Published on:

Hotel Attorney: Ritz-Carlton Bali hotel management agreement termination further court order

Author of
29 April 2008
Hotel Attorney on hotel management agreements and operator breach of duty. U.S. District Court confirms that Owner of the Ritz-Carlton Bali can terminate long-term, no-cut management agreement without penalty.

As of April 29, 2008, the Federal District Court in Maryland issued an order ruling on various post-trial motions of our client, the owner of the Ritz-Carlton Bali. The details of this owner-operator dispute have been previously covered here at, but today was the latest development in this struggle.

Here’s what the court said.

The latest ruling in the Ritz-Carlton Bali case.

For a detailed discussion of the underlying matter, see Ritz-Carlton Bali case, a related article on How to terminate a hotel management agreement, and other articles on Hotel Management Agreements.

In an order dated April 25, 2008, filed April on 29, 2008, the court ruled on Ritz-Carlton’s Motion for Judgment as a Matter of Law/New Trial. The Court denied Marriott’s motion in all respects, except as to their request that the punitive damages award is excessive. The Court deferred a final decision on what amount the court will permit as punitive damages. Accordingly, a final Order entering judgment on all jury counts, and the amount of damages awarded to KMS, has yet to be entered.

The order said:

Specifically, the Motion is GRANTED as to Plaintiff’s request for
declaratory relief regarding its right to terminate the Amended
Operating Agreement dated February 11, 2004 and its relationship
with Ritz-Carlton and it is ADJUDGED, ORDERED and DECREED
that Plaintiff has the right to terminate said Agreement with Ritz-

The Motion is DENIED as to Plaintiff’s request for disgorgement and
forfeiture of fees paid to Ritz-Carlton.

In terms of assessing the appropriate amount of the punitive damages awarded to the Owner against Ritz-Carlton, it appears that the court may want to consider the substantial amount of attorneys fees incurred by the Owner in obtaining the result at trial. The court deferred the question of whether the jury’s award of $382,304 of compensatory damages can support the $10 mil jury award for punitive damages.

While the Court denied KMS’ request for disgorgement or all management fees, it granted the request for a Declaration that KMS is entitled to terminate the Operating Agreement.

Hearing on the award of attorneys fees is expected to held this Summer. Marriott is also expected to appeal.

A full copy of the order is attached. Download file

There is a wealth of information available on Hotel Management Agreements in the Topic by that name at

Other articles on Hotel Law Blog about terminating hotel management agreements

How to terminate a hotel management agreement: A Tale of Two Hotels — Marriott’s Edition Waikiki and Fairmont’s Turnberry Isle Resort

Terminating hotel operators: M Edition lawsuit against Marriott has a new twist — Marriott is replaced overnight

More on M Waikiki Edition lawsuit against Marriott – What Marriott’s General Counsel says

M Waikiki’s Edition lawsuit against Marriott and Ian Schrager – an owner’s HMA dispute with Marriott

Terminating hotel operators: Turnberry Resort drops Fairmont flag

Hotel management agreement terminations — Is there a better way?

Terminating hotel management agreements when things don’t work? Not easy, but not impossible either.

Hotel bankruptcy trump card. Terminating hotel management agreements without liability — the alchemy of lead to gold for troubled hotels and hotel loans?

Ritz-Carlton Bali hotel management agreement termination further court order

Ritz-Carlton breached contractual and fiduciary duties under hotel management agreement giving rise to free termination, $10.3 million in damages plus attorneys fees. When will hotel operators “get it”?

How to terminate a hotel management agreement when an operator really deserves it!

This is Jim Butler, author of and hotel lawyer, signing off. We’ve done more than $50 billion of hotel transactions and more than 100 hotel mixed-used deals in the last 5 years alone. Who’s your hotel lawyer?

Our Perspective. We represent developers, owners and lenders. We have helped our clients as business and legal advisors on more than $50 billion of hotel transactions, involving more than 1,000 properties all over the world. For more information, please contact Jim Butler at or 310.201.3526.

Jim Butler is one of the top hotel lawyers in the world. GOOGLE “hotel lawyer” or “hotel mixed-use” or “condo hotel lawyer” and you will see why.

Jim devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM’s Global Hospitality Group® — a team of 50 seasoned professionals with more than $50 billion of hotel transactional experience, involving more than 1,000 properties located around the globe. In the last 5 years alone, Jim and his team have assisted clients with more than 100 hotel mixed-use projects, all of which have involved at least some residential, and many have also involved significant spa, restaurant, retail, office, sports, and entertainment components — frequently integrated with energizing lifestyle elements.

Jim and his team are more than “just” great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right “fit” for all parts of the capital stack. Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, assemble the right team, strategize the approach to optimize value and then get the deal done.

Jim is frequently quoted as an expert on hotel issues by national and industry publications such as The New York Times, The Wall Street Journal, Los Angeles Times, Forbes, BusinessWeek, and Hotel Business. A frequent author and speaker, Jim’s books, articles and many expert panel presentations cover topics reflecting his practice, including hotel and hotel-mixed-use investment and development, negotiating, re-negotiating or terminating hotel management agreements, acquisition and sale of hospitality properties, hotel finance, complex joint venture and entity structure matters, workouts, as well as many operating and strategic issues.

Jim Butler is a Founding Partner of Jeffer, Mangels, Butler & Marmaro LLP and he is Chairman of the firm’s Global Hospitality Group®. If you would like to discuss any hospitality or condo hotel matters, Jim would like to hear from you. Contact him at or 310.201.3526. For his views on current industry issues, visit