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Joseph Chetrit Sues Hotel Chelsea's Former Owners for $4.15M

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The tumultuous history of the Hotel Chelsea is about to get another chapter. A benevolent tipster sent us the 14-page lawsuit that hotel owner and real estate mega-mogul Joseph Chetrit of the Chetrit Group filed against the hotel's former owners, Chelsea 23rd Street Corporation, in State Supreme Court on March 5, asking for $4.15 million in total damages. In the document, he (well, technically another one of his companies, Chelsea Dynasty, but really Chetrit himself) alleges that both the sellers and former hotel manager Stanley Bard, a legend of sorts at the bohemian paradise who was ousted back in 2007, misrepresented elements of the property?including the valuable artwork included and the descriptions of some of the apartment units?during the sale.

Because of the "defendants' fraudulent misrepresentation and concealment," Chetrit, who paid $78.5 million for the hotel in 2011 and is currently spearheading massive, contentious, Gene Kaufman-designed renovations at the historic artists' enclave that will result in an upscale hotel, is asking Bard and Co. for $2.15 million to make up for "non-existent assets" that he claims he paid for in the selling price plus damages he also had to hand out, plus an extra $2 million on top for punitive damages. Chetrit says in the lawsuit that he was "defrauded" and "deliberately lied" to, and that Bard and Chelsea 23rd's "illicit effort" was "outrageous, fraudulent, shocking to the consequence and deliberate." Ouch!
The suit goes on to detail every piece of artwork that Chetrit was led to believe was his, because they were gifted to the hotel by the artists or the hotel had bought them. But after ownership changed hands, artists and their affiliates (widows, foundations, etc.) kept materializing to claim works as their own. For example, Arthur Alan Weinstein's widow laid claim to 22 of his pieces worth as much as $500,000 and claimed that some were damaged when they were returned. According to the lawsuit, Bard admitted in writing that Chelsea 23rd never actually owned Weinstein's work. Others stepped forward to take back their work, including the Larry Rivers Foundation on behalf of the late Larry Rivers, as well as artist Philip Taaffe himself... and the list goes on.

Chetrit also lays out which of the 88 apartments at the hotel and which tenants' rental statuses were misrepresented to him before the sale. For one, there's a closet on the hotel's first floor that Chetrit thought he could lease or use after the sale, but a tenant proclaimed it to to be his own. (We wonder, was he planning to rent it as a very, very micro-studio?) In other cases, Chelsea 23rd inflated the monthly rents that some tenants were paying, and the seller didn't inform Chetrit about some rent-stabilized apartments or other tenants' rights to the roof, thus deflating the total value of Chetrit's purchase. In sum, the suit proclaims, "Had plaintiff known of defendants' fraud regarding the artwork and apartment units, plaintiff never would have paid $78.5 million for the purchase of the Chelsea Hotel."

Let's not forget that Chetrit himself is no stranger to legal skirmishes; his tenure at the helm of the Hotel Chelsea has been pockmarked by various troubles, from stop-work orders at the construction site to rooftop addition drama to tenant beefs about renovation-induced health hazards and, oh, 10 attempted evictions. His plans for a Landmarks Preservation Commission-approved overhaul haven't gone uncriticized, and there's a hawk-eyed building blog, Living With Legends, and even a Twitter account that chronicle every misstep in the construction process. Plus, the place is, like, haunted.

So what's next for this New York icon? Will we get a trial?
· Hotel Chelsea coverage [Curbed]
?Photo of construction materials via Living with Legends

Hotel Chelsea

222 West 23rd Street, New York, NY 10011 Visit Website