Contract analysis

I. Introduction and Deposition Details The purpose of this memorandum is to summarize the key testimony of Janet Kerrigan, former Regional Controller of Coastal Palms Franchise Holdings LLC ("Coastal Palms"), for use by the litigation team in connection with the above-captioned matter. This summary is intended to highlight the most significant substantive testimony elicited during Kerrigan's deposition, to assess the

II. Witness Background and Employment History Janet Kerrigan testified to the following background and employment history during the opening segment of the deposition. Full Name: Janet Marie Kerrigan. Former Position: Regional Controller, Coastal Palms Franchise Holdings LLC. Employment Period: Kerrigan testified that she was employed by Coastal Palms from approximately March 2011 through October 2021, a period of ro

III. Knowledge of the Franchise Relationship Kerrigan testified at length regarding her understanding of the franchise relationship between Verimark and Coastal Palms. Kerrigan stated that she was aware that the twenty-two (22) hotel properties operated by Coastal Palms — comprising eighteen (18) Verimark Suites locations and four (4) Verimark Select locations — were each franchised under individual Franchise License

IV. Suncoast Room Management Inc. — Formation and Operations A substantial portion of Kerrigan's testimony concerned the formation, structure, and operations of Suncoast Room Management Inc. ("Suncoast"), which is at the center of the revenue-diversion scheme alleged in Verimark's Amended Complaint. A. Establishment of Suncoast Kerrigan testified that Suncoast Room Management Inc. was established by Randall Brecker n

1. Walk-in Guests. Suncoast collected revenues from guests who booked directly at the hotel front desk without going through Verimark's central reservation system. Kerrigan testified that front-desk staff at the Coastal Palms properties were instructed to process certain walk-in bookings through Suncoast's property management system rather than through Verimark's system. She noted that this was particularly common du

2. Corporate-Direct Contracts. Suncoast entered into negotiated-rate agreements directly with corporate clients, bypassing Verimark's corporate booking platform entirely. Kerrigan testified that these corporate-direct contracts were solicited and managed by Suncoast, and that the revenues generated from these arrangements were collected by Suncoast rather than routed through Verimark's system. She recalled that sever

3. Unbranded Website Bookings. Suncoast operated an independent website, gulfcoastrooms.com, which Kerrigan testified was used to capture direct bookings for the Coastal Palms properties at rates that undercut the Verimark-branded booking channel. Kerrigan stated that the gulfcoastrooms.com website did not display any Verimark branding, did not route bookings through Verimark's reservation system, and did not identif

V. Brecker's Instructions to Exclude Direct-Booking Revenues from GRR Reports A. Initial Instructions Kerrigan testified that when she assumed her role as Regional Controller in approximately 2012, the practice of excluding Suncoast-collected revenues from the monthly GRR reports submitted to Verimark was already in place. She stated that she did not design the methodology; rather, she inherited it from the prior rep

VI. Scope and Scale of Underreporting Kerrigan's testimony established the scope and scale of the GRR underreporting with considerable specificity. Her testimony on these points is summarized below. Systematic Nature of the Practice. Kerrigan testified that the exclusion of Suncoast-collected revenues from GRR reports was not a sporadic or inadvertent occurrence but was instead a systematic practice that was implemen

VII. Knowledge of Other Coastal Palms Principals Kerrigan was examined regarding the knowledge and involvement of the other members of Coastal Palms — specifically Theresa Brecker and Nolan Prescott — in the revenue-reporting practices described above. A. Theresa Brecker Kerrigan testified that Theresa Brecker — a member of Coastal Palms holding a fifteen percent (15%) equity interest and the spouse of Randall Brecke

VIII. Internal Concerns and Termination A. Kerrigan's Internal Objections Kerrigan testified that she raised concerns about the revenue-reporting methodology with Randall Brecker on multiple occasions during her tenure at Coastal Palms. She was not a passive participant who simply followed orders without question; rather, she described a pattern of raising concerns that were repeatedly dismissed or overridden by Brec

IX. Whistleblower Contact with Verimark Following her termination, Kerrigan contacted Verimark's compliance hotline on November 8, 2021. Kerrigan's testimony regarding this contact was detailed and consistent. Kerrigan testified that during her call to the compliance hotline, she reported the following:

1. The systematic exclusion of Suncoast-collected revenues from the monthly GRR reports submitted to Verimark by Coastal Palms;

2. The existence and operation of the gulfcoastrooms.com website, which was used to capture direct bookings for Coastal Palms properties without routing them through Verimark's reservation system;

3. The existence and scope of the corporate-direct booking contracts entered into by Suncoast that bypassed Verimark's corporate booking platform;

4. The twelve percent (12%) management fee retained by Suncoast on all revenues it collected, and the exclusion of that management fee from any reporting to Verimark;

5. The OTA netting practice, pursuant to which OTA commissions were deducted from GRR before reporting to Verimark, resulting in additional underreporting. Kerrigan testified that she provided this information to Verimark because she believed that Coastal Palms was defrauding Verimark by systematically underreporting GRR and thereby underpaying royalties and marketing-fund contributions. She stated that she felt a pr

X. Cross-Examination by Defense Counsel A. Defense Themes on Cross Gabriela Montes of Whitfield, Barrow & Crane LLP conducted the cross-examination of Kerrigan on behalf of the Coastal Palms defendants. The cross-examination was approximately two hours in length and focused on the following themes:

1. Bias and Motive. Montes devoted significant time to exploring whether Kerrigan's whistleblower complaint to Verimark was motivated by resentment over her termination rather than genuine concern about the revenue-reporting practices. Montes established the timeline — that Kerrigan was terminated in October 2021 and contacted Verimark's compliance hotline only approximately three weeks later, on November 8, 2021 — a

2. Knowledge Limitations. Montes probed the scope of Kerrigan's personal knowledge, emphasizing that Kerrigan did not personally oversee all twenty-two (22) properties in the Coastal Palms portfolio. Kerrigan acknowledged that she directly oversaw a subset of the properties — primarily the Southwest Florida and coastal Georgia clusters — and conceded that she could not testify from personal, firsthand knowledge about

3. FLA Interpretation. Montes questioned whether Kerrigan, as an accountant rather than a lawyer, was qualified to interpret the GRR definition in the FLAs. Montes suggested that the question of whether Suncoast revenues fell within the scope of the FLA's definition of GRR was a legal question on which Kerrigan was not competent to opine. Kerrigan acknowledged that she is not a lawyer and was not offering a legal opi

4. Verimark's Awareness. In the most substantive line of cross-examination, Montes asked whether Kerrigan was aware that Suncoast was identified in certain property-management agreements that were submitted to Verimark during the franchise-application process. Kerrigan testified that she was aware of those agreements and acknowledged that Verimark may have been aware of Suncoast's existence as a management company. H

XI. Key Exhibits Referenced During Deposition The following key exhibits were marked during Kerrigan's deposition. Each exhibit is listed below with a brief description: Cross-Reference Note: All exhibits marked during the Kerrigan deposition should be cross-referenced against the Nexagen Document Solutions LLC document database, which currently contains approximately 2.3 million documents (1.1 TB of data processed o

XII. Assessment and Recommendations A. Overall Assessment of Witness Janet Kerrigan is a strong, credible, and sympathetic witness for Verimark. She presented well during the deposition, was organized in her recollections, and maintained consistency throughout both direct and cross-examination. Her background as a licensed CPA with a decade of experience in the Coastal Palms organization lends authority and specifici

1. Catalogue specific admissions and document references from Kerrigan's testimony for inclusion in the Statement of Undisputed Material Facts. Key admissions include: (a) the existence and operation of Suncoast; (b) the three booking channels through which Suncoast collected revenues; (c) the 12% management fee; (d) Brecker's explicit instructions to exclude Suncoast revenues from GRR; (e) the OTA netting practice;

2. Cross-reference Kerrigan's testimony regarding Prescott's receipt of quarterly financial summaries showing Suncoast revenue line items with the relevant portions of Prescott's deposition transcript for purposes of potential impeachment and to undermine Prescott's claimed lack of knowledge.

3. Identify key deposition transcript pages for citation in the summary judgment brief and prepare highlighted excerpts for use as appendices to the motion. D. Follow-Up Items Based on Kerrigan's deposition testimony, the following follow-up items are recommended:

1. Locate and authenticate the internal accounting-procedures memorandum described by Kerrigan (circa 2014–2015). This document should be cross-referenced against the November 18, 2022 supplemental production of approximately 312,000 documents. If the memorandum was included in defendants' production, it should be identified by Bates number and flagged as a key exhibit. If it was not included, we should consider fili

2. Coordinate with Yuki Nakamura on incorporating Kerrigan's specific factual assertions into the Requests for Admission served on defendants on January 30, 2023 (48 requests). To the extent any of the 48 requests already encompass Kerrigan's factual assertions, the responses (due within 30 days of service) should be reviewed against Kerrigan's testimony for consistency. If additional requests are warranted, a supple

3. Preserve Kerrigan's contact information and confirm her availability for potential trial testimony. Given her status as a non-party, friendly witness, we should maintain regular contact with Kerrigan to ensure her continued cooperation and availability as the matter progresses toward trial. Kerrigan's current contact information is on file with the author of this memorandum.

4. Obtain the Prescott deposition transcript as soon as it is finalized and compare Prescott's testimony regarding his knowledge of Suncoast revenues against Kerrigan's testimony about the quarterly financial summary packages.

5. Coordinate with the document review team at Nexagen Document Solutions LLC to prioritize review of any documents in the 2.3-million-document database that relate to the accounting-procedures memorandum, the gulfcoastrooms.com website, and the Suncoast revenue-reporting methodology.

XIII. Distribution This memorandum constitutes privileged attorney work product prepared in anticipation of litigation and at the direction of counsel. Distribution is limited to the following individuals: • Priya Anand, Responsible Partner, Calderwood & Harkness LLP • Yuki Nakamura, Lead Associate, Calderwood & Harkness LLP • Engagement team members assigned to Verimark Hospitality Group Inc. v. Coastal Palms Franch