Theowners of Sheraton Grand Chicago in downtown Chicago and the Westin New York atTimes Square in Manhattan, N.Y., have filed a suit in relation to andStarwood Hotels & ResortsWorldwide Inc.'s mergeragreement.
CityfrontHotel Associates LP and Dream Team Hotel Associates LLC are the plaintiffs, whileMarriott, Starwood and its subsidiaries Sheraton Operating Co., The SheratonLLC and Westin Hotel Management LP were named defendants in the lawsuit filedMay 10 with the Supreme Court of the State of New York.
Sheratonmanages the Sheraton Grand Chicago hotel, while Westin manages the Westin NewYork at Times Square hotel.
Accordingto the 64-page lawsuit, the Starwood units' management contracts for the twohotels contain radius restriction clauses that refer to an area commonlydenoted as an area of protection, pursuant to which, Starwood or any of itsaffiliates cannot own, franchise, operate or manage other hotels.
Theplaintiffs claim that Starwood's pending merger with Marriott, which operates "numerous"other hotels in proximity of Sheraton Grand Chicago and Westin New York atTimes Square, would mean that Starwood and its subsidiaries breached theirfiduciary duty of loyalty, pursuant to the management contracts.
Thetwo hotels' owners also claimed that the defendants are, among other things, exchangingconfidential information about them. They added that Starwood misrepresents theimpact of the merger on them, and that Marriott aids and abets Starwood in itsbreach of its duties.
CityfrontHotel and Dream Team Hotel are seeking an injunctive relief, equitable andmonetary relief for breach of contract, anticipatory repudiation of contract,breach of fiduciary duty, unjust enrichment, tortious interference withcontract, aiding and abetting the breach of fiduciary duty and for attorneys'fees and costs, among other things.
Meanwhile,the court filing also mentioned that a Starwood representative told theplaintiffs that the merger could close as early as June 1.