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CAUSE NO. 10-01167 FI | E Dn
SIERRA INVESTMENT ASSOCIATES, § IN THE DISTRIQH gi .
Plaintiff/Counter-Defendant SURF PF 208
G id SONS
ve
WILSON OFFICE INTERIORS, LLC,
ROBERT BLOMSTROM
Defendants/Cross-Claimants,
Counter-Plaintiff
298" JUDICIAL
Vv.
B. DONALD HILL, JR. and
THE WILSON GROUP, LTD.,
Defendants/Cross-Defendants.
DALLAS COUNTY, TEXAS
WILSON OFFICE INTERIORS, LLC’S RESPONSE TO
PLAINTIFF’S MOTION FOR ENTRY OF ORDERS ON
SUMMARY JUDGMENT AND EVIDENTIARY ISSUES
COMES NOW, Defendant Wilson Office Interiors, LLC, and files its Response to
Plaintiff's Motion for Entry of Orders on Summary Judgment and Evidentiary Issues, and
as grounds for same would show as follows:
1. Plaintiff's motion should be denied, since it perpetuates an ambiguity that
Plaintiff has exploited to keep its stale claims alive. In Exhibit | hereto, Defendant
submits a Proposed Order on the parties’ Motions for No Evidence Partial Summary
Judgment and/or Partial Summary Judgment. Defendant believes the attached Exhibit 1
accurately reflects the Court’s rulings on April 22" and eliminates any ambiguity
regarding the scope of the Court’s rulings. Also altached hereto is a copy of the Court
Reporter’s transcript of the Court’s hearing on April 22, 2011. (Exhibit 2.) Defendant
respectfully requests that this Court enter the attached Exhibit | as the Court’s Order.
2. Plaintiffs proposed order should not be entered, because it is vague and
ambiguous regarding the term “accrued.” The problem is that Plaintiff continues to arguethat its excess expenses did not accrue until the end of the lease and that all of its excess
expenses — even back to 1994 - are recoverable. All the defendants’ motions addressed
this very issue, and this issue was argued to the Court at the hearing. The Court rejected
Plaintiff's argument. Yet one week after the hearing, Plaintiff filed its Third Amended
Petition. Contrary to the Court’s rulings, the Petition’s new allegations seck to hold
defendants liable for excess expenses barred by limitations. Exhibit 3 is a courtesy copy
of the Third Amended Petition. In the Petition’s paragraphs 4.1 and 4.3, Plaintiff seeks
damages exceeding $200,000 for excess expenses, which the Court has ruled were barred.
Thus, Plaintiffs proposed order continues to exploit the ambiguity in the term “accrued,”
to try to keep alive its stale claims for excess expenscs incurred prior to February 1, 2006.
3. In contrast, Defendant’s Order at Exhibit 1 hereto accurately reflects the
Court’s ruling that the statute of limitations bars all claims that accrued prior to February
1, 2006, including excess expenses and/or amounts incurred or accrued prior to February
1, 2006. Defendant respectfully requests that the Court enter the attached Exhibit 1.
4, In addition, this Court should deny Plaintiff's Motion to enter the proposed
evidentiary order attached to Plaintiff's Motion at Exhibit B. The Motion is improper.
No conference was held by Plaintiff. There was no advance circulation of the proposed
order. Plaintiff entirely failed to discuss its proposed order prior to filing its motion.
5. Moreover, the Court Reporter's Transcript accurately reflects this Court’s
tulings on the evidentiary objections. (See Exhibit 2 hereto.) No separate order is
needed.
6. Further, Plaintiff's proposed evidentiary order is vague and ambiguous.
The proposed order fails to state which objections are being considered, which objections
are being granted, or what were the scope and bases for the objections. Plaintiff's orderwill confuse the record of the April 22 hearing. Defendant respectfully requests that the
Court deny Plaintiff's Motion in its entirety.
PRAYER
WHEREFORE, Premises Considered, Wilson Office Interiors, LLC respectfully
requests that this Court deny Plaintiff's motion in its entirety and instead enter
Defendant's Proposed Order that is attached hereto as Exhibit 1, and for all other and
further relicf, in law or in equity, to which Defendant Wilson Office Interiors, LLC may
show itself justly entitled.
Respectfully submitted,
GIBSON, McCLURE, WALLACE
& DANIBLS, L.L.P.
EXelyn A. Yacger\, J
Texas Bar No. 00789740
8080 N. Central Expressway
Suite 1300, LB 50
Dallas, Texas 75206-1838
(214) 891-8040
(214) 891-8010 Telecopy
Jean A. Hobart
Texas Bar No. 09736620
Tucker, Ellis & West, LLP
515 South Flower Street, 42" Floor
Los Angeles, California 90071
(213) 430-3400
(213) 430-3409 Telecopy
ATTORNEYS FOR DEFENDANTS
WILSON OFFICE INTERIORS, LLC AND
ROBERT BLOMSTROMCERTIFICATE OF SERVICE
I hereby certify that I have on this the 16th day of May, 2011, served a copy of the
foregoing pleading upon the following via certified mail, return receipt requested:
L. Randall Yazbeck
5050 Quorum Drive
Suite 140
Dallas, Texas 75254
Charles C. Frederiksen
Glast, Phillips & Murray
14801 Quorum Drive, Suite 500
Dallas, Texas 75254
John Helms
Helms, Johnson & Diaz
660 N. Central Expressway
Suite 560
Dallas, Texas 75206 Glbibhe
Evelyn A. Vachef ,CAUSE NO. 10-01167
SIERRA INVESTMENT ASSOCIATES § IN THE DISTRICT COURT
Plaintiff/Counter-Defendant
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,
Defendants/Cross-Defendants, DALLAS COUNTY, TEXAS
2 OP LPL ON UP LN LPO OP OD
ORDER ON THE PARTIES’ MOTIONS FOR NO EVIDENCE SUMMARY JUDGMENT
AND/OR PARTIAL SUMMARY JUDGMENT
On April 22, 2011, CAME ON TO BE HEARD Defendant Wilson Office Interiors,
LLC’s No Evidence Motion For Partial Summary Judgment And Partial Summary Judgment;
Defendants Wilson Group, LTD’s and Don Hill’s Motion For Partial Summary Judgment; and
Plaintiff Sierra Investment Associates’ No Evidence Motion For Partial Summary Judgment.
The Court having considered said Motions, the Responses and Replies thereto by the parties, the
Objections to the evidence by the parties, the arguments of counsel, the legal authorities, and the
summary judgment evidence, is of the opinion that the Motion of Defendant Wilson Office
Interiors, LLC, should be granted in part and denied in part; that the Motion of Wilson Group,
Ltd, and Don Hill should be granted in part and denied in part; and that the Motion of Plaintiff
Sierra Investment Associates should be denied.
IT IS THEREFORE ORDERED, ADJUDGED and DECREED that Defendants Wilson
Office Interiors, LLC No Evidence Motion for Partial Summary Judgment And Partial Summary
Judgment is granted in part and denied in part, and that all claims by Plaintiff are barred by the
ORDER ON THE PARTIES’ MOTIONS FOR NO EVIDENCE SUMMARY JUDGMENT
AND/OR PARTIAL SUMMARYJUDGMENI EXHIBIT
islstatute of limitations except those claims that accrued within 4 years of the filing of the lawsuit
(ic. after February 1, 2006), including by way of example, all excess expense claims for amounts
incurred or accrued prior to February |, 2006 are barred by the statute of limitations, and all
claims for property damage or breach of contract based on conduct prior to February 1, 2006.
IT IS FURTHER ORDERED, ADJUDGED and DECREED that Defendants Wilson
Group, LTD’s and Don Hill’s Motion For Partial Summary Judgment is granted in part and
denied in part, and that all claims by Plaintiff are barred by the statute of limitations except those
accrued within 4 years of the filing of the lawsuit (i.e. on or after February 1, 2006), including by
way of example, all excess expense claims for amounts incurred or accrued prior to February 1,
2006 are barred by the statute of limitations, and all claims for property damage or breach of
contract based on conduct prior to February 1, 2006 are barred by the statute of limitations. The
Court further ORDERS that the 2007 Lease Extension Agreement is not binding on and has no
effect whatsoever on Wilson Group, Ltd and/or Mr. Hill.
IT IS FURTHER ORDERED, ADJUDGED and DECREED that Wilson Group Ltd’s and
Donald Hill’s Motion with respect to Wilson Office Interiors LLC’s cross-complaint is denied.
IT IS FURTHER ORDERED, ADJUDGED and DECREED that Sierra Investments
Associates’ No Evidence Motion for Partial Summary Judgment is denied.
All relief not expressly granted herein is denied.
SIGNED this day of , 2011.
JUDGE PRESIDING
ORDER ON THE PARTIES’ MOTIONS FOR NO EVIDENCE SUMMARY JUDGMENT
AND/OR PARTIAL SUMMARYJUDGMENT 2AGREED AS TO FORM:
GLAST, PHILLIPS & MURRAY
Charles C. Frederiksen
Glast, Phillips & Murray
14801 Quorum Drive, Suite 500
Dallas, Texas 75254
ATTORNEYS FOR PLAINTIFF SIERRA
INVESTMENT ASSOCIATES
HELMS, JOHNSON & DIAZ
John Helms
Helms, Johnson & Diaz
660 N. Central Expressway, Suite 560
Dallas, Texas 75206
ATTORNEYS FOR DEFENDANTS
WILSON GROUP, LTD AND DON HILL
GIBSON, McCLURE, WALLACE &
DANIELS, L.L.P.
Evelyn A. Yaeger
8080 North Central Expressway
Suite 1300, LB 50
Dallas, Texas 75206-1838
ATTORNEYS FOR DEFENDANTS
WILSON OFFICE INTERIORS, LLC
AND ROBERT BLOMSTROM
ORDER ON THE PARTIES’ MOTIONS FOR NO EVIDENCE SUMMARY JUDGMENT
AND/OR PARTIAL SUMMARYJUDGMENTO21 Nn OO fF WN PF
REPORTER'S RECORD
VOLUME 1 OF 1 VOLUMES
TRIAL COURT CAUSE NO. 10-01167-M
SIERRA INVESTMENT IN THE DISTRICT COURT
ASSOCIATES
Plaintiff/Counter-
Defendant
vs. DALLAS COUNTY, TEXAS
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WILSON OFFICE INTERIORS, )
L.L.C., ROBERT BLOMSTROM )
Defendants/Cross- )
Claimants, )
Counter-Plaintiff£ )
vs. )
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B. DONALD HILL, JR. and
THE WILSON GROUP, LTD.
Defendants/Cross-
Defendants. 298TH JUDICIAL DISTRICT
MOTION FOR SUMMARY JUDGMENT
On the 22nd day of April, 2011, the following
proceedings came on to be heard in the above-entitled
and numbered cause before the Honorable Emily
Tobolowsky, Judge Presiding, held in Dallas, Dallas
County, Texas. Proceedings reporte PY
shorthand and computer-aided transc® O
Marcey J. Poeckes, CSR
Official Court Reporter, 298th Districf EXHIBIT
12ony nw B WN
NM MN NY NY KY FP BE Be PB ee ew ee
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APPEARANCES
Charles C. Frederiksen
SBOT # 07413300
Glast, Phillips & Murray, P.C.
14801 Quorum Drive
Suite 500
Dallas, Texas 75254
972.419.8300
972.419.8329 (fax)
ATTORNEY FOR PLAINTIFF
-AND~
Evelyn A. Yaeger
SBOT # 00789740
Gibson, McClure, Wallace & Daniels, LLP
8080 N. Central Expressway
Suite 1330, LB 50
Dallas, Texas 75206
214.891.8040
214.891.8010 (fax)
Jean A. Hobart
SBOT # 09736620
Tucker, Ellis & West, LLP
515 South Flower Street
42nd Floor
Los Angeles, California 90071
213.430.3400
213.430.3409 (fax)
ATTORNEYS FOR DEFENDANTS WILSON OFFICE INTERIORS, LLC
AND ROBERT BLOMSTROM
~AND-
John Helms
SBOT # 09401001
Helms, Johnson & Diaz, LLP
6060 N. Central Expressway
Suite 560
Dallas, Texas 75206
214.800.2086
214.800.2057 (fax)
{cont.)
Marcey J. Poeckes, CSR
Official Court Reporter, 298th District Courtoy DH OW B® WN BP
APPEARANCES (CONT.)
R. Ritch Roberts, III
SBOT # 24041794
R. RITCH ROBERTS, PLLC
6060 N. Central Expressway
Suite 560
Dallas, Texas 75206
214.800.2086
214.800.2057 (fax)
ATTORNEYS FOR DEFENDANTS THE WILSON GROUP, LTD. AND B.
DONALD HILL, JR.
Marcey J. Poeckes, CSR
Official Court Reporter, 298th District CourtoO OY A OH B® WN PF
wm NY NY DY NY SF PP PP PP PP
ae ON HF OHO DY DH HY B WN PP DO
APRIL 22, 2011
Objection to Summary Judgment Motion
Court's Ruling
Argument by Ms.
Argument by Mr.
Argument by Mr.
Court's Ruling
Argument by Ms.
Argument by Mr.
Argument by Ms.
Argument by Mr.
Court's Ruling
Argument by Ms.
Court's Ruling
Court's Ruling
Court's Ruling
Proceedings concluded
INDEX
VOLUME 1 OF 1 VOLUMES
MOTION FOR SUMMARY JUDGMENT
HOrbart vives cere cree eccces
Frederiksen. ........ ee ences
Reporter's Certificate .... sees e eee eee eens
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MOTION FOR SUMMARY JUDGMENT
PROCEEDINGS
THE COURT: Okay. Why don't you-all
state your appearances, please.
MR. FREDERIKSEN: Chris Frederiksen, for
Plaintiff Sierra Investments Associates.
MR. HELMS: John Helms for The Wilson
Group and Don Hill.
MS. HOBART: Jay Hobart, Tucker, Ellis &
West, for Defendants Wilson Office Interiors and Robert
Blomstrom,
MS. YAEGER: Evelyn Yaeger on behalf of
Robert Blomstrom and Wilson Office Interiors, L.L.C.
MR. ROBERTS: And Ritch Roberts, also for
The Wilson Group and Don Hill.
THE COURT: In terms of Mr. Roberts and
Mr. Helms: and Ms. Hobart and Ms. Yaeger, are you all
speaking, or is one of you, in terms of your client,
going to take the lead?
MR. HELMS: Just me, between the two of
us.
MS. HOBART: And myself, as well, for
Wilson Office and Blomstrom.
THE COURT: All right. And
Mr. Frederiksen, your partner there is not a speaking
partner?
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MOTION FOR SUMMARY JUDGMENT
MR. FREDERIKSEN: No. This is Mr. James,
who is a client representative.
THE COURT: And an attorney, as I
understand, from reading the documents.
MR. FREDERIKSEN: So the hearsay says.
THE COURT: So the hearsay says. But
he's shaking his head. And is the Court entitled to
note the operative --
MR. FREDERIKSEN: Yes, he is an attorney.
THE COURT: All right. As between the
defendants then, I'm going to allow you-all to decide
who wants to go first on your motion.
MS. HOBART: May it please the Court, Jay
Hobart for Wilson Office Interiors and Mr. Blomstrom.
This matter can be boiled down to lease
interpretation and interpretation of the agreements
between the parties in connection with any extensions
that extended the Lease. And that --
MR. FREDERIKSEN: Excuse me. Excuse me,
Your Honor. I hate to interrupt Jay. I didn't know you
were going to start.
Is there going to be time allocation
between the hour as to defendants versus us versus their
side motion?
THE COURT: Well, I was rather thinking
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MOTION FOR SUMMARY JUDGMENT
that if they can split their half hour, since I think
there's really only one or two things that are distinct,
we are going to try to make it half hour/half hour. If
that doesn't quite work, maybe we can cheat over and
give them another five minutes or so.
MR. FREDERIKSEN: All right. And Your
Honor, before we commence the arguments, we have some
objections to evidence, which can be carried, but we
have an objection that needs to be ruled on to Wilson
Office Interiors' Summary Judgment Motion.
It was stated in the front, and our
response is in the notebook, of course, but that
objection that is stated at the front of that pertains
to objections to the form of the motion and a special
exception, because we don't fully understand what it is,
from a standpoint of what -- they have some global
allegations to the effect that our claims are barred.
But barred by what?
Now, we've guessed in our response that
we are talking about, obviously, a limitations being an
affirmative defense that they have pled with them having
the burden, but there is several -- I'm assuming it's
some form of no evidence/traditional, and I've guessed,
as to my response. If that's correct, then I guess I'm
apprised, but I don't know that that's correct.
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MOTION FOR SUMMARY JUDGMENT
For example, midway into the motion, not
mentioning the introduction, they throw ina
statute-of-frauds argument, which is not addressed. I
don't know if that was a -- again, another affirmative
defense that they have the burden on, but given the form
of the motion we filed, an objection, we cited some
cases to the effect that, to adequately defend ourselves
and be apprised of what the issues are, we have excepted
to it and ask the Court to have them replead, or at a
minimum, advise us as to what's the basis, so I can make
sure I have covered everything.
THE COURT: Brief response?
MS. YAEGER: Well, Your Honor, he is
right. It clearly is a no evidence motion and a
traditional summary judgment motion. The no evidence
motion is concerning his lack of production of any
expenses receipts and documents supporting the audit.
Then the traditional summary judgment
motion goes into the limitations argument, as he just
stated.
THE COURT: I'll take that under
advisement. I frankly didn't, myself, have any
difficulty discerning, and I didn't think from your
response, you had any difficulty discerning what they
were alleging. But if the argument should suggest that
Marcey J. Poeckes, CSR
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MOTION FOR SUMMARY JUDGMENT
there was some misunderstanding or inability to
determine the -- the issues raised, then I'll consider
it on a point-by-point basis.
MR. FREDERIKSEN: Thank you, Your Honor.
Sorry, Ms. Hobart.
THE COURT: Please continue, Ms. Hobart.
MS. HOBART: The objection points to what
your main argument is. The Court has before it the
documents needed to rule on all of these issues, which
is lease interpretation and applying the rules of
contract construction, which require that the plaintiff
bill its excess expenses, or sometimes called common
area maintenance charges, CAM charges. But we're
calling it excess expenses because that's how it's
drafted in the Lease; that that is billed no later than |
annually after they're incurred, and the Lease requires
that we pay them. Those charges accrued each year and
were due each year. Under the legal authorities that we
have cited in our brief, those charges were barred by
the Statute of Limitations because they were never
presented, never talked to us about it. We knew nothing
about it.
I'm -- I'm apprising the Court that we
were unaware of these charges, but it has nothing to do
with the bases for the motion, which is, the Lease
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MOTION FOR SUMMARY JUDGMENT
10
requires that it be done timely, when incurred, under
the section 8, and it was not done so.
The other main bases for the motion, with
respect to excess expenses is, that plaintiff has
presented no evidence, whatsoever, to support its
allegation that there are excess expenses. We brought a
traditional no evidence motion for summary judgment, and
there's been no presentation by the plaintiffs to
support the damages that it asserts in this lawsuit in
connection with excess expenses. So therefore, on that
bases, their claim fails in connection with the damages
element itself.
For example, we put this in the motion,
but they've presented no evidence, whatsoever, on taxes
for '95, no receipts or any evidence on insurance for
‘96, insurance in '97. No evidence, whatsoever, with
respect to taxes in '97. No evidence, whatsoever, for
taxes for '98. No evidence, whatsoever, for insurance
for '98. No evidence, whatsoever, for taxes and
insurance for ‘99. No taxes and insurance receipts or
evidence in 2000. There's no taxes -- or no evidence
for taxes or insurance in 2001. There's no evidence,
whatsoever, for taxes and insurance for 2002. There's
no evidence, whatsoever, for utilities insurance in
2003. There's no evidence for taxes and insurance in
Marcey J. Poeckes, CSR
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MOTION FOR SUMMARY JUDGMENT
11
2004. The same for 2005. There's no evidence,
whatsoever, in 2006 for taxes, maintenance or insurance.
There's no receipts provided for 2007, until in this
lawsuit.
In connection with its other categories
for excess expenses, the documentary evidence they
produced don't add up to their allegations, so we
brought a no evidence motion to request that they
produce evidence to support their claim. They have not
done so in connection with this proceeding.
THE COURT: In their letter that was
presented in late 2007, purporting to state the amount
due, did it go back to all those years that you have
just stated, or did it only go back a part of those
years?
MS. HOBART: It went back, Your Honor,
and it did not include 2007. The plaintiff brought a
claim for 2007 excess expenses, but those receipts and
documents weren't produced until the lawsuit. But the
particular letter does segregate the excess expenses per
year and per type, and --
THE COURT: Simply states an amount, and
then there's some controversy about whether receipts
were ever given to someone or not, right?
MS. HOBART: Correct. Which is a
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MOTION FOR SUMMARY JUDGMENT
12
condition precedent to their argument that somehow there
was, in 2007, an agreement to pay these past due
amounts. We dispute that that occurred, and if you lock
at the 2007 Lease Extension Agreement, there is not an
agreement to pay any past due amounts. It fails for
other legal defects, such as, it doesn't comply with
16.065 as an acknowledgment of a new debt. It's not
sufficiently pled, which is required by Eldridge versus
Collard, 834 S.W.2d 87 (Tex. App. - Fort Worth 1992).
We have also brought an objection, Your
Honor, to this letter that purports to be an audit. We
dispute that it is an audit, but it purports to be an
audit of the underlying damages. We've brought an
objection that that is hearsay, and similarly, a no
evidence motion that they haven't produced the damages
to support the audit. The authorities for the hearsay
objection is Aquamarine Associates versus Burton
Shipyard, 695 $.W.2d 820 (Texas 1983).
You can see in that letter and in the
motions that these expenses were known to plaintiff when
they were incurred. The Lease requires that the
plaintiff has a duty to maintain the premises, the
interior of the premises, the exterior of the premises.
When the plaintiff breaches -- in maintaining the
premises, when the plaintiff breaches its -- its expense
Marcey J. Poeckes, CSR
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MOTION FOR SUMMARY JUDGMENT
13
stop, plaintiff's duty ends to pay for that. Plaintiffs
still must maintain and repair the premises, but after
that expense stop is reached, under section 8(g), I
believe, then defendants' duties is there, and we must
pay and reimburse landlord.
So the landlord had unique knowledge
about the expenses that it was incurring. They were
incurred when the services were rendered, and the Lease
provides that the landlord's duty to pay or absorb those
costs ends once that expense stop is exceeded.
So that, therefore, brings into an
explicit contractual obligation on the defendants to pay
landlord for those excess expenses. Those are accrued
at the time they're incurred, and that duty is created
right then and there. It's stated in the Lease, which
we've cited for the Court, under section 8(f), that that
is accrued on an annual basis, and that those payments
are due each calendar year. It's stated over and over
again.
Plaintiff's essential defense is that
this contract is not a Lease. Plaintiff's defense is,
this is a continuing contract, and that there was no
obligation of the plaintiff to bill us or even tell us
about these charges until the end of the tenancy.
Plaintiff cites to cases that have nothing to do with
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MOTION FOR SUMMARY JUDGMENT
14
leases. The cases that plaintiff relies on deal with
indivisible service agreements, such as building a home.
You're building a home. That's what you bought, that's
what they're doing.
So in those cases, it's impossible to
segregate and to pay as you're going on. So what the
Lease -- the contracts in those cases set up, they set
up a progress payment for the build. In those cases,
the courts find that at the end of the contract, you
have -~ you square up; the breaches, the not breaches,
what's due, what's owing. Those cases don't apply to
this Lease Agreement, particularly because the Lease
explicitly says that our obligation arises each calendar
year. There's even a formula in our Lease that divvies
up the allocation of the obligation based on the time
that you've been on the Lease per calendar year.
So this Lease -- if the Court construes
it and looks at the terms of this Lease alone, the Lease
takes care of these answers and mandates that this is an
obligation that accrues each calendar year, and that the
Statute of Limitations began to run each calendar year.
So plaintiff's cases are inapposite in connection with
the types of contracts that those cases deal with.
We have stated in our replies some of the
distinctions between the contracts in those cases and
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MOTION FOR SUMMARY JUDGMENT
15
our contract. The Court need not look at those other
contracts because the answers are right here in this
Lease.
The other main point that we bring up,
Your Honor, to defeat plaintiff's claim, is that somehow
this 2007 Lease Extension Agreement was -- made Wilson
Office responsible for any debts incurred or excess
expenses accrued prior to the time that we assumed the
Lease.
In 2005, Wilson Office assumed the Lease,
under an Assumption and Assignment Agreement. That's
before the Court, Your Honor. In numerous places
throughout the Assignment, it's explicitly stated that
Wilson Office has assumed the obligations going forward
from the date of the assignment forward, and that we
have not assumed any prior --
THE COURT: Doesn't it use the language
"due" or "to become due" or something like that?
MS. HOBART: In the 2007 Agreement?
THE COURT: Yes. It says something like
"due" or "to become due," as I'm recalling. I did spend
some time looking at the language. I may not be spot on
as to exactly what it said.
MS. HOBART: That's in paragraph 2, which
plaintiff has called out for your court -- Your Honor in
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MOTION FOR SUMMARY JUDGMENT
16
several instances with respect to plaintiff's belief
that that obligates Wilson Office for all sums due or
becoming due. It's true that Wilson Office agreed to
pay for sums that become due, but it's limited to its
time in the premises. So in the Assignment --
THE COURT: My problem isn't with the
language, “or becoming due." My problem is with the
language "due." I understand that it didn't release
Group from anything.
But I really think the question is, not
withstanding whatever the assignment or assumption
agreement was between Group and Interiors, whether that
language is sufficient to suggest, as a matter of law,
that Interiors has no obligation for allegedly past due
sums. I understand that they represented that there
were none in your transactions with one another.
MS. HOBART: Your Honor, in paragraph
B -- above paragraph 2 is paragraph B under the
recitals. It expressly states that, "We are accepting
the assignment and assuming Wilson Group obligations
from and after the effective date."
And so the "from and after effective
date" is the temporal connection that we are arguing.
It's not “past due." It's "from and after." That's in
paragraph B. Also, in the -- in the introductory
Marcey J. Poeckes, CSR
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Paragraph to your paragraph 2, there is a statement,
"Now, therefore," in the middle of the first page of
Exhibit C, which also conditions this assumption on, "We
agree to the following, effective as of the effective
date," and the effective date is defined in the initial
paragraph as August 7, 2005. That, again, is a temporal
condition that ties in the effective date and the "from
and after" condition in connection with liability.
Lastly, if you look at paragraph 5, it
states there that, "All the parties agree that the
recitals" -- I'm calling the Court's attention to the
recital B, which says, "from and after the effective
date."
THE COURT: Yes.
MS. HOBART: Five says that the recitals
are contractual and not merely recitals.
Obviously, the case law requires this
Court to construe the entire document, not just one
phrase, and to give each clause effect. So we've got
multiple points in this document; the effective date in
paragraph one, recital paragraph 8, "from and after the
effect date." We've got the "now therefore" clause that
says, "We agree to the following, effective as of the
effective date."
And then paragraph 2, which plaintiff has
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cited, but I -- I believe out of context, it's cited as,
“We agree to pay all amounts due or becoming due under
the terms of the Lease." Wilson Office did agree to pay
all amounts due under the Lease; the rent, excess
expenses, those sorts of things, but we did not agree to
any past due amounts nor any amounts that were incurred
while Wilson Group was on the Lease. That's consistent
with all the documents before the Court. For example,
the Asset Purchase Agreement states that we are not
responsible for anything prior to the time. This
Assignment states that we are not responsible for any
past due amounts. Even this 2007 Lease Extension
Agreement, Your Honor, states nothing about past due
amount. It's a 2l-term -~- the 2007 Lease Extension
Agreement is explicitly for a 21-month term, beginning
May 2006 through January 2008, and we have agreed to pay
the sums that are due or accrued in that time frame.
So when you look at all of these
documents and give meaning to each and every clause,
we've agreed to honor the terms of the Lease in
connection with our time on the Lease and pay the
amounts that Sierra's rightfully owed. But at no point
did we agree to take on the debts of another. The
Statute of Fraud would require a written agreement to do
so, and there's nothing in these documents that
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satisfies the Statute of Frauds.
In fact, the opposite is true. All of
the Language that we're seeing clearly says that we're
not liable for any debts or amounts before August 7th,
2005, and in the Lease Extension, we're obligated to pay
the amounts within that term. All of plaintiff's
arguments really are pure argument. They're trying to
create obligations where the Lease states otherwise, and
because of that, this is a legal question in connection
with construing all of these contracts to be consistent
and honor the intent that's expressed therein.
Did you have, Your Honor, any other
questions about the assignment? I have called out the
bases that we believe support that it's not agreeing to
any past dye amounts.
THE COURT: I don't think I did.
MS. HOBART: The -- I'm going to move to
the 2007 Lease Extension Agreement, briefly.
THE COURT: I am just watching the clock.
Mr. Helms has to have a little time to speak.
MS. HOBART: Yes, Your Honor. In
connection with the Lease Extension Agreement, Your
Honor, that -- the new allegation by plaintiff is that
that is an acknowledgment of a new debt. It's an
acknowledgment of an old debt that constitutes a new
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debt going forward, and we've objected to the new
allegation. This acknowledgment point was not in the
First Amended Petition, on which these motions were
brought. Plaintiff has since filed a Second Amended
Petition, where he's -- he's put in one sentence about
an acknowledgment standard for this document.
That Second Amended Petition fails to
meet the pleading requirements for a new debt and
acknowledgment under the authority of California
Chemical Company versus Sasser, 423 S.W.2da 347 (Tex.
App.- Corpus Christi 1957). We would object to that as
a bases going forward. It's not in the pleadings, and
their current pleadings are inadequate and not
sufficiently pled.
The sufficiency -- the insufficiency of
their pleading is also supported by Eldridge versus
Collard, 834 S.W.2d 87 (Fort Worth 1992). In those
cases, they hold that this 2007 Lease Extension
Agreement is not sufficient to meet -- to meet those
standards of acknowledgment. It does not acknowledge
any past due amount, doesn't state the debt that we
would agree to be liable for. It's also conditional.
It's got a 21-month term, and it's also conditional on
this audit and the receipts being presented by Sierra
timely.
Marcey J. Poeckes, CSR
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In our papers we show the Court that that
condition precedent was not met, and even today, they've
not produced the receipts and invoices to support their
damages.
So I would pass my argument to Mr. Helms.
THE COURT: Very well. Mr. Helms?
MR. HELMS: Your Honor, I just want to
discuss two aspects of our motion that I think pertain
only to us.
THE COURT: Sure.
MR. HELMS: One is the aspect of the
motion that as to partial summary judgment that we are
not liable as a result of the ~- of the June 2007 Lease
Extension to which we were not a party. That's pretty
obvious. I don’t think there is really much to add,
other than what's in the papers, except that, you know,
if -- if Sierra was correct, then Wilson Office and
Sierra could have entered into some sort of Lease
Extension in which, you know, the amount of the Lease
was a billion dollars and then they -- and then Wilson
Office could have rolled over and then we would have
been liable for it and nobody intended that. That's
pretty clear. :
The veil-piercing claim is another thing
I wanted to discuss. We moved for a no evidence motion
. Marcey J. Poeckes, CSR
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MOTION FOR SUMMARY JUDGMENT
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on the alterego claim. They have responded by amending
and asking the Court to take judicial notice of Nevada
law, and they are now also asserting an improper
distribution claim. What I would like to do on that is,
I -- I don't think that's raised by our motion. That's
something that's raised by their amendment. I would
like to address that in separate motion so.
THE COURT: Sure.
MR. HELMS: But as far as the alterego
claim that they pleaded beforehand goes, the only
evidence -- the evidence that they submit actually shows
that they can't prove any type of actionable fraud
because the evidence consists of Exhibit H to their
motion, which is a December 29, 2007 letter, which is
the first time that there was any type of notice given
to Wilson Group of a claim against it. So that's
December 29, 2007.
Their other evidence is Exhibit K to
theix response, which is the minutes of a board of
directors meeting of the Morgan Group, which was the
predecessor. In that -- in those minutes it indicates
that all remaining assets are distributed to
shareholders, but those minutes were on December 18th, a
couple of weeks before they ever made any kind of claim
that we were liable for anything like that. So I don't
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think that they can show actual fraud. I don't think
they've met their burden on that.
The only other evidence they have is that
Mr. Hill testified that on the date of his deposition
there were no assets in the company, but that's not
enough to show actual fraud.
THE COURT: All right. Anything else
from Office Interiors, whatever we are calling them,
before I pass it over to --
MR. HELMS: No, Your Honor. Oh, I'm
sorry.
MS. HOBART: Just lastly, that we've
objected to Mr. James' affidavit in connection with the
receipts and invoices as being conclusory. He's not
produced any evidence of those damages, and those are --
objections are contained in the filing that was provided
to the Court this morning.
THE COURT: Thank you, Ms. Hobart.
Ms. Yaeger, anything from you?
MS. YAEGER: No.
THE COURT: Mr. Roberts?
MR. ROBERTS: No, Your Honor.
THE COURT: Okay, Mr. Frederiksen. The
floor is yours.
MR. FREDERIKSEN: Thank you, Your Honor.
Marcey J. Poeckes, CSR
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MOTION FOR SUMMARY JUDGMENT
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May I remain seated?
THE COURT: You may. It's probably
easier to get through your documents that way.
MR. FREDERIKSEN: It is. Thank you, Your
Honor.
I'm going to alter my response because I
think it would be easier to address the two issues that
Mr. Helms has raised on Wilson Group.
THE COURT: Sure.
MR. FREDERIKSEN: Specifically, also in
the evidence was a Tax Return Schedule L preduced by
Wilson Group that indicated that at the year-end,
December 31st of 2007, the sum of $436,000 remained in
Wilson Group's assets. So his argument to the effect
that the distribution was before the demand is new, once
you figure out the demand was received, the assets were
still in the corporation and they distributed them.
You have to go only to section 78.747 of
the Nevada Revised Statutes, where it sets out an
alterego as a matter of law when those events take
place. I think that's sufficient evidence.
As it pertains to Wilson Group's argument
that they're not liable, we've cited for anything that
happened after the extension, Your Honor. We equate
this to, like, a guarantee of the assignment, which is
Marcey J. Poeckes, CSR
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MOTION FOR SUMMARY JUDGMENT
25
behind tab five, which the Court's noted, basically,
says that they are going to remain liable. They had an
option, Wilson Group did, to simply terminate the Lease
instead of assigning it. It's like a guaranty of a
note. The fact that the note's extended doesn't excuse
the guaranty, unless the guarantor has specifically
provided in the documents that his guaranty terminates
on a specific date.
We've cited some law in our response to
the effect that the non-occupying assignor remains
liable unless there's an agreement otherwise. So we
don't believe that they are excused from going forward
after 2007, because again, the assignment and
assumption, Wilson Group remains liable on the Lease,
inclusive of the surrender terms that is the basis for
our damages against Wilson Group after 2007.
I am now going to address, if I may, Your
Honor, the Wilson Office brief, or allegations.
THE COURT: Sure.
MR, FREDERIKSEN: I read that as a
Statute of Limitations. I read it as a -- secondly, a
condition precedent regarding the receipts and invoices.
As I've argued in my response, I believe the evidence
attached to their own motion establishes fact issues to
the effect that James testifies that he provided
. Marcey J. Poeckes, CSR
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MOTION FOR SUMMARY JUDGMENT
26
receipts to Paula Householder (ph), the office manager,
on October 30th, 2007.
I attached some additional deposition
testimony of Ms. Householder and Mr. Blomstrom, who was
the CEO, to the effect that they received a box of
documents, and it was a shoebox full of stuff. I
believe that, combined with his affidavit of Mr. James,
which is Exhibit G to our response, where he says he has
personal knowledge and information of the information
attached, and attaching that audit is sufficient
evidence. I dispute the fact that it's never been
produced. The reply -- first of all, we have his
testimony that it was produced, his affidavit and his
deposition testimony.
In the reply they argue that they filed a
request for production, and it wasn't -- there was no
response. They attached the response, and the response
clearly states that, we'll provide the documents on
March 14th at 10:00 o'clock at my offices. No one came
to see the documents on March 14th. So those underlying
documents, which I don't believe would be the best
evidence, because the best evidence would have been the
receipts provided to Wilson Office at the time, back in
October, have disappeared while in their possession, is
the best evidence, but I believe it's clearly
Marcey J. Poeckes, CSR
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MOTION FOR SUMMARY JUDGMENT
27
sufficient. The audit, itself, with Jeanes' affidavit
and his deposition testimony to create a fact issue;
that we complied with that condition precedent.
Wilson Office's argument that they're not
liable for costs before August 7, 2005, the Court noted
and, obviously, read the assignment. The Court is
correct. The quotation of paragraph one, to the effect
that, they are going to be liable. "Assume or promises
to pay all of the rent and other sums due or becoming
due." So the Lease is clearly identified as the 1993
Lease, which has been continued by extensions. So
clearly that document provides that Wilson Office is
going to pay prior what's due and in the future.
There can be no confusion, because as the
Court’s probably noticed, the Assignment and Assumption
is signed by Wilson Group by Mr. Hill, and accepted by
Wilson Office, signed by Mr. Hill. So Mr. Hill signed
both ends of it. So he had to understand what he was
signing, and there's no affidavit or evidence saying
that the document has been altered, it's ambiguous,
it's -- it's -- we -- you know, we didn't draft it. I
believe it's clear to establish their liability for due
sums before August 7th, 2005.
Next, their audit argument, to the effect
that they didn't receive an audit prior to November lst,
Marcey J. Poeckes, CSR
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I've already covered that.
Lastly, the Statute of Frauds. If
it's -- if it's part of their motion, certainly the
signed document in the form of the assignment, the
assumption of liability signed by the parties is
sufficient to satisfy the Statute of Frauds, if it
applies.
I would like to turn now, Your Honor, if
I can, to the -- to what I believe to be the issue in
this -- these motions, the Statute of Limitations. And
for just background -- and I am pleased the Court is
familiar with the documents provided -- I provided in
tab 4 a brief time line, just as a demonstrative
explanation helping my argument. As the Court will note
from that tab 4, the Wilson Group signed this Lease in
'93. It was extended through a series of lease
agreements, extending it from 2000 to ~- excuse me ~~
from ‘93 to 2000.
You follow this track up to the middle of
this time line, where you see the Assignment Assumption
and Agreement. This was a continual Lease. The
extensions continue the obligations of the Lease and on
August 7th, 2005, Wilson Office Interiors assumed all of
that responsibility going back to '93. Likewise, as you
go forward, you can see where they vacate, finally,
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Wilson Office does, on January 3lst. The lawsuit was
filed February lst, 2010. Another relevant part, which
is not on the line, but that as of 12/29/07, that was
when the notice of default was forwarded.
So, basically, you have a presentation,
as the evidence shows, of an audit on October 30th,
2007. We have a 30-day fuse under the Lease Agreement,
and that is contained, Your Honor, under tab 6. I have
just typed out the -- some of the relevant deals, so we
don't have to go through the entire Lease.
But, basically, as we address the
limitations issue, they are taking the position,
defendants are, is that all leases are installment
contracts. That's just not, as a matter of law,
correct. The Laubach case, which they cite as their
authority, is a case involving the old inner caverns
deal down in Williamson County, outside of Austin.
We've all, probably, at least looked at the signage and
wondered what it was like.
THE COURT: Yes, exactly.
MR. FREDERIKSEN: Off the record, I'll
testify that I've actually gone in there.
But as a practical matter, that was a
99-year lease, and it had to do with the calculation of
the rent. Our case is not about rent. Our case, first
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and foremost, is about section 8, ongoing obligations
and expenses, a classic expense stop provision.
If you note, behind tab 6 on the section
8, that's set forth right there, you have, basically,
the definition of what the expense stop is. If you drop
down to section F on the next page, you see the language
that they claim requires us to be in an annual
installment. Well, if you review section F, there is no
due date, there's no set date that obligates them to pay
by. This is a continuing obligation that is covered by
the basic rule that in a typical contract, limitations
runs from the expiration of the contract.
This language here is no more than a
calculation. It's how you calculate it. It's like if
you had an 8-year note and you had to pay interest per
annum, this just explains the per annum interest, but it
doesn't mean that it's due until the note's due.
Looking at section 8(f), you note that
there is no reference to any installment or installment
payment of that expense obligation. It's merely a
calculation of how it's done. This is not a triple net
lease. This is an old lease that has expense stop
provisions. So it's not something that's automatically
calculable on an annual basis. You have expenses that
are sometimes incurred outside of that year, such as,
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property taxes and other things. So it's merely -- 8(f
is not an installment, it's a calculation.
The contract has numerous other
obligations. The contract is in everybody's motion and
everybody's response. We believe that it best qualifies
as a contract of a continuing nature. We have attached,
and attached to the last tab, are some cases that I have
put in there for the Court's review, but the key case
that we are looking at is the City and County of Dallas
Levy Improvement, which is a Dallas -- or excuse me --
an Amarillo Court of Appeals decision.
It states as follows -- I have marked
it -- "It's been held that in a contract such as this
where the services were rendered or divided into
numerous parts, where it's continuous, invisible and
provides for some payments to be made at stated
intervals or instaliments when proper statements are
rendered."
"Therefore, the total debt matures when
the contract has been completed, according to its terms
and when services are terminated and the Statute of
Limitations does not begin to run on the total debt
until the work has been completed."
This case has been cited by almost all
the other cases that we’ve attached, for this concept
Marcey J. Poeckes, CSR
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that when you have this continuing contract with
multiple obligations, it's not an installment contract.
Again, the plaintiff -- or defendants have found one
case, and I think they are trying to put a square peg
into a round hole and have this Court leap out and say
all leases are installment contracts. That's just not
the case. The fact that you have a rent payment ina
lease does not make it an installment contract
automatically, especially when there's other
obligations, and where this contract has been continued,
guite frankly, as we say in our first -- second amended
petition, affirmed.
The second case I want to bring to the
Court's attention is the Capstone case, which clearly
sets out the limitations for contracts, four years.. It
accrues when the contracts breach, and it sets out the
definition of a normal contract. We think that Statute
of Limitations, four years, applies. The fact that we
brought the lawsuit in February lst is clearly within
four years of the expiration or termination and
completion of the contract?
THE COURT: What about the testimony
regarding your client's alleged presentation of past due
amounts on an annual or somewhat annual basis?
I believe there was testimony that goes
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back a number of years that says, you know, you owe us
for this year or this year or this year. That would
suggest that there was some belief that there was an
amount owin
Preview
CAUSE NO. 10-01167 FI | E Dn SIERRA INVESTMENT ASSOCIATES, § IN THE DISTRIQH gi . Plaintiff/Counter-Defendant SURF PF 208 G id SONS ve WILSON OFFICE INTERIORS, LLC, ROBERT BLOMSTROM Defendants/Cross-Claimants, Counter-Plaintiff 298" JUDICIAL Vv. B. DONALD HILL, JR. and THE WILSON GROUP, LTD., Defendants/Cross-Defendants. DALLAS COUNTY, TEXAS WILSON OFFICE INTERIORS, LLC’S RESPONSE TO PLAINTIFF’S MOTION FOR ENTRY OF ORDERS ON SUMMARY JUDGMENT AND EVIDENTIARY ISSUES COMES NOW, Defendant Wilson Office Interiors, LLC, and files its Response to Plaintiff's Motion for Entry of Orders on Summary Judgment and Evidentiary Issues, and as grounds for same would show as follows: 1. Plaintiff's motion should be denied, since it perpetuates an ambiguity that Plaintiff has exploited to keep its stale claims alive. In Exhibit | hereto, Defendant submits a Proposed Order on the parties’ Motions for No Evidence Partial Summary Judgment and/or Partial Summary Judgment. Defendant believes the attached Exhibit 1 accurately reflects the Court’s rulings on April 22" and eliminates any ambiguity regarding the scope of the Court’s rulings. Also altached hereto is a copy of the Court Reporter’s transcript of the Court’s hearing on April 22, 2011. (Exhibit 2.) Defendant respectfully requests that this Court enter the attached Exhibit | as the Court’s Order. 2. Plaintiffs proposed order should not be entered, because it is vague and ambiguous regarding the term “accrued.” The problem is that Plaintiff continues to arguethat its excess expenses did not accrue until the end of the lease and that all of its excess expenses — even back to 1994 - are recoverable. All the defendants’ motions addressed this very issue, and this issue was argued to the Court at the hearing. The Court rejected Plaintiff's argument. Yet one week after the hearing, Plaintiff filed its Third Amended Petition. Contrary to the Court’s rulings, the Petition’s new allegations seck to hold defendants liable for excess expenses barred by limitations. Exhibit 3 is a courtesy copy of the Third Amended Petition. In the Petition’s paragraphs 4.1 and 4.3, Plaintiff seeks damages exceeding $200,000 for excess expenses, which the Court has ruled were barred. Thus, Plaintiffs proposed order continues to exploit the ambiguity in the term “accrued,” to try to keep alive its stale claims for excess expenscs incurred prior to February 1, 2006. 3. In contrast, Defendant’s Order at Exhibit 1 hereto accurately reflects the Court’s ruling that the statute of limitations bars all claims that accrued prior to February 1, 2006, including excess expenses and/or amounts incurred or accrued prior to February 1, 2006. Defendant respectfully requests that the Court enter the attached Exhibit 1. 4, In addition, this Court should deny Plaintiff's Motion to enter the proposed evidentiary order attached to Plaintiff's Motion at Exhibit B. The Motion is improper. No conference was held by Plaintiff. There was no advance circulation of the proposed order. Plaintiff entirely failed to discuss its proposed order prior to filing its motion. 5. Moreover, the Court Reporter's Transcript accurately reflects this Court’s tulings on the evidentiary objections. (See Exhibit 2 hereto.) No separate order is needed. 6. Further, Plaintiff's proposed evidentiary order is vague and ambiguous. The proposed order fails to state which objections are being considered, which objections are being granted, or what were the scope and bases for the objections. Plaintiff's orderwill confuse the record of the April 22 hearing. Defendant respectfully requests that the Court deny Plaintiff's Motion in its entirety. PRAYER WHEREFORE, Premises Considered, Wilson Office Interiors, LLC respectfully requests that this Court deny Plaintiff's motion in its entirety and instead enter Defendant's Proposed Order that is attached hereto as Exhibit 1, and for all other and further relicf, in law or in equity, to which Defendant Wilson Office Interiors, LLC may show itself justly entitled. Respectfully submitted, GIBSON, McCLURE, WALLACE & DANIBLS, L.L.P. EXelyn A. Yacger\, J Texas Bar No. 00789740 8080 N. Central Expressway Suite 1300, LB 50 Dallas, Texas 75206-1838 (214) 891-8040 (214) 891-8010 Telecopy Jean A. Hobart Texas Bar No. 09736620 Tucker, Ellis & West, LLP 515 South Flower Street, 42" Floor Los Angeles, California 90071 (213) 430-3400 (213) 430-3409 Telecopy ATTORNEYS FOR DEFENDANTS WILSON OFFICE INTERIORS, LLC AND ROBERT BLOMSTROMCERTIFICATE OF SERVICE I hereby certify that I have on this the 16th day of May, 2011, served a copy of the foregoing pleading upon the following via certified mail, return receipt requested: L. Randall Yazbeck 5050 Quorum Drive Suite 140 Dallas, Texas 75254 Charles C. Frederiksen Glast, Phillips & Murray 14801 Quorum Drive, Suite 500 Dallas, Texas 75254 John Helms Helms, Johnson & Diaz 660 N. Central Expressway Suite 560 Dallas, Texas 75206 Glbibhe Evelyn A. Vachef ,CAUSE NO. 10-01167 SIERRA INVESTMENT ASSOCIATES § IN THE DISTRICT COURT Plaintiff/Counter-Defendant 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, Defendants/Cross-Defendants, DALLAS COUNTY, TEXAS 2 OP LPL ON UP LN LPO OP OD ORDER ON THE PARTIES’ MOTIONS FOR NO EVIDENCE SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT On April 22, 2011, CAME ON TO BE HEARD Defendant Wilson Office Interiors, LLC’s No Evidence Motion For Partial Summary Judgment And Partial Summary Judgment; Defendants Wilson Group, LTD’s and Don Hill’s Motion For Partial Summary Judgment; and Plaintiff Sierra Investment Associates’ No Evidence Motion For Partial Summary Judgment. The Court having considered said Motions, the Responses and Replies thereto by the parties, the Objections to the evidence by the parties, the arguments of counsel, the legal authorities, and the summary judgment evidence, is of the opinion that the Motion of Defendant Wilson Office Interiors, LLC, should be granted in part and denied in part; that the Motion of Wilson Group, Ltd, and Don Hill should be granted in part and denied in part; and that the Motion of Plaintiff Sierra Investment Associates should be denied. IT IS THEREFORE ORDERED, ADJUDGED and DECREED that Defendants Wilson Office Interiors, LLC No Evidence Motion for Partial Summary Judgment And Partial Summary Judgment is granted in part and denied in part, and that all claims by Plaintiff are barred by the ORDER ON THE PARTIES’ MOTIONS FOR NO EVIDENCE SUMMARY JUDGMENT AND/OR PARTIAL SUMMARYJUDGMENI EXHIBIT islstatute of limitations except those claims that accrued within 4 years of the filing of the lawsuit (ic. after February 1, 2006), including by way of example, all excess expense claims for amounts incurred or accrued prior to February |, 2006 are barred by the statute of limitations, and all claims for property damage or breach of contract based on conduct prior to February 1, 2006. IT IS FURTHER ORDERED, ADJUDGED and DECREED that Defendants Wilson Group, LTD’s and Don Hill’s Motion For Partial Summary Judgment is granted in part and denied in part, and that all claims by Plaintiff are barred by the statute of limitations except those accrued within 4 years of the filing of the lawsuit (i.e. on or after February 1, 2006), including by way of example, all excess expense claims for amounts incurred or accrued prior to February 1, 2006 are barred by the statute of limitations, and all claims for property damage or breach of contract based on conduct prior to February 1, 2006 are barred by the statute of limitations. The Court further ORDERS that the 2007 Lease Extension Agreement is not binding on and has no effect whatsoever on Wilson Group, Ltd and/or Mr. Hill. IT IS FURTHER ORDERED, ADJUDGED and DECREED that Wilson Group Ltd’s and Donald Hill’s Motion with respect to Wilson Office Interiors LLC’s cross-complaint is denied. IT IS FURTHER ORDERED, ADJUDGED and DECREED that Sierra Investments Associates’ No Evidence Motion for Partial Summary Judgment is denied. All relief not expressly granted herein is denied. SIGNED this day of , 2011. JUDGE PRESIDING ORDER ON THE PARTIES’ MOTIONS FOR NO EVIDENCE SUMMARY JUDGMENT AND/OR PARTIAL SUMMARYJUDGMENT 2AGREED AS TO FORM: GLAST, PHILLIPS & MURRAY Charles C. Frederiksen Glast, Phillips & Murray 14801 Quorum Drive, Suite 500 Dallas, Texas 75254 ATTORNEYS FOR PLAINTIFF SIERRA INVESTMENT ASSOCIATES HELMS, JOHNSON & DIAZ John Helms Helms, Johnson & Diaz 660 N. Central Expressway, Suite 560 Dallas, Texas 75206 ATTORNEYS FOR DEFENDANTS WILSON GROUP, LTD AND DON HILL GIBSON, McCLURE, WALLACE & DANIELS, L.L.P. Evelyn A. Yaeger 8080 North Central Expressway Suite 1300, LB 50 Dallas, Texas 75206-1838 ATTORNEYS FOR DEFENDANTS WILSON OFFICE INTERIORS, LLC AND ROBERT BLOMSTROM ORDER ON THE PARTIES’ MOTIONS FOR NO EVIDENCE SUMMARY JUDGMENT AND/OR PARTIAL SUMMARYJUDGMENTO21 Nn OO fF WN PF REPORTER'S RECORD VOLUME 1 OF 1 VOLUMES TRIAL COURT CAUSE NO. 10-01167-M SIERRA INVESTMENT IN THE DISTRICT COURT ASSOCIATES Plaintiff/Counter- Defendant vs. DALLAS COUNTY, TEXAS } } ) ) ) ) WILSON OFFICE INTERIORS, ) L.L.C., ROBERT BLOMSTROM ) Defendants/Cross- ) Claimants, ) Counter-Plaintiff£ ) vs. ) ) ) ) ) ) B. DONALD HILL, JR. and THE WILSON GROUP, LTD. Defendants/Cross- Defendants. 298TH JUDICIAL DISTRICT MOTION FOR SUMMARY JUDGMENT On the 22nd day of April, 2011, the following proceedings came on to be heard in the above-entitled and numbered cause before the Honorable Emily Tobolowsky, Judge Presiding, held in Dallas, Dallas County, Texas. Proceedings reporte PY shorthand and computer-aided transc® O Marcey J. Poeckes, CSR Official Court Reporter, 298th Districf EXHIBIT 12ony nw B WN NM MN NY NY KY FP BE Be PB ee ew ee OB WMH FP OO OY A HW B® WwW dS FP oO wo APPEARANCES Charles C. Frederiksen SBOT # 07413300 Glast, Phillips & Murray, P.C. 14801 Quorum Drive Suite 500 Dallas, Texas 75254 972.419.8300 972.419.8329 (fax) ATTORNEY FOR PLAINTIFF -AND~ Evelyn A. Yaeger SBOT # 00789740 Gibson, McClure, Wallace & Daniels, LLP 8080 N. Central Expressway Suite 1330, LB 50 Dallas, Texas 75206 214.891.8040 214.891.8010 (fax) Jean A. Hobart SBOT # 09736620 Tucker, Ellis & West, LLP 515 South Flower Street 42nd Floor Los Angeles, California 90071 213.430.3400 213.430.3409 (fax) ATTORNEYS FOR DEFENDANTS WILSON OFFICE INTERIORS, LLC AND ROBERT BLOMSTROM ~AND- John Helms SBOT # 09401001 Helms, Johnson & Diaz, LLP 6060 N. Central Expressway Suite 560 Dallas, Texas 75206 214.800.2086 214.800.2057 (fax) {cont.) Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtoy DH OW B® WN BP APPEARANCES (CONT.) R. Ritch Roberts, III SBOT # 24041794 R. RITCH ROBERTS, PLLC 6060 N. Central Expressway Suite 560 Dallas, Texas 75206 214.800.2086 214.800.2057 (fax) ATTORNEYS FOR DEFENDANTS THE WILSON GROUP, LTD. AND B. DONALD HILL, JR. Marcey J. Poeckes, CSR Official Court Reporter, 298th District CourtoO OY A OH B® WN PF wm NY NY DY NY SF PP PP PP PP ae ON HF OHO DY DH HY B WN PP DO APRIL 22, 2011 Objection to Summary Judgment Motion Court's Ruling Argument by Ms. Argument by Mr. Argument by Mr. Court's Ruling Argument by Ms. Argument by Mr. Argument by Ms. Argument by Mr. Court's Ruling Argument by Ms. Court's Ruling Court's Ruling Court's Ruling Proceedings concluded INDEX VOLUME 1 OF 1 VOLUMES MOTION FOR SUMMARY JUDGMENT HOrbart vives cere cree eccces Frederiksen. ........ ee ences Reporter's Certificate .... sees e eee eee eens PoP bP PRP PP BP Pe Be Be Be Be BP oe Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtony nu B® WN NN MO NY NY NY FPP RP FP PF FP Ee RP eB ao 6b WN eH OC Oo OTN DH HO B WN fF CO LO MOTION FOR SUMMARY JUDGMENT PROCEEDINGS THE COURT: Okay. Why don't you-all state your appearances, please. MR. FREDERIKSEN: Chris Frederiksen, for Plaintiff Sierra Investments Associates. MR. HELMS: John Helms for The Wilson Group and Don Hill. MS. HOBART: Jay Hobart, Tucker, Ellis & West, for Defendants Wilson Office Interiors and Robert Blomstrom, MS. YAEGER: Evelyn Yaeger on behalf of Robert Blomstrom and Wilson Office Interiors, L.L.C. MR. ROBERTS: And Ritch Roberts, also for The Wilson Group and Don Hill. THE COURT: In terms of Mr. Roberts and Mr. Helms: and Ms. Hobart and Ms. Yaeger, are you all speaking, or is one of you, in terms of your client, going to take the lead? MR. HELMS: Just me, between the two of us. MS. HOBART: And myself, as well, for Wilson Office and Blomstrom. THE COURT: All right. And Mr. Frederiksen, your partner there is not a speaking partner? Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtow ODA DH HW & WwW NY PF Po PrP oO e e . MOTION FOR SUMMARY JUDGMENT MR. FREDERIKSEN: No. This is Mr. James, who is a client representative. THE COURT: And an attorney, as I understand, from reading the documents. MR. FREDERIKSEN: So the hearsay says. THE COURT: So the hearsay says. But he's shaking his head. And is the Court entitled to note the operative -- MR. FREDERIKSEN: Yes, he is an attorney. THE COURT: All right. As between the defendants then, I'm going to allow you-all to decide who wants to go first on your motion. MS. HOBART: May it please the Court, Jay Hobart for Wilson Office Interiors and Mr. Blomstrom. This matter can be boiled down to lease interpretation and interpretation of the agreements between the parties in connection with any extensions that extended the Lease. And that -- MR. FREDERIKSEN: Excuse me. Excuse me, Your Honor. I hate to interrupt Jay. I didn't know you were going to start. Is there going to be time allocation between the hour as to defendants versus us versus their side motion? THE COURT: Well, I was rather thinking Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtwow Ot KH FF F&F Ww NY “MN NNN NY PRP BP BP BP Be BP BB Oe Wn PS o6 OI HH B&B wWNH HO MOTION FOR SUMMARY JUDGMENT that if they can split their half hour, since I think there's really only one or two things that are distinct, we are going to try to make it half hour/half hour. If that doesn't quite work, maybe we can cheat over and give them another five minutes or so. MR. FREDERIKSEN: All right. And Your Honor, before we commence the arguments, we have some objections to evidence, which can be carried, but we have an objection that needs to be ruled on to Wilson Office Interiors' Summary Judgment Motion. It was stated in the front, and our response is in the notebook, of course, but that objection that is stated at the front of that pertains to objections to the form of the motion and a special exception, because we don't fully understand what it is, from a standpoint of what -- they have some global allegations to the effect that our claims are barred. But barred by what? Now, we've guessed in our response that we are talking about, obviously, a limitations being an affirmative defense that they have pled with them having the burden, but there is several -- I'm assuming it's some form of no evidence/traditional, and I've guessed, as to my response. If that's correct, then I guess I'm apprised, but I don't know that that's correct. Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtony Oo WW & W NY BF wm BWM NHN FP PP PP BP eB BP aoe OWN FP OY OYA HF WNP DO OO MOTION FOR SUMMARY JUDGMENT For example, midway into the motion, not mentioning the introduction, they throw ina statute-of-frauds argument, which is not addressed. I don't know if that was a -- again, another affirmative defense that they have the burden on, but given the form of the motion we filed, an objection, we cited some cases to the effect that, to adequately defend ourselves and be apprised of what the issues are, we have excepted to it and ask the Court to have them replead, or at a minimum, advise us as to what's the basis, so I can make sure I have covered everything. THE COURT: Brief response? MS. YAEGER: Well, Your Honor, he is right. It clearly is a no evidence motion and a traditional summary judgment motion. The no evidence motion is concerning his lack of production of any expenses receipts and documents supporting the audit. Then the traditional summary judgment motion goes into the limitations argument, as he just stated. THE COURT: I'll take that under advisement. I frankly didn't, myself, have any difficulty discerning, and I didn't think from your response, you had any difficulty discerning what they were alleging. But if the argument should suggest that Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtao Ya KH OF F&F W NY F MOTION FOR SUMMARY JUDGMENT there was some misunderstanding or inability to determine the -- the issues raised, then I'll consider it on a point-by-point basis. MR. FREDERIKSEN: Thank you, Your Honor. Sorry, Ms. Hobart. THE COURT: Please continue, Ms. Hobart. MS. HOBART: The objection points to what your main argument is. The Court has before it the documents needed to rule on all of these issues, which is lease interpretation and applying the rules of contract construction, which require that the plaintiff bill its excess expenses, or sometimes called common area maintenance charges, CAM charges. But we're calling it excess expenses because that's how it's drafted in the Lease; that that is billed no later than | annually after they're incurred, and the Lease requires that we pay them. Those charges accrued each year and were due each year. Under the legal authorities that we have cited in our brief, those charges were barred by the Statute of Limitations because they were never presented, never talked to us about it. We knew nothing about it. I'm -- I'm apprising the Court that we were unaware of these charges, but it has nothing to do with the bases for the motion, which is, the Lease Marcey J. Poeckes, CSR Official Court Reporter, 298th District CourtoY Dn OW FF WN mM MY NY YN PB BE Be Be BP PB Pe Oo 8 WwW HH FP O YD DOD TF HD VF B W NH FP TD WwW MOTION FOR SUMMARY JUDGMENT 10 requires that it be done timely, when incurred, under the section 8, and it was not done so. The other main bases for the motion, with respect to excess expenses is, that plaintiff has presented no evidence, whatsoever, to support its allegation that there are excess expenses. We brought a traditional no evidence motion for summary judgment, and there's been no presentation by the plaintiffs to support the damages that it asserts in this lawsuit in connection with excess expenses. So therefore, on that bases, their claim fails in connection with the damages element itself. For example, we put this in the motion, but they've presented no evidence, whatsoever, on taxes for '95, no receipts or any evidence on insurance for ‘96, insurance in '97. No evidence, whatsoever, with respect to taxes in '97. No evidence, whatsoever, for taxes for '98. No evidence, whatsoever, for insurance for '98. No evidence, whatsoever, for taxes and insurance for ‘99. No taxes and insurance receipts or evidence in 2000. There's no taxes -- or no evidence for taxes or insurance in 2001. There's no evidence, whatsoever, for taxes and insurance for 2002. There's no evidence, whatsoever, for utilities insurance in 2003. There's no evidence for taxes and insurance in Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtpo ont DO FB WN 10 MOTION FOR SUMMARY JUDGMENT 11 2004. The same for 2005. There's no evidence, whatsoever, in 2006 for taxes, maintenance or insurance. There's no receipts provided for 2007, until in this lawsuit. In connection with its other categories for excess expenses, the documentary evidence they produced don't add up to their allegations, so we brought a no evidence motion to request that they produce evidence to support their claim. They have not done so in connection with this proceeding. THE COURT: In their letter that was presented in late 2007, purporting to state the amount due, did it go back to all those years that you have just stated, or did it only go back a part of those years? MS. HOBART: It went back, Your Honor, and it did not include 2007. The plaintiff brought a claim for 2007 excess expenses, but those receipts and documents weren't produced until the lawsuit. But the particular letter does segregate the excess expenses per year and per type, and -- THE COURT: Simply states an amount, and then there's some controversy about whether receipts were ever given to someone or not, right? MS. HOBART: Correct. Which is a Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courteo Ot DH FH S&F W NY Bo Pr Oo MOTION FOR SUMMARY JUDGMENT 12 condition precedent to their argument that somehow there was, in 2007, an agreement to pay these past due amounts. We dispute that that occurred, and if you lock at the 2007 Lease Extension Agreement, there is not an agreement to pay any past due amounts. It fails for other legal defects, such as, it doesn't comply with 16.065 as an acknowledgment of a new debt. It's not sufficiently pled, which is required by Eldridge versus Collard, 834 S.W.2d 87 (Tex. App. - Fort Worth 1992). We have also brought an objection, Your Honor, to this letter that purports to be an audit. We dispute that it is an audit, but it purports to be an audit of the underlying damages. We've brought an objection that that is hearsay, and similarly, a no evidence motion that they haven't produced the damages to support the audit. The authorities for the hearsay objection is Aquamarine Associates versus Burton Shipyard, 695 $.W.2d 820 (Texas 1983). You can see in that letter and in the motions that these expenses were known to plaintiff when they were incurred. The Lease requires that the plaintiff has a duty to maintain the premises, the interior of the premises, the exterior of the premises. When the plaintiff breaches -- in maintaining the premises, when the plaintiff breaches its -- its expense Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courton WD WF W NH BF MOTION FOR SUMMARY JUDGMENT 13 stop, plaintiff's duty ends to pay for that. Plaintiffs still must maintain and repair the premises, but after that expense stop is reached, under section 8(g), I believe, then defendants' duties is there, and we must pay and reimburse landlord. So the landlord had unique knowledge about the expenses that it was incurring. They were incurred when the services were rendered, and the Lease provides that the landlord's duty to pay or absorb those costs ends once that expense stop is exceeded. So that, therefore, brings into an explicit contractual obligation on the defendants to pay landlord for those excess expenses. Those are accrued at the time they're incurred, and that duty is created right then and there. It's stated in the Lease, which we've cited for the Court, under section 8(f), that that is accrued on an annual basis, and that those payments are due each calendar year. It's stated over and over again. Plaintiff's essential defense is that this contract is not a Lease. Plaintiff's defense is, this is a continuing contract, and that there was no obligation of the plaintiff to bill us or even tell us about these charges until the end of the tenancy. Plaintiff cites to cases that have nothing to do with Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtony nun ® wn NM NY NY NY NY FP BP BP PP Be Be ee aoe WN FP OO ONY HAH & WH FP DO LO MOTION FOR SUMMARY JUDGMENT 14 leases. The cases that plaintiff relies on deal with indivisible service agreements, such as building a home. You're building a home. That's what you bought, that's what they're doing. So in those cases, it's impossible to segregate and to pay as you're going on. So what the Lease -- the contracts in those cases set up, they set up a progress payment for the build. In those cases, the courts find that at the end of the contract, you have -~ you square up; the breaches, the not breaches, what's due, what's owing. Those cases don't apply to this Lease Agreement, particularly because the Lease explicitly says that our obligation arises each calendar year. There's even a formula in our Lease that divvies up the allocation of the obligation based on the time that you've been on the Lease per calendar year. So this Lease -- if the Court construes it and looks at the terms of this Lease alone, the Lease takes care of these answers and mandates that this is an obligation that accrues each calendar year, and that the Statute of Limitations began to run each calendar year. So plaintiff's cases are inapposite in connection with the types of contracts that those cases deal with. We have stated in our replies some of the distinctions between the contracts in those cases and Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtowt nH OW & W HY NN NM YD NY NY FP FP BP PP PP eB anf. Ww NY FP OO Hb DOD HI DH TF F&F Ww NY FF DO YO MOTION FOR SUMMARY JUDGMENT 15 our contract. The Court need not look at those other contracts because the answers are right here in this Lease. The other main point that we bring up, Your Honor, to defeat plaintiff's claim, is that somehow this 2007 Lease Extension Agreement was -- made Wilson Office responsible for any debts incurred or excess expenses accrued prior to the time that we assumed the Lease. In 2005, Wilson Office assumed the Lease, under an Assumption and Assignment Agreement. That's before the Court, Your Honor. In numerous places throughout the Assignment, it's explicitly stated that Wilson Office has assumed the obligations going forward from the date of the assignment forward, and that we have not assumed any prior -- THE COURT: Doesn't it use the language "due" or "to become due" or something like that? MS. HOBART: In the 2007 Agreement? THE COURT: Yes. It says something like "due" or "to become due," as I'm recalling. I did spend some time looking at the language. I may not be spot on as to exactly what it said. MS. HOBART: That's in paragraph 2, which plaintiff has called out for your court -- Your Honor in Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtony Dn HW ® WH FB mw MY NY HY N BF FP BP BP PP Pe BP iB Op WN fF Ow OI HA UO F&F WN FE OO Ww MOTION FOR SUMMARY JUDGMENT 16 several instances with respect to plaintiff's belief that that obligates Wilson Office for all sums due or becoming due. It's true that Wilson Office agreed to pay for sums that become due, but it's limited to its time in the premises. So in the Assignment -- THE COURT: My problem isn't with the language, “or becoming due." My problem is with the language "due." I understand that it didn't release Group from anything. But I really think the question is, not withstanding whatever the assignment or assumption agreement was between Group and Interiors, whether that language is sufficient to suggest, as a matter of law, that Interiors has no obligation for allegedly past due sums. I understand that they represented that there were none in your transactions with one another. MS. HOBART: Your Honor, in paragraph B -- above paragraph 2 is paragraph B under the recitals. It expressly states that, "We are accepting the assignment and assuming Wilson Group obligations from and after the effective date." And so the "from and after effective date" is the temporal connection that we are arguing. It's not “past due." It's "from and after." That's in paragraph B. Also, in the -- in the introductory Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtwo Ory DH OO F&F WY NY fF Rw mM NH NY NY KH FP FP BF Fe PP PF RP Be me WN FP OO 6 OY DO OO BW DNYH PRP OO MOTION FOR SUMMARY JUDGMENT 17 Paragraph to your paragraph 2, there is a statement, "Now, therefore," in the middle of the first page of Exhibit C, which also conditions this assumption on, "We agree to the following, effective as of the effective date," and the effective date is defined in the initial paragraph as August 7, 2005. That, again, is a temporal condition that ties in the effective date and the "from and after" condition in connection with liability. Lastly, if you look at paragraph 5, it states there that, "All the parties agree that the recitals" -- I'm calling the Court's attention to the recital B, which says, "from and after the effective date." THE COURT: Yes. MS. HOBART: Five says that the recitals are contractual and not merely recitals. Obviously, the case law requires this Court to construe the entire document, not just one phrase, and to give each clause effect. So we've got multiple points in this document; the effective date in paragraph one, recital paragraph 8, "from and after the effect date." We've got the "now therefore" clause that says, "We agree to the following, effective as of the effective date." And then paragraph 2, which plaintiff has Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtot DH WO B&B WY NY PF NM NNN NM BFP HF BP Be BP PP Pe of WN F Oo DM AN WO MH & WH FP DO LO MOTION FOR SUMMARY JUDGMENT 18 cited, but I -- I believe out of context, it's cited as, “We agree to pay all amounts due or becoming due under the terms of the Lease." Wilson Office did agree to pay all amounts due under the Lease; the rent, excess expenses, those sorts of things, but we did not agree to any past due amounts nor any amounts that were incurred while Wilson Group was on the Lease. That's consistent with all the documents before the Court. For example, the Asset Purchase Agreement states that we are not responsible for anything prior to the time. This Assignment states that we are not responsible for any past due amounts. Even this 2007 Lease Extension Agreement, Your Honor, states nothing about past due amount. It's a 2l-term -~- the 2007 Lease Extension Agreement is explicitly for a 21-month term, beginning May 2006 through January 2008, and we have agreed to pay the sums that are due or accrued in that time frame. So when you look at all of these documents and give meaning to each and every clause, we've agreed to honor the terms of the Lease in connection with our time on the Lease and pay the amounts that Sierra's rightfully owed. But at no point did we agree to take on the debts of another. The Statute of Fraud would require a written agreement to do so, and there's nothing in these documents that Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtao t~ BD MO B&B W N FF NM oNM MN MY NY FP BP SB BP PP YP RP oe Oe ON FP Oo BVH TF WN HE DO MOTION FOR SUMMARY JUDGMENT 19 satisfies the Statute of Frauds. In fact, the opposite is true. All of the Language that we're seeing clearly says that we're not liable for any debts or amounts before August 7th, 2005, and in the Lease Extension, we're obligated to pay the amounts within that term. All of plaintiff's arguments really are pure argument. They're trying to create obligations where the Lease states otherwise, and because of that, this is a legal question in connection with construing all of these contracts to be consistent and honor the intent that's expressed therein. Did you have, Your Honor, any other questions about the assignment? I have called out the bases that we believe support that it's not agreeing to any past dye amounts. THE COURT: I don't think I did. MS. HOBART: The -- I'm going to move to the 2007 Lease Extension Agreement, briefly. THE COURT: I am just watching the clock. Mr. Helms has to have a little time to speak. MS. HOBART: Yes, Your Honor. In connection with the Lease Extension Agreement, Your Honor, that -- the new allegation by plaintiff is that that is an acknowledgment of a new debt. It's an acknowledgment of an old debt that constitutes a new Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtbh NM MY NY DY FP PP BP Pe BP PB Op OWN FP OO OB IY DH HW B&B WH HF OO MOTION FOR SUMMARY JUDGMENT 20 po ON DH TF FF Ww YY debt going forward, and we've objected to the new allegation. This acknowledgment point was not in the First Amended Petition, on which these motions were brought. Plaintiff has since filed a Second Amended Petition, where he's -- he's put in one sentence about an acknowledgment standard for this document. That Second Amended Petition fails to meet the pleading requirements for a new debt and acknowledgment under the authority of California Chemical Company versus Sasser, 423 S.W.2da 347 (Tex. App.- Corpus Christi 1957). We would object to that as a bases going forward. It's not in the pleadings, and their current pleadings are inadequate and not sufficiently pled. The sufficiency -- the insufficiency of their pleading is also supported by Eldridge versus Collard, 834 S.W.2d 87 (Fort Worth 1992). In those cases, they hold that this 2007 Lease Extension Agreement is not sufficient to meet -- to meet those standards of acknowledgment. It does not acknowledge any past due amount, doesn't state the debt that we would agree to be liable for. It's also conditional. It's got a 21-month term, and it's also conditional on this audit and the receipts being presented by Sierra timely. Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtwow OWA HO FF WwW NY BR NN NM RYN NY PP BP BP BP BP BP Be eR aes WN FP Oo ODI A MH F WN HD MOTION FOR SUMMARY JUDGMENT 21 In our papers we show the Court that that condition precedent was not met, and even today, they've not produced the receipts and invoices to support their damages. So I would pass my argument to Mr. Helms. THE COURT: Very well. Mr. Helms? MR. HELMS: Your Honor, I just want to discuss two aspects of our motion that I think pertain only to us. THE COURT: Sure. MR. HELMS: One is the aspect of the motion that as to partial summary judgment that we are not liable as a result of the ~- of the June 2007 Lease Extension to which we were not a party. That's pretty obvious. I don’t think there is really much to add, other than what's in the papers, except that, you know, if -- if Sierra was correct, then Wilson Office and Sierra could have entered into some sort of Lease Extension in which, you know, the amount of the Lease was a billion dollars and then they -- and then Wilson Office could have rolled over and then we would have been liable for it and nobody intended that. That's pretty clear. : The veil-piercing claim is another thing I wanted to discuss. We moved for a no evidence motion . Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtowt nH YO & W HH HF NM NM NY KY NY FP BP FP Be Fe PE RB ao bs WN FP OY OD DH HW B WH FP OO MOTION FOR SUMMARY JUDGMENT 22 on the alterego claim. They have responded by amending and asking the Court to take judicial notice of Nevada law, and they are now also asserting an improper distribution claim. What I would like to do on that is, I -- I don't think that's raised by our motion. That's something that's raised by their amendment. I would like to address that in separate motion so. THE COURT: Sure. MR. HELMS: But as far as the alterego claim that they pleaded beforehand goes, the only evidence -- the evidence that they submit actually shows that they can't prove any type of actionable fraud because the evidence consists of Exhibit H to their motion, which is a December 29, 2007 letter, which is the first time that there was any type of notice given to Wilson Group of a claim against it. So that's December 29, 2007. Their other evidence is Exhibit K to theix response, which is the minutes of a board of directors meeting of the Morgan Group, which was the predecessor. In that -- in those minutes it indicates that all remaining assets are distributed to shareholders, but those minutes were on December 18th, a couple of weeks before they ever made any kind of claim that we were liable for anything like that. So I don't Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtow OI KH YH B® WY mw NM NY HK MY FEF BPP BP PP Pe Pe oe WN FO © ON WD HO ® WN SB DO MOTION FOR SUMMARY JUDGMENT 23 think that they can show actual fraud. I don't think they've met their burden on that. The only other evidence they have is that Mr. Hill testified that on the date of his deposition there were no assets in the company, but that's not enough to show actual fraud. THE COURT: All right. Anything else from Office Interiors, whatever we are calling them, before I pass it over to -- MR. HELMS: No, Your Honor. Oh, I'm sorry. MS. HOBART: Just lastly, that we've objected to Mr. James' affidavit in connection with the receipts and invoices as being conclusory. He's not produced any evidence of those damages, and those are -- objections are contained in the filing that was provided to the Court this morning. THE COURT: Thank you, Ms. Hobart. Ms. Yaeger, anything from you? MS. YAEGER: No. THE COURT: Mr. Roberts? MR. ROBERTS: No, Your Honor. THE COURT: Okay, Mr. Frederiksen. The floor is yours. MR. FREDERIKSEN: Thank you, Your Honor. Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtany nan wn F&F Ww NY MOTION FOR SUMMARY JUDGMENT 24 May I remain seated? THE COURT: You may. It's probably easier to get through your documents that way. MR. FREDERIKSEN: It is. Thank you, Your Honor. I'm going to alter my response because I think it would be easier to address the two issues that Mr. Helms has raised on Wilson Group. THE COURT: Sure. MR. FREDERIKSEN: Specifically, also in the evidence was a Tax Return Schedule L preduced by Wilson Group that indicated that at the year-end, December 31st of 2007, the sum of $436,000 remained in Wilson Group's assets. So his argument to the effect that the distribution was before the demand is new, once you figure out the demand was received, the assets were still in the corporation and they distributed them. You have to go only to section 78.747 of the Nevada Revised Statutes, where it sets out an alterego as a matter of law when those events take place. I think that's sufficient evidence. As it pertains to Wilson Group's argument that they're not liable, we've cited for anything that happened after the extension, Your Honor. We equate this to, like, a guarantee of the assignment, which is Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtoy Dn oO ®F WN MOTION FOR SUMMARY JUDGMENT 25 behind tab five, which the Court's noted, basically, says that they are going to remain liable. They had an option, Wilson Group did, to simply terminate the Lease instead of assigning it. It's like a guaranty of a note. The fact that the note's extended doesn't excuse the guaranty, unless the guarantor has specifically provided in the documents that his guaranty terminates on a specific date. We've cited some law in our response to the effect that the non-occupying assignor remains liable unless there's an agreement otherwise. So we don't believe that they are excused from going forward after 2007, because again, the assignment and assumption, Wilson Group remains liable on the Lease, inclusive of the surrender terms that is the basis for our damages against Wilson Group after 2007. I am now going to address, if I may, Your Honor, the Wilson Office brief, or allegations. THE COURT: Sure. MR, FREDERIKSEN: I read that as a Statute of Limitations. I read it as a -- secondly, a condition precedent regarding the receipts and invoices. As I've argued in my response, I believe the evidence attached to their own motion establishes fact issues to the effect that James testifies that he provided . Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtwo OI Dn OY BF WwW DN PF 10 MOTION FOR SUMMARY JUDGMENT 26 receipts to Paula Householder (ph), the office manager, on October 30th, 2007. I attached some additional deposition testimony of Ms. Householder and Mr. Blomstrom, who was the CEO, to the effect that they received a box of documents, and it was a shoebox full of stuff. I believe that, combined with his affidavit of Mr. James, which is Exhibit G to our response, where he says he has personal knowledge and information of the information attached, and attaching that audit is sufficient evidence. I dispute the fact that it's never been produced. The reply -- first of all, we have his testimony that it was produced, his affidavit and his deposition testimony. In the reply they argue that they filed a request for production, and it wasn't -- there was no response. They attached the response, and the response clearly states that, we'll provide the documents on March 14th at 10:00 o'clock at my offices. No one came to see the documents on March 14th. So those underlying documents, which I don't believe would be the best evidence, because the best evidence would have been the receipts provided to Wilson Office at the time, back in October, have disappeared while in their possession, is the best evidence, but I believe it's clearly Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtorn wn es W NY F MOTION FOR SUMMARY JUDGMENT 27 sufficient. The audit, itself, with Jeanes' affidavit and his deposition testimony to create a fact issue; that we complied with that condition precedent. Wilson Office's argument that they're not liable for costs before August 7, 2005, the Court noted and, obviously, read the assignment. The Court is correct. The quotation of paragraph one, to the effect that, they are going to be liable. "Assume or promises to pay all of the rent and other sums due or becoming due." So the Lease is clearly identified as the 1993 Lease, which has been continued by extensions. So clearly that document provides that Wilson Office is going to pay prior what's due and in the future. There can be no confusion, because as the Court’s probably noticed, the Assignment and Assumption is signed by Wilson Group by Mr. Hill, and accepted by Wilson Office, signed by Mr. Hill. So Mr. Hill signed both ends of it. So he had to understand what he was signing, and there's no affidavit or evidence saying that the document has been altered, it's ambiguous, it's -- it's -- we -- you know, we didn't draft it. I believe it's clear to establish their liability for due sums before August 7th, 2005. Next, their audit argument, to the effect that they didn't receive an audit prior to November lst, Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtwow ODN WH oT ®F wWN Mw NM NM YN NY BF PP Be Be BP Pe BP eB ue WN fF Ow OY DA HW B&B WN Ke GD MOTION FOR SUMMARY JUDGMENT 28 I've already covered that. Lastly, the Statute of Frauds. If it's -- if it's part of their motion, certainly the signed document in the form of the assignment, the assumption of liability signed by the parties is sufficient to satisfy the Statute of Frauds, if it applies. I would like to turn now, Your Honor, if I can, to the -- to what I believe to be the issue in this -- these motions, the Statute of Limitations. And for just background -- and I am pleased the Court is familiar with the documents provided -- I provided in tab 4 a brief time line, just as a demonstrative explanation helping my argument. As the Court will note from that tab 4, the Wilson Group signed this Lease in '93. It was extended through a series of lease agreements, extending it from 2000 to ~- excuse me ~~ from ‘93 to 2000. You follow this track up to the middle of this time line, where you see the Assignment Assumption and Agreement. This was a continual Lease. The extensions continue the obligations of the Lease and on August 7th, 2005, Wilson Office Interiors assumed all of that responsibility going back to '93. Likewise, as you go forward, you can see where they vacate, finally, Marcey J. Poeckes, CSR Official Court Reporter, 298th District CourtOo OY DH oF B&B WwW NY NN YW NY NY N BF FP Pe RP PP BP BP ae oN FPF Ob ON DH HY B® WN PO MOTION FOR SUMMARY JUDGMENT 29 Wilson Office does, on January 3lst. The lawsuit was filed February lst, 2010. Another relevant part, which is not on the line, but that as of 12/29/07, that was when the notice of default was forwarded. So, basically, you have a presentation, as the evidence shows, of an audit on October 30th, 2007. We have a 30-day fuse under the Lease Agreement, and that is contained, Your Honor, under tab 6. I have just typed out the -- some of the relevant deals, so we don't have to go through the entire Lease. But, basically, as we address the limitations issue, they are taking the position, defendants are, is that all leases are installment contracts. That's just not, as a matter of law, correct. The Laubach case, which they cite as their authority, is a case involving the old inner caverns deal down in Williamson County, outside of Austin. We've all, probably, at least looked at the signage and wondered what it was like. THE COURT: Yes, exactly. MR. FREDERIKSEN: Off the record, I'll testify that I've actually gone in there. But as a practical matter, that was a 99-year lease, and it had to do with the calculation of the rent. Our case is not about rent. Our case, first Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtory nuwn & Ww NY Mw N BW NY HN FP PPP PP PB Re oe ase WN» Ov ®@AW BD UY BwWNH RP OD LO MOTION FOR SUMMARY JUDGMENT 30 and foremost, is about section 8, ongoing obligations and expenses, a classic expense stop provision. If you note, behind tab 6 on the section 8, that's set forth right there, you have, basically, the definition of what the expense stop is. If you drop down to section F on the next page, you see the language that they claim requires us to be in an annual installment. Well, if you review section F, there is no due date, there's no set date that obligates them to pay by. This is a continuing obligation that is covered by the basic rule that in a typical contract, limitations runs from the expiration of the contract. This language here is no more than a calculation. It's how you calculate it. It's like if you had an 8-year note and you had to pay interest per annum, this just explains the per annum interest, but it doesn't mean that it's due until the note's due. Looking at section 8(f), you note that there is no reference to any installment or installment payment of that expense obligation. It's merely a calculation of how it's done. This is not a triple net lease. This is an old lease that has expense stop provisions. So it's not something that's automatically calculable on an annual basis. You have expenses that are sometimes incurred outside of that year, such as, Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtony n VU & W NY BF NN HH NN PP PP BP BP PP RP eB Oe WH FP Ow OI DAO BW HY PO MOTION FOR SUMMARY JUDGMENT 31 property taxes and other things. So it's merely -- 8(f is not an installment, it's a calculation. The contract has numerous other obligations. The contract is in everybody's motion and everybody's response. We believe that it best qualifies as a contract of a continuing nature. We have attached, and attached to the last tab, are some cases that I have put in there for the Court's review, but the key case that we are looking at is the City and County of Dallas Levy Improvement, which is a Dallas -- or excuse me -- an Amarillo Court of Appeals decision. It states as follows -- I have marked it -- "It's been held that in a contract such as this where the services were rendered or divided into numerous parts, where it's continuous, invisible and provides for some payments to be made at stated intervals or instaliments when proper statements are rendered." "Therefore, the total debt matures when the contract has been completed, according to its terms and when services are terminated and the Statute of Limitations does not begin to run on the total debt until the work has been completed." This case has been cited by almost all the other cases that we’ve attached, for this concept Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtory nn ®F WH KP m NM NM NY NY NY fF FP FP FP FP FF RP BP RP eB Oe. WN FEF Ow OY OH HW B WH PrP DO MOTION FOR SUMMARY JUDGMENT 32 that when you have this continuing contract with multiple obligations, it's not an installment contract. Again, the plaintiff -- or defendants have found one case, and I think they are trying to put a square peg into a round hole and have this Court leap out and say all leases are installment contracts. That's just not the case. The fact that you have a rent payment ina lease does not make it an installment contract automatically, especially when there's other obligations, and where this contract has been continued, guite frankly, as we say in our first -- second amended petition, affirmed. The second case I want to bring to the Court's attention is the Capstone case, which clearly sets out the limitations for contracts, four years.. It accrues when the contracts breach, and it sets out the definition of a normal contract. We think that Statute of Limitations, four years, applies. The fact that we brought the lawsuit in February lst is clearly within four years of the expiration or termination and completion of the contract? THE COURT: What about the testimony regarding your client's alleged presentation of past due amounts on an annual or somewhat annual basis? I believe there was testimony that goes Marcey J. Poeckes, CSR Official Court Reporter, 298th District Courtany nn wm b&b WN BF mw NM NY YN NK BF BP BP BP BP Pe BP Pe aoe ON FP Ow OI HD HU B® WH FP CO WO MOTION FOR SUMMARY JUDGMENT 33 back a number of years that says, you know, you owe us for this year or this year or this year. That would suggest that there was some belief that there was an amount owin