Marchionda v. Embassy Suites Franchise, LLC
359 F. Supp. 3d 681
| S.D. Iowa | 2018Background
- In April 2014 plaintiff Cheri Marchionda stayed at the Embassy Suites on the River (the Hotel). An intoxicated guest, Christopher LaPointe, obtained a key to her room from hotel staff and, after the maintenance engineer aided entry around the door latch, sexually assaulted her; LaPointe later pleaded guilty to burglary and sexual assault.
- The Hotel was owned by Atrium TRS III, LP (Atrium), franchised under a Franchise License Agreement (FLA) with Embassy Suites Franchise, LLC and affiliated Hilton entities (collectively "Hilton"); the Hotel was operated day-to-day by John Q. Hammons Hotels Management, LLC (Hammons) under a Management Services Agreement (MSA).
- The FLA required compliance with Hilton Brand Standards and gave Hilton certain inspection, training, and approval rights, but disclaimed agency and did not directly employ hotel staff; the MSA made Hammons responsible for hiring, supervising, and operating the restaurant/bar and staff, including key control procedures.
- Plaintiff sued for negligence and punitive damages against Hilton entities, Atrium, and Hammons. Defendants moved for summary judgment: Hilton entities and Atrium as to Count One (negligence); Atrium and Hammons as to Count Two (punitive damages); the Court heard cross-arguments about retained control, ostensible agency, innkeeper duties, and foreseeability of harm.
- The court granted summary judgment dismissing Embassy Suites Franchise, LLC, Hilton Worldwide Holdings, Inc., and Hilton Worldwide, Inc. on Count One (no duty under retained-control/possession tests), denied summary judgment as to Atrium on Count One (Atrium owed an innkeeper duty and foreseeability was disputed), and denied summary judgment on punitive damages as to Atrium and Hammons (submissible issue at trial).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hilton (franchisor) owed plaintiff a duty of care | Hilton retained control or held out Hammons as Hilton's agents; ostensible agency and failure-to-train theories | Under Hoffnagle retained-control test franchisor lacks duty absent day-to-day control; no agency because FLA disclaims it | No duty: Hilton entities dismissed on Count One (no day-to-day control; no ostensible agency) |
| Whether Atrium (owner/franchisee) owed a duty of care | Atrium, as owner/innkeeper, owed a non-delegable duty to protect guests; failure to supervise Hammons and lack of key-control oversight made harm foreseeable | Atrium delegated operations to Hammons; argued lack of direct involvement in employees' acts and policies | Duty exists: Atrium owed innkeeper duty; genuine factual dispute on foreseeability and breach precludes summary judgment on negligence |
| Whether Hammons and Atrium are liable for punitive damages | Plaintiff says conduct (giving key to intoxicated guest; disabling latch) shows willful/wanton or reckless indifference | Defendants say acts were employee-level mistakes, policy violations, not malice or legal malice sufficient for punitive damages | Denied summary judgment on punitive damages as to Atrium and Hammons; submissibility to be evaluated after plaintiff's trial evidence (not resolved on summary judgment) |
| Whether ostensible agency/vicarious liability applies to Hilton for Hammons' acts | Plaintiff: customers would reasonably believe hotel staff are Hilton agents (analogy to hospital-doctor cases) | Defendants: FLA and signage disclaim agency; franchisor-franchisee relationship does not create ostensible agency | Held: No ostensible agency; Hilton not vicariously liable under that theory |
Key Cases Cited
- Hoffnagle v. McDonald's Corp., 522 N.W.2d 808 (Iowa 1994) (adopts retained-control test for franchisor duty; franchisor liable only if it retains day-to-day control)
- McCormick v. Nikkel & Assocs., Inc., 819 N.W.2d 368 (Iowa 2012) (elements of negligence and duty are questions of law for the court)
- Wilkins v. Marshalltown Med. & Surg. Ctr., 758 N.W.2d 232 (Iowa 2008) (hospital can be vicariously liable under ostensible agency for independent contractor physicians)
- Wolbers v. The Finley Hosp., 673 N.W.2d 728 (Iowa 2003) (similar ostensible-agency analysis holding hospital liable for emergency-room caregivers)
- Tenney v. Atlantic Associates, 594 N.W.2d 11 (Iowa 1999) (innkeeper duty: not an insurer; duty limited to foreseeable risks)
- Van Essen v. McCormick Enterprises Co., 599 N.W.2d 716 (Iowa 1999) (discusses duties of out-of-possession landowners and application of retained-control principles)
- Sharbono v. Northern States Power Co., 902 F.3d 891 (8th Cir. 2018) (summary-judgment standard and viewing facts in favor of nonmovant)