Legislation Agency Wins $2M Lease Credit score for Unhealthy HVAC Throughout Covid
Many commercial tenants went to court over a pandemic rent break. A law firm from Murray Hill can now count itself among the few winners.
The New York Appellate Division ruled that affiliates of landlord ABS Partners Real Estate must credit Wolf Haldenstein, a firm specializing in corporate and antitrust law, over $2 million in rent and legal fees after the office owner completed renovations on the two Rented floors of the chancellery had not been completed space.
The HVAC system roared like a “jet engine,” the landlord’s architect said, producing 90-degree temperatures in the summer and unable to circulate fresh air as Covid raged in New York.
The law firm, which has been based at 270 Madison Ave for nearly 100 years, agreed to temporarily move from the 9th and 10th floors to the 11th and 13th floors when it signed a 12-year lease in 2018.
ABS planned to upgrade the heating and air conditioning systems on the two lower floors and agreed in the lease that its tenant would rent the upper floors until an architect deemed the work substantially complete.
The lease included four months of free rent once the company moved downstairs, and a rent loan if the renovation took too long. Wolf Haldenstein would receive a daily credit for each day work continued after February 2020. The rate would increase to a day and a half after April.
Wolf Haldenstein returned prematurely to the 9th and 10th floors in December 2019. But the company immediately questioned whether the work was complete.
“We should have another construction meeting to discuss HVAC issues,” wrote Mark Rifkin, a managing partner at Wolf Haldenstein, in an email to the job’s contractor on Christmas Eve.
“I think some might have accepted a substantial completion before it was finished,” he continued. “Had it been summer when we needed the air conditioning, the room would have been uninhabitable.”
In another email to ABS Partners, Rifkin described the floors as excessively hot and the HVAC system as excessively noisy.
These problems continued into 2020. In February, as Covid began to spread through the city, ABS’ construction manager confirmed in an email that “many ‘existing’ elements…need to be identified and resolved”.
James Caseley, an executive at ABS, went so far as to write a memo to the landlord’s construction manager calling the HVAC system a “disaster.”
In the same month, the landlord began work on the 11th and 13th floors, making it impossible for Wolf Haldenstein to move to a more hospitable floor.
HVAC issues continued throughout the pandemic, forcing partners, employees, employees and clients to deal with a system upon returning to the office that was not circulating fresh air adequately, according to Herrick Feinstein’s Scott Mollen, the tenant’s attorney.
In April 2021, Wolf Haldenstein sued ABS Partners, alleging that the landlord’s architect failed to declare the work complete, meaning the firm was under no obligation to pay rent.
ABS responded a month later, arguing that the law firm had defaulted on rent and owed $1.2 million on its roughly $145,000-a-month lease.
In November of that year, a Supreme Court judge sided with Wolf Haldesstein, ruling that the work was incomplete and the firm did not have to pay rent. The Appellate Division upheld the ruling that the landlord should pay a $1.2 million rent loan, $100,000 in moving expenses and $700,000 in attorneys’ fees.
“Many of the unnecessary fees are due to landlord litigation tactics,” the court found.
Rosenberg & Estis, representing ABS Real Estate, did not respond to a request for comment.
The firm’s late co-founder, Warren Estis, had represented ABS for most of the trial, one of his last. Estis died in April.