Milner Hotels Inc. v. Norfolk & Western Railway Co.

Facts

Norfolk & Western Railway Co. (defendant) entered into an agreement with Milner Hotels, Inc. (plaintiff) in which the plaintiff agreed to feed and house the defendant’s employees for a set fee.  Of the plaintiff’s 102 rooms, approximately 90 were set aside for the defendant. The contract could be terminated at any time by either party with thirty days written notice. On March 10, 1991, a fire broke out in the hotel. Prior to the fire, the defendant’s employees had complained about the conditions of the hotel, contrary to the plaintiff’s contractual obligation to provide good, clean, and sanitary conditions in the rooms and comply with applicable laws and regulations. The defendant insisted on an inspection of the building before its employees returned to it. The inspection revealed electrical and fire code violations and asbestos. The plaintiff estimated it would take $60,000 to $120,000 to make the necessary repairs and asked the defendant for assurance that it would reoccupy the building after the work was complete. The defendant refused to make that assurance and terminated the contract, effective May 11, 1991. The plaintiff soled the hotel instead of making the repairs and sued the defendant for breach of contract, arguing that the defendant was obligated to pay for rooms in the hotel between March 10 and May 11, and that the defendant had wrongfully terminated the contract. The defendant moved for summary judgment.