Nathan Berman’s Metro Loft can breathe easier in its battle with Sonder over Legionnaires’ disease in the Financial District.
A judge on Friday ruled in Metro Loft’s favor in a three-year lawsuit at 20 Broad Street, where the short-term rental operator Sonder tried to use a case of the respiratory disease as an excuse to break its lease.
“The court saw through that argument because we attached emails where Sonder made it very clear they were suffering financially,” Nativ Winiarsky, an attorney at Kucker Marino Winiarsky & Bittens representing Metro Loft. “Clearly they were using the legionella condition to excuse themselves from the lease.”
In February 2020, the city’s Department of Health and Mental Hygiene notified Metro Loft that it had received reports that two people visiting the 29-story 20 Broad Street had contracted Legionnaires’ disease.
Sonder, which had a lease covering about 360-units in the rental building, said it offered guests refunds and transfers to other locations. The company suspended rent payments in July.
Metro Loft sued in August, seeking to eject Sonder and collect nearly $4 million in damages. Sonder countersued, claiming it couldn’t use the space because of the outbreak.
Winiarsky said the claim was undermined by the fact that Sonder never handed over possession of the space.
“Their claim was that they started to cease operations, but the problem was that they never gave over the keys and remained in possession,” he said.
A representative for Sonder, headed by CEO Francis Davidson, did not respond to a request for comment.
Now that the judge has ruled in favor of Metro Loft, the case will go to trial to determine damages. Sonder’s lease is worth about $100 million, and MetroLoft will seek to recoup as much of that as it can.
This wasn’t the only controversy involving Sonder at the building.
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Two of its tenants sued Metro Loft in 2020 claiming Sonder’s guests caused nightmarish conditions in the building, including drug use, harassment and assault.
They pointed to one incident months earlier when six armed men crashed a Sonder party and “viciously beat one of the attendees.”
That lawsuit was settled in 2021.
Berman’s firm bought the ground lease on the 1950s-era building, once the home of the New York Stock Exchange, for $185 million in 2015 from Vornado Realty Trust. Metro Loft converted the tower into 533 rental apartments.