Inova Health Care Servs. v. Omni Shoreham Corp.

INOVA HEALTH CARE SERVICES, FOR INOVA FAIRFAX HOSPITALAND ITS DEPARTMENT, LIFE WITH CANCER, et al., Plaintiffs, v. OMNI SHOREHAM CORPORATION, et al., Defendants.

Civil Action No. 20-784 (JDB)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

April 14, 2021

MEMORANDUM OPINION & ORDER

Plaintiffs are three non-profit organizations that support cancer patients and their loved ones. This action arises out of a contract with the Omni Shoreham Hotel in Washington, D.C. (the "Hotel") to host plaintiffs' annual fundraising gala in September 2019. The Hotel informed plaintiffs that it was relocating their event to rooms at the Hotel other than the ballrooms named in the contract because the designated ballrooms had been reserved by another party. Unsatisfied with the replacement rooms offered, plaintiffs relocated their event to another location entirely and brought suit against Omni Shoreham Corp. ("Omni") and the entity that rented the rooms initially reserved for plaintiffs' gala, alleging breach of contract and of the implied warranty of good faith and fair dealing, tortious interference with contractual relations, and civil conspiracy. In July 2020, the Court denied Omni's motion to dismiss two plaintiffs and three claims from the initial complaint. Plaintiffs subsequently amended their complaint to name the Embassy of Lebanon (the "Embassy") as a defendant, and Omni filed another motion to dismiss. The present motion broadly overlaps with Omni's original motion to dismiss except that now Omni also seeks to dismiss plaintiffs' breach of contract claim. For the following reasons, the Court will again deny Omni's motion.

Background

The following factual background relies on the allegations set forth in the Amended Complaint, which the Court must accept as true for purposes of evaluating the present motion to dismiss. See Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Plaintiffs are three non-profit organizations that provide education and support to cancer patients and their families: Inova Health Care Services, for Inova Fairfax Hospital and its Department, Life with Cancer ("Life with Cancer"); Smith Center for Healing and the Arts ("Smith Center"); and Special Love, Inc. ("Special Love"). See Am. Compl. [ECF No. 26] ¶¶ 1-3. Much of the funding for plaintiffs' programs comes from the annual Joan Hisaoka "Make a Difference" Gala (the "Gala"), which raises about $2,000,000 per year, making it the "single largest annual fundraising event for Life With Cancer and the Smith Center," and "a significant fundraising event for Special Love." See id. ¶¶ 8-9, 21. From 2013 through 2018, the Gala was held at the Hotel. Id. ¶¶ 8, 12. Pursuant to a fundraising agreement, plaintiffs authorized Robert G. Hisaoka to coordinate and contract for the execution of the 2019 Gala as their agent. Id. ¶ 9.

In December 2018, Hisaoka entered into a contract with Omni on behalf of Life with Cancer (the "Gala Contract") to reserve the "usual and customary" ballroom space and hosting services at the Hotel for the 2019 Gala to be held on September 21, 2019. Id. ¶¶ 9, 11-12. The Gala Contract detailed the times and locations at the Hotel for the several component events of the 2019 Gala, including various events to be held in the Hotel's Regency and Ambassador Ballrooms. Id. ¶ 12. The Gala Contract further provided that it would "be binding upon the Hotel and [Life With Cancer]," and that "[a]ny changes, additions, stipulations, or decisions by either the Hotel or [Life With Cancer] . . . will not be considered agreed to or binding unless such modifications have been initialed or otherwise approved in writing by both parties." Id. ¶¶ 13-14. Pursuant to theGala Contract, plaintiffs submitted a deposit check for $10,000, dated December 31, 2018, drawn on Smith Center "under [the] fundraise[ing] agr[eement]." Id. Ex. E at 4 (image of check).

Approximately two months before the Gala was scheduled to take place, on July 8, 2019, Omni informed Hisaoka that the Hotel was relocating the Gala from the Regency and Ambassador Ballrooms to the Hotel's Blue Room, Blue Pre-Event spaces, Roberts Restaurant, and adjacent outdoor terraces. Id. ¶ 16. Plaintiffs' counsel responded the following day asserting "that any attempt to relocate the [Gala] to the other locations in the Hotel would be considered a clear and absolute breach of the [Gala Contract] by the Hotel" and demanding that the Hotel reverse its decision to relocate the Gala. Id. Ex. C at 1-2. As recounted in the Amended Complaint, plaintiffs' counsel insisted in communications with Omni that the Blue Room was "grossly inadequate to meet the needs of the Gala" and a "clear and complete downgrade from what Gala guests had become accustomed to" that "was likely to tarnish the brand of the Gala and leave the impression that the Gala had been cheapened, . . . adversely affect[ing] the Gala's fundraising efforts." Id. ¶ 27. For example, compared to the Regency and Ambassador Ballrooms, plaintiffs complained the Blue Room was "marred by obstructive views," had "low ceilings," could not "accommodate the required stage set up," and was "too small to allow volunteers to navigate the room effectively for the live auction and related programs." Id. Likewise, plaintiffs' counsel charged that the Roberts Restaurant and its adjacent outdoor spaces could not comfortably fit the Gala's silent auction, lacked privacy, and exposed Gala guests to unpredictable weather variations. Id. ¶ 28. Nevertheless, the Hotel refused plaintiffs' request to rescind the relocation of the Gala. Id. ¶ 24.

As plaintiffs have since discovered, Omni had contracted with the Embassy to host a conference at the Hotel from September 19 through 23, 2019, including use of the Regency and Ambassador Ballrooms on September 21. Id. ¶ 18. The Embassy's conference was estimated togenerate over $312,000 in revenue for the Hotel, compared to just $106,000 expected from the Gala. Id. Plaintiffs allege that the Embassy was aware of the Gala at the time it contracted with the Hotel to host its conference. Id. ¶ 17.

Meanwhile, plaintiffs informed Omni that they were unwilling to accept what they considered an inferior substitute venue for the Gala and that they would file suit. Id. ¶ 33. "After spending considerable time and effort searching for an alternative venue," on July 30, 2019, Hisaoka entered into an agreement as plaintiffs' agent with the Mandarin Oriental Hotel to hold the Gala there on the scheduled date of September 21, 2019. Id. ¶ 35. The cost of hosting the Gala at the Mandarin Oriental was "significantly higher," and plaintiffs also incurred over $90,000 in attorney's fees and expenses in their disputes with Omni up to and including the present action. Id. ¶ 37. Furthermore, "[p]laintiffs' fundraising efforts were significantly damaged" by the relocation, with revenue underperforming expectations by $284,700. Id. ¶ 38.

Plaintiffs filed the instant action in D.C. Superior Court on March 2, 2020. See Compl. [ECF No. 1-3] at 20. They sued Omni for breach of contract (Count I) and breach of the covenant of good faith and fair dealing (Count II); they sued John Doe Organization (now known to be the Embassy) for tortious interference with contractual relations (Count III); and they sued both Omni and the Embassy for civil conspiracy to commit tortious interference (Count IV). Id. ¶¶ 35-53. On March 20, 2020, Omni removed the suit to this Court, see Notice of Removal [ECF No. 1] at 1, and moved to dismiss on several grounds, see Omni's Mem. in Supp. of Mot. to Dismiss ("Initial Mot.") [ECF No. 3-1] at 1. First, Omni moved to dismiss Smith Center and Special Love for lack of subject matter jurisdiction, alleging that they lacked standing. Id. at 2. Omni also moved to dismiss Counts II, III, and IV for failure to state a claim. Id. This Court denied Omni's motionon July 20, 2020. See Inova Health Care Servs. for Inova Fairfax Hosp. v. Omni Shoreham Corp., Civ. No. 20-784, 2020 WL 4201661 (D.D.C. July 22, 2020) [ECF No. 13].

After learning that the John Doe Organization that hosted its conference in the Regency and Ambassador Ballrooms on the date that the 2019 Gala was scheduled to take place was in fact the Embassy, plaintiffs sought and received leave to amend their complaint to name the Embassy as a defendant with Omni's consent. See Consent Mot. for Leave to File First Am. Compl. [ECF No. 25] at 1; Min. Order (Dec. 17, 2020). Other than naming the Embassy and including some details gleaned from discovery about the Embassy's contract with Omni, the allegations in the Amended Complaint—including the substance and numbering of the four counts against Omni and the Embassy—are substantially identical to those in the original complaint. See Am. Compl. ¶¶ 17-20, 32; compare Am. Compl. ¶¶ 39-57, with Compl. ¶¶ 35-53.

Omni has now filed a second motion to dismiss, this time regarding the Amended Complaint. See Omni's Mem. in Supp. of Mot. to Dismiss Pls. Smith Ctr. & Special Love Pursuant to Rule 12(b)(1) & Counts I, II & IV of Pls.' First Am. Compl. Pursuant to Rule 12(b)(6) ("Mot.") [ECF No. 29-1]. In large part, Omni's motion repeats three of the same arguments that this Court rejected in its July 2020 Memorandum Opinion, asserting that Smith Center and Special Love lack standing to sue and that Counts II and IV fail to state a claim. Id. at 3. Unlike in its initial motion, however, Omni now seeks to dismiss plaintiffs' breach of contract claim in Count I as well. Id.¹ For their part, plaintiffs oppose Omni's motion both on the merits and under the law of the case doctrine and insist that they have stated a claim for breach of contract sufficient to withstand dismissal under Rule 12(b)(6). See Pls.' Opp'n to Def.'s Mot. to Dismiss Counts I, II & IV ofPls.' First Am. Compl. ("Pls.' Opp'n") [ECF No. 31] at 2. The Court will first examine whether Omni's repeated arguments now require a different result than the one reached in July 2020 before...