Summary: Multipack, a San Marcos-based beverage packing company that formerly operated as Poway distillery The California Spirits Company, has refused to pay rent on an expansive East Coast facility, according to a lawsuit filed by its lessor. The suit alleges that Multipack could owe more than $16 million.

RICHMOND, Va., May 11, 2022 (GLOBE NEWSWIRE) -- A breach of lease lawsuit filed last month alleges that San Marcos-based beverage co-packager Multipack has breached a ten-year, $16 million lease after requesting upgrades and damaging property owned by Summit Properties Partnership (Summit). The suit was filed by Woods Rogers PLC on behalf of Summit in the Prince George Circuit Court and asserts claims of breach of contract resulting from Multipack’s failure to pay base rent due under the lease.

Multipack Services LLC (Multipack) is a former spirits manufacturer-turned full-service co-packer, formerly known as The California Spirits Company, whose principal place of business is in San Diego County. With aspirations of expanding to the East Coast, Multipack leased a 194,880 square foot facility situated on over 20 acres of land just south of Richmond, Virginia with Multipack's holding company Claramond Multipack Holdings as guarantor. 

Per an Early Occupancy Addendum to the lease, Multipack was able to occupy the premises rent-free from lease execution on November 30, 2021 until the end of February 2022. On January 5, 2022, Multipack signed an Acceptance of Premises, in which it approved the majority of the facilities and committed to begin paying rent on March 1, 2022. Multipack then began moving equipment into the facility. During this time, Summit began a standard process of customizing the facility to fulfill all of Multipack's needs, including installing water lines and related equipment necessary to packaging the company’s beverage products.

Yet after the two months of free occupancy had passed, while Summit continued working on the requested upfits, Multipack failed to submit rent payment, in addition to failing to pay for the utilities during its early occupancy of the space. At this time, Summit discovered that Multipack had conducted work without the legally required local building permits and caused up to $20,000 in damages of petroleum contamination to the concrete.

"We have not heard from Multipack in response to our many inquiries," said Joe Hollingsworth, Founder and CEO of The Hollingsworth Companies, parent company of Summit. "As advocates for businesses and job creation, we are always willing to be flexible on reasonable delays in rent, but it is unprecedented to have a lessee essentially ‘ghost’ us. It has forced us to file suit, though we are still hoping for a positive resolution."

Under the Accelerated Clause of the lease— a standard clause enacted in the event of default and a subsequent failure to cure the default within 30 days—Summit is entitled to a payment of more than $16 million, the present worth of the future income stream. 

“We hope Multipack does the right thing and fulfills its duties under the lease,” said Richard Matlock, corporate counsel to Summit. "Summit has gone above and beyond its contractual obligations by modifying the facility in an exceedingly timely manner considering current supply-chain constraints and securing local permits and authorizations, including leveraging its partnership with the county for long-lead items. The ideal scenario for all concerned is for Multipack to return to the leased space, pay the money it owes, and continue to expand its East Coast operations."

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