Payton & Associates, LLC
Commercial Litigation Attorneys
Miami, Florida

Hotel faces breach of contract suit

A Supreme Court is overseeing the case of a hotel being sued by a billionaire's conglomerate for refusing entrance to a board meeting by a company observer. Florida residents may be aware of the Morgans Hotel Group, which is being sued for breach of contract by Yucaipa Cos. overseen by billionaire Ron Burkle. The court documents suggest Morgans has done "everything possible" to undermine the ability of a nominated observer to attend board meetings.

Court documents suggest Yucaipa purchased tens of thousands of preferred stock in Morgans since October 2009. This purchase afforded them the opportunity to nominate a candidate who would either sit on the board of directors or else observe and attend all board meetings. According to Yucaipa, Morgans has paid only "lip service" to this agreement.

This is not the first suit to be pursued by Yucaipa against Morgans. Earlier in the year, Burkle and his representatives filed several other suits against Morgans related to contract disputes. This includes agreements to sell interests in Florida and allegedly misleading shareholders through proxy materials. The local Supreme Court is overseeing this case as of this writing.

Florida business owners know the importance of a contract in any business dealing. Breach of contract goes against everything that makes the capitalist system function effectively, and therefore must be dealt with immediately. Any breach of contract should be reviewed externally in order for a business owner to determine his or her next moves and legal recourse should the other party be found to be in breach of an established agreement.

Source:, Morgans Hotel Sued by Burkle Over Rights to Observe Meetings (1), Chris Dolmetsch, Oct. 7, 2013

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