Heyman Associates No. 5, L.P. v. FelCor TRS Guarantor, L.P.

CourtConnecticut Appellate Court
DecidedOctober 7, 2014
DocketAC35868
StatusPublished

This text of Heyman Associates No. 5, L.P. v. FelCor TRS Guarantor, L.P. (Heyman Associates No. 5, L.P. v. FelCor TRS Guarantor, L.P.) is published on Counsel Stack Legal Research, covering Connecticut Appellate Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Heyman Associates No. 5, L.P. v. FelCor TRS Guarantor, L.P., (Colo. Ct. App. 2014).

Opinion

****************************************************** The ‘‘officially released’’ date that appears near the beginning of each opinion is the date the opinion will be published in the Connecticut Law Journal or the date it was released as a slip opinion. The operative date for the beginning of all time periods for filing postopinion motions and petitions for certification is the ‘‘officially released’’ date appearing in the opinion. In no event will any such motions be accepted before the ‘‘officially released’’ date. All opinions are subject to modification and technical correction prior to official publication in the Connecti- cut Reports and Connecticut Appellate Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the Connecticut Law Journal and subsequently in the Con- necticut Reports or Connecticut Appellate Reports, the latest print version is to be considered authoritative. The syllabus and procedural history accompanying the opinion as it appears on the Commission on Official Legal Publications Electronic Bulletin Board Service and in the Connecticut Law Journal and bound volumes of official reports are copyrighted by the Secretary of the State, State of Connecticut, and may not be repro- duced and distributed without the express written per- mission of the Commission on Official Legal Publications, Judicial Branch, State of Connecticut. ****************************************************** HEYMAN ASSOCIATES NO. 5, L.P., ET AL. v. FELCOR TRS GUARANTOR, L.P. (AC 35868) Lavine, Keller and Mihalakos, Js. Argued May 29—officially released October 7, 2014

(Appeal from Superior Court, judicial district of Stamford-Norwalk, Hon. Taggart D. Adams, judge trial referee.) Robert M. Shields, Jr., with whom were Kenneth J. Bartschi and, on the brief, Wesley W. Horton, for the appellant (defendant). Marc J. Kurzman, with whom were Brian A. Daley and, on the brief, Peter M. Nolin, for the appellees (plaintiffs). Opinion

LAVINE, J. This case concerns the validity and enforceability of a restrictive covenant prohibiting cer- tain premises from being operated as an ‘‘upscale hotel.’’ The defendant, FelCor TRS Guarantor, L.P., claims that the restrictive covenant was extinguished as a result of certain land transfers, and thus appeals from the judgment of the trial court in favor of the plaintiffs, Heyman Associates No. 5, L.P. (Heyman), HD Hotel, LLC (HD Hotel), AIM Management Corporation (AIM), and TRJ II (TRJ).1 On appeal, the defendant claims that the trial court improperly (1) failed to deter- mine that the restrictive covenant was merged out of existence,2 (2) found that the plaintiffs and HD Hotel had standing to enforce the restrictive covenant, and (3) awarded the plaintiffs attorney’s fees. We affirm the judgment of the trial court. The following facts, as found by the trial court in a comprehensive memorandum of decision, and proce- dural history are relevant to the resolution of this appeal. In 1996, the plaintiffs owned two hotels in Stam- ford located two city blocks apart: one was a Marriott, which catered to an upscale market; the other, a Ramada Inn, focused on the midscale market. The hotels were owned by two separate business entities each comprised of the Heyman, Meyer, and Jabara fami- lies.3 The Stamford Marriott (Marriott) charged higher room rates and provided superior service as compared to the Ramada Inn, but because each hotel catered to a different clientele, the hotels were complementary, and did not impinge on one another’s business. Richard Jabara, principal for TRJ, testified that if a large com- pany needed hotel rooms in Stamford for a conference, the plaintiffs could accommodate the salesmen in the Ramada Inn and the executives in the Marriott.4 Shortly after the plaintiffs acquired the Ramada Inn in 1996, Holiday Inns, Inc. (Holiday Inn), expressed an interest in purchasing the Ramada Inn. As a condition of selling the premises to Holiday Inn, the plaintiffs required the imposition of a restrictive covenant prohib- iting Holiday Inn from operating the premises as an upscale hotel. The purpose of the restrictive covenant was to protect the business of the Marriott, which the plaintiffs owned. Following a brief period of negotia- tion, Timothy Lane, chief executive officer of Holiday Inn, assured Jabara that the premises would be run as a midscale hotel, such as a Holiday Inn.5 In a memorandum dated June 5, 1996, Lane outlined the nature of the transaction to the executive committee of Bass PLC:6 ‘‘[The premises] [were] purchased most recently by the Meyer and Jabara Hotel Group . . . who had previously purchased and renovated the . . . Marriott. . . . [Holiday Inn] was offered the asset for $8.3 [million] with a deed restriction barring upscale branding, including Crowne Plaza, for a term of 15 years. . . . The [fifteen year] deed restriction against branding of the hotel as an upscale brand could limit sale options in the future, but is not considered a signifi- cant concern.’’ The plaintiffs and Holiday Inn reached an agreement7 on the sale of the premises on June 21, 1996, and the closing occurred on July 12, 1996. On July 12, 1996, the plaintiffs transferred their land interests in the prem- ises, which included a sublease interest to a large parcel of land and a fee interest to a small parcel, to Holiday Inn.8 The sublease interest was transferred pursuant to a sublease assignment agreement, and the fee interest was transferred by way of a limited warranty deed. Both the sublease assignment agreement and the lim- ited warranty deed contained a restrictive covenant, prohibiting Holiday Inn from using the premises to oper- ate an ‘‘upscale hotel.’’ The transaction included a second phase as well. The sublease, which the plaintiffs transferred to Holiday Inn on July 12, 1996, was governed by a ground lease in favor of a third party, TK Associates. On July 22, 1996, the plaintiffs acquired the ground lease from TK Associ- ates, and transferred the ground lease to Holiday Inn on July 27, 1996, by way of a ground lease assignment agreement. Under the terms of the ground lease assign- ment agreement, the parties agreed that the sublease and ground lease interests would merge. No restrictive covenant was included in the ground lease assignment agreement. Following the sale of the premises, the plain- tiffs dissolved the business entity that owned the prem- ises, i.e., BRS Realty Associates, LLC (BRS). In conformity with the restrictive covenant, Holiday Inn converted the premises into a Holiday Inn Select. In 1997, Holiday Inn merged with the Bristol Hotel Com- pany, which in turn merged with FelCor Lodging Trust in 1998. In 2005, the ground lease for the premises was transferred to the defendant, a taxable real estate investment trust. There is no dispute on appeal that the defendant is Holiday Inn’s corporate successor, and that the defendant assumed Holiday Inn’s contractual obligations.9 At trial, Jabara testified that in 1999, he received a telephone call from Thomas Corcoran, the chairman or president of the defendant, who requested that the restrictive covenant be lifted so that the premises could be used as a Crowne Plaza—an upscale hotel. Jabara testified that he rejected the request after consulting with the other plaintiffs. According to Jabara, Corcoran made a similar request in late 2005, but the plaintiffs denied it. In 2005, the defendant received an offer to purchase the premises from Destination Hotel and Resorts for $30 million. This offer, however, was withdrawn when Destination Hotel and Resorts learned of the restrictive covenant. In response, the defendant consulted with Garret Delehanty, Jr., a real estate attorney.

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Bluebook (online)
Heyman Associates No. 5, L.P. v. FelCor TRS Guarantor, L.P., Counsel Stack Legal Research, https://law.counselstack.com/opinion/heyman-associates-no-5-lp-v-felcor-trs-guarantor-l-connappct-2014.