Virgin Hotels San Francisco v. 250 Fourth Development CA1/3, A166855

In 2013, Virgin Hotels San Francisco (Virgin) and 250 Fourth Development, L.P. (Owner) executed agreements for Virgin to provide pre-opening technical services and then manage a new hotel in San Francisco for 20 years.
Owner was in charge of hotel construction, which was repeatedly delayed; Virgin extended deadlines for opening multiple times in writing.
The Hotel eventually opened in 2019 but with substantial incomplete construction and limited amenities; after initial difficulties, business improved.
In April 2020, Owner terminated the management agreement, citing dissatisfaction with business conditions and unionization concerns, but did not allege a contractual default by Virgin.
Virgin filed suit for breach of contract and expectancy damages; Owner cross-complained, alleging fraud and improper performance by Virgin. After a bench trial, the trial court found in favor of Virgin and awarded $9.7 million in damages.

Issue	Owner's Argument	Virgin's Argument	Held (Court’s Ruling)
Right to Terminate Mgt. Agreement	Principal can unconditionally terminate agency, not limited by contract	Termination rights are limited by contract; breach subjects Owner to damages	Owner could terminate but is liable for breaching exit terms; damages allowed
Alleged Breach by Virgin	Virgin breached pre-opening, management & fiduciary duties	Owner failed to prove breach, expert testimony was irrelevant	No breach by Virgin; Expert opinions rejected; Owner’s claims failed
Fraudulent Misrepresentation	Virgin misrepresented brand’s power and future performance	Statements were predictions, not actionable misrepresentations	No actionable fraud; statements were nonactionable predictions
Notice of Default/ Waiver	Texts & emails gave notice; Virgin waived claim by extending deadlines	No proper written notice; no written waiver as required by contract	No sufficient notice or waiver; Owner failed to meet requirements

Woolley v. Embassy Suites, Inc., 227 Cal.App.3d 1520 (Cal. Ct. App. 1991) (Principal can revoke agent’s authority but may owe damages for breach of contract)
Pacific Landmark Hotel, Ltd. v. Marriott Hotels, Inc., 19 Cal.App.4th 615 (Cal. Ct. App. 1993) (Contractually unjustified termination may lead to damages, but injunctive relief is limited)
Engalla v. Permanente Medical Group, Inc., 15 Cal.4th 951 (Cal. 1997) (Describes the elements of actual fraud in California law)
Cansino v. Bank of America, 224 Cal.App.4th 1462 (Cal. Ct. App. 2014) (Future market predictions generally are not actionable misrepresentations)