## Facts

- Norfolk & Western Railway Co. (N & W) contracted with Milner Hotels, Inc. to house and feed N & W’s transient train crews and other nonresident employees at the Milner Hotel in Bluefield, West Virginia.
- As amended (including a 1989 amendment), N & W agreed to pay a set daily rate per occupied room (reported as $20.25 per day), with a minimum daily payment equal to 60 room occupancies (reported as $1,215 per day).
- The arrangement accounted for essentially all of the hotel’s business; the hotel had about 102 rooms, and roughly 90 were kept available for the railroad’s use.
- The contract required Milner to maintain “good, clean and sanitary conditions” and to comply with all applicable local, state, and federal laws and regulations governing hotel operations.
- The agreement ran from month to month and allowed either party to terminate by giving at least 30 days’ written notice; it also included a default-and-cure provision addressing termination after notice of an uncured default.
- On March 10, 1991, a fire occurred at the hotel. Although the direct fire damage was limited, later inspections identified numerous electrical and fire code violations and the presence of asbestos.
- N & W informed Milner that the identified conditions would have to be corrected before N & W would place employees in the hotel again.
- Milner obtained repair estimates ranging from about $60,000 to $120,000 and demanded assurances that N & W would return its crews after the work was completed.
- N & W refused to guarantee continued occupancy and issued a written 30-day notice terminating the contract.
- Milner later sold the hotel at auction and sued N & W (and Norfolk Southern Corporation, N & W’s parent) for breach of contract, seeking damages tied to the loss of the railroad business.

## Issues

1. Whether N & W breached the contract by terminating the month-to-month agreement through a 30-day written notice.
2. Whether Milner could treat the minimum-payment/guarantee feature of the pricing terms as requiring continued payments or continued use despite the termination clause and the post-fire shutdown.
3. Whether Milner’s demand for assurances created, or was based on, any contractual or legal duty requiring N & W to commit to future occupancy before Milner undertook repairs.

## Decision

- The court granted summary judgment for N & W (and its parent), entering judgment against Milner’s breach-of-contract claim.
- The court held that the agreement was expressly month to month and expressly terminable by either party on at least 30 days’ written notice, and N & W complied with that requirement.
- The court rejected Milner’s theory that N & W had to provide assurances of future occupancy or continued patronage; no such promise appeared in the written contract, and the termination clause allowed N & W to end the relationship without committing to more.
- The court concluded that Milner could not convert its reliance on the railroad’s business, or the contract’s minimum-payment structure, into an indefinite commitment inconsistent with the contract’s month-to-month, terminable-on-notice design.

## Legal Principles

- Clear contract language allowing termination on specified written notice is enforced as written; a court will not add a “for cause” limit when the agreement does not contain one.
- A minimum-payment term in a month-to-month services contract does not eliminate an express right to terminate on notice; it sets payment during the contract’s operation, not a promise of indefinite duration.
- A party’s refusal to give a new promise of future performance is not a breach when the contract already permits termination on notice and does not require any long-term commitment.
- Business dependence, lost profits, or reliance costs do not justify rewriting an at-will, terminable-on-notice arrangement into a longer-term contract.
- Code-compliance and safety concerns may justify a customer’s decision not to place employees in a facility until problems are corrected, and they support the reasonableness of ending a month-to-month arrangement through the contract’s notice provision.

## Conclusion

Milner Hotels held a contract that ran month to month and could be ended by either side with 30 days’ written notice, and N & W exercised that right after a fire and inspections revealed serious code and asbestos problems. Because the contract did not require N & W to guarantee future occupancy or continued payments beyond the notice period, Milner’s breach-of-contract claim failed as a matter of law, and summary judgment was entered for the railroad.


Milner Hotels, Inc. v. Norfolk & Western Railway Co., 822 F. Supp. 341 (1993)