The Episcopal Church has decided to pay a $1.2 million penalty and break a contract with Denver's Adam's Mark Hotel because the hotel chain has been sued for racial discrimination.

The denomination had planned to use more than 1,000 rooms and all of the hotel's meeting rooms during its general convention in July. About 10,000 people are expected to attend the meeting.

Presiding Bishop Frank T. Griswold and House of Deputies President Pamela P. Chinnis issued a statement this week saying members were "disturbed" by a U.S. Justice Department suit, filed in December, "alleging a broad pattern of racial discrimination" at the chain's Daytona Beach, Fla., hotel.

The suit alleges that African Americans were charged more than other guests, given less desirable rooms and required to wear identifying bracelets.

Griswold and Chinnis said discussions with hotel officials in Denver and at the chain's St. Louis headquarters had not alleviated their concerns. The church's executive council voted unanimously Monday to terminate the contract.

"We haven't been found guilty of anything," said Andre van Hall, general manager of the Denver hotel.

The church booked delegates and meetings in four other hotels but had planned to use Adam's Mark, the city's largest, as its headquarters. "This is a large, complicated meeting, so we will have to find another space," said spokesman Jim Solheim.