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Deli owner sues Federal Realty


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Published on: Thursday, October 17, 2013

By Holden Wilen

ROCKVILLE – The owner of the Woodside Deli restaurant has filed a lawsuit against a major developer in the city because of a paid parking system which he says is ruining business. In response the developer has filed a counterclaim.

Sharon Elzarat, the owner of the deli in Courthouse Center at the corner of North Washington Street and Middle Lane, said he came to the U.S. from Israel in 1999 to learn about business. Now, Elzarat is happily married with two daughters and running his own business. However, the paid parking system that the Federal Realty Investment Trust (FRIT), which owns the shopping center, implemented in 2012 is hurting business, he says, because it causes so many problems for customers.

“I disagreed that it would work, but I was open-minded,” Elzarat said. “Then they started it on a Saturday and closed down the parking garage without any warning to customers. There are long lines and it is complicated. Customers do not realize they need to get their ticket scanned. The cars accumulate and people begin honking. People do not want to come back, and my revenue is down 40 percent.”

Elzarat filed a $100,000 lawsuit in January 2013, claiming breach of contract and fraud by FRIT. Elzarat said he signed his lease agreement with FRIT in October 2010, at which time there was no paid parking system, but FRIT did have an on-site parking monitor. But then, according to the statement of facts filed by Elzarat, FRIT notified tenants in April 2012 of a plan to install payment kiosks and require customers to exit through a mechanical gate. The system went into effect the following month.

“Federal Realty Investment Trust made the decision to transition to a paid parking system at the Courthouse Square property to discourage non-retail parkers from parking in the center’s lot,” said Andrea Simpson, a spokesperson for Federal Realty. “The paid parking system is intended to improve the customers’ shopping experience and support the tenants’ business at the center.”

However, Elzarat claims the effects and changes caused by the paid parking system are negative. He sent a letter and video footage of the long exit lines to Federal Realty, but he says the company ignored him.

Business suffered so much, Elzarat said, that he asked to terminate his lease.

“I offered them my keys.  I said, ‘Here you go, take them and let’s be done with this so we can move on,’” Elzarat said. “They continued to ignore me until I sued them. I asked them to let me get out and I will continue my business elsewhere. You’ll never hear from me again.”

In his lawsuit, Elzarat claims Federal Realty had plans to implement paid parking long before he signed his lease in 2010. However, the company never mentioned its plans to him when it negotiated the lease. If he had known at the time about plans to install paid parking, Elzarat said it would have been a “deal breaker.”

“This is not the lease I agreed to,” Elzarat said. “If they had told me about the paid parking I would not have agreed to it because it goes against my business principles.”

On Oct. 2, 2013, Federal Realty filed a counterclaim against Woodside Deli because the restaurant allegedly “defaulted in its obligation to operate the entire premises continuously and uninterruptedly during store hours.”

Federal Realty claims Elzarat closed the restaurant early on multiple nights, and it issued a notice of default to him, which he has refused to pay.

 Due to the financial struggles resulting from the paid parking, Elzarat said he has had to cut down his restaurant’s operating hours to save money. He says the counterclaim is an attempt to strike fear.

“They do everything they can to bully us,” Elzarat said. “I offered to surrender my keys but they would not let me out.”

Simpson did not respond to requests for comment, and Federal Realty’s attorney, Douglas Bregman, refused to comment because the matter is in litigation.

In addition to the lawsuit, Elzarat said he went to the city of Rockville in 2012 to ask for help dealing with the matter. The city wanted to reward him for doing good business, he said, but he refused to accept the award unless he could talk to the Rockville 11, the city’s television station, about his situation. In the end, the city did nothing to help him.

Marylou Berg, city spokesperson, said the city has no role in how a property owner handles parking on their privately owned property, including if the property owner chooses to require payment for parking. The city’s only role came in approving the installation of the gate.

“In order to install the gates used for the Courthouse Center parking system, FRIT did have to apply for a site plan revision, which the city granted in 2011,” Berg said. “FRIT also had to apply for an electrical permit which was issued in 2012. All permits and inspections related to the installation of the gates were performed by the city as set forth by the applicable code.”

“Rockville wants to be good for business but they did not help me, and they bent for Federal Realty because it is a major developer,” Elzarat said. “This is the last time I do business in the city of Rockville.”

Reader Comments - 1 Total

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Posted By: Lucinda Hall On: 10/18/2013

Title: The FRIT Saga Continues

I empathize with the Woodside Deli owner. A couple if years ago, my car was almost towed from that parking lot. At the time, my husband and I were dining at the Woodside Deli. The monitor for the developer called the tow company and said he saw a man get out of my car and walk across the street. Only after a manager, at the Deli, came outside to verify we had been eating at the restaurant, was my car unhooked from the tow truck. The City's inability to protect its businesses, and citizens, leaves much to be desired.




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