The Falcon   |   Volume 83, Issue 51

Published 5/15/13   |   Log In

Stell’s owner files lawsuit against landlord

The building at 3310 Third Avenue West that currently houses Stell’s Burgers & More and Styling Etc. A lawsuit is currently in progress that concerns the right of first refusal on the sale of the left half of the building as seen here.
Photo credit: LIVIU BIRD /The Falcon.

Questions of breach of lease, legitimacy of tenancy await trial

By MEGAN HOYE, News Editor

Published: May 30, 2012

In the wake of litigation surrounding contamination discovered on and around Seattle Pacific’s campus six years ago, another lawsuit emerged — one that questioned the tenancy of Stellios Makratzakis.

Makratzakis, who owns Stell’s Burgers & More, sued his landlord, Shirazali Hirji, for breach of contract in 2011. In response, Hirji claimed that Makratzakis is occupying the property illegally. The case has not yet gone to trial.

Stell’s Burgers & More is located in the northern portion of a commercial duplex on Third Avenue West. The space used to house a dry-cleaning business, which has been connected with the tetrachloroethylene (PCE) contamination found in its vicinity.

Makratzakis’ conflict with Hirji emerged as SPU, Hirji and Lyle Olsen, the owner of the other half of the duplex, disputed the responsibility of cleanup costs for the significant levels of PCE contamination that were found during the repaving of the Ross Parking Lot in 2006.

Since the contamination had been linked to the dry cleaner that once operated in the duplex, the lawsuit touched on issues of the building’s ownership as it sought to determine who would shoulder costs of cleanup.

These issues were later used in court documents for the case between Makratzakis and Hirji.

In 1980, Hirji and Lyle and Mary Olsen both attained interest in the commercial duplex that sits adjacent to Seattle Pacific’s Ross Parking Lot.

In November of that same year, Hirji and the Olsens entered into a joint ownership agreement, which granted a mutual right of first refusal to both parties.

Under this agreement, if either Hirji or the Olsens decide to sell their interest in the property, that party is obligated to offer the sale to the other respective owner before seeking other buyers.

The portion of the duplex the Olsens acquired had been used as a barber shop, owned by Lyle Olsen’s father, and they continue putting it to that use today.

At the time, Hirji’s half of the duplex housed a dry-cleaning business under the name Clean-M-Rite.

Hirji continued this business until around 1988, when he began leasing the property to third parties, some of whom continued to operate the dry-cleaning business.

In 2005, Hirji issued a lease to Soon Yea Kang, which was assigned to Stellios Makratzakis under Makratzakis Investments, Inc. in 2006.

The five-year lease, which included two options to renew the lease for another five years subsequent to its maturation, also granted a right of first refusal to the lessor.

During litigation for the contamination lawsuit, Olsen was alerted to the language of the lease that Hirji granted his tenants.

This revelation prompted the question of whether Olsen’s and Hirji’s original agreement to mutual right of first refusal superseded the right of first refusal that Hirji granted first to Kang and then to Makratzakis.

The court ruled that the original right of first refusal that Hirji granted to Olsen was superior.

On January 4, 2011, Makratzakis filed a lawsuit against Hirji for breach of contract, saying that the deciding factors for his entering into the lease agreement were the right of first refusal and the two options to extend his lease by five years.

At the time Makratzakis entered the lease with Hirji for the northern portion of the duplex at 3310 Third Avenue West, it still housed a dry-cleaning business.

Makratzakis said he spent approximately $270,000 renovating the space to convert it into a restaurant.

He said he would not have done this if he didn’t have the option to renew his lease or without his right of first refusal to the property.

Makratzakis asked that the court award him the money he spent on renovations, since his right of first refusal was no longer valid, as determined by the case between Hirji and SPU and Olsen.

Further, Makratzakis said he attempted to exercise his first option to extend his lease in December 2009, five and a half months before the end of his lease terms, as his lease agreement regulates.

He did this by sending written notice of his intentions by certified mail, Makratzakis’ attorney stated in a court document.

Hirji said he never received the letter, and therefore asserted that because Makratzakis never exercised his right to renew, Makratzakis is occupying the northern portion of the commercial duplex on a month-to-month tenancy.

Because Makratzakis never received written confirmation of the delivery of the letter, Makratzakis said he sent another letter in March 2010. This letter was returned to the post office as undeliverable.

Hirji also asserted that Makratzakis is unlawfully occupying the duplex because he did not pay the automatic 5 percent increase in rent his lease stated would start in June 2010 and because Makratzakis had not paid increases in property taxes.

The court found that while Makratzakis was in breach of lease for not paying these increased costs, he was not in material breach of lease and should therefore be eligible to renew his lease.

The court also ruled that because there can only be one right of first refusal on a property, and because Olsen’s right of first refusal on the property precedes Makratzakis’, Hirji was guilty of misrepresentation, according to a partial summary judgment document from October 2011.

However, the issue of whether Makratzakis expressed his interest to renew his lease remains open, as does the question of damages for the misrepresentation on Hirji’s part.

The lawsuit’s trial, which was originally scheduled for Nov. 15, 2011, had already been pushed back once to June 18 of this year.

On March 16, Hirji and his current wife, Shenaz Nazarali, filed a motion for a temporary stay of the trial, a continuance of the trial date, and an amended case schedule.

Staying the trial would allow the parties to focus on their mediation in the terms of the case, rather than on meeting its deadlines, Hirji’s attorney argued. The court granted the stay on March 20.

The trial will be rescheduled after Nov. 5 with the stipulation that the parties involved complete mediation sessions by the end of May.

Makratzakis declined to comment on this litigation. Attempts to reach Hirji and his legal counsel were unsuccessful.

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