Facts

Preferred Hotel Management Inc. (PHM) operates and manages hotels throughout the Western United States for owners of hotels. On or about Sept. 17, 2004, PHM and Dr. Steven Bein entered into a management agreement by which Preferred Hotel Management Inc. was engaged to operate and manage a Days Inn hotel located in Rawlins, Wyoming.

Prior to being engaged, John Mavros, president of PHM, met with Bein and visited a hotel in Rawlins, Wyoming that Bein was interested in acquiring. Mr. Mavros did not make any specific promises or guarantees to Bein regarding the profitability of the hotel operations or how much net income Bein would receive. Mavros could not accurately discuss net income with Bein as net income would be influenced by the amount of debt used by Bein to purchase the hotel. PHM had no control over the owner's debts.

The evidence established that PHM operated the hotel from Nov. 2004 until July 7, 2006, when PHM was terminated by the owner without cause.

PLAINTIFF'S CONTENTIONS:
Bein contended that Preferred Hotel Management Inc. mismanaged the hotel. Bein sought damages in excess of $900,000 against PHM under a variety of legal theories, including breach of contract, negligence, negligent misrepresentation, fraud, conversion, declaratory relief, accounting, breach of fiduciary duty and specific performance.

DEFENDANT' CONTENTIONS:
Preferred Hotel Management Inc. contended that Bein breached the management agreement between the parties without cause; Bein failed to pay PHM the cancellation fee due under the contract; Bein failed to give PHM 90 days notice as required under the contract and therefore Bein owed Preferred Hotel Management Inc. the management fees that would have been earned had the required notice been given.

Defendant contended that no promises were made regarding the hotel's financial performance, and at no time prior to purchasing the hotel did Bein inform Mavros that he desired to achieve a specific amount of income from the hotel.

In addition, PHM contended that each of the claims advanced by Bein were without merit and was an effort on the part of plaintiff to avoid paying PHM what Bein owed to PHM under the written management contract.

Settlement Discussions

After initially demanding in excess of $200,000 from Preferred Hotel Management Inc., Bein offered $5,000 to PHM a court-ordered mediation. PHM offered to settle for $40,000. After the trial, Bein offered $145,000.

Result

The court awarded Bein nothing and Preferred Hotel Management Inc. the sum of $47,732 with prejudgment interest (approximately $5,000), plus costs and attorney fees. PHM incurred approximately $105,000 in attorney fees and is seeking the recovery of all fees incurred.

Other Information

A post-trial motion for attorney fees has been filed by PHM. FILING DATE: Sept. 9, 2006.