Contract analysis

I. EXECUTIVE SUMMARY The purpose of this memorandum is to analyze the Cross-Motion for Summary Judgment filed by Defendant Coastal Palms Franchise Holdings LLC ("Coastal Palms") on October 13, 2023, identify the weaknesses in each of the five principal arguments advanced by the defense, recommend a comprehensive response strategy, and highlight the numerous genuine disputes of material fact that preclude entry of sum

II. PROCEDURAL BACKGROUND The procedural history of this litigation is extensive and sets important context for evaluating the posture in which the Cross-Motion arrives. We summarize the key milestones below. Complaint and Responsive Pleadings. Verimark filed its Complaint on March 7, 2022, asserting ten counts against Coastal Palms Franchise Holdings LLC, Randall Brecker (individually and as managing member of Coast

III. STRUCTURE OF DEFENDANT'S CROSS-MOTION Coastal Palms' Cross-Motion is organized into five principal arguments, each of which we address in detail in Section IV below. For ease of reference, we summarize the arguments here: Argument 1: GRR Definition "Ambiguity" (FLA § 4.1). Coastal Palms contends that the GRR definition in FLA § 4.1 is ambiguous as applied to revenues collected by Suncoast Room Management Inc., a

IV. SECTION-BY-SECTION ANALYSIS A. Argument 1: GRR Definition "Ambiguity" (FLA § 4.1)

1. Coastal Palms' Position. Coastal Palms' first and most prominent argument is that the Gross Room Revenue definition in FLA § 4.1 is ambiguous as applied to the particular facts of this case. The relevant provision defines GRR as follows: "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

2. Analysis and Weaknesses. Coastal Palms' ambiguity argument is its strongest card, and yet it is fundamentally unsound. The plain language of FLA § 4.1 is unambiguous, and the record evidence — particularly Brecker's own deposition admissions — confirms that the parties understood the provision to mean precisely what it says. Plain Language Analysis. The GRR definition captures "all revenues derived from or attribu

3. Recommended Response Strategy. Our Response should lead with a thorough textual analysis of FLA § 4.1, focusing on the "regardless of the entity collecting such revenue" clause as the dispositive provision. The "at the Hotel" argument should be dispatched through grammatical analysis, commercial-reasonableness principles, and the reductio ad absurdum regarding OTA revenues. We should deploy Brecker's deposition ad

1. Coastal Palms' Position. Coastal Palms' second argument is that Verimark had constructive knowledge of Suncoast's role in collecting guest-room revenue and that Verimark's failure to object to Coastal Palms' reporting methodology from January 2013 through November 2021 — approximately nine years — constitutes ratification or acquiescence that bars Verimark from now asserting breach. In support of this argument, Co

2. Analysis and Weaknesses. This argument fails for multiple independent reasons, any one of which is sufficient to defeat it at summary judgment. The No-Waiver Clause. Each of the 22 FLAs contains an express no-waiver clause, which provides in pertinent part that the failure of either party to enforce any provision of the agreement shall not constitute a waiver of the right to enforce that provision or any other pro

3. Recommended Response Strategy. Our Response should emphasize the no-waiver clause as the threshold contractual bar to the ratification/acquiescence defense, followed by the distinction between knowledge of Suncoast's operational existence and knowledge of Suncoast's revenue-collection role. The affirmative-concealment evidence should be presented in detail, drawing on Brecker's admissions, Kerrigan's testimony, an

1. Coastal Palms' Position. Coastal Palms' third argument attacks Verimark's damages model. Defense counsel advances several sub-arguments in this regard. First, Coastal Palms relies on the expert report of Prof. Grant Hargrove, PhD, CPA, of Hargrove Economic Consulting Inc., who opined that the maximum underpayment attributable to Coastal Palms is $6.2 million — a figure approximately 62% lower than Dr. Kettlewell's

2. Analysis and Weaknesses. ##### (a) Hargrove's Narrowed GRR Definition Prof. Hargrove's $6.2 million estimate is predicated on a GRR definition materially narrower than the one set forth in FLA § 4.1. Specifically, Hargrove excludes walk-in cash payments from GRR on the theory that such payments are not "booked" through any identifiable "booking channel" and therefore fall outside the § 4.1 definition. He also uses

3. Recommended Response Strategy. The damages arguments should be framed as the paradigmatic example of a genuine dispute of material fact precluding summary judgment for either party on damages quantum. We should emphasize that dueling expert opinions — a $16.095 million direct-underpayment figure versus a $6.2 million figure, computed using different methodologies and GRR definitions — are quintessential triable is

1. Coastal Palms' Position on Each Count. Coastal Palms seeks summary judgment on each of the remaining seven counts of the Complaint. We summarize the defense's position on each count before turning to our analysis. Count IV — Breach of Implied Covenant of Good Faith and Fair Dealing. Coastal Palms argues that this count is duplicative of the express breach-of-contract claims asserted in Counts I through III and fai

2. Analysis and Weaknesses. ##### Count IV — Breach of Implied Covenant of Good Faith and Fair Dealing Coastal Palms is correct that Florida law does not recognize an independent tort for breach of the implied covenant of good faith and fair dealing in commercial contracts. However, Florida law does recognize a contract-based claim for breach of the implied covenant where the defendant exercises contractual discretio

3. Recommended Response Strategy. We should preserve all seven counts at this stage and argue vigorously against summary judgment on each. The overarching theme should be that summary judgment is a "blunt instrument" inappropriate for these fact-intensive tort and equitable claims, particularly in a case involving allegations of a deliberate, systematic, nine-year revenue-diversion scheme. For each count, our Respons

1. Coastal Palms' Position. Coastal Palms' fifth and final argument seeks affirmative relief: summary judgment on its $12 million Counterclaim. The Counterclaim asserts three categories of alleged damages: (a) Brand-Standard Violations. Coastal Palms claims that Verimark failed to maintain brand standards, including deferred maintenance at the corporate level, resulting in reduced guest satisfaction and diminished pr

2. Analysis and Weaknesses. The Counterclaim is extraordinarily weak, and the Cross-Motion's request for summary judgment on the Counterclaim borders on frivolous. The evidentiary record is devoid of competent evidence supporting any element of Coastal Palms' claims. Absence of Expert Testimony on Counterclaim Damages. Most fundamentally, Coastal Palms has not produced a damages expert report quantifying the alleged