Iron Hill's Rehoboth landlord rejects restaurant's lawsuit claims

A Rehoboth Beach landlord says it doesn't owe Iron Hill Brewery more than $460,000 because the Wilmington-based restaurant chain requested and agreed to pay for design changes to a new Sussex County site.

Iron Hill is suing Coastal Station Development Co. LLC to recover money it says it spent to improve the Del. 1 building housing the restaurant that opened in May, according to a lawsuit filed in Wilmington's Superior Court.

Iron Hill says it made $1 million in improvements to the site it's leasing and has only been paid a portion of the total amount owed, according to a lawsuit. The company wants to recover $466,948.10, the lawsuit says.

But Charles Brown, attorney for Coastal Station Development Co., said Iron Hill requested a complete redesign of the building after construction began in 2017. He says the design changes resulted in additional costs as well as the potential to delay completion by three months.

According to Brown, the restaurant chain wanted the redesign and both parties agreed that these costs would be absorbed by Iron Hill.

“Coastal Station moved heaven and earth so that Iron Hill could be open by Memorial Day weekend,” said Brown in a statement sent to The News Journal. 

“And now they are reneging on this agreement and suing the landlord for these expenses.”

Iron Hill, which operates 16 restaurants including its flagship operation in Newark and an eatery on the Wilmington Riverfront, signed a 15-year lease in May 2017 with Coastal Station Development Co. that included the construction of a new restaurant in Rehoboth Beach.

Brown said Coastal Station agreed to "an aggressive ground-up construction schedule that would deliver a completed facility in 12 months, so the new restaurant could open by Memorial Day Weekend 2018."

He said costs were advanced by the landlord with the condition that the expenses would be ultimately covered by Iron Hill Brewery.

Brown said, as specified by the terms of the lease, Iron Hill was responsible for permit and tapping fees, which were also advanced by Coastal Station Development Co. under the condition that these fees would be reimbursed.

According to Brown, these fees were never reimbursed by Iron Hill "in spite of claims that payment was forthcoming." In the lawsuit made by Iron Hill, Brown said these costs were included in their claim.

“Coastal Station Co. has made every effort to be responsive to the needs of Iron Hill Brewery and to completely live up to the lease agreement,” Brown said.

In a statement sent earlier this month to The News Journal, Iron Hill officials said, "We’re working to resolve the issue and are confident this matter will be resolved in the near future."

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Contact Patricia Talorico at (302) 324-2861 or ptalorico@delawareonline.com and on Twitter @pattytalorico