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Hanuman, LLC v. Summit Hotel OP, LP

United States District Court, N.D. Alabama, Southern Division

October 2, 2017

HANUMAN, LLC, Plaintiff
v.
SUMMIT HOTEL OP, LP, Defendant

          REVISED MEMORANDUM OPINION

          HERMAN N. JOHNSON, JR. UNITED STATES MAGISTRATE JUDGE

         In this 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.

         Summary Judgment Standard

         Pursuant 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. Fed.R.Civ.P. 56(e).

         At the 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).

         Factual Findings

         Hanuman owned a Hilton Garden Inn in Birmingham, Alabama. (Doc. 20-1, Hanuman Depo. (Vol. I), at 9).[1] 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 Agreement)).

         The 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)[2] 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).

         On 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”)).

         An 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).

         On 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 ...

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