Judge orders Musk’s X to pay $8M+

BOULDER TWITTER OFFICE SPAT

By Lucas High

BizWest / Prairie Mountain Media

Boulder District Court judge Nancy Salomone slammed X Corp., the Elon Musk-owned parent company of the social-media platform formerly known as Twitter, with a nearly $8.3 million judgment last week, settling a lengthy legal battle in favor of the landlord that evicted the company from its Boulder office space in 2023 after Twitter stopped paying rent.

In her order, Salomone ruled that “Twitter unjustifiably stopped paying rent” at its 65,000-square-foot offices at 3401 Bluff St. in the S’Park development to landlord Lot 2 SBO LLC, a holding company affiliated with S’Park co-owner The John Buck Co.

Twitter signed a 10-year lease for the space on Feb. 14, 2020, and was provided with nearly $6 million in tenant-improvement allowances, or TIAs. Musk’s X Corp. bought the social media company in 2022.

X, in a counterclaim that its lawyers argued in court filings and during a five-day trial in March, contended that it had the right to — and that it had informed Lot 2 that it intended to — apply those TIAs to rent.

It “would be non-sensical,” Salomone’s order read, for the landlord to agree to those terms. Rather, “the Court finds credible the extrinsic evidence offered through the testimony of Joseph Killian, a Twitter/X Corp senior project manager from 2021 until his separation from the company in December 2022, that Twitter had a policy and practice arising in December 2022 of not paying rent anymore as a ‘renegotiating tactic … to save money.’”

The Musk-led social-media company’s “cessation of rent payment in December 2022 reflected business strategy rather than a bona fide belief in its entitlement to rent credit under the Lease,” the judge determined.

Salomone found that the testimony of Nicole Hollander, a member of Musk’s inner-circle and an X employee who has been reported to be involved with the Department of Government Efficiency’s efforts to strip federal agencies of funding and staffing, “was not at all credible.”

Lot 2’s eviction of X “was an appropriate remedy under the Office Lease that Lot 2 had a right to exercise when it did, and Twitter at all times had actual notice of the eviction proceedings and nonetheless failed to participate,” the judge ruled.

The former Twitter office space in S’park has sat vacant for several years after the departure of the social media company.

Attorneys representing X argued that the landlord’s leasing team would be better served to subdivide the cavernous space — which features millions of dollars of customizations specific to Twitter, including bird logos embossed into floors and walls — into smaller offices and market them to multiple tenants. Lot 2 has held out for a shift in the office market that will improve its chances to lease the entire space to a single user.

The landlord “has wagered that the likelihood of waiting for a market recovery will ultimately be more profitable than dividing the building and seeking smaller leases at lower Rates,” Salomone wrote in her order.

“The Court does not find that Lot 2’s strategy is unreasonable.”