Multi-million Dollar Trial Victory Announced Against Red Roof Inns

A five-week jury trial has ended in a multi-million dollar victory for Bickel & Brewer’s client, Murat Holdings, LLC. On May 12, a 12-person jury awarded Murat almost $6 million against Red Roof Inns. The amount entered on the jury charge of the 68th Judicial District Court, Dallas County, Texas, also entitles Murat to millions more in attorneys’ fees and pre-judgment interest. The final judgment will likely exceed $11 million.

Murat sued Red Roof Inns for breach of contract arising from a business transaction originally executed in December 1998, when Murat and Red Roof signed a franchise agreement that would ostensibly make the Prince Murat Hotel only the second Red Roof franchise in the Baton Rouge, Louisiana area. Pursuant to the terms of the franchise agreement, Murat planned to open the hotel as a Red Roof property after substantially completing renovations and sufficiently preparing the facility to accommodate business demand. Red Roof was expected to approve the renovations but had to “act in good faith” with respect to authorizing the opening of the hotel once renovations were completed. The jury found that Red Roof breached the franchise agreement, inflicting millions of dollars of damage on Murat.

“This decision confirms our client’s belief that Red Roof breached their obligations to them by refusing to approve the opening of a hotel,” says John W. Bickel II of Bickel & Brewer, counsel for Murat. “The jury apparently concluded that Red Roof changed the rules after our client made a significant financial investment in an effort to gain an unfair advantage in the local market.”

In the trial, Murat offered proof that Accor Economy Lodging, Red Roofs’ new parent company, decided – after Red Roof had signed the franchise agreement with Murat – that it did not want the Prince Murat Hotel to become a Red Roof property. The hotel conglomerate allegedly imposed strict guidelines upon the Prince Murat Hotel, causing the business entity to forgo millions of dollars in operating profits due to a delayed opening.

Originally filed over four years ago, this case became one of the country’s most closely-followed disputes between a hotel management company and individual hotel owner. It was the first major lawsuit brought against Red Roof Inns by an individual owner after the August, 1999, Accor acquisition, a highly-publicized transaction that, at the time of the deal, gave Accor more than 1,100 properties and 122,000 rooms countrywide.

Bickel & Brewer partners John W. Bickel II and Joyce M. Hellstern were joined by Bickel & Brewer associate Susan Eliott and consultant Cedric Fulsom. David Noteware of Thompson & Knight represented Red Roof Inns on this matter, along with John Solich and Keith Klein of Jenkins & Gilchrist’s Los Angeles office.

Murat Holdings, LLC is a Louisiana limited liability company with its principal place of business in Boca Raton, Florida. The Prince Murat Hotel was built in 1968.

Founded in 1984, Bickel & Brewer has earned a reputation as one of the most aggressive and successful law firms in the United States practicing exclusively in the field of complex commercial litigation and dispute resolution. With offices in Dallas, Texas and New York, Bickel & Brewer represents a wide spectrum of industry leaders – from entrepreneurs to Fortune 500 corporations – facing the most challenging of legal issues. Visit Bickel & Brewer at www.bickelbrewer.com.

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