Hotel management agreements (HMAs) often have terms extending 20, 30 or even 50 years. Over such an expanse of time, many things can and do change. With inevitable personnel changes and evolving market dynamics, what was once a fruitful partnership between the hotel owner and operator can devolve into a relationship that no longer works, and negatively impacts the performance of the hotel. In such circumstances, hotel owners often need to consider the consequences of terminating an HMA before it expires. Aside from the obvious legal implications, including possible breach of contract claims brought by the owner and/or operator, owners are faced with the practical dilemma of how to find a replacement operator to manage and operate the hotel going forward. Fearful of exposing themselves to liability for tortiously interfering with the existing HMA, potential replacement operators often are reluctant to take on such a role.

While it is well-known that “tortious interference” claims are available to protect against wrongful competition, it is far less well understood what conduct will give rise to such claims. This confusion largely is rooted in the fact that New York courts recognize at least two separate “tortious interference” torts—tortious interference with contract and tortious interference with prospective business relations—the elements of which, while linguistically similar, are in many ways materially different.

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