Phila. Inquirer parent co. sues developer Bart Blatstein for breach of contract

The owners of two of the region’s largest daily newspapers are suing a well-known area

developer over claims that the defendant, as landlord of the building previously occupied by the media company, failed to return security deposit funds to the plaintiff after the newspapers vacated the property.

Philadelphia Media Network alleges in its recently filed civil action that Bart Blatstein, and his development company, 400 North Broad Partners LP, withheld and misappropriated $340,500 in security deposit funding the plaintiff claims it should have gotten back when it left the iconic structure commonly known as the Inquirer Building in Philadelphia.

The lawsuit, which was filed at Philadelphia’s Common Pleas Court Nov. 29 by attorneys from the Philadelphia firm Obermayer Rebmann Maxwell & Hippel, says that Blatstein and his real estate firm failed to place and maintain the security deposit funds in a segregated, non-interest bearing account as required by the terms of the lease held between the two parties.

Philadelphia Media Network, the suit claims, has made “extraordinary, good faith efforts to accommodate Defendants to amicably resolve this matter – even after it was clear that Defendants wrongfully misappropriated the security deposit funds for their own personal use and benefit in direct violation of the Lease.

“Notwithstanding these efforts and Defendants’ repeated promises of restitution, Defendants continue to evade the return of the security deposit funds.”

The case has its roots in the July 28, 2011, purchase and sale agreement PMN entered into with Blatstein and his company, pursuant to which North Broad Partners bought the facility from PMN.

For years, the building housed the newsrooms and production facilities of the Philadelphia Inquirer, the Philadelphia Daily News, and the Philly.com website.

In late July, in connection with the purchase and sale agreement, PMN Facilities, a subsidiary of PMN, and North Broad Partners entered into the lease that is the subject of the litigation, pursuant to which North Broad Partners temporarily leased the property back to the plaintiff so that PMN would maintain its operations at the building while transitioning to a new location, the complaint states.

The initial term of the lease commenced on the closing date of the purchase and sale agreement and ended on June 30 of this year.

In early October, PMN Facilities and North Broad Partners entered into an amendment to the lease agreement, the complaint shows, which amended the end date of the lease from June 30 to July 15.

The plaintiff then provided the defendant with the $340,500 deposit to be held as security for PMN Facilities’ performance of the lease, the lawsuit states.

The lease required the defendant to hold the security funds in a segregated, non-interest bearing account and not be commingled with other funds, the suit states.

The lease further states that if PMN Facilities complies with its terms, the security money should be returned at the time the plaintiff surrendered the property to North Broad Partners.

In early August, North Broad performed its walkthrough of the property, during which PMN was told of a few minor items it would have to remedy, such as cleaning debris from certain areas of the building.

PMN subsequently agreed to remedy the issues.

In the end, however, North Broad refused to allow PMN Facilities to reenter the property, the lawsuit claims, and the defendant ultimately refused to return the security deposit money.

“It was evident that North Broad Partners and Blatstein were acting in bad faith and simply attempting to evade the return of the Security Deposit,” the complaint states.

Blatstein eventually conceded to PMN that it was owed the return of the security deposit money, the suit states, but that North Broad would need additional time by which to give back the funds.

Blatstein, the suit states, proposed setting up a payment plan by which he would pay back the security money in installments.

The plaintiff contends that the lease, however, required the return of the money in a lump sum.

“It was clear that North Broad Partners and Blatstein misappropriated the Security Deposit funds and that they had absolutely no reasonable justification for refusing to return the full amount of the Security Deposit funds to PMN Facilities,” the lawsuit states.

After PMN officials discussed the situation with Blatstein and his company, the defendants finally made a partial payment in the amount of $56,750 on Oct. 11, the suit shows, although the defendants have yet to agree in writing to the proposed terms of an alternative repayment schedule.

“Despite PMN Facilities’ extraordinary efforts to accommodate Blatstein and North Broad Partners, Blatstein and North Broad Partners ignored PMN Facilities’ repeated efforts to finalize an alternative repayment arrangement in writing and failed to repay the Security Deposit or make any additional partial payments,” the lawsuit reads.

The complaint contains counts of breach of contract, conversion and tortious interference with contract.

The plaintiff seeks damages in excess of $50,000, along with interest, costs, unspecified punitive damages and other court relief.

 

The case ID number is 121103013.