**PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT**
Renata,
Long day. Wanted to get you a full download while everything is fresh. Here's where we stand after Day 1.
**Overview**
We were in session before Hon. Patricia Everwood (Ret.) at Everwood Dispute Resolution PLLC, 396 Alhambra Circle, Suite 800, Coral Gables, from approximately 9:00 AM to 6:30 PM today, with multiple caucus rounds throughout. Attending on our side were myself, Yuki Nakamura, and Martin Holcomb by phone for portions of the afternoon session. On the Coastal Palms side: Nathan Whitfield III and Gabriela Montes of Whitfield, Barrow & Crane, along with Randall Brecker (Managing Member) and Nolan Prescott (25% equity member). Both Brecker and Prescott were present in person for the full day.
**Opening Presentations**
Both sides presented in joint session. I walked Judge Everwood through our position, focusing on the Court's February 9, 2024 Order granting partial summary judgment on Counts I and II — liability established for material breach of FLA §§ 4.1 and 4.2 based on the systematic exclusion of Suncoast Room Management-collected revenues from Gross Room Revenue reports. I then laid out the damages case: Dr. Sharon Kettlewell's forensic analysis establishing $197.8 million in underreported GRR over the 2013–2021 period, $16.095 million in direct underpayments (royalties, marketing-fund contributions, and technology fees), $28.4 million in compounded late-payment interest under FLA § 4.6, and up to $105.5 million in liquidated damages under FLA § 15.3 — total claimed damages of approximately $150 million.
Whitfield presented for Coastal Palms. No real surprises. He continues to lean on Prof. Hargrove's $6.2 million damages estimate as the "reasonable" figure, challenged enforceability of the liquidated-damages provision as a potential penalty, and flagged the $12 million counterclaim for brand-standard violations as an offset. Worth noting: he did not point to any summary judgment support for the counterclaim, and Judge Everwood did not appear to give it much weight.
**Current Negotiating Positions**
Coastal Palms opened at **$32 million** — characterized as a "full and final resolution" inclusive of counterclaim dismissal. Whitfield framed it around Hargrove's $6.2 million plus a "significant premium" for certainty and litigation avoidance.
We opened at **$110 million** — consistent with the lower end of the range we discussed in the settlement authority memorandum ($75M–$95M authority, with $110M as our opening to leave negotiating room). This reflects the ~$150 million total claim discounted for litigation risk, collection risk, and the value of early resolution.
The gap is significant ($32M vs. $110M), but frankly this is not unusual for where things stand at the end of Day 1.
**Movement Through the Day**
Judge Everwood ran approximately four rounds of private caucus with each side throughout the day. By close of session:
- Coastal Palms moved from $32M to approximately **$45M**. - We moved from $110M to approximately **$100M**.
Still a substantial gap ($45M vs. $100M), but the movement from Coastal Palms' side — $13 million in a single day — is meaningful and suggests they understand the liability exposure post-summary judgment. I think there's more room there.
**Judge Everwood's Approach**
She was well-prepared — clearly reviewed both confidential mediation statements thoroughly. In our caucus sessions, she signaled (without revealing confidences from the other room) that Coastal Palms' opening position is unrealistic given the partial summary judgment ruling and the weight of the forensic evidence. At the same time, she pushed us to think carefully about collection risk — specifically, Ironclad National Bank's approximately $94 million in senior first-lien mortgages on 18 of Coastal Palms' 22 properties, which limits practical recovery even with a full trial judgment.
She also encouraged both sides to think creatively about non-cash components — franchise surrender, enhanced compliance mechanisms — as part of a package deal. I think this is the right instinct and could be the key to bridging the gap. More on that below.
**Assessment of the Other Side**
My read: Coastal Palms is taking this seriously. The summary judgment order was clearly a turning point for them. Whitfield acknowledged in joint session that the liability ruling "narrows the issues for trial" — which is essentially a concession that the core breach finding is established and they're fighting over dollars, not liability.
That said, collectibility is their key leverage point, and it's not a frivolous one. Whitfield emphasized repeatedly that even a $150M judgment would be uncollectible given the Ironclad lien position and Coastal Palms' overall asset structure. This is a real concern — but it's also a reason to reach a structured deal with adequate security rather than chase a paper judgment.
On the personal dynamics: Randy Brecker appeared visibly concerned during the joint session, and based on some of Judge Everwood's hints in our caucuses, I believe he may be more motivated to resolve than his lawyers' stated positions reflect. Nolan Prescott was largely silent throughout the day — hard to read.
The franchise-surrender concept that Judge Everwood floated — surrendering a significant number of the 22 properties back to the brand — appeared to gain traction with both sides as a value-bridging mechanism. This could be significant for us operationally, and I want to discuss the strategic implications with you.
**Plan for Tomorrow (Day 2 — March 15)**
Parties reconvene at 9:00 AM at Everwood Dispute Resolution. Judge Everwood asked both sides to come prepared with revised proposals incorporating non-cash components — franchise surrender, enhanced audit protocols, structured payments.
I intend to present a framework that includes:
- A total monetary value in the **$80M–$110M range** (consistent with the board-approved authority of $75M–$95M, depending on the value assigned to non-cash elements); - Franchise surrender of a substantial number of properties; - Enhanced audit and reporting requirements for any retained properties; and - Structured payments with adequate security (we need to think about what form this takes given the Ironclad lien situation).
**Two requests for tomorrow:**
1. Please be available by phone throughout the day. If we reach a framework that looks like it could work, I'll need real-time client input and potentially approval authority decisions. 2. Please confirm Martin Holcomb's availability as well — I'll want him available for review of any financial/structured-payment terms.
**A Few Housekeeping Items**
I'll send another update tomorrow evening, or I'll call you directly if we reach a tentative deal during the session. As a reminder, any settlement above the approved authority range ($75M–$95M) would require board-level approval — but at this stage, the parties' positions are still far enough apart that this isn't yet in play.
Please do not forward this email outside the privileged circle without checking with me first. In addition to attorney-client privilege and work product protection, all mediation communications are protected under Fla. Stat. § 44.405, and I want to make sure we maintain those protections.
I'll have my phone on tonight if you want to discuss any of this by phone. Otherwise, talk to you tomorrow.
Best,
Priya
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**Priya Anand** Partner Calderwood & Harkness LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, FL 33301 panand@calderwoodharkness.com
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**PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT**
This email and any attachments are privileged and confidential, protected by the attorney-client privilege and/or the work product doctrine. This communication also contains information subject to mediation confidentiality under Fla. Stat. § 44.405. It is intended solely for the use of the addressee(s). If you have received this communication in error, please notify the sender immediately and delete all copies. Any unauthorized review, use, disclosure, or distribution is prohibited.