The dispute centers on the Joan Hisaoka “Make a Difference” Gala, an annual black-tie event raising funds for cancer victims. Inova Health Care Services contracted with the Omni Shoreham Hotel to host the 2019 gala in specific ballrooms, explicitly striking a standard clause that would have allowed the hotel to redesignate the event space.
Omni moved the gala to inferior spaces to accommodate the Embassy of Lebanon, which offered three times the revenue. Inova objected, declined the alternative spaces, and held the event elsewhere. The district court granted summary judgment on liability to both Inova and the Smith Center, finding Omni breached the express terms of the contract and the implied covenant of good faith and fair dealing.
The D.C. Circuit agreed that Omni’s breach was material and made in bad faith. The court noted that Omni had negotiated away its right to reassign space and deliberately subordinated its contractual obligations to financial opportunity, which constituted willful imperfect performance as a matter of law.
However, the appellate court reversed the summary judgment granted to the Smith Center. The court held that a genuine dispute of material fact existed regarding whether the hotel and Inova intended to benefit the Smith Center directly, a necessary element for third-party beneficiary status.
Testimony from Omni’s general manager indicated the hotel had no knowledge of the Smith Center’s involvement or payment of deposits. The court ruled that this factual conflict should have been resolved by a jury, not by the district court as a matter of law.
The D.C. Circuit affirmed the jury’s award of $127,001.65 in damages to Inova for lost contributions. It vacated the $60,844.35 award to the Smith Center and the collective costs award, remanding the case for further proceedings consistent with its opinion.