The underlying dispute centers on the Joan Hisaoka "Make a Difference" Gala, an annual black-tie charity event Robert Hisaoka created in 2008 in honor of his sister to raise funds for organizations devoted to cancer victims. Inova had contracted with the Omni Shoreham Hotel in Washington, D.C. for the 2019 Gala, specifically reserving the Ambassador and Regency Ballrooms for September 21, 2019. In July 2019, Omni informed Inova it was moving the event to the Blue Room, Roberts Restaurant, and a tented outdoor area — a decision driven by the Embassy of Lebanon's offer to pay Omni three times more than Inova. Inova objected, Omni refused to relent, and Inova held the Gala at a different venue on the original date. Litigation followed.
On the materiality of the breach, the court held that the undisputed record left no genuine dispute. Inova had specifically bargained for the named ballrooms, and the negotiating history made that priority concrete: Robert Hisaoka, acting as Inova's agent in negotiating the 2013 contract, had insisted that Omni's standard reassignment clause — which would have allowed the hotel to relocate events — be struck from the agreement. Every subsequent Gala contract, including the 2019 Agreement, omitted that clause. The substitute spaces Omni offered had multiple documented deficiencies: obstructed sightlines and low ceilings in the Blue Room, the Blue Room's inability to accommodate the Gala's stage configuration, weather exposure in the outdoor tented area, and the Roberts Restaurant's lack of capacity for the silent auction. Omni offered no evidence rebutting those specific defects.
The court also held that Omni breached the implied covenant of good faith and fair dealing under D.C. law. Omni knew it had negotiated away its standard reassignment right, could point to no prior instance in which it had unilaterally relocated a contracted event, and offered no evidence that any industry custom of reassigning event spaces extends to contracts where that right has been expressly bargained away. The court held that by deliberately displacing the Gala in favor of a higher-paying client, Omni willfully rendered imperfect performance and acted in bad faith as a matter of law, citing Paul v. Howard University, 754 A.2d 297 (D.C. 2000).
On mitigation, the court rejected Omni's argument that Inova unreasonably refused to accept the alternative spaces. The court noted that the mitigation rule does not give a breaching party grounds for hypercritical examination of the choices its own default forced upon the other side, citing Dist. Concrete Co. v. Bernstein Concrete Corp., 418 A.2d 1030 (D.C. 1980). Because there was no genuine dispute that the substitute rooms were inadequate, the district court properly precluded Omni from arguing or introducing evidence that Inova should have accepted them.
The court parted ways with the district court on the status of co-plaintiff Smith Center for Healing and the Arts. Smith Center was not a party to the Agreement and could recover only as an intended third-party beneficiary — a status requiring proof that Inova and Omni had an express or implied intention to benefit Smith Center directly. Omni's general manager testified that Smith Center was not noted in any correspondence regarding the 2019 Gala, that Omni had no knowledge of Smith Center's payment for past events, and that Omni had no knowledge about the identity of the party who signed the $10,000 deposit check. The court held that testimony was sufficient to create a genuine dispute of material fact that should have gone to a jury, and that the district court had effectively conflated its earlier denial of Omni's motion with an affirmative finding that Smith Center qualified as a third-party beneficiary as a matter of law.
The court vacated the damages award to Smith Center and the collective costs award — noting that neither the jury instructions nor the record furnished a basis for apportioning the costs award between Inova and Smith Center — and remanded for further proceedings. The jury's award of $127,001.65 in damages to Inova was affirmed.