Restaurant News & Reviews

Former Burgers & Brew contractor sues for $1.2 million as brewery nears opening

Get a sneak peek at the new Burgers & Brewhouse

Burgers & Brewhouse partner/owner Derar Zawaydeh gives a sneak peek of the new brewery and restaurant on June 14, 2018. The midtown Sacramento location will feature a roof top bar. It is set to open in late June.
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Burgers & Brewhouse partner/owner Derar Zawaydeh gives a sneak peek of the new brewery and restaurant on June 14, 2018. The midtown Sacramento location will feature a roof top bar. It is set to open in late June.

Burgers & Brewhouse's building is complete, the beer is kegged and servers are ready to greet customers Monday for the soft opening of the mini-empire's flagship restaurant and brewery. But it's not a gose or a lambic that's left a sour taste in Yergler Construction Co. Vice President Jeremy Yergler's mouth.

Citrus Heights-based Yergler Construction, the initial company hired to build Burgers & Brew's three-story midtown brewhouse, is suing the restaurant's owners for more than $1 million after a falling-out over slow progress and rising costs. As Burgers & Brew co-owners Derar Zawaydeh and Philippe Masoud celebrate their ninth restaurant's opening, Yergler won't be anywhere near the party.

"It’s hard to stomach watching them try to open a business ... when you're owed the amount of money that we're owed," Yergler said. "It's not a very good feeling."

Yergler Construction was hired to begin $2.56 million worth of work at 1616 J St. in August 2016 and was expected to have the restaurant, brewery and rooftop lounge ready to open by February 2017, according to court records. That date got pushed back again and again as costs swelled, though the reasons why vary depending on who is asked.

Any project with more than 80 change orders, as Burgers & Brewhouse had, is likely to be finished later than anticipated, Yergler said. Construction costs have risen nationwide over the last two years, and a shortage of skilled laborers often delays projects.

"You throw one unexpected item into the equation and it throws off dozens of other things," Yergler said. "There (were) so many things that delayed the project not related to us that we had to address."

To hear Zawaydeh tell it, Yergler Construction repeatedly bought the wrong materials, including an elevator that didn't fit size and weight specifications and wound up costing the owners an extra $120,000. The construction company also filed fewer than 20 Requests For Information throughout the course of the project, Zawaydeh said, roughly half of what Jobsite, an industry website, reported is normal for similar buildings. RFIs typically are used to bridge communication gaps during projects.

Burgers & Brewhouse's basement is home to Sacrament Brewing Co., the in-house brewery that will serve Burgers & Brew restaurants in Chico, Davis and Sacramento. Zawaydeh paid extra for expedited shipping to make sure the brewery equipment was delivered by spring 2017, he said, then watched as it sat in the middle of a construction zone for the last year.

"From an (owner's) perspective, the last thing you want to do is fire a contractor," Zawaydeh said. "But when you see something like this, you have to put a stop to it or the guy is basically taking you for a ride."

Yergler said he and his subcontractors stopped being paid in fall 2017, and eventually refused to do any more work until they were settled up. When Zawaydeh and Masoud terminated the contract in February 2018, the building was expected to cost around $3.06 million and Yergler had been paid $1.82 million, leaving a $1.24 million discrepancy.

Yergler Construction filed a mechanical lien on March 1 and officially sued 1616 J Street Investors on May 14. Green Source Construction Inc. completed the project, Zawaydeh said, and could not be reached for comment.

The development contract included language allowing Yergler Construction to be terminated if its performance didn't meet design standards or if it prevented the ownership group from reasonably anticipating a completion date, according to court records. 1616 J Street Investors' attorney Phillip Cunningham, who has yet to formally respond to Yergler Construction's lawsuit, said he planned to file a countersuit in the near future.

In the meantime, subcontractors Heieck Supply, Competitive Plumbing & Mechanical and Zills Tile Inc. have all independently filed lawsuits against 1616 J St. Investors and Bank of America for a combined $210,827. The two latter suits also list Yergler Construction as a co-defendant. Approximately 25 subcontractors remain unpaid, Yergler said.

The Bee's Benjy Egel is launching a new effort to cover Sacramento's dining and beer scene. Please send tips and story ideas by email at begel@sacbee.com, on Twitter @BenjyEgel or by phone at (916) 321-1052.

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