MIAMI
Pryor Cashman LLP, on behalf of its client, Eden Roc, has successfully argued to a New York appeals court that it should vacate an injunction requiring Eden Roc to accept the hotel management services of Marriott International and its subsidiary, Renaissance Hotel Management Company, LLC. The appellate court agreed and issued an order on March 26, 2013.
Marriott argued that its management agreement with Eden Roc could not be terminated by Eden Roc during the full term of that agreement, which could have lasted another 43 years. Although Marriott obtained an injunction from the lower court securing its place as Eden Roc's manager against Eden Roc's wishes, a unanimous panel of the Appellate Division, First Department of New York, agreed with Pryor Cashman that the parties' hotel management contract "is a classic example of a personal services contract that may not be enforced by injunction."
The dispute has been brewing for over a year. Eden Roc terminated its agreement with Marriott on March 30, 2012, citing a number of defaults. Marriott and Renaissance, however, refused to vacate the hotel or acknowledge the agreement's termination. In October 2012, therefore, Eden Roc and a team of transition professionals attempted to remove Marriott from the premises and to install in its place Eden Roc Management Company, an affiliated operating unit of the hotel's owner that is comprised of seasoned managers of leading lifestyle brands. Marriott resisted and obtained the injunction preventing its removal.
The appellate court's ruling seems to establish that hotel management companies cannot insulate themselves from removal when they operate pursuant to classic management services agreements. The decision perhaps also vindicates the rights of hotel owners to reclaim their valuable property when they see fit to do so.
"This important decision is a vindication of Eden Roc's right to remove Marriott from the hotel, and gives hotel owners across the country legal footing to protect their investments. A hotel manager is barred from commandeering a property against the owner's wishes. Any doubts in that regard have been laid to rest," said Todd E. Soloway, a partner at Pryor Cashman, LLP who, along with partners Joshua D. Bernstein and William Charron represented Eden Roc.
