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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Yuki Nakamura, Lead Associate, Litigation (General)

FROM: Carlos Espinoza, Working Associate, Litigation (General)

DATE: February 3, 2023

RE: Deposition Summary — Janet Kerrigan, Former Regional Controller, Coastal Palms Franchise Holdings LLC

MATTER: Verimark Hospitality Group Inc. v. Coastal Palms Franchise Holdings LLC et al., Case No. 1021-00006, Circuit Court of the 17th Judicial Circuit, Broward County, Florida

CLIENT: Verimark Hospitality Group Inc.

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 witness's credibility and effectiveness, and to identify action items for the team's consideration in preparing for expert work, dispositive motions, and trial.

Kerrigan's deposition was taken on January 27, 2023, within the fact-deposition window established by the Case Management Order (January 9 through March 17, 2023). The deposition was conducted at the offices of Calderwood & Harkness LLP, 110 SE 6th Street, Suite 2800, Fort Lauderdale, Florida 33301. The deposition commenced at approximately 9:00 a.m. and concluded at approximately 3:45 p.m., including a lunch break and two short recesses, for a total duration of approximately six hours on the record.

The direct examination of the witness was conducted by Priya Anand of Calderwood & Harkness LLP on behalf of our client, Verimark Hospitality Group Inc. ("Verimark"). Cross-examination was conducted by Gabriela Montes of Whitfield, Barrow & Crane LLP on behalf of defendants Coastal Palms Franchise Holdings LLC, Randall Brecker, Theresa Brecker, and Nolan Prescott. A certified court reporter was present and administered the oath. The deposition was also videographed pursuant to the parties' stipulation regarding videotaped depositions.

The examination was conducted pursuant to the deposition outline prepared by Yuki Nakamura and dated January 20, 2023, which was circulated to Priya Anand and me for review in advance of the deposition. The outline was designed to treat Kerrigan as a witness-friendly deponent, and the questioning strategy reflected that posture throughout. Ms. Kerrigan appeared voluntarily and was not represented by separate counsel at the deposition. She was cooperative and forthcoming throughout the proceeding.

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 roughly ten years. She was hired initially as a staff accountant and was promoted to the Regional Controller position in approximately 2012.

Professional Background: Kerrigan holds a Bachelor of Science in Accounting from the University of Central Florida (2005) and is a licensed Certified Public Accountant in the State of Florida. Prior to joining Coastal Palms, she worked for approximately five years in public accounting at a regional firm in the Tampa Bay area, where she gained experience in hospitality-industry accounting.

Responsibilities: In her capacity as Regional Controller, Kerrigan was responsible for overseeing financial reporting and accounting functions for a cluster of hotel properties within the Coastal Palms portfolio. Her duties included, among other things:

• Preparation and submission of monthly Gross Room Revenue ("GRR") reports to Verimark in accordance with the terms of the applicable Franchise License Agreements ("FLAs");

• Oversight of property-level bookkeepers at the hotels she was assigned to manage;

• Coordination with Suncoast Room Management Inc. ("Suncoast") on revenue reconciliation for booking channels handled outside of Verimark's central reservation system;

• Preparation of quarterly financial summary packages for distribution to the members of Coastal Palms;

• Participation in year-end close procedures and coordination with Coastal Palms' outside accountants.

Reporting Structure: Kerrigan testified that she reported directly to Randall "Randy" Brecker, the Managing Member and holder of a sixty percent (60%) equity interest in Coastal Palms. She described Brecker as the person who made all significant decisions regarding financial reporting at Coastal Palms and characterized him as being deeply involved in the accounting function and the preparation of the GRR reports submitted to Verimark.

Termination: Kerrigan testified that she was terminated by Coastal Palms in October 2021. According to Kerrigan, the stated reason provided by Brecker for her termination was a "restructuring" of the regional controller function. However, Kerrigan testified that she believed the actual reason for her termination was related to her having raised internal concerns about the revenue-reporting methodology employed by Coastal Palms — specifically, the exclusion of revenues collected through Suncoast from the GRR reports submitted to Verimark. Kerrigan stated that there was no other contemporaneous restructuring of accounting positions at the time of her termination, and that her position was subsequently filled by another individual who performed substantially the same functions she had performed.

Post-Termination Contact with Verimark: Following her termination, Kerrigan contacted Verimark's compliance hotline on November 8, 2021, to report what she described as a systematic scheme to divert guest-room revenues away from the franchise reporting framework. This whistleblower contact is discussed in detail in Section IX below.

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 Agreements entered into between the applicable Coastal Palms property-level entity and Verimark Hospitality Group Inc. She testified that she had reviewed portions of the FLAs in connection with her duties as Regional Controller, and that she was generally familiar with the financial reporting obligations imposed by those agreements.

Specifically, Kerrigan testified that she understood the FLAs required the franchisee to submit monthly reports of Gross Room Revenue and to make the following payments to Verimark based on GRR:

(i) A five percent (5%) royalty on GRR;

(ii) A two and one-half percent (2.5%) marketing-fund contribution on GRR; and

(iii) A per-room technology fee assessed on each room in the hotel's inventory.

Kerrigan stated that she had specifically reviewed the GRR definition set forth in Section 4.1 of the FLAs. She understood that definition to encompass, in her words, "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." She testified that this was a broad definition and that she understood it to capture all guest-room revenue generated at the hotel, irrespective of the mechanism or entity through which the revenue was collected.

Critically, Kerrigan testified that despite this broad definition, the monthly GRR reports she prepared under Brecker's direction did not include all guest-room revenue. Specifically, revenues collected through Suncoast Room Management Inc. — which Kerrigan described as a Brecker-controlled entity — were systematically excluded from the GRR figures reported to Verimark. Kerrigan acknowledged that she was responsible for preparing the reports that omitted these revenues, but she stated that she did so at Brecker's explicit instruction and direction, as described more fully in Section V below.

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 no later than January 2013. Kerrigan stated she was not involved in the formation of Suncoast and did not have personal knowledge of the specific date of incorporation, but she testified that she became aware of Suncoast's existence and began processing transactions related to Suncoast's operations beginning in early 2013.

According to Kerrigan's testimony, Suncoast was organized as a Florida corporation. Randall Brecker served as its President and, to Kerrigan's knowledge, was the entity's sole or controlling shareholder. Kerrigan understood Suncoast to be an affiliated management company created by Brecker to handle certain booking channels outside of Verimark's central reservation system. She testified that Brecker described Suncoast to her at the time as a vehicle to "manage the direct-booking side of the business" for the Coastal Palms properties.

B. Suncoast Booking Channels

Kerrigan identified three primary booking channels through which Suncoast collected revenues for the Coastal Palms hotel properties:

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 during high-demand periods when properties could fill rooms at premium rates without relying on Verimark's branded booking channels.

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 several significant corporate accounts in the Southwest Florida market — including contracts with construction firms, insurance adjusters, and government contractors — were handled exclusively through Suncoast.

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 identify the properties as Verimark-franchised hotels. She testified that the website was designed to appear as an independent lodging-booking platform, and that it marketed the same physical hotel rooms that were also available through Verimark's branded channels. Kerrigan stated that the gulfcoastrooms.com site was designed and maintained at Brecker's direction, and that its purpose was to capture booking revenues outside the franchise reporting framework.

C. Revenue Flow Through Suncoast

Kerrigan described in detail the flow of revenues through the Suncoast structure. According to her testimony, the process operated as follows:

Suncoast collected payments directly from guests who booked through one of the three channels described above — walk-ins, corporate-direct contracts, or the gulfcoastrooms.com website. These payments were deposited into Suncoast's bank accounts, which were maintained separately from the property-level accounts.

Suncoast then retained a twelve percent (12%) "management fee" on all revenues it collected. After deducting this management fee, Suncoast remitted the remaining eighty-eight percent (88%) to the applicable property-level entities. Kerrigan identified two of these property-level entities by name:

• Gulf Breeze Hospitality LLC, which was the operating entity for the six (6) Coastal Palms properties in Southwest Florida; and

• Savannah Lodging Partners LLC, which was the operating entity for the four (4) Coastal Palms properties in coastal Georgia.

Kerrigan testified that the twelve percent (12%) management fee retained by Suncoast was treated on the books of the property-level entities as a cost of operations — specifically, as a management-company expense — and was not included in any reporting to Verimark. More significantly, Kerrigan confirmed that neither the gross revenues collected by Suncoast nor the 12% management fee retained by Suncoast were included in the GRR figures reported to Verimark in the monthly royalty reports. In other words, the entirety of the Suncoast revenue stream — both the 88% remitted to the property entities and the 12% retained by Suncoast — was excluded from the franchise reporting framework.

D. OTA Revenue Netting

In addition to the Suncoast revenue exclusion, Kerrigan also testified regarding a separate but related practice involving third-party online travel agency ("OTA") bookings.

Kerrigan stated that the Coastal Palms properties received payments from OTAs — including major platforms such as Aldermere Technologies, Bramwell Holdings, and Drayton Software — on a net-rate basis. Under these arrangements, the OTA would charge the guest the full room rate, deduct its commission, and remit the net amount to the hotel. The difference between the gross room rate charged to the guest and the net amount received from the OTA represented the OTA's commission.

Kerrigan testified that Brecker directed her and the other controllers to classify this difference — the OTA commission amount — as "commissions receivable" on the property's internal books. The effect of this classification was that the OTA commission amount was then netted against the GRR reported to Verimark, so that only the net OTA payment (after deduction of the commission) was included in the monthly GRR report. Kerrigan stated that this netting methodology was implemented at Brecker's instruction and applied across all properties she oversaw.

Kerrigan acknowledged that this netting practice was inconsistent with Section 4.1 of the FLAs, which she understood to require reporting of gross revenue — that is, the total revenue derived from the rental of the guest room, not the net amount after deducting third-party commissions. She stated that she implemented the netting methodology because she was directed to do so by Brecker, but that she understood at the time that the practice resulted in underreporting of GRR to Verimark.

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 reporting practices at Coastal Palms and continued it at Brecker's direction.

Kerrigan further testified that Randall Brecker personally and explicitly instructed her — and, to her knowledge, all property-level controllers within the Coastal Palms organization — to exclude revenues collected through Suncoast from the monthly GRR reports submitted to Verimark. Kerrigan was clear and unequivocal in her testimony that these instructions came from Brecker directly, and that there was no ambiguity in Brecker's directives on this point.

Kerrigan stated that Brecker's instructions were conveyed through multiple channels, including:

• In-person conversations at the Coastal Palms corporate offices;

• Telephone calls between Kerrigan and Brecker during the monthly reporting cycle; and

• Email communications, some of which Kerrigan recalled seeing in her files during her employment and which she believed should be included in the documents produced in this litigation.

B. Specific Testimony on Brecker's Directives

When asked to describe Brecker's specific statements regarding the exclusion of Suncoast revenues from GRR reports, Kerrigan provided the following testimony:

Kerrigan recalled that Brecker told her, on multiple occasions and in words to the effect, that Suncoast's revenues were "management company income, not hotel revenue," and therefore did not need to be reported to Verimark. Brecker characterized the Suncoast revenues as belonging to a "separate entity" — i.e., Suncoast Room Management Inc. — and asserted that because the revenues were collected by an entity other than the franchisee, they fell outside the scope of the franchise agreement's reporting requirements.

Kerrigan testified that she found this rationale unpersuasive because, in her understanding, the FLA's GRR definition captured all revenue "derived from or attributable to the rental of guest rooms" regardless of the entity collecting the revenue. She stated that she questioned this interpretation internally on several occasions, but was told by Brecker in no uncertain terms to continue following the established methodology and to refrain from raising the issue further. The substance of Kerrigan's internal objections and her conversations with Brecker on this point are discussed in greater detail in Section VIII below.

C. Documentation. Kerrigan testified that she believed there were internal emails and memoranda within Coastal Palms' records that reflected Brecker's instructions to exclude Suncoast revenues from the GRR reports. She identified certain documents she recalled seeing during her employment, including:

• An internal Coastal Palms accounting-procedures memorandum, which Kerrigan described as having been circulated to the accounting staff in approximately 2014 or 2015. According to Kerrigan, this memorandum outlined the methodology for preparing the monthly GRR reports and included a specific instruction to exclude "management company collections" — i.e., Suncoast-collected revenues — from the Verimark GRR calculation. Kerrigan testified that she believed this memorandum was authored at Brecker's direction, although she could not recall with certainty whether Brecker himself drafted it or whether it was prepared by another member of the accounting staff at Brecker's instruction.

• Email correspondence between Kerrigan and Brecker, approximately dating to 2018, in which Kerrigan raised questions about the revenue-reporting methodology and Brecker responded with instructions to maintain the status quo.

The litigation team should cross-reference the documents described by Kerrigan against the November 18, 2022 supplemental production from defendants, which consisted of approximately 312,000 documents and included, for the first time, records of Suncoast Room Management Inc. If the accounting-procedures memorandum and the 2018 email correspondence described by Kerrigan can be located within the production, they will constitute significant corroborative evidence and should be designated as key trial exhibits.

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 implemented across all properties she oversaw. She described the practice as an established feature of Coastal Palms' financial reporting methodology — one that was embedded in the accounting procedures and followed consistently from month to month and year to year.

Magnitude of Underreporting. When asked to estimate the proportion of total guest-room revenue that was channeled through Suncoast and excluded from GRR reports, Kerrigan testified that the amounts were significant. Based on her experience and her familiarity with the revenue data at the properties she oversaw, she estimated that the revenues channeled through Suncoast represented approximately twenty to thirty percent (20–30%) of total guest-room revenue at various properties. This estimate is broadly consistent with the twenty-two to thirty-one percent (22–31%) underreporting range identified in the preliminary analysis prepared by Dr. Sharon Kettlewell of Ridgeline Forensic Advisory LLC.

Duration of the Practice. Kerrigan confirmed that this practice was ongoing from at least January 2013 — when Suncoast began operations — through her termination in October 2021, a period of approximately nine years. Kerrigan testified that at no point during this period did Brecker discontinue or modify the directive to exclude Suncoast revenues from the GRR reports.

Portfolio-Wide Application. Kerrigan stated that the practice applied across the full twenty-two property Coastal Palms portfolio, including the eighteen (18) Verimark Suites locations and the four (4) Verimark Select locations. While Kerrigan clarified that she personally oversaw a subset of the portfolio, she testified that the same methodology was applied at all properties and that she had no reason to believe any Coastal Palms property was reporting Suncoast revenues to Verimark.

Properties with Highest Suncoast-Channel Volume. Kerrigan specifically identified the following clusters of properties as having particularly high volumes of Suncoast-channel bookings:

• The six (6) Southwest Florida properties operated through Gulf Breeze Hospitality LLC, where corporate-direct contracts and walk-in bookings accounted for a substantial share of total revenue; and

• The four (4) coastal Georgia properties operated through Savannah Lodging Partners LLC, where the gulfcoastrooms.com website was particularly active and generated significant booking volume.

Kerrigan testified that at some of the Southwest Florida properties, the combination of walk-in bookings and corporate-direct contracts processed through Suncoast exceeded thirty percent of total guest-room revenue during peak season months.

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 Brecker — primarily managed the payroll and human resources functions of the organization. Kerrigan stated that Theresa was not directly involved in the preparation of the GRR reports or the day-to-day accounting operations.

However, Kerrigan noted that Theresa Brecker had access to all financial reports generated by the accounting department, including the internal revenue reports that distinguished between Verimark-reported revenues and Suncoast-collected revenues. Kerrigan testified that she was uncertain whether Theresa Brecker had detailed knowledge of the specific methodology used to exclude Suncoast revenues from the GRR reports, but she acknowledged that the information necessary to understand the practice was available to Theresa through the financial reporting to which she had access.

B. Nolan Prescott

Kerrigan's testimony regarding Nolan Prescott — a member of Coastal Palms holding a twenty-five percent (25%) equity interest, described as a passive investor — is of particular significance in light of Prescott's own deposition testimony.

Kerrigan testified that Prescott received quarterly financial summary packages from the Coastal Palms accounting department. These quarterly packages were distributed to all members of the LLC and contained detailed financial information about the operations of the Coastal Palms properties. Critically, Kerrigan stated that these quarterly packages included Suncoast revenue line items, which would have shown both the existence and the magnitude of Suncoast-collected revenues. Kerrigan testified that the Suncoast revenue was presented as a separate line item in the summary packages and was clearly identifiable as revenue that was being collected through Suncoast rather than through the Verimark-reported channels.

This testimony is significant because Prescott, during his own deposition (taken on or about February 10, 2023), claimed a lack of knowledge regarding the Suncoast revenue-exclusion practice and asserted that he was not aware of the magnitude of revenues flowing through Suncoast. Kerrigan's testimony that Prescott received quarterly financial summaries containing Suncoast revenue line items creates potential impeachment material and raises a direct inconsistency with Prescott's testimony. The team should carefully compare Kerrigan's testimony on this point with the relevant portions of the Prescott deposition transcript and should obtain copies of the quarterly financial summary packages for the relevant period.

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 Brecker.

Specifically, Kerrigan recalled the following interactions:

• Approximately 2018: Kerrigan testified that she had a conversation with Brecker — she believed it occurred during or shortly after the year-end close process for 2017 — in which she told Brecker that excluding Suncoast revenues from the GRR reports submitted to Verimark appeared to be inconsistent with the franchise agreements. She stated that she specifically referenced the broad language of the GRR definition in the FLAs and expressed her view that Suncoast revenues fell within the scope of that definition. Brecker dismissed her concerns and told her to continue following the established methodology. Kerrigan testified that Brecker stated words to the effect that "the franchise agreement is about the hotel's revenues, not Suncoast's revenues," and instructed her not to raise the issue again.

• Early 2021: Kerrigan testified that she raised the issue again with Brecker in approximately the first quarter of 2021. By this time, Kerrigan stated, the volume of Suncoast-channel bookings had grown significantly, and she was increasingly uncomfortable with the magnitude of the exclusions from the GRR reports. She testified that she told Brecker that the growing gap between total guest-room revenue and reported GRR created a risk that Verimark discover the discrepancy during a franchise-compliance audit. Brecker again dismissed her concerns and reiterated his instruction that the Suncoast revenues were outside the scope of the franchise agreements.

Kerrigan stated that she did not raise the issue with anyone outside of Coastal Palms while she was still employed by the company. She testified that she considered reporting the matter to Verimark while still employed but did not do so because she feared retaliation from Brecker and believed that Brecker's response to her internal concerns signaled that he would not tolerate any external disclosure.

B. Termination in October 2021

As noted in Section II above, Kerrigan was terminated by Coastal Palms in October 2021. The stated reason for the termination, as communicated to Kerrigan by Randall Brecker, was a "restructuring" of the regional controller function.

Kerrigan testified that she did not believe the stated reason was genuine. She stated that:

• There was no other restructuring of accounting positions at the time of her termination;

• Her position was subsequently filled by another individual who performed substantially the same functions she had performed;

• She believed the true reason for her termination was her persistent questioning of the revenue-reporting practices, including the conversations with Brecker described above; and

• The timing of her termination — coming approximately six to eight months after her most recent conversation with Brecker about the revenue-reporting methodology in early 2021 — was not, in her view, coincidental.

Kerrigan testified that her termination reinforced her belief that the revenue-reporting practices at Coastal Palms were improper, and that Brecker's willingness to terminate a ten-year employee who questioned those practices underscored the deliberate nature of the scheme.

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 professional obligation as a certified public accountant to disclose the scheme, and that her willingness to come forward was motivated by that sense of professional duty rather than by any desire for personal gain or retribution.

Kerrigan's whistleblower contact triggered Verimark's engagement of Thornbury & Associates CPAs LLP on November 22, 2021, to conduct a franchise-compliance audit of the Coastal Palms portfolio. The results of that audit form a substantial part of the evidentiary basis for Verimark's claims in this litigation.

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 — and suggested that Kerrigan's complaint was retaliatory in nature. Montes asked Kerrigan directly whether she was "angry" about her termination, and Kerrigan acknowledged that she was disappointed but denied that her complaint was motivated by anger. Kerrigan consistently maintained that her concerns about the reporting practices predated her termination and pointed to her 2018 and early-2021 conversations with Brecker as evidence that she had been raising these issues for years before she was terminated.

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 the specific reporting practices at every property. However, Kerrigan maintained that the same reporting methodology was applied portfolio-wide, that the methodology was dictated by Brecker and codified in the internal accounting-procedures memorandum, and that she had no reason to believe any property deviated from the established methodology.

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 opinion. However, she stated that the language of the GRR definition was "plain" and that she understood it to cover "all guest-room revenue regardless of the collection entity." She added that she had reviewed the definition as part of her professional duties and that her interpretation was informed by her training and experience as a certified public accountant specializing in hospitality-industry accounting.

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. However, Kerrigan drew a sharp and important distinction: she stated that disclosing the existence of Suncoast as a management company was fundamentally different from disclosing that Suncoast revenues were being excluded from GRR. Kerrigan testified that nothing in the property-management agreements, to her knowledge, informed Verimark that the revenues collected by Suncoast were not being included in the GRR figures reported to Verimark. She stated: "They knew Suncoast existed. They did not know that Suncoast revenues were being kept out of the royalty calculation."

B. Assessment of Cross-Examination Impact

Having observed the deposition in its entirety, my assessment is that Kerrigan was a composed and credible witness who was not meaningfully impeached during cross-examination. She answered questions directly, did not become defensive or combative, and maintained consistency in her testimony throughout the proceeding.

The bias/motive line of questioning did not gain significant traction. While Montes established the proximity in time between Kerrigan's termination and her whistleblower complaint, Kerrigan effectively neutralized this line of attack by pointing to her longstanding internal objections to the reporting methodology — objections that predated her termination by several years. The 2018 and early-2021 conversations with Brecker provide independent evidence that Kerrigan's concerns were genuine and not simply a product of post-termination resentment.

The knowledge-limitations line was partially effective in establishing that Kerrigan could not testify from direct personal knowledge about every single property, but it was insufficient to undermine the overall thrust of her testimony. Kerrigan's testimony that the methodology was portfolio-wide and dictated by Brecker from the top was credible, and the existence of the accounting-procedures memorandum (if it can be located in the production) would independently corroborate the systematic nature of the practice.

The FLA interpretation line was largely unsuccessful. While Kerrigan conceded that she is not a lawyer, the GRR definition is sufficiently plain and broad that her common-sense interpretation is likely to be persuasive to a factfinder.

The Verimark-awareness argument was the most potentially damaging line of cross-examination, but Kerrigan's distinction between Suncoast's existence being known and Suncoast revenues being reported as outside GRR was clear, cogent, and persuasive. This distinction is legally significant and should be developed further in our briefing.

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 on the Verimark side). Additionally, the accounting-procedures memorandum (Exhibit K-2) and the email correspondence (Exhibit K-5) should be verified against the November 18, 2022 supplemental production from defendants (312,000 documents including Suncoast records) to confirm their inclusion and production status. If any of these documents were not included in defendants' production, a supplemental request for production or a motion to compel may be warranted.

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 specificity to her testimony.

Kerrigan's testimony directly supports Verimark's position that Coastal Palms systematically excluded Suncoast-collected revenues from GRR reports in violation of Sections 4.1 and 4.2 of the FLAs. Her testimony regarding Brecker's personal and explicit instructions to exclude the revenues is critical to establishing the intentional and deliberate nature of the underreporting, which supports:

• Count V — Fraudulent Concealment: Kerrigan's testimony that Brecker knowingly directed the exclusion of revenues from the franchise reports, while providing a pretextual justification that the revenues were "management company income," supports a finding that the concealment was intentional and designed to deceive Verimark.

• Count X — Civil Conspiracy: Kerrigan's testimony regarding the coordinated structure — the creation of Suncoast, the codified accounting procedures, the portfolio-wide application, and the directives to multiple controllers — supports a finding that the scheme involved a concert of action among the Coastal Palms principals.

Additionally, the FLA provision at Section 14.2(c), which provides that "systematic underreporting of Gross Room Revenue shall constitute a material breach that is incapable of cure," is directly supported by Kerrigan's account of the nine-year duration and portfolio-wide scope of the scheme. This testimony is significant because it provides the factual foundation for Verimark's position that the material breach cannot be cured under the terms of the FLAs, thereby supporting the termination of the franchise relationships and the damages claims flowing from that termination.

B. Use in Expert Work

The litigation team should provide Kerrigan's deposition transcript and the key exhibits marked during her deposition to Dr. Sharon Kettlewell at Ridgeline Forensic Advisory LLC for incorporation into the expert report on damages, which is due on April 14, 2023, pursuant to the Case Management Order.

Kerrigan's testimony is foundational to the expert's work in the following respects:

• Her detailed description of the 12% Suncoast management fee and the revenue flow from Suncoast to the property-level entities provides the structural framework for Dr. Kettlewell's GRR reconstruction methodology.

• Her testimony regarding the OTA netting practice identifies a second, independent category of GRR underreporting that must be captured in the damages calculation.

• Her estimate that Suncoast revenues represented 20–30% of total guest-room revenue across the properties she oversaw is broadly consistent with the preliminary findings of Thornbury & Associates CPAs LLP, which identified an average underreporting rate of approximately 26% for the 2019–2021 period based on the data available during the compliance audit.

We should coordinate with Dr. Kettlewell's team to ensure that Kerrigan's testimony is fully integrated into the expert's analysis and to address any questions the expert may have about the specific mechanics of the revenue-reporting methodology as described by Kerrigan.

C. Use in Dispositive Motions

Kerrigan's testimony will be critical for the anticipated Motion for Partial Summary Judgment on Counts I and II (breach of contract — royalties and marketing-fund contributions). Her testimony provides direct, firsthand evidence of the systematic exclusion of revenues from the GRR reports, the methodology by which the exclusion was implemented, and the duration and scope of the practice.

In preparation for the motion, the following steps should be taken:

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; and (f) the nine-year duration and portfolio-wide scope of the underreporting.

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 filing a targeted supplemental request for production or raising the issue at the next case management conference.

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 supplemental set should be prepared.

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 Franchise Holdings LLC et al.

This memorandum should not be disclosed to any person outside the engagement team without the prior approval of Priya Anand. A copy of this memorandum has been placed in the matter file under Case No. 1021-00006.

Prepared by:

Carlos Espinoza Working Associate, Litigation (General) Calderwood & Harkness LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, FL 33301 (954) 555-1200 cespinoza@calderwoodharkness.com

Date: February 3, 2023

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This document is protected by the attorney-client privilege and the work product doctrine. It is intended solely for use by the attorneys and staff of Calderwood & Harkness LLP in connection with the representation of Verimark Hospitality Group Inc. Any unauthorized disclosure, copying, or distribution of this document is strictly prohibited.

Exhibit No.	Description	Significance
K-1	Sample monthly GRR report prepared by Kerrigan for a Southwest Florida property (Gulf Breeze Hospitality LLC), showing exclusion of Suncoast revenues from the reported GRR figure.	Demonstrates the mechanics of the underreporting — Suncoast revenues are absent from the GRR calculation submitted to Verimark.
K-2	Internal Coastal Palms accounting-procedures memorandum (circa 2014–2015) outlining the methodology to exclude "management company collections" from the Verimark GRR calculation.	Key corroborative document; establishes that the exclusion methodology was codified in writing and disseminated to accounting staff.
K-3	Suncoast Room Management Inc. revenue summary for select properties, showing the 12% management fee deduction and the remittance of 88% to property-level entities.	Illustrates the revenue flow and the magnitude of the diversion through the Suncoast structure.
K-4	Sample booking confirmations from gulfcoastrooms.com for stays at Coastal Palms properties, showing no Verimark branding.	Establishes the existence and operation of the unbranded booking website.
K-5	Email correspondence between Kerrigan and Brecker regarding revenue-reporting questions (approximately 2018).	Contemporaneous documentation of Kerrigan's internal objections and Brecker's directive to continue the established methodology.
K-6	Quarterly financial summary package distributed to Nolan Prescott, showing Suncoast revenue line items.	Potential impeachment exhibit for use against Prescott; contradicts his claimed lack of knowledge regarding the Suncoast revenue stream.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Yuki Nakamura, Lead Associate, Litigation (General)
FROM: Carlos Espinoza, Working Associate, Litigation (General)
DATE: February 3, 2023
RE: Deposition Summary — Janet Kerrigan, Former Regional Controller, Coastal Palms Franchise Holdings LLC
MATTER: Verimark Hospitality Group Inc. v. Coastal Palms Franchise Holdings LLC et al., Case No. 1021-00006, Circuit Court of the 17th Judicial Circuit, Broward County, Florida
CLIENT: Verimark Hospitality Group Inc.
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 witness's credibility and effectiveness, and to identify action items for the team's consideration in preparing for expert work, dispositive motions, and trial.
Kerrigan's deposition was taken on January 27, 2023, within the fact-deposition window established by the Case Management Order (January 9 through March 17, 2023). The deposition was conducted at the offices of Calderwood & Harkness LLP, 110 SE 6th Street, Suite 2800, Fort Lauderdale, Florida 33301. The deposition commenced at approximately 9:00 a.m. and concluded at approximately 3:45 p.m., including a lunch break and two short recesses, for a total duration of approximately six hours on the record.
The direct examination of the witness was conducted by Priya Anand of Calderwood & Harkness LLP on behalf of our client, Verimark Hospitality Group Inc. ("Verimark"). Cross-examination was conducted by Gabriela Montes of Whitfield, Barrow & Crane LLP on behalf of defendants Coastal Palms Franchise Holdings LLC, Randall Brecker, Theresa Brecker, and Nolan Prescott. A certified court reporter was present and administered the oath. The deposition was also videographed pursuant to the parties' stipulation regarding videotaped depositions.
The examination was conducted pursuant to the deposition outline prepared by Yuki Nakamura and dated January 20, 2023, which was circulated to Priya Anand and me for review in advance of the deposition. The outline was designed to treat Kerrigan as a witness-friendly deponent, and the questioning strategy reflected that posture throughout. Ms. Kerrigan appeared voluntarily and was not represented by separate counsel at the deposition. She was cooperative and forthcoming throughout the proceeding.
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 roughly ten years. She was hired initially as a staff accountant and was promoted to the Regional Controller position in approximately 2012.
Professional Background: Kerrigan holds a Bachelor of Science in Accounting from the University of Central Florida (2005) and is a licensed Certified Public Accountant in the State of Florida. Prior to joining Coastal Palms, she worked for approximately five years in public accounting at a regional firm in the Tampa Bay area, where she gained experience in hospitality-industry accounting.
Responsibilities: In her capacity as Regional Controller, Kerrigan was responsible for overseeing financial reporting and accounting functions for a cluster of hotel properties within the Coastal Palms portfolio. Her duties included, among other things:
•  Preparation and submission of monthly Gross Room Revenue ("GRR") reports to Verimark in accordance with the terms of the applicable Franchise License Agreements ("FLAs");
•  Oversight of property-level bookkeepers at the hotels she was assigned to manage;
•  Coordination with Suncoast Room Management Inc. ("Suncoast") on revenue reconciliation for booking channels handled outside of Verimark's central reservation system;
•  Preparation of quarterly financial summary packages for distribution to the members of Coastal Palms;
•  Participation in year-end close procedures and coordination with Coastal Palms' outside accountants.
Reporting Structure: Kerrigan testified that she reported directly to Randall "Randy" Brecker, the Managing Member and holder of a sixty percent (60%) equity interest in Coastal Palms. She described Brecker as the person who made all significant decisions regarding financial reporting at Coastal Palms and characterized him as being deeply involved in the accounting function and the preparation of the GRR reports submitted to Verimark.
Termination: Kerrigan testified that she was terminated by Coastal Palms in October 2021. According to Kerrigan, the stated reason provided by Brecker for her termination was a "restructuring" of the regional controller function. However, Kerrigan testified that she believed the actual reason for her termination was related to her having raised internal concerns about the revenue-reporting methodology employed by Coastal Palms — specifically, the exclusion of revenues collected through Suncoast from the GRR reports submitted to Verimark. Kerrigan stated that there was no other contemporaneous restructuring of accounting positions at the time of her termination, and that her position was subsequently filled by another individual who performed substantially the same functions she had performed.
Post-Termination Contact with Verimark: Following her termination, Kerrigan contacted Verimark's compliance hotline on November 8, 2021, to report what she described as a systematic scheme to divert guest-room revenues away from the franchise reporting framework. This whistleblower contact is discussed in detail in Section IX below.
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 Agreements entered into between the applicable Coastal Palms property-level entity and Verimark Hospitality Group Inc. She testified that she had reviewed portions of the FLAs in connection with her duties as Regional Controller, and that she was generally familiar with the financial reporting obligations imposed by those agreements.
Specifically, Kerrigan testified that she understood the FLAs required the franchisee to submit monthly reports of Gross Room Revenue and to make the following payments to Verimark based on GRR:
(i) A five percent (5%) royalty on GRR;
(ii) A two and one-half percent (2.5%) marketing-fund contribution on GRR; and
(iii) A per-room technology fee assessed on each room in the hotel's inventory.
Kerrigan stated that she had specifically reviewed the GRR definition set forth in Section 4.1 of the FLAs. She understood that definition to encompass, in her words, "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." She testified that this was a broad definition and that she understood it to capture all guest-room revenue generated at the hotel, irrespective of the mechanism or entity through which the revenue was collected.
Critically, Kerrigan testified that despite this broad definition, the monthly GRR reports she prepared under Brecker's direction did not include all guest-room revenue. Specifically, revenues collected through Suncoast Room Management Inc. — which Kerrigan described as a Brecker-controlled entity — were systematically excluded from the GRR figures reported to Verimark. Kerrigan acknowledged that she was responsible for preparing the reports that omitted these revenues, but she stated that she did so at Brecker's explicit instruction and direction, as described more fully in Section V below.
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 no later than January 2013. Kerrigan stated she was not involved in the formation of Suncoast and did not have personal knowledge of the specific date of incorporation, but she testified that she became aware of Suncoast's existence and began processing transactions related to Suncoast's operations beginning in early 2013.
According to Kerrigan's testimony, Suncoast was organized as a Florida corporation. Randall Brecker served as its President and, to Kerrigan's knowledge, was the entity's sole or controlling shareholder. Kerrigan understood Suncoast to be an affiliated management company created by Brecker to handle certain booking channels outside of Verimark's central reservation system. She testified that Brecker described Suncoast to her at the time as a vehicle to "manage the direct-booking side of the business" for the Coastal Palms properties.
B. Suncoast Booking Channels
Kerrigan identified three primary booking channels through which Suncoast collected revenues for the Coastal Palms hotel properties:
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 during high-demand periods when properties could fill rooms at premium rates without relying on Verimark's branded booking channels.
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 several significant corporate accounts in the Southwest Florida market — including contracts with construction firms, insurance adjusters, and government contractors — were handled exclusively through Suncoast.
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 identify the properties as Verimark-franchised hotels. She testified that the website was designed to appear as an independent lodging-booking platform, and that it marketed the same physical hotel rooms that were also available through Verimark's branded channels. Kerrigan stated that the gulfcoastrooms.com site was designed and maintained at Brecker's direction, and that its purpose was to capture booking revenues outside the franchise reporting framework.
C. Revenue Flow Through Suncoast
Kerrigan described in detail the flow of revenues through the Suncoast structure. According to her testimony, the process operated as follows:
Suncoast collected payments directly from guests who booked through one of the three channels described above — walk-ins, corporate-direct contracts, or the gulfcoastrooms.com website. These payments were deposited into Suncoast's bank accounts, which were maintained separately from the property-level accounts.
Suncoast then retained a twelve percent (12%) "management fee" on all revenues it collected. After deducting this management fee, Suncoast remitted the remaining eighty-eight percent (88%) to the applicable property-level entities. Kerrigan identified two of these property-level entities by name:
•  Gulf Breeze Hospitality LLC, which was the operating entity for the six (6) Coastal Palms properties in Southwest Florida; and
•  Savannah Lodging Partners LLC, which was the operating entity for the four (4) Coastal Palms properties in coastal Georgia.
Kerrigan testified that the twelve percent (12%) management fee retained by Suncoast was treated on the books of the property-level entities as a cost of operations — specifically, as a management-company expense — and was not included in any reporting to Verimark. More significantly, Kerrigan confirmed that neither the gross revenues collected by Suncoast nor the 12% management fee retained by Suncoast were included in the GRR figures reported to Verimark in the monthly royalty reports. In other words, the entirety of the Suncoast revenue stream — both the 88% remitted to the property entities and the 12% retained by Suncoast — was excluded from the franchise reporting framework.
D. OTA Revenue Netting
In addition to the Suncoast revenue exclusion, Kerrigan also testified regarding a separate but related practice involving third-party online travel agency ("OTA") bookings.
Kerrigan stated that the Coastal Palms properties received payments from OTAs — including major platforms such as Aldermere Technologies, Bramwell Holdings, and Drayton Software — on a net-rate basis. Under these arrangements, the OTA would charge the guest the full room rate, deduct its commission, and remit the net amount to the hotel. The difference between the gross room rate charged to the guest and the net amount received from the OTA represented the OTA's commission.
Kerrigan testified that Brecker directed her and the other controllers to classify this difference — the OTA commission amount — as "commissions receivable" on the property's internal books. The effect of this classification was that the OTA commission amount was then netted against the GRR reported to Verimark, so that only the net OTA payment (after deduction of the commission) was included in the monthly GRR report. Kerrigan stated that this netting methodology was implemented at Brecker's instruction and applied across all properties she oversaw.
Kerrigan acknowledged that this netting practice was inconsistent with Section 4.1 of the FLAs, which she understood to require reporting of gross revenue — that is, the total revenue derived from the rental of the guest room, not the net amount after deducting third-party commissions. She stated that she implemented the netting methodology because she was directed to do so by Brecker, but that she understood at the time that the practice resulted in underreporting of GRR to Verimark.
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 reporting practices at Coastal Palms and continued it at Brecker's direction.
Kerrigan further testified that Randall Brecker personally and explicitly instructed her — and, to her knowledge, all property-level controllers within the Coastal Palms organization — to exclude revenues collected through Suncoast from the monthly GRR reports submitted to Verimark. Kerrigan was clear and unequivocal in her testimony that these instructions came from Brecker directly, and that there was no ambiguity in Brecker's directives on this point.
Kerrigan stated that Brecker's instructions were conveyed through multiple channels, including:
•  In-person conversations at the Coastal Palms corporate offices;
•  Telephone calls between Kerrigan and Brecker during the monthly reporting cycle; and
•  Email communications, some of which Kerrigan recalled seeing in her files during her employment and which she believed should be included in the documents produced in this litigation.
B. Specific Testimony on Brecker's Directives
When asked to describe Brecker's specific statements regarding the exclusion of Suncoast revenues from GRR reports, Kerrigan provided the following testimony:
Kerrigan recalled that Brecker told her, on multiple occasions and in words to the effect, that Suncoast's revenues were "management company income, not hotel revenue," and therefore did not need to be reported to Verimark. Brecker characterized the Suncoast revenues as belonging to a "separate entity" — i.e., Suncoast Room Management Inc. — and asserted that because the revenues were collected by an entity other than the franchisee, they fell outside the scope of the franchise agreement's reporting requirements.
Kerrigan testified that she found this rationale unpersuasive because, in her understanding, the FLA's GRR definition captured all revenue "derived from or attributable to the rental of guest rooms" regardless of the entity collecting the revenue. She stated that she questioned this interpretation internally on several occasions, but was told by Brecker in no uncertain terms to continue following the established methodology and to refrain from raising the issue further. The substance of Kerrigan's internal objections and her conversations with Brecker on this point are discussed in greater detail in Section VIII below.
C. Documentation.  Kerrigan testified that she believed there were internal emails and memoranda within Coastal Palms' records that reflected Brecker's instructions to exclude Suncoast revenues from the GRR reports. She identified certain documents she recalled seeing during her employment, including:
•  An internal Coastal Palms accounting-procedures memorandum, which Kerrigan described as having been circulated to the accounting staff in approximately 2014 or 2015. According to Kerrigan, this memorandum outlined the methodology for preparing the monthly GRR reports and included a specific instruction to exclude "management company collections" — i.e., Suncoast-collected revenues — from the Verimark GRR calculation. Kerrigan testified that she believed this memorandum was authored at Brecker's direction, although she could not recall with certainty whether Brecker himself drafted it or whether it was prepared by another member of the accounting staff at Brecker's instruction.
•  Email correspondence between Kerrigan and Brecker, approximately dating to 2018, in which Kerrigan raised questions about the revenue-reporting methodology and Brecker responded with instructions to maintain the status quo.
The litigation team should cross-reference the documents described by Kerrigan against the November 18, 2022 supplemental production from defendants, which consisted of approximately 312,000 documents and included, for the first time, records of Suncoast Room Management Inc. If the accounting-procedures memorandum and the 2018 email correspondence described by Kerrigan can be located within the production, they will constitute significant corroborative evidence and should be designated as key trial exhibits.
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 implemented across all properties she oversaw. She described the practice as an established feature of Coastal Palms' financial reporting methodology — one that was embedded in the accounting procedures and followed consistently from month to month and year to year.
Magnitude of Underreporting. When asked to estimate the proportion of total guest-room revenue that was channeled through Suncoast and excluded from GRR reports, Kerrigan testified that the amounts were significant. Based on her experience and her familiarity with the revenue data at the properties she oversaw, she estimated that the revenues channeled through Suncoast represented approximately twenty to thirty percent (20–30%) of total guest-room revenue at various properties. This estimate is broadly consistent with the twenty-two to thirty-one percent (22–31%) underreporting range identified in the preliminary analysis prepared by Dr. Sharon Kettlewell of Ridgeline Forensic Advisory LLC.
Duration of the Practice. Kerrigan confirmed that this practice was ongoing from at least January 2013 — when Suncoast began operations — through her termination in October 2021, a period of approximately nine years. Kerrigan testified that at no point during this period did Brecker discontinue or modify the directive to exclude Suncoast revenues from the GRR reports.
Portfolio-Wide Application. Kerrigan stated that the practice applied across the full twenty-two property Coastal Palms portfolio, including the eighteen (18) Verimark Suites locations and the four (4) Verimark Select locations. While Kerrigan clarified that she personally oversaw a subset of the portfolio, she testified that the same methodology was applied at all properties and that she had no reason to believe any Coastal Palms property was reporting Suncoast revenues to Verimark.
Properties with Highest Suncoast-Channel Volume. Kerrigan specifically identified the following clusters of properties as having particularly high volumes of Suncoast-channel bookings:
•  The six (6) Southwest Florida properties operated through Gulf Breeze Hospitality LLC, where corporate-direct contracts and walk-in bookings accounted for a substantial share of total revenue; and
•  The four (4) coastal Georgia properties operated through Savannah Lodging Partners LLC, where the gulfcoastrooms.com website was particularly active and generated significant booking volume.
Kerrigan testified that at some of the Southwest Florida properties, the combination of walk-in bookings and corporate-direct contracts processed through Suncoast exceeded thirty percent of total guest-room revenue during peak season months.
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 Brecker — primarily managed the payroll and human resources functions of the organization. Kerrigan stated that Theresa was not directly involved in the preparation of the GRR reports or the day-to-day accounting operations.
However, Kerrigan noted that Theresa Brecker had access to all financial reports generated by the accounting department, including the internal revenue reports that distinguished between Verimark-reported revenues and Suncoast-collected revenues. Kerrigan testified that she was uncertain whether Theresa Brecker had detailed knowledge of the specific methodology used to exclude Suncoast revenues from the GRR reports, but she acknowledged that the information necessary to understand the practice was available to Theresa through the financial reporting to which she had access.
B. Nolan Prescott
Kerrigan's testimony regarding Nolan Prescott — a member of Coastal Palms holding a twenty-five percent (25%) equity interest, described as a passive investor — is of particular significance in light of Prescott's own deposition testimony.
Kerrigan testified that Prescott received quarterly financial summary packages from the Coastal Palms accounting department. These quarterly packages were distributed to all members of the LLC and contained detailed financial information about the operations of the Coastal Palms properties. Critically, Kerrigan stated that these quarterly packages included Suncoast revenue line items, which would have shown both the existence and the magnitude of Suncoast-collected revenues. Kerrigan testified that the Suncoast revenue was presented as a separate line item in the summary packages and was clearly identifiable as revenue that was being collected through Suncoast rather than through the Verimark-reported channels.
This testimony is significant because Prescott, during his own deposition (taken on or about February 10, 2023), claimed a lack of knowledge regarding the Suncoast revenue-exclusion practice and asserted that he was not aware of the magnitude of revenues flowing through Suncoast. Kerrigan's testimony that Prescott received quarterly financial summaries containing Suncoast revenue line items creates potential impeachment material and raises a direct inconsistency with Prescott's testimony. The team should carefully compare Kerrigan's testimony on this point with the relevant portions of the Prescott deposition transcript and should obtain copies of the quarterly financial summary packages for the relevant period.
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 Brecker.
Specifically, Kerrigan recalled the following interactions:
•  Approximately 2018: Kerrigan testified that she had a conversation with Brecker — she believed it occurred during or shortly after the year-end close process for 2017 — in which she told Brecker that excluding Suncoast revenues from the GRR reports submitted to Verimark appeared to be inconsistent with the franchise agreements. She stated that she specifically referenced the broad language of the GRR definition in the FLAs and expressed her view that Suncoast revenues fell within the scope of that definition. Brecker dismissed her concerns and told her to continue following the established methodology. Kerrigan testified that Brecker stated words to the effect that "the franchise agreement is about the hotel's revenues, not Suncoast's revenues," and instructed her not to raise the issue again.
•  Early 2021: Kerrigan testified that she raised the issue again with Brecker in approximately the first quarter of 2021. By this time, Kerrigan stated, the volume of Suncoast-channel bookings had grown significantly, and she was increasingly uncomfortable with the magnitude of the exclusions from the GRR reports. She testified that she told Brecker that the growing gap between total guest-room revenue and reported GRR created a risk that Verimark discover the discrepancy during a franchise-compliance audit. Brecker again dismissed her concerns and reiterated his instruction that the Suncoast revenues were outside the scope of the franchise agreements.
Kerrigan stated that she did not raise the issue with anyone outside of Coastal Palms while she was still employed by the company. She testified that she considered reporting the matter to Verimark while still employed but did not do so because she feared retaliation from Brecker and believed that Brecker's response to her internal concerns signaled that he would not tolerate any external disclosure.
B. Termination in October 2021
As noted in Section II above, Kerrigan was terminated by Coastal Palms in October 2021. The stated reason for the termination, as communicated to Kerrigan by Randall Brecker, was a "restructuring" of the regional controller function.
Kerrigan testified that she did not believe the stated reason was genuine. She stated that:
•  There was no other restructuring of accounting positions at the time of her termination;
•  Her position was subsequently filled by another individual who performed substantially the same functions she had performed;
•  She believed the true reason for her termination was her persistent questioning of the revenue-reporting practices, including the conversations with Brecker described above; and
•  The timing of her termination — coming approximately six to eight months after her most recent conversation with Brecker about the revenue-reporting methodology in early 2021 — was not, in her view, coincidental.
Kerrigan testified that her termination reinforced her belief that the revenue-reporting practices at Coastal Palms were improper, and that Brecker's willingness to terminate a ten-year employee who questioned those practices underscored the deliberate nature of the scheme.
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 professional obligation as a certified public accountant to disclose the scheme, and that her willingness to come forward was motivated by that sense of professional duty rather than by any desire for personal gain or retribution.
Kerrigan's whistleblower contact triggered Verimark's engagement of Thornbury & Associates CPAs LLP on November 22, 2021, to conduct a franchise-compliance audit of the Coastal Palms portfolio. The results of that audit form a substantial part of the evidentiary basis for Verimark's claims in this litigation.
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 — and suggested that Kerrigan's complaint was retaliatory in nature. Montes asked Kerrigan directly whether she was "angry" about her termination, and Kerrigan acknowledged that she was disappointed but denied that her complaint was motivated by anger. Kerrigan consistently maintained that her concerns about the reporting practices predated her termination and pointed to her 2018 and early-2021 conversations with Brecker as evidence that she had been raising these issues for years before she was terminated.
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 the specific reporting practices at every property. However, Kerrigan maintained that the same reporting methodology was applied portfolio-wide, that the methodology was dictated by Brecker and codified in the internal accounting-procedures memorandum, and that she had no reason to believe any property deviated from the established methodology.
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 opinion. However, she stated that the language of the GRR definition was "plain" and that she understood it to cover "all guest-room revenue regardless of the collection entity." She added that she had reviewed the definition as part of her professional duties and that her interpretation was informed by her training and experience as a certified public accountant specializing in hospitality-industry accounting.
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. However, Kerrigan drew a sharp and important distinction: she stated that disclosing the existence of Suncoast as a management company was fundamentally different from disclosing that Suncoast revenues were being excluded from GRR. Kerrigan testified that nothing in the property-management agreements, to her knowledge, informed Verimark that the revenues collected by Suncoast were not being included in the GRR figures reported to Verimark. She stated: "They knew Suncoast existed. They did not know that Suncoast revenues were being kept out of the royalty calculation."
B. Assessment of Cross-Examination Impact
Having observed the deposition in its entirety, my assessment is that Kerrigan was a composed and credible witness who was not meaningfully impeached during cross-examination. She answered questions directly, did not become defensive or combative, and maintained consistency in her testimony throughout the proceeding.
The bias/motive line of questioning did not gain significant traction. While Montes established the proximity in time between Kerrigan's termination and her whistleblower complaint, Kerrigan effectively neutralized this line of attack by pointing to her longstanding internal objections to the reporting methodology — objections that predated her termination by several years. The 2018 and early-2021 conversations with Brecker provide independent evidence that Kerrigan's concerns were genuine and not simply a product of post-termination resentment.
The knowledge-limitations line was partially effective in establishing that Kerrigan could not testify from direct personal knowledge about every single property, but it was insufficient to undermine the overall thrust of her testimony. Kerrigan's testimony that the methodology was portfolio-wide and dictated by Brecker from the top was credible, and the existence of the accounting-procedures memorandum (if it can be located in the production) would independently corroborate the systematic nature of the practice.
The FLA interpretation line was largely unsuccessful. While Kerrigan conceded that she is not a lawyer, the GRR definition is sufficiently plain and broad that her common-sense interpretation is likely to be persuasive to a factfinder.
The Verimark-awareness argument was the most potentially damaging line of cross-examination, but Kerrigan's distinction between Suncoast's existence being known and Suncoast revenues being reported as outside GRR was clear, cogent, and persuasive. This distinction is legally significant and should be developed further in our briefing.
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 on the Verimark side). Additionally, the accounting-procedures memorandum (Exhibit K-2) and the email correspondence (Exhibit K-5) should be verified against the November 18, 2022 supplemental production from defendants (312,000 documents including Suncoast records) to confirm their inclusion and production status. If any of these documents were not included in defendants' production, a supplemental request for production or a motion to compel may be warranted.
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 specificity to her testimony.
Kerrigan's testimony directly supports Verimark's position that Coastal Palms systematically excluded Suncoast-collected revenues from GRR reports in violation of Sections 4.1 and 4.2 of the FLAs. Her testimony regarding Brecker's personal and explicit instructions to exclude the revenues is critical to establishing the intentional and deliberate nature of the underreporting, which supports:
•  Count V — Fraudulent Concealment: Kerrigan's testimony that Brecker knowingly directed the exclusion of revenues from the franchise reports, while providing a pretextual justification that the revenues were "management company income," supports a finding that the concealment was intentional and designed to deceive Verimark.
•  Count X — Civil Conspiracy: Kerrigan's testimony regarding the coordinated structure — the creation of Suncoast, the codified accounting procedures, the portfolio-wide application, and the directives to multiple controllers — supports a finding that the scheme involved a concert of action among the Coastal Palms principals.
Additionally, the FLA provision at Section 14.2(c), which provides that "systematic underreporting of Gross Room Revenue shall constitute a material breach that is incapable of cure," is directly supported by Kerrigan's account of the nine-year duration and portfolio-wide scope of the scheme. This testimony is significant because it provides the factual foundation for Verimark's position that the material breach cannot be cured under the terms of the FLAs, thereby supporting the termination of the franchise relationships and the damages claims flowing from that termination.
B. Use in Expert Work
The litigation team should provide Kerrigan's deposition transcript and the key exhibits marked during her deposition to Dr. Sharon Kettlewell at Ridgeline Forensic Advisory LLC for incorporation into the expert report on damages, which is due on April 14, 2023, pursuant to the Case Management Order.
Kerrigan's testimony is foundational to the expert's work in the following respects:
•  Her detailed description of the 12% Suncoast management fee and the revenue flow from Suncoast to the property-level entities provides the structural framework for Dr. Kettlewell's GRR reconstruction methodology.
•  Her testimony regarding the OTA netting practice identifies a second, independent category of GRR underreporting that must be captured in the damages calculation.
•  Her estimate that Suncoast revenues represented 20–30% of total guest-room revenue across the properties she oversaw is broadly consistent with the preliminary findings of Thornbury & Associates CPAs LLP, which identified an average underreporting rate of approximately 26% for the 2019–2021 period based on the data available during the compliance audit.
We should coordinate with Dr. Kettlewell's team to ensure that Kerrigan's testimony is fully integrated into the expert's analysis and to address any questions the expert may have about the specific mechanics of the revenue-reporting methodology as described by Kerrigan.
C. Use in Dispositive Motions
Kerrigan's testimony will be critical for the anticipated Motion for Partial Summary Judgment on Counts I and II (breach of contract — royalties and marketing-fund contributions). Her testimony provides direct, firsthand evidence of the systematic exclusion of revenues from the GRR reports, the methodology by which the exclusion was implemented, and the duration and scope of the practice.
In preparation for the motion, the following steps should be taken:
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; and (f) the nine-year duration and portfolio-wide scope of the underreporting.
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 filing a targeted supplemental request for production or raising the issue at the next case management conference.
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 supplemental set should be prepared.
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 Franchise Holdings LLC et al.
This memorandum should not be disclosed to any person outside the engagement team without the prior approval of Priya Anand. A copy of this memorandum has been placed in the matter file under Case No. 1021-00006.
Prepared by:
Carlos Espinoza Working Associate, Litigation (General) Calderwood & Harkness LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, FL 33301 (954) 555-1200 cespinoza@calderwoodharkness.com
Date: February 3, 2023
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This document is protected by the attorney-client privilege and the work product doctrine. It is intended solely for use by the attorneys and staff of Calderwood & Harkness LLP in connection with the representation of Verimark Hospitality Group Inc. Any unauthorized disclosure, copying, or distribution of this document is strictly prohibited.
Exhibit No. | Description | Significance
K-1 | Sample monthly GRR report prepared by Kerrigan for a Southwest Florida property (Gulf Breeze Hospitality LLC), showing exclusion of Suncoast revenues from the reported GRR figure. | Demonstrates the mechanics of the underreporting — Suncoast revenues are absent from the GRR calculation submitted to Verimark.
K-2 | Internal Coastal Palms accounting-procedures memorandum (circa 2014–2015) outlining the methodology to exclude "management company collections" from the Verimark GRR calculation. | Key corroborative document; establishes that the exclusion methodology was codified in writing and disseminated to accounting staff.
K-3 | Suncoast Room Management Inc. revenue summary for select properties, showing the 12% management fee deduction and the remittance of 88% to property-level entities. | Illustrates the revenue flow and the magnitude of the diversion through the Suncoast structure.
K-4 | Sample booking confirmations from gulfcoastrooms.com for stays at Coastal Palms properties, showing no Verimark branding. | Establishes the existence and operation of the unbranded booking website.
K-5 | Email correspondence between Kerrigan and Brecker regarding revenue-reporting questions (approximately 2018). | Contemporaneous documentation of Kerrigan's internal objections and Brecker's directive to continue the established methodology.
K-6 | Quarterly financial summary package distributed to Nolan Prescott, showing Suncoast revenue line items. | Potential impeachment exhibit for use against Prescott; contradicts his claimed lack of knowledge regarding the Suncoast revenue stream.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

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