The Real Deal New York

Hotel owner sues LMDC for $1M

Suit says hospitality firm lost money through demolition of Deutsche Bank Building

January 03, 2012 02:30PM
By Adam Pincus

The owner of two mid-sized Downtown hotels overlooking the World Trade Center reconstruction site claims the deconstruction of the Deutsche Bank office tower and the placement of a large construction crane nearby have cost it at least $1 million in lost business, a new lawsuit filed in New York State Supreme Court says.

The hotel owner, a company called Cedar & Washington Associates, filed suit against the Lower Manhattan Development Corp., a joint city-state corporation, Dec. 27, court records show. The suit says the deconstruction of the Deutsche Bank property at 130 Liberty Street across the street from the hotels, Club Quarters at 140 Washington Street and World Center Hotel at 144 Washington Street, as well as the placement of a crane on Washington Street for about two weeks starting in late September 2010, harmed business in part by noise and dust and “stigmatized the hotels as unsafe.”

The development corporation took over ownership of the Deutsche Bank property in August 2004, city property records show.

“The [Lower Manhattan Development Corp. was, at all relevant times, aware of the impact the crane and deconstruction activities at the Deutsche Bank site had on the hotels and failed to take any measures to mitigate this impact,” the suit says.

Cedar & Washington operates two hotels in the 21-story building located between Cedar and Liberty streets. The hotel building was damaged in the Sept. 11, 2011 attacks and was closed for eight years. Decontamination of the building was concluded in June 2008 after being stripped down to its concrete and steel shell, the Lower Manhattan Construction Command Center website says.

Cedar & Washington owns the 242-room, members only, business hotel Club Quarters, World Trade Center, and the World Center Hotel that has 179 rooms and is open to the general public. Both hotels reopened for business in November 2009, but did not fully reopen until the following year.

Representatives for the owner, including company president Christopher Colbourne, and the Lower Manhattan Development Corp. did not immediately respond to a request for comment.

Mayor Michael Bloomberg announced the formal reopening of the World Center Hotel with great fanfare in June 2010, declaring a day in the hotel’s honor.

This lawsuit comes seven months after contractor Bovis Lend Lease, which was charged criminally over its demolition of 130 Liberty Street, filed an $80 million suit against the Lower Manhattan Development Corp. last May.

This is not the first lawsuit filed by Cedar & Washington related to the World Trade Center site. In October 2008, the property owner sued in U.S. District Court in Manhattan various entities affiliated with the World Trade Center site related to the Sept. 11 attacks, seeking to recover costs associated with environmental clean-up costs in their building and additional damages. That case was dismissed in September 2010, but Cedar & Washington filed a notice for an appeal in October 2010, which remains active, federal court records show.

Oral argument on Cedar & Washington’s appeal is expected to take place between 30 and 60 days before the federal Second Circuit Court of Appeals, the property owner’s attorney, Jay Spievack, a partner at Cohen Tauber Spievack & Wagner, told The Real Deal.

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