Sam Chang hit with $2M suit over Club Quarters hotels

Management company claims it’s owed money at 3 Manhattan properties

Nov.November 20, 2019 08:15 AM
Sam Chang and 40 West 45th Street (Credit: Google Maps)

Sam Chang and 40 West 45th Street (Credit: Google Maps)

When Sam Chang thought he was finally out, the New York hotel market pulled him back in.

The prolific hotel developer, who retired earlier this year to pursue pigeon racing, is facing a roughly $2 million lawsuit over breach of contract allegations at three Manhattan hotels.

Club Quarters Management Company claims that Chang’s McSam Hotel Group owes it money under the terms of termination and purchase-and-sale agreements at Club Quarters’ Times Square, Wall Street and Rockefeller Center locations.

Club Quarters entered into management and operation agreements on the properties with Rockwood Capital between 2005 and 2007, according to a complaint filed Monday. Chang bought the properties from owner Rockwood in late 2016 and early 2017, and Club Quarters initially continued to run the hotels, the lawsuit says. However, Chang and Club Quarters “ultimately had several disputes regarding the management and operation of the hotels,” according to the lawsuit.

They entered into a termination agreement that ended Club Quarters’ management of the Wall Street and Rockefeller Center hotels “in exchange for a sizeable payment,” the lawsuit says. Chang has not paid the $57,555.82 due under the agreement, according to the lawsuit.

Chang also did not give people working at the Rockefeller Center and Wall Street hotels the chance to keep their jobs despite saying he would, which led to about $1.3 million in losses for Club Quarters, the lawsuit says.

Club Quarters is also claiming Chang owes it money from vendor and customer payments that were mistakenly made to his company instead of the management company at the Times Square hotel. The suit also demands the release of $150,000 from an escrow account.

Representatives for Chang did not respond to a request for comment. Joshua Bernstein of Akerman, attorney for Club Quarters Management Company, declined to comment.

Chang, one of the most prolific hotel developers in New York City, said in May that he was going to retire and spend more time racing pigeons, in part because of a new law that restricts hotel development in manufacturing zones.

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