Atrium Holding Co. affiliates filed a lawsuit against John Q. Hammons Hotels Management Co. claiming CEO Jacquie Dowdy violated a contract in 2010 when she appointed herself as leader and attorney Greggory Groves as general counsel.
The suit, filed July 20, claims Jonathan Eilian’s Atrium has a contractual right to approve senior position changes at the hotel company and that Dowdy hasn’t adhered to those terms since taking over as CEO when founder John Q. Hammons stepped down due to health issues. In 2005 Atrium entered a minority shareholder buyout of US$132 million of JQH Hotels stock as part of a partial merger that returned John Q. Hammons Hotels Management Co., Springfield, Missouri, to private ownership. Eilian is a former managing director of Starwood Capital Group.
The suit also claims Dowdy violated the contract with Atrium by diverting Hammons’ US$200,000 salary to herself and directed the company to pay more than US$1 million in bonuses to employees after waiving performance requirements.
The suit calls for an injunction preventing Dowdy from acting as CEO and removing Groves as general counsel. It also seeks an injunction that would allow Atrium to appoint a president for JQH Hotels, as well as damages related to Dowdy’s salary and the staff bonuses.
A statement released by JQH Hotels said, “The company has received a copy of the complaint and has engaged counsel to aggressively defend against the baseless allegations brought by Atrium TRS LLC, the other Atrium groups and Jonathan Eilian, its principal. The company will establish in court that the company has not violated the terms of the management services agreement. Under the leadership of Jacqueline Dowdy, the company has effectively managed the hotels in its portfolio.”
JQH Hotels also faces a lawsuit over allegations it made false statements regarding its financial status, allegedly overstating the company’s net worth by US$1 billion. A suit filed in a New York state court alleges Hammons CEO Jacquie Dowdy, “grossly inflated Hammons” worth.