1021-00006 · Client 1021 · Discovery

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IN THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA

CIVIL DIVISION

VERIMARK HOSPITALITY GROUP INC., a Delaware corporation,

Plaintiff,

Case No.: 1021-00006

COASTAL PALMS FRANCHISE HOLDINGS LLC, a Florida limited liability company; RANDALL BRECKER, individually; and SUNCOAST ROOM MANAGEMENT INC., a Florida corporation,

Defendants.

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PLAINTIFF'S FIRST SET OF INTERROGATORIES TO DEFENDANT COASTAL PALMS FRANCHISE HOLDINGS LLC

Date Served: July 11, 2022

Plaintiff Verimark Hospitality Group Inc. ("Verimark" or "Plaintiff"), by and through its undersigned counsel, Calderwood & Harkness LLP, and pursuant to Florida Rule of Civil Procedure 1.340, hereby propounds the following Interrogatories upon Defendant Coastal Palms Franchise Holdings LLC ("Coastal Palms" or "Defendant"), to be answered separately and fully, in writing, under oath, within thirty (30) days of service hereof.

Defendant's answers shall be based upon all information known to, possessed by, or reasonably available to Defendant, including but not limited to information held by its officers, members, managers, employees, agents, attorneys (to the extent not privileged), and representatives. Information that is available to Defendant from its affiliated entities, including but not limited to Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, Suncoast Room Management Inc., and each property-level limited liability company, shall be treated as information reasonably available to Defendant for purposes of these Interrogatories.

These Interrogatories are continuing in nature pursuant to Florida Rule of Civil Procedure 1.280(e). Defendant is under a continuing duty to supplement, amend, or correct its responses promptly if additional or corrective information becomes known to Defendant or becomes available to Defendant after the date of its initial responses.

DEFINITIONS

As used in these Interrogatories, the following terms shall have the meanings set forth below. These definitions are intended to be construed broadly and in accordance with the Florida Rules of Civil Procedure and applicable case law.

1. "You," "Your," "Defendant," or "Coastal Palms" shall mean Coastal Palms Franchise Holdings LLC, and shall include its officers, members, managers, employees, agents, representatives, subsidiaries, affiliates, predecessors, and successors, including but not limited to Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, and Suncoast Room Management Inc., as well as each property-level limited liability company or other entity through which Coastal Palms holds, operates, or manages any of the Properties.

2. "Verimark" shall mean Verimark Hospitality Group Inc., and shall include its subsidiaries, affiliates, officers, directors, employees, agents, and representatives.

3. "FLA" or "Franchise License Agreement" shall mean any and all Franchise License Agreements between Verimark and Coastal Palms (or any of its affiliated property-level entities), including the initial FLA executed on or about June 15, 2007, through the most recent FLA executed on or about September 3, 2019, covering a total of twenty-two (22) franchised hotel properties operating under the Verimark Suites or Verimark Select brand flags. The term "FLA" or "Franchise License Agreement" shall include all amendments, addenda, riders, exhibits, schedules, and attachments thereto.

4. "Gross Room Revenue" or "GRR" shall mean Gross Room Revenue as that term is defined in Section 4.1 of the FLAs, which provides: "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."

5. "Suncoast" shall mean Suncoast Room Management Inc., a Florida corporation of which Defendant Randall Brecker is President, and shall include its officers, directors, employees, agents, and representatives.

6. "Property" or "Hotel" shall mean each of the twenty-two (22) hotel properties franchised by Coastal Palms (or its affiliated property-level entities) under the Verimark Suites or Verimark Select brand flags, comprising approximately 3,740 total guest rooms located across the states of Florida and Georgia.

7. "Relevant Period" shall mean the period from January 1, 2013, through the present date, unless otherwise specified in a particular Interrogatory.

8. "Document" or "Documents" shall have the broadest meaning ascribed thereto under Florida Rules of Civil Procedure 1.280 and 1.350, and shall include all writings, electronically stored information ("ESI"), drawings, graphs, charts, photographs, audio or video recordings, and other tangible things, whether in physical or electronic form, regardless of the medium or format in which they are stored or maintained.

9. "Communication" shall mean any oral, written, or electronic exchange of information between two or more persons, including but not limited to letters, memoranda, emails, text messages (including SMS and Westmark Software), instant messages (including messages transmitted through platforms such as Meridian Solutions, Northgate Data Systems, or Meridian Services Inc.), voicemails, in-person conversations, telephonic conversations, and video-conference discussions.

10. "Person" shall mean any natural person, corporation, limited liability company, partnership, joint venture, association, trust, governmental entity, or any other legal entity.

11. "OTA" shall mean Online Travel Agency, and shall include but not be limited to third-party booking platforms through which guest rooms at any of the Properties are marketed, reserved, and sold to consumers, including but not limited to Aldermere Technologies, Bramwell Holdings, Drayton Software, Penmark Industries, Northpoint Corporation, Drayton Corporation, and Brightmoor Industries.

12. "Direct Booking" shall mean any reservation for a guest room at any of the Properties made other than through Verimark's central reservation system ("CRS") or an OTA, including but not limited to walk-in guests, telephone reservations made directly to the Property, bookings made through the website gulfcoastrooms.com, bookings made through any other website or platform operated by or on behalf of Coastal Palms or its affiliates, and corporate-direct contracts negotiated outside of Verimark's CRS.

13. "Identify" (as to a person) shall mean to state the person's full legal name, last known residential or business address, telephone number(s), email address(es), current and former job title(s), current and former employer(s), and relationship (if any) to any party in this action.

14. "Identify" (as to a document) shall mean to state the document's date, author or creator, recipient(s) or addressee(s), subject matter, document type (e.g., letter, email, spreadsheet, report), Bates number or range (if the document has been produced in this litigation), and the current custodian or location of the document.

15. "Describe" shall mean to provide a detailed narrative explanation of the subject matter, including all relevant facts, dates, participants, locations, and circumstances known to, possessed by, or reasonably available to Defendant.

INSTRUCTIONS

1. Each Interrogatory shall be answered separately and fully under oath. Defendant shall restate each Interrogatory in full immediately before providing its answer thereto.

2. If Defendant objects to any Interrogatory or any part thereof, Defendant shall state with specificity the legal basis for each objection, including the particular grounds upon which the objection is based. Notwithstanding any objection, Defendant shall answer each Interrogatory to the fullest extent not foreclosed by the objection. A general or boilerplate objection without a specific legal basis shall not be deemed a proper objection.

3. If the answer to any Interrogatory requires reference to or reliance upon documents, Defendant shall identify each such document by date, author, recipient(s), subject matter, document type, and Bates number (if produced), and shall state where the original of each such document may be found or inspected.

4. If Defendant claims any privilege, including but not limited to the attorney-client privilege, work-product doctrine, or any other protection, as to any information responsive to any Interrogatory, Defendant shall provide a privilege log in accordance with Florida Rule of Civil Procedure 1.280(b)(6), identifying for each withheld communication or document: (a) the date; (b) the author or sender; (c) each recipient; (d) the general subject matter (without revealing privileged content); and (e) the specific privilege or protection claimed.

5. These Interrogatories shall be deemed continuing obligations pursuant to Florida Rule of Civil Procedure 1.280(e). Defendant must promptly supplement, amend, or correct its answers as additional responsive information becomes known to or available to Defendant.

6. The number of Interrogatories contained herein is twenty-five (25), which is within the limit permitted under Florida Rule of Civil Procedure 1.340(a). For purposes of computing the number of Interrogatories, each discrete subpart that is logically related to and in furtherance of the primary Interrogatory is not counted as a separate Interrogatory.

INTERROGATORIES

INTERROGATORY NO. 1: Entity Identification and Organizational Structure

Identify all entities that have any ownership interest in, or are owned (in whole or in part) by, Coastal Palms Franchise Holdings LLC, including but not limited to Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, and Suncoast Room Management Inc., as well as each property-level limited liability company or other entity holding title to or operating any of the twenty-two (22) Properties. For each such entity, state:

(a) its full legal name, state of formation, and date of formation;

(b) the identity of its current and former officers, directors, managers, and/or members during the Relevant Period, including the dates during which each such person held such position;

(c) the ownership percentages of each owner, member, or equity holder, including any changes in such percentages during the Relevant Period;

(d) a description of the entity's role in the operation, management, ownership, or financing of each Property, including whether the entity holds title to real property, operates a hotel, provides management services, collects revenue, or performs any other function related to the Properties; and

(e) the relationship (contractual or otherwise) between such entity and Coastal Palms Franchise Holdings LLC.

INTERROGATORY NO. 2: Membership and Equity Interests in Coastal Palms

Identify each person or entity that holds or has held a membership interest, equity interest, or any other form of ownership interest in Coastal Palms Franchise Holdings LLC at any time during the Relevant Period, including but not limited to Randall Brecker (approximately 60% equity holder), Theresa Brecker (approximately 15% equity holder), and Nolan Prescott (approximately 25% equity holder). For each such person or entity, state:

(a) the percentage of equity or membership interest held;

(b) the dates during which such interest was held, including the date of initial acquisition and, if applicable, the date of any transfer, assignment, or other disposition;

(c) whether such person or entity holds or has held any management authority, voting rights, or decision-making power with respect to Coastal Palms, including whether such person or entity is or was a "managing member" or otherwise authorized to bind Coastal Palms;

(d) any changes in ownership interests during the Relevant Period, including any transfers, assignments, pledges, encumbrances, dilutions, or other modifications, the date of each such change, and the circumstances giving rise thereto; and

(e) any agreements governing the ownership, management, or operation of Coastal Palms, including but not limited to operating agreements, buy-sell agreements, and voting agreements.

INTERROGATORY NO. 3: Formation and Purpose of Suncoast Room Management Inc.

Describe in detail the circumstances surrounding the formation of Suncoast Room Management Inc., including:

(a) the exact date of Suncoast's formation and the state of its incorporation;

(b) the identity of all persons involved in the decision to form Suncoast, including any officers, members, managers, or advisors of Coastal Palms who participated in or were consulted regarding the decision;

(c) the stated business purpose of Suncoast as reflected in its articles of incorporation, organizational documents, or any internal memoranda, business plans, or communications;

(d) Randall Brecker's role as President and his involvement in the day-to-day management and operations of Suncoast, including the scope of his authority and responsibilities;

(e) the reasons for creating Suncoast as a separate and distinct entity from Coastal Palms and the individual property-level limited liability companies, including any tax, liability, operational, or financial motivations;

(f) whether Verimark was notified of Suncoast's formation prior to or after its incorporation and, if so, when such notification occurred, the manner of notification (e.g., written notice, oral communication, submission during franchise-application process), the identity of the person(s) who provided such notification, and the identity of the person(s) at Verimark who received such notification; and

(g) if Verimark was not notified of Suncoast's formation, the reason(s) for the failure to provide such notification and whether Defendant contends that such notification was not required under the FLAs or otherwise.

INTERROGATORY NO. 4: Suncoast Management Agreements

Identify and describe all management agreements, service agreements, consulting agreements, or other contracts of any kind between Suncoast Room Management Inc. and any Coastal Palms-affiliated entity, including but not limited to Coastal Palms Franchise Holdings LLC, Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, and each property-level entity, at any time during the Relevant Period. For each such agreement, state:

(a) the full legal names of all parties to the agreement;

(b) the date of execution and the effective dates of the agreement;

(c) the scope of services to be provided by Suncoast under the agreement, including but not limited to revenue collection, reservation management, guest services, accounting, and property-level operations;

(d) the compensation or fee arrangement, including whether Suncoast received a management fee, the rate or amount of such fee (including but not limited to the twelve percent (12%) management fee on direct-booking revenues alleged in Plaintiff's Complaint), the method of calculation, and the frequency of payment;

(e) any amendments, modifications, renewals, extensions, or terminations of such agreement during the Relevant Period, including the dates thereof and the reasons therefor;

(f) whether such agreements were disclosed to Verimark, including the date, manner, and substance of any disclosure, and whether Verimark's consent or approval was sought or obtained; and

(g) the current status of each such agreement (i.e., whether it remains in force or has been terminated, and if terminated, the date and circumstances of termination).

INTERROGATORY NO. 5: Revenue Collection by Suncoast

For each year during the Relevant Period, state the total amount of revenue collected by Suncoast Room Management Inc. from or on behalf of each Property, broken down by the following categories:

(a) walk-in guest payments (i.e., payments received from guests who arrived at the Property without a prior reservation);

(b) corporate-direct contract payments (i.e., payments received pursuant to negotiated rate agreements with corporate clients, government agencies, or other institutional customers that were negotiated outside of Verimark's central reservation system);

(c) bookings made through the website gulfcoastrooms.com (i.e., payments received from reservations placed through such website);

(d) any other direct-booking channel not identified in subparts (a) through (c) above, with a description of each such channel; and

(e) any other source of revenue collected by Suncoast, with a description of each such source.

For each category identified in subparts (a) through (e), state the gross amount collected by Suncoast and the net amount remitted by Suncoast to the applicable property-level entity or Coastal Palms after deduction of the management fee or any other fee, charge, or deduction retained by Suncoast.

INTERROGATORY NO. 6: Creation and Operation of gulfcoastrooms.com

Describe in detail the creation, ownership, and operation of the website known as gulfcoastrooms.com, including:

(a) the date on which the website was first launched and made available to the public for the purpose of accepting hotel reservations;

(b) the identity of the person(s) who authorized, directed, or approved the creation of the website;

(c) the entity or person that owns the domain name "gulfcoastrooms.com," including the domain registrar and registrant information;

(d) the entity or person(s) responsible for the ongoing operation, maintenance, hosting, content management, and updating of the website during the Relevant Period;

(e) a detailed description of how the website processes reservations, including how a guest selects a Property, selects dates, provides payment information, and receives a booking confirmation, and whether the website is integrated with any property-management system or central reservation system;

(f) a detailed description of how revenues collected through the website are recorded, accounted for, and reported, including whether such revenues are deposited into accounts held by Suncoast, Coastal Palms, or the applicable property-level entity;

(g) for each year during the Relevant Period, the total revenue generated through the website for each Property, stated as both a gross amount and a net amount after deduction of any fees or commissions;

(h) whether Verimark was informed of the website's existence at any time during the Relevant Period and, if so, the date on which Verimark was first informed, the identity of the person(s) who provided such information, the identity of the person(s) at Verimark who received such information, and the manner and substance of the communication; and

(i) if Verimark was not informed of the website's existence, the reason(s) for the failure to disclose the website to Verimark.

INTERROGATORY NO. 7: GRR Calculation Methodology

Describe in detail the methodology used by Coastal Palms (and/or any affiliated entity, including Suncoast Room Management Inc.) to calculate Gross Room Revenue ("GRR") as reported to Verimark for each Property during the Relevant Period, including:

(a) the specific categories of revenue that were included in the calculation of GRR as reported to Verimark;

(b) the specific categories of revenue that were excluded from the calculation of GRR as reported to Verimark, and for each such exclusion, the factual and contractual basis upon which such exclusion was made, including the specific provision(s) of the FLAs relied upon;

(c) whether revenues collected by Suncoast Room Management Inc. were included in or excluded from GRR as reported to Verimark and, if excluded, the specific basis for such exclusion, including whether Defendant contends that revenues collected by Suncoast do not constitute revenues "derived from or attributable to the rental of guest rooms at the Hotel" within the meaning of FLA § 4.1;

(d) the treatment of OTA revenues, including whether OTA payments were reported on a gross basis (i.e., the total amount paid by the guest) or a net basis (i.e., the amount received by the Property after deduction of OTA commissions or fees), and the factual and contractual basis for such treatment; and

(e) the identity of the person(s) responsible for preparing, reviewing, approving, and submitting GRR reports to Verimark for each Property during the Relevant Period.

INTERROGATORY NO. 8: OTA Revenue Reporting Practices

Describe in detail Coastal Palms' practices for reporting revenues derived from OTA booking channels during the Relevant Period, including:

(a) identification of all OTAs through which guest rooms at any of the Properties were marketed, listed, or sold during the Relevant Period;

(b) the contractual payment structure between each Property (or Coastal Palms or its affiliates) and each OTA, including whether the arrangement was a "gross rate" model (in which the OTA collects the full room rate from the guest and remits the room rate less commission to the Property) or a "net rate" model (in which the Property provides a net rate to the OTA and the OTA sets its own retail price), or any other payment structure;

(c) how OTA revenues were classified and recorded in Coastal Palms' internal accounting records and property-management systems, including the general-ledger accounts or categories to which such revenues were posted;

(d) whether OTA commissions were netted against (i.e., deducted from) GRR as reported to Verimark or whether OTA commissions were reported as a separate expense item, and the factual and contractual basis for such treatment;

(e) the specific provision(s) of the FLAs upon which Defendant relied in determining the treatment of OTA revenues and commissions described in subparts (c) and (d) above; and

(f) the identity of the person(s) who determined, authorized, or approved the OTA revenue-reporting treatment described above, including the date(s) on which such determination was made.

INTERROGATORY NO. 9: Monthly GRR Reporting to Verimark

For each Property and for each month during the Relevant Period, identify the amount of Gross Room Revenue reported to Verimark and the corresponding amounts of the following fees and contributions paid to Verimark:

(a) royalties paid, calculated at the rate of five percent (5%) of GRR pursuant to Section 4.1 of the applicable FLA;

(b) marketing-fund contributions paid, calculated at the rate of two and one-half percent (2.5%) of GRR pursuant to Section 4.2 of the applicable FLA; and

(c) technology fees paid, calculated at the rate of twelve dollars and fifty cents ($12.50) per available room per month pursuant to Section 4.3 of the applicable FLA.

If Defendant contends that the GRR figures reported to Verimark during any portion of the Relevant Period were accurate and complete, state in detail the factual basis for that contention, including the steps taken to ensure the accuracy and completeness of GRR reports, the identity of the person(s) who verified the accuracy of such reports, and the records and supporting documentation relied upon in preparing such reports.

INTERROGATORY NO. 10: Room Inventory and Technology Fee Reporting

For each Property and for each year during the Relevant Period, state:

(a) the total number of available rooms at the Property as of January 1 and December 31 of each year;

(b) the number of rooms reported to Verimark for purposes of calculating the technology fees due under Section 4.3 of the applicable FLA;

(c) whether any rooms were added to, renovated at, or taken out of service at the Property during the Relevant Period, including for each such change the number of rooms affected, the dates of the change, and the reason therefor;

(d) whether and when Verimark was notified of any changes to the room inventory at any Property, including the date of notification, the manner of notification, and the identity of the person(s) who provided and received such notification; and

(e) if any rooms were added to the inventory of any Property without timely notice to Verimark, state the number of rooms added without notice, the Property or Properties at which such rooms were added, the dates of the additions, and the reason(s) for the failure to notify Verimark. For purposes of this Interrogatory, Plaintiff notes its allegation that approximately two hundred fourteen (214) rooms were added across four (4) Properties without notice to Verimark, resulting in approximately $1.26 million in underpaid technology fees during the Relevant Period.

INTERROGATORY NO. 11: Internal Accounting Systems and Records

Identify and describe all accounting systems, accounting software, property-management systems ("PMS"), point-of-sale ("POS") systems, and revenue-management systems used by Coastal Palms and/or any of its affiliated entities (including Suncoast Room Management Inc.) at each Property during the Relevant Period, including:

(a) the name, vendor, and version of each system;

(b) the dates during which each system was in use at each Property;

(c) the identity of the person(s) responsible for data entry, administration, and maintenance of each system at each Property;

(d) whether each system was integrated with, connected to, or capable of transmitting data to Verimark's revenue-management, reporting, or reservation systems, and if so, the nature of such integration and the data transmitted; and

(e) whether separate books of account, ledgers, databases, or financial records were maintained for revenues collected by Suncoast Room Management Inc. that were not recorded in the PMS or accounting systems accessible to or reported to Verimark, and if so, a description of such separate records, including their format, location, and custodian.

INTERROGATORY NO. 12: Knowledge and Direction Regarding Revenue Exclusions

Identify each person who had knowledge of, participated in, authorized, directed, approved, or acquiesced in the exclusion of any revenue collected by Suncoast Room Management Inc. from Gross Room Revenue reports submitted to Verimark during the Relevant Period. For each such person, state:

(a) the nature and extent of their knowledge regarding the exclusion of Suncoast-collected revenues from GRR reports, including whether such person knew that such revenues were being excluded and, if so, the factual basis for their belief that such exclusion was proper;

(b) a description of any instructions, directives, policies, procedures, memoranda, or communications given or received by such person regarding the exclusion of Suncoast-collected revenues from GRR reports;

(c) the date on which such person first acquired knowledge of the practice of excluding Suncoast-collected revenues from GRR reports and the circumstances under which such knowledge was acquired; and

(d) the identity of all documents reflecting such person's knowledge, instructions, directives, or communications regarding the exclusion of Suncoast-collected revenues from GRR reports.

INTERROGATORY NO. 13: Communications with Verimark Regarding GRR Reporting

Identify and describe all communications between Coastal Palms (or any of its affiliated entities or principals, including but not limited to Randall Brecker, Theresa Brecker, Nolan Prescott, and any officer, manager, employee, or agent of Suncoast Room Management Inc.) and Verimark (or any of its officers, directors, employees, agents, or representatives, including but not limited to Renata Solis-Vega, Martin Holcomb, and Deidre Langston) during the Relevant Period concerning any of the following subjects:

(a) the definition or calculation of Gross Room Revenue under the FLAs;

(b) the reporting of GRR to Verimark, including the methodology, frequency, or accuracy of GRR reports;

(c) the role of Suncoast Room Management Inc. in hotel operations, revenue collection, or any other aspect of the management of the Properties;

(d) the existence, creation, or operation of the website gulfcoastrooms.com;

(e) any audit, inquiry, investigation, or review by Verimark regarding Coastal Palms' revenue reporting, fee payments, or compliance with the FLAs; and

(f) any dispute, disagreement, or discussion regarding the amount of royalties, marketing-fund contributions, or technology fees owed by Coastal Palms to Verimark.

For each such communication, state the date, the participants (including the sender and recipient of any written or electronic communication), the manner of communication (e.g., in-person meeting, telephone call, email, letter), the substance of the communication, and the identity of any documents reflecting or memorializing such communication.

INTERROGATORY NO. 14: Verimark's Alleged Knowledge of Suncoast

If Defendant contends that Verimark was aware of, consented to, or acquiesced in the role of Suncoast Room Management Inc. in collecting hotel revenues at any of the Properties, or that Verimark was aware of or acquiesced in the exclusion of Suncoast-collected revenues from GRR reports, describe in detail the factual basis for that contention, including:

(a) each specific instance in which Suncoast's role or the exclusion of Suncoast-collected revenues from GRR was allegedly disclosed to Verimark, including the date, location, and circumstances of each disclosure;

(b) the identity of the person(s) at Verimark who allegedly received each such disclosure;

(d) all documents evidencing each such alleged disclosure, including but not limited to any property-management agreements, management-company questionnaires, franchise-application materials, annual certifications, correspondence, or other documents submitted to Verimark during the franchise-application process or at any other time that identified Suncoast or described its role;

(e) any response, acknowledgment, approval, or objection by Verimark to each such alleged disclosure; and

(f) any course of dealing, industry custom, or other extrinsic evidence upon which Defendant relies in support of the contention that Verimark was aware of or acquiesced in Suncoast's role.

INTERROGATORY NO. 15: FLA § 4.1 Interpretation — GRR Definition

State Your interpretation of the term "Gross Room Revenue" as defined in Section 4.1 of the Franchise License Agreements, and specifically:

(a) whether You contend that the definition of "Gross Room Revenue" in Section 4.1 is ambiguous, unclear, or susceptible to more than one reasonable interpretation;

(b) if You contend that the definition is ambiguous, identify the specific word(s), phrase(s), or clause(s) that You contend are ambiguous, and state the basis for such contention;

(c) state what categories or types of revenues You contend are excluded from "Gross Room Revenue" under Section 4.1 and the specific factual, contractual, and legal basis for each such exclusion;

(d) whether You contend that revenues collected by a management entity separate from the franchisee (such as Suncoast Room Management Inc.) are excluded from the definition of "Gross Room Revenue" under Section 4.1, and if so, the specific language in Section 4.1 or elsewhere in the FLAs upon which You rely in support of that contention; and

(e) identify any extrinsic evidence, course of dealing, course of performance, trade usage, or industry custom that You contend supports Your interpretation of "Gross Room Revenue" under Section 4.1, including the identity of any witness who would testify to such extrinsic evidence.

INTERROGATORY NO. 16: Franchise Application Process and Disclosures

For each of the twenty-two (22) Franchise License Agreements between Verimark and Coastal Palms (or its affiliated property-level entities), describe in detail what information was provided to Verimark during the franchise-application process regarding:

(a) the ownership structure of the applicant entity, including the identity and ownership percentages of all members, partners, or equity holders;

(b) the identity of any management companies, operators, or other third parties involved in the day-to-day operation, management, or supervision of the Property, including whether Suncoast Room Management Inc. or any predecessor entity was identified as a management company or operator;

(c) the anticipated booking channels, reservation systems, and revenue-collection methods to be used at the Property, including whether the applicant disclosed the intent to use any direct-booking channels outside of Verimark's CRS; and

(d) any material changes to the information described in subparts (a) through (c) that occurred after execution of each FLA, and whether Verimark was notified of such changes, including the date, manner, and substance of any such notification.

INTERROGATORY NO. 17: Cure Efforts Following Notice of Material Breach

Describe in detail all actions taken by Coastal Palms (or any affiliated entity or principal, including Randall Brecker) in response to the Notice of Material Breach issued by Verimark on February 4, 2022, including:

(a) the date on which the Notice was received, the manner of receipt (e.g., certified mail, email, hand delivery), and the identity of the person(s) who received the Notice on behalf of Coastal Palms;

(b) any internal discussions, meetings, conference calls, or deliberations that took place regarding the Notice, including the dates, participants, and substance thereof;

(c) any analysis, investigation, or review conducted regarding the allegations set forth in the Notice, including the identity of the person(s) who conducted such analysis, the scope of the analysis, and the conclusions reached;

(d) any actions taken by Coastal Palms to cure the alleged breaches identified in the Notice within the thirty (30)-day cure period provided under the FLAs (expiring on or about March 6, 2022), including any payments made, accounting adjustments, changes to revenue-reporting practices, or other corrective measures;

(e) if no cure was tendered within the cure period, or if Defendant contends that no breach occurred and therefore no cure was required, state the specific reason(s) for the failure to tender a cure and the factual and legal basis for Defendant's position; and

(f) all communications between Coastal Palms (or its principals) and its legal counsel, Whitfield, Barrow & Crane LLP, regarding the Notice of Material Breach, to the extent not protected by the attorney-client privilege or work-product doctrine. If Defendant asserts privilege as to any such communications, Defendant shall provide a privilege log in accordance with the Instructions set forth above.

INTERROGATORY NO. 18: Janet Kerrigan's Employment and Termination

Describe in detail:

(a) Janet Kerrigan's employment with Coastal Palms Franchise Holdings LLC and/or any affiliated entity, including each job title held, her duties and responsibilities, her reporting relationships (including the identity of each person to whom she reported and each person who reported to her), the dates of her employment, and the Properties for which she was responsible;

(b) the circumstances surrounding Ms. Kerrigan's termination of employment in or about October 2021, including the stated reason for termination, the identity of the person(s) who made the decision to terminate her employment, and any documentation of the termination decision, including but not limited to termination letters, performance reviews, disciplinary records, and human-resources files;

(c) whether Ms. Kerrigan's termination was in any way related to any dispute, disagreement, complaint, or concern regarding revenue-reporting practices, the role of Suncoast Room Management Inc., the exclusion of direct-booking revenues from GRR reports, or any other matter at issue in this litigation;

(d) any communications between Ms. Kerrigan and any officer, member, manager, or employee of Coastal Palms, Suncoast Room Management Inc., or any affiliated entity regarding Suncoast Room Management Inc., GRR reporting, the exclusion of direct-booking revenues from GRR reports, the website gulfcoastrooms.com, or any other matter at issue in this litigation, including the dates, participants, manner, and substance of each such communication; and

(e) any non-disclosure agreement, non-competition agreement, non-solicitation agreement, separation agreement, severance agreement, release of claims, or any other agreement executed by Ms. Kerrigan in connection with her departure from Coastal Palms or its affiliates, including the date of execution, the parties, and the material terms of each such agreement.

INTERROGATORY NO. 19: Prior Audits and Compliance Reviews

Identify and describe all audits, compliance reviews, financial examinations, or investigations of Coastal Palms' revenue-reporting practices, GRR calculations, or fee payments conducted during the Relevant Period, whether by Verimark, by Thornbury & Associates CPAs LLP, by any other independent auditor or accounting firm, or internally by Coastal Palms or its affiliates. For each such audit or review, state:

(a) the date(s) on which the audit or review was conducted and completed;

(b) the identity of the entity or person(s) who conducted the audit or review, including whether such entity or person was retained by Verimark, by Coastal Palms, or by a third party;

(c) the scope and objectives of the audit or review, including the specific Properties, time periods, and subject matters covered;

(d) the findings, conclusions, and opinions reached as a result of the audit or review;

(e) any discrepancies, irregularities, or errors identified, including the nature and amount of each discrepancy;

(f) any corrective actions taken by Coastal Palms in response to the findings, including any adjustments to GRR reports, additional fee payments to Verimark, or changes to revenue-reporting procedures; and

(g) all documents reflecting the audit or review and its results, including engagement letters, audit plans, workpapers, draft and final reports, management letters, correspondence, and any responses by Coastal Palms to audit findings.

INTERROGATORY NO. 20: Financial Statements Provided to Ironclad National Bank

Identify and describe all financial statements, revenue reports, profit-and-loss statements, balance sheets, operating statements, and other financial information provided by Coastal Palms (or any affiliated entity, including property-level entities, Gulf Breeze Hospitality LLC, and Savannah Lodging Partners LLC) to Ironclad National Bank during the Relevant Period in connection with approximately ninety-four million dollars ($94,000,000) in aggregate mortgage loans secured by eighteen (18) of the twenty-two (22) Properties. For each such submission, state:

(a) the date(s) of submission and the time period covered by the financial information submitted;

(b) the identity of the person(s) who prepared and submitted such documents, including the person who signed or certified each submission;

(c) whether such documents reflected revenues collected by Suncoast Room Management Inc., and if so, how such revenues were categorized or described in the financial information provided to Ironclad National Bank;

(d) whether the total guest-room revenue or GRR figures contained in the financial statements or reports submitted to Ironclad National Bank differed from the GRR figures reported to Verimark for the same Properties and time periods and, if so, the nature and dollar amount of any discrepancy for each Property and each reporting period;

(e) the identity of Devon Schultz or any other officer, employee, or representative of Ironclad National Bank who received such documents or was involved in the loan relationship with Coastal Palms or its affiliates; and

(f) whether Ironclad National Bank has conducted any audit, review, or inquiry regarding the financial information provided by Coastal Palms or its affiliates, and if so, the dates, scope, and results thereof.

INTERROGATORY NO. 21: Counterclaim Factual Basis

Describe in detail the factual basis for each allegation and cause of action asserted in Coastal Palms' Counterclaim filed on April 18, 2022, including:

(a) each specific brand-standard violation alleged against Verimark, including the specific standard or requirement allegedly violated, the Property or Properties affected, and a detailed description of the violation;

(b) the dates, nature, and duration of each alleged brand-standard violation;

(c) a detailed explanation of how each alleged brand-standard violation caused damage to Coastal Palms, including the causal connection between the alleged violation and the alleged harm;

(d) the methodology used by Coastal Palms to calculate the approximately twelve million dollars ($12,000,000) in damages alleged in the Counterclaim, including all assumptions, data inputs, calculations, and expert opinions relied upon;

(e) all communications between Coastal Palms and Verimark regarding the alleged brand-standard violations, including the dates, participants, manner, and substance of each such communication, and whether Coastal Palms provided Verimark with written notice of any alleged violation prior to filing the Counterclaim; and

IN THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA
CIVIL DIVISION
VERIMARK HOSPITALITY GROUP INC., a Delaware corporation,
Plaintiff,
v.
Case No.: 1021-00006
COASTAL PALMS FRANCHISE HOLDINGS LLC, a Florida limited liability company; RANDALL BRECKER, individually; and SUNCOAST ROOM MANAGEMENT INC., a Florida corporation,
Defendants.
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PLAINTIFF'S FIRST SET OF INTERROGATORIES TO DEFENDANT COASTAL PALMS FRANCHISE HOLDINGS LLC
Date Served: July 11, 2022
Plaintiff Verimark Hospitality Group Inc. ("Verimark" or "Plaintiff"), by and through its undersigned counsel, Calderwood & Harkness LLP, and pursuant to Florida Rule of Civil Procedure 1.340, hereby propounds the following Interrogatories upon Defendant Coastal Palms Franchise Holdings LLC ("Coastal Palms" or "Defendant"), to be answered separately and fully, in writing, under oath, within thirty (30) days of service hereof.
Defendant's answers shall be based upon all information known to, possessed by, or reasonably available to Defendant, including but not limited to information held by its officers, members, managers, employees, agents, attorneys (to the extent not privileged), and representatives. Information that is available to Defendant from its affiliated entities, including but not limited to Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, Suncoast Room Management Inc., and each property-level limited liability company, shall be treated as information reasonably available to Defendant for purposes of these Interrogatories.
These Interrogatories are continuing in nature pursuant to Florida Rule of Civil Procedure 1.280(e). Defendant is under a continuing duty to supplement, amend, or correct its responses promptly if additional or corrective information becomes known to Defendant or becomes available to Defendant after the date of its initial responses.
DEFINITIONS
As used in these Interrogatories, the following terms shall have the meanings set forth below. These definitions are intended to be construed broadly and in accordance with the Florida Rules of Civil Procedure and applicable case law.
1.  "You," "Your," "Defendant," or "Coastal Palms" shall mean Coastal Palms Franchise Holdings LLC, and shall include its officers, members, managers, employees, agents, representatives, subsidiaries, affiliates, predecessors, and successors, including but not limited to Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, and Suncoast Room Management Inc., as well as each property-level limited liability company or other entity through which Coastal Palms holds, operates, or manages any of the Properties.
2.  "Verimark" shall mean Verimark Hospitality Group Inc., and shall include its subsidiaries, affiliates, officers, directors, employees, agents, and representatives.
3.  "FLA" or "Franchise License Agreement" shall mean any and all Franchise License Agreements between Verimark and Coastal Palms (or any of its affiliated property-level entities), including the initial FLA executed on or about June 15, 2007, through the most recent FLA executed on or about September 3, 2019, covering a total of twenty-two (22) franchised hotel properties operating under the Verimark Suites or Verimark Select brand flags. The term "FLA" or "Franchise License Agreement" shall include all amendments, addenda, riders, exhibits, schedules, and attachments thereto.
4.  "Gross Room Revenue" or "GRR" shall mean Gross Room Revenue as that term is defined in Section 4.1 of the FLAs, which provides: "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."
5.  "Suncoast" shall mean Suncoast Room Management Inc., a Florida corporation of which Defendant Randall Brecker is President, and shall include its officers, directors, employees, agents, and representatives.
6.  "Property" or "Hotel" shall mean each of the twenty-two (22) hotel properties franchised by Coastal Palms (or its affiliated property-level entities) under the Verimark Suites or Verimark Select brand flags, comprising approximately 3,740 total guest rooms located across the states of Florida and Georgia.
7.  "Relevant Period" shall mean the period from January 1, 2013, through the present date, unless otherwise specified in a particular Interrogatory.
8.  "Document" or "Documents" shall have the broadest meaning ascribed thereto under Florida Rules of Civil Procedure 1.280 and 1.350, and shall include all writings, electronically stored information ("ESI"), drawings, graphs, charts, photographs, audio or video recordings, and other tangible things, whether in physical or electronic form, regardless of the medium or format in which they are stored or maintained.
9.  "Communication" shall mean any oral, written, or electronic exchange of information between two or more persons, including but not limited to letters, memoranda, emails, text messages (including SMS and Westmark Software), instant messages (including messages transmitted through platforms such as Meridian Solutions, Northgate Data Systems, or Meridian Services Inc.), voicemails, in-person conversations, telephonic conversations, and video-conference discussions.
10.  "Person" shall mean any natural person, corporation, limited liability company, partnership, joint venture, association, trust, governmental entity, or any other legal entity.
11.  "OTA" shall mean Online Travel Agency, and shall include but not be limited to third-party booking platforms through which guest rooms at any of the Properties are marketed, reserved, and sold to consumers, including but not limited to Aldermere Technologies, Bramwell Holdings, Drayton Software, Penmark Industries, Northpoint Corporation, Drayton Corporation, and Brightmoor Industries.
12.  "Direct Booking" shall mean any reservation for a guest room at any of the Properties made other than through Verimark's central reservation system ("CRS") or an OTA, including but not limited to walk-in guests, telephone reservations made directly to the Property, bookings made through the website gulfcoastrooms.com, bookings made through any other website or platform operated by or on behalf of Coastal Palms or its affiliates, and corporate-direct contracts negotiated outside of Verimark's CRS.
13.  "Identify" (as to a person) shall mean to state the person's full legal name, last known residential or business address, telephone number(s), email address(es), current and former job title(s), current and former employer(s), and relationship (if any) to any party in this action.
14.  "Identify" (as to a document) shall mean to state the document's date, author or creator, recipient(s) or addressee(s), subject matter, document type (e.g., letter, email, spreadsheet, report), Bates number or range (if the document has been produced in this litigation), and the current custodian or location of the document.
15.  "Describe" shall mean to provide a detailed narrative explanation of the subject matter, including all relevant facts, dates, participants, locations, and circumstances known to, possessed by, or reasonably available to Defendant.
INSTRUCTIONS
1.  Each Interrogatory shall be answered separately and fully under oath. Defendant shall restate each Interrogatory in full immediately before providing its answer thereto.
2.  If Defendant objects to any Interrogatory or any part thereof, Defendant shall state with specificity the legal basis for each objection, including the particular grounds upon which the objection is based. Notwithstanding any objection, Defendant shall answer each Interrogatory to the fullest extent not foreclosed by the objection. A general or boilerplate objection without a specific legal basis shall not be deemed a proper objection.
3.  If the answer to any Interrogatory requires reference to or reliance upon documents, Defendant shall identify each such document by date, author, recipient(s), subject matter, document type, and Bates number (if produced), and shall state where the original of each such document may be found or inspected.
4.  If Defendant claims any privilege, including but not limited to the attorney-client privilege, work-product doctrine, or any other protection, as to any information responsive to any Interrogatory, Defendant shall provide a privilege log in accordance with Florida Rule of Civil Procedure 1.280(b)(6), identifying for each withheld communication or document: (a) the date; (b) the author or sender; (c) each recipient; (d) the general subject matter (without revealing privileged content); and (e) the specific privilege or protection claimed.
5.  These Interrogatories shall be deemed continuing obligations pursuant to Florida Rule of Civil Procedure 1.280(e). Defendant must promptly supplement, amend, or correct its answers as additional responsive information becomes known to or available to Defendant.
6.  The number of Interrogatories contained herein is twenty-five (25), which is within the limit permitted under Florida Rule of Civil Procedure 1.340(a). For purposes of computing the number of Interrogatories, each discrete subpart that is logically related to and in furtherance of the primary Interrogatory is not counted as a separate Interrogatory.
INTERROGATORIES
INTERROGATORY NO. 1: Entity Identification and Organizational Structure
Identify all entities that have any ownership interest in, or are owned (in whole or in part) by, Coastal Palms Franchise Holdings LLC, including but not limited to Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, and Suncoast Room Management Inc., as well as each property-level limited liability company or other entity holding title to or operating any of the twenty-two (22) Properties. For each such entity, state:
(a) its full legal name, state of formation, and date of formation;
(b) the identity of its current and former officers, directors, managers, and/or members during the Relevant Period, including the dates during which each such person held such position;
(c) the ownership percentages of each owner, member, or equity holder, including any changes in such percentages during the Relevant Period;
(d) a description of the entity's role in the operation, management, ownership, or financing of each Property, including whether the entity holds title to real property, operates a hotel, provides management services, collects revenue, or performs any other function related to the Properties; and
(e) the relationship (contractual or otherwise) between such entity and Coastal Palms Franchise Holdings LLC.
INTERROGATORY NO. 2: Membership and Equity Interests in Coastal Palms
Identify each person or entity that holds or has held a membership interest, equity interest, or any other form of ownership interest in Coastal Palms Franchise Holdings LLC at any time during the Relevant Period, including but not limited to Randall Brecker (approximately 60% equity holder), Theresa Brecker (approximately 15% equity holder), and Nolan Prescott (approximately 25% equity holder). For each such person or entity, state:
(a) the percentage of equity or membership interest held;
(b) the dates during which such interest was held, including the date of initial acquisition and, if applicable, the date of any transfer, assignment, or other disposition;
(c) whether such person or entity holds or has held any management authority, voting rights, or decision-making power with respect to Coastal Palms, including whether such person or entity is or was a "managing member" or otherwise authorized to bind Coastal Palms;
(d) any changes in ownership interests during the Relevant Period, including any transfers, assignments, pledges, encumbrances, dilutions, or other modifications, the date of each such change, and the circumstances giving rise thereto; and
(e) any agreements governing the ownership, management, or operation of Coastal Palms, including but not limited to operating agreements, buy-sell agreements, and voting agreements.
INTERROGATORY NO. 3: Formation and Purpose of Suncoast Room Management Inc.
Describe in detail the circumstances surrounding the formation of Suncoast Room Management Inc., including:
(a) the exact date of Suncoast's formation and the state of its incorporation;
(b) the identity of all persons involved in the decision to form Suncoast, including any officers, members, managers, or advisors of Coastal Palms who participated in or were consulted regarding the decision;
(c) the stated business purpose of Suncoast as reflected in its articles of incorporation, organizational documents, or any internal memoranda, business plans, or communications;
(d) Randall Brecker's role as President and his involvement in the day-to-day management and operations of Suncoast, including the scope of his authority and responsibilities;
(e) the reasons for creating Suncoast as a separate and distinct entity from Coastal Palms and the individual property-level limited liability companies, including any tax, liability, operational, or financial motivations;
(f) whether Verimark was notified of Suncoast's formation prior to or after its incorporation and, if so, when such notification occurred, the manner of notification (e.g., written notice, oral communication, submission during franchise-application process), the identity of the person(s) who provided such notification, and the identity of the person(s) at Verimark who received such notification; and
(g) if Verimark was not notified of Suncoast's formation, the reason(s) for the failure to provide such notification and whether Defendant contends that such notification was not required under the FLAs or otherwise.
INTERROGATORY NO. 4: Suncoast Management Agreements
Identify and describe all management agreements, service agreements, consulting agreements, or other contracts of any kind between Suncoast Room Management Inc. and any Coastal Palms-affiliated entity, including but not limited to Coastal Palms Franchise Holdings LLC, Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, and each property-level entity, at any time during the Relevant Period. For each such agreement, state:
(a) the full legal names of all parties to the agreement;
(b) the date of execution and the effective dates of the agreement;
(c) the scope of services to be provided by Suncoast under the agreement, including but not limited to revenue collection, reservation management, guest services, accounting, and property-level operations;
(d) the compensation or fee arrangement, including whether Suncoast received a management fee, the rate or amount of such fee (including but not limited to the twelve percent (12%) management fee on direct-booking revenues alleged in Plaintiff's Complaint), the method of calculation, and the frequency of payment;
(e) any amendments, modifications, renewals, extensions, or terminations of such agreement during the Relevant Period, including the dates thereof and the reasons therefor;
(f) whether such agreements were disclosed to Verimark, including the date, manner, and substance of any disclosure, and whether Verimark's consent or approval was sought or obtained; and
(g) the current status of each such agreement (i.e., whether it remains in force or has been terminated, and if terminated, the date and circumstances of termination).
INTERROGATORY NO. 5: Revenue Collection by Suncoast
For each year during the Relevant Period, state the total amount of revenue collected by Suncoast Room Management Inc. from or on behalf of each Property, broken down by the following categories:
(a) walk-in guest payments (i.e., payments received from guests who arrived at the Property without a prior reservation);
(b) corporate-direct contract payments (i.e., payments received pursuant to negotiated rate agreements with corporate clients, government agencies, or other institutional customers that were negotiated outside of Verimark's central reservation system);
(c) bookings made through the website gulfcoastrooms.com (i.e., payments received from reservations placed through such website);
(d) any other direct-booking channel not identified in subparts (a) through (c) above, with a description of each such channel; and
(e) any other source of revenue collected by Suncoast, with a description of each such source.
For each category identified in subparts (a) through (e), state the gross amount collected by Suncoast and the net amount remitted by Suncoast to the applicable property-level entity or Coastal Palms after deduction of the management fee or any other fee, charge, or deduction retained by Suncoast.
INTERROGATORY NO. 6: Creation and Operation of gulfcoastrooms.com
Describe in detail the creation, ownership, and operation of the website known as gulfcoastrooms.com, including:
(a) the date on which the website was first launched and made available to the public for the purpose of accepting hotel reservations;
(b) the identity of the person(s) who authorized, directed, or approved the creation of the website;
(c) the entity or person that owns the domain name "gulfcoastrooms.com," including the domain registrar and registrant information;
(d) the entity or person(s) responsible for the ongoing operation, maintenance, hosting, content management, and updating of the website during the Relevant Period;
(e) a detailed description of how the website processes reservations, including how a guest selects a Property, selects dates, provides payment information, and receives a booking confirmation, and whether the website is integrated with any property-management system or central reservation system;
(f) a detailed description of how revenues collected through the website are recorded, accounted for, and reported, including whether such revenues are deposited into accounts held by Suncoast, Coastal Palms, or the applicable property-level entity;
(g) for each year during the Relevant Period, the total revenue generated through the website for each Property, stated as both a gross amount and a net amount after deduction of any fees or commissions;
(h) whether Verimark was informed of the website's existence at any time during the Relevant Period and, if so, the date on which Verimark was first informed, the identity of the person(s) who provided such information, the identity of the person(s) at Verimark who received such information, and the manner and substance of the communication; and
(i) if Verimark was not informed of the website's existence, the reason(s) for the failure to disclose the website to Verimark.
INTERROGATORY NO. 7: GRR Calculation Methodology
Describe in detail the methodology used by Coastal Palms (and/or any affiliated entity, including Suncoast Room Management Inc.) to calculate Gross Room Revenue ("GRR") as reported to Verimark for each Property during the Relevant Period, including:
(a) the specific categories of revenue that were included in the calculation of GRR as reported to Verimark;
(b) the specific categories of revenue that were excluded from the calculation of GRR as reported to Verimark, and for each such exclusion, the factual and contractual basis upon which such exclusion was made, including the specific provision(s) of the FLAs relied upon;
(c) whether revenues collected by Suncoast Room Management Inc. were included in or excluded from GRR as reported to Verimark and, if excluded, the specific basis for such exclusion, including whether Defendant contends that revenues collected by Suncoast do not constitute revenues "derived from or attributable to the rental of guest rooms at the Hotel" within the meaning of FLA § 4.1;
(d) the treatment of OTA revenues, including whether OTA payments were reported on a gross basis (i.e., the total amount paid by the guest) or a net basis (i.e., the amount received by the Property after deduction of OTA commissions or fees), and the factual and contractual basis for such treatment; and
(e) the identity of the person(s) responsible for preparing, reviewing, approving, and submitting GRR reports to Verimark for each Property during the Relevant Period.
INTERROGATORY NO. 8: OTA Revenue Reporting Practices
Describe in detail Coastal Palms' practices for reporting revenues derived from OTA booking channels during the Relevant Period, including:
(a) identification of all OTAs through which guest rooms at any of the Properties were marketed, listed, or sold during the Relevant Period;
(b) the contractual payment structure between each Property (or Coastal Palms or its affiliates) and each OTA, including whether the arrangement was a "gross rate" model (in which the OTA collects the full room rate from the guest and remits the room rate less commission to the Property) or a "net rate" model (in which the Property provides a net rate to the OTA and the OTA sets its own retail price), or any other payment structure;
(c) how OTA revenues were classified and recorded in Coastal Palms' internal accounting records and property-management systems, including the general-ledger accounts or categories to which such revenues were posted;
(d) whether OTA commissions were netted against (i.e., deducted from) GRR as reported to Verimark or whether OTA commissions were reported as a separate expense item, and the factual and contractual basis for such treatment;
(e) the specific provision(s) of the FLAs upon which Defendant relied in determining the treatment of OTA revenues and commissions described in subparts (c) and (d) above; and
(f) the identity of the person(s) who determined, authorized, or approved the OTA revenue-reporting treatment described above, including the date(s) on which such determination was made.
INTERROGATORY NO. 9: Monthly GRR Reporting to Verimark
For each Property and for each month during the Relevant Period, identify the amount of Gross Room Revenue reported to Verimark and the corresponding amounts of the following fees and contributions paid to Verimark:
(a) royalties paid, calculated at the rate of five percent (5%) of GRR pursuant to Section 4.1 of the applicable FLA;
(b) marketing-fund contributions paid, calculated at the rate of two and one-half percent (2.5%) of GRR pursuant to Section 4.2 of the applicable FLA; and
(c) technology fees paid, calculated at the rate of twelve dollars and fifty cents ($12.50) per available room per month pursuant to Section 4.3 of the applicable FLA.
If Defendant contends that the GRR figures reported to Verimark during any portion of the Relevant Period were accurate and complete, state in detail the factual basis for that contention, including the steps taken to ensure the accuracy and completeness of GRR reports, the identity of the person(s) who verified the accuracy of such reports, and the records and supporting documentation relied upon in preparing such reports.
INTERROGATORY NO. 10: Room Inventory and Technology Fee Reporting
For each Property and for each year during the Relevant Period, state:
(a) the total number of available rooms at the Property as of January 1 and December 31 of each year;
(b) the number of rooms reported to Verimark for purposes of calculating the technology fees due under Section 4.3 of the applicable FLA;
(c) whether any rooms were added to, renovated at, or taken out of service at the Property during the Relevant Period, including for each such change the number of rooms affected, the dates of the change, and the reason therefor;
(d) whether and when Verimark was notified of any changes to the room inventory at any Property, including the date of notification, the manner of notification, and the identity of the person(s) who provided and received such notification; and
(e) if any rooms were added to the inventory of any Property without timely notice to Verimark, state the number of rooms added without notice, the Property or Properties at which such rooms were added, the dates of the additions, and the reason(s) for the failure to notify Verimark. For purposes of this Interrogatory, Plaintiff notes its allegation that approximately two hundred fourteen (214) rooms were added across four (4) Properties without notice to Verimark, resulting in approximately $1.26 million in underpaid technology fees during the Relevant Period.
INTERROGATORY NO. 11: Internal Accounting Systems and Records
Identify and describe all accounting systems, accounting software, property-management systems ("PMS"), point-of-sale ("POS") systems, and revenue-management systems used by Coastal Palms and/or any of its affiliated entities (including Suncoast Room Management Inc.) at each Property during the Relevant Period, including:
(a) the name, vendor, and version of each system;
(b) the dates during which each system was in use at each Property;
(c) the identity of the person(s) responsible for data entry, administration, and maintenance of each system at each Property;
(d) whether each system was integrated with, connected to, or capable of transmitting data to Verimark's revenue-management, reporting, or reservation systems, and if so, the nature of such integration and the data transmitted; and
(e) whether separate books of account, ledgers, databases, or financial records were maintained for revenues collected by Suncoast Room Management Inc. that were not recorded in the PMS or accounting systems accessible to or reported to Verimark, and if so, a description of such separate records, including their format, location, and custodian.
INTERROGATORY NO. 12: Knowledge and Direction Regarding Revenue Exclusions
Identify each person who had knowledge of, participated in, authorized, directed, approved, or acquiesced in the exclusion of any revenue collected by Suncoast Room Management Inc. from Gross Room Revenue reports submitted to Verimark during the Relevant Period. For each such person, state:
(a) the nature and extent of their knowledge regarding the exclusion of Suncoast-collected revenues from GRR reports, including whether such person knew that such revenues were being excluded and, if so, the factual basis for their belief that such exclusion was proper;
(b) a description of any instructions, directives, policies, procedures, memoranda, or communications given or received by such person regarding the exclusion of Suncoast-collected revenues from GRR reports;
(c) the date on which such person first acquired knowledge of the practice of excluding Suncoast-collected revenues from GRR reports and the circumstances under which such knowledge was acquired; and
(d) the identity of all documents reflecting such person's knowledge, instructions, directives, or communications regarding the exclusion of Suncoast-collected revenues from GRR reports.
INTERROGATORY NO. 13: Communications with Verimark Regarding GRR Reporting
Identify and describe all communications between Coastal Palms (or any of its affiliated entities or principals, including but not limited to Randall Brecker, Theresa Brecker, Nolan Prescott, and any officer, manager, employee, or agent of Suncoast Room Management Inc.) and Verimark (or any of its officers, directors, employees, agents, or representatives, including but not limited to Renata Solis-Vega, Martin Holcomb, and Deidre Langston) during the Relevant Period concerning any of the following subjects:
(a) the definition or calculation of Gross Room Revenue under the FLAs;
(b) the reporting of GRR to Verimark, including the methodology, frequency, or accuracy of GRR reports;
(c) the role of Suncoast Room Management Inc. in hotel operations, revenue collection, or any other aspect of the management of the Properties;
(d) the existence, creation, or operation of the website gulfcoastrooms.com;
(e) any audit, inquiry, investigation, or review by Verimark regarding Coastal Palms' revenue reporting, fee payments, or compliance with the FLAs; and
(f) any dispute, disagreement, or discussion regarding the amount of royalties, marketing-fund contributions, or technology fees owed by Coastal Palms to Verimark.
For each such communication, state the date, the participants (including the sender and recipient of any written or electronic communication), the manner of communication (e.g., in-person meeting, telephone call, email, letter), the substance of the communication, and the identity of any documents reflecting or memorializing such communication.
INTERROGATORY NO. 14: Verimark's Alleged Knowledge of Suncoast
If Defendant contends that Verimark was aware of, consented to, or acquiesced in the role of Suncoast Room Management Inc. in collecting hotel revenues at any of the Properties, or that Verimark was aware of or acquiesced in the exclusion of Suncoast-collected revenues from GRR reports, describe in detail the factual basis for that contention, including:
(a) each specific instance in which Suncoast's role or the exclusion of Suncoast-collected revenues from GRR was allegedly disclosed to Verimark, including the date, location, and circumstances of each disclosure;
(b) the identity of the person(s) at Verimark who allegedly received each such disclosure;
(c) the date, manner, and substance of each alleged disclosure;
(d) all documents evidencing each such alleged disclosure, including but not limited to any property-management agreements, management-company questionnaires, franchise-application materials, annual certifications, correspondence, or other documents submitted to Verimark during the franchise-application process or at any other time that identified Suncoast or described its role;
(e) any response, acknowledgment, approval, or objection by Verimark to each such alleged disclosure; and
(f) any course of dealing, industry custom, or other extrinsic evidence upon which Defendant relies in support of the contention that Verimark was aware of or acquiesced in Suncoast's role.
INTERROGATORY NO. 15: FLA § 4.1 Interpretation — GRR Definition
State Your interpretation of the term "Gross Room Revenue" as defined in Section 4.1 of the Franchise License Agreements, and specifically:
(a) whether You contend that the definition of "Gross Room Revenue" in Section 4.1 is ambiguous, unclear, or susceptible to more than one reasonable interpretation;
(b) if You contend that the definition is ambiguous, identify the specific word(s), phrase(s), or clause(s) that You contend are ambiguous, and state the basis for such contention;
(c) state what categories or types of revenues You contend are excluded from "Gross Room Revenue" under Section 4.1 and the specific factual, contractual, and legal basis for each such exclusion;
(d) whether You contend that revenues collected by a management entity separate from the franchisee (such as Suncoast Room Management Inc.) are excluded from the definition of "Gross Room Revenue" under Section 4.1, and if so, the specific language in Section 4.1 or elsewhere in the FLAs upon which You rely in support of that contention; and
(e) identify any extrinsic evidence, course of dealing, course of performance, trade usage, or industry custom that You contend supports Your interpretation of "Gross Room Revenue" under Section 4.1, including the identity of any witness who would testify to such extrinsic evidence.
INTERROGATORY NO. 16: Franchise Application Process and Disclosures
For each of the twenty-two (22) Franchise License Agreements between Verimark and Coastal Palms (or its affiliated property-level entities), describe in detail what information was provided to Verimark during the franchise-application process regarding:
(a) the ownership structure of the applicant entity, including the identity and ownership percentages of all members, partners, or equity holders;
(b) the identity of any management companies, operators, or other third parties involved in the day-to-day operation, management, or supervision of the Property, including whether Suncoast Room Management Inc. or any predecessor entity was identified as a management company or operator;
(c) the anticipated booking channels, reservation systems, and revenue-collection methods to be used at the Property, including whether the applicant disclosed the intent to use any direct-booking channels outside of Verimark's CRS; and
(d) any material changes to the information described in subparts (a) through (c) that occurred after execution of each FLA, and whether Verimark was notified of such changes, including the date, manner, and substance of any such notification.
INTERROGATORY NO. 17: Cure Efforts Following Notice of Material Breach
Describe in detail all actions taken by Coastal Palms (or any affiliated entity or principal, including Randall Brecker) in response to the Notice of Material Breach issued by Verimark on February 4, 2022, including:
(a) the date on which the Notice was received, the manner of receipt (e.g., certified mail, email, hand delivery), and the identity of the person(s) who received the Notice on behalf of Coastal Palms;
(b) any internal discussions, meetings, conference calls, or deliberations that took place regarding the Notice, including the dates, participants, and substance thereof;
(c) any analysis, investigation, or review conducted regarding the allegations set forth in the Notice, including the identity of the person(s) who conducted such analysis, the scope of the analysis, and the conclusions reached;
(d) any actions taken by Coastal Palms to cure the alleged breaches identified in the Notice within the thirty (30)-day cure period provided under the FLAs (expiring on or about March 6, 2022), including any payments made, accounting adjustments, changes to revenue-reporting practices, or other corrective measures;
(e) if no cure was tendered within the cure period, or if Defendant contends that no breach occurred and therefore no cure was required, state the specific reason(s) for the failure to tender a cure and the factual and legal basis for Defendant's position; and
(f) all communications between Coastal Palms (or its principals) and its legal counsel, Whitfield, Barrow & Crane LLP, regarding the Notice of Material Breach, to the extent not protected by the attorney-client privilege or work-product doctrine. If Defendant asserts privilege as to any such communications, Defendant shall provide a privilege log in accordance with the Instructions set forth above.
INTERROGATORY NO. 18: Janet Kerrigan's Employment and Termination
Describe in detail:
(a) Janet Kerrigan's employment with Coastal Palms Franchise Holdings LLC and/or any affiliated entity, including each job title held, her duties and responsibilities, her reporting relationships (including the identity of each person to whom she reported and each person who reported to her), the dates of her employment, and the Properties for which she was responsible;
(b) the circumstances surrounding Ms. Kerrigan's termination of employment in or about October 2021, including the stated reason for termination, the identity of the person(s) who made the decision to terminate her employment, and any documentation of the termination decision, including but not limited to termination letters, performance reviews, disciplinary records, and human-resources files;
(c) whether Ms. Kerrigan's termination was in any way related to any dispute, disagreement, complaint, or concern regarding revenue-reporting practices, the role of Suncoast Room Management Inc., the exclusion of direct-booking revenues from GRR reports, or any other matter at issue in this litigation;
(d) any communications between Ms. Kerrigan and any officer, member, manager, or employee of Coastal Palms, Suncoast Room Management Inc., or any affiliated entity regarding Suncoast Room Management Inc., GRR reporting, the exclusion of direct-booking revenues from GRR reports, the website gulfcoastrooms.com, or any other matter at issue in this litigation, including the dates, participants, manner, and substance of each such communication; and
(e) any non-disclosure agreement, non-competition agreement, non-solicitation agreement, separation agreement, severance agreement, release of claims, or any other agreement executed by Ms. Kerrigan in connection with her departure from Coastal Palms or its affiliates, including the date of execution, the parties, and the material terms of each such agreement.
INTERROGATORY NO. 19: Prior Audits and Compliance Reviews
Identify and describe all audits, compliance reviews, financial examinations, or investigations of Coastal Palms' revenue-reporting practices, GRR calculations, or fee payments conducted during the Relevant Period, whether by Verimark, by Thornbury & Associates CPAs LLP, by any other independent auditor or accounting firm, or internally by Coastal Palms or its affiliates. For each such audit or review, state:
(a) the date(s) on which the audit or review was conducted and completed;
(b) the identity of the entity or person(s) who conducted the audit or review, including whether such entity or person was retained by Verimark, by Coastal Palms, or by a third party;
(c) the scope and objectives of the audit or review, including the specific Properties, time periods, and subject matters covered;
(d) the findings, conclusions, and opinions reached as a result of the audit or review;
(e) any discrepancies, irregularities, or errors identified, including the nature and amount of each discrepancy;
(f) any corrective actions taken by Coastal Palms in response to the findings, including any adjustments to GRR reports, additional fee payments to Verimark, or changes to revenue-reporting procedures; and
(g) all documents reflecting the audit or review and its results, including engagement letters, audit plans, workpapers, draft and final reports, management letters, correspondence, and any responses by Coastal Palms to audit findings.
INTERROGATORY NO. 20: Financial Statements Provided to Ironclad National Bank
Identify and describe all financial statements, revenue reports, profit-and-loss statements, balance sheets, operating statements, and other financial information provided by Coastal Palms (or any affiliated entity, including property-level entities, Gulf Breeze Hospitality LLC, and Savannah Lodging Partners LLC) to Ironclad National Bank during the Relevant Period in connection with approximately ninety-four million dollars ($94,000,000) in aggregate mortgage loans secured by eighteen (18) of the twenty-two (22) Properties. For each such submission, state:
(a) the date(s) of submission and the time period covered by the financial information submitted;
(b) the identity of the person(s) who prepared and submitted such documents, including the person who signed or certified each submission;
(c) whether such documents reflected revenues collected by Suncoast Room Management Inc., and if so, how such revenues were categorized or described in the financial information provided to Ironclad National Bank;
(d) whether the total guest-room revenue or GRR figures contained in the financial statements or reports submitted to Ironclad National Bank differed from the GRR figures reported to Verimark for the same Properties and time periods and, if so, the nature and dollar amount of any discrepancy for each Property and each reporting period;
(e) the identity of Devon Schultz or any other officer, employee, or representative of Ironclad National Bank who received such documents or was involved in the loan relationship with Coastal Palms or its affiliates; and
(f) whether Ironclad National Bank has conducted any audit, review, or inquiry regarding the financial information provided by Coastal Palms or its affiliates, and if so, the dates, scope, and results thereof.
INTERROGATORY NO. 21: Counterclaim Factual Basis
Describe in detail the factual basis for each allegation and cause of action asserted in Coastal Palms' Counterclaim filed on April 18, 2022, including:
(a) each specific brand-standard violation alleged against Verimark, including the specific standard or requirement allegedly violated, the Property or Properties affected, and a detailed description of the violation;
(b) the dates, nature, and duration of each alleged brand-standard violation;
(c) a detailed explanation of how each alleged brand-standard violation caused damage to Coastal Palms, including the causal connection between the alleged violation and the alleged harm;
(d) the methodology used by Coastal Palms to calculate the approximately twelve million dollars ($12,000,000) in damages alleged in the Counterclaim, including all assumptions, data inputs, calculations, and expert opinions relied upon;
(e) all communications between Coastal Palms and Verimark regarding the alleged brand-standard violations, including the dates, participants, manner, and substance of each such communication, and whether Coastal Palms provided Verimark with written notice of any alleged violation prior to filing the Counterclaim; and
(f) any efforts by Coastal Palms to invoke the cure provisions, dispute-resolution provisions, or mediation or arbitration provisions (if any) of the FLAs in connection with the alleged brand-standard violations prior to asserting the Counterclaim.
INTERROGATORY NO. 22: Persons with Knowledge
Identify each person (other than legal counsel retained in connection with this litigation) who has knowledge of any facts relevant to the claims, counterclaims, defenses, or damages at issue in this action. For each such person, state:
(a) their full legal name, current title, and current affiliation or employer;
(b) a description of the subject matter(s) of their knowledge, with sufficient detail to enable Plaintiff to evaluate the relevance and importance of such person's knowledge; and
(c) the identity of any documents, records, or electronically stored information in such person's possession, custody, or control that are relevant to this action.
This Interrogatory is intended to encompass, without limitation, property-level general managers, assistant general managers, front-desk managers, controllers, accountants, bookkeepers, revenue managers, regional managers, area directors, and any other person involved in GRR reporting, revenue collection, financial reporting, or Suncoast Room Management Inc. operations at any of the twenty-two (22) Properties.
INTERROGATORY NO. 23: Affirmative Defenses Factual Basis
For each affirmative defense asserted in Defendant Coastal Palms Franchise Holdings LLC's Answer to Plaintiff's Complaint, filed on April 18, 2022, state in detail:
(a) all facts that Defendant contends support the affirmative defense, including a detailed narrative explanation of the factual basis for the defense;
(b) all documents that Defendant contends support or are relevant to the affirmative defense, identified with sufficient specificity to enable Plaintiff to locate and review each such document;
(c) all persons with knowledge of facts supporting the affirmative defense, identified by full name, title, affiliation, and a description of their relevant knowledge; and
(d) the legal theory upon which each affirmative defense is based, including the specific statutory or common-law authority relied upon and the manner in which Defendant contends the facts support the defense.
INTERROGATORY NO. 24: Insurance and Indemnification
Identify each insurance policy, indemnification agreement, hold-harmless agreement, or other arrangement or undertaking under which Coastal Palms Franchise Holdings LLC (or any affiliated entity or principal, including Randall Brecker, Theresa Brecker, Nolan Prescott, Suncoast Room Management Inc., Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, or any property-level entity) may be entitled to coverage, reimbursement, defense, or indemnification for any judgment, settlement, or defense costs arising from this action. For each such policy or agreement, state:
(a) the full name and address of each insurer, indemnitor, or other party providing coverage or indemnification;
(b) the policy number or agreement identification number;
(c) the effective dates and expiration dates of the policy or agreement;
(d) the coverage limits, including per-occurrence limits and aggregate limits;
(e) any applicable deductibles, self-insured retentions, or co-insurance obligations;
(f) whether any claim, notice of claim, or notice of potential claim has been submitted under such policy or agreement in connection with this action and, if so, the date of submission and the identity of the person who submitted the claim; and
(g) any coverage determination, reservation of rights, coverage opinion, or denial of coverage issued by the insurer or indemnitor, including the date thereof and the basis stated therein.
INTERROGATORY NO. 25: Damages and Financial Impact
For each year during the Relevant Period, state:
(a) the total revenue from all sources for each Property, including but not limited to revenues collected by Suncoast Room Management Inc., revenues booked through Verimark's central reservation system, revenues booked through OTAs, revenues from walk-in guests, revenues from corporate-direct contracts, revenues from gulfcoastrooms.com, and revenues from any other source, stated as a single aggregate figure for each Property for each year;
(b) the total Gross Room Revenue as reported to Verimark for each Property for each year;
(c) the difference, if any, between the total guest-room revenue figure identified in subpart (a) and the GRR figure reported to Verimark as identified in subpart (b), for each Property for each year;
(d) if Defendant contends that the GRR figures reported to Verimark were accurate and complete notwithstanding any difference between the figures in subparts (a) and (b), explain in detail the factual and contractual basis for any such difference, including the specific categories of revenue excluded from GRR and the specific contractual provision(s) relied upon for each exclusion; and
(e) describe all financial records, accounting workpapers, general-ledger reports, PMS reports, bank statements, revenue journals, and other supporting documentation that reflect or support the revenue amounts identified in subparts (a) through (d), including the custodian and location of each such record.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing Plaintiff's First Set of Interrogatories to Defendant Coastal Palms Franchise Holdings LLC was served on this 11th day of July, 2022, via electronic mail and U.S. Mail, first class, postage prepaid, upon the following:
Nathan Whitfield III, Esq. Gabriela Montes, Esq. Whitfield, Barrow & Crane LLP 1221 Brickell Avenue, Suite 3000 Miami, Florida 33131 Telephone: (305) 555-7200
Email: nwhitfield@wbclaw.com
Email: gmontes@wbclaw.com
Counsel for Defendant Coastal Palms Franchise Holdings LLC
CALDERWOOD & HARKNESS LLP
110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-3400 Facsimile: (954) 555-3401
Email: ynakamura@calderwoodharkness.com
Email: panand@calderwoodharkness.com
Email: dcarmichael@calderwoodharkness.com
Email: cespinoza@calderwoodharkness.com
By: ________
Yuki Nakamura, Esq. Florida Bar No. 0119644
Priya Anand, Esq. Florida Bar No. 0087451
Douglas Carmichael, Esq. Florida Bar No. 0093217
Carlos Espinoza, Esq. Florida Bar No. 0128903
Counsel for Plaintiff Verimark Hospitality Group Inc.

IN THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA

CIVIL DIVISION

DEFINITIONS

INSTRUCTIONS

INTERROGATORIES

Record

Parties

Dates

Amounts