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A MAJOR STINK OVER LEASE AGREEMENT If a Financial District burger joint and pizza place are forced to shut their doors, hungry neighbors might look five stories up — to the San Francisco offices of Shook, Hardy & Bacon. When the firm sued its landlord a year ago to try to extract itself from a 10-year lease, it complained that odors from the food court downstairs were wafting into its fifth- and sixth-floor offices near the corner of Bush and Montgomery streets. Now the landlord is trying to eject Bistro Burger and Escape From New York Pizza from the first floor, accusing them of breaking a no-smelliness clause in their leases. Shook, Hardy claims — in a suit filed in San Francisco Superior Court — that its lawyers have been plagued by “noxious food odors,” noise and toilets that don’t flush correctly since renting the space in 2001. “SHB, an internationally recognized law firm,” the firm complains, “is continually embarrassed at the prospect of bringing outsiders into the premises due to the strong food odors, noise and plumbing problems.” Shook, Hardy wants to break its lease, or recoup the difference between the rent it agreed to and a more “reasonable rental value.” It has also asked for at least $7.6 million in damages for rent paid since 2001, plus punitive damages and money for tenant improvements it made, according to the suit. The building owner, Bush Street San Francisco Property, denies misleading the firm about the condition of the office space. But it doesn’t seem to quarrel with the lawyers’ sense of smell. In a cross-complaint filed Dec. 20, the building owner claims the eateries have violated parts of their leases that say they can’t “allow the emission of offensive or noxious odors from the premises or the outside seating area.” Representatives of the law firm and Escape From New York Pizza declined to comment last week, and a lawyer for the building owner could not be reached before press time. But Bistro Burger’s attorney, David Simpson of San Francisco’s Simpson Partners, called the building’s suit against his client “ludicrous.” The real problem, Simpson claims, is that the building’s ventilation system blows exhaust onto a balcony next to the law firm’s offices. If the restaurant were really responsible for a problem, he added, it should have come to light long before Shook, Hardy & Bacon sued for millions of dollars. “This landlord has, thank you very much, been collecting rent from us for five years with nary a boo.” — Pam Smith AN OFFER SOME CAN REFUSE Former Brobeck, Phleger & Harrison employees got a special invitation in the mail as the holiday season kicked off in November. PrimeShares World Markets LLC, a New York-based outfit that buys stocks, bonds and trade receivables of bankrupt companies, offered to buy claims that former Brobeck employees have filed in the defunct firm’s Chapter 7 bankruptcy proceeding. But the purchase offer is far less than the value of the claim — totaling 10 cents on the dollar in one case. PrimeShares Managing Director Roger von Spiegel said the company’s goal is to provide creditors liquidity so they get cash immediately instead of waiting for the estate to come up with the money. PrimeShares’ proposal apparently appealed to some Brobeck employees. “There are people that have taken up the offer,” von Spiegel said, though he declined to say how many had done so or the amount they would receive for their claims. But one employee who got PrimeShares’ letter was miffed. “It saddens me that some people took the offer,” said former Brobeck senior counsel Jayne Loughry. “At some point they’ll find out they got ripped off.” Loughry said she filed a claim for $185,000, which includes an unpaid 2002 bonus, severance pay and penalty wages. Loughry is one of the plaintiffs in a suit Brobeck employees brought against Brobeck and Morgan, Lewis & Bockius seeking millions in severance pay. When a company enters bankruptcy it files a schedule form with the court listing unsecured claims against it. In a Nov. 24 letter to Loughry, PrimeShares offered to pay her $3,075 for her scheduled claim of $30,750. Another outfit that purchases unsecured claims against bankrupt companies made offers to Brobeck’s former vendors. Debt Acquisition Co. of America sent letters to 157 vendors and got eight takers, including the San Mateo Marriott, which has a claim against Brobeck for $67,316, and messenger service company ProCourier, which has a claim of $10,234. Tom Scheidt, a principal at San Diego-based Debt Acquisition, said the company offered pennies on the dollar for these claims given the uncertainty and litigation involved in Brobeck’s bankruptcy. “The trustee is trying to recoup money, but who knows if he will,” Scheidt said. “I’d assume this case won’t pay a dime for two years.” Debt Acquisition did not offer to buy employee claims, which Scheidt said are more difficult to assess. But he said employees have priority over other creditors, including landlords, for up to $4,600 of their wage claim. Any amount above that would be considered with other unsecured claims. “If the money is available, they should be paid 100 percent on the dollar” for the priority portion of their claims, he said. — Brenda Sandburg

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