United States District Court, N.D. Alabama, Southern Division
REVISED MEMORANDUM OPINION
N. JOHNSON, JR. UNITED STATES MAGISTRATE JUDGE
diversity action, the defendant proceeds before the court on
a Motion for Summary Judgment. (Doc. 19). Plaintiff filed a
response (Docs. 21 & 22), and defendant filed a reply
(Doc. 23). The parties consented to the jurisdiction of the
undersigned United States Magistrate Judge pursuant to 28
U.S.C. § 636(c). (Doc. 17). After careful consideration,
the court GRANTS the Motion for Summary Judgment.
to the Federal Rules of Civil Procedure, “[t]he court
shall grant summary judgment if the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. Rule 56(a). Defendants, as the party seeking
summary judgment, bear the initial responsibility of
informing the district court of the basis for its motion, and
identifying those portions of the pleadings, depositions,
answers to interrogatories, and admissions on file, together
with the affidavits, if any, which it believes demonstrates
the absence of a genuine issue of material fact. Clark v.
Coats & Clark, Inc., 929 F.2d 604, 608
(11th Cir. 1991) (quoting Celotex Corp. v.
Catrett, 477 U.S.317, 323 (1986)). The burden then
shifts to the non-moving party to demonstrate why summary
judgment would not be proper. Celotex, 477 U.S. at
323. The non-moving party must affirmatively set forth
specific facts showing a genuine issue for trial and may not
rest upon the mere allegations or denials in the pleadings.
summary-judgment stage, the court may not weigh the evidence
nor determine the truth of the proceedings; rather, the court
shall determine only whether a genuine issue exists for
trial. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 249 (1986). In doing so, the court must view the
evidence in the light most favorable to the non-moving party
and draw all reasonable inferences in favor of that party.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986).
owned a Hilton Garden Inn in Birmingham, Alabama. (Doc. 20-1,
Hanuman Depo. (Vol. I), at 9). On October 20, 2011, Summit
offered to purchase the Hilton Garden Inn from Hanuman for
$8, 000, 000. (Doc. 20-1 at 38-42 (Letter of Intent)). On
November 21, 2011, the parties signed a Purchase Agreement
memorializing Summit's contract to purchase the Hilton
Garden Inn for $8, 625, 000.00. (Doc. 20-1 at 44-72 (Purchase
Purchase Agreement provided for an adjustment to the purchase
price based upon implementation of Hilton Worldwide's
Product Improvement Plan (PIP) to update the property:
Seller shall be responsible for ordering the Property
Improvement Plan (“PIP”) from Hilton Worldwide
(“Hilton”) and paying the initial PIP fee. The
parties shall mutually agree upon the cost of the PIP scope
prior to the expiration of the Due Diligence Period and the
Purchase Price shall be reduced by the amount that the PIP
scope exceeds $1, 000, 000. Either Purchaser or Seller shall
be entitled to terminate this Agreement during the Due
Diligence Period if Seller or Purchaser cannot secure a
guaranteed, binding contract from a Hilton approved design
and build contractor approved solely by Purchaser to perform
the PIP work for an amount not to exceed $1, 000, 000. If the
scope of the PIP work exceeds $1, 000, 000 and this Agreement
is not otherwise terminated, the Purchase Price shall be
reduced at Closing by the amount the PIP scope exceeds $1,
000, 000. Upon final completion of all required new ownership
PIP items, should the Purchaser's costs specifically
associated with new ownership PIP items be less than $1, 000,
000 the Purchaser warrants that it will reimburse the Seller
for the difference in amount in which those total costs are
less than $1, 000, 000.
(Doc. 20-1 at 46) On November 29, 2011, Hilton issued a PIP
describing work needed to update the property. (Doc. 20-1 at
74-80 (November 2011 PIP)). On December 27, 2011, Hilton
issued a revised PIP representing the “Final PIP”
for renovations to the property. (Doc. 20-1 at 82-88).
February 24, 2012, Hanuman and Summit executed a “Side
Letter to Purchase Agreement.” The Side Letter
Agreement set forth further terms revising the provisions in
the afore-cited Paragraph 2.A. of the Purchase Agreement.
(Doc. 20-2 at 49-51). The Side Letter Agreement set a
“Capped Amount” on the “PIP Work” of
$1, 000, 000 and provided:
The Seller and Purchaser hereby agree that, in accordance
with Section 2.A. of the Agreement, the scope of the PIP Work
is equal to, but does not exceed, Capped Amount. Upon final
completion of the PIP Work, should Purchaser's actual
costs associated with the PIP Work be less than the Capped
Amount, Purchaser agrees to reimburse Seller for the
difference between the Capped Amount less payment made to
Seller for approved Special PIP Items and Purchaser's
actual costs associated with the PIP work.
(Id. at 49 (“PIP Work Agreement”)).
additional term of the Side Letter Agreement provided that
Hanuman would complete and pay for certain items of the PIP
Work. (Id. at 50 (“Special PIP Items”)).
Pursuant to this term, Hanuman enjoyed the right to submit,
within 60 days of closing, its invoices for completing the
Special PIP Items and obtain reimbursement from Summit for
those expenditures. (Id.). Hanuman did not submit
invoices to Summit for the Special PIP expenditures. (Doc.
20-2, Hanuman Depo. (Vol. 2), at 12).
Another term of the Side Letter Agreement provided:
Other PIP Items. Seller's principal,
Chiman Patel, in his individual capacity, shall advise,
consult and develop pricing on behalf of Purchaser for the
Other PIP Items and submit those prices, and installation,
including where needed, employment of contractor and/or
subcontractors, to Purchaser for the purchase and
installation of the Other PIP Items (with all pricing and
purchasing subject to final approval by Purchaser and all
purchases being made by Purchaser), in order to reduce the
total cost of the PIP Work below the Capped Amount.
(Doc. 20-2 at 50). Based upon Patel's recommendation,
Summit switched from the company it intended to rely upon to
supply furniture, fixtures, operating supplies, and equipment
(A1 Fusion Designs) for the Other PIP items and instead
contracted with Carver & Associates for those services.
(Doc. 20-3, Trowbridge Depo., at 12).
August 28, 2012, Chris Eng, Summit's Vice President and
General Counsel, sent an email to Chiman Patel, the sole
member of Hanuman, stating:
As for the rest of the “Other PIP Items” (items
that are not Special PIP items), Summit has engaged Carter
[sic] & Associates as the purchasing company for the
Other PIP items and we've engaged a contractor to
complete the work, which is scheduled to begin November 1st.
We will take care of the “Other PIP Items” per
the terms of our Agreement. You need not be involved in this