Elness Swenson Graham Architects, Inc.// RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP And RLJ Lodging Fund II Acquisitions, LLC v. RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP And RLJ Lodging Fund II Acquisitions, LLC// Elness Swenson Graham Architects, Inc. ( 2015 )

ACCEPTED
03-14-00738-CV
SEE AMENDED BRF 5648230
THIRD COURT OF APPEALS
FILED ON 6/15/15 AUSTIN, TEXAS
6/11/2015 7:28:52 PM
JEFFREY D. KYLE
CLERK
Oral Argument Requested
No. 3-14-00738-CV FILED IN
3rd COURT OF APPEALS
AUSTIN, TEXAS
In The Court of Appeals For The 6/11/2015 7:28:52 PM
Third District of Texas JEFFREY D. KYLE
Clerk
Elness, Swenson, Graham § From the 200th District Court
Architects, Inc., §
Appellant and Cross-Appellee, §
§
v. §
§
RLJII-C Austin Air, LP, §
RLJ II-C Austin Air Lessee, LP §
and RJL Lodging Fund II §
Acquisitions, LLC, §
Appellees and Cross-Appellants. § Of Travis County, Texas
APPELLEES’ BRIEF
MUNSCH, HARDT, KOPF
& HARR, P.C.
Michael W. Huddleston Benton T. Wheatley
State Bar No: 10148415 State Bar No. 24015171
J. Stephen Gibson Tracy McCreight
State Bar No: 07866000 State Bar No. 24037064
3800 Ross Tower 401 Congress Avenue
500 North Akard Street Suite 3050
Dallas, Texas 75201 Austin, TX 78701
214-855-7500 telephone 512-391-6100 telephone
214-855-7584 facsimile 512-391-6149 facsimile
ATTORNEYS FOR APPELLEES,
CROSS-APPELLANTS
IDENTITY OF PARTIES AND COUNSEL
The undersigned counsel of record, pursuant to Texas Rule of Appellate
Procedure 38.2, certifies that the following persons have an interest in the outcome
of this case:
Appellant, Cross-Appellee: Elness, Swenson, Graham Architects, Inc.
Appellant’s, Cross-Appellee’s Weston M. Davis
Counsel on Appeal: Gregory N. Ziegler
Steven R. Baggett
Macdonald Devin, P.C.
1201 Elm Street
3800 Renaissance Tower
Dallas, TX 75270
Appellant, Cross-Appellee’s Weston M. Davis
Counsel at Trial: Gregory N. Ziegler
Matthew Mumm
Macdonald Devin, P.C.
1201 Elm Street
3800 Renaissance Tower
Dallas, TX 75270
Appellees, Cross-Appellants: RLJ II-C Austin Air, LP
RLJ II-C Austin Air Lessee, LP
RLJ Lodging Fund II Acquisitions, LLC
Appellees’, Cross-Appellants’ Michael W. Huddleston
Counsel on Appeal: J. Stephen Gibson
Munsch Hardt Kopf & Harr, P.C.
3800 Ross Tower
500 North Akard Street
Dallas, Texas 75201
i
Appellees’, Cross-Appellants’ Benton T. Wheatley
Counsel at Trial: Tracy McCreight
Munsch Hardt Kopf & Harr, P.C.
401 Congress Avenue
Suite 3050
Austin, TX 78701
By: /s/ Michael W. Huddleston
Attorney for Appellees, Cross-
Appellants
ii
STATEMENT CONCERNING ORAL ARGUMENT
Appellees and Cross-Appellants respectfully request oral argument in this
case. Appellees and Cross-Appellants respectfully submit that oral argument will
help the Court in evaluating the issues necessary to the resolution of this appeal.
iii
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL .............................................................i
STATEMENT CONCERNING ORAL ARGUMENT ........................................... iii
TABLE OF CONTENTS ..........................................................................................iv
INDEX OF AUTHORITIES.................................................................................. viii
I. STATEMENT OF THE CASE ....................................................................... 1
II. ISSUES PRESENTED .................................................................................... 3
III. STATEMENT OF FACTS .............................................................................. 4
IV. SUMMARY OF ARGUMENT ....................................................................... 5
V. ARGUMENT AND AUTHORITIES ............................................................. 8
A. The Trial Court Correctly Awarded RLJ Its Attorney’s Fees............... 8
1. Chapter 38 Does Not Require a Judgment for Damages. ........... 8
a. The “Judgment” Requirement Was
Eliminated by the 1977 Amendment to
Chapter 38’s Predecessor.................................................. 9
b. The Texas Supreme Court and This Court
Have Rejected Any Such Requirement. ........................... 9
c. The Architect’s Cases Do Not Say
Otherwise. .................................................................... 11
2. Chapter 38 Only Requires a Valid Claim Timely Presented and
Unpaid for Thirty Days. ............................................................ 12
a. The Architect Ignores Proper Statutory
Interpretation................................................................... 12
b. The Architect Attempts to Add Words to
Chapter 38 By Misapplication of Cases. ........................ 13
3. Chapter 38 Only Requires a Valid Claim Timely Presented and
Unpaid for Thirty Days. ............................................................ 15
a. A “Valid Claim” Is Required.......................................... 15
1) “In [A]ddition [T]o” Does Not Imply
a “Valid Claim” Requires a Judgment
Awarding Damages. ............................................. 15
2) A Verdict Awarding Damages Is
Enough To Have a “Valid Claim.” ...................... 16
b. Chapter 38 Requires the Valid Claim to
Remain Unpaid 30 Days After Presentment. ................. 17
iv
4. RLJ Met All the Statutory Requirements for Recovering Its
Attorney’s Fees. ........................................................................ 21
a. RLJ Had a Valid Claim. ................................................. 21
b. The Just Amount Owing Was Not Timely
Tendered. .................................................................... 22
5. The Trial Court’s Reasoning Agreed With the Legislature’s. .. 23
B. RLJ Was Assigned the Contract and the Cause of Action and Had
Standing to Sue. ................................................................................... 24
1. RLJ Owned Both the Architectural Contract Rights and Causes
of Action of Action for Its Breach. ........................................... 25
a. Ausaircourt Assigned the Contract to RLJ
Under the PSA and the Cause of Action By
Assignment of “Intangible Assets.” ............................... 25
2. The Intangibles Assignment Transferred the Contract Cause of
Action. ....................................................................................... 26
a. “Intangible Assets” Included Contract
Cause of Action. ............................................................. 27
b. The Architect’s Argument Ignores Context
and the Residuary Clause’s Purpose............................... 28
3. The Intangibles Assignment was “Express.” ............................ 31
4. The Supplemental Clarification May Be Considered and
Removes Any Doubt That RLJ Was Assigned the Architectural
Contract and the Cause of Action For Its Breach. .................... 34
5. Alternatively, The PSA Transferred The Contract Cause of
Action When It Transferred the Contract. ................................ 36
6. The Architectural Contract Was Validly Assigned to RLJ. ..... 36
C. The Contract Was Admissible and Authenticated. ............................. 39
D. The Trial Court Did Not Err in Submitting the Contractual Liability
Issue Concerning Structural Engineering and The Architect’s
Complaints Have Not Been Preserved For Review. ........................... 41
1. The Architect Waived Its Complaint By Failing to Specially
Except to the Omission of Vicarious or Respondeat Superior
Allegations. ............................................................................... 41
2. The Architect Waived Its Complaint By Failing to File a
Verified Denial of Liability in the Capacity Sued. ................... 43
v
3. The Architect Failed to Preserve Its Charge Complaint By
Objecting On Different Grounds Than Those Now Urged. ..... 44
4. Vicarious or Respondeat Superior Liability Is Not Required
When Responsibility Exists Under a Contract. ........................ 44
a. Ryan Decided Tort, Not Contractual, Duty
Under a Now-Rejected Liability Theory. ....................... 44
b. The Contract Defines Contractual Duties....................... 45
5. The Architect Waived Any Complaint About the Duty
Submitted By Failing to Request Any Question, Definition or
Instruction. ................................................................................ 46
6. Ryan Only Addressed the Architect’s Direct, Not Vicarious,
Tort Liability. ............................................................................ 46
7. Architect’s Reasoning Permits It All the Contractual Benefits
Free of Burden and Risk. .......................................................... 47
8. Illegality Is Not an Issue Due to The Architect’s Failure to
Plead It and Statutory Authorization for Architects Performing
Structural Engineering Services. ............................................... 48
a. Any Illegality Was Waived Because It Is
Not Apparent And The Architect Did Not
Affirmatively Plead It. .................................................... 49
b. Seaview Hospital Does Not Say An
Architect Cannot Provide Structural
Engineering Services. ..................................................... 50
E. The Evidence of Diminution in Value Was Legally Sufficient. ......... 50
1. The Evidence Is Legally Sufficient If It Provides More Than a
Scintilla of Factual Support. ..................................................... 51
2. Hornsby’s Testimony Was Well-Founded Based on Well-
Accepted Standards and Methodologies. .................................. 52
3. The Architect’s Complaints Are Meritless. .............................. 54
a. The Evidence Supported the Answer to the
Question Asked, and the Architect Waived
Its Valuation Date Complaint. ........................................ 54
b. The Jury Was Provided With Actual
Performance Data. .......................................................... 58
c. There Was Legally Sufficient Evidence to
Support the Jury’s Verdict and Any
Allocation of Damages. .................................................. 60
vi
1) The Architect Erroneously Assumes
Jury Must Have Implicitly Found
Others Breached. .................................................. 60
2) Evidence of Unsegregated Damages
Is Legally Sufficient Evidence of
Segregated Damages. ........................................... 61
3) Testimony Segregating Damages Is
Not Required. ....................................................... 62
d. Comparable Sales Were a Vouchsafe, Not
the Basis for Valuations. ................................................. 63
e. There Was No Recovery For “Stigma”
Damages and No Double Recovery. .............................. 65
f. Lost Profits Were Not a Separate Element of
Recovery, But Were Only Used As
Necessary for the Texas Supreme Court’s
Approved Method of Valuing Property
Producing Income. .......................................................... 66
VI. CONCLUSION AND PRAYER ................................................................... 67
CERTIFICATE OF COMPLIANCE ....................................................................... 70
CERTIFICATE OF SERVICE ................................................................................ 71
APPENDIX ..............................................................................................................72
vii
INDEX OF AUTHORITIES
Page(s)
CASES
A.D. Willis Co. v. Metal Bldg. Components, Inc.,
No. 03-99-00574-CV, 2000 WL 1508500
(Tex. App.—Austin Oct. 12, 2000, pet. denied) .............................. 10, 12, 15-16
Adams v. Great American Lloyd’s Ins.,
891 S.W.2d 769 (Tex. App.—Austin 1995, no writ) ......................................... 27
Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. E Court, Inc.,
No. 03-02-00714-CV, 2003 WL 21025030
(Tex. App.—Austin May 8, 2003, no pet.)......................................................... 27
Alaniz v. Jones & Neuse, Inc.,
907 S.W.2d 450 (Tex. 1995) .............................................................................. 42
Am. Multi-Cinema, Inc. v. Hegar,
No. 03-14-00397-CV, 2015 WL 1967877
(Tex. App.—Austin Apr. 30, 2015, no pet. h.) ................................................... 28
Associated Press v. Hicks Broad. Corp.,
No. C14-93-00066-CV, 1993 WL 495114
(Tex. App.—Houston [14th Dist.] Dec. 2, 1993, no writ) ........................... 40-41
Austin Hill Country Realty, Inc. v. Palisades Plaza, Inc.,
948 S.W.2d 293 (Tex. 1997) .............................................................................. 10
Austin Road Co. v. Pope,
147 Tex. 430, 216 S.W.2d 563 (1949) ............................................................... 20
Avanti Servs. Inc. v. Questor Drilling, Inc.,
No. 01-86-00741-CV, 1987 WL 8352
(Tex. App.—Houston [1st Dist.] Mar. 26, 1987, no writ) .................................. 43
Baroid Equipment, Inc. v. Odeco Drilling, Inc.,
184 S.W.3d 1 (Tex. App.—Houston [1st Dist.] 2006, pet. denied) ................... 35
Barraza v.Koliba,
933 S.W.2d 164 (Tex. App.—San Antonio 1996, writ denied) ......................... 54
viii
Barry v. Jackson,
309 S.W.3d 135 (Tex. App.—Austin 2010, no pet.) .................................... 56-58
Bechtel Corp. v. CITGO Products Pipeline Co.,
271 S.W.3d 898 (Tex. App.—Austin 2008, no pet.) .......................................... 62
Beech Aircraft Corp. v. Jinkins,
739 S.W.2d 19 (Tex. 1987)................................................................................. 20
Berschauer/Phillips Const. Co. v. Seattle Sch. Dist. No. 1,
881 P.2d 986 (Wash. 1994) .......................................................................... 37-38
Binion v. Brinkley,
No. 2-09-121-CV, 2010 WL 396385
(Tex. App.—Houston [14th Dist.] Feb. 4, 2010) ............................................... 62
Blizzard v. Nationwide Mut. Fire Ins. Co.,
756 S.W.2d 801 (Tex. App.—Dallas 1988, no writ) ....................................12, 20
BMC Software Belgium, N.V. v. Marchand,
83 S.W.3d 789 (Tex. 2002)................................................................................. 23
Boerschig v. Southwestern Holdings, Inc.,
322 S.W.3d 752 (Tex. App.—El Paso 2010, no pet.) ........................................ 30
Brooks v. Chevron USA Inc.,
No. 13-05-029-CV, 2006 WL 1431227
(Tex. App.—Corpus Christi May 25, 2006, pet. denied)(mem. op.) ........... 32-33
Browne v. King,
196 S.W. 884 (Tex. Civ. App. 1917) aff'd,
111 Tex. 330, 235 S.W. 522 (1921) ................................................................... 27
Buccaneer Homes of Ala., Inc. v. Pelis,
43 S.W.3d 586 (Tex. App.—Houston [1st Dist.] 2001, no pet.) ........................ 20
Buckner Glass & Mirror Inc. v. T.A. Pritchard Co.,
697 S.W.2d 712 (Tex. App.—Corpus Christi 1985, no writ) ........................8, 22
Burroughs Wellcome Co. v. Crye,
907 S.W.2d 497 (Tex.1995)................................................................................ 51
ix
Butler v. Joseph's Wine Shop, Inc.,
633 S.W.2d 926
(Tex. App.—Houston [14th Dist.] 1982, writ ref'd n.r.e.) .................................. 43
C.W. 100 Louis Henna, Ltd. v. El Chico Rests. of Tex., L.P.,
295 S.W.3d 748 (Tex. App.—Austin 2009, no pet.) .......................................... 21
C& H Nationwide, Inc. v. Thompson,
903 S.W.2d 315 (Tex. 1994) .............................................................................. 23
CBI NA-CON, Inc. v. UOP Inc.,
961 S.W.2d 336
(Tex. App.—Houston [1st Dist.] 1997, pet. denied) .......................................... 45
Cedar Point Apartments v. Cedar Point Inv. Corp.,
693 F.2d 748 (8th Cir.), cert. denied, 461 U.S. 914 (1983) ............................... 38
Ceramic Tile Int’l Inc. v. Balusek,
137 S.W.3d 722 (Tex. App.—San Antonio 2004, no pet.) ................................ 32
City of Harlingen v. Sharboneau,
48 S.W.3d 177 (Tex. 2001).....................................................................52, 55, 66
City of Keller v. Wilson,
168 S.W.3d 802 (Tex.2005)..........................................................................51, 60
City of Rockwall v. Hughes,
246 S.W.3d 621 (Tex. 2008) ........................................................................ 13-14
Coffin v. Douglas,
61 Tex. 406 (1884)(available at 1884 WL 8785) ......................................... 29-30
Collin Cnty. v. Hixon Family P'ship, Ltd.,
365 S.W.3d 860 (Tex. App.—Dallas 2012, pet. denied).................................... 64
Commercial Structures and Interiors, Inc. v. Liberty Educ. Ministries, Inc.,
192 S.W.3d 827 (Tex. 2006) ........................................................................26, 34
Cook v. Exxon Corp.,
145 S.W.3d 776 (Tex. App.—Texarkana 2004, no pet.).................................... 32
D Design Holdings, L.P. v. MMP Corp.,
339 S.W.3d. 195 (Tex. App.—Dallas 2011, no pet.) ......................................... 36
x
De La Rosa v. Kaples,
812 S.W.2d 432 (Tex. App.—San Antonio 1991, writ denied) ......................... 16
Doctors Hosp. 1997, L.P. v. Sambuca Houston, L.P.,
154 S.W.3d 634
(Tex. App—Houston [14th Dist.] 2004, pet. abated) ......................................... 17
Dynegy Midstream Servs., Ltd. P'ship v. Apache Corp.,
294 S.W.3d 164 (Tex. 2009) .............................................................................. 27
Effel v. McGarry,
339 S.W.3d 789 (Tex. App.—Dallas 2011, pet. denied).................................... 36
Ellis County State Bank v. Keever,
888 S.W.2d 790 (Tex. 1994) .............................................................................. 23
331 S.W.3d at 420, 424-25 ...................................................................................... 31
Enriquez v. K & D Development & Construction, Inc.,
567 S.W.2d 40
(Tex. Civ. App.—El Paso 1978, writ ref'd n.r.e.) ................................................. 8
Exxon Corp. v. Emerald Oil & Gas Co., L.C.,
331 S.W.3d 419, 424-25 (Tex. 2010) ...........................................................31, 33
Exxon Corp. v. Pluff,
94 S.W.3d 22 (Tex. App.—Tyler 2002, pet. denied) ................................... 31-32
Farrar v. Hobby,
506 U.S. 103 (1992) ............................................................................................ 14
Fire Ins. Exchg. v. Sullivan,
192 S.W.3d 99
(Tex. App.—Houston [14th Dist.] 2006, pet. denied) ..................................12, 20
Folgers Architects Ltd. v. Kerns,
612 N.W.2d 539 (Neb. App. 2000) .................................................................... 37
Ford v. Robertson,
739 S.W.2d 3 (Tenn. Ct. App. 1987) .................................................................. 37
Gallagher v. Southern Source Packaging, LLC,
564 F. Supp. 2d 503 (E.D.N.C. 2008) .................................................................. 38
xi
Geis v. Colina Del Rio, LP,
362 S.W.3d 100 (Tex. App.—San Antonio 2011, pet. denied) .......................... 49
Getzschman v. Miller Chem. Co.,
232 Neb. 885, 443 N.W.2d 260 (1989) .............................................................. 45
Gips v. Red Robin Corp.,
366 S.W.2d 853
(Tex. Civ. App.—Houston 1963, writ ref’d n.r.e) .............................................. 38
Grapevine Excavation, Inc. v. Maryland Lloyds,
35 S.W.3d 1 (Tex. 2000)..................................................................................... 13
Green Int’l, Inc. v. Solis,
951 S.W.2d 384 (Tex. 1997) .......................................................................passim
Green v. H. E. Butt Found.,
217 F.2d 553 (5th Cir. 1954) .............................................................................. 28
Guirey, Srnka & Arnold, Architects v. Phoenix,
9 Ariz. App. 70, 449 P.2d 306 (1969) ................................................................ 45
Gulf Ins. Co. v. Cunningham,
A14-91-00799-CV, 1993 WL 136039
(Tex. App.—Houston [14th Dist.] Apr. 29, 1993, writ denied) ......................... 57
Gulf States Utilities Co. v. Low,
79 S.W.3d 561 (Tex. 2002)................................................................................. 59
Hagins v. E-Z Mart Stores, Inc.,
128 S.W.3d 383 (Tex. App.—Texarkana 2004, no pet.).................................... 62
Halliburton, Inc. v. Admin. Review Bd.,
771 F.3d 254 (5th Cir. 2014) .............................................................................. 30
Hamra v. Gulden,
898 S.W.2d 16 (Tex. App.—Dallas 1995, writ dism’d w.o.j.)........................... 20
Haubold v. Medical Carbon Research Inst., LLC,
No. 03-11-00115-CV, 2014 WL 1018008
(Tex. App.—Austin Mar. 14, 2014, no pet.)(mem. op.) ........................ 11-12, 16
xii
Horton v. Robinson,
776 S.W.2d 260 (Tex. App.—El Paso 1989, no writ) ........................................ 43
Houston Unlimited, Inc. Metal Processing v. Mel Acres Ranch,
389 S.W.3d 583 (Tex. App.—Houston [14th Dist.] 2012),
rev'd on other grounds, 443 S.W.3d 820 (Tex. 2014) ........................................ 65
Houston Unlimited, Inc. Metal Processing v. Mel Acres Ranch,
443 S.W.3d 820 (Tex. 2014) .............................................................................. 52
Hubacek v. Ennis State Bank,
159 Tex. 166, 317 S.W.2d 30 (1958) ................................................................. 34
Ian Martin, Inc. v. Greenspoint Bank,
01-87-00631-CV, 1988 WL 45423..................................................................... 33
Imperial Lofts, Ltd. v. Imperial Woodworks, Inc.,
245 S.W.3d 1 (Tex. App.—Waco 2007, pet. denied)......................................... 20
In re Cooper,
242 B.R. 767 (Bankr. S.D. Ga. 1999) ................................................................. 38
In re First State Bancorporation,
498 B.R. 322 (Bankr. D.N.M. 2013) .................................................................. 27
In re Fleckenstein,
589 S.W.2d 788 (Tex. Civ. App.—El Paso 1979, no writ) ................................ 28
In re Grotjohn,
No. 03-47055DML, 2005 WL 6441386
(Bankr. N.D. Tex. July 19, 2005) ....................................................................... 28
In re Malacara,
223 S.W.3d 600 (Tex. App.—Amarillo 2007, no pet.) ...................................... 28
In re Scott,
157 B.R. 297 (Bankr. W.D. Tex. 1993),
withdrawn per settlement, 162 B.R. 1004
(Bankr. W.D. Tex. Jan. 21, 1994) ....................................................................... 28
Intercontinental Group P’ship v. KB Home Lone Star, L.P.,
295 S.W.3d 650 (Tex. 2009) ........................................................................11, 14
xiii
Interstate Contracting Corp. v. City of Dallas,
135 S.W.3d 605 (Tex. 2004) .............................................................................. 48
Jakab v. Gran Villa Townhouses Homeowners Ass'n, Inc.,
149 S.W.3d 863 (Tex. App.—Dallas 2004, no pet.) .......................................... 14
Jones v. Kelley,
614 S.W.2d 95 (Tex.1981)...................................................................... 14, 16-17
Karol v. Presido Enterprises, Inc.,
622 S.W.2d 638 (Tex. App.—Austin 1981, no writ) ......................................... 22
Kelly v. Northwest Community Hospital,
66 Ill.App.3d 679, 23 Ill. Dec. 466, 384 N.E.2d 102 (1978) ............................... 45
Kennedy v. Lynd,
306 F.2d 222 (5th Cir. 1962) .............................................................................. 30
Kleas v. Clark, Thomas & Winters, P.C.,
No. 03-12-00755-CV, 2013 WL 4516120
(Tex. App.—Austin Aug. 21, 2013, pet. denied) .........................................21, 12
La Tierra de Simmons Familia, Ltd. v. Main Event Entm't, LP,
No. 03-10-00503-CV, 2012 WL 753184
(Tex. App.—Austin Mar. 9, 2012, pet. denied).................................................. 32
Lay v. Aetna Ins. Co.,
599 S.W.2d 683 (Tex. App.—Austin 1980, writ ref'd n.r.e.) ............................. 27
Lee v. City of Houston,
807 S.W.2d 290 (Tex. 1991) ................................................................................ 9
Leggett v. Brinson,
817 S.W.2d 154 (Tex. App.—El Paso 1991, no writ) ........................................ 43
Leland v. Brandal,
257 S.W.3d 204 (Tex. 2008) .............................................................................. 13
Lewis v. Adams,
979 S.W.2d 831
(Tex. App.—Houston [14th Dist.] 1998, no pet)................................................ 34
xiv
Lippincott v. Whisenhunt,
58 Tex. Sup. Ct. J. 705, 2015 WL 1967025
(Tex. Apr. 27, 2015)(per curiam) ....................................................................... 12
Mack Trucks, Inc. v. Tamez,
206 S.W.3d 572 (Tex. 2006) .............................................................................. 59
Mancorp, Inc. v. Culpepper,
802 S.W.2d 226 (Tex.1990)................................................................................ 51
Manges v. Mustang Oil Tool Co.,
658 S.W.2d 725
(Tex. App.—Corpus Christi 1983, writ ref'd n.r.e.) ........................................... 17
Marange v. Marshall,
402 S.W.2d 236
(Tex. Civ. App.—Corpus Christi 1966, writ ref'd n.r.e.) ................................... 47
Martini v. Tatum,
776 S.W.2d 666 (Tex. App.—Amarillo 1989, writ denied) ............................... 16
MBM Fin. Corp. v. Woodlands Operating Co.,
292 S.W.3d 660 (Tex. 2009) ........................................................................11, 16
McGalliard v. Kuhlmann,
722 S.W.2d 694 (Tex.1986)................................................................................ 60
McGinty v. Hennen,
372 S.W.3d 625 (Tex. 2012) ........................................................................54, 56
McKinley v. Drozd,
685 S.W.2d 7 (Tex. 1985)............................................................................passim
Merrell Dow Pharm., Inc. v. Havner,
953 S.W.2d 706 (Tex. 1997) .............................................................................. 57
Methodist Hosps. v. Corporate Communicators, Inc.,
806 S.W.2d 879 (Tex. App.-Dallas 1991, writ denied) ...................................... 40
Minn. Mining & Mfg. Co. v. Nishika Ltd.,
953 S.W.2d 733 (Tex. 1997) ........................................................................ 61-62
xv
Missouri-Kansas-Texas R. Co. v. City of Dallas,
623 S.W.2d 296 (Tex. 1981) .............................................................................. 51
Montgomery Ward & Co. v. Scharrenbeck,
146 Tex. 153, 204 S.W.2d 508 (1947) ............................................................... 42
Moundsview ISD v. Buetow & Assoc.,
253 N.W.2d 836 (Minn.1977) ............................................................................ 45
Mueller v. All-Temp Refrig., Inc.,
2014 Ohio 2718 .................................................................................................. 32
Mustang Pipeline Co. v. Driver Pipeline Co.,
134 S.W.3d 195 (Tex. 2004) .............................................................................. 11
Naylor v. Stiegler,
613 S.W.2d 546 (Tex. Civ. App.—Fort Worth 1981, no writ) .......................... 57
O and B Farms, Inc. v. Black,
300 S.W.3d 418
(Tex. App.—Houston [14th Dist.] 2009, pet. denied) ........................................ 51
Office of Pub. Util. Counsel v. P.U.C.,
878 S.W.2d 598 (Tex. 1994) .............................................................................. 40
Orix Credit Alliance, Inc. v. Omnibank, N.A.,
858 S.W.2d 586 (Tex. App. 1993)...................................................................... 33
Osborne v. Jauregui, Inc.,
252 S.W.3d 70 (Tex. App.—Austin 2008, pet. denied) ..............................passim
Osterberg v. Peca,
12 S.W.3d 31 (Tex. 2000)................................................................................... 54
Owen v. CNA Insurance/Continental Cas. Co.,
167 N.J. 450, , 771 A.2d 1208 (N.J. Super. 2001) ............................................. 38
Owen v. Vibrasonic Exploration, Inc.,
694 S.W.2d 421
(Tex. App.—Houston [14th Dist.] 1985, writ ref’d n.r.e.) ................................. 33
Pagosa Oil & Gas LLC v. Marrs & Smith Ptnrs.,
323 S.W.3d 203 (Tex. App.—El Paso 2010, pet. denied) .................................. 37
xvi
Park v. Escalera Ranch Owners' Ass'n, Inc.,
No. 03-12-00314-CV, 2015 WL 737424
(Tex. App.—Austin Feb. 13, 2015, no pet. h.) ................................................... 49
Parkway Co. v. Woodruff,
901 S.W.2d 434 (Tex. 1995) .............................................................................. 66
Peissel v. Peissel,
620 S.W.2d 796
(Tex. Civ. App.—Houston [14th Dist.] 1981, no writ) ...................................... 19
Perez v. Baker Packers,
694 S.W.2d 138
(Tex. App.—Houston [14th Dist.] 1985, writ ref'd n.r.e.) .................................. 10
Petsch v. Slator,
573 S.W.2d 849 (Tex. Civ. App.—Austin 1978, writ ref'd n.r.e.) ..................... 30
Phillips v. Estate of Poulin,
No. 03-05-00099-CV, 2007 WL 2980180
(Tex. App.—Austin Oct. 12, 2007, no pet.) ....................................................... 23
Phillips v. Phillips,
820 S.W.2d 785 (Tex.1991)................................................................................ 49
Pilgrim’s Pride Corp. v. Smoak,
134 S.W.3d 880 (Tex. App.—Texarkana 2004, pet. denied) ............................. 63
Playskool, Inc. v. Elsa Benson, Inc.,
147 Ill. App. 3d 292, 497 N.E.2d 1199 (1986) ................................................... 47
Precision Homes, Inc. v. Cooper,
671 S.W.2d 924
(Tex. App.—Houston [14th Dist.] 1984, writ ref'd n.r.e.) ............................ 65-66
Prize Energy Res., L.P. v. Cliff Hoskins, Inc.,
345 S.W.3d 537 (Tex. App.—San Antonio 2011, no pet.) ................................ 48
Provident Life & Acc. Ins. Co. v. Knott,
128 S.W.3d 211 (Tex. 2003) .............................................................................. 34
xvii
Rasmusson v. LBC PetroUnited, Inc.,
124 S.W.3d 283
(Tex. App.—Houston [14th Dist.] 2003, pet. denied) ..................................14, 16
Reuben H. Donnelley Corp. v. McKinnon,
688 S.W.2d 612 (Tex. App.—Corpus Christi 1985, writ ref’d)......................... 38
Richey v. Stop N Go Markets of Tex.,
654 S.W.2d 430 (Tex.1983).......................................................................... 31-33
Rockwall Commons Assocs. Ltd. v. MRC Mortgage Grantor Trust I,
331 S.W.3d 500 (Tex. App.—El Paso 2010, no pet.) ........................................ 39
Rogers v. RAB Inv. Ltd.,
816 S.W.2d 543 (Tex. App.—Dallas 1991, no writ) .......................................... 16
Rosell v. Central W. Motor Stages, Inc.,
89 S.W.3d 643 (Tex. App.—Dallas 2002, pet. denied) ...................................... 63
Ross v. Ross,
20 Ala. 105 (1852) .............................................................................................. 32
Ross v. St. Luke’s Episcopal Hosp.,
58 Tex. Sup. Ct. J. 766, 2015 WL 2009744 (Tex. May 1, 2015) ....................... 12
Rumbin v. Utica Mut. Ins. Co.,
254 Conn. 259, 757 A.2d 526 (Conn. 2000) ...................................................... 38
Ryan v. Morgan Spear Associates Inc.,
546 S.W.2d 678
(Tex. Civ. App.—Corpus Christi 1977, writ ref'd n.r.e.) ............................. 44-47
Sanders v. Worthington,
382 S.W.2d 910 (Tex.1964)................................................................................ 39
Seaview Hospital, Inc. v. Medicenters of Am., Inc.,
570 S.W.2d 35 (Tex. Civ. App.—Corpus Christi 1978, no writ) ................. 49-50
Shoemake v. Fogel, Ltd.,
826 S.W.2d 933 (Tex.1992)................................................................................ 42
xviii
Simmons v. Bisland,
No. 03-08-00141-CV, 2009 WL 961522
(Tex. App.—Austin Apr. 9, 2009, pet. denied)(mem. op.) ................................ 63
Southwestern Bell Tel. Co. v. DeLanney,
809 S.W.2d 493 (Tex. 1991) .............................................................................. 45
St. Anthony's Hosp. v. Whitfield,
946 S.W.2d 174 (Tex. App.—Amarillo 1997, writ denied) ............................... 47
State Dep't of Highways & Pub. Transp. v. Payne,
838 S.W.2d 235 (Tex. 1992) ........................................................................44, 46
State Farm Fire and Casualty Co. v Gandy,
925 S.W.2d 696 (Tex. 1996) .............................................................................. 36
State Farm Life Ins. Co. v. Beaston,
907 S.W.2d 430 (Tex. 1995) ........................................................................ 11-12
State v. Bristol Hotel Asset Co.,
293 S.W.3d 170 (Tex. 2009) ........................................................................27, 67
Stewart Title Guar. Co. v. Sterling,
822 S.W.2d 1 (Tex. 1991).............................................................................14, 62
Tex. Lottery Comm’n v. First State Bank of DeQueen,
325 S.W.3d 628 (Tex. 2010) .............................................................................. 13
Tex. Pipe Line Co. v. Hunt,
149 Tex. 33, 228 S.W.2d 151 (Tex. 1950) ......................................................... 64
Texarkana Memorial Hospital, Inc. v. Murdock,
946 S.W.2d 936 (Tex. 1997) .............................................................................. 62
Texas Alcoholic Beverage Comm'n v. Kings Four, Inc.,
583 S.W.2d 676 (Tex. Civ. App.—Austin 1979, no writ) ................................... 9
Thomas C. Cook, Inc. v. Rowhanian,
774 S.W.2d 679 (Tex. App.—El Paso 1989, writ denied) ................................. 39
THPD, Inc. v. Cont’l Imports, Inc.,
260 S.W.3d 593 (Tex. App.—Austin 2008, no pet.) .......................................... 54
xix
Turner, Collie & Braden, Inc. v. Brookhollow, Inc.,
642 S.W.2d 160 (Tex. 1984) .............................................................................. 57
Union Carbide Corp. v. Synatzske,
438 S.W.3d 39 (Tex. 2014)................................................................................. 13
University Mews Associates v. Jeanmarie,
122 Misc. 2d 434, 471 N.Y.S.2d 457 (N.Y. Sup.Ct. 1983) ................................. 38
Van Zandt v. Fort Worth Press,
359 S.W.2d 893 (Tex. 1962) .............................................................................. 13
Vance v. My Apartment Steak House of San Antonio, Inc.,
677 S.W.2d 480 (Tex.1984)..........................................................................51, 56
Vanderburg v. Nocona Gen. Hosp.,
No. 7:02-CV-291-KA, 2008 WL 114846
(N.D. Tex. Jan. 10, 2008) ................................................................................... 27
Vann v. Bowie Sewerage Co.,
127 Tex. 97, 90 S.W.2d 561 (1936) ................................................................... 31
Vernooy Architects v. Smith,
346 S.W.3d 877 (Tex. App.—Austin 2011, pet. denied) ................................... 45
Welch v. Monroe,
No. 10-03-00013-CV, 2004 WL 2474504
(Tex. App.—Waco Nov. 3, 2004, no pet.) ......................................................... 31
Westminster Falcon/Trinity L.L.P. v. Chong Shin,
No. 07-11-0033-CV, 2012 WL 5231851
(Tex. App.—Amarillo Oct. 23, 2012, no pet.) ................................................... 56
Whirlpool Corp. v. Camacho,
298 S.W.3d 631 (Tex. 2009) .............................................................................. 59
White v. Dennison,
752 S.W.2d 714 (Tex. App.—Dallas 1988, writ denied) ................................... 47
xx
STATUTES
Act of April 25, 1977, ch. 76, §1, 1977 TEX. GEN. LAWS 153 .................................. 9
Act of May 17, 1971, ch. 225, §1, 1971 TEX. GEN. LAWS 1073 ............................... 9
Act of June 6, 1979, ch. 314, §1, 1979 TEX. GEN. LAWS 718 ................................. 17
TEX. OCCUP. CODE §1001.0031(d) .......................................................................... 50
TEX. BUS. & COMM. CODE §9.110 ........................................................................... 33
TEX. BUS. & COMM. CODE §17.50(d)....................................................................... 14
TEX. BUS. & COM. CODE ANN. § 2.210(b) (West 2011) .......................................... 36
TEX. CIV. PRAC. & REM. CODE §§32.001, 32.002.................................................... 20
TEX. CIV. PRAC. & REM. CODE §33.002.................................................15, 17, 20, 23
TEX. CIV. PRAC. & REM. CODE §38.001.........................................................8, 15, 17
TEX. CIV. PRAC. & REM. CODE §38.005.............................................................13, 17
TEX. INS. CODE §541.152 ......................................................................................... 14
OTHER AUTHORITIES
Black's Law Dictionary (10th ed. 2014) .................................................................. 27
Black’s Law Dictionary 117 (6th ed. 1990) ............................................................ 29
Charles R. “Skip” Watson, Jr., “The Court's Charge to the Jury,”
Advanced Civil Trial Course (State Bar of Texas 2003) ................................... 55
TEX. R. CIV. P. 90 ..................................................................................................... 42
TEX. R. CIV. P. 93 ......................................................................................... 39-40, 43
TEX. R. CIV. P. 94 ..................................................................................................... 49
TEX. R. CIV. P. 274 ................................................................................................... 55
TEX. R. CIV. P. 278 ................................................................................................... 42
xxi
TEX. R. CIV. P. 279 .............................................................................................46, 54
TEX. R. EVID. 201(b) ................................................................................................ 40
TEX. R. EVID. 901(10) .............................................................................................. 41
xxii
I. STATEMENT OF THE CASE
This is a breach of contract case arising out of severe foundation problems at
the Courtyard by Marriott Hotel, located on East Ben White Boulevard, near
Bergstrom International Airport (“Project”). (CR187) 1. RLJ II-C Austin Air, LP;
RLJ II-C Austin Air Lessee, LP; and RLJ Lodging Fund II Acquisitions, LLC
(“RLJ” collectively), sued, among others, the architect, general contractor and soils
engineer for breaching their separate contractual responsibilities related to the
Project’s construction. (CR184-218). RLJ asserted that claim as assignee of and
successor-in-interest to and assignee of the rights under the Architectural Contract
and the contract cause of action of White Lodging Services Corp. (“Owner”),
original owner of the Project. (CR1124;1063-64). The architect, Elness, Swenson,
Graham. Inc. (“Architect”), was the only remaining defendant when the case was
submitted to the jury. (CR1121-29). Due to settlements by other parties and the
trial court’s pre-trial rulings, breach of contract was the only liability theory against
the Architect. Id.
The jury found that the Architect failed to “comply with the Architectural
Contract regarding the structural engineering services required by the contract”
1
The Clerk’s Record is cited as “CR”; First Supplemental Clerk’s Record,“1SCR”; Second
Supplemental Clerk’s Record, “2SCR”; Third Supplemental Clerk’s Record, “3SCR”). The
Reporters Record is cited by “[Volume Number]RR” Exhibits are cited to page or pages of the
Reporter’s Record on which they or the pertinent parts thereof appear. “4SCR__” refers to the
supplemental clerk’s record that is being requested, but is not yet available. See n.14.
1
(“Structural Engineering Question”). (CR1126). The jury’s verdict assessed
$785,000 in damages for the breach. (CR1125-27).
After trial, the Architect moved for and the trial court allowed credit under
the one satisfaction rule for $1.17 million paid by the General Contractor and the
Soils Engineer (“Settling Defendants” collectively) in settlement of the contract
claims against them. (CR1173-79,1439,1710). The parties agreed to try the
attorney’s fees claimed under Chapter 38 of the Texas Civil Practice and Remedies
Code (“Chapter 38” 2) to the court instead of the jury. (CR201,1710).
RLJ presented evidence of its reasonable and necessary attorney’s fees for
asserting the contractual claims against the Architect and the Settling Defendants.
(3SCR3-611;2SCR1603-1605). The trial court only awarded fees for the
contractual claim against the Architect. For that claim, it determined that RLJ was
entitled to recover from the Architect $901,650.96 as reasonable attorney’s fees.
(CR1711). The trial court rendered judgment for RLJ in the principal sum of
$516,650.96. (CR1711). It arrived at this amount by adding the amount of the
damages awarded in the jury verdict with the amount of the Chapter 38 attorney’s
fees award, then subtracting the amounts paid in settlement by the Settling
Defendants. (Id.). The judgment also awarded conditional appellate attorney’s fees,
2
References to “Chapter 38” also include the 1977 and later versions of its predecessor statute,
article 2226.
2
costs, and post-judgment interest. (Id.). The Architect timely filed its notice of
appeal (CR1907-1913) and RLJ timely perfected its cross-appeal (1SCR3-4).
II. ISSUES PRESENTED
A. Whether the trial court correctly allowed RLJ to recover its attorney’s fees
under Chapter 38 of the Texas Civil Practice & Remedies Code even if it
correctly applied the one satisfaction rule to offset the jury’s damage award?
B. Whether the trial court correctly determined that RLJ has standing to sue the
Architect under the assignments of rights from RLJ’s predecessors-in-
interest?
C. Whether the trial court’s determination may be further supported by
consideration of the supplemental clarification which the trial court
erroneously deemed parol evidence inappropriate for consideration?
(Appellees’ Reply Point).
D. Whether the trial court correctly ruled that the Architectural Contract was
not inadmissible hearsay and was sufficiently authenticated?
E. Whether the trial court erred in submitting the contractual liability issue
concerning structural engineering services and, in the unlikely event that it
did, whether the Architect failed to preserve the complaints it makes in this
appeal?
3
F. Whether the evidence was legally sufficient to support the damages for
diminution in value awarded by the jury?
III. STATEMENT OF FACTS
RLJ is not satisfied with the accuracy of Architect’s Statement of Facts and
includes the following as a brief statement of the facts relevant to Appellant’s
issues. The proceedings below are described in the Statement of the Case and as
necessary in the argument section of this brief. RLJ also refers the court to the
Statement of Facts in Cross-Appellant’s Brief at 6-13, and reserves to the argument
section further discussion of the facts relevant to those issues.
The Architect contracted with the Owner to design the Project. The
Architectural Contract obliged the Architect to provide architectural and structural
engineering services. (12RR39,47). Under a separate contract to which the Owner
was not a party, the Architect engaged “[o]ur Structural Engineering firm...Marlin
Bridges Associates, Inc.” (“Structural Engineer”) to design the foundation.
(12RR17-25,30,35,47,49;App.G).
Before the Project was complete, RLJ contracted to purchase the Project
from the Owner, along with numerous other hotels. (CR184-218;606-676;707-
709;App.J). Before RLJ closed the purchase of this hotel, the Project experienced
some cracking in the laundry room and around the pool area. (3RR122). RLJ was
advised that repair costs would be $50,000 (3RR187-88), and it received a credit of
4
the same amount 3 and closed the purchase. (CR626-28). After closing, the Project
began to experience cracks in partition walls, shifting door frames, and other issues
evident of foundation movement. (3RR118;4RR78-79;7RR47). Investigation
revealed the foundation design was inappropriate for the soil conditions at this site.
(4RR111). This litigation ensued.
IV. SUMMARY OF ARGUMENT
None of the Architect’s complaints permit it to elude its liabilities for failing
to comply with the Architectural Contract’s concerning the provision of structural
engineering services.
Its attack on liability for RLJ’s attorney’s fees is invalid. As the verdict
established, it had a valid claim for a just amount owed that was presented and
unpaid for years, and which remained unpaid when this case was tried. Nothing in
Chapter 38 further requires the claimant to recover those damages in a judgment.
The Legislature eliminated that requirement when it amended the statute 38 years
ago. Neither it nor the Architect’s cited cases require the claimant to obtain a
judgment. The Texas Supreme Court has said so. This Court has said so.
acquired during its history that does not address the issue here: whether RLJ
satisfied Chapter 38. The alpha and omega of that inquiry is the statute itself, not
3
The Architect is incorrect to suggest this adjustment amount was for all of the Project’s
foundation problems that ultimately manifested themselves. (Appellant’s Brief 5-6). It was only
for the limited issues then known. (3RR187-88).
5
the language of cases, other statutes, or general concepts about attorney’s fee
recovery.
The trial court adhered to the precise language of the statute when it awarded
RLJ its attorney’s fees. Even if the one satisfaction rule applied so that credit for a
settlement during trial could preclude recovery of the jury’s damage award, the
trial court did not err in allowing RLJ to recover its attorney’s after application of
that credit.
RLJ also had standing to sue on the Architectural Contract by virtue of an
assignment of all intangible assets related to the Project. The Architect’s only
argument is that a cause of action is not an intangible asset. This court, other
jurisdictions, and even the dictionary on which the Architect bases its argument,
recognize that a cause of action is an asset that is intangible. A supplement to this
assignment made clear that it included all “causes of action” against the Architect.
The trial court erroneously ruled that it could consider the supplement, but it may
nevertheless support the trial court’s standing determination because it was not
parol evidence at all. Even if it were, the Architect was not a party to the contract
the supplement concerned and, therefore, could not invoke the parol evidence rule.
The Architect’s complaint that the Architectural Contract was inadmissible
hearsay is baseless. The contract was not offered to prove anything other than the
fact that it said what it said. Its complaint about improper authentication is equally
6
flawed. The Architect used the contract as an exhibit and proved that it was a
business record.
The Architect waived its complaint that RLJ should have been required to
prove its derivative liability for the Structural Engineer’s errors by failing to
specially except, file a verified plea that it was not liable in the capacity sued, and
failing to preserve its complaints at the charge conference. In any event, RLJ was
not obliged to establish vicarious liability because the Architect had direct,
contractual liability. Its only support to the contrary is a case that was long ago
superseded by the Texas Supreme Court.
The Architect finally challenges the sufficiency of the expert testimony to
support the jury’s diminution-in-value damage award. That testimony employed
accepted appraisal methodologies and standards. Indeed, the valuation method
used was the one the Texas Supreme Court has deemed appropriate. The valuation
date used was the date that was submitted in the court’s charge – an appropriate
date given what be considered. Criticism of the appraiser for allegedly failing to
provide actual performance data is baseless because the appraiser in fact provided
it. His testimony did not include “stigma” damages and did not include damages
for lost profits. The damages need not have been “segregated” to be legally
sufficient. Legally sufficient evidence supported the jury’s damage assessment.
7
V. ARGUMENT AND AUTHORITIES
A. The Trial Court Correctly Awarded RLJ Its Attorney’s Fees.
The Architect asserts the trial court erred in awarding RLJ Chapter 38
attorney’s fees. It argues Chapter 38 required RLJ to “recover damages” without
specifying what a “recovery” of damages is. (Appellant’s Brief 16,17). The jury
found $785,000 in damages. 4 (CR1127;App.B). Apparently, the Architect contends
the jury’s damage award does not suffice and that Texas Civil Practice &
Remedies Code §38.001 (“§38.001”) requires a judgment awarding damages to
recover attorney’s fees. The Architect’s complaint is moot if this Court rules that
the one satisfaction rule is inapplicable. 5 (Cross-Appellants’ Brief 13-58).
1. Chapter 38 Does Not Require a Judgment for Damages.
The Architect’s argument is also wrong. Chapter 38 does not now require
and has not for nearly 40 years required a judgment awarding damages. McKinley
v. Drozd, 685 S.W.2d 7, 10-11 (Tex. 1985); Buckner Glass & Mirror Inc. v. T.A.
Pritchard Co., 697 S.W.2d 712, 714 (Tex. App.—Corpus Christi 1985, no writ);
Enriquez v. K & D Development & Construction, Inc., 567 S.W.2d 40, 42 (Tex.
Civ. App.—El Paso 1978, writ ref'd n.r.e.).
4
The Architect’s assertion that the jury “found” RLJ’s damages “greatly exaggerated”
(Appellant’s Brief 17) is incorrect. There was no such finding.
5
RLJ’s attorney’s fees arguments are presented subject to and without waiving its arguments that
the one satisfaction rule is inapplicable.
8
a. The “Judgment” Requirement Was Eliminated by
the 1977 Amendment to Chapter 38’s Predecessor.
In 1977, the Legislature amended the predecessor to Chapter 38 to eliminate
“finally obtain judgment” as a condition to recovering attorney’s fees. Compare
Act of May 17, 1971, ch. 225, §1, 1971 TEX. GEN. LAWS 1073 (former article
2226), with Act of April 25, 1977, ch. 76, §1, 1977 TEX. GEN. LAWS 153;
McKinley, 685 S.W.2d at 10-11 (explaining effect of amendment and court’s
failure to notice it). If the Legislature wishes to re-impose recovery of damages in
the judgment to recover attorney’s fees, it may do so. Judicial resurrection of this
requirement after Legislative elimination would impermissibly transgress the
constitutional separation of legislative authority from judicial power. See Lee v.
City of Houston, 807 S.W.2d 290, 293 (Tex. 1991); Texas Alcoholic Beverage
Comm'n v. Kings Four, Inc., 583 S.W.2d 676, 678 (Tex. Civ. App.—Austin 1979,
no writ).
b. The Texas Supreme Court and This Court Have
Rejected Any Such Requirement.
If “obtain[ing] judgment” were still necessary, the Texas Supreme Court
could not have allowed recovery of attorney’s fees in McKinley. There, the
claimant received a verdict for contract damages, but did not recover them in the
judgment because of an offsetting counterclaim. Nevertheless, the court awarded
9
attorney’s fees because the claimant met the statutory requirements without a
judgment for damages. 685 S.W.2d at 11.
This court also recognized, under circumstances very similar to those in this
case, that a party may recover Chapter 38 attorney’s fees without recovering
damages in the judgment. In A.D. Willis Co. v. Metal Bldg. Components, Inc., No.
03-99-00574-CV, 2000 WL 1508500 (Tex. App.—Austin Oct. 12, 2000, pet.
denied)(not designated for publication), the jury awarded damages for the
claimant’s breach of contract claim, but found a greater loss caused by the
claimant’s failure to mitigate. This Court ruled Chapter 38 attorney’s fees could
not be denied merely for want of damage recovery in the judgment. Id. at *5. Like
a settlement credit, failure to mitigate reduces recovery because it “tends to rebut
the measure of damages under the [plaintiff’s] claim of breach.” Austin Hill
Country Realty, Inc. v. Palisades Plaza, Inc., 948 S.W.2d 293, 300 (Tex. 1997).
This Court noted that the claimant had a “valid claim” for a “just amount” unpaid
on the thirtieth day following presentment. Because McKinley rejected a “net
recovery” requirement, this Court allowed attorney’s fees despite no judgment
awarding damages. 6 Id. at *6.
6
This reasoning is consistent with Perez v. Baker Packers, 694 S.W.2d 138, 143 (Tex. App.—
Houston [14th Dist.] 1985, writ ref'd n.r.e.), in which a claimant whose damages offset by
settlement credits was deemed the “successful party” entitled to recover rule 131 costs.
10
c. The Architect’s Cases Do Not Say Otherwise.
The Architect’s attack rests entirely on cases saying recovery of attorney’s
fees generally requires the claimant “(1) prevail on a cause of action for which
attorney’s fees are recoverable, and (2) recover damages,” Intercontinental Group
P’ship v. KB Home Lone Star, L.P., 295 S.W.3d 650, 653 (Tex. 2009) 7; MBM Fin.
Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 664, 666 (Tex. 2009)(no
proof); Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997); State Farm
Life Ins. Co. v. Beaston, 907 S.W.2d 430, 434, 437 (Tex. 1995); see also Mustang
Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 201 (Tex. 2004); Haubold v.
Medical Carbon Research Inst., LLC, No. 03-11-00115-CV, 2014 WL 1018008 at
*6, *7 (Tex. App.—Austin Mar. 14, 2014, no pet.)(mem. op.).
Closer examination of the facts in these cases reveals that “recovery” does
not require a judgment awarding damages. Instead, they hold that one cannot
recover attorney’s fees when there is no possibility of liability. In each, there was
no recovery because: (1) the jury found zero damages; (2) liability was not
established; or (3) no legally competent evidence supported awarding damages.
Intercontinental Group, 295 S.W.3d at 653, 655 (no finding); MBM Fin. Corp.,
292 S.W.3d at 664, 666 (Tex. 2009)(no proof); Mustang Pipeline Co., 134 S.W.3d
7
An example of the Architect’s superficial analysis is its assertion that this case “hold[s] that,
absent recovery of damages, attorney’s fees are not recoverable under Chapter 38.” (Appellant’s
Brief 15). The opinion, however, says Chapter 38 “is not controlling.” Intercontinental Group,
295 S.W.3d at 653.
11
at 201 (no proof); Solis, 951 S.W.2d at 390 (Tex. 1997)(no finding); Beaston, 907
S.W.2d at 434, 437 (no proof of damages under DTPA); Blizzard v. Nationwide
Mut. Fire Ins. Co., 756 S.W.2d 801, 806 (Tex. App.—Dallas 1988, no writ)(no
unpaid damages 8); Fire Ins. Exchg. v. Sullivan, 192 S.W.3d 99, 102, 110-11 (Tex.
App.—Houston [14th Dist.] 2006, pet. denied)(same 9); Haubold (claimant sought
no recoverable damages). None of them address a situation like McKinley or A.D.
Willis Co. in which the claim is valid but results no recovery under a judgment.
They do not, as the Architect suggests, require the recovery of damages by
judgment.
2. Chapter 38 Only Requires a Valid Claim Timely
Presented and Unpaid for Thirty Days.
The foregoing shows Chapter 38 does not require the recovery of damages
in a judgment. The inquiry may now focus on what Chapter 38 does require.
a. The Architect Ignores Proper Statutory
Interpretation.
All statutory interpretation begins with the statute’s language. Ross v. St.
Luke’s Episcopal Hosp., 58 Tex. Sup. Ct. J. 766, 2015 WL 2009744 at *3 (Tex.
May 1, 2015); Lippincott v. Whisenhunt, 58 Tex. Sup. Ct. J. 705, 2015 WL
8
In both Beaston and Blizzard, there was no breach of contract at all. The insurers paid more
than the policy required. Neither claimant in those cases had a “valid claim.” See Kleas, 2013
WL 4516120, at *2.
9
In Sullivan, the insurer had also paid more than the damages later found so there was never a
“valid claim” for breach of the policy or a DTPA violation that would support recovery of
attorney’s fees.
12
1967025 at *1(Tex. Apr. 27, 2015)(per curiam). The goal is to ascertain the
Legislature’s intent from that language alone, Leland v. Brandal, 257 S.W.3d 204,
206 (Tex. 2008), by considering the all statutory language in context, not in
isolation. See Union Carbide Corp. v. Synatzske, 438 S.W.3d 39, 51 (Tex. 2014).
Under the guise of interpretation, Courts may not add to or remove words from an
unambiguous statute. City of Rockwall v. Hughes, 246 S.W.3d 621, 631 (Tex.
2008). Undefined, unambiguous words have their ordinary meaning. Tex. Lottery
Comm’n v. First State Bank of DeQueen, 325 S.W.3d 628, 635 (Tex. 2010);
Leland, 257 S.W.3d at 206. Further, the Legislature has rejected narrow
construction of Chapter 38 and mandates instead that it “be liberally construed to
promote its underlying purposes.” 10 TEX. CIV. PRAC. & REM. CODE §38.005. That
purpose is to discourage unnecessary litigation over just claims. McKinley, 685
S.W.2d at 10-11.
b. The Architect Attempts to Add Words to Chapter
38 By Misapplication of Cases.
The Architect’s argument ignores these well-settled rules and relies on case
language interpreting other attorney’s fees statutes or previous versions of Chapter
10
Article 2226 was also amended in 1979 to add claims for oral and written contracts and to
mandate liberal statutory construction to overturn the previous rule that it should be strictly
construed because recovery of attorney’s fees was contrary to common law. See, e.g., Van Zandt
v. Fort Worth Press, 359 S.W.2d 893, 995 (Tex. 1962). Without intending to change the statute's
meaning, in 1985 the Legislature codified the 1979 version of article 2226 into the Civil Practice
and Remedies Code. Grapevine Excavation, Inc. v. Maryland Lloyds, 35 S.W.3d 1, 7 (Tex.
2000).
13
38 with language different from Chapter 38. See V.A.1.c., supra. Nothing in
Chapter 38 says the claimant must either “prevail” or “recover damages.” To
“prevail” is only required for recovery of attorney’s fees under the DTPA and
Insurance Code, not Chapter 38. TEX. BUS. & COMM. CODE §17.50(d); TEX. INS.
CODE §541.152. Nevertheless, the Architect relies on cases interpreting these
dissimilar or outdated statutes to impermissibly superimpose requirements not
supported by Chapter 38’s language. Reading words into a statute impermissibly
usurps the legislative prerogative. See Hughes, 246 S.W.3d at 631. The Texas
Supreme Court has ruled that constructions of disparate language in other
attorney's fees statutes do not control what Chapter 38 means. McKinley, 685
S.W.2d at 9; Jakab v. Gran Villa Townhouses Homeowners Ass'n, Inc., 149
S.W.3d 863, 868 (Tex. App.—Dallas 2004, no pet.). 11
11
In Solis, without acknowledging its holding in McKinley, the court included “prevail” as part
of its two-part “test” for Chapter 38. 951 S.W.2d at 390. This led some courts to improperly look
to federal attorney’s fees statutes with a “prevail” requirement. E.g.,, Intercontinental Group,
295 S.W.3d at 654. Even under the federal standard, RLJ “prevailed” by procuring a settlement,
Farrar v. Hobby, 506 U.S. 103, 11-12 (1992); Intercontinental Group, 295 S.W.3d at 654, of its
claim for damages for which all defendants must have been jointly liable if the one satisfaction
rule applies. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991). RLJ also
succeeded by establishing liability and receiving a damages verdict. Several Texas Chapter 38
cases permit attorney’s fees with no damage award if the claimant recovers “something of
value,” such as a decree for specific performance. Jones, 614 S.W.2d at 96, 100–01; Rasmusson
v. LBC PetroUnited, Inc., 124 S.W.3d 283, 287 (Tex. App.—Houston [14th Dist.] 2003, pet.
denied).
14
3. Chapter 38 Only Requires a Valid Claim Timely
Presented and Unpaid for Thirty Days.
Chapter 38 only requires (1) that the claimant be represented by an attorney;
(2) that the claim be for a specified type; (3) that the claim be “valid” and (4)
presented; and (5) that the just amount owing not be tendered within 30 days after
presentment. TEX. CIV. PRAC. & REM. CODE §§38.001-.002. If these conditions are
satisfied, the claimant may recover attorney’s fees. TEX. CIV. PRAC. & REM. CODE
§38.001. In the present case, the meaning of the statutory requirements for
representation of counsel, presentment, and type of claim are not at issue.
a. A “Valid Claim” Is Required.
Under §38.001, “[a] person may recover reasonable attorney’s fees … in
addition to the amount of a valid claim” for a “written contract.” TEX. CIV. PRAC.
& REM. CODE §38.001. Chapter 38 further informs that a “valid claim” is one with
a “just amount owed.” TEX. CIV. PRAC. & REM. CODE §38.002(2). As McKinley
and A. D. Willis illustrate, a “valid claim” authorizing Chapter 38 attorney’s fees
exists with a verdict of liability and resulting damages, even if award of those
damages is ultimately rendered in the judgment.
1) “In [A]ddition [T]o” Does Not Imply a
“Valid Claim” Requires a Judgment
Awarding Damages.
Yet, the Architect also cites cases suggesting that the phrase “in addition to
the amount of a valid claim” implies there must be some damage amount awarded
15
in the judgment to recover Chapter 38 attorney’s fees. (Appellant’s Brief 16). Its
reliance on Solis, 951 S.W.2d at 390, MBM Fin. Corp., 292 S.W.3d at 666, and
Haubold, 2014 WL 1018008 at *6, for this interpretation is misplaced. In all three,
there was no valid verdict awarding damages because the jury found no damages
or the damage finding was unsupported by competent evidence. Further,
suggesting that Chapter 38 requires either a verdict or judgment for monetary
damages ignores that Chapter 38 attorney’s fees may be recovered when only non-
monetary relief is obtained. See, e.g., Jones v. Kelley, 614 S.W.2d 95, 96, 100–01
(Tex.1981); Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283, 287 (Tex.
App.—Houston [14th Dist.] 2003, pet. denied); Martini v. Tatum, 776 S.W.2d 666,
668, 670 (Tex. App.—Amarillo 1989, writ denied)(contractual liability decided but
no judgment awarding monetary relief); De La Rosa v. Kaples, 812 S.W.2d 432,
433, 435 (Tex. App.—San Antonio 1991, writ denied)(same).
2) A Verdict Awarding Damages Is Enough To
Have a “Valid Claim.”
As McKinley and A. D. Willis amply demonstrate, recovery of damages in a
judgment is not necessary. If the existence of a “valid claim” included a
requirement that the claimant “recover” as the Architect’s cases suggest, it is
apparent that a verdict of liability and awarding damages is “recovery” enough to
have a valid claim. Rogers v. RAB Inv. Ltd., 816 S.W.2d 543, 551 (Tex. App.—
Dallas 1991, no writ), observed, “Without a jury finding of damages or a recovery
16
of damages, there can be no award of attorney’s fees” under §38.001. By negative
implication, Solis also suggests that a jury verdict is a “recovery” by treating a zero
damages verdict as a failure to “recover.”
b. Chapter 38 Requires the Valid Claim to Remain
Unpaid 30 Days After Presentment.
Chapter 38 also specifies when the valid claim must exist. “Payment for the
just amount owed must not have been tendered before the expiration of the 30th
day after the claim is presented.” TEX. CIV. PRAC. & REM. CODE §38.002(3). As
already discussed, the reason why the Legislature authorized the recovery of
attorney’s fees was to encourage pre-trial settlement of valid claims and thereby
avoid unnecessary litigation over just claims. McKinley, 685 S.W.2d at 10-11;
Jones v. Kelley, 614 S.W.2d 95, 100 (Tex. 1981); see also Doctors Hosp. 1997,
L.P. v. Sambuca Houston, L.P., 154 S.W.3d 634, 638 (Tex. App—Houston [14th
Dist.] 2004, pet. abated); Manges v. Mustang Oil Tool Co., 658 S.W.2d 725, 730
(Tex. App.—Corpus Christi 1983, writ ref'd n.r.e.). Permitting recovery of Chapter
38 attorney’s fees based on the validity of the claim before events trial instead of
after it commences is “more consistent” with (1) “legislative intent” to discourage
unnecessary litigation over just claims, and (2) the statutory liberal construction
mandate to “promote its underlying purpose.” McKinley, 685 at 10-11; TEX. CIV.
PRAC. & REM. CODE §38.005; Act of June 6, 1979, 66th Leg., R.S., ch. 314, §1,
1979 TEX. GEN. LAWS 718.
17
Of course, trial results affect whether there was ever a valid claim. A finding
of no liability or zero damages, or want of legally sufficient evidence of either
establishes no valid claim ever existed. See cases cited in V.A.1.c., supra.
However, allowing a claim’s validity to be undermined by credits for settlements
that occur during trial, which is the situation here, defeats Chapter 38’s purpose.
Settlements during trial do not avoid the unnecessary expense that Chapter 38 was
intended to avoid.
The distinction between pre-trial and during trial settlements was critical to
this Court’s analysis in Osborne v. Jauregui, Inc., 252 S.W.3d 70, 75-77 (Tex.
App.—Austin 2008, pet. denied). Unlike the present Chapter 38 breach-of-contract
case, Osborne involved recovery of attorney’s fees under the DTPA, under which
the issue was whether the plaintiff “prevailed” – something Chapter 38 does not
require. See V.A.2.a., supra. However, the analogy is instructive with respect to
when the validity of the claim is measured. In Osborne, the plaintiff settled before
trial commenced with all but one defendant for an amount greater than the
damages awarded by the jury against the remaining defendant. Osborne, 252
S.W.3d at 73. RLJ, on the other hand, reached the relevant settlement after trial
commenced.
This Court recognized in Osborne that “a net recovery is not necessary for a
plaintiff to be considered a prevailing party.” Osborne, 252 S.W.3d at 76. But it
18
concluded, reasonably enough, that a party does not “prevail” at trial when it
received before trial more than it recovered at trial for tort damages that all
defendants would have jointly and severally liable for under the contribution
statute. “It is one thing to allow attorney’s fees notwithstanding an opposing
party’s success on an offsetting claim. However it is another to allow attorney’s
fees on a claim that, although successful, was paid before trial.” Id. (Emphasis
added).
The logic of Osborne implicit in the concept of what it means to “prevail” is
explicit under Chapter 38 which specifically says attorney’s fees may be recovered
if the claim is valid and unpaid for more than thirty days after presentment. It
should be noted that some cases have suggest that fees are recoverable under
Chapter 38 if the presented claim is unpaid before trial commences. Peissel v.
Peissel, 620 S.W.2d 796, 800 (Tex. Civ. App.—Houston [14th Dist.] 1981, no
writ). Cases can neither add nor subtract from Chapter 38’s plain language that the
claim need only be valid thirty days after presentment. For reasons discussed
below, resolving that discrepancy is unnecessary here.
Chapter 38’s concern with whether a valid claim that existed before a trial
begins is the basis of the so-called “exception” to McKinley disallowing attorney’s
fees if the claimant’s contract damages are fully offset by a “credit” for sums the
defendant paid. In these cases, including Osborne, the “credit” was due to
19
payments madd worade before trial so that there was no “valid claim” for a “just
amount owing” remaining when trial commenced. Blizzard, 756 S.W.2d at 806 12;
Osborne, 252 S.W.3d at 74, 76-77; Imperial Lofts, Ltd. v. Imperial Woodworks,
Inc., 245 S.W.3d 1, 7 (Tex. App.—Waco 2007, pet. denied); Buccaneer Homes of
Ala., Inc. v. Pelis, 43 S.W.3d 586, 591 (Tex. App.—Houston [1st Dist.] 2001, no
pet.); Hamra v. Gulden, 898 S.W.2d 16, 19 (Tex. App.—Dallas 1995, writ dism’d
w.o.j.); Sullivan, 192 S.W.3d at 109-110.
Assume arguendo the one satisfaction rule applies to breach of contract
claims at all or that joint liability may be based on common injury alone. Under
either assumption, if a claim’s validity were determined by whether the claimant
received a damage award under a judgment, a defendant in multi-defendant cases
would resist reasonable settlements as long as possible in hopes other defendants
would settle and allow it to escape scot-free, despite its joint liability, if those
settlement sums exceed the damages caused. Settling defendants have no
contribution claim against the hold-out under either Chapter 32 or common law
because the settlors are not judgment debtors.13 Beech Aircraft Corp. v. Jinkins,
739 S.W.2d 19, 22 (Tex. 1987)(Chapter 32); Austin Road Co. v. Pope, 147 Tex.
12
Blizzard is actually a no-breach, not a “credit,” case. See n.8, supra.
13
TEX. CIV. PRAC. & REM. CODE §§32.001, 32.002 (contribution allowed only in tort actions for
“a person against whom a judgment is rendered”); TEX. CIV. PRAC. & REM. CODE §33.002
(Chapter 33 only applies to tort actions); Beech Aircraft Corp. v. Jinkins, 739 S.W.2d 19, 22
(Tex. 1987)(settlor has no right to sue for contribution).
20
430, 216 S.W.2d 563, 564-65 (1949)(common law); see Cross-Appellants’ Brief
19-21,48-51. Thus, the Architect’s suggested interpretation of Chapter 38
discourages, rather than encourages, settlement of valid claims. For these reasons,
neither the Architect’s authorities nor Osborne support a rule barring recovery of
Chapter 38 attorney’s fees if the settlement exceeding the damage award occurs
during rather than before trial.
4. RLJ Met All the Statutory Requirements for Recovering
Its Attorney’s Fees.
RLJ met all of Chapter 38’s necessary conditions. It had a valid claim that
was unpaid more than thirty days after presentment and remained unpaid before
trial commenced.
a. RLJ Had a Valid Claim.
A “valid” breach of contract claim requires: (1) a valid contract; (2) that the
claimant performed or was excused from performing; (3) that the defendant
breached which (4) damaged the claimant. Kleas v. Clark, Thomas & Winters,
P.C., No. 03-12-00755-CV, 2013 WL 4516120, at *2 (Tex. App.—Austin Aug. 21,
2013, pet. denied); C.W. 100 Louis Henna, Ltd. v. El Chico Rests. of Tex., L.P.,
295 S.W.3d 748, 752 (Tex. App.—Austin 2009, no pet.). The jury’s verdict
removes all doubt that RLJ’s claim was valid. (CR1126-27).
21
b. The Just Amount Owing Was Not Timely
Tendered.
RLJ’s claim was first presented in August 2009, with further presentments
of its claim in August 2010 and by April 6, 2011 letter. (3SCR37-38,4SCR___ 14).
The Architect did not respond to these presentments. (3SCR38). Assume arguendo
that the jury’s verdict was – as the Architect contended– for “indivisible” damages
for which the Architect and the Settling Defendants were jointly liable, RLJ did not
– unlike the claimant in Osborne – settle for a total amount greater than the jury’s
damage award until during the 2014 trial, long after the claim was presented.
(CR1080-81,1174,1710;7RR105-108). In that hypothetical case, the jury’s finding
established that the “just amount owing” was $785,000 (CR1127) which was not
timely paid. Even if the one satisfaction rule applied, which it does not, that is all
that was necessary. “If a plaintiff meets the requirements of [the attorney’s fee
statute], [t]he [plaintiff] is entitled to attorney's fees. Karol v. Presido Enterprises,
Inc., 622 S.W.2d 638, 640 (Tex. App.—Austin 1981, no writ); see also Buckner
Glass & Mirror Inc. v. T.A. Pritchard Co., 697 S.W.2d 712, 714 (Tex. App.—
Corpus Christi 1985, no writ)(decided under post-1977 amendment to article
14
Exhibits 5 and 6 to Amended Attorney’s Fees Affidavit were included in RLJ’s request for the
accompanying motion to be included in the Clerk’s Record, but appear to have been omitted.
RLJ is requesting supplementation to include them.
22
2226). Thus, RLJ satisfied Chapter 38’s timing requirement regarding its valid
claim. TEX. CIV. PRAC. & REM. CODE §38.002(3). 15
5. The Trial Court’s Reasoning Agreed With the
Legislature’s.
The Architect alleges that the trial court was “creat[ing] its own rule of law”
by ruling based on the settlement’s timing. (Appellant’s Brief 15). To the contrary,
the trial court here correctly distinguished settlements before trial from those that
occur during trial. (CR1439-41). The trial court was not legislating or improvising.
It simply analyzed the language of Chapter 38 more carefully than the Architect. 16
The Architect also attacks the trial court’s reasoning for treating attorney’s
fees as damages. This criticism assumes attorney’s fees cannot be recovered or
considered “part of the amount of the judgment” unless other damages are
recovered. (Appellant’s Brief 16). The Architect cites C& H Nationwide, Inc. v.
Thompson, 903 S.W.2d 315, 325-26 (Tex. 1994), and Ellis County State Bank v.
Keever, 888 S.W.2d 790, 797n.13 (Tex. 1994), without mentioning they construe
“amount of the judgment” in the pre-judgment interest statute, not Chapter 38.
Indeed, “amount of the judgment” appears nowhere in Chapter 38.
15
§38.002 also requires presentment and representation by counsel. It is undisputed that RLJ’s
claim was presented and it was represented by counsel. (3SCR31,37-38).
16
Unlimited by findings or conclusions, the judgment must be upheld under any theory
supported by evidence. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.
2002); Phillips v. Estate of Poulin, No. 03-05-00099-CV, 2007 WL 2980180, at *4 (Tex. App.—
Austin Oct. 12, 2007, no pet.). The very letter ruling the Architect criticizes states that it does not
limit the ruling’s bases and incorporates previous admonitions to that effect. (CR1057,1437).
23
Chapter 38 does not require recovery of damages under a judgment to
authorize attorney’s fees. Whether attorney’s fees are “damages” is beside the
point. It is still worth noting, however, the Legislature considered attorney’s fees as
“damages” when it eliminated the “finally obtain judgment” requirement in 1977.
The Committee Report for the 1977 amendment states, “Even in a lawsuit
involving a lot of money, the losing party in effect prevents the winner from
getting the full amount, because the winner must pay his attorney. Either way, it's
not right for a person to be deprived of his full damages from a wrongdoer.”
(emphasis added; available from the Texas Legislative Reference Library at
http://www.lrl.state.tx.us/scanned/hroBillAnalyses/65-0/HB452.pdf;App.K).
RLJ was entitled to attorney’s fees. It met all of Chapter 38’s requirements.
Nothing further required RLJ to recover a judgment for damages to recover its
attorney’s fees. The Architect cites no authority addressing the effect of post-trial
settlement credits. Authorities interpreting other statutes have no bearing on
Chapter 38. Even if they did, RLJ “prevailed.”
B. RLJ Was Assigned the Contract and the Cause of Action and
Had Standing to Sue.
On three separate occasions, the Architect has tried and failed to convince
two different trial judges that RLJ could not sue because it did not have the
necessary consensual assignment of rights under the Architectural Contract.
(CR220,1083-84). The outcome can be no different here.
24
1. RLJ Owned Both the Architectural Contract Rights and
Causes of Action of Action for Its Breach.
The Owner and the Architect were the original parties to the Architectural
Contract. (CR463;App.G). With the Architect’s consent, the Owner assigned to
South Ausaircourt, L.P. (“Ausaircourt”) “all of [the Owner’s] interest … in and to
that certain Standard Form Agreement Between Owner and Architect … date[d] …
January 1, 2005 ….” (CR578;App.L). There is no dispute that the Owner
effectively assigned its rights under the Architectural Contract to Ausaircourt.
(Appellant’s Brief 19). The Architect does not question that Ausaircourt owned the
contract cause of action against it. (Appellant’s Brief 21). The Architect’s first
challenge to the trial court’s summary judgment is limited to whether Ausaircourt
effectively and validly transferred the cause of action to RLJ. (Appellant’s Brief
19,28).
a. Ausaircourt Assigned the Contract to RLJ Under
the PSA and the Cause of Action By Assignment of
“Intangible Assets.”
After the Project was substantially completed, many properties, including
the Project, were contracted to be sold pursuant to a “New Hotels Purchase and
Sale Agreement” (“PSA”). (CR605-676). Under the PSA, the Owner sold
Ausaircourt “all contracts, agreements … and warranties covering the design,
development, construction, operations, maintenance and repair of the Property….”
(CR 613[“Assets” defined];615[“Contracts” defined]; 619[“Property” defined];
25
621[sales agreement]; App.J). At closing, Ausaircourt assigned RLJ “all of
[Ausaircourt]’s right, title and interest in and to all licenses, permits and all other
intangible assets relating to the [Project]….” (CR701; emphasis added; App.M).
(“Intangibles Assignment”).
RLJ has a clear chain of ownership from Ausaircourt through the PSA and
Intangibles Assignment of both the Architectural Contract and the cause of action.
Under the PSA’s authorization for supplemental documentation effecting the
transaction (CR656), a later “Supplemental Clarification of Assignment”
(“Supplemental”) specified the Intangibles Assignment “intended to assign”
Ausaircourt’s rights in the Architectural Contract “along with all intangibles,
including but not limited to causes of action or claims owned by [Ausaircourt]
against [the Architect].” (CR602-04; emphasis added; App.N).
2. The Intangibles Assignment Transferred the Contract
Cause of Action.
The plain language of the Intangibles Assignment conveyed the cause of
action to RLJ. Assignments are construed like any contract through rules of
construction to ascertain the parties’ intent expressed in the written assignment.
Commercial Structures and Interiors, Inc. v. Liberty Educ. Ministries, Inc., 192
S.W.3d 827, 832-33 (Tex. 2006). Terms are given “their plain and ordinary
meaning unless the instrument indicates the parties intended a different meaning.”
26
Dynegy Midstream Servs., Ltd. P'ship v. Apache Corp., 294 S.W.3d 164, 168 (Tex.
2009).
a. “Intangible Assets” Included Contract Cause of
Action.
The plain, ordinary meaning of an “intangible asset” includes choses in
action or causes of action. An “intangible asset” is “[a]ny nonphysical asset or
resource that can be amortized or converted to cash, such as patents, goodwill, and
computer programs, or a right to something, such as services paid for in advance.”
Asset, Black's Law Dictionary (10th ed. 2014). A cause of action is “intangible”
because it is an incorporeal personal property right with no physical existence
except by a document without intrinsic value. Lay v. Aetna Ins. Co., 599 S.W.2d
683, 686 (Tex. App.—Austin 1980, writ ref'd n.r.e.); Browne v. King, 196 S.W.
884, 887 (Tex. Civ. App. 1917) aff'd, 111 Tex. 330, 235 S.W. 522 (1921). A cause
of action is an “asset” as the right to a judicial proceeding to recover money.
Vanderburg v. Nocona Gen. Hosp., No. 7:02-CV-291-KA, 2008 WL 114846, at *4
(N.D. Tex. Jan. 10, 2008); Adams v. Great American Lloyd’s Ins., 891 S.W.2d 769,
772 (Tex. App.—Austin 1995, no writ). A non-frivolous claim is an “asset,”
regardless of its ultimate success. In re First State Bancorporation, 498 B.R. 322,
329-30 (Bankr. D.N.M. 2013).
This Court agrees, calling a claim “an asset of the receivership estate.” Akin,
Gump, Strauss, Hauer & Feld, L.L.P. v. E Court, Inc., No. 03-02-00714-CV, 2003
27
WL 21025030 (Tex. App.—Austin May 8, 2003, no pet.)(emphasis added). It
explained in Am. Multi-Cinema, Inc. v. Hegar, No. 03-14-00397-CV, 2015 WL
1967877, at *5 (Tex. App.—Austin Apr. 30, 2015, no pet. h.), that “Intangible
property” includes “incorporeal property (as choses in action) often evidenced by
documents (as stocks, bonds, notes, judgments, franchises) having no intrinsic
value or by rights of action, easements, goodwill, trade secrets.” Accord, In re
Malacara, 223 S.W.3d 600, 602 (Tex. App.—Amarillo 2007, no pet.)(retirement
benefits); In re Fleckenstein, 589 S.W.2d 788, 789-90 (Tex. Civ. App.—El Paso
1979, no writ)(promissory note). Thus, “intangible asset” and “intangible property”
are commonly understood to include causes of action. Green v. H. E. Butt Found.,
217 F.2d 553, 554 (5th Cir. 1954)(constructive possession of a chose in action); In
re Grotjohn, No. 03-47055DML, 2005 WL 6441386, at *5 (Bankr. N.D. Tex. July
19, 2005)(“Intangible assets such as … causes of action”); In re Scott, 157 B.R.
297, 314 (Bankr. W.D. Tex. 1993), withdrawn per settlement, 162 B.R. 1004
(Bankr. W.D. Tex. Jan. 21, 1994)(party succeeded to “intangible assets like causes
of action”).
b. The Architect’s Argument Ignores Context and the
Residuary Clause’s Purpose.
The Architect’s declaration that there is “[n]o authority … causes of action
are included within ‘intangible assets’” is incorrect. (Appellant’s Brief 26). The
Architect’s only cited support, an old edition of Black’s Law Dictionary, defines
28
“asset” as “[p]roperty of all kinds, real and personal, tangible and intangible,
including … causes of action….” Black’s Law Dictionary 117 (6th ed.
1990)(emphasis added). Nevertheless, the Architect argues that omission of “cause
of action” from the examples of “intangible asset” means it is not one. Having
already described “cause of action” as an “asset,” the dictionary’s failure to repeat
it as an example of an “intangible asset” does not support the Architect’s
conclusion. Presumably, the dictionary reasonably assumed readers would
understand that a “cause of action” is intangible property and that example lists are
not exhaustive. The Architect points to the dictionary’s inclusion of “judgment” or
“claim” as examples of a “nominal asset” to suggest that they cannot be intangible
assets. Nothing indicates that “intangible” and “nominal” assets are mutually
exclusive. The parties did not incorporate any such distinction. The Architect may
not now urge interpreting the assignments as if they had.
The Architect’s narrow definition of “intangible asset” also ignores its
context. In construing assignments, the courts consider the surrounding
circumstances. Coffin v. Douglas, 61 Tex. 406, 409 (1884)(available at 1884 WL
8785). Here, the parties were closing the sale of the Project. They intended RLJ to
step into Ausaircourt’s shoes. The PSA required the transfer of all Ausaircourt’s
claims and causes of action concerning the Project. (CR692). The PSA provides
specifically that Ausaircourt must cooperate with RLJ to enforce “any rights under
29
the [A]rchitectural [Contract] … respecting the design … and construction of the
Hotel.” (CR643;App.J). Thus, RLJ “bargained for an assignment of the prior
owner’s possible causes of action … that occurred before [its] purchase.”
Boerschig v. Southwestern Holdings, Inc., 322 S.W.3d 752, 767 (Tex. App.—El
Paso 2010, no pet.).
Under the Intangibles Assignment, the transfer of “all other intangible
assets” (CR701;App.M; emphasis added) is a residue or “Mother Hubbard” clause
intended to convey any categorical item not otherwise assigned. This Court
recognizes such clauses clearly intend to dispose of all of one’s property. Petsch v.
Slator, 573 S.W.2d 849, 853 (Tex. Civ. App.—Austin 1978, writ ref'd n.r.e.). The
same is true here.
“The language used [in the Intangibles Assignment] is as broad as it well
could be.” Coffin, 61 Tex. at 409 (effect of assigning “all properties of all kinds
owned by us”). “All means all,” Halliburton, Inc. v. Admin. Review Bd., 771 F.3d
254, 266 (5th Cir. 2014); Kennedy v. Lynd, 306 F.2d 222, 230 (5th Cir. 1962), not
“all, but” or “all, except.” Ausaircourt could not express more definitively that it
conveyed all, and reserved no, intangible asset. The Architect’s narrow and self-
serving assignment interpretation cannot be reconciled with surrounding
circumstances, the parties’ manifest intent, controlling interpretive rules, or its own
dictionary’s definition of “asset.”
30
3. The Intangibles Assignment was “Express.”
Notwithstanding the explicit assignment of “all ... intangible assets”
(CR701;App.M), the Architect argues that something more “express” – by which
the Architect means “more particular” – was required. (Appellant’s Brief 22) This
argument relies on cases about whether wording in a real property deed also
effectively assigns an accrued cause of action for damage to the real estate
conveyed. The courts, quite logically, have said “no.” The cause of action is not a
right that “runs with the land.” Welch v. Monroe, No. 10-03-00013-CV, 2004 WL
2474504, at *2 (Tex. App.—Waco Nov. 3, 2004, no pet.); Exxon Corp. v. Pluff, 94
S.W.3d 22, 27 (Tex. App.—Tyler 2002, pet. denied). Once accrued, the claim is
the personal property of the owner at that time. Exxon Corp. v. Emerald Oil & Gas
Co., L.C., 331 S.W.3d 419, 424-25 (Tex. 2010); Vann v. Bowie Sewerage Co., 127
Tex. 97, 90 S.W.2d 561, 562 (1936)(permanent nuisance).
Not being a real property right, “mere transfer of the land by deed does not
transfer the [accrued] claim for damages.” Emerald Oil, 331 S.W.3d at 420, 424-
25; Vann, 90 S.W.2d at 563. Without a more specific reference, Emerald Oil, 331
S.W.3d at 424-25, the accrued cause of action is not conveyed by a general
warranty deed’s grant of the described real estate and all “rights and appurtenances
thereto.” Richey v. Stop N Go Markets of Tex., 654 S.W.2d 430, 431 (Tex.1983).
Assignment of the cause of action cannot be implied because a general warranty
31
deed contains no language manifesting an intention to convey personal property.
See Brooks v. Chevron USA Inc., No. 13-05-029-CV, 2006 WL 1431227, at *8
(Tex. App.—Corpus Christi May 25, 2006, pet. denied)(mem. op.); Pluff, 94
S.W.3d at 27; Cook v. Exxon Corp., 145 S.W.3d 776, 781 (Tex. App.—Texarkana
2004, no pet.); La Tierra de Simmons Familia, Ltd. v. Main Event Entm't, LP, No.
03-10-00503-CV, 2012 WL 753184 at * (Tex. App.—Austin Mar. 9, 2012, pet.
denied).
Unlike the parties in the Architect’s cases, RLJ need not rely on the real
property deed for its right to sue. It has express assignments of the seller’s personal
property and intangible property. Cf. Ceramic Tile Int’l Inc. v. Balusek, 137
S.W.3d 722, 724 (Tex. App.—San Antonio 2004, no pet.)(plaintiff’s claim for
damage to real property failed due because separate assignment not introduced).
Yet, the Architect relies on Richey to argue that more particularity is necessary for
the cause of action’s assignment to be “express.” “Express” is the opposite of
“implied.” Mueller v. All-Temp Refrig., Inc., 2014 Ohio 2718, ¶ 45; Ross v. Ross,
20 Ala. 105, 111 (1852). RLJ need not resort to implication because the
assignment to it was overtly expressed. Richey says nothing about particularity. It
only holds that a general warranty deed’s conveyance of described real property
“with all … rights and appurtenances” does not include personal property
32
consisting of an accrued land damage cause of action. 654 S.W.2d at 431-32; see
Emerald Oil, 331 S.W.3d at 425; Brooks, 2006 WL 1431227, at *8.
The Richey cases also do not suggest that a categorical description is
ineffective to describe everything within that category. General, categorical
descriptions are effective for that purpose. See, e.g., Owen v. Vibrasonic
Exploration, Inc., 694 S.W.2d 421, 424 (Tex. App.—Houston [14th Dist.] 1985,
writ ref’d n.r.e.)(“accounts receivable” … “including but not limited to those
shown” sufficient to describe unlisted account); Ian Martin, Inc. v. Greenspoint
Bank, 01-87-00631-CV, 1988 WL 45423 at *3 (Tex. App.—Houston [14th Dist.]
May 5, 01-87-00631-CV, 1988 WL 45423 (Tex. App. May 5, 1988)(same;
unpublished); Orix Credit Alliance, Inc. v. Omnibank, N.A., 858 S.W.2d 586 (Tex.
App. 1993)(“property of every kind and nature” satisfied TEX. BUS. & COMM.
CODE §9.110’s “reasonably identified” requirement for a lien on all tangible
property). The Architect cites, and research reveals, no authority invalidating a
cause of action’s assignment because it conveyed an encompassing class of
intangible rights without specifically mentioning “cause of action” or “chose in
action.” Merely because an accrued cause of action does not automatically pass
with a real property conveyance or the underlying contract’s assignment does not
justify a “magic words” test that ignores that assignments like any other contract
must be construed according to its language in light of surrounding circumstances.
33
Commercial Structures, 192 S.W.3d at 832-33. RLJ was validly assigned
Ausaircourt’s ownership of the cause of action against the Architect on the basis of
the Intangibles Assignments alone. 17
4. The Supplemental Clarification May Be Considered and
Removes Any Doubt That RLJ Was Assigned the
Architectural Contract and the Cause of Action For Its
Breach.
The propriety of the trial court’s ruling RLJ had standing is confirmed by
considering the Supplemental’s statement the Intangibles Assignment was intended
to include the Architectural Contract and “causes of action or claims … against the
[Architect].” (CR603;App.N). The Architect suggests, however, the Supplemental
cannot be considered because the trial court sustained its extrinsic parol evidence
objection. (Appellant’s Brief 27).
The parol evidence rule is a substantive, not evidentiary, so this ruling can
be reconsidered de novo. Hubacek v. Ennis State Bank, 159 Tex. 166, 169, 317
S.W.2d 30, 31 (1958)(parol evidence substantive); Provident Life & Acc. Ins. Co.
v. Knott, 128 S.W.3d 211, 215 (Tex. 2003)(summary judgment reviewed de novo).
The parol evidence rule only precludes enforcement of inconsistent prior or
contemporaneous agreements if the parties have a fully integrated agreement.
Hubacek, 317 S.W.2d at 31; Lewis v. Adams, 979 S.W.2d 831, 836 (Tex. App.—
17
The Architect devotes considerable discussion to the trial court’s April 10, 2014 letter.
(Appellant’s Brief 22). The trial court did not limit the underpinnings for its ruling to the
reasoning in its letter. See n. 16, supra.
34
Houston [14th Dist.] 1998, no pet)(only excludes prior agreements). The
Supplemental was not parol evidence for at least four reasons.
First, assuming arguendo that intent was not, as the Architect contends,
expressed with sufficient particularity, the Supplemental was consistent with the
intent to convey causes of action as a subset of the “intangible assets” expressly
conveyed. All the Supplemental did was provide more particularity; it did not alter
and was not inconsistent with the intent originally expressed. Second, the
Supplemental was not parol evidence because it did not antedate the PSA or the
Intangibles Assignment. Third, the assignment was not fully integrated. Indeed, the
PSA authorized the execution of any necessary additional instruments and
permitted its modification in writing. (CR654,656;App.J).
Finally and ironically, the Architect has no standing to assert the parol
evidence rule. The Architect is a stranger to both the Intangibles Assignment and
the PSA. The parol evidence rule does not apply to a dispute between a contracting
party and a contractual stranger. Baroid Equipment, Inc. v. Odeco Drilling, Inc.,
184 S.W.3d 1, 13 (Tex. App.—Houston [1st Dist.] 2006, pet. denied). The
Supplemental was appropriate for consideration despite the trial court’s erroneous
“evidentiary” ruling and fully supports its decision that RLJ had standing through
the Intangibles Assignment.
35
5. Alternatively, The PSA Transferred The Contract Cause
of Action When It Transferred the Contract.
If more than the Intangibles Assignment were required to transfer the cause
of action, it is found in the PSA. It transferred all of Ausaircourt’s “right, title and
interest” to “the Assets,” which included “all contracts, agreements … and
warranties covering the design, development, construction, operations,
maintenance and repair of the Property….” (CR613,615,619;App.J). This clearly
intended and effectuated an assignment of the Architectural Contract rights. The
PSA’s assignment of all “right, title, and interest” in that contract includes the
cause of action for its breach. See D Design Holdings, L.P. v. MMP Corp., 339
S.W.3d. 195, 202-203 (Tex. App.—Dallas 2011, no pet.)(pre-suit assignment of
“all of right, title, and interest” left no cause for the assignor to assert); see also
Effel v. McGarry, 339 S.W.3d 789, 792 (Tex. App.—Dallas 2011, pet. denied) (all
interests in assigned judgment, “including the underlying claim,” was assigned).
6. The Architectural Contract Was Validly Assigned to
RLJ.
The Architect next argues that the Architectural Contract’s Anti-Assignment
Clauses invalidated the transfer of rights under that contract. Notably, the
Architect does not assert these clauses affected assignment of the cause of action.18
18
The Architect’s consent was unnecessary to assign the cause of action. Causes of action are
freely alienable, subject to exceptions inapplicable here. State Farm Fire and Casualty Co. v
Gandy, 925 S.W.2d 696, 707 (Tex. 1996); see TEX. BUS. & COM. CODE ANN. § 2.210(b) (West
2011)(contract actions). Anti-assignment clauses do not prevent assignments of causes of action.
36
Assignment of the cause of action was conclusively established under either the
Intangibles Assignment or the PSA which makes irrelevant the Architect’s
arguments about the Architectural Contract’s assignment. Nevertheless, the
Architect’s challenge to the contract assignment is refuted here.
First, the Architect inaccurately asserts that RLJ admitted “alleg[ing] only an
assigned cause of action … rather than assignment of the [Architectural] Contract
itself.” (Appellant’s Brief 18,n.9). Yet the cited portion of RLJ’s pleading states
“Ausaircourt assigned the Project, the contracts, … intangibles … and causes of
action to [an] RLJ [entity].… and then assigned its rights … under the Project
contracts to … RLJ.” (CR222,329). This is no admission RLJ was not assigned the
contract, but simply acknowledges the PSA and Intangibles Assignments were
separate instruments.
Additionally, even if contract assignment had been proscribed by the anti-
assignment clause, Ausaircourt’s transfer of the Architectural Contract to RLJ
remained effective. “[T]he obligor a right to damages for breach of the terms
forbidding assignment but [its breach] does not render the assignment ineffective.”
Pagosa Oil & Gas LLC v. Marrs & Smith Ptnrs., 323 S.W.3d 203, 212 (Tex. App.—El Paso
2010, pet. denied); see also Restatement (Second) of Contract §§322(1), (2)(a). Other
jurisdictions agree that the AIA anti-assignment clause does not require consent to assign a cause
of action. See e.g. Berschauer/Phillips Const. Co. v. Seattle Sch. Dist. No. 1, 881 P.2d 986
(Wash. 1994); Ford v. Robertson, 739 S.W.2d 3, 5 (Tenn. Ct. App. 1987)(post-performance
assignment of cause of action); Folgers Architects Ltd. v. Kerns, 612 N.W.2d 539, 548 (Neb.
App. 2000)(same).
37
Restatement (Second) of Contract §322(2)(b); see Reuben H. Donnelley Corp. v.
McKinnon, 688 S.W.2d 612, 615 (Tex. App.—Corpus Christi 1985, writ ref’d);
Gips v. Red Robin Corp., 366 S.W.2d 853, 857 (Tex. Civ. App.—Houston 1963,
writ ref’d n.r.e); accord, Cedar Point Apartments v. Cedar Point Inv. Corp., 693
F.2d 748, 753, 754 (8th Cir.), cert. denied, 461 U.S. 914 (1983); Rumbin v. Utica
Mut. Ins. Co., 254 Conn. 259, 757 A.2d 526, 528, 530, 535-537, 541 (Conn. 2000);
University Mews Associates v. Jeanmarie, 122 Misc. 2d 434, 471 N.Y.S.2d 457,
461 (N.Y. Sup.Ct. 1983).
Some jurisdictions hold that if the assignor has fully performed, as is the
case here, the anti-assignment is unenforceable absent significant resulting harm.
In re Cooper, 242 B.R. 767, 771 (Bankr. S.D. Ga. 1999); Gallagher v. Southern
Source Packaging, LLC, 564 F. Supp. 2d 503, 506-508, 514, 515 (E.D.N.C.
2008)(assigment not barred if payment only performance due); Owen v. CNA
Insurance/Continental Cas. Co., 167 N.J. 450, , 771 A.2d 1208, 1213-14, 1218
(N.J. Super. 2001)(no material increase in risk or burden). In Berschauer/Phillips
Const. Co. v. Seattle Sch. Dist. No. 1, 881 P.2d 986 (Wash. 1994), the court
observed that “[t]he primary purpose of clauses prohibiting the assignment of
contract rights without … permission is to protect him [or her] in selecting the
persons with whom he [or she] deals.” 811 P.2d at 830 (citing Portland Elec. &
Plumbing Co. v. Vancouver, 627 P.2d 1350 (1981)). Thus, the anti-assignment
38
clause, if enforceable at all, did not invalidate the PSA’s assignment of the
Architectural Contract.
C. The Contract Was Admissible and Authenticated.
The Architect next complains the trial court abused its discretion by
admitting the Architectural Contract in evidence because the contract was (1)
inadmissible hearsay and (2) not properly authenticated. (Appellant’s Brief 31-32).
Both complaints are meritless. A contract has legal effect independent of the truth
of any statements therein. Rockwall Commons Assocs. Ltd. v. MRC Mortgage
Grantor Trust I, 331 S.W.3d 500, 511 (Tex. App.—El Paso 2010, no pet.).
Statements that constitute offer, acceptance or terms of a contract—
so-called “operative facts”—are not hearsay[. M]erely making of such
statements are in themselves relevant and thus evidence that such
statements were made is not barred by the hearsay rule.
Thomas C. Cook, Inc. v. Rowhanian, 774 S.W.2d 679, 685 (Tex. App.—El Paso
1989, writ denied); see also Sanders v. Worthington, 382 S.W.2d 910, 915–16
(Tex.1964). The Architect is simply wrong when, without supporting authority, it
asserts otherwise. The trial court correctly overruled the Architect’s hearsay
objection. (4RR8-9).
The Architect’s complaint about authentication fares no better. Texas Rule
of Civil Procedure 93(7) requires a verified denial to contest the execution of any
written instrument on which any pleading is wholly or partially founded. RLJ
alleged the Architect “contracted for” and “breached the Architectural Contract”
39
(CR189,192), making the Architectural Contract the bedrock for RLJ’s pleading.
The Architect having not made a sworn denial (CR33-34,47-48), Rule 93(7)
mandated its “receipt in evidence as fully proved.” TEX. R. CIV. P. 93(7); see also
Associated Press v. Hicks Broad. Corp., No. C14-93-00066-CV, 1993 WL 495114,
at *2 (Tex. App.—Houston [14th Dist.] Dec. 2, 1993, no writ)(unpublished);
Methodist Hosps. v. Corporate Communicators, Inc., 806 S.W.2d 879, 882 (Tex.
App.-Dallas 1991, writ denied).
The Architect could hardly deny the authenticity of the Architectural
Contract. It defended on the provisions in, and founded its declaratory relief
request based on, the Architectural Contract. (CR53,55;App.O). It attached the
same contract bearing the same date stamp and its Bates numbers to its live answer
and counterclaim. (Compare CR59-79;App.O with 12RR26-46;App.G). The
Architect supported its summary judgment motions with the Architectural Contract
(CR90-91,100-120,262-63,265,278-300), calling it an “undisputed fact” that the
Architect “performed its services on the Project under” that instrument. (CR91). Its
counsel represented during trial that “Plaintiffs' Exhibit 15 … is a copy of the
ESG/White Lodging contract for this project.” (5RR134). The trial court could and
presumably did take judicial notice of this instrument filed in its records. See TEX.
R. EVID. 201(b); Office of Pub. Util. Counsel v. P.U.C., 878 S.W.2d 598, 600 (Tex.
40
1994). On that basis alone, the contract was sufficiently authenticated. Associated
Press, 1993 WL 495114, at *3.
The same contract was also proved a business record by the Architect’s vice-
president. (CR178,316). Such proof also authenticated the contract. TEX. R. EVID.
901(10). For all these reasons, the trial court correctly overruled the hearsay and
authentication objections.
D. The Trial Court Did Not Err in Submitting the Contractual
Liability Issue Concerning Structural Engineering and The
Architect’s Complaints Have Not Been Preserved For Review.
The Architect complains of the jury submission of its liability for “fail[ure]
to comply with the Architectural Contract regarding the structural engineering
services” (CR1126) “because RLJ did not plead or prove any theory of respondeat
superior or vicarious liability against [it] for the [Structural Engineer’s] services.”
(Appellant’s Brief 33). Though the Architect agreed its “services would ‘include’
structural engineering services” (12RR39,47-50;App.G), it now argues that without
pleading and proof of vicarious or respondeat superior liability, it has no
responsibility for the Structural Engineer’s work. (Appellant’s Brief 33).
1. The Architect Waived Its Complaint By Failing to
Specially Except to the Omission of Vicarious or
Respondeat Superior Allegations.
Vicarious or respondeat superior liability is, as explained below,
unnecessary. The Architect assumed in the Architectural Contract direct
41
responsibility to the Owner to provide structural engineering services.
(12RR39,47-50;App.G) RLJ did not need to rely on any warranty concerning
structural engineering because reasonable performance is implied in every
contractual undertaking. Montgomery Ward & Co. v. Scharrenbeck, 146 Tex. 153,
204 S.W.2d 508, 510 (1947). Even if such derivative liability theories had been
necessary, the Architect cannot predicate its current complaint on its non-specific
“no evidence” charge objection. The trial court is only required to submit the
“questions, instructions and definitions … raised by the pleadings and the
evidence.” TEX. R. CIV. P. 278(emphasis added). A party is only required to prove
what it pleads. See Alaniz v. Jones & Neuse, Inc., 907 S.W.2d 450, 452 (Tex.
1995)(no questions permitted regarding unpleaded issues). Unalleged facts
essential to liability need not be proved unless the opponent specially excepts to
the omission. TEX. R. CIV. P. 90; Shoemake v. Fogel, Ltd., 826 S.W.2d 933, 937
(Tex.1992). RLJ alleged the Architect “agreed to … provide … structural
engineering design … for the Project” (CR44) and “breached the Architectural
Contract by … failing to produce design plans free from defects.” (CR47). The
Architect never specially excepted to failure to allege vicarious or respondeat
superior liability. Therefore, RLJ was not required to prove either theory.
42
2. The Architect Waived Its Complaint By Failing to File a
Verified Denial of Liability in the Capacity Sued.
The Architect also now denies direct contractual liability, asserting instead
that it is only vicariously liable for its Structural Engineer. The Architect alleged
generally it did nothing that harmed RLJ, and any of RLJ’s damages were caused
by “others for whose conduct [the Architect is] not legally responsible.” (CR48
¶¶D.1, 2;App.O). This is a contest to liability in the capacity sued, which the
Architect was required, but failed, to plead by verified denial. TEX. R. CIV. P.
93(2). Leggett v. Brinson, 817 S.W.2d 154, 158 (Tex. App.—El Paso 1991, no
writ)(defendant sued individually for DTPA violations waived defense that he was
only acting as agent for another without a verified denial); Avanti Servs. Inc. v.
Questor Drilling, Inc., No. 01-86-00741-CV, 1987 WL 8352, at *2 (Tex. App.—
Houston [1st Dist.] Mar. 26, 1987, no writ)(unpublished; same for corporate
contract signatory sued for direct contract liability with no verified plea that it only
signed as agent for another). The Architect’s general, unverified denial of causing
any of RLJ’s damages does not preserve its current complaint about its liability for
the Structural Engineer’s defective design. See Butler v. Joseph's Wine Shop, Inc.,
633 S.W.2d 926, 929-30 (Tex. App.—Houston [14th Dist.] 1982, writ ref'd
n.r.e.)(unverified denial of action in individual capacity waived capacity defense).
Without a sworn denial, the Architect waived its complaint. See Horton v.
Robinson, 776 S.W.2d 260, 266–267 (Tex. App.—El Paso 1989, no writ).
43
3. The Architect Failed to Preserve Its Charge Complaint
By Objecting On Different Grounds Than Those Now
Urged.
At the charge conference, the Architect’s only objection to the structural
engineering liability question was “there is no evidence to support [liability for]…
failure to comply with the [A]rchitectural [C]ontract regarding structural
engineering services.” (9RR152). This objects to whether there was probative
evidence the Architect failed to comply. The Architect’s complaint now concerns
evidence supporting the Architect’s responsibility for the Structural Engineer’s
failure to comply. Objection on one ground preserves no error on another. State
Dep't of Highways & Pub. Transp. v. Payne, 838 S.W.2d 235, 242 (Tex. 1992).
The Architect waived its objection to the submission of the structural engineering
liability question for this additional reason.
4. Vicarious or Respondeat Superior Liability Is Not
Required When Responsibility Exists Under a Contract.
The substance of the Architect’s argument is also meritless. The Architect
relies on Ryan v. Morgan Spear Associates Inc., 546 S.W.2d 678, 681–82 (Tex.
Civ. App.—Corpus Christi 1977, writ ref'd n.r.e.), for its vicarious/respondeat
superior liability argument. That reliance is misplaced.
a. Ryan Decided Tort, Not Contractual, Duty Under
a Now-Rejected Liability Theory.
The Architect acknowledges the Ryan plaintiff contended the liability
inquiry should have been based on whether the architect “breached its contractual
44
duty to prepare plans and specifications free from defect.” (Appellant’s Brief
35;emphasis added). It fails to mention, however, that the Ryan court never
reached contractual duty question by ruling “liability … can only be sustained on
proof that [the architect] was negligent….” 19 Id. at 682 (emphasis added). For 24
years since Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494–95
(Tex. 1991), damages to the contract’s subject must be recovered in contract, not
tort, actions. CBI NA-CON, Inc. v. UOP Inc., 961 S.W.2d 336, 340 (Tex. App.—
Houston [1st Dist.] 1997, pet. denied). Ryan antedated DeLanney and only
addresses the architect’s tort duty. It does not resolve the situation here: whether
contractual liability may be imposed for breach of a duty the architect’s agreement
to provide structural engineering services. (CR68,72-73).
b. The Contract Defines Contractual Duties.
As this Court recognized in Black + Vernooy Architects v. Smith, 346
S.W.3d 877, 882 (Tex. App.—Austin 2011, pet. denied), an architect’s duties are
contractually defined. Accord Guirey, Srnka & Arnold, Architects v. Phoenix, 9
Ariz. App. 70, 449 P.2d 306 (1969); Moundsview ISD v. Buetow & Assoc., 253
N.W.2d 836 (Minn.1977); Getzschman v. Miller Chem. Co., 232 Neb. 885, 898-99,
443 N.W.2d 260, 270 (1989); Kelly v. Northwest Community Hospital, 66
19
After obtaining summary judgment that RLJ could not recover in negligence pursuant to the
doctrine of equitable subrogation (CR1708), the Architect now seeks liability insulation under
law only applicable to liability for negligence.
45
Ill.App.3d 679, 23 Ill. Dec. 466, 384 N.E.2d 102 (1978). Here, the Architect had a
direct duty to provide structural engineering services by contracting to do so. Proof
of vicarious or respondeat superior liability was superfluous.
5. The Architect Waived Any Complaint About the Duty
Submitted By Failing to Request Any Question,
Definition or Instruction.
Nevertheless, the Architect suggests under Ryan it should not be liable for
“failure to comply with the Architectural Contract regarding the structural
engineering services required” because it neither “guarantee[d]” quality nor
promised “a perfect plan or satisfactory result.” (Appellant’s Brief 33, 34). Even if
Ryan had so constricted the Architect’s contractual duty, the Architect’s complaint
is that the jury question incorrectly stated the liability standard. But the Architect
requested no question proposing any liability standard. (CR1119-20). Its own
proposed bulk charge, on which it obtained no ruling, included no such liability
standard. (CR1108). It requested no definition or instruction submitting such a
standard. (CR1119-20). The Architect’s complaint was waived through these
failures. TEX. R. CIV. P. 279; Payne, 838 S.W.2d at 242.
6. Ryan Only Addressed the Architect’s Direct, Not
Vicarious, Tort Liability.
The Architect also asserts that Ryan means a contract party may later
delegate its promised performance to one it unilaterally characterizes an
independent contractor and thereby elude liability without proof of respondeat
46
superior. Respondeat superior, however, is only applicable to torts. It is based on
the theory the employer is liable for the employee’s negligence though the
employer itself beached no duty. St. Anthony's Hosp. v. Whitfield, 946 S.W.2d 174,
178 (Tex. App.—Amarillo 1997, writ denied); White v. Dennison, 752 S.W.2d
714, 716 (Tex. App.—Dallas 1988, writ denied); Marange v. Marshall, 402
S.W.2d 236, 241–42 (Tex. Civ. App.—Corpus Christi 1966, writ ref'd n.r.e.). It is
unnecessary when the employer breaches a direct duty it contractually assumed.
See V.D.4.b., supra.
Because the Ryan plaintiff failed to request a charge question whether the
engineer was the architect’s agent, 546 S.W.2d at 682, the only issue before the
court was whether sufficient evidence supported the architect’s direct tort liability.
Id. at 681. The Architect’s suggestion that Ryan defines a contractual standard is
incorrect. Even in negligence, an architect is not relieved of responsibility simply
by hiring a consultant to discharge its professional responsibilities. Playskool, Inc.
v. Elsa Benson, Inc., 147 Ill. App. 3d 292, 299, 497 N.E.2d 1199, 1204 (1986).
7. Architect’s Reasoning Permits It All the Contractual
Benefits Free of Burden and Risk.
The Architect further uses Ryan to suggest that it is not contractually liable
for the Structural Engineer’s shortcomings because the contract between the
Architect and Structural Engineer provided the latter was an independent
contractor. (Appellant’s Brief 33). The Owner was not a party to that agreement.
47
Its rights are unaffected by such a contract. See Prize Energy Res., L.P. v. Cliff
Hoskins, Inc., 345 S.W.3d 537, 554 (Tex. App.—San Antonio 2011, no pet.). The
lack of privity between construction subcontractors and owners is why it was
necessary to devise the “pass-through” fiction based on the general contractor’s
privity with the owner to permit subcontractors to sue owners for breaches.
Interstate Contracting Corp. v. City of Dallas, 135 S.W.3d 605, 615 (Tex. 2004).
The Architect in this case was, however, a party to the contract under which
it agreed to perform structural engineering services. It was free to contract with the
Structural Engineer for indemnity or other protections. No matter how it chose to
arrange the Structural Engineer’s performance, the Architect was contractually
answerable to the Owner and its assigns for the breach. The Architect’s vicarious-
only argument overlooks the same principle the Architect espouses concerning the
assignment: there is no privity; ergo, no contractual liability. If the remedy against
the Architect were limited to derivative liability, the Architect would be free to
contract for services completely free of liability for another’s failure to provide the
promised performance.
8. Illegality Is Not an Issue Due to The Architect’s Failure
to Plead It and Statutory Authorization for Architects
Performing Structural Engineering Services.
The Architect also argues that it cannot be liable for failings of its Structural
Engineer because it “literally cannot agree to provide structural engineering
48
services.” (Appellant’s Brief 36). It quotes Seaview Hospital, Inc. v. Medicenters
of Am., Inc., 570 S.W.2d 35, 39 (Tex. Civ. App.—Corpus Christi 1978, no writ),
for the proposition that “a contract for engineering services to be performed by a
person who is prohibited from practicing engineering in Texas is void and
unenforceable.” (Appellant’s Brief 36).
a. Any Illegality Was Waived Because It Is Not
Apparent And The Architect Did Not
Affirmatively Plead It.
Unenforceability due to alleged illegality is an affirmative defense that is
waived if not pleaded unless pleaded facts conclusively establish illegality. TEX. R.
CIV. P. 94; Phillips v. Phillips, 820 S.W.2d 785, 789 (Tex.1991); Park v. Escalera
Ranch Owners' Ass'n, Inc., No. 03-12-00314-CV, 2015 WL 737424, at *16 (Tex.
App.—Austin Feb. 13, 2015, no pet. h.). Even if it were a valid defense here,
nothing pleaded showed the Architect was not licensed to or could not lawfully
provide engineering services. Failure to plead illegality waived any such defense.
There was no illegality defense to waive, however. Even if the contract
violated architecture regulations, the Architect could not assert it. Public policy
would not prevent contract enforcement against the Architect because of the need
to discourage Architect’s from regulatory violations. Geis v. Colina Del Rio, LP,
362 S.W.3d 100, 110 (Tex. App.—San Antonio 2011, pet. denied). Further, there
is no illegality. The Architect is authorized to prepare “engineering plans and
49
specifications for … the depiction of the building systems, including structural,
mechanical, electrical, and plumbing systems….” TEX. OCCUP. CODE
§1001.0031(d)(emphasis added).
b. Seaview Hospital Does Not Say An Architect
Cannot Provide Structural Engineering Services.
Finally, the Architect’s citation of and quotation ignores that Seaview
Hospital does not discuss the dividing line between architecture and engineering. It
involved a contract under which a general contractor agreed to provide, not
perform, those services under a turnkey contract. 570 S.W.2d at 38-39. The
contractor in fact arranged for those services through licensed professionals. It was
the owner-defendant, not the architect, asserting illegality. Seaview Hospital held
the contract should be interpreted to be enforceable; i.e., that the general contractor
only agreed to arrange for others to provide such services.
The Architect’s complaint cannot be sustained. The trial court did not
reversibly err in submitting a jury question concerning the Architect’s failure to
perform structural engineering services.
E. The Evidence of Diminution in Value Was Legally Sufficient.
The Architect’s last complaint is “[t]he evidence at trial was legally
insufficient to support the jury’s $700,000 award of market value damages.”
(Appellant’s Brief 36). This attack is limited to supporting evidence for the jury’s
50
finding of Project value difference “determined as of August 31, 2010.” (CR
1127;App.B). The jury’s verdict, however, is fully supported.
1. The Evidence Is Legally Sufficient If It Provides More
Than a Scintilla of Factual Support.
A finding is unsupported by legally sufficient evidence only if there is a
complete absence of probative evidence; such evidence is not enough to cause
reasonable, fair-minded people to differ; or its opposite is conclusively established.
City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex.2005); Burroughs Wellcome
Co. v. Crye, 907 S.W.2d 497, 499 (Tex.1995). A reviewing court may only
consider evidence supporting the verdict, viewing that evidence and inferences
therefrom in the light most favorable to the verdict. Mancorp, Inc. v. Culpepper,
802 S.W.2d 226, 227 (Tex.1990). Even if an expert’s valuation lacks supportive
market data, the opinion is more than a scintilla and sufficient to present a disputed
fact issue. Alleged data deficiency goes to persuasive, not probative, value. See
Missouri-Kansas-Texas R. Co. v. City of Dallas, 623 S.W.2d 296, 299 (Tex. 1981).
Damages are not denied for want of exactitude “[i]f an injured party has produced
the best evidence available… afford[ing] a reasonable basis for determining [the]
loss.” Vance v. My Apartment Steak House of San Antonio, Inc., 677 S.W.2d 480,
484 (Tex.1984); O and B Farms, Inc. v. Black, 300 S.W.3d 418, 422 (Tex. App.—
Houston [14th Dist.] 2009, pet. denied)(evidence sufficient despite loss of
documents necessary for precise calculation). Whatever the Architect’s quibbles
51
about the appraiser’s supporting data, his opinion is not facially conclusory. It has
probative value. See Houston Unlimited, Inc. Metal Processing v. Mel Acres
Ranch, 443 S.W.3d 820, 838 (Tex. 2014).
2. Hornsby’s Testimony Was Well-Founded Based on Well-
Accepted Standards and Methodologies.
Real estate appraiser Paul Hornsby appropriately valued the Project on the
date the charge specified – August 31, 2010 (“Valuation Date”) – using the income
approach under two different scenarios. “[T]he income approach … is appropriate
when the property would, in the open market, be priced according to the income
that it already generates.” City of Harlingen v. Sharboneau, 48 S.W.3d 177, 183
(Tex. 2001). This is how a buyer would value the Project. (7RR128). Hornsby’s
methodology complied with the Uniform Standards of Professional Appraisal
Practice (“USPAP”). (7RR116, 122-23).
Hornsby appraised thousands of Austin-area properties over 34 years
(7RR114), including over 100 hotels. (7RR115). Hornsby performed two August
31, 2010 valuations: one for the Project’s actual impaired condition after the
remediation had been implemented; another had its condition not been impaired.
(7RR116,122-23,175-177). As USPAP requires, Hornsby considered three
customary valuation methods: cost, comparable sales, and income. (7RR121-22).
Hornsby looked primarily to the income approach, with comparable sales as a
vouchsafe only. There was insufficient sales data for comparable sales to be
52
independently reliable. (7RR142-43). Unless a hotel is brand new, the cost method
is inappropriate. (7RR128).
To determine the Project’s income-based value on the appraisal date were it
undamaged (“undamaged value”), Hornsby considered average daily room rate,
average occupancy rate, typical expenses, and capitalization rate from published
data for five other similar nearby hotels and the Project’s actual performance data
through the Valuation Date. (7RR130-34). With necessary adjustments, Hornsby
estimated that the undamaged Project would have a $100.00 average daily rate and
70% average occupancy. (7RR134-40). He concluded that the income-based
undamaged value of the Project was $13,650,000. (7RR141-42,44). Hornsby
checked that valuation against comparable sales. (7RR142-44).
Hornsby then used income to value the Project “as-is” as of the appraisal
date, assuming all feasible repairs were complete and recognizing their future
effectiveness was uncertain (“damaged value”). (7RR144-45). Hornsby adjusted
for faster-declining room rates, no-growth occupancy rates, increased operating
expenses for the Project as-is compared to undamaged hotels. (7RR145-47). He
also adjusted the capitalization rate up from that for undamaged hotels because of
the higher return rate necessary to induce a buyer to take on the additional known
foundation risks with the Project. (7RR147-48). He concluded that the income-
based damaged value of the Project was $7,220,000. (7RR148). He could not test
53
this against comparable sales because there were no area sales of hotels in a similar
state. (7RR145). Hornsby’s diminution-in-value testimony was more than
sufficient to support the jury’s verdict.
3. The Architect’s Complaints Are Meritless.
a. The Evidence Supported the Answer to the
Question Asked, and the Architect Waived Its
Valuation Date Complaint.
Without challenging any evidentiary ruling, the Architect asserts Hornsby’s
testimony could not support the verdict “because his valuations were determined as
of the wrong date.” The Architect ignores the charge specifically instructed
damages should be determined “as of August 31, 2010” – the date of Hornsby’s
valuations. 20 (CR1127). The evidence need only support the answer to the question
asked. Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000); see THPD, Inc. v. Cont’l
Imports, Inc., 260 S.W.3d 593, 608 (Tex. App.—Austin 2008, no pet.). It did.
If the Architect wanted an instruction with a different date, it needed to
tender such an instruction. TEX. R. CIV. P. 279. It did not. (CR1119). Neither did
it object to the question because of the date. (9RR153). Its objection was to
“legal[ly] and factually insufficient evidence to support the damages question
tendered, and we incorporate the motion for directed verdict arguments.” (Id.;
20
In McGinty v. Hennen, 372 S.W.3d 625, 628 (Tex. 2012), and Barraza v.Koliba, 933 S.W.2d
164, 169 (Tex. App.—San Antonio 1996, writ denied), do not apply here. There, the testimony
and charge involved different valuation dates; here, the testimony and charge involved the same
valuation dates.
54
emphasis added). The objection to the “question tendered” was invalid because
Hornsby’s testimony supported the “question tendered” in the charge.
The attempted incorporation of “directed verdict arguments” added nothing.
Rule 274 is explicit that “[n]o objection to one part of the charge may be adopted
and applied to any other part… by reference only” because “all participants… are
entitled to know with certainty the that all objections have been made at the
designated point….” Charles R. “Skip” Watson, Jr., “The Court's Charge to the
Jury,” Advanced Civil Trial Course 7–28 (State Bar of Texas 2003). Because this
goal is thwarted by incorporating charge objections by reference, objections to
defects in instructions that incorporate arguments in previous motions must also be
deemed waived because they are not “specifically included in the objections.” TEX.
R. CIV. P. 274.
In addition, the Valuation Date submitted was appropriate in light of the
acknowledged superiority of the “income approach” when the market values
properties like the Project according to its income. (7RR128-29). Sharboneau, 48
S.W.3d at 183. By the Valuation Date, the Project’s operations had stabilized and
provided a more reliable income model, much of the possible repair work was
complete, and the ramifications of the Project’s problems were more fully known.
(7RR120,124-25). That date permitted appraisal by analysis, not speculation. An
55
earlier date would have yielded inaccurate results because of uncertainty over the
full consequences of the Project’s problems. (7RR125-26).
This carefully tailored approach is precisely what cases involving breaches
of design or construction contracts call for because measure of damages is
governed by each case’s peculiar facts. Vance, 677 S.W.2d at 482. “What is a
reasonable time is a question of fact, varied by the circumstances of each case.”
Barry v. Jackson, 309 S.W.3d 135, 141 (Tex. App.—Austin 2010, no pet.) 21. Yet,
the Architect offers and research revealed no authority that the Valuation Date is
improper for breach of a design contract for an income-producing property. The
Architect ignores the Vance directive and would superimpose a one-size-fits-all
solution by resort to a rigid-date approach used in real estate sales contract
breaches.
A date-of-sale valuation is appropriate for the breach of a real estate sales
contract because damages are based on a single value fixed at a definite time.
Barry 309 S.W.3d at 140; accord Westminster Falcon/Trinity L.L.P. v. Chong
Shin, No. 07-11-0033-CV, 2012 WL 5231851, at *2 (Tex. App.—Amarillo Oct.
23, 2012, no pet.). Damages for the breach of a contract concerning a newly-built
building, on the other hand, is based on a difference in two separate values: “the
21
The Architect overlooks that Barry involved lay, not expert, opinion and that there was no
testimony relating the post-sale valuation to market conditions on the date of sale. Id. at 140.
This is the problem also addressed in McGinty, see n. 20, supra., but is not present here.
56
value of the building as constructed and its value had it been constructed in
accordance with the contract.” Turner, Collie & Braden, Inc. v. Brookhollow, Inc.,
642 S.W.2d 160, 164 (Tex. 1984); Gulf Ins. Co. v. Cunningham, A14-91-00799-
CV, 1993 WL 136039, at *3 (Tex. App.—Houston [14th Dist.] Apr. 29, 1993, writ
denied).
Unlike breach of a sales contract, the consequences of contractual deviations
in construction frequently do not become manifest until after the breach occurrs.
That was certainly true here because the damage to the Project resulting from the
structural design deficiencies were dynamic, not static, and continued to worsen as
time passed. (7RR117,126,144-45;4RR78-79). Thus, a rigid date-of-breach
approach would often underestimate the value received in contractual breaches
involving new construction.
Further, given the delay involved for latent defects to appear, assessing the
hypothetical undamaged value must be postponed so that both it and damaged
value are assessed under the same market conditions to avoid concerns about
rapidly-fluctuating market conditions expressed in Barry and Naylor v. Stiegler,
613 S.W.2d 546, 547 (Tex. Civ. App.—Fort Worth 1981, no writ). Otherwise, the
comparison ceases to be reliable for accurately measuring diminution. Unreliable
data is not a permissible basis for expert opinion. Merrell Dow Pharm., Inc. v.
Havner, 953 S.W.2d 706, 714 (Tex. 1997).
57
In addition, the Architect’s reliance on this Court’s observation in Barry
about the effect of the passage of time on the real estate market concerned
valuation based on sales, not income. 309 S.W.3d at 141. Thus, worries about lay
testimony that did not attempt to relate a later sale to the valuation date are absent
here. The valuation method here was different. The testimony was presented by an
expert who related his data to the Valuation Date. Hornsby eschewed the
Architect’s unreliable approach and used the charge’s Valuation Date to determine
both the damaged and undamaged value as precisely as circumstances permitted –
i.e., after the issues had manifested and the remediation work was complete, even
though the Project could not be fully repaired. (7RR123-25,176-77).
b. The Jury Was Provided With Actual Performance
Data.
Having argued that the Valuation Date in the charge was too late, the
Architect also argues that it was not late enough. It contends Hornsby’s diminished
value opinion was undermined because it was based on predicted data as of the
valuation date instead of actual performance data that only became available until
after the court’s charge’s specified valuation date. In fact, Hornsby testified about
the diminution in value based on both the actual, post-valuation performance data
and the projections based on the data available on the valuation date. (7RR149-53.)
Hornsby informed the jury that based on actual performance, the Project’s
diminution in value was $4.3 million (7RR152); based on the data available as of
58
the valuation date, its diminution in value was $6.4 million. (7RR153). Thus, even
if the Architect were right about the proper underpinnings for calculating value
diminution, the Architect’s legal sufficiency attack on this basis is meritless
because the jury was given a valuation based on the actual performance data. Its
diminution finding as caused by the Architect’s breach was within the range of
diminution damages the evidence supports. See Gulf States Utilities Co. v. Low, 79
S.W.3d 561, 566 (Tex. 2002).
Nonetheless, the Architect is wrong about using data unavailable on the
Valuation Date. USPAP standards disallow consideration of information the
hypothetical buyer and seller not then know. (7RR149,152). Hornsby’s use of only
pre-valuation data was the correct methodology and his analysis was reliable. That
is all that was required. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 581 (Tex.
2006). The jury gets to resolve the weight to be given his opinion. See id.
Hornsby’s analysis is not unreliable under Whirlpool Corp. v. Camacho, 298
S.W.3d 631, 640 (Tex. 2009), because his opinion based on pre-valuation data did
not disregard relevant facts as the experts in Whirlpool did.
Again, the Architect is complaining that a different date should have been
asked without preserving that objection to the charge. For any and all of these
reasons, this aspect of the Architect’s legal insufficiency argument is specious.
59
c. There Was Legally Sufficient Evidence to Support
the Jury’s Verdict and Any Allocation of Damages.
The Architect apparently argues Hornsby’s opinion cannot support the jury’s
verdict because it was not limited to diminution caused by the Architect alone.
This argument is flawed in several of its premises.
1) The Architect Erroneously Assumes Jury
Must Have Implicitly Found Others
Breached.
It erroneously assumes the jury must have found other’s breaches caused
diminution damages. Such assumption violates the obligation to review evidence in
the most favorable light, ignoring all contrary evidence and inferences. City of
Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005). The jury is entitled to
disbelieve any or all of expert or lay testimony. See McGalliard v. Kuhlmann, 722
S.W.2d 694, 697 (Tex.1986). It could have believed the Architect’s breach of its
structural design obligation alone caused all the diminution in value.
There evidence supported that conclusion. An expert testified that
inadequate foundation design caused foundation movement because it focused on
load distribution, not resisting movement from soil expansion. (4RR87,90-92,111-
12). The Soils Engineer correctly evaluated the Project site’s soil plasticity.
(4RR114-117,119-122). The Architect was the center of the design team ultimately
responsible to see that the foundation design followed the Soils Engineer’s
recommendations. (5RR165-67,176,216-18,222-23).
60
The foundation design utilized was not the one the Soils Engineer
recommended (4RR122-23,185), and was not adequate for the Project site.
(5RR57-58,96,217-18). The design was inappropriate because it did not properly
address resistance to movement from soil expansion. (4RR87-88,128-29). The
General Contractor was required to build the type of foundation specified, which it
did. (3RR159,157-58). This evidence supported any determination the Architect’s
failure to provide proper structural engineering alone would have caused value-
diminishing Project damage in the amount the jury found. The Architect’s
segregation complaint is academic.
2) Evidence of Unsegregated Damages Is
Legally Sufficient Evidence of Segregated
Damages.
Complaint about the legal insufficiency of the supporting damages evidence
is procedurally and substantively invalid. Procedurally, the architect did not make
clear that its objection was to lack of evidence of segregation or allocation. It only
generally objected that there was legally insufficient evidence. See V.F.3.a., supra.;
cf. Minn. Mining & Mfg. Co. v. Nishika Ltd., 953 S.W.2d 733, 738 (Tex.
1997)(“objection pointed out distinctly the nature of 3M's complaint about the
damage question's form” sufficient).
Substantively, the legally insufficient evidence objection being asserted on
appeal could not be sustained even had it been sufficiently particular. The Texas
61
Supreme Court resolved this issue against the Architect in Nishika. 953 S.W.2d at
978-79. There, four plaintiffs sued for breach of warranty and recovered lump-sum
damages. On appeal, two plaintiffs were disqualified from warranty protection.
The court rejected defendant’s argument for a take-nothing judgment because
damages evidence was not segregated for the remaining plaintiffs. It held that
unsegregated damages evidence was legally sufficient evidence of segregated
damages. Accord, Stewart Title Guaranty Co. v. Sterling, 822 S.W.2d 1, 11 (Tex.
1991)(attorney’s fees not limited to permissible claims); Texarkana Memorial
Hospital, Inc. v. Murdock, 946 S.W.2d 936, 840-41 (Tex. 1997)(damages not
segregated by liable defendant).
3) Testimony Segregating Damages Is Not
Required.
The Architect is in effect challenging the jury’s ability to apportion
responsibility without expert guidance. The percentage responsibility cases,
however, confirm that such allocations are routinely entrusted to juries without
specific allocation testimony, and that courts will not substitute their judgment for
the jury’s concerning that allocation. Bechtel Corp. v. CITGO Products Pipeline
Co., 271 S.W.3d 898, 920 (Tex. App.—Austin 2008, no pet.); accord, Binion v.
Brinkley, No. 2-09-121-CV, 2010 WL 396385, at *2 (Tex. App.—Houston [14th
Dist.] Feb. 4, 2010); Hagins v. E-Z Mart Stores, Inc., 128 S.W.3d 383, 392 (Tex.
62
App.—Texarkana 2004, no pet.); Rosell v. Central W. Motor Stages, Inc., 89
S.W.3d 643, 659–60 (Tex. App.—Dallas 2002, pet. denied).
The jury may decide causation whenever general experience and common
sense enable a layperson to fairly determine that relationship between event and
result. Pilgrim’s Pride Corp. v. Smoak, 134 S.W.3d 880, 894 (Tex. App.—
Texarkana 2004, pet. denied). When not subject to precise mathematical
calculation, it is the peculiar province of the jury to determine the issue. Simmons
v. Bisland, No. 03-08-00141-CV, 2009 WL 961522, at *8 (Tex. App.—Austin
Apr. 9, 2009, pet. denied)(mem. op.). Allocation of damages caused among
multiple breaches is not subject to precise calculation.
d. Comparable Sales Were a Vouchsafe, Not the
Basis for Valuations.
The Architect confuses things again with its “comparable sales” method
argument. (Appellant’s Brief 46). Hornsby did not calculate diminution in value
based on comparable sales. (7RR128). He calculated income-based valuations for
the “damaged” and hypothetical “undamaged” Project on the Valuation Date
(7RR128-142), only using comparable sales to “test” his income-based valuations.
(7RR142-43). Even if Hornsby had partially relied on comparable sales, it would
not invalidate his opinion.
[I]f the opinion should be shown to be based exclusively upon
considerations of incompetent factors, it would have to be
disregarded, ‘but, all opinion being at best something of a speculation,
63
it does not cease to have probative force when impropriety attaches
only to some, rather than all, of its underlying reasons. The question
of market value is thus peculiarly one for the fact finding body....’”
Tex. Pipe Line Co. v. Hunt, 149 Tex. 33, 228 S.W.2d 151, 156 (Tex. 1950).
Comparable sales were not the sole basis for or only methodology underlying the
valuations. Their incidental, confirmatory role did not rob Hornsby’s valuations of
probative value.
Even when an expert’s valuation is based on comparable sales, the trial court
has broad discretion whether “a sale is sufficiently similar to be admissible as a
circumstance influencing an expert witness in arriving at his opinion of value.” Id.
(quoting Tex. Elec. Serv. Co. v. Graves, 488 S.W.2d 135, 139 (Tex. Civ. App.—El
Paso 1972, writ ref'd n.r.e.). The Architect has shown no such abuse. Comparable
sales are generally admissible unless “reasonable minds cannot differ that the
evidence of the other sale lacks probative force because of its dissimilarity….”
Collin Cnty. v. Hixon Family P'ship, Ltd., 365 S.W.3d 860, 868 (Tex. App.—
Dallas 2012, pet. denied) (quoting Bridges v. Trinity River Auth., 570 S.W.2d 50,
56 (Tex. Civ. App.—Tyler 1978, writ ref'd n.r.e.)). Here, Hornsby followed
USPAP in utilizing sales comparisons (7RR143) and provided an explanation as to
the appropriateness of the comparisons. (7RR142-145).
64
e. There Was No Recovery For “Stigma” Damages
and No Double Recovery.
The Architect also reasons there was no evidence the Project was incapable
of repair, so any diminution valuation necessarily included “stigma” damages.
Again, the Architect’s premise is flawed. “Stigma” or “fear” damages are those for
reductions in property value due to the lingering perception or fear of a harmful
condition after it has been repaired or eliminated. Houston Unlimited, Inc. Metal
Processing v. Mel Acres Ranch, 389 S.W.3d 583, 594 (Tex. App.—Houston [14th
Dist.] 2012), rev'd on other grounds, 443 S.W.3d 820 (Tex. 2014). The damage
here is concrete reality, not anguished perception.
The factual flaw is that there was probative evidence that the foundation
could not be repaired. (4RR93,96-97). Thus, the question of diminution in value
attributable solely to market risk/uncertainty intolerance for a non-existent
condition never arises. The foundation could not be strengthened or altered to
avoid ongoing movement. (4RR90-92,96-97). The best that could be accomplished
was to control soil expansion and resulting movement by limiting moisture
infiltration. (4RR90-97). The foundation problems would continue. The efficacy of
the repairs was uncertain. (Id.). Thus, market uncertainty was over an existing, not
imagined, condition likely to cause future damage or deterioration. (Id.;7RR117,
124,176-77). On that is required for value diminution. Precision Homes, Inc. v.
65
Cooper, 671 S.W.2d 924, 930 (Tex. App.—Houston [14th Dist.] 1984, writ ref'd
n.r.e.).
There is no double recovery when the jury awarded pre-Valuation Date
repair costs of repair for repairs plus Valuation Date value diminution. The latter
takes into account future repair costs. (7RR123-24,177-78). That is how Hornsby
calculated the damaged value. (Id.). Indeed, there is no duplication in comparing
post-repair value to the hypothetical undamaged value on the same Valuation Date.
See Parkway Co. v. Woodruff, 901 S.W.2d 434, 441 (Tex. 1995). The charge’s
damage question avoided any possibility of double recovery by limiting repair
costs to those incurred on or before the Valuation Date (CR1127;App.B), which
were not factored in to Hornsby’s valuation. Those that might have been incurred
after the valuation date were included in the diminished value as of the Valuation
Date. There was no double recovery and no recovery for “stigma” damages.
f. Lost Profits Were Not a Separate Element of
Recovery, But Were Only Used As Necessary for
the Texas Supreme Court’s Approved Method of
Valuing Property Producing Income.
Hornsby’s income-based Project valuation utilized the method the Texas
Supreme Court approved for income-producing property. Sharboneau, 48 S.W.3d
at 183. “[E]stimating … future income and applying a capitalization rate … allows
the appraiser to arrive at a present value.” Id. The income method consists of
“estimating the net operating income stream of a property and applying a
66
capitalization rate to determine the property’s present value.” State v. Bristol Hotel
Asset Co., 293 S.W.3d 170, 171 (Tex. 2009).
Estimating future income necessarily includes modeling based on historical
performance, consultation with published figures available to appraisal
professionals and estimates of future occupancy and room rates. (7RR129-30).
Hornsby used these resources to arrive at an overall valuation of the Hotel itself.
This is not a “lost profits” model and RLJ did not obtain damages for “lost profits,”
despite the Architect’s claims. None of the Architect’s evidentiary insufficiency
arguments are meritorious.
VI. CONCLUSION AND PRAYER
For the foregoing reasons, and the reasons presented in RLJ’s Cross-
Appellants’ Brief, RLJ asks the Court to:
1) Reverse the trial court’s the judgment applying the one satisfaction rule
and delete the credit for the amount of the Settling Defendants’
settlements;
2) In the alternative, if and only if the one satisfaction rule applies, reverse
the trial court’s judgment concerning the award of attorney’s fees and
either reform it to award RLJ unsegregated fees for prosecution of all
contract claims against the Architect and the Settling Defendants, or
remand the case to the trial court solely for a determination of reasonable
67
and necessary attorney’s fees for the prosecution of all contract claims
against the Architect and the Settling Defendants;
3) Grant any one or more of 1) – 2) above subject to the conditions
prescribed; and/or
4) Otherwise affirm or modify the trial court’s judgment in favor of RLJ as
set forth herein and in RLJ’s Cross-Appellants’ Brief.
RLJ further requests such other relief to which it is justly entitled, provided
such relief requested does not include a retrial on the merits of its claims against
the Architect.
Respectfully submitted,
MUNSCH HARDT KOPF & HARR PC
/s/Michael W. Huddleston
Michael W. Huddleston
State Bar No. 10148415
J. Stephen Gibson
State Bar No. 07866000
3800 Ross Tower
500 North Akard Street
Dallas, TX 75201
(214) 855-7500 Main Tel.
(214) 855-7584 Main Fax
mhuddleston@munsch.com
sgibson@munsch.com
68
Benton T. Wheatley
State Bar No. 24015171
Tracy McCreight
State Bar No. 24037064
Munsch Hardt Kopf & Harr, P.C.
401 Congress Avenue, Suite 3050
Austin, TX 78701
(512) 391-6100 Main Tel.
(512) 391-6149 Main Fax
bwheatley@munsch.com
tmccreight@munsch.com
Attorneys For Appellees and
Cross- Appellants.
69
CERTIFICATE OF COMPLIANCE
I hereby certify that this Appellees’ Brief was prepared using Microsoft
Word 2010, which indicated that the total word count (exclusive of those items
listed in Tex. R. App. P. 9.4(i)(1)) is 14,955 words.
/s/ Michael W. Huddleston
Michael W. Huddleston
70
CERTIFICATE OF SERVICE
I certify that I served a true and correct copy of the foregoing document
upon counsel listed below on this 11th day of June, 2015 by e-file:
Weston M. Davis
Gregory N. Ziegler
Steven R. Baggett
Macdonald Devin, P.C.
1201 Elm Street
3800 Renaissance Tower
Dallas, TX 75270
/s/ Michael W. Huddleston
Michael W. Huddleston
71
APPENDIX
TAB DESCRIPTION OF DOCUMENT CR/RR
Appendix documents under Tabs A-I can be located in the Appendix to
Cross-Appellants’ Brief and are not re-attached to Appellees’ Brief.
A Plaintiffs’ Seventh Amended Original CR184-218
Petition 2SCR39-73 (duplicate)
B Charge of the Court CR1121-29
2SCR1563-71 (duplicate)
C June 13, 2014 Letter from Hon. Judge CR1437-41
Yelenosky 2SCR1598-1602 (duplicate)
D Final Judgment CR1708-12
CR1905-09 (duplicate)
E Contract with Soils Engineer 12RR6-11
F Contract with General Contractor 12RR567-651
G Contract with Architect 12RR26-128
H Architect’s Second Amended Answer CR46-79
2SCR5-38 (duplicate)
I Report of SB 890 (2005) n/a
TAB DESCRIPTION OF DOCUMENT CR/RR
Appendix documents under Tabs J-O are attached hereto.
J Purchase and Sale Agreement (PSA) CR606-676
K Legislative Committee Report for n/a
1977 Amendment to Article 2226
L Assignment of Contract CR578
72
M Intangibles Assignment CR701-05
N Supplemental Clarification of CR602-604
Assignment
O Elness, Swenson Graham Architects, CR 46-79;44-45
Inc.’s Second Amended Answer and
Original Counterclaim for
Declaratory Judgment
73
APPENDIX J
NEW HOTELS PURCIIASE AND SALE AGREEMENT
BY AND BETWEEN
WBITECO INDUS'J'lUES, JNC.
and each of me parties named on Sdledple A hereto
(Sellen)
IU..J LODGING FUND U ACQUlSlTlONS, LlC
(Purchaser)
ond join-ed by
WHITE LODGING SERVICES CORPORATION,
as Manager and agent fN Sellers
(Wh~ Lodgiug)
Qo!ed: March 16.2006
Exhibit f
Witness _-_--~'-_.,A:_-~C/_.._,_~,.,?J::L:.o....t'"'":P~:-=
Date S. . '2.~--- /7/
Melissa Parkhill, CSR
-
RLJ Austin Courtyard 018307
Exhibit 6
606
------------------ -----------------
TABLE OF CONTENTS
SECTION 1. DEFINITIONS
SECTION 2. PURCHASE-SALE
2.1 Purehut-Sale
21 ~
2.3 Al~e Price
2.4 ~
SECTION 3. DILIGENCE; INSPECTIONS
3.1 1nsoeW9n Perjosl.
3.2 Title md Syryey Maners
3.3 Struc!ural a.nd Enyjroruncp.!!lt R.epons
3.4 TakiQ¥ !!!'!? Cawl!lrY
SltcrJON 4.. CLOSING CONDITIONS
4 .l {:!oaing Docwnent:s
4.2 Allocable Price
4.3 Materials
4.4 ('ondjtion of APP!i!:qbh; P!'!ID!:!lY
4.5 :Q1bg
4.6 faj!!.!le ofCom.litions
SECfiON 5. TERMINATION OF AGREEMENT
' '
--
RLJ Austin Courtyard 018308
607
SECTION Ci. REPRESENTATIONS AND WARRA.N11.ES OF SELLlm
6.1 Swus ofSeller
6.2 AuthQrilx sz!~lle[
6.3 Existing Agreements
6.4 Tax Returns
6.5 No Yioladoqs of Agreements
6.6 Litigation
6.1 ConcleomatiQn
6.8 N!2l A Emti!Ul Pmru!
6.9 Construc:tiQ!l ~OOllJC:t!
6.10 Eferdo~ Su!2~a!X~
6.1 J [ntentiQ!!!Il~ Qmi~
6.12 Inten!.iooall! Qmitted
6.13 ~
6.14 No Pmffi:rs
6.15 ti2 Yi21Aii2m
6.16 Seoome Im! ~m:el
6.17 lntentiQD!Ul Omitted
6.18 Groundf.mes
6.19 Llbor and ERISA
6.20 b!2..C.ammi!mmti
6.21 Res!atemem orSs:llc;r Re~I2!Kw @f!d Wammties
6.22 SllQ'ival of Seller Rmn;sentatiQDS
-ii-
--
RU Austin Courtyard 018309
608
...
6.23 Ljabjlin! for~adl ofSetl.erRepresetmioos
6.24 Disc!ii!neto{.Elcprm or Implied ~tkm$
6.25 Seller's ~ge
SECTION GA. REPRESENTATIONS AND WARRAJ\'TIES OF WHITE
LODGING
6A.I Status ofWitite Lodgjn£
6A.2 Alllhority oOYhite Lodslng
6A.J No Violations of Asreemems
6AA Litigatjoo
6A.6 Swriwl ofWbjte Lodging's Representatjons:
6A.7 L.i!bility for .Preach ofWhijt,: Lodging·s Rtprmntatioos
6A.B )Vhlte t,QS!gjna·s Knu``o--!);dm:
SECTION 7. REPRESENJAIIONS ,ANI> W6RRANDES Qll' MJR.CfiASER
7.1 Stalus nnd Authoritv ofPurebmr
7.2 Agjoo oflJ!rcbger
7.3 No ViolatiOJ!$ of Agreem_egts
1.4 Lir.igatkm
7.5 W> Reliance
7. 7 ~testatemc:nl of Pwcha:;er Re;prcseptations and Warranties
7.9 lilbilily fm-.Sn:acb offurchllser RcpresenwiQP£
7.10 PUJ£baser's J(rowlcdge
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...
7.11 SeRer`` Deemed Waived
SECTION 8. COVENANTS OF SELLERS. PURCHASER AND WHITE
LODGING
!U Seller Coymm!;S
8.2 ~ Co'GOants
&.4 ligugt Permit1
SECTION 9. APPORTIONMENTS
9.2 Cklsjoo Staie!IWll; fnNr-Up
9.3 Sellers CJosing kQstS
9.4 Pult'hgfs Closiwl Cos!s
9.5 Cancellation fee
9.7 ~.
SECfiON 10. DSFAULT
10.1 DefBYil by Seller
I0.2 Oeftn1lt by Plrehaser
SECTION 11. MlSCELLANEOUS
11.1 AmcmenUo .IndemnitY.
ll.2 Brokmee CommisSi~
IJ.3 ~
Jl.4 ~
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Rl.J Austin Courtyard 018311
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11.5 Waiyers; ModifieR ofA~t
I L6 1\sSi!UJ!lW!t Spcmso.rs and Assigns
Ju Seyqa!n1i!v
11.3 CounlemW
tJ.9 Govemin& l..aw
ll.l I> PerformN!Ce on Businm P!n
1u1 Merom' fees
11. 12 RelatiQnsbifl
11.13 Like-Kind l2xdtange
11.14 Purshm o(Ooc or More Seller Entities
1 I. 15 Eurtl!er ASSUl1!11Cey
I l. I6 Alltboritv of White Lodging
11.17 Seclion and Other Heading~
J f.lll Time of the Essoce
RLJ Austin Courtyard 018312
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NEW HOULS PURCIMSE AND SALE A(!RUM§.NT
'l'mS NEW HOTELS PURCHASE AND SALE AGREEMENT is made as of the
16th day of Match. 2006 ("Effedfve Date") by ad between (i) WHITECO
INDUSTIUES, INC., a Nebraska CCI'pOflllioo. and eii.Ch of tbe panics uamed on
Sefmi!leA ~remo (individually, "'Seller" and c:oUectivdy, "Sellen"}, and (ii) RU
LODGJNG FUND li ACQl!ISI110NS, LLC,a Delaware limited liability company
("hrdtuer''), and joined by (iii) WHITE .LODGING SERVICES CORPORATION.
an [ndiana coJPOI"'(ion ('White Lodpng'') liS Manager and agent for the Sellers.
RECJTal.S
J. Sellm' IN the owners of aU or the Properties, with the specific ownership
of spec:ift<: Properties being set lbnb on §el!edp!e A hereto.
2. Ptm:haser desires to ptlfChne all oflhe Properties and thereby acquire aU
of Sellers' teSpeC~ive right, title and inmrest in md to the Properties upon the terms and
conditilllts hereiflli\er set fonh.
3. Sellers~ to sell to~ all of the Properties 11nd lbereby convey
all their respective right. rille lllld interest in ~h Properties. upon the terms and
conditions hereinafter set fonh.
4. Upon comple'lion of !he Improvements on eaeb Property, White lodging
will be the Manager ohll oftlw: Properties.
5. Purchaser and White Lodging have agreed that White lodging will
manage lhe operatioo of aiJ of tbe Properties after Purchaser acquires the sarue.
6. All capitafmd tmos USed herein and 001. otherwise defined ~thaH have the
meatJiqs ascribed to such terms in Section 1.
NOW. TIIEREFORE. mcunsidemtion oft he mutwl covenants herein tol'ltllined
and other Rood Md valuable cunsidenuion. the munml receip1 and legal suffkic:ncy of
which are hereby acknuwlfil,;td. &I len. Purl: baser nnd White Lodging hereby agree as
follows:
SECTION I
.Dif1NmQNS
Capitalized terms used in this Agreemll!l'lt arid not defmed elsewhere herein shaJI
have the meanings set fOrth below:
..Act pf Bankm@" shaiiiTJtlll) if a Pil1.Y hcrelo (or any genet'llll partner or
member lbereofat:ting on behalf of sucb parl)')shall (i)apply for or consent roth.
-wnmmt 111K1 Assumtion ctf Ltasc( shall mean an Assigrunent and
Assumption of Lease in the fonn ofScbechlte J hereto.
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RlJ Austin Courtyard 018314
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''Assimpept of!Jgp•.lm!iliJ m lp,lmgibl@" shall mean an Assignment
ofLicenses IUid Permits in 1be {(11111 of Selaedule K hereto.
..B!l!Dge" shall bavc: tbe meaning given such lmn in Section 9.6.
"BiU ofSg.. mall mean a bill ofsale in tbe form ofSd!ed!k L hereto•
..Baum D!y" shall mean my day other !ban a. Satl.llday, Sunday or any Oilier
day on whk:h bimtin& institutions in the State of Maryland liN authorized by law or
executive .action to close.
··~.. rmd '"C!osiag" shall have the mealling given suc:b term in Section 2.4.
"Qesin.COJd!titM" shall have tbe meaning given mch term in Section4.
''C!!!Bnc Dah:" shall have !be meaning given IJtlCb 1enn in Sccuon 2.4.
~,. shall mean the Consolidated Omnibus Budget Reconciliation Aet of
198S.
"Completed" shall mBal'l with respect to the Improvements on a specifit Property
that sudt Improvements .have beefl constmt:ted. and ampleb:d (j) in a good end
workmanlike mWJer, (ii) in eompliance with all app1K:able laws, rules and regulations.
{iii) in accordance, in all tnaterial respects, with the Plans and Specifications, (iv) in
compliance with any (a) conditional opening approvulletter, (b) authorization of
Fmnchisor or{c) any PIP. and {v} incomplillllce. ina!J material respectS. with lite
requiremeoms of the SelkrFranch~ Agrtemenl. as !be same may be modil:ied or
amended by ae~"fflent Oel1A"«n Seller and the franchi!lor. provided IM12ny materia(
modification Of amendment of me Seller Franchbe Agrecmeut shall be subject to
Purcllaser's approval, whith appn:wal shall not be unre``sonably \\lithhekJ.
PCellletim! Csrtifitate" 'ball mean the certitica.te of a Seller to be deliveted al
Closing and certifying to Purchaser lhar {i} the Improvements haw: been Completed. and
(ii) the Hoti!l has been fully equipped witb the furnishings. flltlun:s, equipment and
supplies necessary for !he opemion of the H~l as required pursuant to the Sdlet
Franc:hise Agreement. lo which cenifitate shaJI be appended (a) a copy of 11 current
certifJCate of occupan<:y or equivalem thcreor iss~ by 1M jurisdiction in which the
Pmpcrty is located and evidencing the ril!hliO occupy the Impwvetnet~ts on such
Property and (b) a certifiCate of the project manqer (who may be an employee ofWbite
Lodging or :m employee of an Affilillte of White Loddng) for lhe developmeat of the
lmprovements, cenifyiq to Pure~ that the lmprovemeniS have been completed in
acc::~c with the Plall! ll%ld Spei:ificntions.
"£cmp!tmt" sball have me meaning givm such temt in lhe definifion of
Physical Condition.
"'i&DWV.ble J~tveatorics" shall me:m aU merchandise, food and beverages held
for sale in connection wilb the operation of ~h Property to the ex1ent the food and
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RLJ Austin Courtyard 018315
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beverage ootletB. are not opmted by third-party 1emmts under lell$.1!! ~ pi'O'IIided
. that any llcoholic beverages that c:asmot legally be tzamt'erred 10 Pw-chaser al Closing
shall be and tetnain lhe propmy of Sellers until such time as: such beveraget may legally
be traosfcmd to Purchaser.
'"Co•tnS!I" shalf me.n, wilb respect lO each Property, (l) atl eonfem1Ce.
oonvmdon and banquet room contracts. guest mom resnvations; {u) Ill! leases,
concessions and other occupancy tgreemeo~. if any. with tenants of the Property; fui) aJJ
leases covering the equipment nec:ess!U)' to operate the Property. if any; and (iv) all
contracts, agreements {other than suiJcohtrac1s) lllld wuranties oo-vering the design.
development. con$tnletion. operatiorw, rnainttn~.nee IIIDd repair of the Property and/or
equipment loca.ced in the Property.
"!!mr' sballroeao a 5pecial wammty deed in substamiaily the form attached
hereto as Sdl!4Jde 0 (or such other fbrm u is customarY in the applictble jmildictim to
the same substantive effect) when:by each Seller of a Property conveys fee simple title to
lhe real property portion of the Property {other Than the real property portions of
Properties which are in the form oflcldebold interests) 10 P``tthaser.
-~··shall rnran the deposi1 in the amOtDJI of Ten Millim Dollars
($1 0,000,000.00), qe1her with interest earned thereon.
--
"Deposit Ess;pw IJllfJ'!IS!iopJ~ shall mean lhose insmactions 10 the Title
Company in !be form of S9ed•le P attached hereto pursuan1 ttl wbieh the Titk:
Company will hold the Deposil.
"Effecqve Date" shall be the date set fcnh in the prellmble of this Agreement that
bas been entered by agfeeml!t'lt of counsel for Sellers and Pun:haser alkt all ~nntetpart
siptures and Scbcdult!s haw: been rcceh'ed and attached •
..Eipployt! Li!!!bil!tle£' shall have the meaning given to such tmn in
Section 9.1fnt.
~EatiiY furd!ase Notice·• shall bnr: the meaning given 10 such leon in
Section I U4.
"ERISA Affiliate" means any en~i1y wh.iclt. together with the Seller or Menagcr
(as applieable:),js required to be umed as a si~q~le employer mufer Code Section 4H or
ERISA Stctioo 400 I.
``;studq! ets'" shrdl mean. with rer.
''Gfgetal E.<~.toppel" shall have the meaning given such term in Section 8.1 (i).
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RLJ Austin Courtyard 018317
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"Grmmtl Lwt Esfop!!d" sbaiJ mean an estoppel cemficute sub&bl.ntially in the
.Corn~of Scla!!f!l§ M hereto (subject to sueb reuonabk vsriations as may be ~uested by
l'un:haser's lenderS and the applicable Lam:llooj)•
..~.. all mean Hod~ Ward Elliott
"um.!" shaD mean the Compleled opmting hotel, franchised by the national
Fnmdri.sor idemified gyhe francbisor for such Hotel oo SeM!I!!l¢ E.localed on a. parcel
or pan:e!s ofreal property whieh is a part ofa Property.
..lrnmaterilll T!!ldg" shall have the meanins g.iven such term in ~ction 3.4{a).
.. I.mpme!JW~b.. liball mean. \\ith respect to each P~t~perty. all buildings
(meludins the Hotel), fi~ttures. wallr. fences.landscapin& 4lld other stl1ldUres and
improvements siu.ted on. affixed or appiiTteDitl)t to the real property including, wllhout
limitaUon, all pavement. acceu ways. curb ew. parking. ki«chen Jll1ld support facilities,
meeting and confemx:e rooms:, swirtl11lin& pool facilities, rweatlooal amenities, office
facilities. drainage system and facilities. air ventilation and filtering systems ad facilities
and utility facilities and connections for saniWy sewer, potable water, irrigation.
eh:etricity. ldephooe, cable television and natural gas. to the extent the same form a part
of the Propeny.
~tnspa;etio• Peri!XS'' shall have the meani11g given such tenn in Section 3.J(a).
-Jpspcctiu Rmort.. shall have the meaning gn:en soch term in the definition of
Ph)"sieal Condition.
-Lallfllkin:l" sball mean (i} !he Finley Company, 1he fee owner and lessor of the
parcel uo which both the Coortyard and Residence lnn In Austin. Texas {propeny
numbezs 93 and 9-IJ ~ consrructed, and {ii) the City ofB'Ioomington, Jndillllll
Redcvelopmem Commission. the fee owner and lessor of the parcel on which lbe Hihon
Darden in Bktominf,!.ron. Indiana {property number 95) is construttcd.
.. l.ap!IJmis-shll.!l mean. CQIJet:tively. each alld ev~· Landlonl.
··~&m'" .sfWI m~ individually or (ollcetivdy, any of !hose ground lease
agreemems iden4Hied on Se.bedtale D hereto and ..~·· shall mean all oftbose ground
lease agn..~ents.
'"l&i!K fil:redit'' shall have the~ given such lerm in Section U(b).
-Lkmm pd f:maits.. shllll mean, with respect to each Property. aU pennits,
licenses and aWloriZIMiollll issued by anr stale: ur Joca[ !Wthorities and requiml for the:
coJ"ljtnJt"tion. OWI'Iei"Ship and operation of the Jmprovemcms including. without limilation,
completion certif"ICDles. buildill!! permits. signaae f!t!rmits. site l.llle approvals. zoning
ccrlificates, 100 environm~"'IW ami land use permits. provided that sueh permilS and
licenset aretnl'nSfembie or assignabk.
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RLJ Austin Courtyard 018318
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"Liens to be Reieullld" shan have the znearring given to such tenn in
Section 3.2(d) .
..Liquer Pemeit- and "Lk!llot' Permits'' shall have the meaning given to such
terms mSection 8.4.
"l~htaagemept Mreemepf' shaU ml!'lln, with respect to each Property. the new
Manag.:m~mt Agreement, substantially in the form ofSebmle N .hereto, to be enlered
into by While LodgiDg. as maoager, and Pun:haser, as owner of the Propefly, at or prior
to Closing.
"'Mauger" ~all mean White Lodgmg.
"Material Tak~g" shall b...-e the meaning given suth term in Section 3.4{a).
"!:!:Ja,dmgm Plmkal CimdJtiom Ol!lilt!tiotf shall have the meaning given s~h
tenn in Secdon 3.3(b).
'"Qpe11laa pate"' shall mean the dale on which a Hotel opens to the public for
business as a Fnmchise Hotel in compliiUice with the Seller fi'IUlChise Agreement and all
~pplicable laws, rules and regulations.
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"Person'"' or "Pers011s'' shaD mean liD)' individmll or en.lity. and the heins,
executors. administtatOrS, lepl repmenta.tives. s`` nod assigns of such Person
where the ccmtext so permits.
-·
~rmeaal Pa·P.nrrty., ~halll'llea.n all fumiture. furr.isbill£-<;, works of!lrt.lradc
li:\tures and equipmenlloeated a( 11ndlor used in eonnec:tion with the Property, indudinc
d1c FF&E.
-Qysl£!1 CD'ndition" shall mean a suuctural or em·imnmemal defect iden1ifitd
by an independent and qualified structural or envirorunental consultant ("'ConSllltautj in
either a p:ropert)' condition DSSeSSment repon or an environmemaJ ~tc assessment report
issued by 5\!Ch Consultant (either an -raspeetkln Report"') that {a) efther(x) involves a
remediation cost of$25.000.00 or m«m, or (y) in the reasonabl!!-judgment of Purchaser.
based on the Inspection Report, has a mareriol impact on the marketability or operations
of a Propeny. and (b) is. in the professiomtljudgmcnt oflhe C'oosuhant as e,·idtnced b)'
the Inspection R~port. an ~immediate need.~ ·
~Physit;al Coaditjpps"' sftall mean.1:olleclivdy. each nnd t:\'et)' l,bysiral
Condition.
.. FbytkaJ Cpditi~t``s Cr:gfif' shall bave the meaning given such term in
Section 3.3(b).
"Phviigl C'oBdltiGII!S Cau·e" shall have the meaning gh'ell sueh term m
Sectioo 3.3(b).
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RLJ Austin Courtyard 018319
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"Phnical Cop®ioos IWmvr" shall have the meaning give-n such term in
Section 3.3(c).
"Pbyaiql Coaditio``tt Notice.. shall have the meaning ~:iven such term in
Section 3.3(a).
".Pl!l'lim! C9!1111Kklt!ll Resmse" shall have 1he meaning given snell term in
Seetioo JJ(b).
"m" shall,. to the exlmt applicable, mean all of the ~equirements ofa Ftanchisor
for improvements tO 11 specifiC Property, including tbe establishment of reserves fbr the
making or.mch ill'lproVemc:nt!l at the Pro{:mr. but only to the extent th1n such
improvemcJJts are required lo be completed ~ilhin twelve ( 12) months after the Closing
Date.
·~·· sflftll mean, collectively, tacit and e'\ll:ry PIP.
. ''p)m !!lid Spedfqcw" shall mem. with respect to each Properly. those
nenain plans and specifications for COIIlltrutrlon of the ImprovementS whieb: (i) comply
wilh tbe requirements ofall appfic:able laM. IUh~s and replations and with lhe
requirements of the Se-ller Francblse Agreement, and (ii} will be provided by Seller to
Purch!lw during the 1nspoctir.m ~riod. as 3UCit pia~ and spmlications may be mrppe[ties" shall mean. collecth'l!l~. euch and cvuy .Property•
..Property" .shall mean the fee simpk intete$1 or leasehold interest, a~ !lflPiicabk,
in a partitular pared of real mate iOelltiJied by address on Sthechllt Q. Md by legal
description on ggechtle S..l. togetbeT with (i} the Improvements i:OOSCnlded on. or to be
tonSlNCted on. such mtl estate; and (ii) Ihe Asstls.
. '·
~rrppgty Cma]!r'' shall have !he meaning giv.m to sucb term in
Section 3.4(b).
..Pmertv Eg!J)I!!"«S'" shall mean all c:mplo)"t-~s orSelkt. Manager or any
l\ffili:uc of Scller tlr MonftJII."I' employed at ;t Pr.1pcn~.
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RLJ Austin Courtyard 018320
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'1!'!J!riet!rv lgfo!'l!!!ful!" shall mean the White Lodging owned software
program kllowu as «full Service Deily Sales Propm...
"P!rdwe Price" shall mean the sum ofTwo Hundred Fifty-One M'dliOII Six
Hundred Tbirly-Egbt 'J'bousand Eight Hundred Sewn Dotlm ($251,638,807.00). which
amooot sbllll equal the aggregate of the Allaeable Prices fot all Properties being
purchased. subject to allJKijustments and appmtiOOitlellts made pursuant 1.0 lite provisions
of this Agreement.
..P•rclt!!!H!" shall mean RIJ Lodging Fund II Acquisitions. tLC and its
permitted suecessors and assigns. .
..&eodiiiJ Ch•!Jes" shall have the meaning ,Pven to such tenn in
Section 9.3(11). ·
..Sale ~t BiX!!!" shall bave the memtiog, given 10 such term in Section 9.6.
. ~" sholl have the meaning given to such tmn in lhe Preamble to this
Agreement. As rome times used herein. Seller shall mean the :respecth:e owner of a
particular Properly.
"Seller l'mnehise Agrttgu;gt" sban mean the franchise agreement enrered ioto
by Seller and the Pnmebisor for the operation of a Franchised Hotel, a copy of wbith
shall be delivered to Purchasef during rhe Inspection Period.
·~shall mean, collec!ively. each ;uvd every Seller.
·-stalldard EBdOf]e&npts" shall have meaning given siiCb ll:rm in S~rion 9.3(e).
'"StP»lT lnvt!!ttrles- shall rnean. \0/Jrh resp:ct to eath Property. all china.
glasswl!re.llil~me.linms. uniforms. materials and supplies used or intended for~
and/or for sale in connection with the opmttion orthe J:lropeny. all fuel stored on sire,
and all inventory. if any, held for sale in 1he gift shops or other re~ail outlets located in !he
Property to the eKtent the rebkil oudets are not opc:mlc:d by lbird·Jlllrfy ternmls IInder leaJ;e
agreements.
-TS!J!i&~n N!!tis!~ shall have !he meaning given S\'dl tenn in Section 5.
"Thlrd-Pgrtv Costs" shall nave the. meaning given StiCh term in Sectfoo 9.4{i).
'"J]!inJ-farty f!itcl!ne Rig!l!!l:l' shall have the meaning given to suclt tenn in
Section 8.1 (j}. _,
'"Tide Commitmr:mts" shall hnve the meanins given such i.enn in Section 3.2.
d!ltle S:OI!IP!u" shall mean LandAmetlca FintneiaJ Group. Inc.
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RLJ Austin Counyard 018321
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"Titk CAAd®!D bcJ&mi!W!t!" shall hm: lhe mtaning given such term in
•Section 9 3{f).
''Tille Coadijio!S" siWl have the mtaning given sueh tenn in Section 3.2(a).
"'Tiile Ccm!IWqm Notig" shall !moe 1he meanin& given such terDi in
Section 3.2(b).
"TitJt Poiiey'' shall have the meaning given such term in Section .3.2(t).
"'Tme-Up" !dlaO have the meaning given such term in Section 9.2.
"liBusd OJ!im Cllegu" shall bave the meaning givm such term in Section 9.6.
.. WARN Ad' shall meso the U.S. Worker Adjustment and Retrtrining
Notification Ael
·')¥bite Lcdlring" shall tnean White Lodging Services Corpomion.
w~,.. shatl mean Wbireco Industries, Ine.
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SECTION2
PURCHASE-SALE
~
2.1 Putcg-Sale. Purchaser ~by agrees to purchase from each Seller, and
each Seller h•:rcb} agr~s to sell and ccnvt)' iO Purchaser, for the: Allocable Price, rhe
Property owntd by such Seller.~ ~.to and in ~e wi\h lhe lmns and
conditions of this Agreement. None oft~ Sellen mull have any obligation to convey.
and Purcbaf•te") that the Title Company rettives (i) funds
from P~randlor i1s lender sufficim to close the sale wilb respec!IO a Property and
(.ii) instrutlions to disbuml Ncb funds in accordance with the Settlement Statement. The
provisions of die p-eceding scmmce notwithstanding. in dJC event that the Title Comp;!l1lY
sball rereM: such funds or lhe illstruttiOPS lo disbuni: sucb funds after 3 p.m.
(WasbinJPOO. D.C. ~).the Clcmng Da!e mall be lllC' next :Business Day.
(d) Seller sbaJl provide notice to Pun:baseroftbe anticipated Opemng
Date for a Hotel not later than thirty (30) days prior to such antioipeted Opening Dau: and
or
shall provide II second notice to Purthuer. 'A:hic:ll SCC\'100 notice shall advi!JC Purchaser
the ac:tuaJ Opcni11!J Date. 001 lruu than thirty (30} days following the actual Opening
Date. The foregoing proviskw of Ibis ~n notwithstanding.. if Clo$iog on IRI)'
Propeny has not occurred ~nuse ofStller's tiilure lO Complete the Improvements or
~ c;£lfJvcy the !"ropc:n)- in BCOO!'~Wlce with the 1em1s of this Agreanent by 1he
date specified on Scbedale E u the Outside Closing Date, Pun:huer shall have the right,
in its sole diecmioo. to ~mninate ibis Agreemetll with respect 1o such Propeny.
wbm:upon tbe Purch• Pric:e shall be mluc:ed by the amount oftbe Allocable Ptmbese
Price for such Property and Pun:llll$CI' sballllll"'e the risht to reduce the Deposit as
provided in Section 2.2{c}.
SECTlON3
DU.. IGEISCE; KNSPEcnOiiSj CHANGES TQ Pt.ANS
.'
3.1 lnspcstion Period.
(a) Duri.nc !he period beginning on tbc Effecti\!WI. with respect to escl1 J'n)perty, survive the tennl.nafion oftbis Agreement
or the Closing bereundet-, as applicable, rou period of one year.
3.1 Iilk rmQ Survey Mattm· Prior to lbc date hr:n:of, Purclwcr and 'White
Lodging ditee1ed the Title Company 10 prep!in! and deliver 10 Put1:haser and White
Lodging preliminary title eomrniuneats for ALTA extended owner's policies(){ leuehold
owner's policies, as applicable, with respect to each Property, together with eompJete and
legible copies of all instnnnents. and docnments referred to as exceptions to lille
(colleet.iveiy, '"Tit~ Commftlw!DfS"). ln additkm, Purebasa- will llrl'mF for the
prepm.tion of as--built surveys with respect to each Property. and has ~the
surveyor preparing each sueh wney 10 deliver copies 10 (i) ADD Bo'Wiftan, White
Lodging'! O~ral Counsel, (ii) ~Therese Beehamps, at Venable LLP.IIJICI (iii) Ti*
C"ompany.
(a} If Purebaser does not notify White Lodging of any title or survey
oonditiCIIlll thaJ materially and ldvenely atrect Iitie 10 any PI'"Opmy, including conditions
that render any Property unmarketable or"Unmirable for commercial financing, ("Tide
Cumildontj pior to tbe expiration ol lhe Inspection Period, Purchaser s:ball be deemed
to have approwd (i) the Tide Commitments, Mid (ii) title for each Property u $c:t fortb in
such Trtle Commitment. 5Ubject to the reprcsenlations, wammlies, terms and t"'Olditions
of this Agreement.
(b) lf Purcooscr determines rbat wy Pmperty has Tille Cooditions,
Purdm'll:f" sh:tJI. prior li';l the cxpinuion of !h.: lnspcc-1ioo Period. pru\·itk writto!ll noticl!
(-Title Ctllld:itioas Notice.., to While lcxlging indica ling the nature or 1be Tille
Conditions. and the Propti1Y vr Properties so urTcctcd by the Titk Conditions. Sellers
$ball in good faith reasonably cooperate wilb P``t~:baser to cause the removal of eny Title
Comliti®s; p!S!Yided. ~if, for aJJY rnson, a Seller who~ Propc::ny is identified in
a Title Condiriom Notic:c: as having Title Coodilioos is unable or UltWI1liag lo take such
actioas as may be required to cause such Tide Conditions to be muoved from lhe Tnle
Commibm:nts or lo p11f the costs 10 have !he Tille C0111pany imure over such Title
COnditions. :!IIJCh SeHer shall give Purc!wer and White Lodgina notice 1hen:on it being
IIJldmtood and agreed thai. the fail we of such Seller to give $UCh notice within
fifteen (IS) days alter Pul'l:ba$er's ddiveey of its 1itlc: Conditions Notice shall be deemed
an election by such Seller not to remedy mch Title Cooditiont.
(c) lf a s~uer ag.rees 10 cure me Title Conditions ()f llgrel!S to pay t~
premiums nl!t:es!llllry to c:uuse the Tille Compnny to insun: on:r lhe Title Condieions in 11
m~tnner I"CaSSiillb.!y Slltistilctory to Purchas.e:r, Seller shall eff~le such cure oo or
before Dosing or pay such premiums 111 Closing .so that Tille Company shall be
uneonditionally prepan:d to issue an ALTA Polity ofTitle lnsumtee in the ill'OOUI'It of lbe
Alfocuble Price insuring Pun::haser·s title 10 the Property without ex;cept{on fouucb Title
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RU Austin Courtyard 018326
625
,
,~
..
Conditlont and free and clear of tht Liens to be Released and othe:rw1st: in eonformli.Y
witb the Title Commitment for the Property ("T'1de hliey") and Purebaser shall close 011
tbe Property without adj'ustlmlll (for Title Conditions) to the AJiotable Price for such
Property. It a Seller eletts to take no attioo with respect to such Title Conditions,
PwclJaser shall tJave the option to (i} lelminate this A~ent with~ 1o the
affected Property, m which```` the Pun:bue Prite shall be reduced by the fiiOOllnL of
the AlJOC!IbJe Price for such Property and !his A~ shall be ofno fbrtbe.r force and
effect with respect to such Property. or (ii) ~ the uansactions ccmtmplated
11ereby. aotwithmoding such Tnle Cooditioo, withom any abatement or reduction in the
Purchase Price or lhe A.IJocabte Price. Purcltaser shalllllllke such election by written
notice to White Lodging givefl oo or before 1he expimtioo of the Jmpec:lion Period. A
failure by Pure'luuer tQ give notice of its election in accordance with clause (i) of this
section shatl ~ del:mcd an election by Purchaser lo proceed to C!osing in I!ICCOnlance
whh cta.Jse (ii) of Ibis Section.
{d} The fuJegoing provisions ofrhis Section 3.2 nolwlthsl.anding,
Sellers shall cause all mortga@es. deeds ortrus~. and other monmry liens encumbering
any of !he! Properties lo be releosed or bonded over (to the reasonable: satisfaction of
Purchaser) at or prior to Clorin& (''Uti!$ to be Released"'). Sellers· obligation to cause
the n:lwc of an Liens to be Released shall swvive Clcsing.
(e) Except u approved in writina by Purchaser. in no event shall lillY
Seller creale uy monetary encumbrance witb resped ro its Property (except for
encumbmnces lhat. together with an)' cxillting enc-umbrances do not aggregate to more
lhan eigtlty petcenl {80%) oftb~ Allocable Price for the Property and will be released or
b\lm!rd over (W illc reasonmbk s:~lisfac:tion ofPurc:b``SCr} bef«e Oosin~}. nor sho.ll "1'1)
Seller burden its Property \vith any obligad,m. undertaking or reslrictive c:ovenanl that
will sun:irt C'losifll:.
3.3 SlrliCtural @l1!f En\'imnmental Reports.
(a) lfPurchaJCr or .Purebase:r·s Consuhmlt has derennined 1bid a
Property bas one or more Physical Conditions, Purchaser shaiJ provide written notice to
Whi&e lodgins (each S\ICh notification being a "Pitysieal C.nditlou No-tJcej and,
tOBether witb the Physical CORditiom Notice. delh-er to White Lodging 111 copy of the
Inspection Report describing the nature of such Physical Conditions prior to the
expiration of !be lospe<:tion (leriud. The Phys.ical l'onditi,,n, !'>:Oiicc shall lkn'fibe (i) the
Physical Condition (t~>getlwr "itb l~ appropriute rclctmcc 10 the ln!.-pection R.epon).
(ii) lbe Ptoptrty affected by the Physical Conditions. and {iii) the estimated cost required
10 correct each sueb Physical Condllion (as rt:ISOOably drtermined by Ptm:haser's
Ccmsuhmt). If Pun:buer filils to provide a l'ttysieal Cflllditions Non~. toaelher wi1h the
appmpria~ Inspc:ction Report. witb respect to any Property to Whlte. Lodging durina the
l~cm Period, Purchaser sball be deemed to have approved such Prupe.rty in its "as is,
where is" condition as of the later of: (y) 100 dale hereof. or (z) the date dle inspection of
the Property has been completed, in each case subject to (I} lien-free completion oflhf:
Improvements, (2) ordinary wear and tear. and (3) the representalions. warranties, 1£nns
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RLJ Austin Courtyard 018327
626
and c:Oildltionl oflbis Asreement.aubject, bo'vllever.to the obligation of Seller to
Complete the lmprovements liS provided herein.
(b} · Upon receipt ofa Physiall Cooditi011li Notice, together with &:
~te ~Oil Report 5otn Putclwcr,a Seller smdl have the option. to be
exe~ised by written notice 10 Purchaser ('"P'hy.sinl Coaditlcms R~ given mdtin
ten (IO)dayt foDowing receipt by White l.cd4ing of the Ph)'!ical Conditions Notice.
together with the Inspection Report: eithcr{j)to agree to cure the Physical Conditions
prior to Closing ("PIIysial Ccmditiou C11re'"), and/or (ii) 10 give Purehsser a credit.
("Piayskal Cottdmeu Cnditj apin$t the Allocable Priec 111 Closing in the amoUII(
r.:quired lo cttre the Physical Conditions; ~ bqweyer. tlw. Sellers i'lereuuder lliJd
1hc' Exlstinlt Hotel Agreement Sellers col1eetivdy. shall not be required to contribute
more tblm Fiftren MH!ion Dollan (SIS,OOO,OOO.OO} i111M aaregate towards Pbysital
Comfitic:ms Cutes Eldlor Physial Conditions Credits in connection with Physical
ConditiOIIS afkting 1be Properties and/or the E.'llsting Hotel Pmpenies: ("M11:dlrHrm
Pb)'Sic1d CaBdiCions Oblipdoo"). but sba!l be required 10 meet the Maximum Physical
Ccmditions Obligations if the Physical Cmfltions Nctiees and attomp&nyiug Inspection
Reports indieftte thtt at leut Fifteen Million Dollars (Sl 5,000,000.00) or Pbyskal
Condi,ions exiSI on the Properties and/or lhe Existing Hotel Properties. Once Sellen and
!he F.xistlng I`` Asm-ment Sellen have made Physical Conditions Cures or agreed 10
pM'ide Ph)"Jlal Conditions Credits of Fi~ Million Oollm (Sl5,000.000.00) towmf
the cure or Physical t'tl!lditiom on lhe P'rclpl:nics andi.ise impscted. ff a SeJiet
thaf has eteetc:d to mde 11 Physical Conditioos Cure mils to complete !lie cure by the
Closing Date, Ptlrth&SCt' shall haw dte op1ion either to {i) defer !he Closing on such
Property until sucb Physi<:al. Conditions Cure is completed; or (ii} close on such Propeny,
but Purch3ser shan dtber (x) :K"qttiR' lb.: l'rl!peny :rubjet::llu the Physical C'Oftdilions and
receive a credit eq1111110 the IIIIJIOiml required to complete tbe Physical Condirioos Cure,
or (y) require the Selltt lo e.ttr into 11 Physical Conditioml C``te escrow substantially
simiJar 10 tbe fomt of the agreement auu:hed hereto u St;htdqfe G \1'11ysLc:.l
C011ditieu Ew-mv"} in the amouot of JOS% o£the Physical Conditions On toSt and
have Seller complelt such Physical Conditions Cure followjQg Closing. To the elUent
dtat Purchuer elects to bsve 11 Seller establish a Pby$kal Conditions Escrow, !lOll the
Physical Conditions Cure l$ :sulmqucruly completed b}· sud1 Seller for less than lhe
eserowed amount. any funds te!Dllmmg in the~ upon completion of the Physical
C:onditioM Cure shall promptly be rttumed ro Seller. lf, punmnnt to clause liil of
Section 3.3(b). a SeJier elects to give Purchaser a Physical Conditions Credit. Purehii!Str
shall acquire t~ Propeny Stlbj«t It) the Physic:al C<'lnditio~. for lbe amtltlm lhai is equal
to !he Allocable PriceD the :rmoullt orlbe Physical (."ondiliO!)S Cttdit.
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RLJ Austin Courtyard OJ83l8
627
(d) The provisions of Section .3.3(e) ootwitbstanding. if. after Sellen
have giveo a Physical Conditioas Response in which Sellm~agree to either (i) make the
Physical Ccmditions Cure, and/or (ii) 10 give Purchaser a Physical Conditions Credil in an
amount equal to cbe cost 10 cute the Physical Conditions, addltiomll Physical Conditions
remain um:und with respeet to any Property, Purl:haser shall have the option (x) to
tenninllte rrus Agreement with respect to such affected Property or Propertia. in which
event d11: Purchase Price shall be reduced by the lll'llOilnt of the Allocable Price for such
Property or Properties and this Agreemem shaH be of no further rorc:e and effi:ct with
respect co sud.! .Property or Propettic:s, or (y} to COIIS\I1nmlll1e the trans&ctiom
con.cempl•ted hereby with respect to sucll affected Property or Properties,
notwithstanding such Physical CODditions, without any abatement otredudion in the
l'un:hlse Pri<:e or the Allocable Priee. Purchaser sbaiJ make such el«tion by 'Written
notice to White Lodging before the expimtion oftbe Inspection Period. A faihne by
Purchaser to give ooti~:e ofit.s clection in accordance with clause (x} of this Seetion shall
be detomed an election by Pun:heser to p!"t~Ct'l.'d 10 Closing in accordance with clause (y)
of this Section.
3.4 Takine pnd Casul!ll)'.
(a) If. prio.r to lhe Closing, a Property is the subject of a
condemnation, White Lodgiq sbafl promptly ftOI:ift Purcbaser oftbe same. If such
condemnation. as reasonably ~nnlned by ~baser. does not rnateria.lly and adversely
affect: (i) access to tbe Property or tbe Imprnventellt$ ~n. (ii} complifiJtCe with
applicable zoning or building requirements. including parking. (iii) the projected ne~ cash
tlow from the Propeny. and {iv} the ope1111ion oftbe lmpn:nlentenl!l as 11 Hotel or
restamnt. as applicable C"lmnu1teriol Taking"). this A!!r«n~enl will remain in full
r.,n:e snd dTett with ~t to the .sale of such Property; ~ ~. dm Seller
shall be ~:~tthkd 11.'1 receive and main any condemnation award on account of such tuing,.
but lhe Alloc:abk Price far sua:h Propeny shill! be red!ll:ed by the amount of SUth
condemnation award. If such condemnation is not an Immaterial Taking \Msk:rial
TakiDgj, Pu.rcha$er shall have the right. upon delivery ofwrinennotice to White
Lodging within lm (1 0) days of receipt of White Lodaing's notice advis.ing of such
condemnation. to terminate chis A.greemeat with respec!t to she affected Pmpeny, in
which event the Purchase Price shall be reduced by !he amount of the Allocable Price for
such Propmy and this Agreement shalt be of no filrther feme 1md efl'et:t wi!b mpect to
such Property.
(b) tf. prior tD the Closi~ n Pro~y. is dllm``d or destroyed by lire
or other cas\llllty. such that it cannot, in Lilt :re-.tSI)QIIble opinioo of Purchaser. be
subslanlial!y restored within nine (9) momhs after the cas~.~:~ lay (-Properly CasqaJiy"),
P~ shall have the right to tennirullle this Agreem~m with ~t to the affected
Property, by delivering atenninatioo notice to Seller within thirty (30) days of !he
Property Carualty• .in which event !he Purch115e Price shan be red Deed by the all:IOW:It of
the Allocable Price for such Property and this Agreement shall be of no further force and
effect with respect to such Property. If Purchaser does not terminare this Agreement
pl!fSU&nl ta the preceding sentence, Seller shall undertake and pursue the restmatioo of
such Property in a commercially msonabl~ fashion. and ("losing on s.ucb Property shall
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-!7-
RU Austin Courtyard 018329
628
be extended for such period of time as may be reasonably neeessary or appropriate to
permit Seller to complete sueh re!ttmltion. The risk oflou to my Property £hall remain
with Seller until Closing on sueb Propctty.
SECTION4
CLOSING CQffruDOt§
The obliption ofPIJI'Chaser to acquire a Property and Seller to corwey 1he
Propeny is subject fo the salisfaerion. or waiver. ofihe fOllowing c:ondjtions ("Clusisg
C~uulinouj on and as of~ Closing Date:
4.1 OosinB Doctmu:ms. All dooumo:nts lo be filed or n:corded in the land
reccm:ls or official recon:ls wU be delivered to tbe Title Company to be held in escrow
during lfle Closing procedures. AJI ofother doeu~Y~ents deser.ibed below in thi!l
Section 4J sbmll be delivered co the Arent FQX dming room to be held in escrow during
the Ciosihf! pmcedures. Seller and Purebam (10 the extent Plnclwer's signature on such
decumem is required) shall have delivered (or ~used lobe delivered) tbe following duly
executed docW'Jlenls with Rspect to each PR:Jpert)';
(a) Deed (or. with respect lO tU'IY Property in whieh a Seller possesses
a leasehold interest. an Assignment and A.!I$UmpUOfl of Lease);
(b) Bill of Sale:
(c} Assignmentll.l'ld Assumption of ConlnBCk;
(d) Assignment of Lieeoses. Permits and lnlllngibles;
(e) Mmagemem Agreement duly extcUtcd by White: Lodging. as
manager. and Pun:baser;
[1) Copies of n:soltnions tmd emi.licates ofincumbcney with respect
to Seller. Puttlr.lser and such other Persons as Purchaser, Seller 01'" Title Cornpeny m~.~y
reusunably require:
(g) C..'l'ti.licalt.."S of Seller (fur`` hcl'h!lit ofPun::haser). Certificate of
Pwtbaser {for the benefit of Sellers) and CenifJCale of White Lodging (for the bmdit of
Purcfwcr) re:affinning the tMh unci &ceumcy of \heir mpective repn:sem.at.ions and
warranties made in this Agreement {subject to mch dmngcs liS Seller bas given notice of
1o Pun:hlser pursuant to Section 6.21 );
{b) Owner's Affidavi£ executed by Seller in a furm reiiSOnably
acceptable 10 Title Company;
{i} Physical CondilioJrS £!Crow. if.:~ppticabl~:
(.j) Ground Lease Estoppel. ir applicable:
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RLJ Austin Courtyard 018330
629
(k) Cltoentl EswppeJ, ifapplieabte;
(1) FIRPTA Affidavit;
(m) Settlement S11tern~nt:
(n) .Post...CJo.~il'l,@ Undertaking. if appticable:
to) Post-Cicaing Escrow, ifaJ'lPk:able;
{p) Completion Cenificare;
(q) F"mal and complete COMtru<.:t!on doeuments whlcll shall include
any chaDg6 ro ibe Plans mel SpecifJCatwm; and
(r) Such other doeumcnls. certi&ates lml'l other i~ as may be:
reaSCX'I8hly reqllired to r:onsummate !he ~on I:OI'Itemplatecl hereby.
4.2 AJioc:ab(c ftjee. (a) Purcbcser 5ball hive delivered to Title ContJIIIII)'. to
hold in eliCl'OW pending Closing and iheret~ikY to delivet to Seller, tla: Allocable Priee for
the Property.
4.3 Marqials. Selk:t shall~ deli\'tfed, or made lr!1mgetnents tc delive:r. to
Purchaser (or at Purebasefs oprion, lo M``t``~ger) the foflowing malerials with respect to a
Property:
(a) Originals (or lf001available:, copies) ofLicenJC.'S and Permits:
Cb) Orig.in=tls (or if notllv11illble, copks} ofCootraa:ts;
(c} Origjnols (or if 1'101uvailabk. ~-opies) of an)' Dnd an Wlll'lllntle$ and
guamntcea issued with n:spec::t tu thv htrpro\'a'nents; ond
{d) All information in Seller or Manago:r' s Jl'I)SK'SSion. m control and
relating to bookings and opemtions at the Property. except to the exfml the !llml.C:
is Proprieulry lnfonnation.
4.4 l;!W!ition gCA.pptiC!ble Prooeru.
(a) The lmprovemenls shall be fully Compkred and the Optning Date
of the Hotel shall h:l.ve occl.ltl'ed not less than thinecn {13) monllts previously, with I he
llotel bnving been opc:n ro lbe publ~ ror business durifl!: 11 prepondetan~:"e of me period
.;inc..: tho: Opening Date; '·
RU Austin Courtyard 018331
630
(b) Other !han an lmmlltcrial. Taking. no action shall be pendi112 or
threatened for tbe condemnation or taki~t¥ by power of eminent domain of all or any
mmerial ponion of the Property; and
(c) Other thin ordinary wear and leer, the Improvements oo the
Propct1y ..U QOl have suffered any damqe siat:e the Opening Date thal have not been
repaired to mbstantiafly the saJDe or better couditioo thl!ln e:xisled prior to sudJ dMJage.
4.5 ~-
(a) The represenlations tnd wammties of Seller set forth in Section 6,
the represefltl\tions and wamnties ofManager set forth in Section 6A. and the
representations and warrt~nties of Purchaser set fonh in Settion 7 of Ibis Agreemenl mall
be true. com!Ct and complete in 1111 milleriaJ respect~ 011 and as ofrhe Closing D«te;
(b) No`` of .Bankruptcy on the part of Seller, Purehaser or M~
shall have ~\lt11!d and remain ouiStanding as of the Closing Date;
(c) Sdleuball be1be sole owner oflhe Property or, with respect Loa
Property in which a Seller possesses a leadlold inkrut. Seller sball be the leD&nl under
the l.ease,IIBd 10 the extent~ by tbe Lease., Landlord sh111l have (i) approved
SeDer's a&``ignmem and Purclwer's assuMption of the lease. (ii) delivered a tomplell!d
GtoUIId lease Estoppd, and (iii) relet!ed Seller and any Pemms guifllnteting the:
obliglltions of Seller from liabilities under the Lease arising after Closing;
Id) Franc:hisor shall have entered inw u lli!.W Franchise A.greement
wilb Purtha.ser. or at the option ofsuc:b fnncbisor. Purcha.">Cf shall lS$Wl'IC th~
obliptions of Srller undc:r 1he existing franchise a~ afrer Closing. and Franchisor
shnll have rele:Jm! Seller and 1111y Persons gllllnmltt::inJ!- the obliptioos of Seller from
any liabilities under the existing &anehise apement arising IIIler C!ming;
{e} Purchaser sba!l have funded any working capital remve or FF&.E
ruerve to the extent required (i) undet' the Mana~ent A~l, (ii) under 1he
Franchise Agreement. and (iii) by any Purclulser lender;
!J) The existing propeny management apmenl for elleh Propeny
slwJI have been ttnnimned and all rosts and ~.\pfD!IeS in ;;:,lfllll!r:ti~'ll with till: property
mauaymo!Jn u~ments shall ha\<: been paW by ScJkr;
u::) Any !.And lord, Franchisor, Mamtt,'l:r or other p!IIIt}' ha\ting a right
of litsl refUsal or first offet ill ronneclioo with lhe proposed trm1sfer of any Property sball
hnve waived rn writing~ e111en:isc 'br such right of fir£t refusal ur litst offe1. or the time
period for the exercise 1he:r«lf shall have lapsed:
(hJ Title Company shan be unconditionally (subject only r.o pa}ment
of premiums) and irrevocably prepared to issue a Title Policy with respect to each
Prope11y; and
-20-
Rl.J Austin Courtyard 018332
631
(j) Pun:haser sbaU have complied., in aU mJteri.ld respcc:U. with it$
obligatiot'IS under the Existing Hotel Agreemen!.
4.6 failure of CQ!l(ltigns. The fwure of aoy CJO$i``g Condition with respect
10 any Property shall only affect tile obligation of Sell= to cxmvey and ofPun:baser to
acquire that Property, and such failure shall not affi!Ct lhe obligations oftbe plllties
hereunder with respect to any other Property. Any ~rary pi"''Yisions oftbis Agreemeot
notwithstanding. a party hereto shall only have me right to invoke or waive a CJosing
Condit.iort thnt is 'fl:ll" the ~fit of such party.
SECMONS
~ATION OF AGREEMENT
5.1 Aqy <:Oftirlir:Y provisions ofthis Agreement notwithstanding. to the extent
tlutt men: lhan eight (8) Properties are not able to be conveyed (it being understood that
such unal shall include any Existing llotel Propenies lhat are nol able to be eonveyed}
because: {i) Sellers or F_>cisting I Iotel Agrecmm~ ~11ers. as applicable.~ unwilliDg or
l!Oable lO rat'IO\-e any Title Conditions (but Tbird-l,any Purclwe Rights shalloot be
demed Title Conditions for the purposes of tim Stetion), 11pd/or {ii) Sellft'S or Existing
Hotel A~ment Sellers. u applicable. are wtwilling or unable to remove any PbyskaJ
Conditions (after having agreed to make the Physical Conditions Cure andJor to provide
the Physical CondiliOIU Cm:lit in an amomt or not less than the Maximum Physical
Conditions Obtiaation), am:llor (iii) the Closing Conditions set forth in Seaion 4 thltt an:
for the benefit of Sellm or Existing HOld Agreement Sellers. as applicable, are not
satisfied, White f...odgJng shall have the Jight, in msole discretion, (0 deliver to Purehaser
within ten (10) days afler White lodging has become a\\-'llre of the matters set forth in
llt.lbsection li). (ii) andlor (iii) abo\~ no servil:e contracts.. ma.in.t~
agreements, leasing commissions or brokeragE agrcemems. repair c::ootracts. property
manatemcnt contracrs. contracts for the pun:hase or•liver)' of labor, serviets,. materials
or goods, supplies or equiptb.etn.le~ licenses or occupertc:y agreemcnts. or sirnilv
agreements entered into by or on bdJalf of Sdler with respect to its Property which will
be obligations ofPurdm.m after Closing and which are materially diiTcrent from the
agreements in place \\ith respect to tboslcl Properties of comparable si2e
and room cuunt :1!1 the Prupen) .
6.4 Tax Returns. 1\U privilege, gross m:eipts, excise, sales and use, pmonal
property and mncbise taJtes resull.ing-from opemrloos prior to Oosillg have been or will
be paid by Seller as lind wt~en due, and all tax n:tums fur 5J.idJ taxes shall be prepv~red and
duly and timely filed.
6.5 iSa Vjolatlons of Agreements. Neither t1le uecution, delivery or
perfonnliJ'Ice of this Agreement by Set~r. nor complianee with Ute terms and provisions
hereof. will resuh in any breach of the l¢rnl5, conditi.ms or provisions of. or conflict with
RU Austin Courtyard 018334
633
or constitute a default under,llDY illdenture, mortgage, deed of trust, note, evidence of
jadebtedness or llDJ' other ag.eement or insttumetlt by which Seller is bound.
6.6 wtfption. Scller has received 110 written no1ic:e of. and Seller bu IJO
bowiedge of. my pending or threa.tmed investigation, action or proceeding. which
(i) quesliooa the validity of this Agreement or 1111)" action rakm or Co be t&!:en pun.m~nt
hereto. or (ii) may result in or 111.1bject the PJoperiy to a material liability whieb is nat
covered by insurance or will not be paid or satisfied by Closing.
6.7 Coodemnatjon. Seller has received no written notice of, and 1m no
knowledge of. any action that imrolves coodemn111ion CJf eminent domain procmiinp
against ~ny rnaiCr.ial part of the Property.
6.8 No!. A f. Seller has not received any writll!n notice of defeblt unci« tht CinMld
Lease that has 110t been e~Md. Se.ller has 1101 assipe-d any interest in tbe Ground lease to
any party, other than 10 a secured lender.on a coJiateral basis. To Seller's knowledge. the
landlord is nol in defllult uJlder the Oround lease in any material resp«U.
6.19 L..abor and ERISA. There exisl no liens on the Property or any other a5$et
to be tzansfemd Co tlx: Purcha$tr under thil; Agreement 8$ a resuh of MY li•bility. under
Tille IV of ERISA. (i) Th~rt:•re no ernplo~ of Seller at the Property and (ii) none or
Sella'. Manager or nn>· ERISA Aftiliate {a) is subject to a collective bargainill.@
ag~emenl with respect to any of lhe Property Employees. or {b) eit~r curTently or v.-ithin
ahe paS! five (5) )'eDJ'S has sponsored. contribuled to or had 1111 obligorion to contribute to
any mulliempl.oyer plan as defined in Section 3(31) of ERJSA ora dmned benefit
pension pbu (as ~fmed in Seclion 3{35) ofERJSA). No portion or any l'ropert}'
constit111e.s a "ppan 8$1el," as defined in Labor Reg. S~ction 2510.3-HH.
6.20 No Commitmco!s. To Seller's knowledge, no material commitments have
been made by SeJier or Manap to any GovernnlC'IItat Authority, utility company, sebool
board, cbureh or other religious body, or any homcoWilers' association or any other
orgarrintion, !IFOUP or individunl relmi~ to its Property wbitb would impose: any
oblip!ion upon J>un::baser or Manager to mike ony contribution or dedication of money
or land or to constrUct. in~tall or mointnin any impro~·emcnts of u public or privme oaiUre
an·
on or such Propc:rt.) • ,"
6.1 I Rt:!tat!!ll!tnt o{SdJer R,;!!fmnl!lti9Q1 and WNIJ!P,Ue$. The
rqmsentations and watranties made in this A~ by eaclt Seller are made as of the
date hereof aud shall be deemed rema1fe by such Seller as of the Closing Dare, with the
mne force a11d effect as if made on. and as of, stJCh date; ~ howewr, thllt a Seller
shall have !be right, from time to time prior 1.0 the Closing J)atco. to modify the
-24-
RU Austin Courtyard 018336
635
representations and warramies made in Section 6.3 (Existing Agreements), Sectiou6.S
(No Violaiio:os of Agreements), Section 6.6 (Litiption). Section 6.1 (Olndemoatioo).
Sectioa 6.10 ~Sub~). Section 6.9 {Contracts). Section 6.15 (No
Violations), Section 6.18 (Ground Leases), Section 6.19 (ii)(a) (Labor 8Jld ERISA).
Section 6.20 (No Commitmetlll) u a teSUft or cbaqe.s in ~blc condiOO:ns or if
eonslstent with Seller•s covel'lants herein. by delivery of ootic:e to i'un:baK:r ud, in socb
event, die~ and Wllmultiet: sbaU be deemed modified to Jb! extent .required
by such changes;~. boweyer. that any m:b change. ir material and adverse, shall
giVe Purebuer the riabt to &erminate this AJ11:ement with yespecl to the: Property in
question, 'Wi.thout giving Sellers a right to lenninate this Agrecrnem with respect to any or
all Properlies.
6.22 SurvJnl ofSetkiRem;mn!atjons. All repre$entations and wammries
:made in this Agreement by ~Jier shall survive the applicable Closinl Date for a period
of one (t} year. Any action, .suit or proeeedins wjth n!llpect to the truth,acturacy ot
t'lOIIIpldenen ofany such representation or warranty shall be commencc:d, if a1a!l, on or
before tbe dare which Is one (1) yeat aftet the applicable Closing Date Md. if OOl
cOmmenced on or- before such date. thereafter shall be void and of no ron:e or effect.
6.23 Lj!Wjlirv fur Bm!!;b ofSeJ!q Repruculltjgm. Ptu:ebaser sbo.ll giYe
written notice to a Seller thai such Seller !Jas bmlthc:d any represenlation or W~mU~l)'
made in this Section 6. If. as a consequenee ofsuelt breach. Puretwer shall hr.-e
suffered a loss or incurred damages. then ~h Seller shall be liable tQ Porcbaser ror
JliiYmenl of damages. lbe precedinr. senteQee notwithstanding, in no «:vent shall the
liability or Rll}' Seller with respe<-t ((I bre``C!IB oh.ny representations or ~mmlies made
in this Section 6 exceed, in the aggregale, the sum of five percen1 (5%) offhe Allocable
Prire for sue h Properl!f.
6.24 Disclaimer of E.-spre$s or lnmlied Representations. Except a Olhelwise
express!! provided in !his AgreemmL each Seller disclllims the mllldlli. of any
represenUrtions or wamm1its. express or implied. reprdins thc Property or mlllters
aiTectillg lhe Prqlen y. wh~th« made b~· Scller or Wllire lodging on ~tier's behalf.
6-25 Seller's Koowlg!gs;. As used ifl this Asreement. the phrBsc ·1o Sclter•s
bowledge."' Of' words of similar import shall m«:ln the ICtUaJ (and not constructive or
imputed) knowh:dgc of (i} Dl:oo Yiankes. wid! respecl to all of thr Properties; and
{ii) Mike Wernet, with res~ to all of the PropertieS. and (iii} the manager, mamging
member or Bf:neral partner. as applicable. or eac:h SeUer with respect to the Property
OWl'led by such Seller. none of whom shall have any duty ofim'CStigatioo or inquiry other
lban 1o review and comment in 800!i! faith on the representations and wammties
contained herein. -
S£CTION6A
BEPRF..SF.NTATJOI'\S AND WAgR.<\~'TIF-~ Of WHITE LODGL'I(i
--
RLJ Austin Couriya.rd 018337
636
To induce PwciJaser to enter into thll Agreement, While Lodging ~t:s &lid
warrauts to Purchaser as fo.llomr:
6A.I StmtiS of Wbi!e I.ndgjng White Lodging is duly in~ llftd validly
exisliog unc!crthe laws ofit.``: state ofim:orporation, a has llll requisite power and
authority under the faws of such state and i&s reJpeetive cbaner documents 10 elller ie1to
and perfonn its obligatioos undeT tbis. Agreeure,n and to consummate the~
contempla~d bcreby. White Lodging is duly qualified to tran.sac:t business in diose slates
where, based upon the nature of White Lodging·~ business, it Is required to be so
qll&lifted.
6A.2 Amboritv of White Lodgina. White Lodging bas laken all neeeuary
action w uutborize the execution. deli my and perfOilnllDCe of lhiJ Agreement by it, and
upon the: exewriat:l and delil'el')' of aoy doc:umene to be delivered by White LocJcing
hereunder• .!l'lldll `` sbaJI c:onstiltlle the valid end binding obtiptiooand !lllteement-
of wrote Lodging. The Person or Persons executing and dC'Iiverihg thit Agreement or
any other document to be delivered by White Lodging on or prior 10 the Closing. Oat~ is
dUly authorized to execute IIJid deliver s&K:b doct1men~ on bebalrof White Lod!linJJ.
6A.3 No \fi!.Jiations 0 fAgreeQ¥ms. Neither lhe el(ecution, delivery nor
perfortnanee of this A~ by While Lodeing. nor compliance with the 1enns and
provisions hereof. will result in any breach of the tem11, o::.ndition& or provisiooa of, or
conflict with or constitute a default under ooy agreement or instroment by which While
Lodging is bound.
6A.4 l.iri~Jl!Iim- White Lodging bu ..:ceived no written notice of.I!Jld to White
Lodging's koowledge ~ is no pending or threatened inve&tigation, action or
procet'ding. "'hich que,;tions tiM: \·alidity of this A~ment or any :n.1ion ~liken or to be
taken by White Lodging pursuant hereto.
61\.5 Oisdajmey of E.wrm or Implied Benrmntfllions. Except as otbetwise
expr'C$llly provitled in 1his Al!~ent. White Lodgin& disdairns the makjng of m'IY
representariolls or wat11mties. e.Jtpress or implied.
6A.6 Survjwl ofWbite todcing's Repn;st!!l.!tiQ!!S. AU n:presenutions and
warTanties made in lhis A~ent by White Lodging shall survive the Cloti113 Pale with
respetl to each Property for a period of one (1) year. Any !!Won. sui! or proc:t"eding with
respettto the umh. aCCUtliCy or complereness of any such representation or warranty
shall be oomml.'nce mowledge of Bruce White. u Ch&irmaD ofWhite Lodging.
.DMo Y"lllnk.es, u Piesident aDd COO Developmott aad A.-I: Mana,.ement Dirision of
White I..oclginr. and Larry Bumelt,as Chief Operating Officer of Wbire Lodging. none of
wbom !ball Jmre any duty of invsigati011 or> inquiry other dum to review and comment
in good flaith on the ~entatioos and W``m~Dties contained herrin.
SI!:CflO!o£7
To indace Sellers to enter into this Agreement. Pu:tcbaset represents and warrants
10 Sellers as fOlloW!:
7.1 Sl.itus!JilliAU!Jqitv ofr'lirdwer. Purchaser is duly mpniud lJ1ld
validly existing under the Inn of the juriscfiction in vdli<:h it was formed. and has aU
requisill: power antlalllhority under the laws of such Slate and und~r its charter
documcms to enlef into and perfurm its o&ligacions under Ihis Agreement and lo
conswnmm die tra~iOM c:ontempla~d here~·. Tu the e.'(tcnl required by 11ppJicabJc
:.tate law, P~ is. or wiJI be by lhe Closing De~e. duly qualified and in good
stw:rding in eodt of the Slates in which Ihe Properties are loe•ted.
7.2 Action ofPun;hPgr. Pwthaser bas taken all necemuy action to authorize
the e:m:ution. delivery and performance of this Agreeme111, and UJXlD me esccwtion and
delivery of any document to be delivered b)• Purcbast:r on or prior to the Closing Date,
such document shall constittlte the valid and binding obligatibn and aJreeH~ent of
hrehaser. The Persoo or Persona exr:cuting and delivering this Agreement or any other
document to be deHvm:d by Purchaser on or pior to lht Clo!inll Date is duty authorized
ao e-xecute and del~r such documents on behilfof Purchaser.
7.3 No VjoJatioos of AgreemcniS. The exeeurion. &>livery and performance
orthis A~ by Pun:haser. and the complhutee wim the terms and provisions
hereof. will001 result In any br=ch of the terms, conditions or provisions of, or conmcr.
with or comtil.ute a default under an) agreement or inltf111Mflt by which Purchaser is
bound.
7.4- LitiptioJl. Purcfmer has received no W!iuen notice of and. to Purchaser's
koowledge, no imrestiption. action or proceeding is pending or 1hrca1ened. wbicb
questions !he validity or this A~ent or tm:; a<:tioo taken or t¢ be taken pursuant
hefelo.
--
·'11-
ExeaJ~ion Vmioa
RU Austia Courtyard 018339
638
7.5 HQRdiarq. SUBJECTONLYTOTHBEXPRESSCOVENANTS.
REPRESENTATIONS AND WARRANTIES SET FOR1H HEREIN MADE BY EACH
SELLER AND WHITE LODOING FOR THE BENEFIT Of PURCHASER: IN
ENl'EitiNG INTO TIUS AGREEMENT. PURCHASER HAS NOT RELIED ON ANY
REPRESENTAnON, WARR.ANTY. PROMlSB OR. STATEMENT. EXPRESS OR
JMPUED. OF SRLLERS OR ANYONE (I.NCLUDJNO WHITE LOOOINO) AC11NO
FOR OR ON BEHALF OF SELLERS; AND THAT, AS AMATERIAL
JNOUCEMEN'rro 11iE .EXECUTION AND DELIVERY Of TillS AGREEMENT
BY SELU!RS. PURCHASERACKNOWLEDGES 1lfATnrE PROPERTIES WILL
BE ACQUIRED BY PURCHASER. IN THEIR "AS TS'" CONDmON. WITH AlL
FAULTS.
7.6 Puni~Jaser•s fndepmdem lnye,Hig!ltioN. PuBumt to !he terms of this
Agreement. Sellers have agreed to give Purcflaser llie opportunity to investigate all
J)hysiealiiSIX!Ctf c>f the Properties., and to make all $1lcf\ independent inspection! mdlor
investiptioos rL eacb Property. as Purtluim deems necessary or desirable. Pwcbaser
acknowledges dial it bas entered into this Agreement with the imeftticn of maldng and
relying upoo its own ~stigatial or that of t!rird parties with respecl to the physical.
envii'OflllKntaf. economic and legal conditjon of each Property.
1.1 Rest~lemeru ofP~ &mse!!Wioos !lid Wl!mmtie.5. The
rq:ID:!It'ruatium and \\'llrrriJKk!l made in this AJn:emcm by Pun: bam' are mlidc' liS of the
dat.: hereof and shall be deemed remade by Purdmcr liS of the Closing Dllfe wilb the
same force and dfcet liS if made on. nnd us of. such date-.
1.8 S!!IVjvaJ QfPurdmser R.cRRSmtiw. Aii n:prt."SenWions aDd 9/lirianties
made in this Agreement by Ptm:haser Jball survive the applicable Closing Dale for a
period of one ( l) )QI'. An)• actioa. suit Of procecdinu. \vith resped to !he truth, accuracy
or completeness ofany sum rep~ion Ot wanmty shall be comrnenctd., if at all. oo
or be~ the dnre v;bith is ~ (1} yaw after Ilk! Closing Dare for 1 giml Property and. if
nnt $0 commenced on or bd~ such date. 1hm:oficr :dull! be void and of no forte or
effect.
7 .tJ J..!abilit):.fur Urc!ltb of Purrgr Rc:rummatiQDS. Wh~ Lodging shoJI
give written notice ro Pu~ rhat Pun:bastt has breached any tqnSentation or
Wllmi:Qty made in lhis Section 7. 1f, u a ronsequm:e of such breach, 11!1)' Seller shaU
have sufftred a loss or incuned damages, then P.urehaser shl\ll be liable 10 such Seller for
payment or eeurs. All r.E'Veri'Uc!s from
16lllurants. burs und lot1J18C lieilitics f\lr t.l~<: night during which lh1: Apponionmmt Tltl'le
occUlli sball belong tO Seller and SeUer shall bear all expenses related lo such revenues
indudil'lg. bul oollim.iled to. payroll and food lind be'Yffllge ~osts.
·33-
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RU Austin Courtyard 018345
645
.
(b) I~ !!ll4 A.w!s.smmt.i, Seller shall be solely re!pOJUible for any
taxes~ in respect of its income, net wonb or capital, if any, and any privilege, sa1e:s,
hote] or terort occupancy laX or transient a:cupency llllt, due or owing to any
g~ entil)' in connection with tbt: operation of !.he Property for any~ of
time prior to the Apportionment Time. ~shall be solely r.:spomible for all such
taxes for any period fiom 111\d aftet' the Apportionment Time. AEj mcome 1llX arising u
a res\ilt of the sale and lransfct of the Property by SeDer to Purchaser shall be the SQie
responsibility of Seller. All ad valorem taxes. special or general assessmeots. teal
prop«ty taxes, water and sewer rems, rates and charges. vault cbarges. IIDd any mllllieipai
permit fees shall be proraled as of the Apportionment Time between Purcha:ser 1100
Seller.
{c) UtiljJies; Id!;plwnc. Telephone and telex charges and charges for
the supply<)( heat. meam. electriC po\Wr. p:>. lighfing.. cnb11!' television and any O'lhet-
utility ~rvice shall be prorated u of the Apponiomncnt l'imc between Pun:hast!r and
s~ner. Seller shan recch-e a credit for all d~its. if any. made by Seller as securiry
under any utifil}r service cxmttacts if the same are Cnmsferable end provided sueb ®posits
remain on deposit for the benefit or Purchaser. If possible. cutoff readings wiU be
secured F«atlutilities liS oflhe Apponionment Time. To the extern cutoffreadiugs are
not available as of the Apportio:nmem Uu.te. the cost of sue1t uti)ities sbal! be apportkl~
between rhe pa.rties on she basis oftbe latest actwal {not cstimeted} biJJ for such service.
{d) ContJ1H:ts and ~; Trode Pavabh:s and Receivables: Securi!'r
Dcwsits. An)' Dl'!IOUIIIS prepaid or payable 111xkr any Contm:ts and any other !Rdeo
pa}abll:lllllld reeei"llbles sit! II be prot;lled as of the A.pponilmmcnt Time bctween
Purchaser and Sl!ller. AU amounts known w be due under Contracts v.ith reference ro
periods prior lo the Cloting Date shall be paid by Seller orcredlh."'llo Pun::lwer. Any
addhloN.l!lmoums not known or oot available at Closing will be pan of the post closing
adjustments contempla!ed in Secrion 9.2. Pwdtaser shall be entitled to a credit for all
security and other deposits, if any, held by Seller us of the Apportionment Tune with
rcspeello Contrac~ to the extent Pun:haset aumnes such Contracts.
(e) ~- fees peidforliccnses, p:mits and otherauthorizatioos
ne~sary for 1hc usc.~Jecupancy and OjXf'Ution of the Prop.-ny in tbe cllfTeflt period shall
be prorattd ns af tilt! Apponi0tU71tnl Tim.! between Pur<:ha`` and Seller provided that
such licenses. pewits and other aUI.ftorizatioos are trnnsfcrred 10 Ptm:hlm:r.
(I) Bookings. Purchit!!Ct shall receiw II credit roradl-11nCe Jlll)"JUelll$
and &posits. if nny. under my ~ings lh11: rela!l! to a period after the Apportionmeut
Time:.
(gj Qitl Ctttifisr@. Pun:l!aser sball receive a credit fur 1he value of
all gift certifieales issued by SeUer or Manager ~hat have not been redeemf'd as oflhe
Apportionment Time, oel of the historic forfeiture rau: applicable at the Propmy.
RU Austin Courtyard 018346
646
..., ..
(b) Ye!!dbm Madiixles: AlMs. To the extent that fobds in ~
machines lllld ATMs are the property ofSeUcr, 5\M:b ftmds shall be remand by Se~ as
of the Appot't.iaDmeDt Time. Purcbaser shall nol receive a credit for such monies.
(i) Cub .Accomis, AU Jiulds held in any accoams mllintllirled by or
for the benefit of Seller at the Appartionment Time will be retained by Seller. hrc:base
shall not reteive a credit for such funds.
(i) House Bapk.s. NOtWithstanding t~ provisiom of S«lion 9.l(i).
Seller shall RCCive 11 cred"ll for the cub held in lbe H. Except as otherwise provided for herein. such other
items as are normally premed and adjusted in !be lillie of teal property or of a hotel sh&.ll
·35-
RLJ Austin Courtyard 018347
647
be prorated as of the Apportionment T'ame in accordance with Jocaa custom in the
jurisdiction in which the Property is locaf£d.
9.2 Closing S!!llemCI)I; Jwe-!Jp, Sellers and Purchaser shall joindy prepare a
proposed closint statement containing the parties' reasooable estimate o( the items
requiring p!'OI'lltions and adjt~Stn'~ems in this Agrttmem. Subsequetrt fmaladjuslmmts
and paymems ('1'ntt-Up'') shall be made in cash or olher immediately available funds IllS
soon DS practicable after the Closing Dale. Jn the event thai a Seller and Purchaser have
not agreed on rhe IKljustmentS described in Seetioo 9. J, upon epplica6on by either l*t}'.
a certified public accountant ~bly acceptable to both parties shall detenniM any
such adjustmtm~:S. The charges ofsuch aceollfttant shall be bome equally by the parties to
such disputed adjustment. All adjustments to be made as a ~t of the final result! of
tbe Troo-Up diall be paid to the party entitled to such adjustmeQt within ninety (90) days
after the final ddmnination thereof.
. 9.3 Sdlm Clqg Costs. The- following costs and charp shllill be paid by
Sellers:
(a) filly percent (SO%) of all transfer. Ales, use, recordlalion or otbeT
similar IDes, impositions or expenses ("Rc:ccrdmg Chllllrp~"J incurred in comection
with lhe recordation or filing of the instl1lU'Iel'ltt required at Closing on any Property.
includin& the 1Ili11S-fcr of the Asseu;
{b) fifty ~ (50%) of all bulk sales raxes and other persooal
.· ~)' lll!Ce!;, if IIDY~
{c) fill)' percent (50%) uflhe costs or undennking lhe Iitle selllirelteg
and preparint.: Ibe Title: Comm itmt!nts:
{d) lifl.)' perccn1 {50%) or the coo~ ~lf un~ title premiums charged by
the Title Company in connectioo with the issuance orTnle Policies, as w-ell as the costs
to obtain lhe follo\\ing endonements to lht Title Policies, where applicable 8!ld
av.-ilable: ( 1) com_prebensive endorsemen«. (2) zoning eodorsetnent (ALTA JJ ).
(3} MVCy/legal description endorsement, (4) il:eess to public road endorsement,
{S} torltiguity endorsement, (6) blanket/non-locatable easementS. (1) encmechments onto
eu:stments. and (8) separate tal' lot endorsement rsbl.,dard Eationemenb"');
(e) the eoslofany endorsemtn!s. other thM me Stnndard
End~mc:n!S.. issued tu remedy Title Coodiriow ("'Ttale Coadlrion Endor-sements}:
(0 fifir pcrum~ (S~) of any fees payable ro the Tirl~ C'ompmy in
connection wilh irs sett'k:es as I!Serow agent:
(g) any commission due to HWE; and
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-36-
RU Austin Courtyard 018348
648
....-
(b) all fees charged by s.llm' legal`` end their other
con.mltmts in eollllCCtlcm with the prepention aDd negotiation of this Asreement. and all
other dac:uments aQtl iasuumenlS in cortliedion hetewith.
(a) !he Allocable Price;
(b) any ``moums due in eoona:tion with the issuance of new fmrehbe
Agreements (bul excluding any anKnmts requi~ to fund any PIPs. which shall be the
sole reJpOnSibillty of Seller as part of Seller's I Jotcl ~tion obligllltion};
(c) any amounts to be paid h1 Ctllllll!etion with new Management
A,gmmen'b, iJJCiuding any reserves and/or working capital required by !be terms of the -
Manaceme:nt Agreeme~
(d) fifty pm:em (SO%) of tbe ~om of undertlakin& the title ~hes
8Jld prepllring lbe Title Commitments:
(c:) fiftY pmem (50%) of the costs of any title premiums chargtd by
the Title C'omp!llly in cOM«tion \\ith ihc il.suance ofTim Policies and !he Sllll'Xbrd
Endorsernenls;
{f) tb~ COSI. of any endor.aements. othet- than Slaftdatd Undorsements
and Title C'onditioo Endom:mems, that Pun:ham- and/or it$ tenders sbeU n:q~t;
(g) ttU tide re-insurance tOSt$:
(h) fifty~ (50%) ofany fees payable lo the Tide Company in
ronnetlion with its serviC"C"S as escrow agent~
(i) all cow: im:umd in performin~ due dilisencc and :teeurin~t
finllllcinJ to complete the lnlnsm:tion ("Third-Prerty Costs..) ii'IC"Iuding. without
limillltion: (i) cnYinmmentul t.:pt.'lltS for :my PI\,Jl'!rtY: tii) !'Urveys ohny Prop:ny;
(iii) nppraislils~ {iv) fees 3nd custs paid to any ]l!lld(f in conneetioll whll obtaining
fil'l8llCing for any Propeny~
G) all fees charged by Purchaser's legal ~land its other
c:onst~ltallls
in tunnection with dtl;_prepara1ima aQd ~gotiation oftbis Agreement and all
other doc:urnenlS and instrtmlenltin connmion herewi.~h;
(k) fifty peretnt (SO%} of all Recording Charges in~d in
connection with the recordtltion or filinG ofrhe imtnrments required at Ctosing on any
Property, including the tmns&r of the Asseb; nnd
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RLJ Austill Courtyard 018349
649
(1) My pemm.t (50%) oran bUlk sa~es tws md other pen!OI1il
property taxes, if any.
9.!1 C!m:eJI~&iDD. &e. The obligauioo of Seltm and Purchaser to pay any
~ion fee charged by Title Coi'II'J)tny shalJ not bt ccmctitioned upon a dosint; of the
l:r'aRSI9Ctions dncribed in this Apmnent. The parlin hereto !!pee that ifthis ~
shall be: tenn.inated for Bny reason whatsoever Sellers and PL~ttllascr shaU eacll pay fifi.y
pe~ttnt {50%) of lilY cancellation fee charged by Tide Company.
9.6 Baggage; Safe J}cJ!osit Bow. On the Closing Date, ~tativcs of
Seller and Pwdmer shall &Me 1111 iJwentory ot: and seal. (i) aU safe deposit boxes (other
than~ .u:fet located in guest l'OOIIIIl for use by Hotel~) in tbe ~("Safe
Deposit kesj; (u) aU lttuage. valises, trunb. pam:}$. ~.valet~ and
other property ofpe3ts elleclted or left in the care of me Hotel by guests or IBioed by
Sellet'u ~ty for any unpaid ~receivable. and all ilems ~oed io lbe
Hotel's lostund found (eolleetiYely, ..~;;and (iii) an unused bagpge cllairn
dlecb ("V••* Clafla Clsetks"), JfPureboser ef~ not to take an inventof)' ofd~e
Sa-te Deposit Boxes. &IWlJe und Unused Claim Checks. Seller's irrven10ry of S"UCh irems
wm be deemed llCCilrilte. From and sftct the making ol"suclt inventory and sealine of the
Safe Deposit &lees, Baggage lllld Unused Claim Cheeks, Purcbascr shall be rtSpOnsible
forrdl Safe Oeposlts Boxes, all claims relaYug tO Untl$ed Claim Cheeks and all Baggage..
If and to the extefil. the seal placed on any Safe Deposit Box or Bar&gage sball be broken
prior ro lhe release thereof to «be respectjve owners, Purt:h``Se!' sbtll be responsible for the
eonk1lts tbereo£.
9.7 ~ The provisions of lhis Section 9 shall sur'\'ive Closing. or in me
case of Section 9.5, a tmnin11tion etflhis Agreement.
SECTI0:-410
~f;FAULT
10.1 oerautt. by Selley. If any Seller shall fail to perform any of t1te material
<:OVmU1tS 8lld ~ cmtained herein .net such condition or faiJure continues for 11
peri()d often (I O) days (or S\ICh additional period ;1s 108)' be reasonably required to
etfectuote a c:ute oftbe same) after written notiee tbemlf from Pwehaser~ Ptm:Ju:r may
eleet 1o pursue one of the following remedies: (i} pursue the remedy of specifiC
perfonnance apinst tbe dethulting Seller, or (ii} tmninate 1his Agreement solely witb
rnpeet to the atrec~ed Property. in whkll event the Pmclllll$e Pritt s.IWJ be redi!Ced by the
amoom. of the Allocable Price for sw.;h Propo:n). In tlb: ~,·ent lltal Purchaser shall
terminate Ibis Agreement pursuant tb clause (ii) of the precedi"~t sententt, Purchaser
shall name only tlw! Seller or Sellers whose fail``tt to perform gave rise to the derault in
my lepl action. and in no event. sJmll Purdtam iru:ludl: While Lodging or any other
Sellers in sucb suit or proeeec:Hng. In the C\'ellt that Pwcha:ser sball terminate this
Agreemenl pulSU811110 clause (ii) of Ihis: seelion. Purch``SCT shalt be mtitkd to m:over its
reasonable aad vetifmbJe out-of·~ expc.II'$H paid by Purchaser 10 third-plll'tits and
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RLJ Austin Courtyard 018350
650
rela!inrl to lhe tesu, stlldies or iupections of !.he specific Pmpert:y or Properiiea ofany
defaultiu£ Sellezs.. and with respect to oommon or sblllred expense~ {sueb u h:pl r:osu)
paid to lhlrd-partles. Pmdluer shaJI be eolitfed to reoover a pro rua ~ of at~eh
expenses. The foregoitlg provisil.l>IIB of this Seetion J0.1 n«witbsundiug. in ao event
Hall defawtiag Sellera be oblil!,llted to reimburse Purdmer for more tbm Oac MUUcn
Dollars (Sl,OOO,OOO.OO) in me agregate ofmth ~
10.2 DetJu!tbyfnmbgser. Ifthuale of11.11.y Property. u ooolemplali!d
hereunder, is not c:oosummated due to Purchaser's &illlre to perfonn atJY mataitJ
~ or~ts c:~ bcrdn (other thll.ll. Putclraer's failure to pay tile
P~hase Priee and !be other amounts 10 be paid by Pun:~ hereunder) and wch
~iorll or faihlr'e~ for aperiodoftm(fO)dsy.s adler written noticethee.of
from ~tleTa or soeh additi0111111l period IS may lie ~bly required to efTeernre a awe
of the same {bitt in no evem longer dwJ lhlrty (30) days aftef notia: from Sellm). Sellers
wlt be mtiUH, u their sole and eJ~clusive retDedy for such defilutt,. to tetm~ 1hi.s
A~ .QCVor ~cive the Depoeit IS liquidated dauuqes. Sellers' ript to =ive 1he
~tis lntcaded 1101 ar a penalty.tM. u t\111 Jiquidat=d ~ The right to m:em
the J)qlosi.t as fullliquidlled dlfll88" is Sellm' sole amJ exdwrivc remedy in die e\-eat
of defau!E bemmder by Pun:baser, and Sellers ~ waive and release &flY rlabt to (ll.lld
hereby covenllllts that !hey shall not) sue Purdlluer for~ perfonJ111L11Ce oft!tit
Agmemeol or to recover any damap ~any .lllllure or description other thaD Ule f)epaJit.
P~ hereby waives and relem:s any rigbl to (and hereby .:DVlmlln!J that it shall not)
sue Selltrs or seek or daim a n:ftmd oflhe Deposit (or any part thBeOt) oo lhe ~it
is ~bk in amO\Illt and elttteds Sellers" actumf damases or that its relertion by
Sellers eonstinaes a p191alty lind nolag.reed upon and n:1150nable liquidated da1ft11$t:s.
SECTIONlt
11.1 Asmmmt to lndemnifr.
(a) Subject to the expn.'SS provisions oftbis Agreement, Sellers shell
indemnify. de rend and hold hlmnleu Potth!ISCr and its suetCS9orS and assigns !'rom and
agaiusl any claims. los!ie$. damases. liabilities. custs. and expenses (including. without
fimilatioa, mtiiOI)Ilbl~ attorneys • fees IUld expenses) arisiQ3 out of events. acrs. or
omissions of SIX:b Seller duu oc:cuned in conntttion with ilS ownership ot operation ofits
Property prior to the Clofing Dtde, OF obligations `` prior 10 the Closittg Date
under any Comraca of sw:b Seller {exetpt 1o the extent of any adjusbntnt made in respect
of such Contt$Ct at Closing). T&e Indemnity provided for in this Section 11.1 (•) !>hall no1
exteJJd IO consequetlliaJ damages.
(b) Whenever it is prtl\ided in this Agyeement lhat 211 oblisalion will
c:on~inue after Closing ISnn obligation of Pun;ha``er or be a!SSI&med by PurdJUer 11.fter
Closing. Purchaser shall be det!med lo hove 11lso ~to indemnify and bold harmless
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RLJ Austin Courtyard 018351
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Sellers 111111 their respective ~and wipa from fllld against any clllims,lossi:s,
dam.ases, JiabiJities, costs. and expen.ser (induding. w1tbout limitation. ~
im~· fees and ~) arisiD& fiomarry fli.Butt!: of Ptln:base, 10 perfoun rbe
obli8Jltion 110 !ring E:``..·rou. the sum or not less lhan li\-e
percent (S%) oflhe Allacable Prite payabl! to such Seller. From and after the dmc: tlldlt is
six {6) months after lhe Closing Oat\'! and until the date d!at is twelve (12} lllOOths after
the ClosiBg Date, the boklbatlr and net worth requi~s ~ forth in lhe preccdinc
sentence shttll be reduec:d fulm five(S) pm:em of the All«able Price payable to such
.· Seller to two and one-balfpercebl (2.5%) oftbe Allocable Prlee Jlll}'tllbk t() such Seller,
and the balance in any escn:rw shall be released ro Setler; ~ ~Jstv.tem. that to the
extent that Purcbuer bas timely wened ill Writing any claim against such Seller. either
(i) sodt S«llet shall retain nDIIess tJ.n one bllmhed twenty percent (120%) Qf1he
reasonable amomn of sacll ellrim, or (ii) an amOWit equal tu one hundred twmty pereent
(120%)oflbe~leamount of such claim sballcontinueto be bcld in escww,asshe
case II'IIIY be--. until sueb time os such dnim is dlhl:r n:solved or released.
(d) The pll)\'isions of this Seetiun 11.1 shall sunive the Closing
bere\mder.
11.2 Broke!JL'£ Commimu Purswim I() Ill¢ I.Cmi.S or. sepal"'l..e ~ent
between Seller.! and HWE. Sellen have cawed HWE to serve 11s the broker for the
tnlnSaC'tioJis ck$tribed herein nnd haw a.peed to p``y a commission 10 HWE.at Cklsing.
Olher than HWE, each of the panifs ~10 represen1s that it deolt with no broker. finder
or like JlFnl in tonnection with this (lgrument or the lransactionl contempl11ed hereby.
and tbal it reasonably helie''l!S that t'berc is no basis forM)' olher Person to clahn a
commissitln O'l' other compe119tion for briflllng llhout this A~ or \he ll'liiiSIKtions
contemplated hereby. Se!Jm shalt illdemllilj and hold barmJes.l Purchaser and its
sue<:esSOOIIIItld migns from and qainsf any lou.. liability or expense, including
reuonable auomeys· fees. arising OUl of any claim or-claims for commissi.OM or Olber
compensation for bringing about this Agreement or the tTllnSaetions coorem!Uted hereby
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RU Austio Courtyard 018352
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...
~ by any broker. finder or like •&ent. if such claim or claims an: bued in whole or In
put on dealings with Sellett. Purcliaserdu&ll i~ lind hold bannless Sellers and
their respective ~ and assigns from and against any loss. liability or expense.
indmins m90flllbie llltOmeyS' fees., arising out of any claim or clain:ls fur commissions
or other compensation for briDging about Ibis Aareemem or the tnmsactioos
ccnaemp.la&ed baeby macle by any broker, fmder or like agent, ifmch claim or c.lflim are
based in whole or in p11rt on dealings with~- ``in this seetioa
sh11ll be deemed to eaeate .lll1y rights in uy !bird party. The provj~ ofthis
Seetioo 11.2 sWI. JUI'Vive lhe Closing hereimdcr and Bll)' ~on oft&.ia Agreement.
lt..3 ~- Prior to Cbi.Ds.aoyrelealetotbepublic ofinfotmalion wilh
respeet to the sale contemplated mmn or 11111)' matten set tbnJi in this Agreentellt will be
made only in the form approved by~ and White LodBing (as agent for Sellm).
11.4 ~-
(a} Any and all norices. demands. consents, ;approvals, offers,
elections 8i1ld odlu commWiications required or pennilied under this Agroement shall be
deeled adequately given If bl writin& and the MUte sbdl be ddiveml either iD lud. by
mai1. by Federal EXJRSS orsimilarexpedited commucie.l cmit:r or by fu (with a copy
to be sent lbr next business dilly deUvery br Fede!UI Expre!IS or similar canier 011 tbt: same
dny), addressed to die recipient of the nolice, postpaid and rqi$tel"fd or certified With
return receipt reqlleSied (if by mail). or wilb all freight charges prepaid (if by Fcdel'lll
Express or similar carri~}.
~) AJI notices requirei.lur pennitlet.llo be sent hereunder sba!J be
deemed to have been given for all Jttll'POKS of this Agreement upon !he earner of (i) the
dftte of aclmowledaed ~ipt. cii) me date tbe n:-tipiem tcl"UKS receipt. or (iii) lfM: next
business day afteT depMit with !he carrier if st'nt by Fedenl Express cr similar mrrier.
(<:} All soch notices shall be addressed.
if to Sellers to:
Carol Ann Bowman
1000 E. 80111 PlacE
Suite 700 North
Merrillville, Indiana 46410
with a copy 1o:
Venable I..LP
BtllO T()lll'€:111 Creseenl Drive
Suire 300
Vl.f11na. Virginia ``I &l
A~ion: M. J11~ Yurow
-41-
RLJ Austin Courtyard 018353
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iflo Pwclmer, to:
do RU Developmena,UC
6903 Roclckdge Drive
Suite 910
Bethesda. Maryland 20&:17
Attention: Thomas J. Ballimore. Jr.
with a copy to:
Amu Fox PLLC
1050 Connecticuc Ave._, NW
Washington, D.C. 20036
Attention: Gemd Leval
{d) By notice given as herein provided, the parties hereto shall have
die right fiolll ti~ to time liJI(I at any time dllrins the ttnu or dii3 Agreement to cbl.utge
their respe(tive addreSSl:S effective upon receipt by the lllhl."t' parties of such nCIIiee and
each shall have ~be right to spetify as its~ rmy oehrr address within the United
Sta~ of America.
11.5 Wilms: Modificalioo of.A~ Any wm-er or any wrm DJ'
eondilkm of this Apement, or oflbe breaeh of :my f;(l'¥el)llnt., ~or wamutty
contained htreia, in any om; ins~anc;e. shall not opeme as or be deemed to be or
construed as 11 flll'tber or continuing \\-aiver ofany otber hm:ch of such term.. condition,
cm-enam, re~on or wammty. No failure at any time to enfim::e or require
pcrformmcc of 1111)' provision hereof sha!J operate liS a waiver of, or affect in MY mmner,
such patty's right •t a lllklr time to enme or require pcrfui'Rii8J1Ce of web provision or
nny ocher provision hereof. This Agrrcmem may nol bt- amended nor shall arry >A11ivcr.
change. modifit11tinn, consent or discharge bl.· cffecred. e~:cept by 1111 instrument in
writing executed br or on brhlliC of the party againn whom enforcement of 11ny
amendment. wah·er, chant,oe. modilicn~i011. t'Omomt or uiscbnrge is sought. Tbis
~ s!WI not be binding until such timc ns 1111 p3rtics l:w:rtlo have cxeC111ed this
A~t.
11.6 ®ignmm; Sm:cmors and Auim. This A~ment and all rights and
obligations bmunder shl!l net be assignable by any party without !be written ~ of
the other party. uceptlhat Purchaser may usip this Awecment to any one or ll')(ft
Affiliales of~. ilris Agreement shatl be binding upon Md shall inure to the
benefit ofthe pmies herelo nnd their rcgpcctiw succcsSOIS and pemtiucd assisns- This
A~ent is not intended 11nd shall not be conJtneed to create any rights in, or to be
enlbreeztbk! in any pan by. any other Pmons.
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RU Austin Courtyard 018354
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.-
,~
11.7 ScvmbjJitv. H any provision oftbis ~is, determined by a tomt
of c:ompmqt jllrisdiction to be invalid or unenforceable, the remainder oflhis Agreemellt
shall nooetbelm mnai.11 in twr foree and effect.
11.8 COUIItgJI!InS. ·rrus Apement may be ~er:uted In twc (2) or more
eournerparU. each of which shall be d~mcd en crip, but aU of which tophu shall
c:onstiMe OtlC$ and the ume instruJQIUlt. This ~ CONtitutes the entire qreemem
of the psrties baeto with respect 10 the subject matter hereof and shaH supersede I!Bid take
the place of IUI1 other inscrumenlll purporting to hi! 1111 agreement of the part~ henMo
relating to the Sl)'l:!ieet matter hereof.
. 11.9 Oovemjng yw. This Agreement shall be Wtetpt$d. construed, applied
and enforced in BCCordance w"ilh the Jaws of~ State ofMaeyJand. applicable 10
contracts made and to be perl"ormcd in ihe Slate of Maryflllld. To tbe maximum exk:nt
permined by applicable law. any acdon to enlOree. arllling oot or. or relating in anyway
to, any of the provisions of this Agreement shall bt brought and pnmeuted in such court
or courts located in the Srate of Maryland liS is prm'ided by 1aYr. and tbe partie3 CWISent
10 lhe jurisdictioa of said court or couns locAted in the Stale of Maryland and !0 service
of process by registeml mail, return receipt requested. w by any od1er nmmer provided
bylaw.
-
11.10 Ptrfgrmancr ou Buslnqs £>a,,s.
In tht event the date on which
performanc:e or payment or any obligation of ll party required beretmder i l orber than a
Business Da.y.lhe time for payment or perfonnance shall automatically he extcllded to
the fi!"$1 B\tSiness Day fullov.ing Sl.lidl da.\e.
11.11 Attcmeys' fee,. If any lawsuit or arbitration or other legal proceeding
ruises in eonneetion witb the ~lion or ~nron:emenl of this A~L die
prevailing pany shall be entilled to receive, rrom th:! other pany, the prev``iling pany•s
cos:IS and expenses, includivg Je8$009ble a!tOme)$. f-ees.
11.12 lkfarjqmbjp. Nothing herein conain!!d sb$11 be deemed or construed by
tbe )l'llfl.ics hereto, nor by IIDY third party, u cm~ting the rciQllombip of principal and
agent or of parlne'!!lhip orjoint venture betwet'n the parties bema, il being lll:aderstood
nnd agreed ihllt (~c:ept II.S !!lid &o the extent 5pe¢i !k.l!y ~idt:d tor hereinl no provl$ion
eomaincd herein. not any acts ofthc panies he!'cto shall be deemed to crea~e 11'1)'
relationship betw~n th.e parties hen.-to \ltller rh:ln r.hc- rd:nionsltip of ~Iter and pmdnlser.
J 1.13 Ljke-Kind E;,:cbanu. Each Sellon (btlt not indh-ic!wl members or):llfll'lm
of any Seller) shill hal-t tile' righ1 to. srructure ies tmnsrer or int~ in its Property as Jlllltl
of l'llike-kind exchange 1o be dc:sipted by suth Seller (includmg 1be ability ro hive tiile
taken in the l'll1l1e of an entity established in ooier \o effec:tuate !Ueb ex~), by
providing Purcltastt with llOt.ke or such exdluge by not lateT than t~ (20) days prior
to the Closing Dale (with any doeumentsm be J"e\.iewed by hrehaser in c:onfliCiioR
th.m:wilb 1.o be submitted 1o Purchaser by not later than fifteen (1 S) days prior to the
Closing Date). with the rt:.'ltllt tbril the exc:bl!nge shall qt``~.Iify for non-1'1!C0g11iti~m of gain
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RLJ Austin Courtyard 018355
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..
or loss lll'!dl:r Section l 03l of rhe Internal Revenue Code of 1986~ as amei'lded. P~
sball coopeme with a SeDer in efli!ctinB $Udl exe~ (such eoopemion to be limited to
the review and. execuliora of en ~t to a q!W!1kd exclumge intezmedilly and other
re~e. requests of Seller and expressly to exeJmk: &12)' ``~T~mgc:ment to provide: t'or
instillment sale trea~ment112fP'Vi*d liD!: (i)uy cosiS and ~ inetBm:.d by
Pun:bper as a result of structuring such ti'IIIDSIH:tion as an excbanp, as opposed to a
outrighi. sete. shall be borne by Seller, (ji) Seller shall Indemnify and bold iulmtless
Pwclme:r from and against lillY and all liabilities, C03!S. ~ claims or demands
arisina from rhe coopemtion ofPtlfChtser in rifecting the exchange contemplated hefeby
including. but DOt limited to. Purcbaser"s reasonable attomeys' fees: and (iii) such
excbanse sbUI not result in any delay in closing the tmJsac:tion.
I U4 Ppn:hm ofO!Ie orMm k!l.ttutities. A.t PurebaseT"s opUon.furebuer
may eleer, with respect to one or more Properties, to puttlwe all ofthe interests ill !he
Selkrcntity in 1teu afpurcltasing such Propeft)' direclly. Such option shaD be exercised
with mpect to one or more Properties. if at 111. by Purchaser givina While Lodling
written noliee rllereof \Entity Part"hase Notfee..) not lluerthan thirty (30) da:ys prior to
the expiration of the Jnspeelion Period. U(JOft tie detivel}' ohn Entity Pwdwe Notite,
the parties sball negotiace io good mtb to enter into one or more appropriate JM"'base
and ~ agreements n,.- the ~base .md ,.}e of the Sdler entity rad&er tbllll the Property,
tiM: tmns and provisions or StJCb •gn:cmem' to be economically as identical to the tenns
and provisions c)fthis Agreement as possible. wit!\ approprime adjUIIUnenu to take into
ac~o.-olllll !he reasonAble requirements for &!K' ~IT.lsc Df emit)' intererns. The foregoing
pro,•isiOI'I$ of this Section ll.14 noh\ilhstnndins, ifPilfrllaser' s election ro buy the Sdlt!£
entity woaki cnt~\lllen ta\'Orable tax trealm~ltt for u Seller 1ban a sale of abe Propeny.
Pureh*T 1111d Sell~r agree lo work togclher in good faith 10 !IUUCI~ 11 sale in 111 manner
that does 00( crcaae for such Seller the unf~Mlt"ablc Ullt t.reatment.
11.1 S furtbq Assurances. Upon ~ tmns and subject to the conditions hereof,
each of the p.1ll1ies bere1o ~ to use its commercially reasonable b'OOd faith effort$ to
take. or cause lo bot taken. all actions, and m do. or cal.lle to be done, and to assist and
cooperate \nth the other pBrtin in doing. alllhlng.s necc:smy. proper or advisabJe to
con~ummate and make effective, in the mOSt expeditious manner pra<:tieable,1he
U'IIJtS8Clions contemplated by this Agreement including. without limitation (i) the
obtainin& of all necessary actions or non-a<:tioos, wt~h•ers. conseniS nnd appoval$ from
govemme~Nal or regulatory 'l!fltities and lb.: making of all JJeCe5SIIfy regislnltions and
filings and the taking of all StepS as may be necessary 1o oblain 1!11 approvltl or W4iver
from. or 1G avoid an aaion or proceeding by, any governmental authority. (ii) the:
obtnining or aiJ llt!ces~ry consents, approvals or waivers from lbird puties, and (iii) 1M
aecution and delivery of a11y addiml insuumenls ~ to c:onsununare the
transactions. ctm~emplatC!d ~. and ro full)' cony out the pu~'"S Q[ this. Agreement, but
which are not inc:oosis.tent v.ith tJ1is A~menl.
11.16 MlhQrit\ of\\ibh,; l.vte caused tJtis New Holels ~ llltd
SaJc ~ to be eJ~C:Cuted u a sealed instrument u ofthe d.te first ablwe WJ~tten.
S.th A.tlllllalreHrt, LP,
1m bldW. limitcd~fp
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RU Austin Courtyard 018368
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.-..
,
IN WITN£SS WHEREOF, the: perlill:s 'have cnsed Ibis Ncrw Hotcla ~ lllld
Sale ~to be encutcd u a sealed IIISttllnlentn ofd'le liMe tim above wri1tm..
Wldteeo lndustriei,I.H..
aNebrasb COlJICII'Irion
By``t~
I.Jemis E. Kackos
Flwmc:lal Vice President
RU Austin Courtyard 018369
669
1N WITNESS WHEREOF, the putie&lurve caused this NtN Hotels Purcbaa and
Sale Aj;reenJCDl 1o W OXecvtCICI a$ a scaJed WlruMaJt II$ Of the df.lte firsl above written.
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RLJ Austin Coa.artyard 018370
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lN WTINESS WHEREOt,lhe pm1iet have eaused tma New HoEe'b Purcbase and
Sale Agreement lobe cxecutl:d aa a sealed instnunent aa mthe elate first a'bave ~
-4&-
RLJ Austin Courtyard 018371
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....-
Schedule A Identity ofSellm
ScheduleB Addres31e5 of Properties
SehwuleB-l Legal De9Cripti00$ ofl'roperties
Sch.edule C Allocable Price b' eacll Propeny
ScheduleD Oround Leases
ScheduleE Franchises and Oulitde COfllpletion and Closing Dates
Scbedule F [Intentionally Omilted]
ScheduleO Form orPhY'ieal Conditions EseTOW
ScheduleH Form of Liquor Ucense MaMgement ASJettnent
Schedule J Fonn of ~gnment!Uid Am~mption of Contracts
Schedule J Form of A~AnRI'ml and Auumption of Ground Leose
Schedule K Form or Assi&nment Dnd Assumption ofl.icePSes. Permits
and lntanples
Schedule t. form of Bill or Sale
Schedule M Form ofClround Lease Estoppel Cenificale
Schedule N Form ofManagemeht Ag:eemenl
SeheduleO Ust ofB\chlde:d Anets
Schedt.lle P Fonn of Deposit Eserov.·tnstruttions
Schedule Q Form or Special Wammty Deed
ScheduleR t:.,rm of Subordination. Non-Dmurbanee ond Anommmt
AgrceR~enl
ScheduleS [Intentionally Omitted!
ScheduleT FormOrPost-Ciosinll Escrow Agreement
-49-
RU Austi.o Cou.rtyard 018372
672
PROPERTY OWNER
PROPERTY
NUMBER l
118. CO\Ii1YIIrd Mimnar Ft. Miraeourt, LLC
14.500 sw 2~ Street
Mlrm!ar, Florida 33027
89. Residence Jnn Mii'!IIDaf fL Mirares.LtC
14700 S.W. 29"' Slreet
Minnnlll'. Floriclll 3302?
90. Residence Inn Downtown louisville Loures. LLC'
Kentucky
l33 E. Mttrltet Sm:et
Louisville, K~ntUtky 40202
91. Sprinahill Suites lonplont Lon11mont White Etkin Sprfna. LLC
1470 Dry Creek Drive
Lonpnool., Colorado 80503
92. Schaumburg Counyard Stllcourt. l.lC
· 131J Americun l.ane
Schaumburg. Illinois 60173 '
I
9]. Courtyard Austin Downtown Hotel J'ropertie! A~ist. LP
300 E. 4111 Street
AuStin. Texas 78701
94. Residence Inn Austin DoWIItCJWn Hotel Properties Austin. LP
300 E. 4" Strttt
Austin, Texas 7870 I
I 9). Bloomington Hilton Garden Bloomholel. UC
245 N. College Avbnle
B1oomington. Indiana 47404
96. : Courtyard Grand Jwc:1ion G1111'J(! White Etkin COUI1, LLC
765 Hortttm Drive
Grand Junction, Colorado 81506
A-I
I
RU Austin Courtyard 018373
673
.
97. Residence bm Gmnd Junction Grand White Etkin Res. Ltc
767 Horiton Drive
Orand Jtme1ion, Colomdo 81506
98. Courtym'd Austin AiJport SoutbA~LP
7109 Esst Ben White Blvd.
AustiD,. Texas· 78744
99. Homewood Suites Brandon Wbiteco Industries, Inc.
!0230:Palm River Road
8nmdon, Florida 33619
i
A-2
RLJ Austin Courtyard 018374
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. ..
...,..
Sd!e!)W!B
Addmm tfl'rqperties
PR.OPD.T\' PROPmTY OWNER
NUMIHtR
88. Courtyard Miramar FL Mii'IICOurt. U.C
14500 S.W. 2tf' Sttte1.
Miramar. Aorida 33027
39. Resideoee Inn Miramar fL Mil'8ftS,lLC
14700 sw 29* Street
Miram.v, Florida 33027
90. Residence I'm Downtown Louisville lc:Jura llC'
K.enwcky
. 333 E. Market St:reet
Louiaville. Kenruck)' 40)01 I
~
9t. Sprlnshill Suites Lonpnont llon(IIJt<)m Whhe l:!lfdn Sprini:LiE"
1470 Dry Creek Drive
Longmont, Colorado 80S03
92. ScbaumbW'g Counyard Sehcowt, LLC
1311 American lane
Sebaumburg, IUinois 60173
93. Courtyard Austin Downtown Hotel Ptopt'rties Austin. LP
300 E. 4``> Street
· Austin, Texas 78701
94. Residence 11111 Austin Dnwntovm Hotel Properties Austin. LP
300 E.. 4* Smet
Austin. Texu 7&1tll
9S. Bloomington Hilton Gmlen : Bloomhotel. Ll.C
24S N. College A'f(f'nue
; Bloomington, Indiana 4740=1
I
I 96. Coun)'IJd Grand Junction
765 Hori:ton Drive
lI Gmnd Wbite Etkin Coun,llC
Orand Junct1011. Colorado 81506
i
a.J
RLJ Austin Courtyard 018375
675
91. Residence Inn Orand Junction GJ'IIl1d White Etltin Res, LLC
767 Horiron Drive
Grand Junction. Colorado 81506
98. Cc:rurtyard Austin Airport South Amain:omt, LP
1809 East Ben Wbhe Blvd.
Austin, Texas 78744
99. Homewood Sui1es Brandon Whiteco Industries, Inc.
I0230 Palm River Road
Brandon. Florida 33619
RLJ Austin Courtyard 018376
676
APPENDIX K
HOUSE HB 452
STUDY Willis
GROUP bill analysis
SUBJECT: Recovery of attorney's fees in suits founded on oral or
written contracts
COMMITTEE: Judiciary recommended that it do pass, without amendment
VOTE: 9 ayes--Grant*, Hale, Moreno*, M. Garcia*, Cain*, Ezzell,
D. Hill*, Ribak*, Rudd
0 nays--
2 absent--Maloney, Jackson
WITNESSES: None
DIGEST: Article 2226, Revised Civil Statutes, allows recovery of
attorney's fees (in addition to the basic claim) for certain
limited kinds of lawsuits. HB 452 expands Article 2226 so
that reasonable attorney's fees may be recovered in all suits
founded on oral or written contracts. The bill also exempts
certain insurance contracts and certain insurers from all
provisions of the article.
PRO: Expanding the recovery of attorney's fees would serve the ends
of justice. Generally, the winner in a lawsuit cannot make
the loser pay attorney's fees, unless there is a specific
authorization in the law or a contract with that provision.
Many times a person with a valid, but small, claim will not
bother to go to court because the lawyer's fees are almost
as much as the possible proceeds of the suit, sometimes more.
Even in a lawsuit involving a lot of money, the losing
party in effect prevents the winner from getting the full
amount, because the winner must pay his attorney.
Either way, it's not right for a person to be deprived
of his full damages from a wrongdoer.
HB 452 is a minor extension of Article 2226, which already
allows attorney's fees for valid claims against a person or
corporation for services rendered, labor done and several other
causes. Further, many written contracts already contain
provisions for attorney's fees. And several other Texas laws
permit recovery of fees.
In some foreign countries, the winner in every lawsuit
receives attorney's fees from the loser. These laws have
proved workable.
This bill excludes certain insurance contracts and certain
insurers to prevent overlapping coverage of· other statutes
relating to attorney's fees.
CON: This bill is a broad extension of the kinds of lawsuits in
which attorney's fees can be recovered. It will cause more
litigation and more crowded courts. Oral contracts, in
particular, should not involve attorney's fees. Suits on
these contracts often degenerate into swearing matches. It 1 s
enough for the basic claim to rest on the outcome without
putting attorney's fees in the balance, too.
(more)
HB 452
Page 2
In contract suits, defendants frequently countersue_
Wealthier parties will be in good position to run up the
costs and the potential liability far beyond the means of
a poor plaintiff. This may scare poor claimants away from
ever filing a lawsuit.
The proposal to exclude certain insurance contracts
and insurers from Article 2226 is an unwarranted grant of
immunity from liability for attorney's fees. They should
pay, like everyone else, when they lose.
COMMENTARY~ 1) The potential advantages and disadvantages of
the proposed extension are hard to assess with much certainty.
More lawsuits are likely to be filed and the courts will be
busier. But that's one thing courts are for. Lawyers will
probably make more money. More contracts might be put into
writing to avoid the uncertainties and extra liability of
oral contracts. And perhaps this would reduce the number
of disputes and suits.
2) Texas courts may have to decide how the proposed legislation
is to apply to actions arising before the effective date of
the act and whether statutory provisions for attorney's fees
are always to control over contract provisions.
3) An alternative approach to help settle small lawsuits
is to increase the current $150-to-$200 limit for small
claims courts in Texas. Some state permit people to sue
for much larger claims and prohibit either party from
retaining an attorney.
4) HB 452 excludes ~ covera~e those contracts issued by
insurers subject to the Unfairlaim Settlement Practices Act.
In general, this includes such lines as accident and sickness,
motor vehicles, casualty, prepaid legal services, fire, lightning,
wind storms, hail, inland marine, rain, home warranty, and
fidelity, surety and guaranty bonds.
5) It is worth notin~ that the Uniform Claim Settlement
Practices Act does no give individual policyholders any remedy
for delayed or inadequate settlement of claims, much less
attorney's fees. Instead, the Act gives the State Board of
Insurance authority to deal with insurers which frequently
engage in certain practices. Thus, under HB 452, persons
will not be able to recover Article 2226 attorney's fees
against this la"Pge class of insurers. (Under Insurance Code
§3.62 and §3.62-1, a policyholder can recover attorney's fees
in a case involving a life, health or accident policy.)
6) As written, the bill also excludes entirely from the
provisions of 2226 various companies issuing life, health
or accident policies. Presumably, then, such companies could
not take advantage of the provisions of 2226 for recovering
attorney's fees in their own lawsuits.
#
APPENDIX L
Assignment of Contract
White Lodging Services Corporation, an Indiana corporation, hereby assigns and
transfers to South Ausaircourt, L.P., an Indiana limited partnership, all of the interest of
White Lodging Services Corporation, Inc. (sic), in and to that certain Standard Form
Agreement Between Owner and Architect having a date of January I, 2005, between
White Lodging Services Corporation, Inc. (sic) and Elness Swenson Graham Architects,
Inc.
Dated: September 19, 2005.
White Lodging Services Corporation
By. ____________________
Lawrence E. Burnell
Chief Operating Officer
Approved and Consented to:
=~fuc.
Paul Mittendorf, AlA
Principal and Vice President
3Sl6:10Z:09190S
SCANNED
SEP 2 2 2007
ESG001952
578
APPENDIX M
A.ust!JJ~ Texll/1
C(JTJr/yprrl AumiJ Airport
PropertyNIIl.llber 98
ASSIGNMENT AND ASS'UMPTXON OF
Ll"C:ENSES, PERMITS AND INTANGIBLES
TillS ASSIGNMENT AND ASSUMPTION OF UCENSES, PERMITS AND
INTANGIBLES ("Assignrnenf') is made and entered into as of the c:Jff:nay ofDecember,
2007, by and between SOUTH AUSAIR.COURT, LP, an Indiana limited parlnernhip
(<'Assigi~o:r''), and RLJU -CAUSTIN AIR LESSEE, LP, a Delaware limited partnership
("Assignee"),
RECITALS
A. Reference js made to that certain New Hotels Purchase a:nd Sale Agreement dated
March 16.2006, by and among (i}Whfteco Industries, lno. and each of the parties named on
Schedule A of the New Hotels :Purchase and Sale Agreement, (fi) RL1 Lodging Fund I1
Acquisitions, LLC, and joined by (iii) White Lodgi:ng Services Coipotation (for itself and as
agent for Seller and each of the other sellers named on SchednleA of the New Botels Purchase
and Sale Agreement), as amended (as so amended, ''Purehnse.Agreement");
B. Simultaneously here.with, Assignor is conveying to RLJ IT- C AUSTIN AlR, LP
.:=:~.\ its interest in that certain. Tell1 property more fully descn'bed on :Exhibit A attached hereto :md
.. .,. ..
.:•
made a part hereof ("Property") pursuant to the Purchase Agreement; and
c. In connection with the conveyance of the Property. and as oontemp!ated under the
Purchase Agreemen~ Assignor and Assignee desire to execute fuis Assignment.
NOW, THEREFORE, in consideration of good and valuable consideration, the receipt
and sufficiency of which are hereby- acknowledged, the parties agree as follows:
1. Recitals. The foregoing recitals are hereby incorporated into 1his Assigument·as
if fully rewritten and restated in the body of this Assignment.
2. . Assi!Wment.ofLicenses, :Permits and Intangibles. Assignor hereby sells,
transfers, conveys and assigns to Assignee all of Assignor's right, title and interest in and to all
licenses, permit;s and all other intangible assets relating to the Prop~ (collectively,
"'Licenses"), subject, however, to the terms and covenants of the Licenses tmd ihis Assignment
3. AssumptlQn ofOhligafimm. Assignee hereby accepts the assignnient ofth.e
Licenses subject to the tenus and conditions hereof; and from and after the date hereof; Assignee
hereby assumes and shall be responsible fur and shall perronn, discharge and ful:l'ill all of the
obligations imposed on Assignee, ~ iuccessor-in-interest to Assignor, under the Licenses that
accrue on or a::fter the date hereof.
R1J Austin CQurt,yard 00601.1
701
~ ' • • ... •• l '." ., • •.: ...... •l. ·t~-;.·•,• :; ....~·· • . • ~,. '• ``' •
.·)...•
:,:;·:1 4. Assiguee~s fudemnifiea:tion. Assignee hereby agrees to indemni1y, protect.
defend and hold Assignor, Assignor's memberil or partners, and all oftheir respe:ctive sucaessors
and assigns hartnless :from any and all claims, damages, losses, suits, proceedings, costs and
expenses including, without limitation, reasonable attorneys' fees {"Losses"), both known or
unknown, arising out of or by virtue of the brea~h by As$ignee of (or Assignee's failure to tlmely .
perform)'any or all of tbe obligations imposed on Assignee under the Licenses, as successor-in-
interest to Assignor, 1hat accrue on or after the date -hetcot , · ·
S. Af!sigpor§ Xndi~mnificJ!tlon •. Assignor hereby agrees to indemnify, protectk
defend and hold Assignee, Assignee's members or partners, and all of their respective successors
and assigqs harmless from any and all Losses, both kno;.vn and unknown,. arising .out of or by
virtue of the breach by Assignor of (or Assignor• s failure to timely perlotm) llllY or all of the
obligations imposed upon Assignor under tbe Licenses that accrued prior to the date hereof.
ti. Defined Terms; Constructif):q, All capitalized terms nsed herein withGut...
·definition shall have the meanings given them in the Purchase Agn:ement. This Assignment is
subject in its entirety to the ~nns and conditions of the Purchase Agreement. To the extent the
terms and conditions herein and in the Purchase Agreement are inconsistent, the terms and
conditions of the Purchase Agreement shall Control.
7. Counterparts. This Assignment ma:y be executed in one or more counterparts,
all of which, when taken together shall constitute one and the same instrument.
8. Go'l'erning Law, Thls Assignment shall be governed by and construed in
accordance with the laws of the State in which the Property :is located.
9. Partial Invalidity. The provisions hereof shall be deemed independent and
severoble, and the invalidity or enforceability of any one provision shall not affect the validity ot
enforceability of any other pro'Vision hereof.
10. Successors: and Assig]s. This Assignment shall he binding upon and inure to the
benefit of Assignor and Assignee and each of their successors and assigns .
.11. Amendments~ Neither this Assignment nor any term, provision or condition
hereof may be changed,. amended or modified,. except in a writing signed by Assignor and
Assignee.
fSignature Pages to Follow]
. : :·i
•.H~"?:.
• -•. ·.l·j
~.. \.!;i,t J
RLJ Austin Courtyard 1;10601:!
702
•• ••• ~ '•",;. > ' • ~·
·' ............··, ~. ``~ . ; ' .. ' ;; . ..
IN WITNESS WHEREOF, Assignor and Assignee have e;;:ecuted this Assignment to be
effective as of the date first above written.
ASSIGNOR:
South Ausaix-cuurt, LP,
an Indiana limite;d partnership
By: Southairgen Corp., an Indiana corporation,
General Partner
... B~: ~ ~q----<_. [_ p__.d______ · - ----·---· .. - .....
. ~nee E. Bumell
President
-)
:·..
-3-
703
'j-.)
; i: .. ) . IN WITNESS WHEREOF. Assignor and Assignee have executed this Assignraentta be
• , effective as offhe date first above written.
ASSIGNEE:
RLJ U ~ C AUSTIN .AlR LESSEE, LP
a Delaware limited partnership
By; RLJ U ~ C Austin Air Lessee General Partner, LLC;
a Delaware limited liabili1y compa:o:y General Partner
RLJ Aus!ln Courtyard 006014
704
AustiJJ, Texas
Courtyard Austfn Airport
Property Number .98
Legal Description
Lot 5-D, Block C, nffi .RESUBDMSION' OF LOTS 4 AND 5, BLOCK C, :METRO CENTER
SECTION 5, a subdivision in TRAVIS County, Texas, according to the plat thereof recorded
under Document Number 199900265 of the Official 'Public Records of TRAVIS County, Texas.
Being also descnood by metes and bounds description prepared by Robert C. Watts; Jr.,
RegiStered Professional Land Surveyor) State of Texas No. 499 5, of Chaparral Professional Land
Surv~ying, Inc., and dated November 15, 2007. as follows: ·
BEGINNING at a 1/2" rob~ wifu cap found £01· -the southeast co= of said Lot 5-D, being· the
-------nCJ:fili.east-co~r~gf.I.Gt-6,..Ble~k-G,M~tr-e-Genter-Sectien~ra-sabdtvision~f-'.f-eeeid-in..:V-elum.e--~----··--
102, Page 177 of the Plat Records of Travis ·county, Texas and also being in the west right-of-
way line of :Palma Verde Drive (75 foot right-of-way width);
. THENCE South 68~50'09" Wes~ with the south. line ofLot 5-D· and the north line of said Lot 6,
a distance of 479.89 feet to a 1/2" rebar with cap found in the north line of Lot 6, being ~he·
southwest corner of Lot 5-D and also being the southeast comer of Lot 5-C, of the said
Resuhdivision of Lots 4 and 5, Block C, Metro Center, Section 5:
T:B:mNCE Wfth the west line Of Lot 5-D and the east line of said Lot 5-c, the following three (3)
courses:
L North21 1109'32'7 West, a distance of 166.37 feet to a lf2''rebarwi1h cap found;
Z. North 68"5.4'26" East, a distance of39A3 feet to a l/2" tebar with cap found;
3. North21 "08'04"West, a distance o£233,64 feet to a :mag nail fottnd far the northwest
corner of Lot 5-D, bemg fue no:ctheast cornet o(tot 5-C and also being in the sciuth'
line of Lot 3, Bl~ck C. of sind Metro Center Section 5; ·
TliENCE North 68()49'12" East, with. the north line of Lot 5-D and the south line of said Lot 3,
a distance of 240.57 feetto a mag nail found ,.in the west rj.ght-of-way lin.e of Palma Verde Drive,
being the northeaSt comer ofLot 5-D and also being the southeast corner of Lot 3;
THENCE South:47"41'57" East, with'the.east line of Lot s:n and the west rlght:.Of-way line of
Palma Verde Drive, a distance of 447.12 fee~ to the l'OINT OF BEGINNJNG.
A-1
RLJ Austin Counyard 006015
705
APPENDIX N
SUPPLEMENTAL CLARIFICATION OF ASSIGNMENT
1. Whiteco Industries, Inc., ("Seller'') joined by White Lodging Services Corporation (''White
Lodging") and other identified Sellers, including South Ausaircourt, L.P., entered into a
New Hotels Purchase and Sale Agreement ("PSA") with RLJ Lodging Fund II
Acquisitions, LLC ("Purchaser") dated March 16, 2006. Subsequent to the execution of the
PSA, Seller, White Lodging, South Ausaircourt, LP and Purchaser entered into a Ninth
Amendment to New Hotels Purchase and Sales Agreement ("Ninth Amendment'') dated
December 20, 2007.
2. Both the PSA and the Ninth Amendment reference and pertain to, among other things,
"Property 98", which is described as "Courtyard Austin Airport, 7809 East Ben White
Blvd., Austin, TX 78744.''
3. The definition of "Contracts'' in the PSA "shall mean, with respect to each Property ... (iv)
all contracts, agreements (other than subcontracts) and warranties covering the design,
development, construction, operations, maintenance and repair of the Property ... "
4. Paragraph 3.l(a) of the PSA contemplates that "[a]t Closing, Sellers or White Lodging shall
assign and deliver to Purchaser, pursuant to the terms of Section 4.2(b), true and complete
originals or copies of architects agreements and general contracts for the Properties ..."
5. The language "pursuant to the terms of Section 4.2(b)" as contained in Paragraph 3.l(a) of
the PSA, and referenced in paragraph 4 above, is a Scrivener's Error and should likely be to
"Section 4.1 (c), as there is no "Section 4.2(b)" in the PSA.
6. Paragraph 11.15 ofthe PSA contemplates that:
"Further Assurances: Upon the terms and subject to the conditions hereof,
each of the parties hereto agrees to use its commercially reasonable good
faith efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective,
in the most expeditious manner practicable, the transactions contemplated
by this Agreement including, without limitation ... (iii)the execution and
delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement, but which are not inconsistent with this Agreement."
7. In order to clarify the (a) Assignment and Assumption of Licenses, Permits and Intangibles,
and the (b) Assignment and Assumption of Contracts and Leases, each dated December 20,
2007, from South Ausaircourt, LP as Assignor to RLJ II - C Austin Air Lessee, LP as
Assignee, Assignor intended to assign to Assignee the Assignor's interest in the following:
a. The Agreement for Consulting Services between HBC Engineers, Inc. and White
Lodging Services Corporation, dated 10/31/00.
602
b. The Assignor's tangible and intangible rights with respect to the Agreement for
Consulting Services between HBC Engineers, Inc. and White Lodging Services
Corporation, dated 10/3/00, along with all other contracts, work orders or amendments
thereto between HBC Engineers, Inc. and White Lodging Services Corporation relating to
Property 98, along with all intangibles, including but not limited to causes of actions or
claims owned by Assignor against HBC Engineering, Inc.
c. All contracts, oral or written, between White Lodging Services Corporation, and
Terracon Consultants, Inc. relating to the Project.
d. The Assignor's tangible and intangible rights with respect to the all contracts, oral
or written, between it and Terracon Consultants, Inc. relating to the Project, along with all
other contracts, work orders or amendments thereto and with all intangibles, including but
not limited to causes of actions or claims owned by Assignor against Terracon.
e. The Standard Form of Agreement Between Ovmer and Architect, AlA Document
B 141-1997 Edition, Parts 1 and 2, between White Lodging Services Corporation,
lnc.(sic)and Elness Swenson Graham Architects, Inc., dated January 1, 2005.
f. The Assignor's tangible and intangible rights with respect to the Standard Fom1 of
Agreement Between Owner and Architect, AlA Document B 141-1997 Edition, Parts 1 and
2, between White Lodging Services Corporation, Inc, (§.!£) and Elness Swenson Graham
Architects, Inc., dated January 1, 2005, along with all other contracts, work orders or
amendments thereto between Elness Swenson Graham Architects, Inc., and White Lodging
Services Corporation, Inc. relating to Property 98, along with all intangibles, including but
not limited to causes of actions or claims owned by Assignor against Elness Swenson
Graham Architects, Inc.
g. The Standard Form of Agreement between Owner and General Contractor, dated
August 17, 2005, between EBCO General Contractor, Ltd., and White Lodging Services
(sic), as assigned by White Lodging to Assignor pursuant to that certain Assignment of
Contract dated September 19, 2005 by White Lodging with the approval and consent of
EBCO General Contractor, Ltd.
h. The Assignor's tangible and intangible rights with respect to the Standard Form of
Agreement between Owner and General Contractor, dated August ·17, 2005, between
EBCO General Contractor, Ltd., and White Lodging Services ~), as assigned by White
Lodging to Assignor pursuant to that certain Assignment of Contract dated September 19,
2005 by White Lodging with the approval and consent of EBCO General Contractor, Ltd.,
along with all other contracts, work orders or amendments thereto between EBCO General
Contractor, Ltd., and White Lodging relating to Property 98, along with all intangibles,
including but not limited to causes of actions, fiduciary duties or claims owned by Assignor
against EBCO General Contractor, Ltd.
603
8. Assignor executes this document pursuant to Paragraph 11.15 of the PSA in order to fully
carry out the purposes of the PSA in a manner which is consistent with the PSA.
Execution
The undersigned signs this document subject to the penalties imposed by law for the
submission of a materially false or fraudulent instrument and certifies under penalty of perjury that
the undersigned is authorized under the provisions of law governing the entity to execute the filing
instrument.
Date: January 16,2014.
SOUTH AUSAIRCOURT, LP
By:
By:.J:E:::::``````--'­
Carol Ann Bowman, Vice President
Notary
STATE OF INDIANA§
§
COUNTY OF LAKE §
This instrument was acknowledged before me this 16th day of January 2014, by Carol Ann
Bowman, an individual residing in the county of Porter, as Vice President of Southairgen Corp.,
General Partner of South Ausaircourt, LP.
MARGUERITE E. DRAKE
Porter County
``
Notar:u ublic State of Indiana
My Commission Expires
February 26.2017 Marguerite E. Drake
Printed Name ofNotary Public
604
APPENDIX O
Filed
12 October 1 P4:20
Amalia Rodriguez-Mendoza
District Clerk
Travis District
D-1-GN-1 0-002325
CAUSE NO. D-1-GN-10-002325
RLJ 11-C AUSTIN AIR, LP; RLJ 11-C § IN THE DISTRICT COURT OF
AUSTIN AIR LESSEE, LP; AND RLJ §
LODGING FUND II ACQUISITIONS, §
LLC, §
§
Plaintiffs/Counter-Defendants, §
§
~ § TRAVIS COUNTY, TEXAS
§
EBCO GENERAL CONTRACTOR, §
LTD; EBCO ADVANCED BUILDING §
SYSTEM, LTD; EBCO/WARRIOR §
MANAGEMENT LLC; ELNESS, §
SWENSON, GRAHAM ARCHITECTS, §
INC.; MARK G. SWENSON, §
INDIVIDUALLY, TERRACON §
CONSULTANTS, INC.; TODD E. §
SWOBODA, P.E., INDIVIDUALLY; §
MBA STRUCTURAL ENGINEERS AND §
ANDREW T. MARLIN, P.E. §
INDIVIDUALLY, §
§
Defendants/Counter-Claimants. § 200 TH JUDICIAL DISTRICT
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S
SECOND AMENDED ANSWER AND ORIGINAL COUNTERCLAIM
FOR DECLARATORY JUDGMENT
TO THE HONORABLE COURT:
CoME NOW, Defendants and Counter-Claimants Elness, Swenson, Graham Architects,
Inc. ("ESG") and Mark G. Swenson ("Swenson" and, together with ESG, collectively,
"Defendants" or "Counter-Claimants") and file and serve this Second Amended Answer and
Original Counterclaim for Declaratory Judgment in response to Plaintiffs' Sixth Amended
Original Petition and, in support thereof, would respectfully show the Court as follows:
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED
ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 1
599603.1 4021122
46
I.
SECOND AMENDED ANSWER
A. GENERAL DENIAL
Pursuant to Rule 92 of the Texas Rules of Civil Procedure, Defendants generally deny
each and every, all and singular, the assertions alleged in Plaintiffs' Sixth Amended Original
Petition and any amendments thereto and request that Plaintiffs be required to prove the charges
and allegations against these Defendants by a preponderance of the evidence and/or by clear and
convincing evidence, as required by the Constitution and the Laws of the State of Texas.
B. SPECIFIC DENIAL
Pursuant to Rule 54 of the Texas Rules of Civil Procedure, Defendants specifically deny
that all conditions precedent to the Plaintiffs' right to recover have been performed, have
occurred, or have been waived or excused. In particular, Defendants specifically deny that
Plaintiffs have presented their claims for payment to Defendants or Defendants' duly authorized
agents as required by Section 38.002(2) of the Texas Civil Practice & Remedies Code.
C. VERIFIED DENIALS
Pursuant to Rule 93 of the Texas Rules of Civil Procedure, Defendants make the
following verified denials:
1. Defendants deny the assignment of the contract upon which Plaintiffs' claims
against Defendants are founded. Specifically, Defendants deny that Defendants or Defendants'
authorized representative(s) provided consent to assign the contract at issue to Plaintiffs.
Therefore, any alleged assignment violates the anti-assignment clause of the contract and is null
and void.
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED
ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 2
599603.1 4021122
47
2. Defendants deny that Plaintiffs are entitled to recover in the capacity in which
they sue. Defendants did not provide consent to assign the contract upon which Plaintiffs'
claims are founded, and any such assignment is, therefore, made in violation of the anti-
assignment. As such, Plaintiffs are not parties to the contract and lack standing to bring contract
claims against Defendants.
3. Defendants deny that Swenson is liable in the capacity in which he has been sued.
In particular, Swenson is not a signatory or a party to the contract upon which Plaintiffs' claims
against Defendants are founded.
4. Defendants incorporate by reference herein the sworn verification of Paul
Mittendorf£, a Principal and Vice President of Elness, Swenson, Graham Architects, Inc., which
is attached to Defendants' First Amended Answer and Original Counterclaim for Declaratory
Judgment filed with the Court on or about December 30, 2011.
D. AFFIRMATIVE DEFENSES
Pleading in the affirmative, if such IS necessary, Defendants would further show as
follows:
1. Plaintiffs' alleged injuries and damages, if any, resulted, if at all, from conditions
unrelated to any act, omission or conduct of Defendants.
2. Plaintiffs' alleged injuries and damages, if any, were caused, if at all, in whole or
m part by the acts or omissions of others for whose conduct Defendants are not legally
responsible.
3. At all times material to Plaintiffs' allegations, Defendants' conduct conformed to
the applicable standard of care.
4. Plaintiffs' tort claims are barred in whole or in part, by the economic loss rule.
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED
ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 3
599603.1 4021122
48
5. Alternatively, if the economic loss rule does not completely bar all of Plaintiffs'
tort claims, then, pursuant to Chapter 33 of the Texas Civil Practice and Remedies Code,
Defendants are entitled to a credit for any settlement Plaintiffs receive from any other person or
entity. If Plaintiffs settle with any other person or entity, then Defendants reserve the right to
make a written election of credit for settlement under §33.014 of the Texas Civil Practice and
Remedies Code.
6. Alternatively, if the economic loss rule does not completely bar all of Plaintiffs'
tort claims, then, Plaintiffs' alleged injuries and damages, if any, were caused, if at all, in whole
or in part, by Plaintiffs' own negligence. Plaintiffs are wholly barred from recovery to the extent
the finder-of-fact determines Plaintiffs' comparative responsibility is 50% or greater, and, if
Plaintiffs' comparative responsibility is less than 50%, any recovery must be reduced by
Plaintiffs' percentage of responsibility determined by the finder-of-fact, in accordance with
Chapter 33 of the Texas Civil Practice & Remedies Code.
7. Plaintiffs cannot recover for any amount that could have been avoided by their
exercise of reasonable care.
8. Plaintiffs' claims are barred, in whole or in part, by Plaintiffs' failure to mitigate
any alleged damages.
9. Plaintiffs' alleged injuries and damages, if any, resulted, if at all, from
independent, unforeseeable, intervening and/or superseding causes. Any alleged action or
omission on the part of Defendants was not the proximate cause, producing cause, or cause-in-
fact ofPlaintiffs' alleged injuries or damages, if any.
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED
ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 4
599603.1 4021122
49
10. Defendants assert any and all defenses and seek any and all relief to which
Defendants may be entitled in accordance with and pursuant to Chapter 150 of the Texas Civil
Practice and Remedies Code.
11. Plaintiffs lack standing to sue on and are not parties to the contract on which
Plaintiffs' claims against Defendants are founded. Assignment of the contract to Plaintiffs was
made without consent ofDefendants, in violation of the anti-assignment clause of the contract.
12. Plaintiffs' non-contract claims are barred by the appropriate statute oflimitations.
13. Plaintiffs' non-contract claims, including claims for equitable subrogation, are
barred by the economic loss doctrine.
14. Plaintiffs' recovery, if any, is limited to direct contract damages, if any, pursuant
to the waiver of consequential damages clause in the contract upon which Plaintiffs' claims
against Defendants are founded. More specifically, Plaintiffs' claims for current and future lost
revenue, profits and diminution in value are barred by the consequential damages clause of the
contract.
15. Plaintiffs' claims are barred against Defendants because Plaintiffs purchased the
building in question "as is."
16. Defendants reserve the right to amend or supplement with any additional
affirmative defenses or pleas of avoidance to which Defendants may be entitled.
II.
COUNTERCLAIM FOR DECLARATORY JUDGMENT
A. INTRODUCTION
1. Now as Counter-Claimants, ESG and Swenson bring this action pursuant to TEX.
Crv. PRAc. & REM. CoDE§ 37.001, et. seq., the Uniform Declaratory Judgments Act, and seek a
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED
ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 5
599603.1 4021122
50
declaration from the Court that RLJ 11-C Austin Air, LP; RLJ 11-C Austin Air Lessee, LP; and
RLJ Lodging Fund II Acquisitions, LLC (collectively, "Counter-Defendants") may not recover
contract damages under the contract at issue in this case.
2. As provided for by Chapter 37 of the Texas Civil Practice and Remedies Code,
Counter-Claimants seek the following declarations from the Court:
a. That the "Anti-Assignment" clause of the contract IS valid, enforceable and
applies to Counter-Plaintiffs, making any ostensible assignment of the contract, in
violation of the Anti-Assignment clause, null and void and of no effect;
b. That the "Statute of Limitations Accrual" clause of the contract is valid and
enforceable and, to the effect that a party could enforce the contract against
Counter-Claimants, such Statute of Limitations Accrual clause establishes the
date upon which any cause of action against Counter-Claimants accrues, i.e., the
date that Counter-Claimants' services were substantially completed, which such
date time-bars all of Counter-Defendants' causes of action with a two-year
limitations period;
c. That the "Waiver of Consequential Damages" clause of the Contract is valid and
enforceable and, to the effect that a party could enforce the contract against
Counter-Claimants, such Waiver of Consequential Damages clause bars Counter-
Defendants from recovering any consequential damages from Counter-Claimants;
and
d. That Swenson was not a signatory or a party to the contract at issue here and, as
such, cannot be liable to the Counter-Defendants under the contract.
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED
ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 6
599603.1 4021122
51
B. DISCOVERY CONTROL PLAN
Discovery in this action is intended to be conducted under a Level 3 Discovery Control
Order pursuant to Texas Rule of Civil Procedure 190.3.
C. PARTIES
1. ESG is a Minnesota corporation that is authorized to do business in Texas. ESG
has made an appearance in this matter.
2. Swenson is an individual who is a citizen of Minnesota and who has already
appeared in this lawsuit.
3. RLJ 11-C Austin Air, LP ("RLJ 11-C Austin Air") is a Delaware Limited Liability
Company that is authorized to do business in Texas. RLJ 11-C Austin Air has already appeared
in this matter.
4. RLJ 11-C Austin Air Lessee, LP ("RLJ 11-C Austin Air Lessee") is a Delaware
Limited Partnership that is authorized to do business in Texas. RLJ 11-C Austin Air Lessee has
already made an appearance in this matter.
5. RLJ Lodging Fund II Acquisitions, LLC ("RLJ Lodging") is a Delaware Limited
Liability Company that is, upon information and belief, authorized to do business in Texas. RLJ
Lodging has already appeared in this matter.
D. JURISDICTION AND VENUE
1. The subject matter of this declaratory judgment action is within the jurisdiction of
this Court and is authorized pursuant to TEX. Crv. PRAc. & REM. CoDE§ 37.003.
2. Pursuant to section 15.062(a) of the Texas Civil Practice and Remedies Code,
venue is proper in Travis County, Texas.
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED
ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 7
599603.1 4021122
52
E. FACTUALBACKGROUND
1. On or about January 1, 2005, White Lodging Services Corporation, Inc. ("White
Lodging") and ESG entered into an agreement for architect services, as set forth in the following
contracts: (i) AlA Document B141- 1997 Part 1: Standard Form of Agreement Between Owner
and Architect with Standard Form of Architect's Services (the "Contract - 1997 Part 1"),
attached hereto as Exhibit "1;" and (ii) AlA Document B141 - 1997 Part 2: Standard Form of
Architect's Services: Design and Contract Administration (the "Contract - 1997 Part 2"),
attached hereto as Exhibit "2."
2. The Contract - 1997 Part 1 and the Contract - 1997 Part 2 (collectively, the
"Contract") were both executed on March 30, 2005. The Contract was not signed by Swenson in
either his individual or representative capacity.
3. Section 1.3.7.9 of the Contract contains an Anti-Assignment clause, wherein
"[n]either [White Lodging] nor [ESG] shall assign this Agreement without the written consent of
the other, except that [White Lodging] may assign this Agreement to an institutional lender
providing financing on the Project."
4. Section 1.3.6 of the Contract contains a Waiver of Consequential Damages clause,
under which both ESG and White Lodging "waive consequential damages for claims, disputes,
or other matters in question arising out of or relating to this [Contract]."
5. Section 1.3.7.3 of the Contract contains a clause commonly known as a "Statute
of Limitations Accrual" clause, which provides the method to determine when a cause of action
accrues for the purpose of starting the statute of limitations. Specifically, section 1.3.7.3 reads as
follows:
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED
ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 8
599603.1 4021122
53
Causes of action between the parties to this Agreement pertaining
to acts or failures to act shall be deemed to have accrued and the
applicable statute of limitations shall commence to run not later
than either the date of Substantial Completion for acts or failures to
act occurring prior to Substantial Completion or the date of
issuance of the final Certificate for Payment for acts or failures to
act occurring after Substantial Completion. In no event shall such
statute of limitations commence to run any later than the date
when the Architect's services are substantially completed.
(Emphasis added).
6. On or about March 16, 2006 White Lodging, et al. and Counter-Defendants
entered into an agreement entitled New Hotels Purchase and Sale Agreement by and between
Whiteco Industries, Inc. and RLJ Lodging Fund II Acquisitions, LLC, (the "New Hotels Purchase
and Sale Agreement"), through which Counter-Defendants claim that the Contract was assigned
to them.
7. ESG did not consent to an assignment of the Contract from White Lodging to
Counter-Defendants, allegedly effectuated through the New Hotels Purchase and Sale
Agreement.
8. ESG's services were substantially complete before the date the Certificate of
Occupancy was issued for the Project, which was on October 12, 2006. Therefore, any causes of
action against Counter-Claimants accrued, if at all, no later than October 12, 2006.
9. Counter-Defendants initiated this lawsuit and filed Plaintiffs' Original Petition
and Request for Disclosure on July 7, 2010. Therefore, the negligence, negligent
misrepresentation and equitable subrogation causes of action asserted by Counter-Defendants,
each of which are governed by a two-year limitations period, are time-barred by the statute of
limitations.
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED
ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 9
599603.1 4021122
54
10. Counter-Defendants seek recovery from Counter-Claimants for, among other
things, diminution in the Project's value, lost revenue and other consequential damages, which
such recovery is barred by the Waiver of Consequential Damages clause in the Contract.
F. CAUSE OF ACTION: APPLICATION FOR DECLARATORY RELIEF.
1. Counter-Claimants incorporate by reference paragraphs II.A.1 through and
including II.E.1 0 above as if fully set forth verbatim herein.
2. There exists an actual and justiciable controversy between Counter-Claimants and
Counter-Defendants herein, within the jurisdiction of this Court, and involving rights, duties,
legal obligations and relations of the parties under the Contract at issue.
3. Counter-Claimants petition this Court, pursuant to Chapter 37 of the Texas Civil
Practice and Remedies Code, to declare that:
a. the Anti-Assignment clause of the Contract is valid, enforceable and applies to
Counter-Plaintiffs, making the assignment of the Contract, which was in violation
of the Anti-Assignment clause, null and void and of no effect;
b. the Statute of Limitations Accrual clause of the Contract is valid and enforceable
and establishes the date upon which any cause of action against ESG accrued was
on or before October 12, 2006, which is the latest date by which ESGs' services
were substantially completed;
c. that all of Counter-Defendants' causes of action against ESG with a two-year
limitations period are time-barred;
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED
ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 10
599603.1 4021122
55
d. the Waiver of Consequential Damages clause of the Contract is valid and
enforceable and bars Counter-Defendants from recovering any consequential
damages from Counter-Claimants; and
e. Swenson was not a signatory or a party to the Contract and cannot be liable to the
Counter-Defendants under such Contract.
G. COSTS AND ATTORNEYS' FEES
Counter-Claimants have retained the undersigned law firm to represent them in this
action and have agreed to pay the firm all costs and reasonable and necessary attorneys' fees
incurred in this matter. An award of costs and reasonable and necessary attorney's fees to
Counter-Claimants is equitable and just and, therefore, authorized by Chapter 37 of the Texas
Civil Practice and Remedies Code.
III.
PRAYER
WHEREFORE, PREMISES CONSIDERED, Defendants and Counter-Claimants Elness,
Swenson, Graham Architects, Inc. and Mark G. Swenson respectfully request that Plaintiffs and
Counter-Defendants RLJ 11-C Austin Air, LP; RLJ 11-C Austin Air Lessee, LP; and RLJ Lodging
Fund II Acquisitions, LLC be cited to appear and answer herein and that, on final hearing, the
Court enter an Order as follows:
a. That Plaintiffs and Counter-Defendants take nothing by their claims;
b. A declaration that the assignment of the Contract to Plaintiffs and Counter-
Defendants was made in violation of the Anti-Assignment clause, is null and void
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED
ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 11
599603.1 4021122
56
and of no effect, and Defendants and Counter-Claimants are not liable to
Plaintiffs and Counter-Defendants under such Contract;
c. A declaration that Plaintiffs and Counter-Defendants' claims against ESG are
time-barred, pursuant to the Statute of Limitations Accrual clause of the Contract;
d. A declaration that Swenson was not a signatory or party to the Contract and
cannot be liable to Plaintiffs and Counter-Defendants under the Contract;
e. That Counter-Claimants be awarded their costs and all reasonable and necessary
attorneys' fees; and
f. All such other and further relief, both general and special, at law or in equity, to
which Defendants and Counter-Claimants have shown themselves to be justly
entitled.
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED
ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 12
599603.1 4021122
57
Respectfully submitted,
MACDONALD DEVIN, P.C.
By:
Gregory N. Ziegler
State BarNo. 00791985
gziegler@macdonalddevin.com
Russell E. Clinage
State Bar No. 00790473
rclinage@macdonal ddevin. com
3800 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270-2130
(214) 744-3300 Telephone
(214) 747-0942 Facsimile
ATTORNEYSFORDEFENDANTSAND
COUNTER-CLAIMANTS ELNESS,
SWENSON, GRAHAM ARCHITECTS, INC.
AND MARK G. SWENSON
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing document has been served
upon all counsel of record in accordance with the Texas Rules of Civil Procedure, on this 1st day
of October 2012.
Gregory N. Ziegler
ELNESS, SWENSON, GRAHAM ARCHITECTS, INC. AND MARK G. SWENSON'S SECOND AMENDED
ANSWER AND ORIGINAL COUNTERCLAIM FOR DECLARATORY JUDGMENT- Page 13
599603.1 4021122
58
(S.;
I .AlA Document B141m -1997 Part 1
$11ndard Form of Agreement Between Owner and Architect
wilh·Standarrl Form ofArohitect's Services
TABLE OF ARTICLES
1~ INmnALINF``llON
RE$PQNSIBJ!#.li=S OF THE PARTIES ADDmOHS AND DELETIONS;
lba IIUihor at thll document hu
~ !.fio:CONDlJIONS
.. .. . . addDd !nlcnnatlen noeclod ferIa
ccmplllllon. Thtt aulllelt may also
SCOPE(),fiS!ftvtCeSAND OTHER SPECIAL TERMS AND CONDmONS have nMaad 1M !lilt ollhe
. r .;·" Q'fg!nal AlA atandallllonn. An
1.5. c'O~ENSAT~df.i-. Alltllon~IU!d o.letloM R.ptJtt
. . -``· lhal nctas adcted lnlcnnatlon a
Aoiet.mNT ~do u·~(tftc Pliat doy or Jaouary ia tim year Two Thousaod Five. waD DIIRMiions ID lhe alll1dan:t
(In JNrdJ, lndlctJtll dar...monrll lllld ye11r) lcrm Ialit II avallablit fl1lm 1M
aulhcr lll1d ai1CIIIId bo lll'lfewm.
BETWEEN the Architecc'r.cllel)t idcatifled 1111 the Owner: A VltlllcaJ In& In lhe l&lllllllrflt of
(NiiiM, tJddrrtn Dlld ot#itsr.}liformlllion) 1? "'? /:~ {. IIIIo docl.mont lndlcatn Mloro
' f\ (!_'I j::. 0 c;... 't 0 S tile av111ot has adclcd noconiiY
Whlta Lodglug Setvicei qHponulon, r.c. lnfOI'IIIA!Ian llld wllere lhe llllhor
I 1000 But 80tb Place. Spl.~ SOO North
Merril9ille, IN 46410.S666
, 'P .1 !>... 0,... ~
't- c:;, 1
1
F~ "" has addad to Of delaCtd from 118
origlml AlA llxt.
0-,z:.lcc Co~r. 2../,/o.rrno«xvner~tva~
legal consequences.
llld the Arcbire.ct: • ~'{ 1!.../o ,.[ .\. ~IL Comuaalon Mlh lUI at=rnoy
(Nunw, tZddnu lllld Olh.~r hrfonntiflon) II OI\CIDUiaOIId wftiiiOtJIOCI Ill
~Alt..~ bA-T6.Ja lb ~ 01 madlfcatlon.
Blaeu SweJUOQ Osabam ~ltects, lilc.
500 WuhlllgLOn Awooe SQUib
MiDncopoUs.MN S54l5
Z/'2.~/o~
:Slot lo-s:
.3/z,r / os
For the followJag Ptojecc· ·
(Include dd41led dqcrll!f!,.'f§}'[.r,_'('jt!cr)
. ~ ~ ........ r ..
Dcsiln; 4o«:u~on a!il~ conllaCt admlilhtradoa for 1he COIIStnlclion of a
l Court)'d.llyltfardott iu Auscia. Tex83.
Tho Owner IU!d Arehltcc:t agree as followa:
1
SCA'f\ff\JED
SFP 2 2 2007
EXHIBIT ESG001454
I 59
ARTICLE 1.1 INITIAL INFORMATION
.§ 1.1~1 Thi.1 Agreemeat 11 based on the foltowillg mronnadon lllld a.sawnplfona.
(Nor. ih#dLrposldonjor lila following /~1111 b)' ln#rtllls the nquutd bifonnatfon or a stotemSII such as •not
-apPJlctll!lir," "un.b!own til time of exc~:utlrm" or "ro bet.t.rmlnr4 ~tar by mutual agrei!IJIDIL ")
§ 1.1.2 PROJECT PARAMETERS
§ 1.1.2.1 The objecdve or usc is:
(ltrlftti/'J or ducribfl, if approprillle, proposed 1114 or goals.)
A COIDiyard by Mmfou • a limited-service, ptototyplcal hotel
§ 1.1.2.2 The physical p~ten are:
(ltknlih o;. ducrlbe. Ifqp1't1prilzle. `` location, dllllfiiiSlons, or otbr pt~rllnent ltifomr.allDn, .ruch as gfiDtuhnl&tll
rtporU about 1htt site:)
§ 1.1.2.3 The Owaet'a Program Is:
(ldlntt.fy docummtmion or &tllltl ths 1NJ11Mr in whit:h the progi'U1fl wiU btl diVtlloped.)
The hotel program calls .for a five-stoty building. The project will conlaia 148 guestrooms and die olher
prototypical Courtyard Hci~l ~oas - a lobby/lounge, cliDiug..ldtcllea, a recepdon desk witb saadriea display uea
and ofliul. meeting space. s'llrimmins pool and whirlpool, exeltise room, bsct-of-bo``~e storap,lauucky,
mecbaulcill and electrical spaces IIDd a guestlauadry &or. Futthcc dcfiDitiou or the ProiCGt Program is COI:IIaincd In
Elaess Sweascm ~An:blrects' PmposalleaerdaredNovember 12.2004, nMaedJauuy 21,2004 altiiCbed u
"Bxhibit A" with further clarifitatioD colllaiacd In BIDess Sweosoa Graham An:hilectl' schematic dedp documears
dalecl111111111'Y 28, 200S. wbicb ire attached by refen~oce as -sxbiblt B.•
§ 1.1.2.4 The legal piiJ!IlDlCiei'S are:
(ld6111ifJ pert/Milt lt!Bal information, incbulins. ifoppropriQu, lluul SU¥WyS and lt~gal duaiptiotu and rutrlctlotu
ofthe sile.)
L:pJ Dc:lcripdon ofPEopeny:
Lot 5-D, Block C. RBSUBDIVJ8JON OFLOl'S 4 AND S, BLOCK C. METRO CBNTRB SEC110N S,11
subdivision Jn Austin, Travis Coouty, Texas, accordiDg to the map or plat ``=n:or n:c:cmkd as Docummt t999002GS
in lhe Plats Rc:c:ords of'l'111vfs County, Tens.
§ 1.1.2.5 Tbc'liDancial paliiJDI:(I:tll ~n u roUows .
•1 .AmoUnt of ~.Owner's ovetaU budget for the Project, includiai the Mhifcc:t'a compeiiSatiou. b: $48,000 oil'
per room or S/,000,000, r'1
.2 Amcunt of the pwiicrs budget for !he Cou or lhe Wod:, acludillg de Archftect's compeosalion, b: \~
unbowil-at time-of execuliqn or Ibis Agrccmcut ~ "\
§ 1.1.2.6 The lime panur=tcn ~=
(Irlmlib. if appropriaie, milestone datu, duralions orfan rmclc scheduling.}
,,
The following MjJestoac Dares ~ lhe same as !hose listed illl!htess Swt:``son GraMm Aldllrects' Proposalleucr
daled November 12. 2004, revised January 21, 2004 attached as "Bxbbbit A. • and herein rcpiOduccd:
Jamwy 28, 200S 3K Design Documents Chcclc Set
March 11, 2~ • 7596 Design Documents Check Set
Aprii2S, 20QS 9~ Contract Docu1111111ts; FoWtdalioa Buildillg Permit
§1.1.2.7Tbe proposed procureme``tordelivay melhod for the Project is:
(ldmlif:y mnlwrl such tU ct)mpedtive bltl. negozlatlll COIIlTrZCt. or ct)IUinU:tlcln IIIIIMB611111111.)
2
SEP 22 2007
ESGDD1455
60
Negotlaled Connct.
§1.1.2.8 Otbu parameters are:
(IJlen.tifyqet:ial dulnu:tulslic8 or ntw ofthe PttJj«t sud! tU Drl1'fiY, Dl'llronnutnt41 or lrmorir: p~ei'WIIitm
·nipzinm&Ml.r.J
§ 1.1.3 PROJECT TEAM
S1.1.3..1 The Owner's Dcaigaalcd Rep.reaealallvc is:
(lbl1111nw, mldren t11rd oilier illfomwum.)
Trezat Bubcr
Whi1D Lodglas Scrvk:cG CorpomioD, IDe.
1000 But 80th Plaee, Suite .500 Nonh
Menilrillc. IN 46410..56~
§ j.U.2 The pecsoJIS or cntllies, in addltioAIO tho Owacr's Dclianalcd ~ who are required 10 nwicw
theAtchlrect'ssubiniuals.lcl the Owner ue:
(lilt-. a&Jrus and oilier ill/rlmuJtitm.J
Marriou International
MarriCIU Dme
WasblllfOn, D.C. 20058
§ 1.1.3.31bc Owner's olhcr consultanla and conlniCIOn an::
(lbr discipline and, ({known, ldrnrify thmt by nam• and addnu.)
CMLENGINEBR:
Griffin Engineering Group, IDe.
11711 North Lamar Boulevard
Aasdn, TX781.53
§ 1.1.3.4 The Archllcct'a Dcaignatcd Ri:p.lesentativc is:
(Un nan", addnu arid othtn" itifomtJJtlon.)
Mark Swensan, AlA
Paul M!Ueudorff, AlA
JlllllCI Timm, AlA
J!.hless Swenson Grabam.Archlrecu, Inc,
500 Washiog!o'n Avenue ~9Uih
Milinompolls, MN SS41S'
i 1.1.3.5 Tba CODIU~.~Ia retained at the An:hitecl's OXpCDIO 11n1:
(Ust dl.Jclpllne Gnd. if known, ldmtifl th4m by name and addrer~.)
STRUcrtJRAL BNOINEERlNG:
Kollh Owcm, P.B.
l4irli~ .Brilfgea !f. Assoc:ialel, Inc.
'31520'Bigbtll AVeliuc South, Suire 1J0
Blnnfngham, AL 3!1222
SEP 22 2007
ESG001456
61
MECHANICAL, ELECTRICAL ENOINEEIUNO:
Laaylllldsoy, P.B.
Lill-aud AzdWccc ID
cleCermiDiDglhe Arcllltect's ~n. Both partie~, howclw, ncogalr.e lhat such lafonnatioa nay cba.agc aud,
ia 1batC\'all, the Owa!=z:aadibe An:h!tcc:t shall u.egotlale 1ppropriaro lldjustmca1a iD ac:hcdala, compeualioa and
Cha.atoiD Services in iicoonbace withSeclioa 1.3.3.
ARTICLE 1.2 RESPONSmiunEs.OF THE PARTIES
§ 1~1 'lbe Owaer and :tbe...-Ardlltect llbalJ c:ooperatc with oae IIIIOChcr ro Cu1fi1l their respedive obliaalfons wufer Ibis
~ Bodl par1les sbiill emleavor ro malnlain sood wotldDg relatiauhipa amoq all membcn of tbe Project
leam.
§1.2.20WNER
§ 1.2.2.1Ulllcas olhcnvisc provided WJdcr this A&rccmcnt, lbc OWJU:r sball provide Cull faformatloa 1a a dmcly
l!llllllerregariliag ``~ for IJid fi~ODS OD tbo Project. 'Jbe Owner Shall fllnllsb to lbc Archlll:d, wlthJa
15 days afta" reCeipt ~a wriUCD rcqucac, lnfonnadoa acceaary and rclevaut for the A.rdlirect ro evaiDale, pvc:
notice of or eafon:c Ucn rights.
§ 1.2.U The OWDCI" shall periodically updale the budset for the Project, IDc:ludlDJihat pcrtlou aUocaed Cor tho Cost
of tho Wort.·1be Owiacr &baD nOc-dgnlficaatly bcralc orclccrwc lho ovaaU bud&do the portioD ofllle budget
allocated fW ibc ~of the Woik, or coatlageades lacluded 1a tbo ovenll budaet or a potdoa or tbo budget,
Without tho apcemazt of the Architect to a comspoftdlns chaap lathe Project scopo and qaallty.
§ 1.2.2.3 The Qwua-'a DeaJpated R.epaellladve ldcadfied Ia Seclloa 1.1.3 &haJl be IUiborized ta act Oil the
Owau'a behaJf with respect tp the Project. Tbc Owner or lhe Ow11cr'a Dcalpaled RcpreaentDIJve shall render
decbloiiS iD a dmely"JJWU!eL" prrtalnlng ro clocumcata lllbmltted by the Architect iD order to avoid aareasoaahlo
delay in the orderly and l!CqUCIItial progms of the Architect's aervlc:es.
§ 1~ Tbe OWDU sbal~ ``~ !he services of couullallfl ollw" thaD those dellpa1ed In Secdoa 1.1.3 or aulhclriu
· lhe ·~tO futlli5h tbmi as a Chqe ia Services when such IClYiCZS are requested by the Aldlltcc:r llld &Je
reuonablY.t#;luiRd. ~ tho scopo or the Project.
§1.2.2.5 Unlt:ssiltbenrise provided In Ibis Aareement. the Owner shall fllraiah teats,laapcctlons and repona e.qu1red
by law or the Conlract Doc:umenu. such as strucllual, mechanical, ud chemical teats. tests for air aud water
pollutl011, end ce.ts for buardous marerlals.
§1.7,2.6 Tho Owner shall t"umlsb aU legal,lnsutllllcc IUld aCCOUDiiogsetViCCI, includlag auditing services, that may
~ reuohably..necessary at any time Cor the Projecr to mccr the Owner' a I!Ceds and interests.
§ 1.2.2.7 Tho Owaer aball provide prompt wriUCII oodcc to the Architect If the Owner becomes aware of aay fault or
deled In the Project, including any mora, omissions or lncoadsiOIIC!cs 1a thc Architect's Insttumcols of Service.
N4Doclllnenl8141"'-11197 Plllt t.C.pyrlgl!l 01817, 18211,1848. 18SJ,1M,IIISII,IEH11,11Ml3,1008, 111117, 11170, 1tr14,1tr17,18871111111811711y,.._
Amcllcan lnollUt ~ An:hlloella. All rlstllta nsaomtd. W~HIH011bla AJfli Docllmmt 18 pn~t.cllld lly u.a. CDprfllllll Llw ancllnlllrnatlllnlll TMaltes.
lln&utlladDd raprociiiOilon or cllllrlblltlan oltl\lo AI_. Documon~ onnr parelan olll, may mullin M\IDIO cfvtiiiiiCI almlllll ponallln, and Will Ill 4
No.tOOOIS«llS.):
uur MaiM: s CAN NED
JHOtCcutld to the maximum alent s-llble under lho In'. 'IIIIa doculnont wu ~by NA 10ftw1111t aa 14:32:11011 01112&'200S under Onler
Mic:h aplrN an llftll/li*I08, and Ill nat lot rOMit. (38&MS4002)
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§ 1.2.3 ARCHITECT
5 t2,3.11bo savfcea pedotmed by the AR:hilect, Alchitcct's employecs aad Arcbj~ec:t's ``~ abal1 be u
e!Nmcmtcd iD Aatielo 1.4.
§·1.2.3.21bo Atchltect's services shall be performed 11 cxpcdilloDIIy as II coasisteat with profCISioaal sJdU and care
• ' " orderly proBRSS of lhc Project. Tho Architect ablll submit ror die Owner"a approval a schedule for lhe
~ of the An:bitcct's services wbicb iDirillly sball be ccmsbtc11t with lhe time periods established iD
Scclion 1.1.2.6 and wh1cb shall be adjusted, it necawy, as lbc Project pzoceeda. This schedule aball iacludo
aDOWllllCCS for pcriodl of time rcquin:d tor the Owacr's review, for lhc pc:donDaqco oldie Ovmcr's c:oiiS\1llaJita, ud
filr appto'lll or submilalalls by aulhcrltlcs havhlg jurisdlceion over lhc Project. 1'imo limita Cltablisbed by Ibis
sclu:dule approved by c= Owner shall aot, except ror JUSallablc eausc. be eKeedcd by lho Ard!icoct or OWJW.
su.u ne Archilcct'l Dcalguted Ropreac.utalive ida!tificd iD Section 1.1.3 shaD be authorized to act OD lhc
Arch!II:Cl's bchall with respect ID die ProjCCL
au.u Tho Arehlcect shall mabitailllho eollfideudality of lolinm:dioo specificully dcaiJruucd ss coofidcnlial by the
Owuu; ua.lc:ss wilbholditJ& sucllillfonnalion would vlolaU: the law, create tbc risk of slpiftcalu harm to lhe public
ot provoot tho Atcbl~ from oatablbhiDg a c:laim or dctimac iD 1111 adjudicatory pmc:eecliDg. Tho ArdUtect sball
require of tho ArChlteot'i ~llltaots sltnllar agreeme``ts to maiolain tile c:ollfidenliality or illfonnatioo speclficslly
dcs.lgosltd aa confidait#al by die Owner.
§ 1.2.U Bxccpt with tlic.Owner's bowledgo lllld C011Sent, tile An:hltect shall not cugaso in any ac:tivity, or accept
1111y employment, lo~:or· c:ontribulioo that would reasonably appear to compromise the Archlrect'll professional
judgment wilb rupoct,~tbis Project.
§ 1.2.3.6 Tho Arehltoct.ablill rmow l11ws, c:odcs,lllld regulstloas applicable to the ~t's services. 11m Archilect
shall respond In die design of tho Project to requirements imposed by govemmontal autbodtlos havbagjurisdlctlOll
over the Project.
§ 1.2.3.7 The Aldllrcc:t·lbsll be eotided to rely oo lho acewaey and complc:ta~oss of scMc:os and informalioo
fumishcd by the Owno,r;.Jbo Archltec:l shaD provide prompt wrlttc11 notice to the Owner if lbe Archllcct becomes
aware of~ erron, o~slona or iacOIIIIiltcnclos in such services or lofol'UIIItion.
ARilCLE 1.3 TERMS AND CONDmONs
§ 1.3.1 COST OF THE WORK
§ 1.3.1.1 'nlo Celli at tht Work shall be the toaaJ coat or, to the oxteatlbc Project is not compldcd, the osdmated cost
to lbo Owner of all olomcol5 ~f~-~Jcet designed or specified by tho .AtchitccL
•• • 0
51.3.1.2 Tbc Celli of tho Wait siii"llii!Ciodo tho coat at current market ndcs of labor aDd maiCI'Ials fumlshcd by lho
0\Wet IIIII equiplllODt dcdped, spoeified. selected or specially provided far by the Aadd1ect, iJicludina the costs of
liiiDIIgeiiiCOt OC supetvisloo cit"C011Slr11Ction ot lastalladoo provided by a sepanilO c:oiiiUUCtloo maDaF Gr
contractor, plus a rusooablc aDowa.acc for lbe.lt ovahead and profit. Jn additi011, a reasoublc allowance ror
contiJI&ellcles lball bo ``lcet coodld0111atlho time ofblddiog and for changes lo tbe Wort.
§1.3.1J Tbo QoiC o~the Wort docs DOt illcludc tho compomatiOD of the An:hica:t and tho An:bicoct's CODSUIIanu,
diocosts of the ~ ~bts-of·way and fioandns or oilier coats tbat 1110 tbe rospousibility of tho Owoer.
§ 1.3.21HSTRUMENTS OF SERVICE
§ i.!+1-.J)ra~ spedtlcadoos and other documcats, locludiag Chose in dec110Dic form, )lleplml by lho Arcbiloct
llld the'~s c:olllllltuta an: Insuuments or Service fot usc solely with respect to dlls Project. The Archihlct
IUid tbe An:hi~Kt's c:onsultaots shall bo dccmccl 1M authors and owucn of their I'Cipcc:li\'0 IDstruDICIIIS of Servlco
IIIII aball itfaln aU common law, statutory and other reserved rights, ii!C!uding copyripta.
§ 1.3.2.2 Upon oxccutlon of Chis Agreement, the Archll£ct paulS to lhc Owner a noooxcluslvc liccnac to reproduce
lho Arc:bitcct's Instruments of Service solely for purposes of conslnlcting, using and maiotaloiog the Projoet,
provided that the Owner shall eomply with all obUgstloos, Including prompt paymeot of aD sums wbon due. under
this Apmeat. Tho Architect shall obtalo similar IIOilOXCiuslvo llcensoa from tho Arc:bicect•s c:onsultuta consislenl
6
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wilh this Agreemeul Any taminacioo of lhia Aarccmaat prior to completion of the Projecc sballlemllDIIIC thla
~ O_pou aucll rermloatlou, tbe Owacr sbaU I'D&aln li'om ma1:lng fWtbc:l' repnlductlou oflnltluiiiMII of Service
lllld eballfttlml to the Alcbllect within seVI:I1 days of flmllnadoa all odaloalaud reprodac:d0111 In the Owacr's
pci;`` or conlrol. H ud upon the dste tho Amdtzcl illdJIIdaed la default oflhls Apemcnl, the fCII'IIJOing
Ucense aball be dcelned letmluat.ed ud Rplaced by a ICICODd. oonexclusive lll:eme petmln.lag the OWDCr to
~other simllarly credentialed design prorcsdr:mala to repmduce 111d, wbete penDIUCd by law, to IIIIWI
cilili!ge8, comclioos OJ' addllioDs ro the IAslrumcnls of Scnlco solely for purposes or completing. uiDs IDd
D'WDD~lolag the Project.
§ 1.3.2.3 Except for the licenses gnmtcd in Sec:Uoa 1.3.2.2, 110 olha Uccme or riabt aball be deemed sranled or
iJDpUcd IIJider lhls AgreeuleDL 1be Owner shaD not ual&a. dclqate, 111bllcecse, pledge or olherwlse lr'IIISfcr any
llccUc graDfCd here~ to DAOlhcr party wirbout the prior wriUcn qrecmeat of the A,n:hllect. However, the Owner
lbaJl be petmllted to .authorize the Coatraetor, SubcaalnlcCon, Sub-subcollllaCCDR IIDd material or cqalpiDCllt
supplicrlto mpi'nduc:e applicable ponlona of die Iuaumeats of Service approprillto to IUid for usc In lhdr cxccutlon
of the Work by lfceDse gnm~ ill Scc:doa 1.3.2.2. Submission or dlscributlcm of JDI1niJIIellts of Savlco to meet
otlidal rqula.aory rcqulre111C11ts or for almllar purposes in COIIIIOCtloa with the Project b aot to be c:CIIIICrlll:d a
pUblication in dc:ropliooofdu: reiCI'Ted ripts ofthc An:hlrec&lllld the Archllect's coasallalltl. Tho Owaarsball not
use the Jiistiumalss of Service fOJ flltarc additioos or altcrali0111 to lhia Project or for odv:r projectl, uaJeas lho
OwDcrobtaiDII'IIII: pdor wriUCilqRC``~C``t of lite An:hlii!Ctalld die ArdiJiecr'a c:onaulranta. Any uaalllhorlxd USD or
rho IDalrumcnts of Servkc shall be at the Owner's sole rht and wllbaut llablllry to die Archlted sad the ArchfJecr'a
c0uultm15.
§ 1.3.2.4 Prior to tbe Architect providing ro rhc Owacr any lllllnliiiCIIts of Service ID elecavnlc fotm or rha Owuer
providing to lho An:hl~ee& any electronic dala for lucotporatlonhlto tha Jostrumcots of Scnice. the Owner IUid t1u:
Architect aball by separate written agn:cmentiCI fol1h die speclftc condld0111 gDYer1liJJa lila format or such
lllst:n1111eaU of Service or t~lccbcnic d&ta, iocludlag uy speclalllm.itadons or liceascs noa olhetwise provided iD this
Agn:ement, anacl1ed u "'Bxhlblt C.".
l.J.lA.I 1bc Arcbitect will make drawiap or spec:ificalioDs ill e!cctnmlc fonn availllble 10 the Contractor,
sullcolllniCUil'S, alld ma1Cdal suppllen for a charlo 10 compeusate IQc tboir pceparaliou. "l''z clcc:uo.W:
files 18 specifically for usc ID pn:pariug sbop dtawiaga or Oilier reqalred 111bloitllb md Cor no Oilier
n:ason. The cha.rp for cacb. ~ of electiOolc documcata for da1s 1110 5biU be SSOO. Bacb nclpicor
aball sip dae Aft:birect>a nonilll Elecrroulc Media Rdeuo fllt'lll prior to release of the docomcuta. Bada
recipieal is prohibited ·aom·sbariag lhcsc docuiiiCills.
1.3.2.4.2 ~ KparaYo ·~ governinglhc uso of elcccronlc I'AslniiiiCIIIS of Service by tbose oilier 111111 die
Owaer Is altlu:bed as "'Exhibit D."
I 1.U CHANOE.IN &EIMCES .
§ 1.3..3.1 Quae in SerW1cs or the Architect. illdudias scrviccs required of the Arc:bitcct's CODSUitanta. may be
(ICICOI1lp1isbc aftu~don of_tbls Agxeemcut, wldlout iDYD.lida!iag the Agreemelll, ifmutualJy agreed In wrhinJ,
if required by circulllllallccs bCyoDd lite An:hltect's coatrol, or it the An::hltccl's IIUYic:a are atrectcd as descn'bcd ill
Section 1.3.3.2. Ia the ableacc 9f mutual ~in writing, the An:hllel:t aballllotify lila Owacr prior ro
providlag such scnices. Htbe OWIICI' deems IJiat all or a pan of aucb Cbaagc iD Services is uot requiftd, lhe Owner
sball give prompt writtal JIOiicc to the Ardlitect, and tbe Archltcc:l shaD have uo oblfpdora to provide those
sqylces. Blc~t ft)r:a c:baage due co die fault of the Arclllkct, Olaagc In Scrvic:cs of the An:hlta:t shall eotlde the
Architect to ail adjusUDCnt io compensadoo pursuant to SectlDD 1.5.2, ud toADY Reimbuaablo Bxpcucs clcacribcd
in Section 1.3.9.2 and Section l.S.S.
51~.3,2Jfagy'of lhe following cin:umstanccs affect the Arddtect's services lor the Project, tbo Arcbitl:ctabaU be
eat!ded tO'mi ~priate adjustment ia rho .Architect's scltedule IUid competllllion:
.1 cban1e in die instnJCl.lolll or approvals given by llle Owner lhat DeCOS&ilate mvlsiona in IMinlmeuts
of Service;
.2 enac:uneot or revlsioo or codes, Jaws OJ repiAtloos or offidal iaterprefadoos wblcb nc:cessii.Bie
cbangc.s co previously prepared lnstrumelltl of Service;
.3 dec:lsioas of tho Owoer not rendered in a dlllcly rtUUIIICr,
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.4 sipi6caut c:Jumge in the Project includllls. but DOt limited to. shie, quaDay, compledty, the Owaer's
schedule or budget, or procurement method;
.5 failure or pertomuuu:e on lho pan orehc OWDel' or lhe Owuer'a cousulWIIS ur conuaaon;
.6 preparation for and ~nduec at a public heari!lg, a dlspntc reaolution pnx:ccdlug or Illegal
proceeding exa:pt where tho Architect is party ~hereto:
.7 change In the iDfonnation coutained in Anicle 1.1.
§ UA MEDIATION
§. t.3.4.1 Auy claim. dispute or olher matter in question arising out of ar lela!ed to this Agreement sball be subject to
mccllation u a condition precedent to arbilradon or tho iu&titutiou orlegal or equllablc proccediDgs by eidler pany.
If such manenelates to. or ia the sobjoct of a lleuriaillg out of lbe Aldlitect's services, the Arcbitect may proceed
ill accordauec with app!icable law to comply wllh the lien nodce or filing deadlines prier to resolutiou of the matter
by mediadon. or. by ub~tratiou.
§ f.3.A.2 'l1le Owner 8lll1 ~n:ct shall eudeaVDI' to resol'ie claims, disputes and other matters in question '*ween
lhem by mediDdon w~ iui1i:a the panlea mutually agree od1awise, allaJl be in accordiiiiCO witb die: Coastruction
l¢usuy Meilladoa RUlesof the Amctlcan ArlJJJradon Association CWRIIIdy lu e.fl'ect. Request for mediadoo sball be
filed In wridng wltb the bdicr plllt:y to this AgeeDtCDt IUid with the A.nlcric:a Albitntloa Alsociatloo. The nqucst
may be made COUCW1'811dy with the fiUng of a demaud for adlitrallou bur. In l1lcb ovent, mediatio11 shall proceed ia
advauce of urbitration or lep'l or equitable proceedings. which shall be stayed peadlug mediation for a period of 60
days from tho ·date of filiDg. unless stayed for a longer period by agreement of tho parties or court order.
§ 1.3.4.3 The patlfes sball share lhe mec.liatur's lee lllld uy f'ding rea equally. The mcdialiun shall he held In the
place wbcre tbe Projecfl&.IOCIIICd, unless another location is mutually agJeCd upon. Agreements reached ia
mediadon shall be ealorceable· as settlement agreemeots in auy court having jllrisdiclioa thaeof.
§ 1.3.5ARBITRAnoN
§ 1.3.5.1 Any claiin. cf.lspute.oi ocher :awtet In quesdoa arising out of or ~elated to tbis A~IMDt sball be subject to
amtmtion. Prior to arbiliafion. the parties sball cadcavor to resolve disputes by mediation 1D aa:ordauce wilh
Section I .3.4.
§ 1.3.5.2 Claims. disputes and other matters iD queslioa betwCCII the parties that are not n:solvcd by mediation sban
be decided by arbitration which, liDless tbe parties mutually ape olllerwise, shaJl be iD accoJdance with tbe
Construction Iadustl)' Arbitraticm Rules' of the American AJbitralioa Association currently 1D effect. The demand ror
amlration shall be filed in writiug with the other party to this Agreeme11t IUid witb lhe American Arbilmlion
Assocladoo.
§ 1.3.5.3 A demand for a.rbltralion shall be made wilbla a reaso.aable tUDe aflu tbe claim. dispute or othea- lllllltCf in
qucstion·has lqiac:u.lll no evertt·s~IJ 1he demaud for arbitration be made after the date when ins1itutJon of legal or
eqWto.ble proceedings bas!'`` on sucb claim, dispute or otber matter in question would be banecl by the applicable
~.Qfllmitadons•.
§ U.U No arbitration arisiligout·or or relating to this Agrumeat shall include. by coasoUdatioa or joincla- « ia
1\DY otht:f ~· .I!Jl. addltluJial penon or ellliay not a party to 1his Agreement. except by written collllelll containing
ll apecifi~Jireii=i¢e;l0. this A~meotand signed by tbe Owner, Archi!cct. and any other penon or eality sought to
ile:joiDed/~ i``itratlon involvia8 an additional person or entity shall uot coaslitutc consent to arbitration of
any ·claim, di~pui&·Qi.oiher matter in question not dcscribecl in the wdn= coDSCGt or willl a penon or elllity uot
IWDCd or described therein. Tho foregoing agreement to arllltrato and other ~IS to arbitrate with an
addkiol)al~911 or entity duly cousented to by parties to Ibis AgreemeDI shan be specifically enforceable in
·aa:Ora.nce:wfl,li!,Jpplicabie Jaw in any court baYing jurisdiction thereof.
§ 1.3.5.5 11le~ telldered by the arbitrator or ari!itrators shall be final, and judgment may be entered upon h In
accordance witli applicable law ln any court bavlugjurisdiclion thereof.
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§ 1.3.8 ClAIMS FOR CONSEQUENTIAL DAMAGES
Tbc.``=t &lid the OW1ler waive colllcqucudal daJMp for c1alms, disputes or other matters in question arising
.'opt Qfor teladng to this Ag~CC``~a~L Tbb mutual waivcr ia applicable, without limitation, to aD coDSequentiaJ
~1¢e.dac to either party's termlnaliou in accordance with Sectioa 1.3.8.
§.1.3,71'11SCB.LANEOUS PROVISIONS
.§'tlh':1 This Agtecmeut shall be govemed by the law of the priDclpal pl&ec of buabws of the An:hilect, uuless
oiherwise provided iD Sec:dou 1A.2.
§ 1.3.7.2 Terms in this Ag!cement shall have the same meaning as those In die edition of AJA Documeat A201,
Geuetal Conditions of tile Conlnld for Construction, cutreJJt IS oflhe date of this A~L
§ 1.3.1.3 Causes of action between the parties to this Agsecmeut penaluiug to acts or failures lO act sball be deemed
10 bave accn~ed and tbe appUcab1e statutes of limllltlcms shan commeucc to runaot later thaD either the elate of
Substautlal Completion for acJs or failures to act oc:cuniDg prior to Substantial Complelioa or the date of issuance of
dlo fiual Certificat& for Pay.ment for acts or failures to act occurrlag a1iel' Substai11Ja1 Compledou. In 110 eveot sail
such llatutes of limitations COIJUilCIICC to run any later thm the date when the Architect's &ervices an: subdantlally
completed.
§ 1.3.7.4 To the cxteut d~es arc co~ by property l.asuranco darillg construction, lhe OWDer' llld the Architect
waive ali rights agaioat each othP;r and agalust the contl'lc!Ors, COllll!ltants, ageullmd employees of the other for
daillap. except Sllch Ji8hts as;f!H:y DUlY baVc to thc proc:eeds ofsucb luswana:: 111 set fortll in the ediliou of AIA
Document A201. GC11Cn!~f9.11~6oas of the Contmct for Construceion, CUft'alt u of tho dale of lhi1 AgrameuL The
Owaer or tile Arc:hitect, ¥ ..DJIP.Opdate, shall requim of the contracron, coiiSUlta11ts, apars and employees of auy of
lhem.shnilar waivers in favor. of Ule otlu:r pries enumerated l=eln.
§ 1.3.7.5 Nothing c:o~..~i~S Agreement shall create a coalmCIUal relatfonsblp wllh or a cause of action in
favor of a third patty aaai.l¥t'cithcr the Owner or An:bitcc;t.
; . ~·
§ 1.3.7.6 Unless olhetwi.S& provided lu this Agreement. the ArcblleCI and Arcbilcel's couu!WIIs slutll have no
ieapansibility for the discovery, presence, baudling, removal or disposal of or exposw-e ot persons to buardous
matariala or toxlo subs~ in lll!fJOlJ!lllt lhe Project Site.
§ 1.3.7.7 'lba ~hitcet sbaU havo:``t to include pborograpbic or ll1tillic ~ollltiou of the design of tbe
Project ainong the~;s prt;Diitibw and profeaslonal matedal.s. The Arcbltect shall be given EeUOMble
ai:i:eQ to tho coinplcted Pmject to mala: such RptciClltatious. Ho\Wvcr, the Archiccct's materials sballnot laclucle
~ Oym&!!'s coufideatial or.J!ro``orma.tioa if the Owner baa previously advbecl tb8 Arcbirect in writiug of
d)C:ijleCifiC``rmatlon CClJ!;SldeRd~y;'dle Owner co be coaftdOIIIlal or proprlewy. The Owner sball provide
piofesaiOJIIl.i=dit fq.r the`` iil'ihc Owner's ptomotiollll matcdals for the ProjccL
§ U.7.8 If-~ requeS'tl~e Architect to execute c:ellilic:ata~, the proposed language of such cer1lficallls shall
be ~ttccftD the Afc:blCCCt W,i~ew It lcut 14 days prior to the n:questcd dlliCI of oxccutiOD. The ArchilcCl
!thlill...nt be required'tq``J~Iiillficates that would requlro knowledge, semces or responsibUlllcs beyond the
~;f-``L'"'
~ . ::i;. ... :':*:-:
~p.9 ThO;``~ Archileel, respeclivety, bind themselves, their parlllen, succcsson. asslgas and legal
~ti"vea;~other party to this Agreement and to the panners. IIUCCtSSOB,ISSlgns and legal &qlrC5Cntatim
of such olhor party with Rlllpcct to aU covcnanta of this Agiee``~CDL Neither the Owner a.or the ArchiUICt shall assign
tJds Agreement without the writteo consent of the orher, except that the Owner may asslgulbis Agreement to an
l~iJ.u!w`` 1c11dcr providing fiuanclns for the Project. In such event. the Ieder shallusume the Owner's rishta and
ali~ti_p]i;~er this Apement. The Architect shall execute all coiiSetlb rea.sollllbly required to facilitate such
``
§{i.& ``~TloN OR SUSPENSION
§ 1.3.8.1 If the Owner falls to malc:e paymeots to the Architect iD accorda.uce with this A&reenu:nt, sucb failure shall
be coasidcled subslllntial nonpertbnnaoc:e aad cauae for te.rmination or, at the AJchitect's option. cause lor
suspeusion of pcrfotDWlCC of services under this Agr=IJIOIIL If the Arcbilect elects to suspe``d services, prior to
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66
suspemioa of servlcca. the Ardiltcct •ball givc aevcn ~· wriUI:a nodco liD the Owls«. Ill tho~ of a swpeas!on
or lC(Yices. the Arcllitect Sball bave 110 llabiUiy to the Owner far delay or damap c:auiOCI lho Owner boc:auso of 1111Cb
·5UiPcuUoa of aervlca. Before R:lllmlag ICI'V!a:a.lbe An:bllllel BIDII be paid uD 1111111 due prior to 8Uipa1lloD and
~Y~ Incurred In the lnturupdoa1111d resumpdouftbo Architect's services. The Ardlilcct'sfea Cor tho
nmialitlris ICIVices aad the time schedules shall be equ!14bly adjusted.
S t~.U If the Project ls suspended by the Owner for moro llwl30 COIIIOCUtlvc days, tbc Ardllteet ahal1 be
~CIIIIted for scrvfccs performed prior to aotlc:e of IUCh auspaldoa. WileD the Project II resumed, the Architect
lha1l be co~ for gpcmea incurred ill the iotempdcna IIIII n:IUIIlpliun vr thc An:tdiii:C:l's ICIYices. The
Architect's feel for tho remaiDillg GCrYices aDd tbo tlme IChedulcs shall be equllably adjusted.
51.3.U Ir the Plojcc:t is suspcudcd or dJo An:hltcct's servlcca co suspcadcd Cor more ChiD 90 coma:udve da:JS, lbc
Architecl may tcrminatc this AgrumeDI by ghlllg aotlas lhan IIIIYCn days' wriueu aotlco.
51.3.8.4 This Agrccmcut ms.y be wminatc:d by cilha' pvty upon notlclllhlll seven daya' wriuml DOtic:c should the
Olhcr pany filii sabstaalilllly to perform ill accordiUice wilh the terms of thlJ Aaroemcut lhnluJh DO fault of tbc party
iniliatina tbc tmni~Jioa.
§ 1.3,U This ``i be tennlDafed I!Y the Owner apon not las IIIIIIICYCD days' writteal notice ID tbc
~for the OvtDCr.-.~nvc:nlesu:e aad without cause.
. ··.. :......
§ 1.3.8.8 In !lie eYeDl of~ uClllho fault of IIIII Arcllkecr. cbc Archtrccc shill be c:ompemaiCd for scrviccl
pedomcd pdar to teniliuil!ltl, togedlcr with Reimbunabfa Bxpcuca lheo dae aDd aJ1 Tennillation Bxpeases u
defined Ill Secllonl.3.8;7,. ·
:~:-· :. ·.
§ 1.3.8.7 Termination ~·11R ill addltion to compeuation for the senic:ea oftbc Apccmeut m1 iDctude
c:lCpCIISCS dllectly Adribuyabl'c!w. lamination ror which the Architect Ia aot od!elwiso compcD.Ialccl, pills .aamouat
for the An:blccet's antlc;l~jirOfit on the value of the services DOl pcri'01111Cd by the ArchlcceL
§1.3.9 PAYMENTS TO Tt!E·ARCHITECT
§ 1.3.9.1 Payments oa IU:COunt· of service~ n:ndcml and far Relmbunabfa Bxpemcs lncumd shall be made moll1hly
upon JII'OfCIIIIdiOn or tbe J),tcbilcct'~ ,~,of ICIMCCS. No cleclucdons sball be mado flomlho All:bitec:t's
c:ompcnsallon on accoui1J' of peaaf,lY;.J!'ll!}datzd diiiDIIpa or otbu lllD1I wllhhold hm paymeats to coa~n~C~DCS. or on
account of tho cost or changes J,;'~ ~!file other chaD those far wblch the Architccc bu bcca acijudpl to bo Bab!tl.
S1.3.9.2 Relmbursablt;~sea are in addllfoa to compaasalioa for the Archllect's services and Include cxpcuca
incumd by the An:liitut 1111d AkQlliOI)t!.a employees ODd consullants directly rcl&ted Co the Project, as idCIIIificd iD
rile followillg Clauses: ·
.1 tranapCirtation in COillloctlon with the Project, autborlzed out-<~f-town ~ravel and subsbtc:ncc. ud
clecttolllc c:imimualcatlam;
.2 fees paid for secUring appzowl or authorltlea havloa jurisdiction ovec the Project:
.3 reproductions, plots, slaadud form documents, poalllge, bandllag and deUvery of IDStruiDCIIts of
Service:
A ·`` of overtime work requiring higher tbu regular nates if authorized in advance by the Owuer,
,5 ~ilgs, modela aad mock-ups roquatcd by tho Owner;
.6 ~tilai>:or professional liability lnaurnca deditlfed exclusively 10 this Project or the expease or
additional insurance covoraae or limits requested by the Owner ia excess of that normally cmlccl by
the .Architect aad the Arcbitect's coasullanta;
,7 reimbursable expenses as deslgnqted In Section l.S.S;
.8 other similar dltect Projcct-rolatcd expCI!dltwes.
§U.UR.ecoidtofRelmbursable Expenses, of expenses pertaining co a Cllanp in Services, and of!IOI'Yices
pedonnad on tho basis of hourly ratea or 11 awlliplc of Direct Pcraouncl Bxpaasc abllll be available CD the Owner or
the Owner' I authorized representative at mutually CODYenlelll dmcs.
NA Doc1rn1n1 8141111•19t1hrt1.Coprrtghl 01817, 182t.1114&. 18S1,1Be3, 1&1111, 11161,11183,1960,18117,1870. 1974, U77,188111111111197bJ'IIIe
Alnalcall lnati:Uio o1 Ardllodl. All rl!ita re.o~Wd. WARMHO: 11111 NA• Documanlll piOIHiad br U.S. CoPVfllllal LIW and llllllnlllanaiTreallal. g
llnauiJI...ad ropnodiK:IIon ot clllltl!lullon of tllb N.A• Do...-1, or MJ pG111on otiC, liMY ruullln ...,... dwU lind criminal penalaN, and Will 1ae
piOMCIIitiCI to tbll mulmum aunt poullllo under the law. 11ia dacumant -IIIIIIU:ied by NA IOIIwln u 14:82:1EI an 03126'200511111a Onllr
~:m-htlclleoph&GIItli16120C&.amt11Mtrotrnalo. sCAN NE~
SEP 22 2607
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67
§ 1.U.4 DiRcl Pcracmnd SxtJ- is defiJicd u the dlia:t llllriA CJIIho Architect's penouuel eagapd 011 die
`` the ponlon otdte cost otlheir IIWidatory &lid cusiDmlry COI1ttibmfoas aDd beudlcs related then:ut, such
~llliiiXQ IUid other 1111Utory employee bc:ucfics,lnsuraDce, sick leave, holidays, vacatioaa, employee
`` plllls Clad similar contrlbutioos.
~ 1.4 SCOPE Of SERVICES AND OTHER SPECIAL TmMS AND COHDfi'JONS
J;f.~11;!!nametadoa of Parts of lho Agmsment. This Agnemeat npn:sencs the enlin: and intepl!IM ``
lieiweca tbe OWIIU aad die Architect and supellledes all prior RSOiiallcms. repmcalatlou or aareem=t~. either
wrillal or oral This ~111 may be arncuded oa1y by wriUcD insbamcDt sipcd by both Owuer aad ArchilecL
1)l4 AgreemeDI coqrises tbe dOCWI!alb listed below.
1·1.-C.U Slandard Porm ofApement Between Owner lll!d Archilect. AlA DOCUD1eDtB141-1997.
ttA.1.2 Srandaid Fonn of Archfrect's SemCQ: Desipllld Co1!mct AdmiDlslraflon, AlA Documcal Bl41-1997,or
It f~llows:
(Ust otlru dDCIIIfUin/3, .#/G1f1· deliMating Arr:hlua':r #tlpe of :rnvlcc:r.J
I P.iu.e.uS'Nei!Son Onhaa,l.A'rchitecb' Proposal lellerdaled November 12,2004, revised January 21,2004 al!lle:W as
·"Bxlllbll A."
t 1.4.1.3 Other documeab as follows:
(Un oriMr documau, Iftilly, fonning pan of lhe AgneiMnt)
Ellleu Sweoson OrahiiDl Architecb' schematic design documenll daled January 28, 2005, whicb are attac:hcd by
reference as qBxltibll B. •
§1.4.2 Spccill Tenus aud Coaditi0113, Special terms aud coaditiona that modify this Agtceroeut IR as follows:
ARTICLE 1.5 COMPfNSATION
§ 1.5.1 For the Architect~ a services as .described under Article 1.4. compensation shall be computed as follows:
=
Fixed fee tor Arcb1letture. StnlcnuaJ, MechaDJca1 aod Eleclrical EnglaeedDg $112.SOO. See schedule for Pbases
ofwodc:
Sec ach~ll.~ of~ly rates anacbed as "lhhibll a •
.,. § 1.5J For a Cuut&e in Services of tho Architect's consuliUits, compensation sball be computrd as a multiple of
Cue ( 1.00 ) limes lbe amounts bDled to the An:hitect tor such servicel.
SEP 2 2 2007
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11.5.4 Par Rc:imbursable '&pcllsc:$ as dCICribed iD Scctioo 1.3.9.2, mlay olher Items locludcd lD ScclloD l.S.S as
Rchnbarsablo Bxpcnscs, the compcnsation shall be compoced u a mukfplc of One ( 1.00 ) limes the cxpenaes
1 lllcurred by tho Archllect. IIJid lhe Archl~• employees IUld coosullliiiiS.
§ 1.5.5 Olher Reimbursable ExpcDSCS, if any, urc as follows:
§1.5.6 Tho rares ad JDilltlples for services of the An:blcec:t IIJid lho Archlrecc's CODIIlltalltl as :set forth fn lhis
Ap:e111C11t abalJ be adjusted iD accotdllllU wilh chclr nonual Alary review pmcdc:es.
I
'· 1u.r An Initial payment of Zero Dollar~ ud Zero Ccnls ($ o.oo) shall be macle upon executlou of this
Ap:emcnt md Is the miulmum paymc:at under tbls A.glccmcul. It ahall be credited to lbe O'MICI''s accouut at final
payment. Subseqaoul paymcuts for services shall bo umdc moulhly, IIIII whonl applicable, sbalJ be ill p:oportiou 10
services pcrf'ormed on die basis set forth In this Agn:cma~t.
§ U.8 PayiJICilts - dllC and payable immcdialely zero ( 0.00 ) daya from tbo dato of lho An:hitoct'1 illvaiee.
Amounts unpaid sixty . ( 60 ) days aCier lbe invoice dale sball bear IDtaat at lhc rate cntrnd below, or In the
abtcnce lheroof at tho logal ia1o pmvailing &om limo 10 lime at the priuclpal place ofblllincss of the Ard!itcet.
(lnMtf m" of lnt~rDIDgrud upon..)
U.S. Federal Rese:tve Pdmc Rate plus 2'1..
{f/nu:JIGW$ and r~lmrrents rou/u 1M Fe«ral7ivlh In undlng Aa, slmll4r #Gic Gild ~call co1UIIIIIU credilltnvs
tuul otlrttr rwguiDtiou QJ the Own1r's tllld An:hilm's prlndpGI pllu:u ofbllSinu#, lire I«Dttlm ofthe Projed tllld
el#wMn: 111111 11/fo&t 1M valld1ty ofrhU pi'DIIlsimL Sp1djic legal Dlhl« Wndd be obltJ/Md witA ~ tD ddetimu
ormodijicodou, and ab11 n:~g ,.,~such 111 writun dlst:~Muruor -Mr6.)
§ U.9 Jfthe KI'Viees covered by this AgRCmCJ~t haw: aot been complclt:d within Three ( 3) months of the date
hereof, throogb 110 tilalt of cbo Arcbitec:t, cxtcDSioD of tbe Arcbitec:t's sccvlc:ea boyoud tbDt ti1111: shall be
co~nalcd as provided in Section I.S.2.
This Agreemenl eotered iAto as of the day and year first writtu above.
~
(S tlllllm)
Paul Mittcndorff, AlA
PrinciJI!land Vice PresideD!
(PrlnmlnomeiUtd tltl~)
SEP 22 2007
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'Zo53o2.oo
eAIA Document 8141,.-1997 Part 2
Standard Fonn of Architect's Services:
Design and Contract Administration
TABLE OF ARTICLES
2.1 PROJECT ADMINISTRATION SERVICES
2.2 SUPPORTING SERVICES T111s docurnolt IUIIIImportunt
legal~
2.3 EVAWAnON AND PLANNING SERVICES COnscAIGVon with an allomly
Is 811CX11111lpd with respect to
2A DESIGN SERVICES ~' complotilln or moclillcalcn.
2.5 COHSTRUcnON PROCUReMENT SERVICES
2.6 CONTRACT ADMINISTRATION SERVICES
2.7 FACILITY OPERATION SERVICES
2.8 SCHEOULEOFS~CES
2.9 MODIFICATIONS
ARTICLE 2.1 PROJECT ADMINISTRATION SERVICES
§ 2.1.11bo An:hlrcec shall Jllll1ap the Architect's serv.k:es IUid adminl&t« the Projec:L Tho
Archircec shall consult with the Owacr, rcacan:h applicable dafan aiteria. attau1 Project
meetings., COI1IJI1UDicate wflb members or the Project team &lid Issue JIIO&\UI JqJOrtS. Tho
An:bltecl shall coordinate the scrv!ces provided by die Archirect lllld die An:hltec:t's
COIISUitaDts with 1hasc IC&'Vac:c:,.~dcd by the Owncrllld the Owner's consultaDts.
§ 2.1.2 When Project requirements have been aufflcleDily ldeodfted, the Architect shoJI
prepare, and periodically update. 11 Project acbcdulc that lhall identify miiCICOnc date.• for
dec:isions required of the Owner, design servlta fwuisbed by the Architect, completion or
documentation pnmded by tbe An;bitec:t. commeDCOIIIeZ!t of c:onstnlction lllld Subscantial
Compledon or the w.J&Work. spbjeet !9 !he !lmjralions jndjq!gl in m!!!l!l1 Ssgmg
gpabam Arcbl!ec!S' Prooos!\l letter dated November 12.1004, revised January 21. 2004 ~ ll \\Jb
attached as "Rxhjbit A::. 1 "1\ .,.-
§.~1.4 '1:/tJ&R RllfllBSief lbe OWRer. t~Je...Afohkeekballlllake a p-tali~e
eesiga er die Pft,;eet te RIJIMBRtaftr,.et ef lbB 9WIIBt'o
§ 2.1.5 The ArchiteCt sball submit dc.~lgn documents to the Owner at inlen'ab appropriatr:
to lhe design process far purpose~ or evaluation and approval by lho Owner. The Architect
1
SEP 22 2007
EXHIBIT
ESG001465
70
§2.1.81be Arcllitect shall usistlho OWII&It iD canucctlon with the Own=' arespoosibWty tor filing documents
IrcquiRd f'or die approval or gvycnuncaaal authodlka baYing jllriscliclion 0\'a' cbo Ftejeet.fmlccl. lllbjcq fD the
fpJlowigg llmjrations;
2.1.6.1 Si18layout, submittals and appiovals will bo by othm. Tbe Alchitm will pcdOIID cmc set of
revisions to tbe scope buildiDg drawings :iacluded by referalco as "Exhibit B" and 0110 set ofrcviai.om to
tbo dOCUDiaiiB submitted forpormit from input recoivcd from the O"Mier pursuant to~ of the . IL
l1lllllicipal authorities having jurisdiction over lho Project. Beyoud those revisions, the ArChitect wiD !lOt C 1\
aeate my special drawmp or exhibits. DocumculB or otber work eftbrts reqnired tor p)amWig mbmiUals I\ R.
or govCIDDICDial``ge``Cyreview aft« the iuitial submisliou will bo ideutified immodjately by lhe Owaer -1f\
8ll.d may result in a revision to our schedule IIDII compeusatiOD.
. . ·: . . ~·
\.! 3,_1,;````·``WQisfAND CQI;i'OHN&WORK .
:·§~!14``~,a~mullflllla•Je 11- eaftle!e&dyiderllifiiiii,IIID /MhitoM..U P"PMI arr'imln'f)•
.·``~==-,.::::::::..``==ea
:``n``t~eof.!b.~P.IJdale
1111d refiRHb&pNIImilllll)' eatimaleofthe Gesl ef lheWerka Tbo ;\rebiteel
. ~lllli~'l!\8'`` 91 ...-~t1Jll6tmea~S te ~RYiaaa estilMiee efehe Gea afll\e "'A'elk-iodiealed lJy 1111aDgee ill
.-~=::=======::ll
:~ ~!IDJ)'•Ot `` aad lbe Q'Miel' liheJJ ODIIfletale widlllle t-..Uteat ia maHBI &UGh lllljiiBIOIIIIItlo
·li: :}.::;::':: . \ ". i.
:=~=~;;;``==~==:=:=.
::==``=====-~·
``~ iiie~(ii"r-~f;il "-' llide er aesaliatedpd815 wiD 11111 TJtPf h• die Qwue.'a llllldaet faF !he PtejeGI er fRIIR
.,..llllliiB".te iifh Qe&t ellbe ~fl1 a, e·oaluaden prep-d or ISM'ed le lly tho 14ehiteatr
t,~.iJ.Jt!i~Rft pimatB~·~.a COS~ arthe WelkJ !he l'ahi!llllUIIalllle peRBilted 1e iaelllde eeBdaseaBies l'er
~ IJid~ IBd ``•.e0GGJ~Ii8ai 18 detenuiae 'l4JII BIIIIBi!Ws, equipmllllt 1181Rp8nea& .,&kiiiiiHIIId.c,pea.of
~-
e!l'l8eded~.&hallllle iaeNa9ed aeelll"i'IRaly.
.
0
... .·· ... :-
•• .. ••
PeBIIIIIIRIS 1e lila
•
g_.., lllftleDOed willlia 99 da:Yt Dftef die ,\rekltelt HllmiiS d!e Cealltrlletlaa
dt11 budget Cer llle Cesl oldie WerJIIMJllleiHijUSied te tellaot ol!silgBI iD die tii!Mflll
)f!IJ.I.af pfi~ p tile OBIIUNedea iiMJtl&lfJa
§ ~!I;,J,'-III!I:e ,wqel fer !he Cesa af lite Weds Is e-Ddsd lty Ilia le~IB&f llle•a fide bid e• oegefieled p~epeea1 1 11!a
~
. . ·.,,~ . giw "Nfltt8B lljJJIRI'JGI af BR IB11f81198 iB lhlll!UdJDI urlho Cell afllte Wlfkt
.3 autlleme ,Uiddiag ar RIRII&&delilll eflhe PRijeet wtdlia I Ra~Baallle limo!
,3 ll!m1inare in aaeetdt~Me mill Seeliua UJI.It ur
,4 eaapeate Ia Wliaiagllle Pfejeet seape IIJld quality as te1JIIife4 te tedueollle Gasl efllte W.fk,
2
SEP 22 2007
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71
§ ;U,7Al U' rile QwR81' eheeaes IB preeeed under S``edon :u:t.J,4, ae /..rohllear, 'lloidleUI addidanal ee``~peaaaalee,
ellell modify lito doeulllelliS fer whieh the I'..Jellillilllf ls105J10milllll uedor thlo t\iiiJCimeel at neeUIRI)' le o8111pl)' willl
dMI budpt fer diB caas afd!a 'tVarlh 'Ale madllieatiea efli\leh deeumenl~ ehalllla lila 1111111 efdlo .Velllteol'll
napellfilllif,y Hilder tlth Seelie11 ;u ,;t, The t.Nkitesf lh.U lie ealided 18 oemplftiWBR iR 11118onlaBeo will! !Ills
l.peeiMIIt ferllll aeMan peftenned 'rhelbeHJLBei..COBSIRialiaa i5 semmeaOCMI.
ARTICLE 2.2 SUPPORTING SERVICES
§ 2.2.1 Unloa spcclflcaDy deslgaated In Section 2.8.3, the ICtYices in Ibis Article 2.2 shill be provided by die Owucr
or lhc Owaer's couulrauts and collttKIOrs.
§ 2.2.1.1111e Owac:r sbaiJ tumish a prosram &Oaiag ford! tbe Owner's objccdvcs, scbedlllc. c:onauaims and crileria,
iDdudiDg space n:quirameniS and ~latlonships, speelal equiptnenl, systemS aad site requllenu:nu.
§ 2.2.1.2 Tho Owner shall fbnlJsh aurveys ID dacribe physical characterilllca, legal Umitatioaa and utility locallons
for du: site of tho Project, 1111d a written lepl dcsc:riplion or the site. The swveys and lqlll lnformalion shAll include,
as appUeable, grad= IIDd liDes of ltreets, 11lleys, pavemcntllllld adjoining property ud uractUJCS; adjiiCCIIt dralnaae;
npcs~r-way, restricdoDS, easemeats, encroachmcuts, zoning. deed raule1loaa, boundaries and c:on1ours or the site;
J.oealioas. dimensions and accessaJY data wilb respect to exbtiu& buildings, olher Improvements and treea; and
infom~alion coaceming avaD11ble utility ICtvices ud llllea, bolb public ad private, above 11111 below grade,
lnclucllng Inverts and depths. All the ln!ormadon on tbe survey aball be rct'maced 10 a Project benchmark.
5 2.2.1.31be OWuer shall £urnisb services of geo18cludcal engineers whlcb mny include but ace aot limited to test
boriags, rat pits, deaenninadons of aoU bearif18 values, percolali011 rats, evallwloaa of ha2.ardow materiala, JrCIU11d
COJJ'OSlon tests and resbtivlty liSts, fDCludJDg necessary opetllions for IDIIclpathlg subloil c:onditioaa, with reports
aad approptlale rec:otiUllfllldtions.
AlmC:bli 2.a 6\f.t.IJM':RON ~D PbtJUIING SER'nC:IiS
S2.1.1 The ,\telllreetlhlll pta•tidaa preliuli-, walualloa ef the ielelftlGtlee Nmislled tty l.ha g lftii!F 1111d• lhi5
o\gl8umoaf, illeludiag the Qwellr'a pNiftUB lllld sahedtlle RNiuirellleatHIIIIHlu4gll fer 1118 Gesl effko 'Wedt, IJCielt ift
leftM ar the ether. 'Ale AJieldleel shall ~a Ae'll' &eelllolaARadooiB iiSIM!Ifaiu d!lt il is eeasisi!JRI wilb die RNIUIR!meftiS
ef the PN,jeot 111111 allllll aadfy lhe-OwMr ef My alltoril!lfeftftlllien ar eeBSullallt sof'¥iea dlaiiiD)' llo naslltllllll)'
needed fer the PNje&to
§ 2.3.2 'Die t'.mbiteol shall pRI'Jide a prellmiaary e•JalllltieR ef the Qweer's till far the JIA)jeet IJ115ed QR the
laren..dea p~&·.~d•d by tile Owtlar ehile eoadici0111,8Bikho Gvli\Gf'a JIAISIBIR, sehadlll..aa4-budget fer lito Gesl
el'the W.Orl&
§ :LU 'Ria ,\R!Wteel shaiiNViaw lbe Qwner'a prep and mlllhed ar oaallaedas far aea&tNedea &llf'olillll& aetkllall
aelify lite Qo.wer ef aatlelpalld impee~ t.hetaueh melhed lllll)' havo en tho Q~s p18lf&IRI AnaneiaiiHld IIIRII
ARTIClE 2.4 DESIGN SERVICES
§2.4.1 The Architect's design service~ sbllll include notmal siJUctUJal. mecblllical and electrical enpccring
suvlc:es.
12.4.2 SCHEMATIC DESIGN DOCUMENJ'S
§ 2.4.2.11be Architect shall provide Schematic Deslp Documents based OD lhe mutulllly ap!CCklpon program,
schedule, and budget for the Cost of lbc Wort. 1bc documents slmll C$tablish lbc coDCep(Ual cleslga of 1bc Project
Ullll1nliDs the scale IUid ~latioashlp of lhe Project componeiiiS. 'Ilia Schematic Design Documcmts shalliBCiudc a
conceptual site plan, if appropriate, aud ~limlnary bulldlq plans, sectlons and elevations. At rhe Arcblcect's
option, rho Sehemutlc Desip DocumeniS may include study models, pcrspec:tlw s.lcctchea, elccuonic modeUng or
comblnatlou of these media. Preliminary selections of major building systems lllld construction materials shall be
noted onlbc dnlwfngs or described In wrlring.
SEP 22 2007
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52.4.3 DESIGN DEVELOPMENT DOCUMENI'S
12.0.f Tbe An:hl~ dla1l provide Dellp Developllll!llt Documenll based 011 the approved Sc:bemalic Dcsisn
Documr.nts and updaled budget l'or the Colt of the Work. The Dealp Oevelopme``t Documcatlshall ilhuaate and
describe the rdlnemeat of the de5ip of lhe ProJect. cstlblisbiJia the scope, motioabips, f'onns. size and lppWUICC
oC lho Pxoject by means oC plalls, scctioiiS and olevatioDS, typical conslrUdioa delaiJs, a.ad equipment layouts. The
Deslp Dovelopmcat Documents ahall include specifications that ldclltify ml!,jor materials and aystcms and es~abllsh
ID scaera.J their quaUty levels.
§ 2.4.4 CDNSTRUcnoN DOCUMEHI'S
§2.4.4.1 'l'lla Arcbitect lllall provide Coustrucdoa Documents hued oa tbe ipproVed Desip Development
Documeats arid updated budget for tbc Cost of tbe Work. The Coulnldl011 Documents shaD set forth In detail the
requirements for conalnlction of tho Project. The CoDSirucdon Documents sllall b11:!ude Drawlnp and
Speclflcadoas that cstabllsh JD delail tllt: quality levels ot materials and sysaems ~ ror lhe Project.
53.4.4.3 gMsJ dlo de'HiefiBIIII er tile~ tile lallileel allall . . . . , Qweer iB lho
!Je"elepR!IIBIHd fR!pURdiea efl (I) blddiBJ aad p18GUR!aaalafGimadea wWoiHieserillee lho dmev piiiGO and
eotldidaas efbiddiar;t lllddillr; Grfrepaslll l'eHII5tlllld die f'eftH eflllfiOMBe&t lloiMeR die 0MIIIf and lila Ganll'llelaFi
lllld E3) the Qladldeat afdle Ge~ &r Co116t111Gtiae (Qe~lementuy and allier CleRdld• • 11\e
Arelliteat lise shciU aempUn the P.Rijeet NaBIIIIIIMa ineludelllle Geadllieas ef the Ge!IINGI fer Ge115U11edea ud
SpeeililllltiGBllllld may iBelude biddiag tellllileiDI!DIS lllld sample CeHM.
MRQ.U 3.5 CONSJRuaiON PROCUREM&Nf SER'AC&S
1a.U 1!M t.,1811lall shallllsisl the 0111'11H ia obtaleiag either eempetitio;·e hide or negotiated prep esals and shell
wist lhe Owaer In awenling ud prepaflag eealluela f8J' aeii&IJUali&fto.
L
5a.I.J 'Jhe t"..teltiteel c;lr" assist dlo 9WBer Ia hid , alideliea erptepesal e ICI!ualiea BBd dele--Ins~ en ef lite
&U&&e51SM ~ld er pmpesal, Jfu,c. lrRifllested by die Owaer, tlle .~alliteel shall aoti(y.GJ!.proepeu&h·o bidders er
eealrleleN ef llle llid er prep asal restdl6s
~
S2.1.4A :Bidding »oeumei!IS ahe1l 88119iet ef IIWdifts te'IUiAIIBIIRiec pfBJJ&I!I!!d uOHIRIIIlfoRMc Gaaeml Seadlii08!H111l
Sllf!pleme_,. Seailld0111o S,llllifienoae lllld Dfllwiugs,
52.5 t.a If fa4:11051ed by lhe Owner, lllo Mhiteet ahallll'fiiii&Cil'eP f!8GuRal dlo repradu&tiaa er Bidding Deeameall
l'et dlsllillelli811 Ia prespesdWIIIiddlll!la 'Ale 0'JJRer shall I'll)' direaiJy l'eF die GB&t of reproduadea er allaU roiiRIIIIfllo
tbe AIVIIileet fer sueh IIJIIII!ft9e&a
§ 2.1.4.1 v RWIIIIIMBd lly die Qwall; tilt .'1dCI!iteel sllaD dislfilllllO lho Bi~IO!~
se1111Ml their l'lllllm vpea eemplelian ef tho blddq pl'll ellSIIa 1!he hehiteeuhall Jllalftlaia a las er dlslrilludea and
181riewlw BBdiM emauaf6 sf dspaailllwlf llftYt maei'.'O!d hm IIJld reiUIRN 10 fii'II8JII!Mi\~ bilidcft,
§ 2.5.4.4 ``~ Al&hiteat sWl eelllider eqllll51e fer wbslilllliaRSc ir peRIIiaed lly the Biddiag DoaumentG, 1111d sllall
prnp11R11111d dl511i~lll8 addenda ldaeli(yier; appRI•Ied sallstillllillllll te ell pre5peai'H lliddereo
§ 2.5.4.5 'J!IIe.~hlteaa sMII p8fdeipa18 ia &f¥ at lite Ownw's dlnaien, sllull ergank.e allll eendueta pre bid
GGaleHueo fer preepeeliNe lllddeAJ,
§ 2.5A.S'I'Ile .~bi~eet &hall pRpllM rnspeasas ta ``~ter.1ieM rre"' pteipeelive lliddeB BBil p~e•reaip and Collll3Ct Admlnbtndfcm Services shall be provided by lbc An:llllecl a a Cuutae
· in.Setviccdn accorilallce with Scctioo 1.3.3:
r 1 ·tev.!~ of a Contractor's submiaal out of sequence liom tho submittal schedule agreed to by tbe
Architect:
.2 respoDSOS to tho Contractor' a rcqucau for information whcR svch infomwloo is available to the
Contractor ft'om a cam'ul study aod co~ of tho Contract Documcrlls, field conditions, other
Owner-ptovidcd lnfonnatioa, Coutnctor-preparecl coordination drawings. or prlo:r Projcc:l
correspoadcnco or documcnl.lldon;
.3 Change Orders and Conslnletlon Change Directives rcquirlog evaluation of proposals, iucludlng the
preparalioo or revilion orlnstnunenu or Service;
.A pRividiDJ consultation concemlDg replacement of Wort resulting from tlrc or otber cause dudns
consrructlon;
.5 evalUAtion of an extcDSive number or c:Jalms submitted by the Owner' a consultants, tbe Contractor or
otbets i.a connrctioa with the Went:
AlA Do.__,. 8141"' -1117 p.,t 2. CapJitghl 01117, 11120, 1941, IMJ. liN, IDA. 11101, I &a. 1116&. 1567, 1tml, 1874,1977, IU'TIACI 1Wl'bf Tile
Amttlcln lndlllll ol ArcllllaciL All il;lda MCmld. WtJ!I!ll«