865 F. Supp. 2d 1172
S.D. Fla.2011Background
- Fairmont and Fairmont Hotels & Resorts (U.S.) Inc. sue Turnberry for preliminary injunction to reinstate Fairmont as manager of Turnberry Isle Miami after Turnberry ousted Fairmont on Aug. 28, 2011.
- The hotel was operated under a long-term hotel management agreement (HMA) governed by New York law, with arbitration provisions for disputes.
- Turnberry initiated a unilateral takeover without required notice, cure period, or termination grounds under the HMA, and changed branding and access.
- Fairmont sought to enjoin Turnberry to maintain status quo pending arbitration; the Magistrate Judge recommended denial, which district court affirmed.
- The court’s analysis centered on whether Fairmont’s agency was irrevocable and capable of specific performance, and whether injunctive relief was appropriate for a personal-services contract.
- The court also reviewed prior arbitration in 2009 where Turnberry partially paid amounts owed to Fairmont under the HMA, and Turnberry later agreed to arbitration outcomes and damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Fairmont’s agency irrevocable under the HMA? | Agency coupled with an interest exists. | Agency is revocable; no vested interest. | No; agency not irrevocably coupled with an interest. |
| Is the agency irrevocable due to consideration or other interests (ROFO/ROE, quiet enjoyment)? | Rights like ROFO/ROE and quiet enjoyment vest an irrevocable agency. | These rights are contingent or insufficient to vest an irrevocable agency. | Insufficient to render irrevocable; consideration alone not enough without vested interest. |
| Can a court compel reinstatement of a hotel manager (specific performance) given personal service contract law? | HMA allows specific performance; reinstatement is permissible. | Personal service contracts cannot be specifically enforced. | Not allowed; HMA is a personal services contract not subject to specific performance. |
| Does Fairmont demonstrate irreparable harm justifying a preliminary injunction? | Irreparable harm to brand, goodwill, and arbitration integrity. | Harm is compensable by damages; risk is not irreparable. | No irreparable harm; damages adequate. |
| Do public interest or balance of harms support issuing an injunction? | Maintaining status quo serves arbitration and contractual integrity. | Enforcing revocation aligns with property owner rights and avoids compelled partnership. | Public interest and balance favor denial. |
Key Cases Cited
- Wilson Sullivan Co., Inc. v. International Paper Makers Realty Corp., 307 N.E.2d 573 (N.Y. 1954) (principal may revoke agency; damages for breach may follow)
- Pacific Landmark Hotel, Ltd. v. Marriott Hotels, Inc., 23 Cal.Rptr.2d 555 (Cal. Ct. App. 1993) (agency not irrevocable absent present vested interest)
- Woolley v. Embassy Suites, Inc., 227 Cal.App.3d 1520 (Cal. Ct. App. 1991) (hotel management agreement generally revocable not by contract language alone)
- Government Guarantee Fund of the Republic of Finland v. Hyatt Corp., 95 F.3d 291 (3d Cir. 1996) (agency could be revocable despite contract provisions)
- In re Mitchell (Bankr. S.D.N.Y.), 249 B.R. 55 (S.D.N.Y. 2000) (no specific enforcement of personal service contracts)
- Terwilliger v. Ontario, C. & S.R. Co., 149 N.Y. 86, 43 N.E. 432 (1896) (N.Y.) (agency irrevocable only when accompanied by vested interest)