By Matt Fair

Law360 (June 4, 2021, 6:45 PM EDT) -- A Pennsylvania state judge showed little patience during a hearing on Friday with a request from the owners of a shuttered Pittsburgh hotel building that they receive $2,000 per day to cover costs after being enjoined from reopening as part of a branding battle with boutique hotel manager Ace.

Judge Christine Ward of the Allegheny County Court of Common Pleas issued an injunction at the end of last month barring the owners of the converted YMCA building from reopening over Memorial Day weekend as a rebranded "independent hotel," kicking out Ace.

In exchange for being required to keep its doors closed while resolving the branding dispute with Ace Group Pittsburgh LLC, building owner Y Hotel LP asked Judge Ward during a videoconference hearing for a bond to cover what it said was the approximately $2,000 in costs it was incurring per day.

But Judge Ward shot down the request for a bond of that amount, saying it was Y Hotel's hastily announced plans to reopen that led to the injunction in the first place.

"Y Hotel brought this situation upon themselves," she said. "If they had been honest with the courts about their intention to reopen, we would've set a hearing well in advance of that date and there would've been no bond."

Ace has been fighting to keep its name on the building amid the building owners' purported financial troubles, claiming in a lawsuit that Y Hotel was trying to sell the building and terminate Ace's 20-year contract to run the hotel. Y Hotel said there was no evidence that it was trying to sell the building.

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 last year 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 over Memorial Day weekend.

Judge Ward agreed to grant the injunction request last week and ordered the hotel to remain closed "until such time as this court orders otherwise."

In the meantime, Y Hotel attorney Samuel Hornak of Clark Hill PLC said, the company was incurring about $2,000 a day in debt service, taxes, insurance and utilities and asked the court to require Ace to post a bond to cover the costs.

"These are costs we are bearing and carrying while the doors are locked," he said.

Douglas Hance, an attorney with Morris Manning & Martin LLP representing Ace, said that the costs were "irrelevant," and that there was no sign of the rebranded hotel.

"The question is, 'Is the hotel going to make any money during this short time period of your order?' " he said. "There's no evidence at all that this hotel was even prepared to open."

He said he'd seen no evidence that any reservations had been made, that any staffers had been hired, or that the owners had even created a website for their new hotel.

Judge Ward ultimately agreed with Ace's argument. She granted Y Hotel's request for a bond, but set it at $2,500.

A hearing is scheduled for later this month on Y Hotel's preliminary objection to Ace's lawsuit.

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, the hotel ownership group, 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 Allegheny County Court of Common Pleas.

--Additional reporting by Matthew Santoni. Editing by Karin Roberts.

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