A legal fight between the owner and erstwhile manager of the Westin Nashville hotel downtown is moving forward, this time to the U.S. 6th Circuit Court of Appeals, where both parties have recently filed briefs.
The dispute stems from 2017, when Westin developer Nashville Hospitality Capital fired management firm Wischermann Partners Inc., alleging that the Minnesota-based hospitality company had breached their contract by working on a nearby hotel, The Joseph Nashville.
Both parties sued each other — the ownership group seeking $2.29 million in reimbursement of money paid to Wischermann and the management group seeking a $1.66 million termination fee they said they were owed.
After an eight-day bench trial in October 2019, a U.S. District Court judge earlier this year ruled in favor of Wischermann and ordered Nashville Hospitality Capital to pay the termination fee.
The local ownership group, represented by attorneys at Bass, Berry & Sims, filed to appeal the ruling and submitted a full appeal brief in September. Wischermann, represented by Dickinson Wright, filed a response on Wednesday.
It is “beyond question that WPI’s and Wischermann’s repeated lies, divided loyalties, and working in concert with a competitor within a few blocks of the Westin violated the ‘highest degree of honesty and loyalty’ required of a fiduciary,” the hotel owner argued in the brief.
A spokesperson for Castlerock Asset Management, a Nashville Hospitality Capital-affiliated company that manages both the Westin and the Bobby Hotel, declined to comment. Neither Wischermann President and CEO Paul Wischermann nor the Dickinson Wright attorneys responded to a request for comment.
In the appeals briefs, the two parties largely agree on much of the facts. Yes, Wischermann was also working on The Joseph with The Pizzuti Cos. While the hotel owner argues that activity constituted a violation of a one-mile non-compete clause, Wischermann argues that the work with The Joseph was both known to NHC for years and was immaterial to their existing contract. Despite that, Wischermann agreed to quit working on The Joseph in 2017, but NHC terminated the contract anyway. Wischermann reengaged with Pizzuti and currently manages The Joseph, which NHC takes to mean the disengagement was a “sham,” an argument disputed by Wischermann.
Both groups also agreed that Wischermann representatives gave documents related to the under-construction Westin to Pizzuti, in addition to leading them on a tour of the site, but they disagreed over the significance of those actions.
The hotel ownership group argued that Wischermann’s attempt to “cure” the breach was too little, too late — “putting the toothpaste back in the tube,” they wrote.
In the appeals briefs, both parties took shots at each other, airing dirty laundry about the development of the downtown hotel that opened in 2016. The hotel ownership group claimed that Wischermann failed to get the proper licenses leading to months of unlicensed massage services. Wischermann said that construction delays hindered their ability to manage the property, including because five floors of the hotel were not completed by the opening date, elevators were not functioning properly, the lobby area was not complete and construction on the rooftop bar was not complete until hours before a grand opening party.
Wischermann also argued that NHC’s decision to fire them was not motivated by a breach of contract but by a desire for more money, as the company ultimately managed the hotel directly.
“The reason for NHC’s action soon became clear: It was more profitable for NHC to replace WPI with Castle Rock (a management company NHC created) to manage The Westin than to pay WPI under the Management Interactions.”
A mediation conference is scheduled Nov. 8.