Case 17.3 Holiday Inn Franchising, Inc. v. Hotel Associates, Inc.

Issue

Did the defendant commit fraud by not informing the plaintiff of it's plan to not renew the plaintiff's franchising license instead requiring it to renovate?

Conclusion

HAI was awarded compensatory and punitive damages. When Holiday Inn appealed, the appellate court increased the amount of punitive damages citing Holiday Inn's "degree of reprehensibility"

Analysis

Holiday Inn Franchising, Inc had an agreement with Hotel Associates, Inc to renew their franchising license after 10 years after HAI recovered the cost of renovations. Aden had a plan to franchise another hotel and not renew the license for HAI. HAI filed a suit againt Holiday Inn asserting fraud for not telling them of Aden's plan.

Rule

silence as fraud; relation of trust and confidence; inequality of condition or knowledge; duty of disclosure