Izabella HMC-MF, LLC v. Radisson Hotels International, Inc.

Background

Izabella HMC-MF, LLC owned and operated the Radisson Menomonee Falls hotel in Wisconsin. It had operated the hotel under a 20-year license agreement with Radisson Hotels International, Inc. The agreement required Izabella to obtain Radisson’s approval before performing renovations, except for routine maintenance and repairs. It also allowed Radisson to suspend reservation-system services after notice of a material default until the default was cured.

Radisson sent Izabella a January 29, 2019 letter alleging that Izabella had violated the agreement by making unapproved renovations. Radisson identified the replacement of carpet, drapes, and lamps in two guest rooms as possible renovations and warned that it would terminate the agreement if Izabella did not cure the alleged default. Radisson also contended that the rooms had been renovated as model rooms for converting the hotel to a non-Radisson brand. Radisson terminated the license agreement on May 1, 2019.

Izabella filed this lawsuit on April 30, 2019. It alleged that the threatened termination violated the Wisconsin Fair Dealership Law and amounted to an anticipatory breach of the license agreement. Izabella also asked the court for a temporary restraining order and preliminary injunction preventing Radisson from terminating the agreement.

Analysis

The court applied the four-factor test for temporary restraining orders and preliminary injunctions: the likelihood of success on the merits, the threat of irreparable harm, the balance of harms, and the public interest. The court began with irreparable harm because failure to show that harm independently justified denying the requested relief.

Izabella argued that the Wisconsin Fair Dealership Law created a presumption that it would suffer irreparable harm. The court agreed with federal courts that the presumption was rebuttable, meaning Radisson could present evidence showing that Izabella would not suffer irreparable injury. The court concluded that Radisson had rebutted the presumption.

Izabella claimed that termination would reduce hotel bookings and cause substantial lost revenue. The court held that lost revenue was compensable through money damages and that Izabella had not shown why the amount would be impossible or unreasonably difficult to calculate. Izabella had estimated that the hotel would lose approximately $175,000 per month in revenue, which the court said undermined the claim that the damages could not be calculated.

Izabella also alleged harm to its reputation and goodwill from losing the Radisson branding. The court recognized that loss of reputation or goodwill can sometimes be irreparable, but it noted that the license agreement stated that Radisson owned the Radisson marks and all associated goodwill. Izabella therefore had not shown irreparable harm to goodwill belonging to it rather than Radisson. The court also concluded that harm to Izabella’s own reputation or goodwill could be compensated through damages for lost revenue.

Because Izabella failed to show irreparable harm and Radisson rebutted the statutory presumption, the court did not address the remaining injunction factors.

Disposition

Judge Wilhelmina M. Wright ordered that Izabella’s motion for a temporary restraining order and preliminary injunction was DENIED. The order addressed only Izabella’s request for preliminary relief; it did not decide whether Radisson violated the Wisconsin Fair Dealership Law or breached the license agreement.