The management company that operates the city-owned Annapolis Market House has sued the city for $2 million, alleging the loss of rental income because of the city's failure to install an air conditioning system and to allow it to rent sidewalk space to vendors.
Lawyers on behalf of Market House Ventures LLC, a subsidiary of the Silver Spring-based Site Realty Group, which leases the Market House property, filed the lawsuit on Dec. 24 in Anne Arundel Circuit Court.
The lawsuit, which alleges breach of contract, is the latest misfortune for the Market House.
Shortly after Site Realty began leasing the building, the air conditioning system was overwhelmed by high summer temperatures and heat generated by food stalls' ovens.
The city and the management company later agreed to wait to install a new air conditioning unit until after the tourist season, according to news reports at the time.
Additionally, the city paid for a $1 million overhaul after the 300-year-old building was flooded by a major storm in 2003. A deal brokered to bring the gourmet grocer Dean & DeLuca to the site fell apart.
Mayor Ellen O. Moyer and the City Council, which plans to hold a closed-door meeting tomorrow night to discuss the lawsuit with the city attorney, are named as defendants.
Moyer said Thursday that she was "surprised" by the court action because of the prior agreement to wait until this month to install the air conditioning. She also added that she was never made aware of any proposal to install kiosks on the sidewalk outside of the building.
She said the city made efforts to market the building to residents and tourists.
"We have a letter of record asking that we not install the air conditioning till January of '08. So that's rather interesting," Moyer said. "It was the beginning of the new visitors' season; they didn't want to interrupt [business]."
Site Realty Vice President Richard Cohen and Neil S. Hyman, an attorney representing Market House Ventures, did not return calls for comment.
According to the seven-page brief, which says the management company "has suffered and will continue to suffer harm and damages," the city is responsible for providing "improvements to the basic building structure (roof, walls) and building systems (HVAC, electrical and plumbing)," and those improvements had to be completed prior to the opening date, which was April 1, 2006.
It goes on to say "the city has failed to install a proper and functional HVAC [high velocity air conditioning] system" and as a result, "temperatures in the premises exceed 90 degrees during the summer." The suit also alleges that "several of the plaintiff's tenants have vacated the premises," and others have threatened to do so, "causing plaintiff to lose rental income."
In an August 2006 article in The Sun that documented the air conditioning problems at Market House, city spokesman Ray Weaver said, "We're working hard to get this thing fixed, and we're taking the responsibility. It's a mess and we're mortified."
In April, the two parties appeared to reach an agreement, postponing plans to install a new air conditioning until this month, after the busy tourist season, according to another Sun article.
A temporary air-conditioning unit was erected on the sidewalk behind a fenced-in area, which raised the ire of some residents and tenants, complaining it was a noisy eyesore that obscured parking spaces and blocked doorways.
In September, Jacksonshole LLC, which operated a fudge and candy shop in the Market House, sued Market House Ventures for $75,000, claiming it had "suffered damages, including lost profits and spoiled products," and were in "a space where they cannot operate their business," due to the air conditioning malfunctions.
According to an attorney representing Market House Ventures, that lawsuit was settled two weeks later. He would not disclose the terms.