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The fiduciary, contractual and agency duties of hotel brokers

The fiduciary, contractual and agency duties of hotel brokers

In the high-profile lawsuit of Host Hotels & Resorts against Robert T. Koger (personally) and his brokerage firm Molinaro Koger Inc., Host Hotels & Resorts sued a number of defendants, including Rob Koger and Molinaro Koger for breach of fiduciary duties, breach of contract, fraud and other serious claims.

Lawsuits between sellers and brokers are not particularly common in the hospitality industry. And lawsuits alleging fraud are even less common. 

One of the reasons I enjoy working in the hospitality industry is the optimism, openness and collegiality that exists throughout the hospitality community. Developers, owners, operators, lenders, brokers, lawyers, consultants, advisors, trade media — we all depend upon each other. Although I am a rigorous advocate for my client’s position in negotiations, there is an understanding — including with those on the “other side” — that we are working together for the success of making the deal or completing the project.

Anyone in this industry will tell you that a serious charge of violating the fiduciary duties a professional owes to his client is troubling. But a claim of fraud goes a step further. And personally naming a high-profile industry leader is really an attention-getter, particularly by an institutional player like Host Hotels.

These are serious allegations. A lot of facts were put into the complaint, such as who called who and who did what. You have very specific, detailed, factual allegations. This lawsuit does not look like it was filed to get discovery and run a fishing expedition. It looks like someone already has the goods.

Still, at this time, they remain allegations in a complaint. How this lawsuit will play out is anyone’s guess, but many will be watching. If you would like a copy of the complaint, let me know, and I will email it to you.

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