X Corp., the social media company formerly known as Twitter, has been ordered to pay more than $8 million to its former landlord in Boulder after a judge determined it broke its lease.<\/p>\n
\u201cTwitter was not entitled to a credit for rent due on Dec. 1, 2022, and its nonpayment of rent for December and thereafter was a breach,\u201d Judge Nancy Salomone wrote May 23.<\/p>\n
In 2020, Twitter agreed to lease 64,500 square feet of the 70,000-square-foot Railyards at S\u2019PARK office building, which was then under construction at 3401 Bluff St. The lease called for the company to stay 10 years, until 2032. It lasted a little more than one year.<\/p>\n
Twitter stopped paying rent in late 2022, was evicted and sued its former landlord for wrongful eviction, and was sued for back rent. A five-day trial was held this past March.<\/p>\n
The triple-net lease between Twitter and S\u2019PARK\u2019s owners, The John Buck Co. in Chicago, provided Twitter with a tenant improvement allowance of $5.8 million. As Salomone noted in her verdict last week, \u201cThe central dispute in this litigation is whether Twitter satisfied the lease conditions precedent to accessing that tenant improvement allowance.\u201d<\/p>\n
The 192-page lease for 3401 Bluff St. required Twitter to build out the property and send documentation proving that it had before it could collect the allowance. Twitter did the build-out work — at a cost of $40 million, by its own estimation \u2014 but, in the period following Elon Musk\u2019s purchase of the company, never sent evidence of that to its landlord.<\/p>\n
Salomone was persuaded by a video deposition of Joseph Killian, a former Twitter executive, who testified that Twitter stopped paying rent in December 2022 as a \u201crenegotiating tactic — a tactic to save money.\u201d By comparison, the judge found trial testimony from Nicole Hollander, a top Musk aide who led Twitter\u2019s real estate division, \u201cnot at all credible.\u201d<\/p>\n
\u201cThis testimony suggests to the court that Twitter\u2019s cessation of rent payment reflected business strategy rather than a bona fide belief in its entitlement to rent credit,\u201d Salomone wrote.<\/p>\n
Because Twitter could not claim a rent credit in December 2022, its refusal to pay rent was a breach of its lease, the judge determined. With that, she ordered the company, which now goes by X Corp., to pay $8.3 million, plus interest and the Buck Co.\u2019s attorney fees.<\/p>\n