Why has the former Spats in downtown State College sat empty for years? Depends who you ask
The owners of a building once home to one of the most beloved eateries in downtown State College and those who eyed opening a New Zealand-themed restaurant in its place have found themselves spending more time in court than across from Old Main.
Three cases that amount to a dispute over a leasing contract has kept the former home of Spats Cafe and Speakeasy empty for years, and forced would-be customers to turn elsewhere.
Each have filed suit against the other. It’s led to the filing of dozens of public documents that help show how a promising business relationship soured.
The most recent hearing was Thursday, a proceeding that saw both attorneys volley words like “ridiculous” and “absurd” as if they were a hot potato. Tied up in the back and forth is at least hundreds of thousands of dollars.
How did we get here?
Martin and Deanna Gillespie made public in 2019 their plans to open a restaurant tentatively named Queenstown above Doggie’s Pub in the Foster/Gentzel Building at the corner of South Pugh Street and East College Avenue.
Breakfast, lunch and dinner was expected to be offered in an upscale location not geared toward students, a setting State College locals have pushed for consistently.
The lease was for portions 138 and 142 E. College Ave., as well as 114 S. Pugh St. The pact began March 1, 2019, and the initial term was scheduled to expire Feb. 28, 2024.
The lease granted the Gillespies three successive five-year options, opening the door for Queenstown to call downtown State College home for 20 years. Base rent for the 5,280-square-foot space was $9,512 per month.
Their agreement with Neil and Charles Herlocher, whose company purchased the building for $6.17 million in July 2017, went sideways almost immediately.
The Gillespies argue they were led to believe the entire first floor was an unbroken space capable of operating as a restaurant. The Herlochers have denied the claim, with an attorney writing it was “patently obvious that the referenced spaces were all separate, discrete spaces.”
The Gillespies were evicted in September 2022, a move that touched off another round of finger-pointing.
Gillespie attorney Steven Marino claimed it triggered a clause in the contract that required the Herlochers to buy back a liquor license for $300,000. Herlocher attorney Carolyn M. Larrabee said Thursday that Marino was “cherry-picking.”
What is each side hoping to get?
The Gillespies asked Centre County Judge Brian Marshall to void the lease agreement and award them compensation to make up for what they argue were false claims. They also asked that the Herlochers be forced to buy back the liquor license.
The Herlochers, meanwhile, are seeking more than $200,000 in unpaid rent and another $300,000 to restore the spaces to a “bare-minimum, (usable) pre-lease condition.”
The Gillespies, Larrabee wrote in July, “completely gutted much of the leased space and has failed to proceed toward completion, thus rendering the space as currently utterly unusable.”
How soon could there be a resolution?
Marshall and Larrabee, at minimum, appear interested in resolving the falling-out sooner rather than later.
Marshall wrote in a September order no delays would be granted absent compelling circumstances, while Larrabee told Marino “This case has gone on long enough” during a spirited exchange after Thursday’s hearing.
Discovery — the formal process of exchanging information about witnesses and evidence that could be presented at trial — was scheduled for November, but could be pushed back to December or January.
Marshall deferred ruling on one request Thursday, telling the attorneys he planned to issue a ruling in short order.