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October 17, 2013

Hotel Used as Shelter Wants Damages From Salvation Army

New York state's highest court heard oral arguments Wednesday in a case brought by the owner of a New York City hotel that is seeking to hold the Salvation Army liable for $200-million in damage allegedly done to the building when it used as a homeless shelter, according to Law360.

JFK Holding Co. received a $10-million termination fee from the city, which negotiated the Salvation Army's lease to use the Carlton House Hotel in Queens. But a lawyer for the property owner argued that the charity should have secured more money from the city after leaving behind "an uninhabitable building" riddled with code violations, structural problems, and other damage.

A trial court found for the Salvation Army, but a midlevel appellate court reversed that decision, ruling that JFK Holding had a viable breach-of-contract claim against the charity. The Salvation Army argues that under the Carlton House lease the city's Department of Homeless Services was "the exclusive source of funds" for the hotel's use as a shelter.