‘Glorious brew day’

Court rules in favor of Cognition Brewing Company in lease dispute

A pint of “Scene of the Climb” American Stout is seen in the foreground as Cognition Brewing Company owner Jay Clancey talks to customers Monday night at Cognition. (Journal photo by Justin Marietti)

ISHPEMING — A thriving Ishpeming brewery has the right to stay in business at its current location, according a decision Monday in Marquette County 96th District Court.

Judge Karl Weber ruled that Cognition Brewing Company was not in default of its lease agreement with the owners of The Mather Inn.

“With respect to any monetary claim by The Mather Inn for base rent or operating expenses, this court concludes Cognition was not and is not in default of the terms of the lease to the extent that there were any discrepancies,” Weber said. “The parties reached an agreement in December 2016 and January 2017 with respect to curing any monetary and non-monetary defaults as well as monies owed to Clancey Electric by The Mather Inn.”

Head brewer Brian Richards said in a Facebook video on Monday the reading of the verdict was emotional, but reached the desired outcome.

“We pretty much got the ruling that we felt we should have got in every sense,” Richards said. “We’re brewing beer still — I will be brewing tomorrow, and it will be a glorious brew day.”

Pictured from left: Glenn Smith, attorney at Bensinger, Cotant & Menkes of Marquette; Brian Richards, brewmaster at Cognition Brewing Company; Jay Clancey, owner of Cognition Brewing Company; and Will Sullivan, attorney at Bensinger, Cotant & Menkes of Marquette, as they celebrate the court’s decision Monday night at Cognition in Ishpeming. (Journal photo by Justin Marietti)

Dozens of Cognition supporters were on hand to hear the ruling on the case, which is the culmination of a months-long financial dispute between the brewing company and its landlord.

Weber heard arguments during a bench trial beginning in July and concluded on Aug. 10 with post-trial submissions due from both parties on Sept. 8.

In its initial complaint in May, The Mather Inn sought to recover possession of the property being leased by Cognition alleging, in part, that the brewery owed $11,937 for arrearages specified in the lease.

According to court documents, Robin Baird, chief operations officer of The Mather Inn and Jay Clancey, owner of Cognition Brewing Company, met Dec. 22 and discussed various issues including rent, utility payments, gas metering, boiler inspection and monies owed from the Mather Inn to Clancey Electric — also owned by Clancey — for work done on the property.

A Jan. 3 letter from Baird to Clancey discussed a lease renewal and outlined actions required by Cognition to resolve any past due defaults.

Cognition would pay $6,741 to bring all past due balances current, list any work that Cognition would like to see completed as part of the lease renewal, and complete the inspection of the boiler and related documentation.

In addition, through text messages and other communications, The Mather Inn agreed to pay $4,741.30 to Clancey Electric for work performed at the location.

“Text messages between Robin Baird and Jay Clancey in January of 2017 further established that there was an agreement to exchange checks to resolve all disputes between parties,” Weber stated in his decision.

Clancey agreed to pay two checks in the amounts of $4,741.30 and $2,000 to cure the default and resolve any ongoing dispute.

Clancey and Baird agreed that the check exchange would happen no later than Jan. 31, and Clancey informed Baird via text message that he was prepared to make the exchange on Jan. 30.

“Baird failed to perform the mutually agreed-upon check exchange on January 30, and told Jay Clancey instead to leave the checks somewhere where they could be picked up, which was not the arrangement that had been reached by the parties,” court documents read.

Despite attempts on both sides, according to court documents, there was no check exchange on Jan. 31.

Sometime in the early hours of Feb. 1, The Mather Inn locked Cognition out of the premises, blocking the brewery’s main entrance with a large snow pile, shutting down the business for 10 days, a matter which resulted in a separate lawsuit in Marquette County 25th Circuit Court, Weber said.

“Matters were further complicated when The Mather Inn resorted to self-help on Feb. 1, 2017, and wrongfully evicted the Cognition by, among other things, piling a snowbank in front of the Cognition’s business entrance,” Weber said.

Subsequently, Clancey delivered the checks to Baird at The Mather Inn on Feb.1, court documents state, and Baird cashed them the same day. The Mather Inn, however, refused to exchange the check it agreed to pay Clancey Electric.

“Jay Clancey was able and did perform his obligations to deliver the checks to The Mather Inn; however, his efforts were frustrated by Robin Baird by failing to meet on Jan. 30 and further thwarting Jay Clancey’s efforts on Jan. 31, 2017, by imposing new conditions namely waivers and other conditions which were not part of the parties’ original agreement,” Weber said.

On Feb. 2, The Mather Inn sent a letter to Cognition claiming the brewery owed them $24,465 in late fees, interest, balance due of rents, attorney fees, security charges and the cost of changing the locks at the brewery due to the lockout, all due to the Cognition’s alleged failure to make payment by Jan. 31, court documents state.

Weber said because Baird was not present to make the initial agreed-upon check exchange by the parties, the court concluded that any late fees or other costs were waived there was no default on the part of Cognition.

Cognition also took proper action regarding extension of its initial three-year lease which expired on May 31, Weber said.

“Cognition properly exercised its right to renew and/or extend the lease, in accordance with terms of the lease, that it was not a default that Jay Clancey and/or his agents exercised this right,” Weber said. “Again, because the lease is ambiguous and must be construed against The Mather Inn.”

Representatives of The Mather Inn could not be reached for comment before press time.

Lisa Bowers can be reached at 906-228-2500, ext. 242. Her email address is lbowers@miningjournal.net.