Charity sues NJ hospital for $400M over canceled hotel project

St. Joseph's Medical Center in Paterson, N.J., signed a land lease in 2012, giving nonprofit developer Medical Missions for Children land to build a hotel. Medical Missions is now suing St. Joseph's for breach of contract for nixing the project, according to NJ.com

Under a plan led by former St. Joseph's CEO Bill McDonald, the hospital provided land to Medical Missions to build a hotel through a 99-year ground lease signed in 2012. Although Medical Missions is a charitable organization, it has established profitable ventures such as the planned hotel to ensure its long-term stability. Under the plan, part of the hotel's profits would be donated to St. Joseph's Children's Hospital, while the charity would use the rest to further its mission.

After Mr. McDonald retired, Kevin Slavin took over as CEO of St. Joseph's in 2014. The complaint claims Mr. Slavin began questioning the validity of the ground lease in 2015, according to the report.

Medical Missions still moved forward with the plan and received approvals for the project from the City of Paterson. However, in June, St. Joseph's announced it was yanking support for the plan. The hospital's lawyers claim the 2012 land lease is invalid. The hospital is now seeking to evict Medical Missions from its property, according to the report. 

The complaint against St. Joseph's is pending in Passaic County Superior Court. Medical Missions is seeking a declaration that the ground lease is valid and at least $400 million in damages.

A spokeswoman for St. Joseph's, Karen Kessler, told NJ.com the lawsuit is baseless. 

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