Contract analysis

I. PRELIMINARY INSTRUCTIONS AND OBJECTIVES A. Strategic Objectives for Day 1 The primary strategic objective for the first day of Randall Brecker's deposition is to establish his personal knowledge of, participation in, and control over the revenue-diversion scheme conducted through Suncoast Room Management Inc. ("Suncoast"). This testimony is critical to multiple claims in the operative complaint, including breach o

1. Pin down Brecker's understanding of the Gross Room Revenue ("GRR") definition in FLA § 4.1. The definition provides that GRR encompasses "all revenues derived from or attributable to the rental of guest rooms at the Hotel, including revenues from any booking channel, direct or indirect, and regardless of the entity collecting such revenue." This language is unambiguous on its face, and the objective is to force Br

2. Obtain admissions that Brecker personally directed the formation of Suncoast Room Management Inc. and the establishment of gulfcoastrooms.com as an off-platform booking channel. The documentary evidence, including the Articles of Incorporation, bank-account opening documents, domain-registration records, and internal communications, supports the conclusion that Brecker was the architect and principal decision-make

3. Establish that Brecker directed property-level controllers to exclude Suncoast-collected revenues from monthly GRR reports to Verimark. The internal communications produced in discovery — particularly those from the 312,000-document supplemental production ordered by Judge Calloway on October 28, 2022 — contain emails and memoranda from Brecker or his designated "corporate" designees instructing property-level con

4. Develop the timeline from formation of Suncoast (no later than January 2013) through the whistleblower complaint (November 8, 2021). This nearly nine-year period of systematic underreporting is central to the damages analysis and to the claim that the breach was "incurable" under FLA § 14.2(c). Establishing a clear timeline during Day 1 will provide a framework for the more granular financial analysis to be conduc

5. Lay the groundwork for the civil conspiracy claim (Count X) by establishing Brecker's individual role. Count X alleges a civil conspiracy among Coastal Palms Franchise Holdings LLC, Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, Suncoast Room Management Inc., and Randall Brecker individually. To sustain this claim, we must show that Brecker acted in concert with the entity defendants to accomplish a c

6. Create impeachment opportunities by testing Brecker's testimony against documents produced in discovery. The initial production consisted of approximately 84,000 documents, and the supplemental production (including Suncoast financial records ordered produced by Judge Calloway on October 28, 2022) added approximately 312,000 documents. The pre-marked exhibit binder for Day 1 contains 90 tabs of selected documents

II. BACKGROUND AND PERSONAL HISTORY A. Personal and Professional Background Begin the substantive examination by establishing the basic biographical and professional background of the witness. This section serves two purposes: first, to build a complete record of Brecker's qualifications, experience, and sophistication as a hospitality-industry executive; and second, to begin establishing rapport and a rhythm of ques

III. THE FRANCHISE RELATIONSHIP WITH VERIMARK A. Execution of the First Franchise License Agreement The franchise relationship between Coastal Palms and Verimark is governed by a series of Franchise License Agreements ("FLAs"), the first of which was executed on June 15, 2007, for the Naples, Florida Verimark Suites property. This section of the examination should establish the circumstances under which Brecker enter

1. Gross Room Revenue Definition (§ 4.1) Read aloud the GRR definition from FLA § 4.1 and have Brecker confirm it on the record: "'Gross Room Revenue' or 'GRR' means all revenues derived from or attributable to the rental of guest rooms at the Hotel, including revenues from any booking channel, direct or indirect, and regardless of the entity collecting such revenue." The following questions should be asked in sequen

2. Royalty Obligation (§ 4.1) • Confirm that under each FLA, Coastal Palms is obligated to pay Verimark a royalty equal to 5% of GRR, payable monthly. • Confirm that Brecker understood this obligation when he signed the first FLA and that it applied consistently across all 22 agreements. • Confirm that the royalty is calculated on gross room revenue — not net room revenue, not revenue net of commissions, and not reve

3. Marketing-Fund Contribution (§ 4.2) • Confirm that under each FLA, Coastal Palms is obligated to contribute 2.5% of GRR to Verimark's system-wide marketing fund, payable monthly. • Confirm that this contribution is also calculated on gross room revenue, using the same GRR definition as the royalty obligation.

4. Technology Fee (§ 4.3) • Confirm that under each FLA, Coastal Palms is obligated to pay a technology fee of $12.50 per available room per month, subject to annual adjustment based on the Consumer Price Index ("CPI"), with the annual increase capped at 3% per year. • Explore whether rooms were ever added to any properties without notification to Verimark. Based on Verimark's records, approximately 214 rooms were ad

5. Late-Payment Interest (§ 4.6) • Confirm that FLA § 4.6 provides for late-payment interest at a rate of 1.5% per month, compounded monthly, on any royalty, marketing-fund contribution, technology fee, or other amount that is not paid when due or that is underpaid. • Confirm that Brecker was aware of this provision at the time he signed the FLAs. • Confirm his understanding that, under this provision, interest accru

6. Audit Rights (§ 8.2) • Confirm that FLA § 8.2 grants Verimark the right to audit the books and records of the franchisee upon 10 business days' written notice. • Confirm that if the audit reveals an underpayment exceeding 2% of reported GRR for any audited period, the franchisee is obligated to bear all costs associated with the audit, including the fees and expenses of Verimark's auditors. • Ask: Prior to the Tho

7. Cure Provision (§ 14.1) and Incurable Breach (§ 14.2(c)) • Confirm that FLA § 14.1 provides a 30-day cure period upon written notice of a material breach. • Read aloud FLA § 14.2(c) and have Brecker confirm his awareness of this provision: "Systematic underreporting of Gross Room Revenue shall constitute a material breach that is incapable of cure." • Ask: When did you first become aware of § 14.2(c)? Did you read

8. Liquidated Damages (§ 15.3) • Confirm that FLA § 15.3 provides that upon termination of a franchise agreement for cause, the franchisee is obligated to pay liquidated damages in an amount equal to three times the trailing-twelve-month royalties attributable to the terminated property. • Confirm that Brecker understood the financial exposure created by this provision. Ask him to estimate, even roughly, the liquidat

IV. FORMATION AND PURPOSE OF SUNCOAST ROOM MANAGEMENT INC. A. Formation Exhibit: Suncoast Room Management Inc. Articles of Incorporation (Florida) — Tab 16 This section of the examination is designed to establish the origin of Suncoast Room Management Inc. and to pin Brecker as the decision-maker behind its creation. • When was Suncoast Room Management Inc. incorporated in the State of Florida? What was the date of f

V. ESTABLISHMENT OF GULFCOASTROOMS.COM A. Creation and Operation Exhibit: Domain registration records for gulfcoastrooms.com — Tab 51; Website screenshots — Tabs 52–55 The examination should now turn to the unbranded website gulfcoastrooms.com, which served as a digital booking channel through which guests could reserve rooms at Verimark-branded properties operated by Coastal Palms. The revenues from bookings made th

VI. GRR REPORTING PRACTICES — DETAILED EXAMINATION A. What Was Included in Reported GRR Exhibits: Sample monthly GRR reports submitted to Verimark (2013–2021) — Tabs 31–35; Internal Coastal Palms revenue reports for the same periods — Tabs 36–40 The examination should now compare, side by side, the GRR figures that Coastal Palms reported to Verimark with the internal revenue figures maintained by Coastal Palms and it

VII. COMMUNICATIONS WITH VERIMARK REGARDING REVENUE REPORTING A. Routine Communications Establish the communication channels between Coastal Palms and Verimark during the ordinary course of the franchise relationship: • Who at Coastal Palms communicated regularly with Verimark about franchise operations? Was it Brecker personally, or a designated representative such as a regional director, general manager, or control