Reyna Hotel Corp. v. Lotus Hospitality Management, LLC

• Court: Missouri Court of Appeals
• Writing for the Court: EDWARD R. ARDINI, JR., JUDGE
• Citation: Reyna Hotel Corp. v. Lotus Hospitality Management, LLC, 714 S.W.3d 423 (Mo. App. 2025)
• Docket Number: WD 86858
• Decision Date: 29 April 2025
• Parties: REYNA HOTEL CORPORATION, et al., Respondents, v. LOTUS HOSPITALITY MANAGEMENT, LLC, et aL, Appellants.

714 S.W.3d 423

REYNA HOTEL CORPORATION, et al., Respondents,

v.LOTUS HOSPITALITY MANAGEMENT, LLC, et aL, Appellants.

WD 86858

Missouri Court of Appeals, Western District.

Opinion filed: April 29, 2025

APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI, THE HONORABLE SARAH A. CASTLE, JUDGE

Kenneth E. Barnes, for Respondents.

Kelly C. Tobin, for Appellants.

Division Three: Edward R. Ardini, Jr., Presiding Judge, Alok Ahuja, Judge and Thomas N. Chapman, Judge

EDWARD R. ARDINI, JR., JUDGE

In April 2021, the mayor of Kansas City, Missouri announced an initiative to relocate the homeless individuals camping on the lawn of City Hall to hotels paid for by Kansas City (“the City”). The City engaged Hope Faith Ministries (“Hope Faith”)—a non-profit organization—to implement and manage the program. Two hotels that initially participated in the program are plaintiffs in this action: North Kansas City Hotel Corporation (“Econo Lodge”) and Reyna Hotel Corporation (“Best Western”) (collectively, “Plaintiff Hotels”). Plaintiff Hotels and Hope Faith agreed that Plaintiff Hotels would accommodate homeless individuals for 90 days at a rate of $100 per night per room. Thereafter, Hope Faith terminated its role in the program and the City engaged Defendants Mihir Patel (“Patel”), Lotus Hospitality Management, LLC, and Lotus Care House (collectively, “Defendants”) to manage the program. Plaintiff Hotels were then removed from the program and the homeless individuals staying at Plaintiff Hotels were moved to other locations. Plaintiff Hotels submitted invoices for the rooms they had provided while participating in the program. The City transferred money to Lotus Hospitality Management, LLC, and Lotus Care House (collectively, “Lotus”) to pay the invoices; Lotus refused to pay Plaintiff Hotels until they signed a release, which Plaintiff Hotels would not do.

Plaintiff Hotels initiated this action against Defendants, asserting claims of tortious interference with a business expectancy and conversion. A jury found in favor of Plaintiff Hotels and awarded them actual and punitive damages. The Circuit Court of Jackson County (“the trial court”) entered judgment on the jury’s verdicts.

Defendants appeal, asserting nine points of trial court error. In five of their points, they claim the trial court erred in denying their motions for directed verdict. We find no merit to these claims. In four of their points, they claim the trial court committed instructional error. We find merit to one of these claims; specifically, that the trial court erred in refusing to submit to the jury Defendants’ proffered agency affirmative defense instructions relating to the claim of tortious interference. For this reason, we reverse the trial court’s judgment in favor of Plaintiff Hotels on their tortious interference claim and remand for a new trial on that claim. In all other respects, the trial court’s judgment is affirmed.

Factual and Procedural Background¹

In spring of 2021, homeless individuals started an encampment on the lawn of City Hall. On April 8, 2021, the mayor announced the City would pay for 500 hotel rooms for homeless individuals for 90 days, and would relocate the individuals on the lawn to the hotels. The City was not prepared to implement this initiative. After the mayor made the announcement, the City reached out to Hope Faith and asked it to relocate individuals from the City Hall lawn that day, find hotels to participate in the program, and negotiate with the hotels to house the individuals for 90 days. Hope Faith agreed to do so. Hope Faith loaded individuals onto buses and started calling nearby hotels.

The programs director at Hope Faith (“Programs Director”) contacted Econo Lodge and spoke to Hiral Bhakta (“Bhakta”). Bhakta owns Plaintiff Hotels, and was initially a plaintiff in this action. Bhakta agreed to provide rooms at Plaintiff Hotels, and homeless individuals were immediately transported there. Bhakta initially made 25 of the 89 rooms at Econo Lodge available, as there were other guests staying at the hotel. However, he made arrangements within days to have all 89 rooms at Econo Lodge available for the program. Occupants “trickled” in and after four or five days, Econo Lodge was full. On April 13th, Bhakta and Programs Director agreed that Econo Lodge would provide 89 rooms and Best Western would provide 10 rooms for 90 days at the rate of $100 per night. The $100 rate was to “bake in the damages” that the homeless individuals were causing to Plaintiff Hotels, and due to amenities and services Plaintiff Hotels were providing, such as breakfast and allowing guests to use the laundry facilities. Bhakta set up “a direct bill account with the city.”

On April 15th, Hope Faith decided that managing the City’s initiative was “beyond [its] mission,” and terminated its role in the program. The City then engaged Defendants to manage the program. Patel is a hotel developer. Lotus Hospitality Management is a limited liability company that provides hotel and hospitality management services; Patel is a member/manager and is “in charge.” Lotus Care House is a nonprofit organization formed by Patel; he is a director.

Defendants decided to implement a request for proposals (“RFC”): any hotel that wished to participate in the City’s program was required to submit a proposal for consideration. Bhakta submitted a proposal. Bhakta learned his proposal was rejected on April 27th, when an Econo Lodge employee called Bhakta and informed him that the individuals staying at Econo Lodge were being removed, placed on buses, and relocated. That day, a flyer had been slipped under the room doors at Econo Lodge, which stated: “We (Econolodge Kansas City) are undergoing a change in room placement for this program. As of April 27, 2021 we are not able to provide room accommodations at this location. The hotel has decided not to provide accommodation through the continuing program.” The flyer was on Lotus Care House letterhead. An Econo Lodge employee saw the executive director of Lotus Care House—who had previously worked for Hope Faith and who had visited Econo Lodge throughout the program—slide the flyers under the doors of Econo Lodge guest rooms. Defendants denied creating or distributing the flyer.

Plaintiff Hotels submitted invoices for the rooms they had provided while participating in the program. The City transferred money to Lotus to pay the invoices. Lotus refused to pay Plaintiff Hotels until Bhakta signed a release. The release required Bhakta to indemnify or hold harmless Lotus and the City for any losses, damages, or liabilities that Lotus or the City incurred related to the program up to that date, and barred Bhakta from making any future claims against Lotus or the City. The release was drafted by Defendants and their attorney after Plaintiff Hotels had been removed from the program. Bhakta refused to sign the release. In 2022, Lotus transferred the money (that had been paid by the City) from Lotus’ operating account to Lotus’ attorney’s trust account. All hotels that participated in the program were paid except for Econo Lodge and Best Western.

Bhakta and Plaintiff Hotels initiated this action against Defendants, asserting claims of tortious interference with a business expectancy and conversion. The case proceeded to a jury trial. During trial, Defendants moved for directed verdict on the tortious interference and conversion claims. The trial court denied their motions. However, the trial court did find there was insufficient evidence to support Bhakta’s claims and insufficient evidence to support the conversion claim against Patel, and directed the verdicts on those claims in Defendants’ favor. Accordingly, the following claims were submitted to the jury:

• Plaintiff Hotels’ claim of tortious interference with a business expectancy against all three Defendants.

• Plaintiff Hotels’ claim of conversion against the Lotus defendants.

The jury found in favor of Plaintiff Hotels and awarded them actual and punitive damages. On the tortious interference claim, the jury assessed actual damages in the amount of $421,277 and punitive damages against Patel at $1,000,000, against Lotus Hospitality Management at $250,000, and against Lotus Care House at $150,000. On the conversion claim, the jury assessed actual damages in the amount of $186,040.68 and punitive damages against Lotus Hospitality Management at $250,000 and against Lotus Care House at $150,000. The trial court entered judgment on the jury’s verdicts. Defendants filed a motion for judgment notwithstanding the verdict or, alternatively, for a new trial. That motion was denied.

Defendants appeal, asserting five points related to the denials of their motions for directed verdict and four points related to instructional error.

Points 1-5: Denial of Defendants’ Motions for Directed Verdict

In Points 1, 2, and 3, Defendants assert the trial court erred in denying their motion for directed verdict on Plaintiff Hotels’ tortious interference claim. In Points 4 and 5, Defendants assert the trial court erred in denying their motion for directed verdict on Plaintiff Hotels’ conversion claim.

Standard of Review

[1-4] When reviewing the denial of a motion for directed verdict, we “must determine whether the plaintiff presented a submissible case by offering evidence to support every element necessary for liability.” Barron v. Abbott Laboratories, Inc.,529 S.W.3d 795, 799 (Mo. banc 2017). “Evidence is viewed in the light most favorable to the jury’s verdict, giving the plaintiff all reasonable inferences and disregarding all conflicting evidence and inferences.” Id. “If the challenge is that an affirmative defense precludes recovery for the plaintiff, this Court must determine whether the moving party proved the affirmative defense as a matter of law.” Fleshner v. Pepose Vision Inst, P.O., 304 S.W.3d 81, 95 (Mo. banc 2010). A motion for directed verdict should not “be granted unless there are...