September 19, 2025|Franchise Frontlines
September 19, 2025 | U.S. District Court for the Middle District of Tennessee | Unpublished Opinion
Executive Summary
In an unpublished decision, Chief Judge William L. Campbell, Jr. of the Middle District of Tennessee issued amended findings of fact and conclusions of law on remand from the Sixth Circuit in a long-running dispute between Nashville Hospitality Capital (“NHC”), hotel owner of the Westin Nashville, and Wischermann Partners, Inc. (“WPI”), its former management company. On remand, the court reconsidered whether WPI materially breached the Management Agreement’s confidentiality and non-compete provisions and whether any breach had been cured. The court found that the breaches were material and uncured, that NHC properly terminated the agreement for cause without paying the termination fee, and that WPI and its principal were not liable on NHC’s fiduciary-duty counterclaim.
Relevant Background
According to the allegations presented at trial, NHC hired WPI and its CEO, Paul Wischermann, to consult on and later manage the development and operation of the Westin Nashville. The parties executed a Consulting Agreement in 2013 and a detailed Management Agreement in 2014. The Management Agreement included extensive confidentiality obligations and a non-compete provision prohibiting WPI from managing or developing any hotel within a one-mile radius of the Westin without NHC’s written consent.
The evidence at trial reflected that while engaged to develop and manage the Westin, WPI simultaneously assisted another developer on a nearby luxury hotel project known as The Joseph. The record included allegations that WPI shared significant technical, operational, and proprietary information from the Westin project with the competing development team and provided strategic insights, budget materials, group-pace information, and other data containing non-public elements. WPI maintained that much of the information it shared was public, and that it performed its duties under the Management Agreement without incident.
By early 2017, NHC had become concerned that WPI’s work on The Joseph violated confidentiality and non-compete restrictions. In April 2017, NHC issued a Notice of Default alleging WPI assisted a competitor and improperly shared protected information. WPI responded by terminating its consulting relationship with the competing developer but denied any breach of confidentiality. Shortly thereafter, NHC terminated the Management Agreement for cause, asserting that the breaches were material and uncured.
The district court originally ruled in WPI’s favor. On appeal, the Sixth Circuit reversed in part, instructing the district court to reconsider materiality under the Restatement factors and to reassess whether any alleged breaches had been properly cured, including whether WPI took retrospective steps to address prior disclosures.
Decision
After reconsideration, the court found that the confidentiality and non-compete provisions of the Management Agreement were material provisions. Applying the materiality factors recognized under Tennessee law, the court noted that NHC had expected a conflict-free manager who would safeguard sensitive hotel information, and that WPI’s assistance to a nearby competitor impaired that expectation. The court found that the difficulty in quantifying the harm caused by sharing operational and development-related information strengthened the materiality of the provisions. Although WPI had otherwise managed the Westin profitably, the court concluded that NHC did not receive the full benefit of its bargain.
On cure, the court found that WPI did not “cure” the breaches within the meaning of the agreement, even after terminating its consulting agreement with the competing developer. The court emphasized that cure required prospective and retrospective action. The court found no evidence that WPI attempted to retrieve confidential information previously shared, to mitigate the effects of those disclosures, or to correct past breaches. Because the court found the breaches both material and uncured, termination for cause was proper under Section 17.2 of the Management Agreement. As a result, NHC was not required to pay the contractual termination fee.
The court also reconsidered NHC’s fiduciary-duty counterclaim. The Sixth Circuit had directed the court to evaluate whether a breach occurred and, if so, whether an equitable forfeiture remedy was appropriate. The court assumed, for purposes of the analysis, that a fiduciary relationship existed and that certain conduct fell short of loyalty expectations. However, the court found that forfeiture was not warranted given the overall circumstances, including the services WPI performed, the compensation structure, and the shortfall WPI incurred during pre-opening phases. The court determined that termination for cause—together with the loss of the termination fee—was an adequate remedy under the circumstances. Accordingly, judgment was entered in favor of WPI and Mr. Wischermann on the fiduciary-duty claim.
Looking Forward
This decision may offer useful guidance to owners, franchisors, and management companies navigating confidentiality restrictions, competitive-activity provisions, and cure rights within long-term operational agreements. The ruling illustrates that courts may treat confidentiality and non-compete clauses as material provisions even when agreements do not expressly label them as such, particularly where sensitive operational or system-level information is involved. It also underscores that cure provisions may require more than ceasing the activity at issue; in some situations, courts may expect remedial efforts addressing the effects of past conduct.
For brands and owners relying on management or license agreements, the case highlights the importance of documenting consent processes, monitoring competitive-activity restrictions, and responding promptly when conflicts or parallel engagements arise. The court’s analysis further suggests that where a contract provides for a termination-for-cause framework, courts may view the contractual remedies as sufficient without resorting to broader equitable forfeiture, depending on the factual record and the parties’ performance history.
While each dispute will turn on its own facts and governing law, this case reinforces how courts may analyze materiality, cure, and fiduciary-duty theories in complex hotel and hospitality agreements—principles that may be highly relevant for franchisors, multi-unit operators, and other parties seeking to safeguard confidential information and system integrity.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
