quantity of restaurants but to allow one to get established and grow, therefore begin to generate a steady revenue! Once a lease expires with a prominent, successful restaurant in place for renegotiations the opportunity is there for even further profits. It's a team effort. The only reason for such an abrupt action by a landlord would be a highly illegal incentive provided by a third party investor... it'll be interesting to see how this game of chess is played. I would like to be the first to say it looks as though the landlord exposed his queen a little early... A few properly placed moves and this is clearly an easy checkmate. ; )

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Jack

10:52 pm on Monday, July 18, 2011

totally agree w/ goldberg. well said.
imagine if the landlord is some how associated with the next tenants (if shenandoah can't come to a resolution and reopen). a partnership or payoff for a fully renovated prime restaurant space....i can only hope that's not the case here. would be a very evil plan. possibly illegal too, no? hope this gets cleared up.

Michael Kimmel

10:52 am on Tuesday, July 19, 2011

I don't think it's all on the Landlord here. The landlord are in the business of making money on rent. SAG certainly doesn't have a track record of paying rent and then missed the first payment that were due -- other than the deposit and 1 month's advanced rent that were paid. A restauranteer needs to go into business thinking that the first year they will be in the red and be prepared with funds to cover the underflow of revenue. Sounds like this planning was not completely done.
While I think it may be that a little more time could be provided to see if SAG can make it, let's not lump this all on the landlord.

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Dan Telvock

12:02 pm on Tuesday, July 19, 2011

$18,000 a month rent for that building doesn't seem high. Does it? There are some interesting reviews of this restaurant on various websites that might explain the revenue problems.

Dan Telvock

11:56 am on Tuesday, July 19, 2011

Great job following up on this. A lot of people wanted to know what was going on and this helps a ton! This is why I love hyperlocal news.

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Dealin Dave

10:31 pm on Tuesday, July 19, 2011

Anyone have thoughts on why that shopping center (in general) isn't getting enough volume to keep the restaurants open? Seems like there is plenty of traffic on Waxpool, but I've seen lots of businesses come and go there.

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Mike Schmitt

6:09 am on Wednesday, July 20, 2011

Just a thought - the entrance / exit is horrible and a little confusing. Anyone leaving that shopping center needing to make a left to go east on Waxpool is basically screwed.

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Michael Kimmel

8:42 am on Wednesday, July 20, 2011

Mike S is right -- I drive by this shopping center every morning and evening. Turning left into it or out of it is very hard during the 6-9am and 5-7pm evening timeframes.

Tatiana Clare

1:26 am on Thursday, July 21, 2011

I agree with Michael Kimmel's initial post. The whole point of the landlord renting out out the space is to make money. If the landlord is not receiving any income from the tenant, then they should be able to do what is necessary to receive it. It does not make sense that ANY tenant is allowed to negotiate rent on their OWN terms. Although the landlord may not have done it in the best fashion, it seems only right for them to do as they see fit. As for the owner of "SAG" - I feel as though this predicament is one that was a long time coming. The treatment that he has received from his landlord is a mirror image of how he treated his employees. It is interesting to me that the major issue at hand is the profit for the Landlord. Pau is simply insuring that he receives his money. Whether it seems irrational, demeaning, or uncompromising, the bottom line is business, which is exactly how Lance Smith ran his previous establishment. His business was solely based on profit, and it was clear that was all that he was interested in. The well being, and welfare of his employees was not his concern.The Landlord is solely about making his profit - regardless of the well being of S.A.G. I worked under Lance Smith for nearly two years, and can count on my hand the amount of times I -as his employee- held a conversation with him. The situation is unfortunate, however, it was only a matter of time before he would have to receive the same treatment he had been bestowing on others.

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MickeyP

12:00 pm on Thursday, July 21, 2011

As much as I love Moe's, I refuse to go into the shopping center, it's too congested in that area and I'd fear for my life trying to get out!
The best idea would have been to put a back entrance/exit that comes out behind the center into the industrial park, near the Post Office. It would be a quick 50ft paving job.

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Brian

2:44 pm on Monday, July 25, 2011

as a Landlord if I gave 6 months free rent and when the first payment was missed and was only sent 1,000 when 18,000 or more was owed I'd shut down the place down asap. How could a business not forecast rent payment and expenses for less then a year? How could investors and or stake holders plan so poorly? With the millions that were spent in opening the restaurant 18,000 is a drop in the bucket and should have been planned and accounted for. You can't expect a restaurant to be profitable right out of the gates and this was obviously a case of poor management and planning.

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carl deshazior

2:11 pm on Wednesday, July 27, 2011

i will send up a prayer now while court is going on for my friend LANCE everything
will be alright.
doc,

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Zachary Joseph Castro

4:03 pm on Wednesday, September 28, 2011

it sucks i worked there lance is a good guy too

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SmartyPants

9:48 am on Tuesday, October 25, 2011

For those of you who clearly did not have the whole story, the Judge decided in favor of the Landlord, citing several cases and awarding a decent sum of money

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