Marriott International Inc. (MAR:US), the largest publicly traded U.S. hotel chain, lost an appeal in its lawsuit against the owners of the Eden Roc Renaissance Hotel in Miami Beach, Florida.
The owners of the 57-year-old Eden Roc sued Bethesda, Maryland-based Marriott in April, saying the company mismanaged the property after they invested more than $300 million in the hotel, including a $240 million renovation. Marriott sued the owners in the same court six months later, accusing them of attempting a hostile takeover.
New York State Supreme Court Justice Melvin L. Schweitzer granted Marriott a preliminary injunction in November and urged the two sides to resolve the case. In a decision released today, an appeals panel in Manhattan reversed Schweitzer’s order and vacated the preliminary injunction.
“The parties’ detailed management agreement places full discretion with plaintiffs to manage virtually every aspect of the hotel,” the appeals court said in its decision. “Such an agreement, in which a party has discretion to execute tasks that cannot be objectively measured, is a classic example of a personal services contract that may not be enforced by injunction.”
The 21-floor, 631-room art deco hotel opened in 1956 and has hosted celebrities including Elizabeth Taylor, Katherine Hepburn and Humphrey Bogart, according to its website.
The hotel, which was featured in several episodes of the 1950s television show “I Love Lucy,” was designed by architect Morris Lapidus, who also designed the neighboring Fontainebleau.
The ruling shows that ownership “has the absolute right to remove Marriott from the property if it so desires,” Todd Soloway, an attorney for owner Eden Roc LLLP with Pryor Cashman LLP, said in a telephone interview. Marriott is currently managing the property under its Renaissance brand and Eden Roc LLLP hasn’t yet determined how to proceed, he said.
“This decision vindicates the owner’s absolute right to control its own property and its own hotel in which it has a huge investment,” Soloway said. “It bars hotel managers like Marriott from commandeering the owner’s property.”
Marriott spokesman Jeff Flaherty didn’t immediately comment on the decision in an e-mail.
The case is Marriott International Inc. v. Eden Roc LLLP, 653590/2012, New York State Supreme Court, New York County (Manhattan).
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