Disney Hotel Won't Nix Conference Pact For Virus, Suit Says

By Craig Clough
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Law360 (October 22, 2020, 6:44 PM EDT) -- An investment research firm sued a Walt Disney-branded hotel in Florida federal court Wednesday, saying the hotel won't agree to nullify a contract for it to host a conference with 2,000-plus attendees even though COVID-19 makes it "illegal, impossible or impracticable" for the firm's conference to go forward.

Iowa-based Cambridge Investment Research Inc. is seeking a declaratory judgment from the court recognizing its right to enforce the contract's force majeure clause, or that the contract could not be executed due to the pandemic. Alternatively, Cambridge is asking the court to rule that its performance should be "excused due to frustration of purpose."

"Under each theory, Cambridge requests a declaratory judgment that it is not liable to the hotel for cancellation fees or other damages," Cambridge said.

The conference in question was scheduled to occur in September, and Cambridge says that after speaking with representatives in June from the Walt Disney World Swan and Dolphin Resort, it became clear that the conference could not be held there.

According to the lawsuit, there were a number of laws and regulations in place in Florida making it "illegal, impossible or impracticable" for the conference to occur. At the time, the Disney World resort and the hotel were closed, and it was unclear if they would reopen by September, Cambridge says. Both reopened in July.

"The numerous government restrictions in place would make it illegal, impossible or impracticable to hold the conference indoors at the hotel," Cambridge said. "For example, the hotel's elevators and walkway spaces would not be able to accommodate the transit of approximately 2,200 attendees while still observing proper social distancing."

On June 1, around the time when Cambridge decided not to hold the conference at the hotel, Florida had reported 56,830 coronavirus cases and a death toll of 2,460 individuals due to COVID-19, according to the lawsuit.

"By June 2020, it was clear that COVID-19 cases in Florida were increasing at an alarming rate and the number of cases in Florida were among the highest in the United States," Cambridge said.

On June 4, when the hotel was still closed for business, Cambridge notified the hotel in writing that it was terminating the contract under its force majeure provision, according to the lawsuit.

Under the contract there are several deadlines for cancellation, unless one party triggers the force majeure provision, the suit says. If Cambridge canceled the event between Sept. 21, 2019, and Sept. 20, 2020, Cambridge is obligated to pay a fee of around $1.1 million, according to the complaint.

The force majeure section of the contract says that the "performance of this agreement by either party is subject to acts of God, government authority, disaster, or other emergencies, any of which make it illegal or impossible to provide the facilities and/or services for your meeting," according to the complaint.

Despite the factors, the hotel told Cambridge on June 5 "that it did not appear that force majeure would apply, and that regardless of its applicability it could not be determined until the dates occurred" and is seeking cancellation fees, according to the complaint.

Defendant Tishman Realty and Construction Co. — one of the hotel's owners, according to the suit — and counsel for Cambridge did not immediately respond to requests for comment.

Cambridge is represented by Peter B. King and Ailen Cruz of Wiand Guerra King PA.

Counsel for the defendants could not immediately be identified.

The case is Cambridge Investment Research Inc. v. Tishman Realty and Construction Co. et al., case number 6:20-cv-01953, in the U.S. District Court for the Middle District of Florida.

--Editing by Abbie Sarfo.

For a reprint of this article, please contact reprints@law360.com.

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