Simpson Thacher Sues Landlord For $8M Rent Abatement

By Emma Cueto
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Law360 (July 29, 2020, 3:49 PM EDT) -- Simpson Thacher & Bartlett LLP has filed an $8 million suit against its New York City landlord, saying that the firm was entitled to rent abatement due to the COVID-19 pandemic and that the landlord had ignored the terms of the lease.

The firm said in a suit filed in New York state court on Monday against the corporate entity VBGO 425 Lexington LLC that Simpson Thacher's lease for its longtime office space at 425 Lexington Avenue in Manhattan included a provision for "force majeure" events and that the closures caused by the COVID-19 pandemic met this criteria.

"With this action, STB seeks to hold [VBGO] to the express terms of the parties' contract, enforce tenant's negotiated rights to rent abatement, and secure the economic benefits for which STB bargained when it entered into the lease," the firm wrote in its complaint.

According to the complaint, Simpson Thacher has had offices at 425 Lexington since 1987, when the landlord was Orion Limited Partnership. Though the lease agreement was modified several times over the years, when VBGO, a corporate entity associated with the Vanbarton Group, purchased the building in 2018, the lease agreement was adopted as it existed at the time, the complaint said.

That lease agreement included a provision for "force majeure" events, which covers major events such as fires, strikes and "governmental preemption" due to "public emergency," according to the complaint. If such an event forced the firm to vacate a significant portion of the space for 60 consecutive days or more, the lease agreement entitled Simpson Thacher to rent abatement, the complaint said.

The firm argued that when the state of New York shut down nonessential businesses in March due to the COVID-19 pandemic, this qualified as a force majeure event under the terms of the lease. Although restrictions have since been somewhat eased, the firm said it has still been unable to use the office space.

The firm is seeking declaratory judgement and monetary damages of $8 million.

Simpson Thacher told Law360 in a statement, "While we typically do not comment on litigation, we can confirm that we have filed a claim for rent abatement against our [New York] landlord to preserve our rights under a provision in our lease agreement and have continued to pay rent while reserving our rights."

VBGO did not respond Wednesday to a request for comment.

Since the start of the COVID-19 pandemic, many states, New York included, have imposed eviction moratoriums to protect tenants. New York also has protections for those unable to pay rent due to hardships brought on by the pandemic, but in general tenants are still obligated to pay rent.

The pandemic has seen other rent disputes, including a suit between Jenner & Block LLP and its Chicago landlord. The crisis has also brought new scrutiny to force majeure clauses, with the applicability of such clauses still uncertain.

Simpson Thacher is represented by Patrick D. Bonner and John R. Menz of Menz Bonner Komar & Koenigsberg LLP.

Counsel information for VBGO was not available Wednesday.

The case is Simpson Thacher & Bartlett LLP v. VBGO 425 Lexington LLC in the Supreme Court of the State of New York, County of New York. A case number had not been assigned yet as of Wednesday.

--Additional reporting by Dave Simpson. Editing by Rebecca Flanagan.

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