Law School Case Brief
Milner Hotels v. Norfolk & W. Ry. - 822 F. Supp. 341 (S.D. W. Va. 1993)
Under West Virginia law, a party who sues for damages for breach of contract must show his own compliance with the contract or that he was prevented or relieved from compliance by the defendant. For it to be barred from recovery of damages by its own breach, the plaintiff's breach must be material. Normally, the issue of whether a breach is a material one is a question of fact for the jury. Where the facts presented are not in dispute, however, the issue of whether a contract has been performed or breached in a material way is a question of law for the court to decide. The rule is the same where the evidence presented is subject to only one reasonable conclusion.
Plaintiff Milner Hotels, Inc. ("Hotel") and defendant Norfolk & Western Railway Company ("Railroad") entered into a contract whereby the Hotel agreed to house and feed the Railroad's non-resident employees. A fire damaged the Hotel, and the Railroad removed its employees from the Hotel. The Hotel asked the Railroad for assurances that it would reoccupy the building upon the completion of repairs. The Railroad refused and sent the Hotel notice that it was terminating the parties' agreement. The Hotel filed a lawsuit against the Railroad in federal district court seeking to recover damages for breach of contract. The Railroad filed a motion for summary judgment.
Could the Hotel recover damages from the Railroad for any loss it sustained after the effective date of the Railroad's termination of the parties' agreement?
The court granted the Railroad's motion for summary judgment. The court held that the Railroad properly terminated the agreement, and that it was not liable for any loss the Hotel sustained after the effective date of the termination. The costs occasioned by loss of the Railroad's patronage was not recoverable. It did not flow from any contractual breach but rather was the economic consequences to the Hotel's loss of the Railroad's business. The Hotel breached its covenant under the contract to keep the building in a good, clean, and sanitary condition and to comply with all laws and regulations pertaining to operation of the Hotel. The breach was a material breach and absolved the Railroad from any obligation to compensate the Hotel.
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