The Real Deal New York

Hotel owner escalates fight with charity over homeless shelter

October 17, 2013 09:23AM

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A Salvation Army volunteer

A Salvation Army volunteer

A Queens hotel owner has taken his fight with the Salvation Army over an alleged breach of contract to the state’s highest court. The New York State Court of Appeals heard oral arguments yesterday on whether the Salvation Army could be held liable for the claim, which alleges $200 million in damage to the Carlton House Hotel on North Conduit Avenue. The site was used by the charity as a homeless shelter.

The breach of contract allegation was brought against the Salvation Army despite the fact that the city – which negotiated the charity’s lease – has previously paid the owner a $10 million termination fee.

New York City’s First Department, a mid-level appellate court, had previously ruled that the owner, JFK Holdings, had a viable claim against the Salvation Army, Law360 reported. The charity “failed to take the most basic steps to maintain the facility in a safe and sanitary condition, as a result of which the property deteriorated precipitously,” that court said in July 2012.

The Salvation Army’s attorney Kathy Chin told the Appeals court on Wednesday that the $10 million sum was all the city had to pay under the services agreement, according to Law360, pointing out that there was a limitation of liability for the charity in the lease.

“Ironically, the Salvation Army now stands alone to defend against JFK’s claims arising out of the city’s determination to cease utilizing JFK’s property as a homeless shelter,” Chin said in her brief.

But JFK Holdings’ attorney Jennifer Recine told the court that the language of the lease didn’t exempt the charity from acting. The damage to the hotel was considerable, including structural problems, mold and code violations, Recine said.

“You don’t get to just sit on your hands,” she said. [Law360]  – Hiten Samtani

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