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Red Lion sues Florida financier for $12 million amid legal turf war with Radisson

UPDATED: Fri., May 1, 2020

This photo from October 2018 shows the former Red Lion River Inn, which is now owned by Ruby Hospitality. Red Lion is suing a Florida financier, alleging he’s responsible for covering legal damages tied to expansion into properties owned by competitor Radisson. (Libby Kamrowski / The Spokesman-Review)
This photo from October 2018 shows the former Red Lion River Inn, which is now owned by Ruby Hospitality. Red Lion is suing a Florida financier, alleging he’s responsible for covering legal damages tied to expansion into properties owned by competitor Radisson. (Libby Kamrowski / The Spokesman-Review)

An ongoing turf war between two major hotel chains is playing out in Eastern Washington’s federal courts with former Spokane-based company Red Lion suing a Florida financier for $12 million to cover legal costs in its dispute with Radisson Hotels.

Radisson originally sued Red Lion in September 2018, alleging the chain had sought franchising and improvement agreements with nine hotels nationwide to do business under the Red Lion name while they were still under contract with Radisson.

A year prior, Red Lion – which formed as a hospitality company providing lodging after the rush on tourism caused by Expo ’74 – had announced it was moving out of the Inland Northwest to Denver, Colorado.

Radisson alleged in its lawsuit, which is currently in mediation, that Red Lion began courting agreements with hotels in Connecticut, Maryland, Missouri, Montana, New York, North Carolina, Wisconsin and Wyoming for room improvements and new franchising. Those hotels, which were owned by third-party corporations, were operating under the Radisson name.

The closest hotel to Spokane involved in the litigation, a 316-room hotel in Billings, closed suddenly in November, according to the Billings Gazette. The hotel operated as a Radisson from 2015 until March 2018, when that company terminated its franchise agreement with the hotel and it reopened as a Red Lion.

The effect of the move by Red Lion was to “freeze out” its Minnesota-based competitor in nine markets around the United States, said Joseph Goode, managing partner of Laffey, Leitner & Goode, LLC, a Milwaukee-based firm representing Radisson.

“These locations aren’t going to support another hotel the size of what Radisson lost to Red Lion,” Goode said.

Red Lion argues in its latest lawsuit that Joseph G. Gillespie, founder and chief executive of a company called Inner Circle, personally guaranteed loans and financial agreements with the corporations running the nine hotels and agreed to pay any legal costs prompted by its actions.

An attempt to reach Gillespie was unsuccessful Friday. An email to Inner Circle requesting comment on the allegations was not immediately returned Friday.

Court records show the lawsuit was served on Gillespie at his home in Ormond Beach, Florida, on Monday. He did not have a named attorney as of Friday.

Six of the nine companies owning the hotels have since filed for Chapter 11 bankruptcy in the Middle District of Florida, where Inner Circle is headquartered.

The legal dispute between Radisson and Red Lion has been put on hold in Eastern Washington as mediation and settlement talks continue, according to court filings.

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