Ritz-Carlton Bali Hotel in court.
Thursday, 1st May 2008
Source : By Jim Butler, Hotel Lawyer
A US District Court confirms that the Owner of the Ritz-Carlton Bali can terminate a 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.

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- Carlton.
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 available.

This is Jim Butler, author of www.HotelLawBlog.com 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 jbutler@jmbm.com or 310.201.3526.

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.

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