FILED DALLAS COUNTY 2/17/2017 2:08:56 PM FELICIA PITRE DISTRICT CLERK 2-CITS ES Tonya Pointer DC-17-01990 CAUSE NO. _______________ ESMITH REALTY PARTNERS DALLAS, LLC, Plaintiff, v. ALTERRA 211 NORTH ERVAY, LLC; ALT-211 NORTH ERVAY MASTER TENANT, LLC; Defendants. § § § § § § § § § § § § IN THE DISTRICT COURT __st JUDICIAL DISTRICT DALLAS COUNTY, TEXAS PLAINTIFF’S ORIGINAL PETITION COMES NOW Plaintiff, ESMITH REALTY PARTNERS DALLAS, LLC, (“ESmith Realty”) and files this original petition complaining of Defendants, ALTERRA 211 NORTH ERVAY, LLC, and ALT-211 NORTH ERVAY MASTER TENANT, LLC, (collectively “Defendants”) and respectfully states the following. I. 1. DISCOVERY CONTROL PLAN AND STATEMENT OF RELIEF Pursuant to TEX. R. CIV. P. 190.3, Plaintiff alleges that discovery should be conducted under Level 3. 2. Pursuant to TEX. R. CIV. P. 47, Plaintiff seeks monetary relief over $200,000 but not more than $1,000,000.00. II. 3. INTRODUCTION Plaintiff entered into a Master Lease Agreement (the “Master Agreement”) with Defendants wherein Plaintiff was appointed as the exclusive leasing agent for Defendants’ property located at 211 N. Ervay Street, in Dallas, Texas (the “Building”). As the exclusive leasing agent, Plaintiff was to promote the Building and any part of the Building available for lease during PLAINTIFF’S ORIGINAL PETITION Page 1 the term of the Agreement. All inquiries concerning new leases were referred to Plaintiff, and all negotiations were conducted by or under the direction of Plaintiff. 4. In return for Plaintiff’s services, Defendants agreed to pay Plaintiff a percentage of each tenant’s lease as commission, based on the square footage and aggregate value of each tenant lease. Plaintiff successfully attracted and negotiated leases for at least five (5) major tenants and several smaller tenants, all of whom have entered binding lease agreements with Defendants for space in the Building. 5. Defendants, however, have failed and refused (after several demands) to distribute amounts owed to Plaintiff as commission under the Master Agreement. 6. In addition to the Master Agreement, Plaintiff and Defendants entered a specific Leasing Commission Agreement (the “Commission Agreement”) wherein Plaintiff negotiated a specific lease on behalf of a specific prospective tenant, and in turn Defendants agreed to pay Plaintiff a percentage of the base rent as commission. The lease was successfully negotiated by Plaintiff, and signed by Defendants and Tenant on February 24, 2015. 7. Defendants, however, have failed and refused (after several demands) to distribute amounts owed as commission to Plaintiff under the Commission Agreement. 8. Because Defendants have failed to pay the agreed-upon commissions to Plaintiff as required under the Agreements, they have breached said Agreements and have damaged Plaintiff. III. 9. PARTIES AND SERVICE OF CITATION Plaintiff is a for-profit limited liability company authorized to do business in the State of Texas, with its principal place of business located in Dallas, Dallas County, Texas 10. Alterra 211 North Ervay, LLC is a for-profit limited liability company that is organized and exists pursuant to the laws of the State of Texas, with its principal place of business PLAINTIFF’S ORIGINAL PETITION Page 2   located in Dallas, Dallas County, Texas. Service of process may be accomplished on Alterra 211 North Ervay, LLC by and through its registered agent for service, Capitol Corporate Services, Inc., 206 E 9th Street, Suite 1300, Austin, Texas 78701, or at such other place that the registered agent may be found. 11. Alt-211 North Ervay Master Tenant, LLC is a for-profit limited liability company that is organized and exists pursuant to the laws of the State of Texas, with its principal place of business located in Dallas, Dallas County, Texas. Service of process may be accomplished on Alt-211 North Ervay Master Tenant, LLC by and through its registered agent for service, Mukemmel Sarimsakci, 211 North Ervay, 18th Floor, Dallas, TX 75201, or at such other place that the registered agent may be found. IV. 12. JURISDICTION AND VENUE This Court has jurisdiction over Defendants because they are entities organized and existing pursuant to the laws of the State of Texas. 13. This Court has jurisdiction over the subject matter of this dispute pursuant to Article V of the Texas Constitution because the amount in controversy exceeds $500. 14. This Court is an appropriate venue for this case because the Agreements were entered in Dallas County, Texas, and the Agreements were to be performed in Dallas County, Texas. V. FACTUAL ALLEGATIONS A. “Master” Lease Agreement 15. On or about February 25, 2015, Plaintiff and Defendant Alterra 211 North Ervay, LLC (“North Ervay”), entered a Lease Agreement (the “Master Agreement”) wherein Plaintiff was appointed as the exclusive leasing agent for the property located at 211 N. Ervay Street, in Dallas, PLAINTIFF’S ORIGINAL PETITION Page 3   Texas (the “Building”). North Ervay is the owner of the Building. Under the Master Agreement, all inquiries concerning new leases were to be referred to Plaintiff, and all lease negotiations were to be conducted by or under the direction of Plaintiff. The Master Agreement provided for commissions due on the base rent for any new leases, renewals, and/or expansions. 16. Pursuant to the terms of the Master Agreement, Plaintiff advertised the building, and investigated and analyzed references and financial statements for prospective tenants for the vacancies in the building. As a result of Plaintiff’s efforts, multiple prospective tenants were qualified and presented to Defendants. Five major tenants and several smaller tenants ultimately leased space in the Building, leasing 43,838 square feet and generating over $225,000 in commissions that should have been paid to Plaintiff per the terms of the Master Agreement. Despite Plaintiff’s efforts, Defendants have failed and refused to pay Plaintiff the total commissions due for each tenant. B. Leasing Commission Agreement 17. In addition to the Master Agreement, Plaintiff and Defendant Alt-211 North Ervay Master Tenant, LLC (“Master Tenant”), entered a separate Leasing Commission Agreement (“Commission Agreement”) for the lease negotiated with VENUE, an approved prospective tenant presented by Plaintiff. The Commission Agreement provided for a leasing commission equal to ten percent (10%) of VENUE’s gross rent to be paid to Plaintiff by Master Tenant during the initial term of the lease. 18. Additionally, should the lease with VENUE be renewed or expanded, then Plaintiff is entitled to an additional five percent (5%) commission on the gross rent for the number of years in the renewed or expanded term. PLAINTIFF’S ORIGINAL PETITION Page 4   19. To date, Defendants have failed to distribute all commissions currently owed and due to Plaintiff. Plaintiff has requested, on multiple occasions, the payments to which it is entitled and has provided line item documentation of all commissions due and owing. Defendants, however, have failed and continue to refuse to honor their obligations. C. CONDITIONS PRECEDENT 20. All conditions precedent to this lawsuit have been performed or have occurred. D. CAUSE OF ACTION A. Count I: Breach of Contract 21. Plaintiff incorporates the factual allegations of the foregoing paragraphs as if fully reproduced herein. 22. Defendants are in breach of their obligations contained in the Master Agreement and the Commission Agreement. Specifically, Defendants breached the terms of each of the Agreements by entering lease agreements with the tenants vetted and presented by Plaintiff, receiving funds under the lease agreements with those tenants, and failing to distribute the percentages due as commission to Plaintiff as promised. Plaintiff has performed or tendered all its obligations. As a direct and foreseeable breach of Defendants’ duties under each of the Agreements, Plaintiff has been damaged in an amount to be proven at trial. 23. In order to prosecute its claim under the Agreements, Plaintiff has retained and has agreed to pay the law firm of Ferguson Braswell Fraser Kubasta, PC a reasonable fee for the necessary services it performs in connection with this lawsuit. Pursuant to V.T.C.A., TEX. CIV. PRAC. & REM. CODE §38.001, et seq., Plaintiff is entitled to recover the reasonable and necessary attorneys’ fees it incurs in prosecuting its breach of contract claim in this case. PLAINTIFF’S ORIGINAL PETITION Page 5   B. Count II: Conversion 24. Plaintiff incorporates the factual allegations of the foregoing paragraphs above, as if fully reproduced herein. 25. Plaintiff advertised the building, investigated and analyzed references and financial statements for prospective tenants, and presented qualified tenants to Defendants for the vacancies in the building. In return, Defendants agreed and promised to pay Plaintiff a percentage of the base rent for each successfully signed lease agreement as commission. 26. Commissions on the amounts collected by Defendants and owed to Plaintiff pursuant to the Agreements are property that has been converted by the Defendants. The Defendants wrongfully exercised dominion or control over these funds by using such funds without Plaintiff’s consent in a manner inconsistent with the terms of the Agreements. Defendants used Plaintiff’s commission funds as if Defendants were the true owners. 27. Plaintiff has been damaged due to Defendants’ conversion of such funds in an amount to be proven at trial. C. Count III: Unjust Enrichment 28. Plaintiff incorporates the factual allegations of the foregoing paragraphs above, as if fully reproduced herein. 29. Defendants, through their retention and impermissible use of Plaintiff’s commissions, have deprived Plaintiff of the benefit of a large sum of money and the use of such funds. 30. Defendants have financially benefited from Plaintiff’s loss through the retention and use of the funds. PLAINTIFF’S ORIGINAL PETITION Page 6   31. The benefit received by Defendants at Plaintiff’s expense was not anticipated or foreordained by the Agreements or any other contract, written or oral, between the parties. 32. In order to prosecute this unjust enrichment claim, Plaintiff has retained and has agreed to pay the law firm of Ferguson Braswell Fraser Kubasta, PC a reasonable fee for the necessary services it performs in connection with this lawsuit. D. Count IV: Money Had and Received 33. Plaintiff incorporates the factual allegations of the foregoing paragraphs as if fully reproduced herein. 34. Defendants are currently holding and retaining money that in equity and good conscience belongs to Plaintiff. 35. Specifically, Defendants are holding and retaining Plaintiff’s commission fees, the percentages of the base rents for multiple tenants in the Building, which are due pursuant to the Master Agreement and the Commission Agreement. Because Defendants are not distributing these funds as promised, they have no right to such funds. 36. The funds rightfully belong to Plaintiff, and Plaintiff has been damaged in an amount to be determined at trial. E. Count V: Fraud and Fraudulent Inducement 37. Plaintiff incorporates the factual allegations of the foregoing paragraphs as if fully reproduced herein. 38. Defendants made materially false representations to Plaintiff in the course of Defendants’ business. Defendants knew such representations were false and/or made them recklessly, as positive assertions and without knowledge of their truth or falsity. PLAINTIFF’S ORIGINAL PETITION Page 7   39. Defendants intended for Plaintiff to act on these representations by entering the Master Agreement and Commission Agreement. Plaintiff detrimentally relied upon the apparent truth of Defendant’s representations when Plaintiff entered the agreements. 40. Defendants’ actions have caused substantial injury to Plaintiff, for which Plaintiff seeks recovery for actual, consequential, and exemplary damages against Defendants. F. Count VI: Foreclosure on Lien 41. Plaintiff incorporates the factual allegations of the foregoing paragraphs as if fully reproduced herein. 42. The Commission Agreement is attached hereto and incorporated herein by reference. Specifically, the Agreements disclosed to Defendants the Plaintiff’s right to the lien set forth in the Agreements. The Commission Agreement was executed on or about January 15, 2015. The commission under the Commission Agreement was earned upon the execution of a lease by the Defendants and the prospective tenant, Venue. The commission was payable in five set payments, the first upon execution of the lease, a second payment on the commencement date set forth in the lease, the third payment on 12/28/2016, a fourth payment on 12/28/2016, and a final payment on 12/28/2017. 43. Plaintiff performed its obligations under the Commission Agreement, including but not limited to seeking out the prospective tenant and negotiating a lease or other written agreement with Defendants. 44. The amount of payable commission which came due on 12/28/2016 and is unpaid is $175,000.00. Due to the unpaid amounts owed by Defendants, a lien is attached to Defendants property commonly described as 211 N. Ervay Street, in Dallas, Texas. PLAINTIFF’S ORIGINAL PETITION Page 8   45. Attached hereto is the verification from Plaintiff’s representative affirming that the notice of lien has been recorded. VIII. PRAYER WHEREFORE, PREMISES CONSIDERED, Plaintiff respectfully requests that the Defendants be cited to appear and answer, and that the Court a. enter final judgment against Defendants; b. award Plaintiff actual damages, consequential damages, all attorneys’ fees and cost of suit, including any attorneys’ fees and costs of suit for any and all appeals to the Court of Appeals and/or Texas Supreme Court, and pre-judgment and post-judgment interest as allowed by law; and c. grant Plaintiff all such other and further relief to which it may be justly entitled. Dated: February 17, 2017 Respectfully submitted, FERGUSON BRASWELL FRASER KUBASTA, P.C. 2500 Dallas Parkway, Suite 600 Plano, Texas 75093 T: 972-378-9111 F: 972-378-9115 Ryan A. Starnes State Bar No. 24070669 E-Mail: rstarnes@dallasbusinesslaw.com Spencer A. Bryson State Bar No. 24087230 E-Mail: sbryson@dallasbusinesslaw.com ATTORNEYS FOR PLAINTIFF PLAINTIFF’S ORIGINAL PETITION Page 9 VERIFICATION STATE OF TEXAS COUNTY OF DALLAS BEFORE ME, the undersigned authority, personally appeared Karra Guess, who, after being duly sworn, stated under oath that she is the Chief Financial Officer and duly authorized representative for ESmith Realty Partners Dallas, LLC, and that she has read the foregoing Plaintiffs Original Petition and that the facts set forth therein are, within her personal knowledge, and are, true and correct to the best of her knowledge. Mam Karra Guess, CFO ESmith Realty Partners Dallas, LLC SUBSCRIBED AND SWORN to before me on this the day of 5111!:le 2017, to certify which witness my hand and of?cial seal. 1 CLARA ALDERMAN . . ?Nomrv Public. 818:6 of Texas Notary Public 1n and for the State of Texas 335mg Comm Expires 05-13-2020 0 4 or go l, Notary '0 ?2?66? Name Printed: Ha?mrtn My commission expires:_5 5