NYC Eatery Says Virus, NYU Dorm Flip Should Bar Eviction

By Meghan Kelly
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Law360 (January 13, 2021, 5:50 PM EST) -- Marriott is being sued by the owner and operator of a Manhattan restaurant and bar located in a W Hotel for allegedly breaching the restaurant's lease by attempting to evict it after closing the hotel and converting it to an NYU dormitory.

The parent company of the Irvington restaurant said landlord Marriott is trying to evict it in retaliation for a previously filed lawsuit over insurance coverage and without paying the termination fee required by their lease agreement, which the restaurant entered with a previous landlord in 2015 and won't expire until 2024.

"The NYU Dorm conversion decimated the patronage of the restaurant and bar," the restaurant said.

Marriott, which acquired the W Hotel on Union Square in 2019, informed GG Union Square of its plans to close the hotel following Gov. Andrew Cuomo's March 16 executive order requiring New York state bars and restaurants to close due to COVID-19. It then converted the building into a residential dormitory for New York University students.

Gerber Group subsidiary and Irvington owner GG Union Square LLC said in its Monday filing that as part of the conversion, Marriott put up barriers separating the hotel's former lobby from the restaurant and bar and banned room service for the students in the rooms, while also ordering Irvington to stop offering food service for employees of the W Hotel.

Facing blows to its business, GG Union Square temporarily closed the restaurant and bar in November, saying Marriott "completely frustrated the business partnership that existed between GG Union Square and Marriott that was embodied in the lease."

The complaint said that for the weeks following its temporary closure, GG Union Square maintained the premises so the restaurant and bar could be reopened after Marriott resumed operations of the W Hotel.

According to the suit, Marriott responded with a letter purporting to terminate the lease based on the temporary closure of the restaurant and bar in response to the NYU dorm conversion.

"In the letter, Marriott falsely stated that GG Union Square had 'abandoned' the restaurant and bar," the restaurant said. "The letter blithely ignored the fact that GG Union Square was then prohibited by law from operating the restaurant/bar."

Its suit seeks to bar Marriott from terminating the lease agreement pending the resolution of both the previously filed lawsuit and the current case and to excuse the restaurant from paying rent from March 2020 until the restaurant is legally permitted to reopen at full capacity.

Marriott's NYU dorm operation ceased in December, and the building has since resumed operating as the W Hotel, but the hospitality giant still seeks to boot Irvington from its lease, according to the complaint.

The Gerber Group said Marriott gave up any right to terminate the lease when it breached its landlord obligations by closing the W Hotel and then converting the building to an NYU dorm, saying it entered into the lease agreement "based on the mutual understanding that a high-quality hotel would be open for business in the same building as the restaurant and bar."

Representatives for Marriott and counsel and representatives for GG Union Square did not respond Wednesday to requests for comment.

GG Union Square is represented by Robert Knuts of Sher Tremonte LLP.

Counsel information for Marriott was unavailable.

The suit is GG Union Square LLC v. MI 201 Park LLC, case number 650206/2021, in the Supreme Court of the City of New York, County of New York.

--Editing by Peter Rozovsky.

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