IHG MANAGEMENT MARYLAND LLC v. Tishman Asset Corporation, Defendant. (2018)

Orders, Supreme Court, New York County (Eileen Bransten, J.), entered April 10, 2018 and September 19, 2017, which, to the extent appealed from as limited by the briefs, denied defendant West 44th Street Hotel LLC's (owner) motion to dismiss the specific performance cause of action, granted plaintiff's motion for a preliminary injunction, and denied owner's motion to vacate the TRO, unanimously affirmed, without costs.

The court properly denied defendant owner's motion to dismiss the cause of action for specific performance.  It is undisputed that the hotel management agreement (HMA) at issue provides for the application of Maryland law, which specifically provides that a court may order specific performance for anticipatory or actual breach or attempted or actual termination of a hotel management agreement (Md Code, Commercial Law §§ 23–102[b];  23–101[c] ).  Sections 14.02(d) and (e) of the HMA provide that either party could seek specific performance, where applicable.  Defendant owner's argument that personal service contracts such as the HMA cannot be specifically enforced as a matter of constitutional and Maryland law because such enforcement violates the Thirteenth Amendment's prohibition against involuntary servitude is inapposite since, among other things, the owner voluntarily negotiated for and signed the contract.  Moreover, the Maryland statute is presumed constitutional and the presumption may be upset only by proof persuasive beyond a reasonable doubt, which is absent here (see Hotel Dorset Co. v. Trust for Cultural Resources of City of N.Y., 46 N.Y.2d 358, 370, 413 N.Y.S.2d 357, 385 N.E.2d 1284 [1978] ).

The court did not improvidently exercise its discretion in granting plaintiff's motion for a preliminary injunction and denying owner's request to vacate the TRO in order to maintain the status quo until a determination was made as to whether plaintiff was in default of its obligations under the HMA. Plaintiff demonstrated a probability of success on the merits, a danger of irreparable injury, and a balance of equities in its favor (see Nobu Next Door, LLC v. Fine Arts Hous., Inc., 4 N.Y.3d 839, 840, 800 N.Y.S.2d 48, 833 N.E.2d 191 [2005];  Occupational Health Ctrs. of the Southwest, P.A. v. Toney, 2017 WL 1546430, *9, 2017 U.S. Dist. LEXIS 64784, *24 [D. Md. 2017] ).  “A likelihood of success on the merits may be sufficiently established even where the facts are in dispute, and the evidence need not be conclusive” (Barbes Rest. Inc. v. ASRR Suzer 218, LLC, 140 A.D.3d 430, 431, 33 N.Y.S.3d 43 [1st Dept. 2016] ).

Pursuant to Maryland law, plaintiff made a prima facie showing that it may be entitled to specific performance of the HMA. The court properly found that ejecting plaintiff from the hotel without a determination of the merits would subject it to irreparable harm in the loss of goodwill and injury to its reputation (see Second on Second Café, Inc. v. Hing Sing Trading, Inc., 66 A.D.3d 255, 272, 884 N.Y.S.2d 353 [1st Dept. 2009];  DMF Leasing, Inc. v. Budget Rent–A–Car of Md., Inc., 161 Md.App. 640, 871 A.2d 639, 652 [Md. Ct. Spec. App. 2005] ).

We have considered owner's remaining arguments and find them unavailing.