Mugs on Main closing after eviction for unpaid rent

Mugs on Main is closing after its landlord obtained a court judgment awarding possession of the East Main Street premises and nearly $100,000 in unpaid rent, attorneys’ fees and disbursements.

Mugs on Main co-owner Jeff Schaeffer acknowledged unpaid rent and the eviction in a written statement to RiverheadLOCAL Tuesday evening.  When the closing was announced on the coffee shop’s social media pages Friday, Mugs on Main attributed the closing to persistent flooding in the basement. 

“We’ve been plagued with ongoing facility issues and flooding since opening our doors and we can’t afford to continue to fix the problems,” the social media post read. The shop would close Oct. 14, it said. The same post invited customers to visit a new location, Mugs at Schmidt’s in Quogue. 

In a lengthy text message Tuesday, sent to RiverheadLOCAL after a request for an interview, Schaeffer said building conditions repeatedly disrupted the business and that efforts to negotiate a repayment agreement with the landlord were unsuccessful.

“We recognize our financial obligations and do not dispute that unpaid rent was part of this situation,” the owner wrote.

Riverhead Town Justice Lori Hulse entered a judgment of possession and a warrant of eviction Sept. 1 after a trial in the commercial nonpayment proceeding brought by property owner Ladybugs Riverhead LLC against Mugs on Main LLC. RiverheadLOCAL obtained a copies of the warrant and judgment from the court Tuesday.

The judgment awarded the landlord $99,587.03, comprising $85,294.78 in rent and $14,292.25 in attorneys’ fees and disbursements under the lease. It also awarded the landlord possession of the premises at 33 East Main Street.

The warrant directed the Suffolk County sheriff to remove the tenant and restore possession to the landlord. The warrant is now with the sheriff’s office.

In his statement to RiverheadLOCAL, Schaeffer said the circumstances surrounding the closure extended beyond unpaid rent. He described persistent basement flooding, sometimes leaving approximately a foot of water, along with recurring HVAC failures, door issues, kitchen problems and other maintenance concerns.

Schaeffer said he made repeated attempts over several months to reach an agreement that would address the outstanding rent and allow the business to remain open.

“Our proposals included substantial upfront payments, followed by structured arrangements to repay the remaining balance,” he wrote.

Richard Israel, an owner of Ladybugs Riverhead, in an interview Tuesday night disputed Schaeffer’s account but declined to discuss details on the record. “I’m not the kind of person who will smear someone else,” he said. He would say only that he did everything he could to be fair to the coffee shop owners.

The Israel family runs a construction company and has developed or renovated many commercial properties in Riverhead, including several downtown. 

In a statement to RiverheadLOCAL, Isaac Israel, Richard Israel’s son, urged residents to support downtown businesses.

“Downtown is something very special to us and I want to remind everyone that if it is special to you please support the businesses on Main Street. Walk around! Go get Ice cream. Be part of the solution.”

Schaeffer and co-owner Kasandra Watkins opened Mugs on Main in the spring of 2023, after Schaeffer exited from Peconic County Brewing Company, which operated a riverfront brew pub in the Riverview Lofts building at 221 E. Main St. in Riverhead. 

Schaeffer founded the brewery with partner Kawadwo Osei in early 2021. Osei continued operating the brewery after Schaeffer’s exit, until shutting it down in August 2023. 

According to an Aug. 31, 2023 report in the Riverhead News-Review, Osei closed the brewery after being notified by the water district that its water service would be shut off. The brewery was already mired in financial trouble. The landlord had obtained a warrant of eviction, the paper reported. The property management company said the brewery had not paid rent in a year, according to the Riverhead News-Review report. It was also embroiled in legal disputes with lenders, the paper said. 

One creditor, Dime Community Bank, holder of an SBA-backed $900,000 note personally guaranteed by Osei and Schaeffer, sued in September 2024 to recover the debt. That action, which remains pending in Suffolk Supreme Court, does not seek relief or monetary damages against Schaeffer personally because he had already received a discharge in bankruptcy, according to court filings. Eastern District of New York Bankruptcy Court records show Schaeffer filed for bankruptcy in December 2023 and had his debts liquidated in March 2024.