T&T Management, Inc. v. Choice Hotels International, Inc.

Background

T&T Management, Inc. entered into a license agreement with Country Inn & Suites by Carlson, Inc. to open and operate a Country Inn & Suites hotel in Port Orange, Florida. The agreement provided T&T with a Protected Area and an exclusive license for hotels within the same hotel system during the agreement’s 15-year term.

The franchised hotel system later changed ownership. Radisson acquired Country’s franchised hotel system in 2016, and Choice acquired Radisson’s franchise hotel system in the United States in June 2022. The agreement allowed a transfer of the franchisor but required the successor to assume the agreement’s obligations.

Before Choice acquired Radisson’s system, Choice issued Sunshine Fund Port Orange, LLC a license to open and operate a WoodSpring Suites hotel within the Protected Area. After the acquisition, Choice listed both Country Inn & Suites and WoodSpring Suites among its franchise brands. T&T later sold its hotel and alleged that the defendants’ conduct reduced its value and damaged its goodwill.

T&T’s Third Amended Complaint asserted four counts: breach of contract against Choice and Radisson; breach of the implied covenant of good faith and fair dealing against Choice and Radisson; tortious interference with contract or expectancy against Sunshine; and violation of the Defend Trade Secrets Act against all defendants.

Motion-to-dismiss standard

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. At this stage, the court accepts well-pleaded factual allegations as true and views them favorably to the plaintiff, but it does not accept legal conclusions presented as facts.

Breach of contract

T&T alleged that Radisson improperly disclosed Guest Data to Choice and that Choice improperly used it. The court held that the agreement identified the franchisor as an owner of all Guest Data and allowed the owner to use that data. The court therefore concluded that sharing the data with the successor franchisor and Choice’s use of the data did not breach the agreement.

T&T also alleged that Choice breached the agreement by licensing Sunshine to operate a WoodSpring Suites hotel within the Protected Area. The court interpreted the agreement’s terms, including “Marks” and “System,” under Florida law. It concluded that the agreement’s exclusivity protections applied narrowly to other licenses using the Country Inn & Suites brands. The agreement also expressly allowed Choice to use acquired trademarks and franchise systems and to license hotels using other systems and marks. Because WoodSpring Suites was outside the agreement’s exclusivity protections, the court held that neither Radisson nor Choice breached the agreement and granted dismissal of the breach-of-contract claim.

Implied covenant of good faith and fair dealing

T&T based this claim on the same conduct as its contract claim. The court explained that Florida law does not recognize a breach of the implied covenant as an independent claim when there is no express breach of the contract. Because the court found no contract breach, it dismissed this claim.

Tortious interference

T&T alleged that Sunshine interfered with its agreement with Choice and with its relationships and expected business from customers. The court held that a tortious-interference claim involving a contract requires a breach of that contract. Because there was no contract breach, the contractual-interference claim failed.

The court also held that T&T’s alleged customer relationships were too speculative. T&T identified a proprietary customer list but did not show that, without Sunshine’s alleged interference, the customers were likely to provide repeat business to T&T. The court therefore dismissed the tortious-interference claim.

Defend Trade Secrets Act

The Defend Trade Secrets Act provides a federal claim for certain unauthorized uses or disclosures of protected trade secrets. The court found that T&T adequately alleged that its customer lists were trade secrets because T&T kept them confidential and alleged that they had independent economic value.

The court nevertheless held that T&T did not adequately allege misappropriation. Under the agreement, T&T and Choice both owned the customer lists, T&T was required to provide the information to Choice, and each could use it. Choice therefore had express contractual consent to use the data. The agreement required T&T to protect the information but did not impose the same confidentiality obligation on Choice, so Choice’s disclosure of the information did not constitute misappropriation under the claim as pleaded.

The court also found that T&T did not sufficiently allege that Sunshine misappropriated the trade secrets. The complaint did not specifically describe Sunshine’s conduct, and it did not allege that Sunshine used the customer lists or knew that the information came from someone required to keep it confidential. The court dismissed the Defend Trade Secrets Act claim.

Disposition

The court granted Defendants’ Motion to Dismiss [Docket No. 83] and dismissed Plaintiff’s Third Amended Complaint [Docket No. 113] with prejudice. The court stated that leave to amend was not warranted because T&T had amended its complaint three times. Judgment was ordered to be entered accordingly.

The opinion’s caption identifies one defendant as “Redisson Hotels International, Inc.,” while the body generally refers to “Radisson Hotels International, Inc.”