Airbnb: Theater district high-rise owner has no legal leg to stand on in lawsuit over short-term tenants

By Scott Holland | Jan 9, 2018

Airbnb has asked a Cook County Judge to dismiss a lawsuit brought by the owner of a luxury high-rise apartment building in Chicago's Theater District, which argues Airbnb should pay because tenants are breaking their leases by using the short-term and vacation rental service to sublet their units.

Airbnb has asked a Cook County Judge to dismiss a lawsuit brought by the owner of a luxury high-rise apartment building in Chicago's Theater District, which argues Airbnb should pay because tenants are breaking their leases by using the short-term and vacation rental service to sublet their units.

In July, MDA City Apartments LLC filed suit in Cook County Circuit Court against Airbnb and another company, TempHomes Chicago, which the complaint said specializes in providing “temporary living and corporate housing.” The complaint indicates TempHomes holds several units in MDA City’s building, which it lists through Airbnb. MDA City said Airbnb should be made to pay for disrupting life in the building, as tenants continue to list rentals in that building, even though their leases and building rules prohibit them from renting their apartments through such services.

MDA City Apartments is in what its website describes as a “historic building” at 63 E. Lake St., at the corner of East Lake and North Wabash Avenue, “steps from the Chicago River and the famous Theater District,” in Chicago’s North Loop. According to an entry on Apartments.com, the building, renovated in 2003, offers 190 apartments, ranging from studios to three bedrooms. The units are listed for rent from about $1,600-$3,600 per month.

In a motion filed Dec. 11, Airbnb alleged “MDA’s own allegations and admissions fatally undermine its claim,” noting TempHomes “expressly represented” it would sublease units at the time it executed primary lease agreements with MDA and also that a concierge working for MDA checked TempHomes guests in and out of the apartments.

According to Airbnb, MDA insists its cooperation did not waive its ability to enforce lease restrictions, but Airbnb said, although MDA might have claims against TempHomes, it has no grounds for tort claims against Airbnb.

The Cook County motion was filed a few weeks before Airbnb scored a victory in a similar matter in federal court in Los Angeles. U.S. District Judge Dolly Gee said in a Dec. 29 ruling the 1996 Communications Decency Act protects Airbnb and other online service providers from liability for user-posted content – in this instance, ads posted on Airbnb by tenants listing their apartments as available for short-term rental through the Airbnb program.

In arguing its Chicago case, Airbnb also said MDA’s case should end because it failed to allege Airbnb intended for tenants to breach their leases; that Airbnb secured a benefit that should have gone to MDA; that any actual trespassing occurred; and that short-term rentals do not meet the legal definition of private nuisance, especially when MDA markets its own furnished, short-term rentals in the same building.

“MDA alleges it is harmed by ‘the constant flow of unfamiliar faces’ at its property,” Airbnb stated, “but it has expressly authorized this activity by contracting with TempHomes and currently encouraging similar ‘furnished short-term rentals’ on the website it operates for the same building that is the subject of this litigation.”

Airbnb also invoked the CDA in its motion against MDA, saying the company’s choice to allege a failure to remove listings violated lease terms proves MDA targeted Airbnb as a publisher.

“Were MDA to succeed on any of its claims, Airbnb would be required to review and monitor listings to determine if they were in violation of MDA’s lease terms,” Airbnb said, explaining “the CDA does not permit liability based on editorial judgments like this.”

The California action involved Denver-based Apartment Investment & Management Co., or Aimco, which also is suing Airbnb in Florida and recently survived a motion to dismiss in that action.

MDA City Apartments is represented in the Chicago case by the law firm of Cozen O’Connor, of Chicago.

Representing Airbnb is Massey & Gail LLP, of Chicago.

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Organizations in this Story

Airbnb Cozen O'Connor - Chicago Massey & Gail

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