Motion,Ex Parte: SIERRA INVESTMENT ASSOCIATES vs. WILSON OFFICE INTERIORS LLC, et al

• 
• 
• 
• 
• 
• 
• 
• 

						
                                
Preview
                                CAUSE NO. 10-01167

SIERRA INVESTMENT ASSOCIATES, § IN THE DISTRICT COURT OF
Plaintiff/Counter-Defendant

Vv.

 

°
>
5

  

WILSON OFFICE INTERIORS, LLC,

ass

Zh:€ Ud S2 834 1)

ROBERT BLOMSTROM 298" JUDICIAL DIST!
Defendants/Cross-Claimants, a
Counter-Plaintiff a

v. 3

B. DONALD HILL, JR. and
THE WILSON GROUP, LTD.,
Defendants/Cross-Defendants. § DALLAS COUNTY, TEXAS

WILSON GROUP, LTD.’S AND DON HILL’S MOTION FOR
PARTIAL SUMMARY JUDGMENT

In this case, the plaintiff, Sierra Investment Associates (“Sierra”), has asserted stale
claims tong past the limitations period against the Wilson Group, Lid. (“Wilson Group”) and its
former president Mr. Don Hill (“Mr. Hill). Sierra's February 1, 2010 lawsuit seeks payments
from as far back as 1996 under a lease that ended with respect to Wilson Group in 2005. In an
effort to revive those clearly time-barred claims Sierra attempts to argue that a subsequent
contract to which Wilson Group is not a party and which Wilson Group did not sign somehow
revives all claims against Wilson Group. As a matter of law, Sierra’s claims against Wilson
Group and Mr. Hill cannot stand. For the reasons stated herein, Wilson Group and Mr. Hill
respectfully request that the Court enter summary judgment in their favor.

1 Factual Background

This case concerns a lease and various extensions thereto for commercial property
located at 1540 Champion Drive in Carrollton, Texas (the “Property”). The Property contains

both (1) a Building and (2) Common Areas such as parking lots, truck aprons, yards, porches and

Wilson Group, Ltd.’s and Don Hill's Motion for Partial Summary Judgment Page | of 13walkways outside of the Building. Commercial Lease { | (attached as Exhibit B). The Building,
generally speaking, is a warehouse with front offices.

In 1993, Sierra Investment Associates (“Sierra”), the plaintiff in this case, leased the
Building to the Wilson Group, Ltd. (“Wilson Group”). /d. at §j 1. That lease expired at the end
of April 2000 (the “Lease”), /d. at | 2. On May 22, 2000 Wilson Group and Sierra executed a
Lease Extension Agreement that extended the lease from May 1, 2000 to April 30, 2003. May
22, 2000 Lease Extension Agreement (attached as Exhibit C). On July 22, 2003, Wilson Group
and Sierra again extended the lease from May 1, 2003 to April 30, 2006. July 22, 2003 Lease
Extension Agreement (attached as Exhibit D). This was the last lease extension that Wilson
Group participated in or signed.

In 2005, the Wilson Group sold virtually all of its assets to a company called Wilson
Office Interiors, LLC. Hill Depo. 24:3-17 (attached as Exhibit E). On August 7, 2005 Wilson
Group assigned the Lease to Wilson Office. Assignment of Lease Agreement (attached as
Exhibit F). Sierra consented to and signed the August 7, 2005 assignment (the “Assignment”).
Id. Thereafter, Wilson Group duly wound down its operations and ceased functioning as an
ongoing concern in 2006. Hill Depo. 55:22-57:5.

Sierra and Wilson Office continued their business relationship after Wilson Group
assigned the lease. On June 26, 2007, Sierra and Wilson Office executed the final Lease
Extension agreement. June 26, 2007 Lease Extension Agreement (attached as Exhibit G).
Wilson Group did not participate in any negotiations concerning that lease extension, Wilson
Group is not mentioned in that lease extension, and Wilson Group did not sign that lease
extension. /d. That extension ran trom May 1, 2006 to January 31, 2008 and is the source of

much of the dispute in this case. /d.

Wilson Group, L.td."s and Don Hill’s Motion for Partial Summary Judgment Page 2 of 13Sierra inserted a new provision in the 2007 Lease Extension that had not existed in any
prior agreement between the parties to this case. Sicrra’s new provision states

Landlord shall conduct an audit of all amounts due or accrued under the lease and

shall submit such audit, together with supporting receipts and invoices, to Tenant

on or before November 1, 2007. ‘Tenant shall pay, on or before December 1,

2007, all amounts due or accrued under the lease as of November 1, 2007, as
shown by the audit.

Id.

Based on this new provision, on October 30, 2007, Sierra sent a letter to Wilson Office
demanding that Wilson Office pay excess expenses allegedly due under the Lease for 1994,
1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, and 2006. Letter from
Wesley Jeanes to Robert Blomstrom (October 30, 2007) (attached as Exhibit H). Sierra had
never before made a demand for these excess expenses to either Wilson Group or Wilson Office.
Wilson Office declined to pay the stale expenses allegedly incurred before Wilson Office
Assumed the tease in 2005 and Wilson Group no longer existed to provide an answer to Sierra’s
demand. Letter from Robert Blomstrom to Wesley Jeanes (January 15, 2008) (attached as
Exhibit 1). Sierra thereafter filed this lawsuit on February 1, 2010 against Wilson Office, Robert
Blomstrom (Wilson Office’s President), Wilson Group, and Don Hill (the former Wilson
Group’s President), Plaintiff's Original Petition (attached as Exhibit J).

Sierra asserts one cause of action against Wilson Group. Sierra's breach of contract
claim alleges that Wilson Group (and Wilson Office) breached the 1993 Lease, the Assignment,
and the various I_case Extension Agreements by (1) failing to pay the excess expenses for 1994-
2006 and (2) by failing to pay or reimburse Sierra for damage beyond normal wear and tear.
Plaintiff's First Amended Petition, {ff 4.1-4.2 (attached as Exhibit K). Sierra further secks to
pierce Wilson Group’s corporate structure and hold Mr. Hill personally liable for the company’s

obligations. /d. at §§ 7.1-7.2.

Wilson Group, Ltd.’s and Don Hill's Motion for Partial Summary Judgment Page 3 of 13As explained herein, each of Sierra’s causes of action fails as a matter of law. First, the
relevant statutes of limitations preclude recovery for any claims that arose before February 1,
2006 (four years before filing). Since Wilson Group assigned the lease and wound down its
operations in August 2005, the statute of limitations relieves it from the claims at issue in this
case. Second, as a matter of law, Wilson Group cannot be held liable for any obligations that
arose after April 30, 2006 because Wilson Group was not a party to and did not sign any
agreement extending the Lease beyond that date. Finally, Sierra has no evidence to support its
request to disregard Wilson Group as a corporation because it has no evidence to show that Mr.
Hill used Wilson Group to perpetrate an actual fraud on Sierra. TEx. BUS. ORG. CODE § 21.223.

Il. Summary Judgment Standard

Summary judgment is appropriate if the pleadings and summary judgment evidence
“show that, except as to the amount of damages, there is no genuine issue as to any material fact
and the moving party is entitled to judgment as a matter of law on the issues expressly set out in
the motion or in an answer or any other response.” TEX. R. Civ. P. 166a(c). Moreover, summary
judgment is appropriate if, after adequate time for discovery, “there is no evidence of one or
more essential elements of a claim or defense on which an adverse party would have the burden
of proof at trial.” /d. at 166a(i). Where a motion states elements as to which there is no
evidence, “the court must grant the motion unless the respondent produces summary judgment
evidence raising a genuine issue of material fact.” /d.

III. Statute of Limitations Bars Claims for Excess Expenses

The four year statute of limitations for contract actions bars Sierra’s recovery for any
excess expenses incurred before February 1. 2006. Sierra’s claim for excess expenses sounds

solely in contract and therefore is subject to a four year statute of limitations. TEx. Civ. PRAC.

Wilson Group, Ltd.’s and Don Hill’s Motion for Partial Summary Judgment Page 4 of 13Rem. Cope § 16.004(a). Sierra must thercfore bring its causes of action for excess expenses
within four years of when such claims for the excess expenses accrue. /d.

Generally, the accrual of the cause of action “means the right to institute and maintain a
suit; and whenever one person may sue another a cause of action has accrued, and the statute
begins to run.” Port Arthur Rice Milling Co. v. Beaumont Rice Mills, 105 Tex. 514, 143 S.W.
926, 928 (1912)(emphasis omitted). A breach of contract claim accrues at the time of the breach
or when the “claimant has notice of facts sufficient to place him on notice of the breach.” Davis
Apparel v. Gale-Sobel, 117 S.W.3d 15, 18 (Tex.App—Eastland 2003, no pet.); Stine v. Stewart,
80 S.W.3d 586, 592 (Tex.2002); Slusser v. Union Bankers Insurance Company, 72 $.W.3d 713,
77 (Tex. App-Eastland 2002, no pet.).

A cause of action for payment under a lease agreement accrues when the payment is due.
See, e.g. WW. Laubach Trust v. Georgetown Corp., 80 S.W.3d 149, 160 (Tex. App.--Austin
2002, pet. denied) (“a cause of action for breaching a lease accrues when each payment is due”).
When a tenant does not make a payment under a contract, the landlord must chose to either (1)
treat the missed rent payment as a breach terminating the entire lease or (2) keep the lease alive
and sue for rents as they become due. F.D. Stella Prods. Co. v. Scott, 875 S$.W.2d 462, 465
(Tex.App.-Austin 1994, no writ).

In this case, Sierra’s claim for excess expenses accrues at the end of each calendar year or
at that end of the period in which the lease is in effect. The excess expense provision is found in
paragraph 8(f) of the Lease. That paragraph specifies that, while Sierra is obligated to pay
certain taxes, insurance, maintenance and repairs under the lease, Sierra must only pay up to
$42,099.00 of such costs in any calendar year. Lease  8(f) (Exhibit B). This amount is

sometimes referred to as an “expense stop.” To the extent such expenses exceed that expense

Wilson Group, Ltd.’s and Don Hill's Motion for Partial Summary Judgment Page 5 of 13stop for a ycar, the tenant is required to reimburse Sierra for the difference.' Jd. Since Sierra had
the right to any payments over the expense stop at the end of each calendar year, its cause of
action for excess expenses accrued at the end of each calendar year. Sierra’s demand letter to
Wilson Office confirms that the excess expenses accrue yearly by breaking down such expenses
year by year. Letter from Wesley Jeanes to Robert Blomstrom (October 30, 2007) (Exhibit H).
Moreover, Sierra’s corporate representative testified that Sierra was owed excess expenses “as
of” the end of each year. Jeans Depo 195:3-196:10 (attached as Exhibit L.). In other words,
when Sierra did not receive a payment for excess expenses at the end of any given calendar year,
it was required to either terminate the entire lease or keep the lease alive and sue for the excess
expense payment. See FD. Stella Prods., 875 S.W.2d at 465. Sierra obviously chose not to
terminate the entire contract and therefore was obligated to sue for each missed excess expense
payment.

The record is undisputed that Sierra did not file this lawsuit until February 1, 2010. Since
Sierra’s claims for excess expenses accrued at the end of each calendar year, it is cannot recover
for the excess expense payments it claims for 1994-2005. Wilson Group and Mr. Hill
accordingly ask that the Court enter summary judgment that Sierra can recover nothing for its
claims for excess expenses concerning the years 1994 through 2005.

IV. Statute of Limitations Bars claims for Alleged Damage to The Building

Sierra’s Petition asserts that Wilson Office and Wilson Group breached the Lease by
failing to repair physical damage to the property in excess of normal wear and tear. First
Amended Petition, 4 4.2 (Exhibit K). Sierra’s Rule 194 disclosures attempt to couch this claim .

as both for breach of contract and for negligence. Plaintiff's Amended Rule 194 Disclosures

' Also, if the Lease terminates in the middle of a year, then the Lease specifies how to prorate the excess expenses
over that year. /d.

Wilson Group, Ltd.'s and Don Hill’s Motion for Partial Summary Judgment Page 6 of 13(attached as Exhibit M). Although Sierra does not specify the contractual provision on which

this claim relies, it appears that Sierra is relying on 4 8(d):
Notwithstanding the other provisions of this Section 8; cach party shall be
financially responsible for such loss or damage to the Property, the Common
Area, the Building or the Leased Premises: (i) for which there is no
reimbursement under insurance coverage; and (ii) which is caused by that party’s
willful actions or negligence, or the willful actions or negligence of that party’s
agents, servants, employees, invitees, or licensees.

Commercial Lease § 8(d) (Exhibit B)
Sierra may also be relying on § 17:
Tenant shall deliver and surrender possession of the leased Premises to Landlord
upon the termination of this lease, by expiration of the term or otherwise, clean
and in the same condition as existed at the commencement of the term; provided,
Tenant shall not be responsible for any degradation of the leased Premises caused

by: (i) ordinary wear; or (ii) the failure of Landlord to perform its duties of repair,
reconstruction or maintenance under this Lease.

Id. at § 17.

Regardless of the provision or whether this cause of action sounds in contract or tort,
Wilson Group can have no liability within the limitations period because it vacated the premises
over five (5) years before Sierra filed suit. As discussed supra, breach of contract damages are
subject to a four-year statute of limitations. Negligence claims are subject to a two-year statute
of limitations. TEx. Civ. Prac. & REM. CODE ANN. §§ 16.003(a). For the purposes of
limitations, a cause of action for negligence, with few exceptions, accrues when the wrongful act
causes an injury, not when the plaintiff learned of the injury. Moreno v. Sterling Drug, Inc., 787
S.W.2d 348, 351 (Tex. 1990). In this instance, Wilson Group undisputedly vacated the Property
when it assigned the Lease to Wilson Office in August 2005. Therefore, for the purposes of this
summary judgment motion, it does not matter whether the cause of action for excessive wear and

tear arose when Wilson Group allegedly caused the damage or when Wilson Group moved out.

Wilson Group, Ltd.’s and Don Hill’s Motion for Partial Summary Judgment Page 7 of 13Either case places any physical damage to the Property that Wilson Group could have possibly
caused outside of the limitations period.

Accordingly, Wilson Group and Mr. Hill request that the Court enter summary judgment
that Sierra’s claims against them for physical damage to the Property are time barred.

Vv. Wilson Group is not responsible for any claims fullowing April 30, 2006

Witson Group denies that it remained liable for any obligations following transfer of the
lease to Wilson Office on August 7, 2005. It appears that Sierra, however, seeks to hold Wilson
Group responsible for alleged breach of contract claims by Wilson Office. First Amended
Petition § IX (Exhibit K). Sierra seems to argue that the Assignment’s statement that Wilson
Group remains liable for “rent and other sums due and becoming duc under the terms of the
Lease or the performance of any of the conditions, covenants and provisions of the Lease”
creates in effect unlimited liability against Wilson Group in perpetuity for any actions by Wilson
Office in connection with the Property. Under this interpretation, Sierra also claims that the
statute of limitations does not apply to Wilson Group because the 2007 Lease Extension
Agreement that Wilson Office negotiated somehow works to waive Wilson Group's rights to
claim the statute of limitations. Legally, this cannot be the case.

First, Wilson Group can only be responsible for those contracts to which it is a party. In
this case, the only agreement in effect at the time of the Lease Assignment was the July 22, 2003
Lease Extension Agreement. That Lease Extension Agreement extended only until April 30,
2006. July 22, 2003 Lease Extension Agreement (Exhibit D). Wilson Group did not agree to the
later June 26, 2007 Lease Extension Agreement and Wilson Group never agreed to be bound by
any future Lease Extensions when it executed the Assignment. /d. Therefore, the June 26, 2007

Lease Extension Agreement can have no effect as to Wilson Group and as a matter of law

Wilson Group, Ltd.’s and Don Hill’s Motion for Partial Summary Judgment Page 8 of 13Wilson Group’s liability under the Lease cannot extend past the expiration of the final Lease
Extension Agreement Wilson Group signed (April 30, 2006).

Second, the statute of frauds prevents application of the June 26, 2007 Lease Extension
Agreement to Wilson Group. Whether an agreement falls within the statute of frauds is a
question of law. Tabrizi v. Daz-Rez Corp., 153 $.W.3d 63, 66 (Tex. App.-San Antonio 2004, no
pet.). Here, the Lease Extension agreement unquestionably subject to the statute of frauds
because it is a contract for a lease of real estate longer than one year? Tex. Bus. & Como. Cong.
§ 26.01(b)(S). Thus, to have any effect against Wilson Group. the 2007 Lease Extension
Agreement must have been (1) in writing and (2) signed by Wilson Group. /d. at 26.01(a). In
this case, the uncontroverted evidence shows that Wilson Group did not sign the 2007 Lease
Extension Agreement. Moreover, there is no evidence that Wilson Group, which was no longer
operating in June 2007, gave authority for Wilson Office to sign on Wilson Group’s behalf.
Therefore, as a matter of law, the 2007 Lease Extension Agreement can have no effect on Wilson
Group.

Accordingly, Wilson Group respectfully requests that the Court enter summary judgment
that as a matter of law Wilson Group faces no liability under the Lease, the Assignment, or any
Lease Extension Agreement beyond April 30, 2007. Furthermore, Wilson Group requests that
the Court enter summary judgment that the June 26, 2007 Lease Extension Agreement has no
effect on Wilson Group, including by way of specific example, that the June 26, 2007 Lease
Extension Agreement does not waive any statute of limitations defense or allow any cause of

action to arise/accrue against Wilson Group.

* Other relevant statutes of frauds may also apply to the Lease Extension agreement. For example, to the extent that
the 2007 lease Extension Agreement purports to make Wilson Group responsible for any obligations incurred by
Wilson Office (a claim Wilson Group denies), TEX. BUS. & COMM CODE § 26.01(b)(2) would also apply.

Wilson Group, Ltd.'s and Don Hill's Motion for Partial Summary Judgment Page 9 of 13VI. No evidence that Sierra_met conditions precedent to asserting a claim for
reimbursement

 

As described supra, the 2007 Lease Extension legally can have no effect on Wilson
Group or Mr. Hill. In addition, Sierra has no evidence that it complied with the conditions
precedent Sierra itself inserted into that 2007 Lease Extension. In relevant part, the 2007 Lease
Extension Agreement requires that:

Landlord shall conduct an audit of all mounts due or accrued under the lease and

shall submit such audit, together with supporting receipt and invoices, to Tenant,

on or before November 1, 2007. ‘Tenant shalt pay, on or before December 1,

2007, all amounts due or accrued under the lease as of November 1, 2007, as
shown by the audit.

June 26, 2007 Lease Extension Agreement (Exhibit G). Thus, Sierra has no claim for the excess
expenses it secks in this case if it did not provide an audit and aff receipts by November 1, 2007.
The evidence shows that Sierra presented only a demand letter and there is no evidence of an
audit being presented. See, e.g. Jeanes Depo. 54:21-55:22; 57:18-21 (Exhibit L). Moreover,
there is no evidence that Sierra presented all receipts underlying all elements claimed in that
demand letter. It appears that Sierra has failed to produce, even as of today, receipts for a
number of items including, by way of example and not of limitation: insurance for 1995-2003,
2007; utilities for 2003; taxes for 1995, 1998-2001, 2004-2006, and 2007.

Sierra’s failure to provide an actual audit and appropriate documentation is meaningful
not only in that it violates a condition precedent to any recovery but also because it demonstrates
the lack of support for Sierra’s claims. For example, the Lease required Sierra to provide a
“standard form fire insurance policy... .” The Lease required the tenant (Wilson Group and later
Wilson Office) to maintain a “commercial general liability coverage and property damage
insurance policy” and an “all risk and perils property insurance policy. . . .”. Commercial Lease

9 7(a). 7(b) (Exhibit B). Sierra has presented no evidence, either before November |, 2007 or in

Wilson Group, Ltd.'s and Don Hill's Motion for Partial Summary Judgment Page 10 of 13this litigation, that its claims for excess insurance expenses concern only a standard form fire
insurance policy as distinguished from the insurance the Lease required the tenants to carry.

Accordingly, Wilson Group and Mr. Hill respectfully request that the Court enter
summary judgment that as a matter of law Sierra has failed to satisfy the conditions precedent for
recovering excess expenses and therefore can recover no such excess expenses from Wilson
Group.

VII. No evidence to pierce corporate veil

Sierra has no evidence to support one or more elements of its cause of action VII
“Improper Distributions and Disregard of the Corporate Structure” and thus that claim should be
dismissed. The Wilson Group is a Nevada Corporation that operated in Texas. Plaintiffs’ First
Amended Petition, {1.4 (Exhibit K); Hill Depo. 55:22-56:22 (Exhibit E). Mr. Hill was a
shareholder of that entity. Hill Depo 8:6-13; 60:8-20; 61:3-6 (Exhibit E). Accordingly, Sierra
may only pierce the corporate veil and pursue Mr. Hill personally if it shows that Mr. Hill
“caused the corporation to be used for the purpose of perpetrating and did perpetrate an actual
fraud on the obligee primarily for the direct personal bencfit of the holder, beneficial owner,
subscriber, or.affiliate.” Tex. BUS. ORGS. CODE §§ 21.001; 21.223; 21.224. In this case, there is
no evidence that Mr. Hill used Wilson Group to perpetrate an actual fraud against Sierra.

Accordingly, Wilson Group and Mr. Hill respectfully request that the Court enter
summary judgment denying Sierra’s

VII. Plaintiff's Claim for Attorneys’ fees fails because it has no cause of action
against Wilson Group or Hill

For the reasons explained supra, Sierra states no colorable cause of action against Wilson

Group or Mr. Hill. Accordingly, Sierra has no basis in which to claim attomeys’ fees. Wilson

Wilson Group, Ltd.’s and Don Hill’s Motion for Partial Summary Judgment Page 11 of 13Group and Mr. Hill respectfully request that the Court grant summary judgment denying Sierra’s

claims for attorneys’ fees.

IX. © The Cross Claims are Moot Because there can be no ongoing liability against
Wilson Group or Hill

In their cross claims, Wilson Office seeks judgments that Wilson Group is responsible for
any monies allegedly owed to Sierra prior to August 7, 2005. Wilson Office Interiors, L.L.C.’s
Amended Cross-Claim, J 1.9-2.2 (attached as Exhibit N). For the reasons stated supra, Sierra
has no claim to any monies owed prior to August 7, 2005. Wilson Offices’ cross claim is
therefore moot. Wilson Group respectfully request that the Court enter summary judgment

dismissing that cross-claim accordingly.

February 25, 2011

   

R. Ritch Roberts

John Helms

Texas Bar No. 09401001

Helms, Johnson & Diaz LLP

6060 N. Central Expressway. Suite 560
Dallas, Texas 75206

Tel: (214) 800-2086

Fax: (214) 800-2057

R. Ritch Roberts, III

‘Texas Bar No. 24041794

R. Ritch Roberts PLLC

9090 Skillman St., Suite 182-A310
Dallas, TX 75243-8262

Tel: (972) 468-8779

Fax: (972) 468-9455

Wilson Group, Ltd."s and Don Hill's Motion for Partial Summary Judgment Page 12 of 13CERTIFICATE OF SERVICE

I hereby certify that on Eebruary 25, 2011, 1 caused a true and correct copy of this
pleading to be served on the following counsel by hand delivery.

L. Randall Yazbeck
The Law Office of L. Randall Yazbeck
5050 Quorum Drive. Suite 140
Dallas, Texas 75254
972.980.8278 (fax); and

Charles C. Frederiksn
Glast, Phillips & Murray P.C.
14801 Quorum Dr. Suite $00

Dallas, TX 75254
972.419.8329 (fax)

_ Evelyn A. Yaeger
Gibson, McClure, Wallace & Daniels, L.L.P.
8080 N. Central Expressway
Suite 1300, LB 50
Dallas, Texas
214.891.8010 (fax); and

Jean A. Hobart
Tucker, Ellis & West, LLP
515 South Flower Street, 42nd Floor
Los Angeles, California 90071
(213) 430-3409.

R. Ritch Roberts

Wilson Group, Ltd.'s and Don Hill's Motion for Partial Summary Judgment Page 13 of 13Exhibit ACAUSE NO. 10-01167

SIERRA INVESTMENT ASSOCIATES,
Plaintiff/Counter-Defendant

IN THE DISTRICT COURT OF

Vv.

WILSON OFFICE INTERIORS, LLC,

ROBERT BLOMSTROM
Defendants/Cross-Claimants,
Counter-Plaintiff

298" JUDICIAL DISTRICT

ve
B. DONALD HILL, JR. and

THE WILSON GROUP, LTD.,

§
§
§
8
§
§
§
§
§
§
§
:
Defendants/Cross-Defendants. §

DALLAS COUNTY, TEXAS

AFFIDAVIT OF R. RITCH ROBERTS
BEFORE ME, the undersigned authority, a notary public in and for the state of Texas, on
this day personally appeared R. Ritch Roberts III, who being duly swom, upon her oath deposes

and says:

1. I am over the age of 21 years, of sound mind, and fully competent to testify as to
the matters herein. I have never been convicted of a felony or a crime of moral turpitude. | have
personal knowledge of every statement herein unless explicitly stated otherwise.

2. [ am an attomey representing B. Donald Hill Jr. and the Wilson Group, Ltd. in the
above-styled matter. This affidavit is being submitted as an exhibit to the Wilson Group, Ltd.’s
and Don Hill’s Motion for Partial Summary Judgment (hereafter the “Motion”)

3. Attached as Exhibit B to the Motion is a true and correct copy of the Commercial
Lease Dated September 15, 1993.

4, Attached as Exhibit C to the Motion is a true and correct copy of the Lease

Extension Agreement dated May 22, 2000.

AFFIDAVIT OF R. RITCH ROBERTS Page | of 35. Attached as Exhibit D to the Motion is a true and correct copy of the Lease
Extension Agreement dated July 22, 2003.

6. Attached as Exhibit E to the Motion is a true and correct copy of excerpts from
the deposition transcript of Bayard Donald Hill, Jr. taken in this case and dated October 5, 2010.

7. Attached as Exhibit F to the Motion is a true and correct copy of the Assignment
of Lease Agreement and Landlord’s Consent dated August 7, 2005

8. Attached as Exhibit G to the Motion is a true and correct copy of the Lease
Extension Agreement dated June 26, 2007.

9. Attached as Exhibit H to the motion is a true and correct copy of the letter from
Wesley Jeanes to Robert Blomstrom dated October 30, 2007.

10. Attached as Exhibit | to the Motion is a true and correct copy of the Letter from
Robert Blomstrom to Wesley Jeanes and dated January 15, 2008.

I. Attached as Exhibit J to the Motion is a true and correct copy of Plaintiff's
Original Petition in this case.

12. Attached as Exhibit K to the Motion is a true and correct copy of Plaintiff's First
Amended Petition.

13. Attached as Exhibit L to the Motion is a true and correct copy of excerpts from
the deposition transcript of Wesley Jeanes taken in this case and dated January 31, 2011.

14. Attached as Exhibit M is a true and correct copy of the Plaintiff's Amended Rule
194 Disclosures produced in this case and dated January 21, 2011.

15. Attached as Exhibit N is a true and correct copy of Wilson Office Interiors,
L.L.C.’s Amended Cross-Claim filed in this case.

Further affiant sayeth not.

AFFIDAVIT OF R. RITCH ROBERTS Page 2 of 3JULIA G. QUINONE:
Notary Public, State of Texas
My Commission Expires
May 26, 2074

 

My Commission Expires:

$-24-

 

AFFIDAVIT OF R. RITCH ROBERTS Page 3 of 3Exhibit BA ble

STATE OF TEXAS Z3I- FLPY
COUNTY OF DALLAS
COMMERCIAL LEASE
— :
yt THIS LEASE is made and entered into this /S day of
al"- September,, 1993 by and between Sierra Investment Associates,
74 a Texas partnership having an office and place of business at

740 South Sherman Street, Richardson, Texas, 75081 ("Landlord"),
and the Wilson Group, Ltd., a Nevada corporation having its
corporate headquarters at 11880 Shiloh Road, Dallas, Texas, |

75228 ("Tenant"). . |

Landlord and Tenant, for the consideration hereia stated,
hereby covenant and agree as follows: 1

1. MISE PREMISES:

Landlord is the owner of a 2.9657 acre tract of land situated
in Block 3 of the Cottonbelt West Industrial Park (an addition:
to the City of Carrollton, Dallas County, Texas, the plet af
which is recorded in Volume 84013, Page 3801 of the Map And
Plat Records of Dallas County, Texas) described by metes and
bounds in Exhibit A attached hereto, together with all
improvements thereon constructed (the ‘“Property"). Located
and constructed on the Property is a building having a floor
area of 56,132 square feet (the “Building"), as shown on the
diagram attached as Exhibit B hereto. The Common Area consists
of the land, parking lots, truck aprons, yards, porches and
walkways outside the Building but within the boundary lines
of the Property. Landlord does hereby lease and demise to Tenant, !
and Tenant does hereby lease, hire and take from Landlord, all
of the Building (in this Lease the terms “Building” and "Leased
Premises" are synonymous). Landlord does. further hereby grant
to Tenant the nonexclusive right and license to use the Common
Area; provided, Tenant shall have no right or license to alter
any part of the Common Area.

 

2. LANDLORD'S TI

Landlord covenants that it is the fee owner of the Property,

2 Tee oe BOTT: .: adefeasibic title to the Property,
that the Property is free and clear of all leases, tenan
agreements, encumbrances, liens or defects in title except as
expressly set forth in Exhibit C attached hereto. Landlord
agrees that it will furnish to Tenant, without cost, a true

       

   
  

 

| EXHIBIT aa
oae__ LI DULD

1.
BY RE
WA Fada ray COR, RAR GRRand correct copy of Landlord's Owner's Policy of Title Insurance
with respect to the Property, together with copies of all
documents shown on Exhibit C, as evidence that Landlord's title
is in accordance with the foregoing, upon Tenant's written request
therefor. Landlord further represents that, at the commencement
of the term hereof, neither the Property as fully improved nor
the use thereof by Tenant for office, light manufacturing and
warehouse purposes, other lawful uses incidental thereto, and
such other uses as are set forth in Exhibit D attached hereto,
will violate any present law, ordinance or regulation of any
governmental authority having jurisdiction over the Property,
or violate any restrictions imposed upon the Property by deed
or otherwise; provided, Landlord does not represent or covenant
that Tenant may conduct any hazardous activity, or use or store
any hazardous substance, on the Property or within the Leased
Premises.

3. TERM AND POSSESSION:

The term of this Lease shall be for a period of six (6)
years and six (6) months, commencing on the first day of November,
1993 and ending on the last day of April, 2000, unless extended
or sooner terminated as hereinafter provided. Landlord shall
deliver possession of the Leased Premises to Tenant on the
commencement date of the term hereof, free and clear of all
tenancies and occupancies, broom clean and in good order and
condition, and with the alterations and improvements, if any,
to be made by Landlord as may be elsewhere provided for in this
Lease, completed in a good and workmanlike manner. Prior to
the commencement date, Landlord and Tenant shall make a joint
inspection and inventory of the Leased Premises to insure that
the Leased Premises are in the condition required for delivery
to Tenant and that all fixtures and equipment required as part
of the Leased Premises are present and operational.

4. RENT:

The rent for the Leased Premises for the term of this Lease
shall be $1,125,090.12, which Tenant agrees to pay Landlord
in seventy~seven (77) monthly installments of $14,611.56 each,
each such monthly installment being due and payable, in advance,
on the first day of each and every calendar month during the
term of this Lease: provided, there shall be no rent due from
Tenant to Landlord for the first full calender month of this
Lease. All rent shall be paid to Landlord at its address first
above written, unless Landlord shall designate some other payee

. or address for the payment thereof by giving notice to that

at.

 

te-Te

 

5. UPILITEES: |

Landlord represents and warrants that utility lines and
facilities serving the Leased Premises are Presently availableat the Leased Premises, fully installed, assessed and operational.
The terms “utility” or "utilities", as used in this Section
S shall include gas, electricity, water (including water for
fire protection service), sewer (both sanitary and storm) and
telephone. Tenant shall pay all charges for its use or
consumption of utilities during the term of this Lease. The
companies providing utility services to the Leased Premises
shall be responsible for the maintenance and repair of all utility
lines and facilities currently serving the Leased Premises,
and Landlord shall in no event be liable for any shortages or
interruption in utility services to the Leased Premises, nor
for the costs of any repairs or replacements of any utility
lines or facilities made necessary by reason of waste or
negligence on the part of the utility or Tenant, or their agents,
employees, or contractors. Should Tenant at any time require
additional utility service, Landlord agrees to cooperate with
Tenant and to execute those documents reasonably necessary to
obtain same, but all costs in connection therewith shall be

paid by Tenant.

6. TAXES AND_IMPOSITIONS :

(a) Landlord shall pay, during the term hereof, before
any fine, penalty, interest or cost may be added thereto for
the nonpayment thereof, all real estate taxes, assessments,
and other governmental charges, general and special, ordinary
and extraordinary, unforeseen as well as foreseen, of any kind
and nature whatsoever (all of which taxes, assessments, and
other governmental charges are hereinafter referred to as
“Impositions"), that are assessed, levied, confirmed, imposed,
or become a lien upon the Property, or the sidewalks or streets
in front of or adjoining the Property, or become payable with
respect to the Property, during the term of this Lease. Provided,
however, that any Imposition relating to a fiscal period of
the taxing authority, a part of which period is included within
the term of this Lease and a part of which is included in a
period of time either before the commencement, or after the
expiration, of the term of this Lease, shall (whether or not
such Imposition shall be assessed, levied, confirmed, imposed
or become a lien upon the Property or shall become payable during
the term of this Lease) be adjusted and prorated as of the
commencement and/or expiration of the term of this Lease so
that io no event shall any portion of such Imposition allocable
to a period of time either before the commencement, or after
the expiration, of the term of this Lease be allocated to the

term of this Lease.

(b) Nothing contained in this Lease shall require either
party to this Lease to pay any franchise, corporate, estate,
inheritance, succession, capital, transfer, income, excise,
profits or revenue tax of the other party hereto, nor shali
any sucb tax, assessment, charge or levy be deemed to be includedwithin the term "Imposition" as hereinabove defined. If either
party to this Lease sball be required by law to pay and, pursuant
to such law, does pay any such tax, assessment, charge or levy,
the other party shall, upon written request, reimburse the first

party for any such payment.

. (c) Notwithstanding any other provision of this Section
6, Landlord shall not be required to pay or discharge any
Imposition so long as Landlord shall in good faith contest the
same, or the validity thereof, by appropriate legal proceedings
which operate to prevent the collection of the Imposition, or
the involuntary sale or foreclosure of the Property or any part
thereof to satisfy the Imposition; provided, before or during
the pendency of any such legal proceedings, Landlord shall have
the right to pay, discharge or remove the contested Imposition
if required by law or as Landlord may in its discretion consider
prudent or appropriate. Any legal . proceedings contesting the
validity or amount of, or to recover back, any Imposition, may
be brought by either party hereto, or both, as may be necessary
or appropriate, and each of the parties hereto agrees that it
shall cooperate with the other in any such proceedings to such
extent as such other party may reasonably request. However,
if any such proceeding is brought and lost by Tenant, Tenant
shall indemnify and hold Landlord harmless from and against
any and all loss, cost or expense of any kind that may be imposed
upon Landlord in connection therewith. Tenant shall be entitled
to any refunds of any Imposition, or refunds of other charges,
penalties or interest thereon, which have been paid by Tenant,
or paid by Landlord and for which Landlord has been reimbursed
by Tenant. The term "proceedings" as used herein shall include
appeals to any court or governmental entity having or claiming
jurisdiction or authority over the Property.

7. INSURANCE:

(a) ai g the term of this Lease, at Tenant's
sole cost and expense, (procure and maintain in full fore
effect a_¢ B and property damage
{nsurance policy to prot aga lial oO the pu
or_to_any employee, invitee or 1 ee of Tenant 0: andiord,
ieident to the use of or arising or resulting from any event,
injury or accident occurring on the Property or within the Leased
Premises, with a comprehensive single’ limit of not less than
One Million Dollars (($1,000,000.00)> Tenant shall also, during
the term of this Lease, at Tenant's sole cost and expense, procure
and maintain in full force and effect an all risk and perils
property insurance policy to, protect against any Jose or damage
to all personal property stored or placed by Tenant on the
Property or within the Leased Premises, with policy limits in
an amount not less than the replacement cost of such personal

property.ith extended coverage endorsement covering e operty
and the improvements thereon in an amount not less than the
full replacement value thereof, exclusive of architectural and
engineering fees, excavation, footings and foundations, insuring
against the perils of fire and lightning and including extended
coverage; provided, however, that a policy of fire insurance
which fin the opinion of Landlord insures ninety percent (90%)
of said replacement value of the Property and improvements in
common with other facilities of the insured, and which contains
an inflation-guard endorsement, shall be sufficient.

b Landlord shall during the term hereof, procure and
Gaintain>in Tull force and effect @ standaya Orn Tire insurance
w

(c) All insurance coverage and policies required by this
Section 7 shall: (1) expressly name Landlord and any - mortgagee
or hypothecary creditors of Landlord as named or additionally
named insureds thereunder, and provide for the loss proceeds
of such policy to be expressly made payable to Landlord and
such creditors as their respective interests may appear; (41)
be issued by an insurance company or companies authorized to
write insurance in the State of Texas and reasonably acceptable
to Landlord; and (111) provide that said insurance shall not
be canceiled unless thirty (30) days prior written notice shall
have been given to Landlord.

8. AINT: R IR REPLAC: TS XP} Ps

(a) Landlord shall, at its sole cost and expense, maintain
the structural parts of the Building in a good, safe, operable
condition, promptly providing all necessary repairs and
maintenance thereof. The structural parts of the Building for
which repairs and maintenance shall be provided by Landlord
at Landlord's sole cost and expense shall only include, and
shall be limited to, the following:

(1) Roof ' and roofing, including flashings, gutters,
downspouts, eaves and all other portions of the roof;

(2) Foundation, including floor slab;
(3) Exterior walls and all load-bearing walls; and

(4) Structural steel.

(b) Landlord shall, at the sole cost and expense of Tenant,
to the extent Landlord is not specifically obligated to provide
such work at. Uandlord's cost,and expense under Sections 3 or
8(a) above, keep and maintain ali parts of the Leased Premises
in good condition and repair, promptly providing all necessary
repairs and maintenance thereof. Without limiting the foregoing,
the items and parts of the Leased Premises for which repairs
and maintenance shall be provided by Landlord, but for whichthe cost and expense shall be solely borne by Tenant, shall]
include, but shall not be limited to, the following:

(1) Windows, glass and. plate glass, doors, skylights,
entryways, interior walls and finish work, floor
coverings, truck doors, and loading docks; and

(2) Heating and air conditioning systems and fixtures,
electrical systems and fixtures, and plumbing systems

and fixtures.

Prior to performing or providing such repairs and
maintenance, Landlord and Tenant shall have the right to obtain
three (3) competitive bids each for the performance of such
repairs and maintenance. Landlord shall employ the bidder which
Landlord and Tenant agree is qualified to perform the work at
the lowest net cost. Should Landlord and Tenant not agree on
the person or entity to perform the work, Landlord shall select
the person or entity to perform the work, but Tenant shall not
be liable for any costs of repairs or maintenance performed
by such person or entity to the extent that such costs exceed
the average of the bids secured by Landlord and Tenant for such
work. Upon performing or providing such repairs and maintenance,
Landlord sball invoice Tenant therefor, and Tenant shall pay
such invoice within fifteen (15) days of the receipt of the
invoice by Tenant.

(c) Landlord shall maintain the Common Area, including
landscaping, lawns, parking lots, driveways, and walkways.
Landlord shall pay the costs of maintenance of the Common Area,
and any assessments against the Property for maintenance of
the common areas of the business park in which the Property
is located.

(d) Notwithstanding the other provisions of this Section
8, each party shall be financially responsible for such loss
or damage to the Property, the Common Area, the Building or
the Leased Premises: (i) for which there is no reimbursement
under insurance coverage; and (ii) which is caused by that party's
willful actions or negligence, or the willful actions or
negligence of that party's agents, servants, employees, invitees
or licensees.

(e) The provisions of Sections 10, 11, and 22 shall control
in the event of any conflict between such named sections and
this Section 8.

(ft) Notwithstanding any other provision of this Lease, -

Landlord's duty to pay or absorb the combined costs for taxes,
insurance, maintenance and repairs pursuant to Sections 6, 7,
8(b) and B(c) of this Lease shall not exceed $42,099.00 in any
calender year. To the extent that such combined costs exceednorth/sout

$42,099.00 in any calender year, Tenant shall reimburse Landlord
the amount by which such combined costs exceed $42,099.00 that
calender year. Por periods at the commencement or expiration
of the term of this Lease when Tenant has the Leased Premises
for only a portion of the calender year, such excess costs shall
be prorated so that Tenant bears the amount of the excess costs
multiplied by e@ fraction, the numerator of which is the oumber
of days the Tenant had the Leased Premises during that calender
year, and the denominator of which is 365.

(g) Notwithstanding any other provision of this Section
8, it shall be the duty and responsibility of Tenant, at Tenant's
sole cost and expense, to keep the Leased Premises clean, free
of rubbish, free of obstruction of passageways and exits, free
of hazardous substances, and free of hazardous conditions ‘arising
from the use or occupancy of the Leased Premises by Tenant.

(h) Whenever Tenant shall observe the need for the repair,
maintenance or replacement of any part or portion of the Property,
the Common Area, the Building or the Leased Premises, Tenant
shall promptly notify Landlord of the need for such repair,

maintenance or replacement.

(14) In the event any part or portion of the Property shall
through normal use or age deteriorate to the point where further
repair or maintenance thereof is not economic or prudent, Landlord
shall bear the cost of replacing such item as a capital

expenditure.
9. ALTERATIONS AND IMPROVEMENTS:

(a) Tenant shall have the right, but not the obligation,
to at any time during the initial term of this Lease demolish
at Tenant's sole expense the existing offices within the Leased
Premises. In the event Tenant exercises such right, Tenant
shall following the demolition of the existing offices immediately
construct within the Leased Premises new offices io accordance
with the plans and specifications drafted by Wilson Design
Services, dated July 30, 1993 and amended August 16, 1993 and
August 31, 1993, said plans and specifications being hereby
incorporated by reference; provided, Tenant shall have the right,
by moving the eastern wall of such new offices to the east or
west, to increase or decrease the area of the new offices by
twenty-five perceat (25%) over or under the area set forth within
said plans and specifications; provided further, in no event
shall Tenant deviate from said plans and specifications, within
+ the new offices lying within the first,,on.sccond
ine of warehouse bays from the west wall of the
Leased Premises, without the written consent of Landiord. Said

 

Aven

 

improvements shall when constructed be the property of Landlord. —

Tenant shall at all times keep the Property free and clear of
any and all claims and mechanics liens arising from the-gtructurai:- integrity or overall s@

construction of such improvements. Prior to the initiation
of the demolition of the existing offices within the Leased
Premises, Tenant shall deposit with American Title Insurance
Company, 18112 Preston Road, Dallas, Texas, an amount equal
to the estimated costs of the demolition of the existing offices
and the construction of the new offices. American Title Insurance
Company shall hold such funds {in escrow, to be disbursed by
said title company, upon the joint approval of Landlord and
Tenant, to the contractors, materialmen and laborers who perform
such work. Upon the completion of the {mprovements, and the
issuance of a Certificate Of Occupancy of said improvements
by the City of Carrollton, Texas, Landlord shall grant Tenant
77 monthly rent credits in the amount of $2,338.83 each, being
one rent credit for each of the 77 months for which Tenant is
Jdable for the payment of rent under this Lease. Tenant shall
have the right to apply one rent credit of $2,338.83 to each
monthly instaliment of reat due under this lease as the
installment matures and becomes due and payable; provided, for
the installments of rent for those months preceding the completion
of the improvements, and for which Tenaot has previously paid
the full amount of rent under Section 4 above, Tenant shall
have the right to accrue the rent credits allocable to such
months, and deduct such accrued rent credits from the first
installments of rent maturing and becoming due and payable under
this Lease following the completion of the improvements, until
the full amount of such accrued rent credits is exhausted.
During the construction of the improvements, Landlord shall
at its sole cost and expense reconstruct the primary entrance
to the Building to bring that entrance into compliance with
the Americans with Disabilities Act of 1990.

(b) Tenant shall have the right, at its own expense, to
make such other alterations, additions, installation of materials
(including partitioning, trade fixtures, machinery, equipment,
furnishisgs and other items) and changes (hereinafter collectively
called. "Alterations") in and to the Building and the Leased
Premises as necessary for Tenant's purposes; provided: (i) Tenant
shall, prior to making such Alterations, submit to Landlord
for its approval, in accordance with the procedures set forth
in Paragraph (c)} below, plans and specifications for such
Alterations, and Landlord shall have approved in writing such
Alterations; (ii) Tenant shall bave complied with all legal
requirements for the construction of improvements on the Property,
and such Alterations shall not violate the terms of asy easements,
restrictions, or other matters affecting. or encumbering the
Property; and (444) such Alterations will not impair the
ty of the Building, or
diminish the value of the Property.” All Sweh’ “ATvéeratious, “sive
and except .personal property not permanently attached to the
Property, shall become the property of Landliord when constructed
or installed. In the event of damage or destruction of such
Alterations by fire or other causes, Landlord shall have theright to recover the value thereof as its own loss from any
insurance company which has insured the same, and Landlord shall
have the right to any award relating to such Alterations in
the event of condemnation. Tenant agrees that any and all
Alterations shall be performed, constructed and installed: (4)
in a good and workmanlike manner; (41) ion accordance with the
plans and specifications for the Alterations which have previously
been approved by Landlord through the procedures set forth in
Paragraph (c) belo