Aranza TRO Application 11-03-10

8/8/2019 Aranza TRO Application 11-03-10

1/10

NO.JD lltl\-65MULTI RESTAURANTSCONCEPTS, LTD., CHAMPPS DF WJOINT VENTURE, ASC STAR I,LTD., an d TEAM JOINT VENTURE,Plaintiffs,v.DF W INTERNATIONAL AIRPORTBOARD,Defendant

14th @ JUDICIAL DISTRICT

DALLAS COUNTY, TEXAS

VERIFIED APPLICATION FO R A TEMPORARY RESTRAINING ORDERTO THE HONORABLE JUDGE OF SAID COURT:

Pursuant to Texas Rule of Civil Procedure 680, MultiRestaurants Concepts, Ltd.,Champps DFW Joint Venture, ASC Star I, Ltd., and Team Joint Venture ("Plaintiffs" or"MultiRestaurants"), file their Verified Application for a Temporary Restraining Order,against Defendant the DFW International Airport Board, as follows:

I.STATEMENT OF FACTS AND PROCEDURAL BACKGROUND1. In 1996, MultiRestaurants and Team Joint Venture contracted with the

Dallas/Fort Worth International Airport Board for the operation of food and beverageconcessions at DFW Airport (the "Airport") by various concession agreements. Article2, of the original concession defines gross receipts as follows:

3. "GROSS RECEIPTS" shall include all monies paid or payable to theConcessionaire fa t sales made and for services rendered at or from the Premised,regardless of when or where the order therefore is received, and at the option ofthe Board, outside the Premised, if the order therefore is received at the Premises,and any other revenues of any tyPe arising out of or in connection with theConcessionaire's operations at the Premises, including, but not limited to , those

APPLICATION FO R TEMPORARYRESTRAININGRELIEF 1ORIGINAL


2/10

operations of the Concessionaries' agents or sub lessees, arising from any salesmade or services rendered at or from the Premises, provided, however, that GrossReceipts shall not include:A. Any taxes imposed by law which are separately stated to and paid by acustomer and directly payable to the taxing authority by theConcessionaire, and alcoholic beverage taxes collected for remittance tothe taxing authority from the retail sale ofalcoholic beverages.

(emphasis added). A true and correct copy of the excerpted concession agreement isattached to the Appendix in Support of this Application ("App.") at pages 7-35.

2. In and around August 2005, extensions of the concessions were executed.between theBoard and MultiRestaurants, Team Joint Venture. Article 4, Section 4.01 ofthe concession agreements define gross receipts as follows:

"GROSS RECEIPTS", sometimes called Gross Revenues and/or Gross Sales,shall include all monies paid or payable to Concessionaire for sales made and for servicesrendered at or from the Premises, regardless of when or where the order therefore isreceived, and at the option of the Board, outside the Premises, if the order therefore isreceived at the Premises and any other revenues of any type arising out of or inconnection with Concessionaire's operations at the Premises including, but not limit to,those operations ofConcessionaire's agents or sublessees, arising from any sales made or.services rendered at or from the Premises, provided, however, that Gross Receipts shallnot include:1. Any taxes imposed by law which are separately stated to and paid by a

customer and directly payable to the taxing authority by Concessionaire.Champps and Star also executed a 2005 Concession with the Board. A true and correctcopy of the excerpts from the concession agreement is attached to the Appendix inSupport of this Application at App. 47-96.

3. Plaintiffs did not intend Gross Receipts in the 2005 Concessions to includealcoholic beverage taxes remitted to the taxing authority by the Concessionaire; as such, ascrivener's error occurred in the drafting of the concessions. See Affidavit of GilbertAranza, App. at 130-137. Indeed, from 1996 through March, 2010, the Board neverasserted that Gross Receipts included alcoholic beverage taxes remitted to the taxing

APPLICATION FOR TEMPORARYRESTRAINING RELIEF 2


3/10

authority by concessionaires. See Aranza Affidavit - App. 138. The Airport knew as .early as January 2010, that other Texas airports did not collect such taxes as rent but thatthey were excluded from the definition of gross sales. App. at 97-111 (Defendant staffemails dated January 2010).

4. By letter dated April 29, 2010, Zenola Campbell, Vice President of AirportConcessions, sent Plaintiffs (and other concessionaires) a letter demanding paYment ofpast due'rents, inclusive ofTexas Alcohol and Beverage taxes ('.'TABC taxes"), based onthe "Board's position that rent calculations be based on the gross receipts inclusive ofTABC taxes as stipulated in the terms of the concession." App. 5-6 (letter from Z.Campbell). Plaintiffs were informed further that "it is the position of the Board that anypast rents paid based on the net sales calculation be recalculated and the difference besubmitted to our Finance Department no later than June 11, 2010." Id. This was the firstsuch notification to Plaintiffs of the Board's intent to collect such amounts. Aranza Aff.,App. 131. It basically amounts to collecting "rent" on an excise tax.

5. On May 12, 2010, Ken Buchanan, Executive Vice President, RevenueManagement for the Airport, met with Gilbert Aranza, representative ofMultiRestaurants, to discuss the TABC tax issue. Aranza Aff. App. 132. At thatmeeting, Mr. Buchanan told Mr. Aranza that he had personally researched the issue withTABC officials, the Texas Comptroller's office, other Texas airports, and other TexasState officials and concluded that both the Airport's auditor and counsel were incorrect intheir position that the additional "rent" was owed. Id. Mr. Buchanan had been providedwith the Affidavit of Pat Gleason - the former Vice President of Airport Concessionswho had supervisory control over the administration of the concessions contracts - and

APPLICATION FOR TEMPORARY RESTRAININGRELIEF 3


4/10

asked for letters on the issue fron1 Brinker Intemational,franchisor and owner/operator ofover 1,000 Chili's,.Magianos and On the Border restaurants, with hundreds of locationsin Texas, CRO franchise owner/operator of over 100 Cool River and Cantina Laredorestaurants among other brands, and Herb Weitzman, commercial real estate agent. SeeAranza Aff.- App. 133 and App. at 44-46 (Gleason Affidavit) and App. at 36-43 (variousletters). He asked that Mr. Aranza refrain from "sending in the nukes" while hepersuaded Jeff Fegan, Airport CEO, and the Board to drop the issue. App. 133.

6. On May 17, 2010, Mr. Buchanan shared the same views with Steve Johnsonand Anthony Alessi of HMS Host who had made it clear that they agreed with Aranza'sposition that the amounts were not owed. App. at 112 -121 (emails between HMS Hostand Airport); Aranza Aff. - App. at 134. Mr. Aranza, Plaintiffs, and HMS Host refrainedfrom immediate action consistent with Mr. Buchanan's request. Id. It was clear thatmost of the concessionaires disagreed with the Airport's position as acknowledged in theAirport's own email correspondence. See App. at 122-125 (email from Robert Darbyacknowledging that the alleged amounts owed "go back a number of years [and that]concessionaires want the Board to forgive the past amounts owed and not collect in thefuture.").

7. Sometime between May 17, 2010 and June 1, 2010, however, when theconcessions committee of the Board met, the Board, Mr. Paul Tomme (Airport counsel)and Mr. Fegan apparently rejected Ken Buchanan's position and convinced thecommittee to continue to pursue collection of the TABC taxes as "rent." Uponinformation and belief, the Board was informed erroneously that other airports in Texasdid collect TABC taxes as rent from concessionaires, something the Airport knew in

APPLICATION FOR TEMPORARY RESTRAINING RELIEF 4


5/10

January 2010 was not true. App. at . This was confirmed once more in Airport emails inand around June 2010. App. at 97-111 (Airport emails containing excerpts from Texasairports excluding TABC taxes from the definition of gross receipts).

8. By letter dated June 15, 2010, Plaintiffs informed the Board that failure toexclude TABC taxes was a mutual mistake between Plaintiffs and the Board. See App. at1-46 (letter dated June 15 to Board). If not a mutual mistake, at a minimum, there is aunilateral mistake by Plaintiffs, accompanied by other inequitable .conduct on the part ofthe Board, requiring reformation of the concession contracts in equity to conform to theparties' true agreement that excluded TABC taxes from payment as "rent." Id. TheBoard was given the Pat Gleason Affidavit. Id.. Mr. Gleason was Vice President ofAirport Concessions in 2004 when the new concession contract was drafted. Id. Heagreed with Plaintiffs' position. Id. Despite the Affidavit, the Board continues to pressfor payment. Plaintiffs have made many efforts to resolve this matter with the Airport.Aranza Aff. at App. 137.

9. Curiously, at the same time the TABC tax collection issue was heating upbetween the Board and concessionaires, issues were coming to a head on GilbertAranza's concessions at Dallas Love Field Airport. App. at 136. Emails produced by theAirport to Plaintiffs pursuant to an open records act request reveal Mayor Leppert 'spreoccupation with any possible related issues regarding Mr. Aranza's concessioncontracts at both airports. It appears from the emails that Mayor Leppert and his CityHall staff made frequent inquiries in June and July 2010 regarding Mr. Aranza'sconcessions contracts at DFW. App. at 122-125. At one point, Mr. Buchanan

APPLICATION FOR TEMPORARYRESTRAINING RELIEF 5


6/10

admonished Airport staff that it needed to avoid getting side tracked by the issues at LoveField. App. at Id.

9. By letter dated July 19, 2010, Plaintiffs infonned the Board that they wouldinvoke section 4.03 of the Concessionwhich provides that

"in the event of a dispute as to the amount to be paid [as rent], the Board shallaccept the sum tendered without prejudice and, if a deficiency is detennined toexist, the Late Payment Charge shall apply only to the deficiency."App. at 50 (Concession at Section 4.0.3 Schedule of Charges); App. at 126-129 (letterdated July 19 to the Board). Plaintiffs take the position that there is no deficiency,dispute the amount owed as purported "rent" and that the Board, while accepting theamount that Plaintiffs have tendered, has not done so without prejudice to Plaintiffs'rights while the dispute is resolved. Id. and Aranza Aff. at App. 136. Specifically,Plaintiffs are poised to receive earned bonus points which are critical to future requestsfor proposals at the Airport. Aranza Aff. - App. 136. Counsel for the Board has statedthat the Board will not award the earned bonus points to Plaintiffs due to the dispute overthe concession contract tenns. App. (letter dated Oct. 7, 2010 from P. Tomme toPlaintiffs).

10. The Airport issued Requests for Proposal for Tenninal A on September 22,2010. App. at 137. The Board has stated that any proposer with any unresolved claimswith the Airport will be disqualified.

11. Curiously, the draft concession for Tenninal A included in the September 22,2010 request for proposals' provides that a concessionaire may deduct Mixed BeverageTaxes from Gross Sales in detennining rent due to the Board. AranzaAff.



7/10

12. On November 2, 2010, the Concessions Committee of the Board voted tomove forward with termination of Plaintiffs' concessions contracts. App. at 137 and 138Aranza Aff. The Board meets on November 4, 2010, at which time the Plaintiffs'concessions are likely to be terminated despite disputed fact issues. Id.

II.ARGUMENTS & AUTHORITIESA. Th e Standard for a Temporary Restraining Order/ Temporary. Injunction.An applicant is entitled to an injunction pursuant to the provisions of 65.011

Tex.Civ.Prac.& Rem. Code which provides that a writ of injunctionmay be granted if:(1) the applicant is entitled to the relief demanded and all or part of therelief requires the restraint of some act prejudicial to the applicant; (2) aparty performs or is about to perform or is procuring or allowing theperformance of an act relating to the subject of pending litigation, inviolation of the rights of the applicant, and the act would tend to render thejudgment in that litigation ineffectual; (3) the applicant is entitled to a writof injunction under the principles of equity and the statutes of this staterelating to injunctions; (4) a cloud would be placed on the title of realproperty being sold under an execution against a party having no interestin the real property subject to execution at the time of sale, irrespective ofany remedy at law; or (5) irreparable injury to real or personal property isthreatened, irrespective of any remedy at law.A Temporary Restraining Order is warranted where the applicant has

shown that it has a probable injury, that harm is imminent and that if theinjunction is not issued, the harm will be irreparable. Town of Palm Valley v.Johnson, 87 S.W.3d 110, 111 (Tex. 2001). The applicant must also show that

there is no adequate remedy at law. Id.B. Plaintiffs ar e entitled to a Temporary Restraining Order an d

Temporary Injunctive Relief.1. Th e Last, Peaceable Status

APPLICATION FO R TEMPORARY RESTRAINING RELIEF 7


8/10

An injunction is necessary in this case to assure the orderly administration ofjustice, protect the Plaintiffs' contract rights and to preserve the subject matter of this suituntil it is resolved. The status quo is the last actual, peaceable, uncontested status thatpreceded the controversy. In Re Newton, 146 S.W.3d 648, 651 (Tex. 2004). Here, thelast peaceable non contested status was that the TABC taxes were not being collected asrent and Plaintiffs' concessions at the Airport were not under threat of tennination fornon payment of the taxes. This status should be preserved during the pendency of this.case on the merits.

2. Plaintiffs will suffer probable imminent, irreparable injury for whichthere is no adequate remedy at law.

Absent an injunction, the concessions between Plaintiffs and the Board may beterminated by the Board on November 4, 2010. The Board is likely to vote to terminatethe concessions and Plaintiffs will be removed from DFW Airport. If Plaintiffs' arewrongfully terminated and the Board proceeds with wrongfully removing Plaintiffs fromthe concession spaces, they will suffer irreparable harm to their reputation asconcessionaires at the Airport and in the industry. An injunction is necessary to preventsuch irreparable harm. Plaintiffs can not be adequately compensated by money damagesbecause once they are removed from the concession space and new entities move in withconcession contracts, Plaintiffs will be prohibited from moving back in.

III.CONCLUSION AND REQUEST FOR RELIEFFor all of the foregoing reasons, Plaintiffs request that the Court enter a

Temporary Restraining Order and upon full evidentiary hearing, Temporary Injunction,that the DFW International Airport Board, be enjoined, restrained and prohibited from



9/10

terminating the Plaintiffs' concessions with the Board pending resolution of the merits ofPlaintiffs' cause of action against the Board.

RESPECTFULLY S

By: sf Eliz . a schuchElizabeth A. H a n ( ~ _ p - - - " ~State Bar No. 08903950Linda M. DedmanState Bar No. 24007098Floyd Clardy, of counselState BarNo. 04268010202 High Point Centre12225 Greenville AvenueDallas, Texas 75243(214) 361-8885 (telephone)(214) 363-4902 (facsimile)ATTORNEYS FOR PLAINTIFF

CERTIFICATE OF CONFERENCEI hereby certify that I spoke with Paul Tomme, counsel for the Board on

November 2 and 3, 2010 regarding the relief requested herein and was informed that heopposed the requested reliefon behalfof the Airport.

sf ElizabethA. HandschucElizabeth A. Handschuch

CERTIFICATE OF SERVICEI hereby certify that I served a copy of the above and foregoing Application upon

sf Elizabeth A. HandschuchElizabeth A. Handschuch

APPLICATION FOR TEMPORARY RESTRAININGRELIEF 9


10/10

FIAT

Plaintiffs' Emergency Request for Temporary Restraining Order is set for hearingon , 2010 at _ am/pm. Signed this _ day of , 2010.

Presiding Judge


Documents

Aranza TRO Application 11-03-10