The lawsuit between the owner of the property at 250 Fourth Street in San Francisco’s SoMa neighborhood and Virgin Hotels will go to court in early February, and it remains to be seen if a hotel will ever open in that building again.

Virgin Hotels San Francisco had a big, sparkling opening in February 2019, half a block from Moscone Center, with restaurants and lounges on both the ground floor and rooftop. And just a year later, it was shut down at the start of the pandemic and then quickly became embroiled in legal drama.

Property owner Jay Singh of Paradigm Hotels Group terminated Virgin’s operating agreement in April 2020, soon after which Miami-based Virgin Hotels sued for breach of contract, saying Paradigm “wrongly and prematurely” terminated their operating agreement.

Singh later countersued in July 2020, claiming it was Virgin who broke the law and making multiple claims as to why. Among other things, according to Singh’s counterclaim, Virgin inflated its gross receipts in 2019 to also increase the management fee for the property and paid large sums in employee bonuses and severance pay that were unreasonable. And Singh claims he was misled into entering into a management agreement with Virgin in the first place because the company made “false and misleading claims about Virgin Hotels’ ability and commitment to building an enduring hotel brand in the United States.”

There’s a lot in there too the counterclaim about

As the SF Business Times reports, Virgin is targeting over $20 million, which is what they would have been owed in management fees over the life of the contract. And Singh is seeking unspecified damages.

In a statement to The Business Times, Singh’s attorney said, “Our clients believe that this valuable hotel asset has fallen victim to false promises, fraud and mismanagement… Our clients look forward to this process.”

Virgin called Singh’s claims “unfounded” and said in a statement: “Virgin Hotels went beyond its contractual obligations in supporting the successful opening of Virgin Hotels San Francisco. Mr Singh delivered an incomplete property to Virgin Hotels three years late. Despite this, Virgin Hotels transformed the property into a celebrated, award-winning hotel in just a short year, as Mr. Singh benefited from Virgin Hotels’ great dedication, expertise and global brand.”

The judge in that case has dismissed Virgin’s lawyers’ motions to dismiss some of Singh’s counterclaims. And now the case goes to a jury trial beginning February 7th.

All previous claims indicate that the business relationship was troubled and predated the opening of the hotel. Both sides blame each other for construction delays that resulted in a 2016 scheduled opening being delayed by three years.

Virgin Hotels has opened four more hotels in Dallas, Nashville, Las Vegas and New Orleans since the SF opened – the latter two just last year. They also operate a hotel in Chicago and may open a hotel in New York later this year.

In a separate lawsuit, a South Bay cybersecurity firm is suing Virgin Hotels, alleging they were overcharged for a February 2020 event. Attorneys in this lawsuit are seeking summary judgment and this case may not go to trial.

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