Schulte Roth & Zabel has filed a suit against the landlord of its Manhattan-based headquarters claiming they failed to meet lease provisions requiring rent abatement in an emergency. The suit makes them the latest of several Am Law 200 firms to dispute its office rent obligations during the COVID-19 pandemic.
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Schulte Roth vacated its Manhattan offices, owned by Metropolitan 919 3rd Avenue LLC, on March 13 in accordance with government mandates. The lawsuit claims the firm has been unable to use the space for “ordinary conduct of its business” since then, although small, rotating crews have come into the office to complete simple functions.
On March 31, the firm informed the landlord that it would seek rent abatement as the pandemic falls within the “unavoidable delays” requirement listed in the lease. That request was denied on April 4 in a letter stating firms are, “only entitled to Rent Abatement in the event of a breach by Landlord.” Schulte says that interpretation is blatantly erroneous and the lease provision is clear and explicit in outlining qualifying circumstances.
Schulte said that under its agreement, it is entitled to rent abatement when it cannot use the office for typical business conduct for more than 15 consecutive days because of “laws, governmental preemption in connection with a national emergency… or other emergency.”
Schulte has continued to pay its rent “in protest” to maintain its rights as a tenant, however the suit seeks monetary damages for all months since March and all future rent payments during the health crisis.
Metropolitan 919 3rd Avenue LLC’s attorney said this in response to the claims, ” The attempt by Schulte Roth & Zabel and other well-heeled, white shoe firms to take advantage of the pandemic and try to weasel out of their financial commitments at a time when the vast majority of New Yorkers continue to meet their obligations poses a very serious threat to New York City and its economy.”
While it’s a given that the pandemic extends beyond 2020, this suit likely won’t be the last of its kind as many firms must now navigate a new legal environment in which the role of in-person interaction has decreased immensely.
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