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

Norfolk & Western Railway Co. (N & W) (defendant) entered into an agreement with Milner Hotels, Inc. (plaintiff). Under this contract, Milner Hotels agreed to feed and house N & W’s employees. N & W agreed to pay a set fee for each room rented, with a minimum amount equal to the fee for 60 rooms each night. In fact, this contract constituted essentially all of the hotel’s business. The contract required Milner Hotels to provide good, clean, and sanitary conditions in the rooms and hotel and to comply with applicable laws and regulations. The term of the contract was from month to month until one party terminated by providing at least 30-days prior written notice. On March 10, 1991, there was a fire in the hotel. The damage from the fire was limited, but a subsequent inspection revealed numerous violations of electrical and fire code. The inspection also revealed the presence of asbestos. N & W informed Milner Hotels that the issues identified in the inspection would have to be fixed before N & W employees would stay there again. Milner Hotels obtained estimates for the work, which ranged from $60,000 to $120,000. Milner Hotels then demanded assurances from N & W that N & W would reoccupy the hotel after the work had been completed. N & W refused to provide the assurance and sent in the 30-day notice of termination. Milner Hotels then sold the hotel at an auction. Milner Hotels sued N & W, alleging breach of contract.