Author of www.HotelLawBlog.com
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 www.HotelLawBlog.com, but today was the latest development in this struggle.
Here’s what the court said.
The latest ruling in the Ritz-Carlton Bali case.
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
Other articles on Hotel Law Blog about terminating hotel management agreements
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”?
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