Milner Hotels, Inc. v. Norfolk & Western Railway Company

822 F.Supp. 341 (1993)

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Nature of the Case

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Facts

P entered into a contract with D to house and feed its transient train crews and other non-resident employees. D was required to pay P $20.25 per day for each room occupied by a railroad employee, but not less than an amount sufficient to cover sixty room occupancies or $ 1,215.00 per day. P had 102 rooms and approximately ninety of these were set aside at all times for D's use. P agreed to provide certain services and guarantees such as (d) Maintaining at all times good, clean, and sanitary conditions throughout the said hotel; (e) Observing and complying with all local, state, or federal laws and regulations pertaining to the operation of the said Hotel . . . . The agreement was to continue in full force from month to month until terminated by either party giving to the other party at least thirty (30) days prior written notice. In the event of any default by either party which is not cured within 30 days of receipt of notice thereof, the other party may, in addition to other remedies available, terminate this agreement. On March 10, 1991, a fire broke out on the second floor caused by an electrical malfunction in an oil heater. It was quickly contained and damage from the blaze was limited to a few rooms on the second floor. Smoke damage permeated the entire building and there was extensive water damage from efforts to put out the fire. D removed all of its employees from the hotel pending repair of the damage. P began to clean and deodorize the building and told the railroad it would be available for re-occupancy in a few days. D had received complaints from its employees about the conditions and these complaints escalated after the fire. D insisted on a thorough inspection of the building before it would allow re-occupancy by its employees. An inspection revealed numerous violations of electrical and fire codes and the presence of crumbling, friable asbestos. D informed P that these conditions would have to be remedied before the railroad would allow its employees to reoccupy the hotel. The total cost of this work ranged from $ 60,000 to $ 120,000. P asked D for assurances that it would reoccupy the building upon completion of the work. D refused and on April 9, 1991, mailed written notice to the hotel that it was terminating the Agreement. P elected not to complete the repairs but instead sold the hotel and its contents at a public auction for $56,000. P sued D seeking damages for breach of contract. P seeks the payment for the rental of rooms at the contract rate and compensation for lost revenues from food service and concessions from the date of the fire until May 11, 1991, the date the termination was effective, regardless of the fact that the hotel was not occupied by the D's employees at any time after the March 10, 1991 fire. D moved for summary judgment.