The optimism was short-lived. A flurry of lawsuits has been filed against the owner, 1000 Van Ness LP, and James Kilpatrick, an investor, alleging broken promises, conflicts of interest, and hostile management.
The owner of Emerald Lounge sued in August. The Grand Athletic Club sued in October and has abandoned its opening plans (opens in new tab). Earlier claims against the building owner by an insurance broker and the owner of the parking lot remain outstanding.
The lobby of the 1921-built Don Lee Building at 1000 Van Ness Ave. | Source: Constanza Hevia H. for The Standard
The historic building’s turbulence reflects the street’s struggles. A 20-year transit project that cost hundreds of millions of dollars debuted in 2022, but the corridor has remained riddled with empty storefronts, homelessness, and scenes of misery. The Don Lee Building’s uneven resurgence mirrors Van Ness’s broader challenges, worsened by the pandemic.
City planners had once hoped that a revitalized Van Ness — anchored by large, activated commercial buildings like this one — could help stabilize the area. Its ongoing turmoil instead highlights how fragile San Francisco’s recovery remains.
Korean theater chain CGV was meant to usher in the revival of 1000 Van Ness. After long-time tenant AMC departed (opens in new tab) in 2019, CGV poured about $14 million into renovations, according to Variety (opens in new tab). But by the time CGV opened in 2021, Covid had wrecked the theater business, and it struggled to pay rent (opens in new tab).
CGV sought to end its long-term lease early and agreed to buy the building from owner Site Centers for $28 million and quietly resell it to 1000 Van Ness LP to avoid publicity. (A related lawsuit over a “success fee” for the bankruptcy firm that brokered the deal settled in October (opens in new tab).)
The collapse of CGV’s splashy revival plan didn’t just weaken 1000 Van Ness — it stalled momentum on a corridor that had banked on major destinations to draw people back.
Both Van Ness Ave and the Don Lee Building continue to limp along, as the time and price of revival snowball. Still, Kilpatrick has painted the process as an expected cost of doing business, characterizing the raft of litigation as ordinary “growing pains” that come with rehabbing distressed real estate.
He noted that the property is divided into three parcels — the commercial building, a parking lot, and a condo complex — making decisions and approvals complicated. And he described the lawsuits from the owners of the cafe and gym as being driven by tenant inexperience.
A brewing conflict
In the summer of 2024, Rebecca Fox moved from Kansas to San Francisco with the dream of opening a showroom for Brew Grind Water (opens in new tab), her high-end coffee equipment company, paired with a café. Real estate brokerage NAI (opens in new tab), where Kilpatrick is president, showed her the 1000 Van Ness lobby space, and she fell in love, signing a lease and opening Emerald Lounge in April.
Fox alleges in her lawsuit (opens in new tab) that NAI failed to disclose Kilpatrick’s ownership stake in the building and that several stipulations discussed in her letter of intent were missing from the final lease. She’s seeking “no less than” $100,000 in damages, alleging breach of fiduciary duty, constructive fraud, and concealment.
While Kilpatrick admits the brokerage team’s failure to disclose his ownership in writing, he disputes that the omission would have made any financial difference for Fox and says many terms changed before the lease was finalized.
Barista Julius Moridis prepares a matcha latte. | Source: Constanza Hevia H. for The Standard
The Emerald Lounge is locked in a dispute with the building’s owner. | Source: Constanza Hevia H. for The Standard
Emerald Lounge remains open, decked out with ornate furniture and serving lavender white mochas and strawberry basil sodas, but Fox has not launched the Brew Grind Water showroom. She blames hostility from management and unfinished building improvements, including plumbing and power upgrades, for her inability to open the showroom, which she was relying on to drive revenue.
“Despite investing everything I have — emotionally, financially, and physically — in this business, we’ve faced continuous obstacles from the building’s ownership,” Fox said.
Her situation resembles the struggles faced by many small business owners trying to gain a foothold in a city where commercial recovery remains uneven and often dependent on cooperation from landlords.
Since filing the lawsuit, Fox has also accused Kilpatrick of stealing a sandwich board she’d put on the sidewalk and tearing down ICE crisis hotline posters she’d taped on the building’s front window. Kilpatrick denies tearing down posters and says management removed a sign after warning Fox that it required prior approval.
She’s been withholding rent in protest of “promised building improvements [that] were never delivered” and fears she may be on the brink of eviction. Kilpatrick argues that the building has met its obligations, and that Fox is responsible for spearheading any remaining work.
“We just wish she would pay rent,” Kilpatrick said. “We don’t want to kick her out.”
Fox said she has “done more to stabilize this property and protect the neighborhood than its landlord has ever shown interest in doing.” She claims the building’s security failed to protect her staff from people wandering in off the street while in mental health crises, resulting in theft and an incident in which she was punched (opens in new tab).
Kilpatrick acknowledged issues with the security team but said hiring a new one would require approval from all three parcels, which are also in conflict.
The gym that didn’t work out
The Grand Athletic Club never opened despite signing a lease in December, and its owners, Kris and Kelsey Morton, have sparred with the building and Kilpatrick over who is to blame for renovations that were not completed.
The Mortons allege in their complaint (opens in new tab) that 1000 Van Ness LP failed to complete the work it was responsible for and is holding more than $100,000 worth of their gym equipment hostage. They’re seeking nearly $3 million in damages.
Kilpatrick said his team made all required repairs, and certain fixes were the gym’s responsibility. “There’s lots of stuff that was on the landlord. We did all that stuff,” he said. “There’s lots of stuff that’s on the tenant.” He argued that 1000 Van Ness LP legally took possession of the gym equipment as security collateral.
“They had heart, and they were in it to win it; they just didn’t have the expertise,” Kilpatrick said. “If I were a billionaire, I would say, ‘You guys gave it a shot. It’s OK. Here’s your deposit back.’ That being said, there is a loan on the property. If I were going to donate money, it would probably be to an animal or an immigrant.”
Because The Grand Athletic Club never opened, the building is showing the space to prospective tenants. | Source: Constanza Hevia H. for The Standard
The gym alleges that the building has no right to hold its equipment, which is says is worth more than $100,000. | Source: Constanza Hevia H. for The Standard
The Mortons say the project failed due to the building’s condition and reject Kilpatrick’s portrayal of them as inexperienced or overwhelmed.
“Opening this gym was our dream, and we poured significant time and financial resources into the space,” they said in a statement. “But, as outlined in our filed complaint, Mr. Kilpatrick’s refusal to complete what was required under the lease made that impossible.”
A building full of finger-pointing
The disputes go beyond the newest tenants. A lawsuit filed in November by 5910 Investments, owner of the parking garage at 1000 Van Ness Ave., remains active and has resulted in a court-appointed receiver overseeing the building’s management.
5910 Investments (opens in new tab) accuses the building owner and Lakeside Investment Company, owned by Kilpatrick, of “multiple breaches,” including mishandling money, failing to provide financial records, and not procuring required insurance. Like Fox, 5910 Investments accuses Kilpatrick of misrepresenting his relationship to various business entities.
In March, 1000 Van Ness LP countersued, (opens in new tab) claiming the parking lot owner neglected basic maintenance, resulting in a garage that’s “dirty and dilapidated,” and accused it of selling more monthly parking passes than it was authorized to.
In a recent report, (opens in new tab) the court-appointed receiver, Michael Kasolas, noted the need for extensive repairs: “The current and previous building owners have deferred much-needed maintenance and have not reserved any meaningful funds for such repairs,” Kasolas wrote. “The fighting among the current owners has sapped resources that should be used to fund building operations and repairs. While the receivership estate currently has sufficient operational funds to carry out its activities at present, that will not be the case indefinitely.”
A lawyer for 5910 Investments did not respond to a request for comment.
A lawsuit filed by the owner of the parking lot has resulted in a court-appointed receiver overseeing the building’s management. | Source: Constanza Hevia H. for The Standard
1000 Van Ness LP claims the parking lot owner neglected basic maintenance, resulting in a garage that’s “dirty and dilapidated.” | Source: Constanza Hevia H. for The Standard
Kilpatrick described the issues with the parking lot and the building maintenance as “drama” that was brewing before he became involved with 1000 Van Ness.
“We had a feeling that this building is amazing and we are getting into a hornet’s nest,” he said. “Do I regret it? No, it’s a beautiful building. I think I still would have bought it.”
Another outstanding lawsuit, filed in December (opens in new tab) by financial services firm Acrisure, claims that Kilpatrick and 1000 Van Ness LP refused to pay for a property insurance policy that Acrisure secured on their behalf. The firm is seeking $250,000 in damages.
Kilpatrick tied the issue back to disagreements within the building, saying the parking lot and condo owners refused to approve the insurance package, despite his objections.
The infighting highlights a broader pattern in older San Francisco commercial properties, where fragmented ownership and years of deferred repairs have made coordinated recovery efforts painfully slow.
A Department of Building Inspection job card is taped to the building’s worn exterior. | Source: Constanza Hevia H. for The StandardA checkered track record
Kilpatrick has had previous legal troubles. He settled a $1 million lawsuit (opens in new tab) with the city of Oakland, which accused his company of intentionally gutting a Chinatown apartment to force tenants out. While Kilpatrick describes the situation as “heartbreaking,” he blamed the general contractor for the issues.
There have been several (opens in new tab) other (opens in new tab) lawsuits (opens in new tab) against companies he owned over years, which he said were par for the course for someone handling so many transactions. Kilpatrick has also had his real estate license temporarily suspended twice (opens in new tab), for mishandling money and for continuing to work during his first suspension. Kilpatrick said that while there was a violation, no money was alleged to be lost or missing, and the suspension occurred because he was late paying a fine.
Kilpatrick has disputed previous reporting that he acquired 1000 Van Ness Ave. “virtually for free” but acknowledges getting a favorable deal. While he previously said he expected the property to be fully occupied by the end of 2025, he now admits this is unlikely.
Signs advertising retail space available for lease hang in the windows. | Source: Morgan Ellis/The Standard
While it hosts Ike’s Love & Sandwiches and a ghost kitchen called City Smoke House (opens in new tab), three leasable spaces at the Don Lee Building remain empty (opens in new tab). Kilpatrick says several gyms are interested in the space that was to have been The Grand Athletic Club, and a bar and “experiential amusement center” are in discussions for other units. His new goal is to be fully occupied by the end of 2026.
Kilpatrick said Apple Cinemas is “doing great” despite operational issues. The movie theater has made no public complaints against the building’s owners, (opens in new tab)though it’s dealing with its own legal headache, as tech company Apple (opens in new tab) has sued it for trademark infringement.
The cinema is still working to attract steady business, based on seating charts (opens in new tab), though director of operations Jessica Robitaille expects traffic to increase because of the holidays. She says Apple Cinemas’ relationship with the landlord has been smooth.
“We haven’t experienced difficulties seeing things through,” she said.
Apple Cinemas is still ramping up its self-serve concessions. | Source: Constanza Hevia H. for The Standard
It’s also working to attract consistent business. | Source: Constanza Hevia H. for The Standard
It’s been a different matter for the erstwhile owners of The Grand Athletic Club.
“We carried the stress, uncertainty, and heartbreak of watching our opening slip further away,” the Mortons said in a statement. “It has been emotionally and financially devastating.”
They look forward to the truth coming out in court, they added: “We trust that process to address the details.”
Fox, meanwhile, mourns for both herself and the overall Van Ness corridor, which she says will suffer the most from the building’s drama.
“You would think the management would want us to succeed, but they’ve fought us every step of the way,” she said. “All I want to do is keep making lattes and contributing to this community.”