Lottery and Yogurt Don’t Mix at Mall

Selling lottery tickets at his frozen yogurt shop turned out to be a big gamble for Jeff Clarke.

With 3,000 tickets already in hand and a state-issued “L” in his shop window, Clarke, co-owner of Judy’s Frozen Yogurt in West Covina, hoped that lottery fever would help boost sales of his low-calorie strawberry swirls.

But on Oct. 2, just 24 hours before the lottery began, Clarke received a letter from his landlord saying that, if he sold the lottery tickets, he could lose his lease.

Despite the warning, Clarke went ahead and began selling the “instant winner” coupons.

“This is America, isn’t it?” said Clarke, who in July was authorized by the state to sell lottery tickets. “The lottery is a public thing.”

By Sunday, most of his tickets were gone and another 2,000 were on order from the state.

However, his landlord, Ziad Alhassen, said that Clarke and three other merchants selling lottery tickets at the West Covina Village Shopping Center are violating their leases, which forbid them to sell anything not specified in their rental agreements.

“His premises are leased for frozen yogurt,” said Alhassen, president of Hassen Real Estate Partnership, which owns the 15-shop mini-mall on North Azusa Avenue near the San Bernardino Freeway. “It wasn’t just the lottery. He should have read the lease.”

The lease, which Clarke signed nearly a year ago, states that he “shall use the premises for a frozen yogurt shop and shall not use or permit the premises to be used for any other purpose” without the prior consent of the landlord.

“It’s still a yogurt shop,” Clarke complained. “We sell strawberries to put on top of the yogurt. Does that mean we’re not supposed to sell strawberries without asking?”

Although the merchants could be evicted if they do not stop selling the tickets within 30 days, Alhassen said, he hopes that the dispute will be resolved without legal action.

The state Lottery Commission, which licenses more than 21,000 ticket outlets, is not taking an active part in the controversy, a spokesman said.

“I wouldn’t consider this a major problem,” said Bob Taylor, communications manager for the lottery. “It’s a private matter between landlord and tenant.”

Taylor said that the location of ticket outlets is determined by ZIP code and population density to provide at least one outlet for every 1,250 residents. Although the Lottery Commission has denied permission to some merchants to prevent overburdening a particular area, Taylor said, he did not think the West Covina mall represented an unusually concentrated cluster of outlets.

According to Alhassen, only one merchant in the mini-mall, Partys Etc., is permitted to sell lottery tickets. The owner of the novelty shop included the clause when he signed his lease in June. Alhassen added, however, that he has instructed the shop to stop selling computer supplies, which he said are not included in the lease.

“I just don’t want to have too many people selling the same thing,” he said. “If you allow someone to sell something they’re not supposed to, the whole shopping center can turn to chaos.”

But Clarke and other merchants in the center said that the lottery should be viewed as a promotional device designed to attract customers, not as a substantial departure from the nature of their businesses.

“The reason we sell tickets is to generate business,” Clarke said. “When we got them, who would have thought to call the landlord and ask if this is OK?”

Besides Clarke, the other tenants who Alhassen says are violating their leases are EZ 1-Hour Photo, Nasri’s Video and BIF Furniture.

“I voted for the lottery,” he said. “I support it. But once they start selling lottery tickets, the next time it will be something else.”

A similar dispute erupted in Arcadia last week when Jadefinger, a jewelry store in the Santa Anita Fashion Park Mall, was ordered by its landlord to stop selling lottery tickets or face eviction.

“I don’t look at lottery tickets as a tangible product,” said Richard Chen, owner of the jewelry store. “This is no different from donating a few coins to charity.”

But a spokeswoman for Ernest W. Hahn Inc., a San Diego firm that owns the Arcadia mall, said that all tenants sign specific “use clauses” and none of them are permitted to sell lottery tickets. Instead, the firm, which owns 26 shopping malls in the state, is planning to install kiosks at each location to serve as central lottery-ticket outlets.

“That way none of the tenants will be competing,” said Anne Cox, assistant director of corporate communications for Hahn. “If they all sell lottery tickets, then obviously they’re all not going to do well.”

Similarly, Alhassen, who owns another 15 undeveloped shops adjacent to his West Covina mall, said that too many lottery outlets could jeopardize his ability to lure future tenants to the shopping village.

“There have to be rules and regulations,” he said. “It’s black and white, not gray.”