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Law360 (May 28, 2021, 4:12 PM EDT) -- The Ace Hotel in Pittsburgh can't reopen under a new name while the building's owners feud with the hip hotel brand over control of the converted YMCA building, a Pennsylvania state court judge ruled.
Allegheny County Court of Common Pleas Judge Christine Ward issued a special injunction barring the hotel in the trendy East Liberty neighborhood from reopening to the public after the New York-based hotelier claimed the building's owners planned to reopen it Friday as an "independent hotel."
"The property subject to the above captioned matter shall not open to the public until such time as this court orders otherwise," Judge Ward wrote in an order posted to the case's docket Friday.
The judge set a June 4 videoconference to discuss the order, including how much of a bond Ace will have to post, and an in-person hearing for June 22.
Ace Group Pittsburgh has been fighting to keep managing the hotel amid the building owners' alleged financial troubles, claiming in a lawsuit that Y Hotel LP was seeking to sell the building and terminate Ace's 20-year contract to run the hotel.
In their preliminary objections earlier in May, the owners claimed Ace hadn't proven the building had been sold or marketed; Ace countered it had an agreement that said it would keep its control of the hotel even if the owners ran into financial trouble. Judge Ward overruled the preliminary objections May 10.
The hotel and its associated restaurant, located in a historic former YMCA surrounded by luxury apartments, new restaurants and the headquarters for language software company Duolingo, shut down at the outset of the COVID-19 pandemic and has not reopened. But in a renewed request for an emergency injunction May 25, the hotelier said the building owners had planned to reopen without Ace's management.
"Owner announced in a letter to the court that it plans to reopen the hotel as an independent hotel that is open to the public on or about May 28, 2021," Ace wrote in its brief supporting the injunction. "Plaintiff is requesting the relief herein on an emergency basis to pre)vent the immediate and irreparable harm caused by the reopening of the hotel under new management and ultimate termination of the [hotel management agreement]."
The letter, included as an exhibit with the injunction motion, reiterated that the building wasn't under contract or being marketed for sale, but the owners told the court "in the interest of transparency" that they were planning to reopen their property without Ace.
Ace claimed it would be harmed if the hotel reopened, and said it was likely to succeed in its case because the building owners' financial troubles were exactly the kind of circumstances intended to be addressed by the "subordination, nondisturbance and attornment agreement" that allegedly keeps Ace in charge even through changes in ownership.
"Ace will be forced to improperly terminate customer contracts, lose significant customer relationships and will lose reputational standing in the industry if it is replaced as the manager of the hotel," Ace's brief said. "Ace will also lose the considerable benefits it receives merely from the additional management experience gained through its involvement with the hotel. … Termination of this relationship will damage Ace in a way that cannot be adequately compensated by damages."
Counsel for the owners and Ace declined to comment.
Ace Group Pittsburgh LLC is represented by Gretchen E. Moore and Christopher J. Azzara of Strassburger McKenna Gutnick & Gefsky and Robert Alpert and Douglas M. Hance of Morris Manning & Martin LLP.
Y Hotel LP and Y Master Tenant LLC are represented by Danny P. Cerrone Jr. and Samuel A. Hornak of Clark Hill PLC.
The case is Ace Group Pittsburgh v. Y Hotel LP et al., case number GD-21-001310, in the Court of Common Pleas for Allegheny County, Pennsylvania.
--Editing by Andrew Cohen.
Update: This article has been updated with a response from counsel for Ace Hotels.
For a reprint of this article, please contact reprints@law360.com.
