The skywalk within Sheraton Denver Downtown Hotel. (Courtesy Sheraton Denver Downtown)
A Denver judge has determined that downtown’s largest hotel is not entitled to $140,000 in termination fees from a trade group that canceled an event there due to COVID.
The 31-page decision from Judge Ian Kellogg on July 21 was the first to analyze whether Denver convention hosts can collect from clients who canceled as a result of the pandemic. A second case involving the Sheraton Denver Downtown Hotel is unresolved and a case involving the Gaylord Rockies Resort was settled.
“The court’s finding of no damages reinforces what we have maintained from the outset: MESA acted responsibly and appropriately under extraordinarily difficult circumstances,” Michael Kuhn, an attorney for the Mobile Electronics Specialists of America, said in a statement.
MESA agreed to rent 862 rooms at the hotel between Sept. 15-19 and spend at least $125,000 on food and drinks. If it canceled without cause, it would owe the hotel $139,427.
The contract between the two sides included what is often known as an “act of God” clause that allowed for a no-cost cancellation if natural disasters, terrorism or the like made a trade show downtown impossible. So, when Colorado and Denver issued health orders limiting public gatherings on March 16, 2020, MESA canceled its September event that same day.
“In response to MESA’s cancellation letter, Sheraton did nothing,” the judge wrote last week.
The hotel didn’t respond at all until October 2020 — after the event was supposed to occur — when it demanded $145,000 from MESA. Then, four years later, it sued the group — requesting $140,000 plus years of 1.5% monthly interest that basically doubled the figure.
“Despite the unprecedented uncertainty of those early days, Sheraton insisted that MESA should have proceeded with planning and hosting a 300-person conference just months later,” Kuhn said. “No reasonable person would have believed that was possible.”
One question before the judge was whether MESA could prove in March 2020 that hosting an event six months later would be impossible. He concluded that MESA could not, since the March public health orders “were set to expire well before the MESA annual conference was to take place in September 2020.” So, MESA committed breach of contract, Kellogg found.
“The court confesses to being somewhat troubled by this result,” the judge wrote, noting that MESA had shown “common sense and decency” by canceling so proactively.
Having concluded that MESA breached the contract, Kellogg turned to the question of what it owes the Sheraton. Here he sided with the trade group, finding that the hotel could not have upheld its end of the contract and hosted a 300-person event for MESA on Sept. 15, 2020. Therefore, the Sheraton is owed nothing from MESA for breaching the contract.
As of that Sept. 14, public gatherings were limited to 10 people in Denver. While that order was replaced the next day — what would have been the first day of the MESA event — “Sheraton has presented no evidence that it could have received the public health order and transformed its function spaces to host a 300-person event the same day,” Kellogg explained.
The judge’s verdict was a mixed ruling and he said that neither side can be considered the prevailing party, so each must pay its own attorney fees. The Sheraton is represented in both of its local lawsuits by Steven Rudner of the Rudner Law Offices in Dallas, Texas.
“My client’s policy is not to comment on pending litigation,” the attorney said by email.
The skywalk within Sheraton Denver Downtown Hotel. (Courtesy Sheraton Denver Downtown)
A Denver judge has determined that downtown’s largest hotel is not entitled to $140,000 in termination fees from a trade group that canceled an event there due to COVID.
The 31-page decision from Judge Ian Kellogg on July 21 was the first to analyze whether Denver convention hosts can collect from clients who canceled as a result of the pandemic. A second case involving the Sheraton Denver Downtown Hotel is unresolved and a case involving the Gaylord Rockies Resort was settled.
“The court’s finding of no damages reinforces what we have maintained from the outset: MESA acted responsibly and appropriately under extraordinarily difficult circumstances,” Michael Kuhn, an attorney for the Mobile Electronics Specialists of America, said in a statement.
MESA agreed to rent 862 rooms at the hotel between Sept. 15-19 and spend at least $125,000 on food and drinks. If it canceled without cause, it would owe the hotel $139,427.
The contract between the two sides included what is often known as an “act of God” clause that allowed for a no-cost cancellation if natural disasters, terrorism or the like made a trade show downtown impossible. So, when Colorado and Denver issued health orders limiting public gatherings on March 16, 2020, MESA canceled its September event that same day.
“In response to MESA’s cancellation letter, Sheraton did nothing,” the judge wrote last week.
The hotel didn’t respond at all until October 2020 — after the event was supposed to occur — when it demanded $145,000 from MESA. Then, four years later, it sued the group — requesting $140,000 plus years of 1.5% monthly interest that basically doubled the figure.
“Despite the unprecedented uncertainty of those early days, Sheraton insisted that MESA should have proceeded with planning and hosting a 300-person conference just months later,” Kuhn said. “No reasonable person would have believed that was possible.”
One question before the judge was whether MESA could prove in March 2020 that hosting an event six months later would be impossible. He concluded that MESA could not, since the March public health orders “were set to expire well before the MESA annual conference was to take place in September 2020.” So, MESA committed breach of contract, Kellogg found.
“The court confesses to being somewhat troubled by this result,” the judge wrote, noting that MESA had shown “common sense and decency” by canceling so proactively.
Having concluded that MESA breached the contract, Kellogg turned to the question of what it owes the Sheraton. Here he sided with the trade group, finding that the hotel could not have upheld its end of the contract and hosted a 300-person event for MESA on Sept. 15, 2020. Therefore, the Sheraton is owed nothing from MESA for breaching the contract.
As of that Sept. 14, public gatherings were limited to 10 people in Denver. While that order was replaced the next day — what would have been the first day of the MESA event — “Sheraton has presented no evidence that it could have received the public health order and transformed its function spaces to host a 300-person event the same day,” Kellogg explained.
The judge’s verdict was a mixed ruling and he said that neither side can be considered the prevailing party, so each must pay its own attorney fees. The Sheraton is represented in both of its local lawsuits by Steven Rudner of the Rudner Law Offices in Dallas, Texas.
“My client’s policy is not to comment on pending litigation,” the attorney said by email.
