Inova Health Care Services, for Inova Fairfax Hospital v. Omni Shoreham Corporation

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 26, 2026 Decided April 17, 2026
No. 25-7010
INOVA HEALTH CARE SERVICES, FOR INOVA FAIRFAX
HOSPITAL AND ITS DEPARTMENT, LIFE WITH CANCER, ET AL.,
APPELLEES
v.
OMNI SHOREHAM CORPORATION,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 1:20-cv-00784)
Matthew H. Lembke argued the cause for appellant. With
him on the briefs were C. Stephen Setliff, Eli Jason S. Mackey,
and W. Chadwick Lamar, Jr.
Christopher W. Mahoney argued the cause for appellees.
With him on the brief was Gregory S. Seador.
Before: MILLETT and CHILDS, Circuit Judges, and
RANDOLPH, Senior Circuit Judge.

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Opinion for the court filed by Senior Circuit Judge
RANDOLPH.
RANDOLPH, Senior Circuit Judge: This is a breach of
contract action. Jurisdiction rests on diversity of citizenship.
The parties agree that substantive District of Columbia law
controls. The parties’ disagreement is mainly about the
district court’s application of D.C. law in rendering judgment
in favor of the plaintiffs, Inova Health Care Services, and the
Smith Center for Healing and the Arts, and against the
defendant, the Omni Shoreham Corporation.
I
The events leading to the breach are as follows.
The Joan Hisaoka “Make a Difference” Gala was an
annual black-tie charity event Robert Hisaoka created in 2008
in honor of his sister to raise funds for organizations devoted
to cancer victims. In 2013, and each year thereafter through
2018, the Gala took place at the Omni Shoreham Hotel in
Washington, D.C. Inova contracted with Omni for the yearly
event. While plaintiff Smith Center was not a party to any of
the contracts, it had benefitted financially from the Galas and
paid the cost of the event or the $10,000 deposit to Omni
each year.
In December 2018, Omni and Inova executed an
Agreement for the 2019 Gala, to be held at the Hotel on
September 21, 2019. The Agreement provided that cocktails
and dessert would be in the Hotel’s Ambassador Ballroom
and dinner would be in the Regency Ballroom. Smith Center
paid the $10,000 deposit.

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Omni’s standard contract for events like these contained
a clause allowing the Hotel to redesignate where in the Hotel
the event would be held. Robert Hisaoka, acting as an agent
for Inova in negotiating the 2013 Omni-Inova contract,
insisted on deleting this standard clause. Omni agreed. The
2019 Agreement, like each Gala contract between Omni and
Inova after 2013, did not contain such a clause.
Nonetheless, on July 8, 2019—a few months before the
upcoming September Gala—Omni informed Inova that the
Hotel was moving the Gala out of the Ambassador and
Regency Ballrooms and into the Hotel’s Blue Room and
Roberts Restaurant, as well as a tented outdoor area. Omni
made this decision to accommodate the Embassy of
Lebanon’s desire to conduct a conflicting event at the Hotel.
The Embassy offered to pay Omni three times more than
Inova.
Inova objected, and demanded that Omni honor the
contract. Omni declined, but reiterated that it remained
willing to host the Gala in the alternative spaces it had
proposed. Counsel for Inova informed Omni that the
alternative spaces were not suitable for enumerated reasons,
and Inova therefore would not proceed with the event at the
Hotel and intended to file suit.
Inova held its 2019 Gala at another venue on the same
date originally planned.
After initially denying both parties’ motions for summary
judgment, the district court granted Inova’s motion for
reconsideration and granted summary judgment on liability to
Inova and to Smith Center as a third-party beneficiary. The
court ruled that Omni had breached both the contract’s

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express terms and the implied covenant of good faith and fair
dealing. The case proceeded to a jury trial on damages.
Before trial, the court limited Omni’s mitigation defense,
precluding it from arguing or introducing evidence that Inova
should have accepted the proffered alternative spaces within
the Hotel.
The jury returned a verdict of $225,000.27: $127,001.65
to Inova for lost contributions, $60,844.35 to Smith Center
for lost contributions, and $37,154.27 in additional costs
incurred as a result of the breach.
II
A
Omni concedes that it breached its contract with Inova.
But it contends that genuine disputes of material fact should
have precluded summary judgment on whether the breach
was material and whether it violated the implied covenant of
good faith and fair dealing.
A breach of contract is deemed material when the
non-breaching party receives “something substantially less or
different from that for which he bargained.” CorpCar
Services Houston, Ltd. v. Carey Licensing, Inc., 325 A.3d
1235, 1245 (D.C. 2024) (quoting Fowler v. A&A Co., 262
A.2d 344, 347 (D.C. 1970)) (internal quotation marks
omitted). That test was met here. The undisputed evidence
shows that far from accepting a general commitment to
suitable event space, Inova “specifically bargained” for the
Gala to be held in the Ambassador and Regency Ballrooms.
Id. at 1246. Hisaoka made that priority concrete during
negotiations, insisting that Omni’s standard reassignment

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clause—which would have given the Hotel the right to
reassign the event to different space—be struck from the
Agreement.
The record also reveals no genuine dispute regarding the
inadequacy of the substitute arrangement Omni offered. Inova
identified multiple, concrete deficiencies: obstructed sightlines
and low ceilings in the Blue Room; the Blue Room’s
inability to accommodate the Gala’s stage configuration; the
exposure of guests to weather in the outdoor, tented space;
and the Roberts Restaurant’s lack of physical capacity for the
silent auction. Omni introduced no evidence rebutting those
defects. In both its briefing and at oral argument, Omni’s
response consisted entirely of conclusory assurances that the
alternative spaces would suffice, without engaging any of the
particular problems Inova identified. Such assertions are
insufficient to create a triable issue of fact.
Nor is there any genuine dispute that Omni breached the
covenant of good faith and fair dealing. See Allworth v.1
Howard Univ., 890 A.2d 194, 201 (D.C. 2006) (“If the party
to a contract evades the spirit of the contract, willfully
renders imperfect performance, or interferes with performance
by the other party, he or she may be liable for breach of the
implied covenant of good faith and fair dealing.” (quoting
Paul v. Howard Univ., 754 A.2d 297, 310 (D.C. 2000))).
Omni argues that plaintiffs abandoned their implied covenant 1
claim by failing to object when the district court did not provide a
separate jury instruction on damages for that claim. We disagree. The
jury was instructed to assess damages for breach of contract generally,
without limitation to breaches of express contractual provisions.
Because an implied covenant claim is itself a form of breach of
contract claim, see Choharis v. State Farm Fire & Cas. Co., 961 A.2d
1080, 1087 (D.C. 2008), the jury instructions encompassed damages
attributable to that claim.

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Omni was aware that it had negotiated away its standard
reassignment right. Although Omni invokes industry custom
to argue that reassignment of event spaces is standard
practice, it offered no evidence that such a practice extends
to contracts where the parties have expressly bargained that
right away. Nor could Omni’s witnesses identify any prior
instance in which Omni had unilaterally relocated a
contracted event. The motivation for its decision, moreover,
is undisputed: Omni displaced the Gala in favor of a
competing event that promised to generate more than three
times the revenue. In deliberately choosing to subordinate
contractual obligation to financial opportunity, Omni
“willfully render[ed] imperfect performance” and acted in bad
faith as a matter of law. Paul, 754 A.2d at 310.
B
Omni argues that the district court erred in prohibiting
evidence and argument that Inova failed to mitigate losses by
declining Omni’s alternative offer. Omni bases this challenge
on a misreading of the ruling below, portraying it as a
categorical holding that D.C. law forecloses any mitigation
defense premised on a non-breaching party’s refusal to
continue dealing with the breaching party. Even if we assume
the district court initially indicated such a view, the court
went on to conduct a fact-specific inquiry and conclude that,
under the circumstances presented, Omni could not sustain its
mitigation defense as a matter of law.
That determination was well-grounded. Inova had a duty
to take reasonable steps to minimize its losses. See Sizer v.
Lopez Velasquez, 270 A.3d 299, 303 (D.C. 2022). The
district court concluded that Inova satisfied that obligation by
seeking an alternative venue. Omni insists that a reasonable

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jury could have found its alternative proposal to be a suitable
substitute that would have placed Inova in the same position
as under the original arrangement. Even if we accepted the
premise, it does not follow that Inova acted unreasonably by
declining Omni’s offer. The mitigation rule exists to
encourage injured parties to act sensibly—it does not give the
breaching party grounds for “hypercritical examination” of the
choices its own default forced upon the other side. See Dist.
Concrete Co. v. Bernstein Concrete Corp., 418 A.2d 1030,
1037 (D.C. 1980) (quoting In re Kellett Aircraft Corp., 186
F.2d 197, 198 (3d Cir. 1950)). Omni cannot show an
“absence of reasonable efforts to mitigate” simply by
identifying an alternative that might also have been
reasonable. Sizer, 270 A.3d at 303 (quoting Norris v. Green,
656 A.2d 282, 287 (D.C. 1995)). Where, as here, there was
no genuine dispute of material fact that the substitute rooms
were inadequate, see supra Section II.A, Omni’s argument
about the suitability of its alternative rooms is simply beside
the point, and the district court properly precluded evidence
on that question. See id. (holding that the question of which
facts may bear on whether the non-breaching party fulfilled
its duty to mitigate is a legal question for the court to
decide).
C
Although the district court correctly granted summary
judgment on liability to Inova, it erred in extending that
ruling to Smith Center. A genuine dispute of material fact
existed about whether Smith Center was an intended third-
party beneficiary of the Agreement, and that question should
have been presented to a jury.

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Unlike Inova, Smith Center was not a party to the
Agreement and therefore could bring its claims only as an
intended third-party beneficiary. Fort Lincoln Civic Ass’n,
Inc. v. Fort Lincoln New Town Corp., 944 A.2d 1055, 1064
(D.C. 2008). That status requires a showing that Inova and
Omni “had an express or implied intention to benefit [Smith
Center] directly”—a determination that, on this record, a
reasonable jury could have declined to make. Id. (quoting
Alpine Cnty., Cal. v. United States, 417 F.3d 1366, 1368
(Fed. Cir. 2005)). Omni’s general manager, Mark Roche-
Garland, testified that Smith Center was not “noted in any
correspondence” regarding the 2019 Gala, that “Omni has no
knowledge” of Smith Center’s payment for past events, and
that “Omni has no knowledge” about the identity of the party
who signed the $10,000 deposit check. Roche-Garland/Omni
30(b)(6) Dep. Tr. 202:2-203:18. That testimony was not
rebutted to any degree that would permit the question to be
resolved as a matter of law.
In its initial summary judgment opinion, the district court
itself acknowledged the foregoing evidence when it denied
summary judgment in favor of Omni. Yet on reconsideration,
the district court included Smith Center in its grant of
summary judgment without ever walking back the factual
conflict it had previously identified. The district court
reasoned that it had previously “rejected Omni’s renewed
argument that . . . Smith Center . . . lacked standing to assert
claims against Omni”—apparently conflating its denial of
Omni’s motion with an affirmative finding that Smith Center
qualified as a third-party beneficiary as a matter of law.
Inova Health Care Servs., for Inova Fairfax Hosp. v. Omni
Shoreham Corp., No. CV 20-784 (JDB), 2023 WL 5206142,
at *3 (D.D.C. Aug. 14, 2023). At no point—whether in its
original summary judgment opinion, its reconsideration

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decision, or elsewhere—did the district court provide a
rationale for dismissing Omni’s factual evidence to the
contrary.
We therefore vacate the damages award to Smith Center
and the collective costs award, and remand for further2
proceedings consistent with this opinion. We affirm the jury’s
award of $127,001.65 in damages to Inova.
So ordered.
Neither the jury instructions nor the record furnishes a basis 2
for apportioning the collective costs award between Inova and
Smith Center.

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