Truett-Hurst sues landlord in winery lease dispute

Dec 2, 2015

(NBBJ) - Publicly owned startup vintner Truett-Hurst has taken the owner of its Russian River Valley winery and tasting room to court, claiming the action is necessary to prevent eviction ahead of what the wine company speculates could be a move to position the property for sale.

H.D.D. LLC, parent company of Truett-Hurst (NASDAQ: THST), sued Hambrecht Wine Group LP in Sonoma County Superior Court on Nov. 9. Led by investment banker and vintner William R. Hambrecht, his eponymous partnership owns the property at 4035 Westside Rd., where Truett-Hurst’s VML winery and tasting room are located.

In U.S. Securities & Exchange Commission filings on Oct. 27, Nov. 10 and 13, Truett-Hurst said Hambrecht Wine Group sent H.D.D. a letter Oct. 21, alleging $33,000 in partly unpaid rent for several months in 2011, 2013 and 2014; unauthorized subletting of the property; and failure to submit annual production reports required for rent adjustments.

In its court complaint, H.D.D. added that the letter gave the wine company until Nov. 15 to move out. The holding company wants the court to find it didn’t materially breach the lease contract, did properly notify Hambrecht of plans to extend the lease for five years and still has contractual first dibs — first right of refusal — on matching any purchase offer for the property, according to the complaint.

If Truett-Hurst is evicted, the company “will suffer extreme disruption of its business,” the document said.

Further, the company claims in the lawsuit the eviction action has other motives.

Hambrecht “intends to sell the property and have sought to terminate the lease and tenancy for pretextual reasons so [the owner] will receive a higher sale price for the property,” the legal team asserted in the complaint.

“We filed the lawsuit to trigger arbitration,” said Lewis Warren, a partner with Abbey, Weitzenberg, Warren & Emery, the Santa Rosa-based law firm that filed the lawsuit for Truett-Hurst. Hambrect would have to take the vintner to court to throw it out of the winery. “Neither the Truett-Hurst attorney or I think there is any merit to the case, and we’re not looking for a new location.”


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