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Trump SoHo sues over Sandy damages


On Thursday, the hotel's owner sued its insurance provider for rejecting its claim for damages. Con Edison was also named in the suit that was filed in New York City Supreme Court. The lawsuit may be the first legal challenge to the utility's position that a flood at its East 14th Street substation caused lower Manhattan's nearly week-long blackout. This explanation has been widely cited by insurers as a reason for denying Sandy-related claims.

The hotel is seeking at least $2.3 million in damages, alleging gross negligence by Con Edison and breach of contract by its insurer, Affiliated FM.

The 391-room property, owned by Bayrock/Sapir Organization LLC—in which the Trump family is a partner—submitted a business interruption claim to its insurer. In January, its claim was rejected, according to the lawsuit, because the hotel's policy did not cover it for off-premise service interruption caused by flooding at the Con Edison substation.

"We didn't expect to get denied for 100% of our claim," said BSO's general counsel Julius Schwarz. "We had flood insurance."

While hundreds of Sandy-related lawsuits have been filed in New York and other states, this one has the potential to affect many other claims in the city that were denied.

The complaint maintains that an explosion at Con Edison's facility was the cause of the power outage—not excessive water. Numerous news outlets showed video footage of the explosion, and a darkened lower Manhattan moments later.

The complaint notes that the hotel's insurance policy contains no exclusions for explosions at an off premise service provider resulting in power outages.

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