Walter v. Holiday Inns, Inc.

In 1979, Louis Walter and others (plaintiffs) formed a partnership with Holiday Inns, Inc. (defendant) to build a hotel and casino in New Jersey. Holiday had day-to-day control of the operations, but all major decisions rested with an executive committee controlled equally by the plaintiffs and Holiday. Construction costs exceeded projections and a financial projection for 1981 was bleak, projecting a negative cash flow. Holiday told the plaintiffs they needed to put up more money to fund capital and operational costs. In 1981, the plaintiffs sold 49% of their interest to Holiday. In 1983, the plaintiffs sold their remaining 1% interest to Holiday. Around 1982, the hotel and casino became very profitable. The plaintiffs brought suit for breach of fiduciary duty, alleging that Holiday failed to disclose certain material information the plaintiffs needed to negotiate a fair buy out. Specifically, the plaintiffs alleged that Holiday should have provided them with the Boxer Report, which was a 35-year financial projection for the casino based on raw data from partnership financial information. The report projected significant profits over the long term. The plaintiffs stipulated that they were sophisticated investors. Further, at all relevant times, the plaintiffs had unrestricted access to the partnership’s books and accounts. The district court granted Holiday’s motion for judgment as a matter of law. Walter appealed.