William L. Killion, Lindsey M. Hogan|ilnd|Sears Home Applian... -- eLawyers

Filed: Sep. 28, 2018
Latest Update: Sep. 28, 2018

Summary: PLAINTIFFS' MOTION FOR JUDGMENT OR IN THE ALTERNATIVE FOR DEFAULT JUDGMENT JOHN Z. LEE , District Judge . Plaintiffs Sears Home Appliance Showrooms, LLC ("SHAS") and Sears Authorized Hometown Stores, LLC ("SAHS") (collectively "Plaintiffs") hereby move the Court under Fed. R. Civ. Pro. 54 for a Motion for Judgment, or in the alternative, for Default Judgment under Fed. R. Civ. Pro. 55(b)(2), against Defendants Appliance Alliance, LLC ("Appliance Alliance"), Brent Turley and Minena Turley (

PLAINTIFFS' MOTION FOR JUDGMENT OR IN THE ALTERNATIVE FOR DEFAULT JUDGMENT

JOHN Z. LEE, District Judge.

Plaintiffs Sears Home Appliance Showrooms, LLC ("SHAS") and Sears Authorized Hometown Stores, LLC ("SAHS") (collectively "Plaintiffs") hereby move the Court under Fed. R. Civ. Pro. 54 for a Motion for Judgment, or in the alternative, for Default Judgment under Fed. R. Civ. Pro. 55(b)(2), against Defendants Appliance Alliance, LLC ("Appliance Alliance"), Brent Turley and Minena Turley (collectively "Defendants"), stating as follows:

1. The Court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties "if the court expressly determines that there is no just reason for delay." Fed. R. Civ. Pro. 54(b). Here, there is no just reason to delay entering a final judgment on fewer than all claims.

2. The Court already determined that Plaintiffs properly terminated their relationship with Defendants pursuant to the Franchise Agreements (Doc. 138, p. 29), and Defendants breached the Franchise Agreements (Id. at p. 32) and the Promissory Notes (Id. at p. 34). There is no dispute that Plaintiffs are entitled to reasonable attorneys' fees, costs, and expenses pursuant to the Promissory Notes and Franchise Agreements, and Plaintiffs can tender to the Court sufficient documentary evidence for the Court to determine the amount of attorneys' fees, costs, and expenses recoverable by Plaintiffs as the prevailing party.

3. Counsel for Plaintiffs have made numerous attempts to discuss the issue of damages with counsel for Defendants. On July 3, 2018, counsel for Defendants explicitly told counsel for Plaintiffs (numerous times) that Defendants could not satisfy any judgment. On July 24, 2018 and August 1, 2018, counsel for Plaintiffs invited Defendants to discuss a resolution and forwarded Plaintiffs' damages calculations. (See Correspondences, attached as Exhibit A). Counsel for Defendants did not respond.

4. At the August 15, 2018 hearing, counsel for Plaintiff learned that Defendants were "contesting" the damages.

5. Yet, on August 22, 2018, counsel for Defendants told counsel for Plaintiff that despite informing the Court that Defendants would like to retain experts to evaluate the issue of damages, Defendants were unlikely to do so, and had no desire to expend any additional funds on this litigation. Defendants nonetheless were unwilling to stipulate to any damages (even the damages that could be reasonably calculated in the Promissory Notes and Franchise Agreements), would not agree to a voluntary judgment, and were not (and, according to their counsel, will never be) in a position to pay for any judgment entered against Defendants.

6. A party may apply to the court for a default judgment when a "party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend." Fed. R. Civ. Pro. 55. When considering a motion for default judgment, a court often must hold a hearing to determine damages. O'Brien v. R. 1 O'Brien & Assoc., Inc., 998 F.2d 1394, 1404 (7th Cir. 1993). However, if the damages are "capable of ascertainment from definitive figures contained in documentary evidence or detailed affidavits," such a hearing is unnecessary. Id.

7. In this case, a hearing to determine the amount of debt owed by Defendants is unnecessary. Plaintiffs have provided sufficient documentary evidence for the Court to determine the amount of debt owed by Defendants to Plaintiffs. Plaintiffs provided the Franchise Agreements signed by Appliance Alliance and the Promissory Notes as exhibits to the Complaint (Compl., Ex. A and B, respectively).

8. The Promissory Notes establish the principal amount owed and puts forward the terms and conditions of the loan, including the interest that would accrue on any payment due, not to exceed 18%. The Franchise Agreements establish the fees Defendants agreed to pay, including interest of all past due amounts owed under the Franchise Agreement (Comp. ¶ 22), the losses SHAS would experience as a result of the premature termination (id., ¶ 28), and the prevailing party's costs, expenses, including reasonable attorneys' fees to enforce their rights under the Franchise Agreements (id., ¶ 29).

9. The total amounts owed, including Plaintiffs' calculation of the amount Defendants paid and what is owed as a result of Defendants' breach, is verified by the declarations of Rudy Mazak, Vice President of SAHS and Jon Philips, Divisional Vice President, Business Development of SAHS. (See R. Mazak Dec., Aug. 11, 2017; J. Phillips Dec., Sep. 17, 2018, attached as Exhibit B). Further, $506,590.82 in attorneys' fees, costs, and expenses have been incurred. (See B. Schnell Dec., Sep. 27, 2018, attached as Exhibit C). Therefore, the Court can, with reasonable certainty, determine the amount owed by Defendants to Plaintiffs without holding a hearing to do so.

WHEREFORE, Plaintiffs Sears Home Appliance Showrooms, LLC and Sears Authorized Hometown Stores, LLC respectfully request that this Court grant their motion for judgment, or in the alternative, grant their motion for default judgment against Defendants, and for any further relief as the Court deems proper.

EXHIBIT A

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS SEARS HOME APPLIANCE SHOWROOMS, LLC, et al., Plaintiffs/Counter-Defendants and No. 15-cv-04414 Third Party Defendants, v. APPLIANCE ALLIANCE, LLC, et al., Judge John Z. Lee Defendants/Counter-Plaintiffs. Magistrate Judge Maria Valdez

PLAINTIFFS' MOTION FOR JUDGMENT OR IN THE ALTERNATIVE FOR DEFAULT JUDGMENT

St. Clair, Sylvia Bokyung

From: Smiricky, Stacey L. Sent: Tuesday, July 24, 2018 2:14 PM To: jeff@jeffcranelaw.com; emil@texaslaw.com Subject: Sears Home Appliance Showrooms v. Appliance Alliance, LLC, et al.; Case No. 15-cv-04414 Attachments: 07-24-2018 Letter to J. Crane and E. Lippe.pdf

Please see the attached letter with regard to the above-referenced matter.

Karen A. Kubas Legal Administrative Assistant karen.kubas@FaegreBD.com Download vCard D: +1 312 212 2350 Faegre Baker Daniels LLP 311 S. Wacker Drive I Suite 4300 I Chicago, IL 60606, USA

This message and any attachments are for the sole use of the intended recipient(s) and may contain confidential and/or privileged information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply email and destroy all copies of the original message and any attachments. Thank you.

FaegreBD.com FAEGRE BAKER USA ▾ UK ▾ CHINA IDWIIELS Stacey L. Smiricky Faegre Baker Daniels LLP Partner 311 South Wacker Drive Suite 4300 stacey.smiricky@FaegreBD.com Chicago Illinois 60606-6622 Direct +1 312 212 6525 Main +1 312 212 6500 Fax +1 312 212 6501 July 24, 2018 Jeffrey E. Crane Law Office of Jeffrey E. Crane, LLC 1363 Shermer Road, Suite 222 Northbrook, IL 60062 jeffAjeffcranelaw.com Emil Lippe, Jr. Law Office of Lippe & Associates 600 N. Pearl Street, Suite S2460 Dallas, TX 75201 emil@texaslaw.com Re: Sears Home Appliance Showrooms v. Appliance Alliance, LLC, et al. Case No. 15-cv-04414

Dear Emil and Jeff:

As you are aware, the court has scheduled a status hearing for August 15, 2018 to discuss the issue of damages in this case. It is my understanding that you spoke with my colleague, Sylvia St. Clair, and advised that your clients have few funds to satisfy any judgment that may be entered against them. In an effort to avoid additional costs and attorneys' fees, we would recommend that the parties discuss a voluntary judgment entered against your clients that my clients could enforce if they chose to do so. For your convenience, we are summarizing the damages below:

SHO: Appliance Alliance Damages Calculation

CATEGORY AMOUNT BASIS Breach of Promissory Note Remaining Principle: $490,324 5/28/2010 Promissory Note Accrued Interest (through August $820,160 14, 2018): $205,936.08 "Every amount overdue under this Note shall Total: $696,260.08 bear interest from and after the date on which such amount first became overdue at an annual rate of 18% or the highest legal rate of interest, whichever is lower." Remaining Principle: $191,065 3/4/2012 Promissory Note Accrued Interest (through August $247,500 14, 2018): $80,247.30 "Every amount overdue under this Note shall Total: $271,312.30 bear interest from and after the date on which such amount first became overdue at an annual rate of 18% or the highest legal rate of interest, whichever is lower." Remaining Principle: $196,957 7/22/2012 Promissory Note Accrued Interest (through August $247,500 14, 2018): $82,721.94 "Every amount overdue under this Note shall Total: $279,678.94 bear interest from and after the date on which such amount first became overdue at an annual rate of 18% or the highest legal rate of interest, whichever is lower." SUBTOTAL $1,247,251.32 Breach of Franchise Net Sales, April 2014 to March 5/6/2010 Euless, TX Agreement 2015: $1,040,879 Section 15.1. "net present value of the Net Commissions, April 2014 to March Sales (less Commissions to which you would 2015: $319,546 be entitled under sections 2.B(1) and 2.B(2)) Net Sales less Commissions, April and the Fund contributions that would have 2014 to March 2015: $721,333 become due from the date of termination to Fund Contribution (2% Net Sales), the scheduled expiration date of this April 2014 to March 2015: $20,818 Agreement. For this purpose, the damages Total: $742,151 ($61,846/mo.) are calculated based on Net Sales of the Showroom for the 12 months preceding the Total from April 2015 to May 2017 termination date." (26 months): $1,607,996 Net present value (12.5% WACC): $1,332,955 Net Sales, April 2014 to March 5/6/2010 Ft. Worth, TX 2015: $2,013,835 Section 15.1. "net present value of the Net Commissions, April 2014 to March Sales (less Commissions to which you would 2015: $469,128 be entitled under sections 2.B(1) and 2.B(2)) Net Sales less Commissions, April and the Fund contributions that would have 2014 to March 2015: $1,544,707 become due from the date of termination to Fund Contribution (2% Net Sales), the scheduled expiration date of this April 2014 to March 2015: $40,277 Agreement. For this purpose, the damages Total: $1,584,984 ($132,082/mo.) are calculated based on Net Sales of the Showroom for the 12 months preceding the Total from April 2015 to May 2017 termination date." (26 months): $3,434,131 Net present value (12.5% WACC): $2,846,739 Net Sales, April 2014 to March 5/6/2010 Burleson, TX 2015: $989,489 Section 15.1. "net present value of the Net Commissions, April 2014 to March Sales (less Commissions to which you would 2015: $290,102 be entitled under sections 2.B(1) and 2.B(2)) Net Sales less Commissions, April and the Fund contributions that would have 2014 to March 2015: $699,387 become due from the date of termination to Fund Contribution (2% Net Sales), the scheduled expiration date of this April 2014 to March 2015: $19,790 Agreement. For this purpose, the damages Total: $719,177 ($59,931/mo.) are calculated based on Net Sales of the Showroom for the 12 months preceding the Total from April 2015 to May 2017 termination date." (26 months): $1,558,216 Net present value (12.5% WACC): $1,291,691 Net Sales, April 2014 to March 5/6/2010 Cedar Hill, TX 2015: $1,110,587 Section 15.1. "net present value of the Net Commissions, April 2014 to March Sales (less Commissions to which you would 2015: $346,607 be entitled under sections 2.B(1) and 2.B(2)) Net Sales less Commissions, April and the Fund contributions that would have 2014 to March 2015: $763,980 become due from the date of termination to Fund Contribution (2% Net Sales), the scheduled expiration date of this April 2014 to March 2015: $22,212 Agreement. For this purpose, the damages Total: $786,192 ($65,516/mo.) are calculated based on Net Sales of the Showroom for the 12 months preceding the Total from April 2015 to May 2017 termination date." (26 months): $1,703,415 Net present value (12.5% WACC): $1,412,053 Net Sales, April 2014 to March 2/22/2012 Dallas, TX 2015: $1,202,971 Section 15.H. "net present value of the Net Commissions, April 2014 to March Sales of Merchandise and Protection 2015: $335,892 Agreements (less Commissions to which you Net Sales less Commissions, April would be entitled under sections 2.B(1) and 2014 to March 2015: $867,079 2.B(2)) and the Marketing Contributions that Fund Contribution (2% Net Sales), would have become due from the date of April 2014 to March 2015: $24,059 termination to the scheduled expiration date Total: $891,138 ($74,262/mo.) of this Agreement." Total from April 2015 to March 2022 (84 months): $6,237,966 Net present value (12.5% WACC): $4,003,260 Net Sales, April 2014 to March 7/2/2012 Carrollton, TX 2015: $587,713 Section 15.H. "net present value of the Net Commissions, April 2014 to March Sales of Merchandise and Protection 2015: $180,387 Agreements (less Commissions to which you Net Sales less Commissions, April would be entitled under sections 2.B(1) and 2014 to March 2015: $407,326 2.B(2)) and the Marketing Contributions that Fund Contribution (2% Net Sales), would have become due from the date of April 2014 to March 2015: $11,754 termination to the scheduled expiration date Total: $419,080 ($34,923/mo.) of this Agreement." Total from April 2015 to July 2022 (87 months): $3,038,332 Net present value (12.5% WACC): $1,923,467 SUBTOTAL $12,810,165 Other Consequential Euless, TX Expenses to take over and operate stores Damages Payroll & Incentive: $33,495 following termination Benefits & P/R Tax: $3,945 Outside Services/Associations: $183 Equipment: $6,201 Occupancy Repairs: $43,083 Utilities & Telephone: $12,284 Display: $77 Supplies & Postage: $2,164 Insurance: $76 V-Check: $111 V-Bank Card: $8,855 V-Off. Cash Over/Short: $128 V-Operating Services: $140 V-Customer Expenses: $2,952 DS/PS Handling Fee: $0 Store Closing Real Estate: $12,000 Total: $125,694 Fort Worth, TX Payroll & Incentive: $2,836 Benefits & P/R Tax: $397 Outside Services/Associations: $0 Equipment: $7,666 Occupancy Repairs: ($45,409) Utilities & Telephone: $604 Display: $327 Supplies & Postage: $790 Insurance: $88 V-Check: $106 V-Bank Card: $8,551 V-Off. Cash Over/Short: $1,879 V-Operating Services: $246 V-Customer Expenses: $1,044 DS/PS Handling Fee: ($8) Store Closing Real Estate: $0 Total: ($20,883) Burleson, TX Payroll & Incentive: $4,707 Benefits & P/R Tax: $656 Outside Services/Associations: $283 Equipment: $7,248 Occupancy Repairs: $5,263 Utilities & Telephone: $8,110 Display: $166 Supplies & Postage: $514 Insurance: $88 V-Check: $103 V-Bank Card: $3,634 V-Off. Cash Over/Short: ($1,899) V-Operating Services: $171 V-Customer Expenses: $520 DS/PS Handling Fee: $0 Store Closing Real Estate: $0 Total: $29,564 Cedar Hill, TX Payroll & Incentive: $10,001 Benefits & P/R Tax: $1,394 Outside Services/Associations: $605 Equipment: $3,931 Occupancy Repairs: $377 Utilities & Telephone: $9,047 Display: $221 Supplies & Postage: $562 Insurance: $80 V-Check: $567 V-Bank Card: $520 V-Off. Cash Over/Short: $0 V-Operating Services: $0 V-Customer Expenses: ($555) DS/PS Handling Fee: $0 Store Closing Real Estate: $0 Total: $26,750 Dallas, TX Payroll & Incentive: $149,420 Benefits & P/R Tax: $16,894 Outside Services/Associations: $481 Equipment: $6,547 Occupancy Repairs: $197,715 Utilities & Telephone: $25,343 Display: $505 Supplies & Postage: $1,907 Insurance: $2,533 V-Check:$203 V-Bank Card: $14,110 V-Off. Cash Over/Short: $3,059 V-Operating Services: $4,874 V-Customer Expenses: $2,007 DS/PS Handling Fee: ($8) Store Closing Real Estate: $0 Total: $425,590 Carrollton, TX Payroll & Incentive: $96,553 Benefits & P/R Tax: $26,817 Outside Services/Associations: $536 Equipment: $6,018 Occupancy Repairs: $224,738 Utilities & Telephone: $25,914 Display: $551 Supplies & Postage: $985 Insurance: $10,654 V-Check: ($1,457) V-Bank Card: $7,572 V-Off. Cash Over/Short: $639 V-Operating Services: $6,052 V-Customer Expenses: $5,420 DS/PS Handling Fee: ($8) Store Closing Real Estate: $0 Total: $410,984 Attorneys' fees and costs $496,874.82 (through July 11, 2018) SUBTOTAL $1,494,573.82 TOTAL $15,551,990.10

Please contact me at your earliest convenience to discuss a potential voluntary judgment in an amount agreeable to both parties. I look forward to hearing from you.

Best regards, Stacey L. Smiricky SLS

St. Clair, Sylvia Bokyung

From: Smiricky, Stacey L. Sent: Wednesday, August 01, 2018 9:52 AM To: jeff@jeffcranelaw.com; emil@texaslaw.com Cc: St. Clair, Sylvia Bokyung Subject: FW: Sears Home Appliance Showrooms v. Appliance Alliance, LLC, et al.; Case No. 15-cv-04414 Attachments: 07-24-2018 Letter to J. Crane and E. Lippe.pdf

Gentlemen:

Please let me know if you'd like to discuss this prior to the August 15th hearing. Thank you.

Stacey L. Smiricky Partner stacey.smiricky@FaegreBD.com Download vCard D: +1 312 212 6525 I F: +1 312 212 6501 Faegre Baker Daniels LLP 311 S. Wacker Drive I Suite 4300 I Chicago, IL 60606, USA Connect: Linkedln | Twitter

Please see the attached letter with regard to the above-referenced matter.

Karen A. Kubas Legal Administrative Assistant karen.kubas@FaegreBD.com Download vCard D: +1 312 212 2350 Faegre Baker Daniels LLP 311 S. Wacker Drive I Suite 4300 I Chicago, IL 60606, USA

EXHIBIT B

PLAINTIFFS' MOTION FOR JUDGMENT OR IN THE ALTERNATIVE FOR DEFAULT JUDGMENT

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

SEARS HOME APPLIANCE SHOWROOMS, No. 15-cv-04414 LLC, et al., Plaintiffs/Counter-Defendants and DECLARATION OF RUDY MAZAK Third Party Defendants, v. APPLIANCE ALLIANCE, LLC, et al., Judge John Z. Lee Defendants/Counter-Plaintiffs. Magistrate Judge Maria Valdez

I, Rudy Mazak, hereby state and declare as follows:

1. I am Vice President, Dealer and Hometown Stores with Sears Authorized Hometown Stores, LLC. I have personal knowledge of each fact stated herein and am competent to testify thereto.

2. Sears Hometown and Outlet Stores, Inc. ("SHO") was incorporated in Delaware in 2012.

3. Sears Authorized Hometown Stores, LLC ("SAHS") was formed in Delaware in 2008.

4. Sears Home Appliance Showrooms, LLC ("SHAS") was formed in Delaware in 2009.

5. SHO is the parent company and sole member of both SAHS and SHAS.

6. SHO's, SAHS's and SHAS's corporate offices are located at 5500 Trillium Blvd., Suite 501, Hoffi-nan Estates, IL 60192.

7. Brent Turley and Minena Turley, on behalf of Appliance Alliance, LLC (collectively, "Defendants"), signed four Franchise Agreements with SHAS in 2010.

8. Prior to signing the 2010 Franchise Agreements, Defendants were provided with a copy of SHAS's May 2009 Franchise Disclosure Document.

9. Brent Turley and Minena Turley, on behalf of Appliance Alliance, LLC, signed two additional Franchise Agreements with SHAS in 2012.

10. Initially, SHAS and Defendants discussed Defendants signing the two Franchise Agreements at the same time in early 2012, but only the Dallas Franchise Agreement was signed at that time.

11. Later, Defendants said they did not like the Carrollton location and did not want it, so SHAS looked for another franchisee to operate the location.

12. When Defendants learned that SHAS was looking for another franchisee for the Carrollton location, however, they signed the paperwork for the Franchise Agreements and sent it to SHAS.

13. Prior to signing both of the Franchise Agreements in 2012, Defendants again were provided with SHAS's FDD.

14. During their tenure as franchisees, Defendants were provided with several physical copies of SHAS's Operations Manual. The Operations Manual was also available electronically online.

15. In connection with entering into the Franchise Agreements for the Dallas and Carrollton locations, Defendants also signed subleases with SAHS for those stores.

v. Defendants executed several promissory notes, for a total of $1,344,297.06, to SAHS in connection with the purchase of their franchises.

17. Defendants paid the following amounts on the promissory notes:

• May 28, 2010, Note: $329,836 in principle, $222,638 in interest • March 4, 2012, Note: $56,435 in principle, $47,018 in interest • July 22, 2012, Note: $50,543 in principle, $41,415 in interest

18. Defendants stopped making payments on the promissory notes following their termination as franchisees and continue to owe $878,346 in principle plus accrued interest.

19. SAHS remains the holder of the Promissory Notes.

20. In 2012, SHAS and SAHS's corporate parent, SHO and Sears Holding Corporation ("SHC") separated and became two separate publicly held companies.

21. Since their separation, the relationship between SHC and SHO has been essentially that of supplier and buyer, and trademark licensor and licensee.

22. In negotiating the 2010 Franchise Agreements, Defendants' attorney asked for the minimum annual aggregate commission to be raised from 9.25% to 15% or 20%, but SHO did not agree to do so, and retained the right to change the commission structure.

23. SHO never raised Defendants' guaranteed annual minimum commission rate above 9.25%, and Defendants' average annual commissions never went below that rate; specifically Defendants received the following in commissions each year:116350326317317317312317316317317317317312316317322312373116350326317317

Store Year Net Sales Store Commission Comm.% 1856 2011 562,248.29 60,907.27 10.83% 1856 2012 2,888,554.60 326,138.35 11.29% 1856 2013 3,251,073.26 342,675.33 10.54% 1856 2014 2,646,851.85 282,940.90 10.69% 1856 2015 641,483.00 73,799.23 11.49% 1858 2011 328,909.88 32,824.41 9.98% 1858 2012 1,657,928.48 183,360.95 11.06% 1858 2013 1,792,393.38 183,435.79 10.23% 1858 2014 1,505,030.04 155,767.16 10.35% 1858 2015 311,722.63 32,644.52 10.47% 7567 2011 364,244.11 37,628.76 10.33% 7567 2012 1,779,054.17 181,257.37 10.19% 7567 2013 1,819,801.11 179,116.03 9.84% 7567 2014 1,730,031.85 166,200.35 9.61% 7567 2015 435,502.20 47,018.86 10.80% 1811 2011 333,738.15 37,716 11.30% 1811 2012 1,747,817.47 193,914.78 11.09% 1811 2013 1,623,621.64 171,199.51 10.54% 1811 2014 1,503,338.42 160,270.67 10.66% 1811 2015 363,445.09 39,807.57 10.95% 7686 2012 1,760,126.12 192,341.35 10.93% 7686 2013 2,153,387.87 230,002.68 10.68% 7686 2014 2,006,378.19 222,831.12 11.11% 7686 2015 324,671.40 35,887.20 11.05% 9201 2012 516,574.95 55,828.95 10.81% 9201 2013 1,190,901.89 120,664.85 10.13% 9201 2014 878,523.42 89,229.91 10.15% 9201 2015 193,006.26 20,544.94 10.64% TOTAL 36,310,359.72 3,855,954.54 10.62%

24. SHO made numerous payments to Defendants in addition to their commissions, including reimbursements for free delivery.

25. Starting in February 2014, instead of paying Defendants a 2% Marketing Allowance, SHO ran local marketing for them, spending nearly twice what would have been provided to Defendants in the Marketing Allowance.

26. In February 2014, after SHO had run local marketing for Defendants for twentyfour months, Defendants asked SHO to stop running its local marketing for three of its stores and, instead, provide Defendants with the 2% Marketing Allowance.

27. SHO asked Defendants to provide a marketing plan setting forth how Defendants intended to spend the Marketing Allowance, and offered to provide marketing analytics to assist Defendants in preparing their marketing plan.

28. Defendants never provided SHO with the requested marketing plan.

29. In September and October 2011, Defendants were unable to stay current with their rent payments, and reassigned their lease agreements back to Sears.

30. Again, in the first half of 2014, Defendants failed to pay rent that was due, and so SHO loaned Defendants $29,137.06 to help satisfy Defendants' rent obligation for their Burleson store and $14,869.92 to help satisfy their rent obligation for their Cedar Hill store. On June 6, 2014, SHO issued a Notice of Default documenting this failure to pay rent, among other things, as a default.

31. By March 2015, Defendants were again $50,000 behind in rent for their Burleson store.

32. In 2014 and 2015, SHO repeatedly asked Defendants for financial statements on a store-by-store basis, but Defendants never provided SHO with the requested financial statements.

33. In May 2014, Defendants had problems making payroll, and SHO learned that Defendants' employees were threatening to call the labor board.

34. In May 2014, SHO offered to repurchase the Dallas and Carrollton locations from Defendants to alleviate some of their problems with payroll, but Defendants rejected the offer.

35. In February 2015, SHO issued a default notice to Defendants, in part concerning their failures to meet payroll, and asking that Defendants provide documentation showing they were current on payroll obligations. Defendants never provided the requested documentation.

36. Following the termination of Defendants' franchise agreements, Brent Turley gave Jeff Tucker the keys to Defendants' stores.

37. After receiving the keys to the stores, SHO conducted inventories of its merchandise and closed the Cedar Hills, Burleson, and Ft. Worth locations within a month of termination.

38. SHO attempted to enter into an Occupancy Agreement for the Ft. Worth location, but that did not go through, and SHO ultimately was granted access to remove its merchandise and other files.

39. SHO entered into an Occupancy Agreement with the landlord for the Euless location, to operate the store for three months. After that three-month period, SHO conducted an inventory of its merchandise and closed the store.

40. SHO took over and continued operating the Dallas and Carrollton locations for several years.

41. Defendants did not attempt to recover their property from any of the stores while SHO was operating them.

42. Attached hereto as Exhibit 1 is a true and accurate copy of excerpts from the deposition of Brent Turley, taken on November 18, 2016.

43. Attached hereto as Exhibit 2 is a true and accurate copy of excerpts from the deposition of Minena Turley, taken on November 17, 2016.

44. Attached hereto as Exhibit 3 is a true and accurate copy of the Franchise Agreement for Euless, TX, dated May 6, 2010, Bates-Numbered TUR00627-TUR00689.

45. Attached hereto as Exhibit 4 is a true and accurate copy of the Franchise Agreement for Ft. Worth, TX, dated May 6, 2010, Bates-Numbered TUR00755-TUR00813.

46. Attached hereto as Exhibit 5 is a true and accurate copy of the Franchise Agreement for Burleson, TX, dated May 6, 2010, Bates-Numbered TUR00827-TUR00879.

47. Attached hereto as Exhibit 6 is a true and accurate copy of the Franchise Agreement for Cedar Hill, TX, dated May 6, 2010, Bates-Numbered TUR00899-TUR00957.

48. Attached hereto as Exhibit 7 is a true and accurate copy of the Franchise Agreement for Dallas, TX, dated February 22, 2012, Bates-Numbered TUR03423-TUR03483.

49. Attached hereto as Exhibit 8 is a true and accurate copy of the Franchise Agreement for Carrollton, TX, dated July 2, 2012, Bates-Numbered SHAS00000412-SHAS00000473.

50. Attached hereto as Exhibit 9 is a true and accurate copy of the February 22, 2012, Amendment to the Euless Franchise Agreement, Bates-Numbered TUR03502-TUR03505.

51. Attached hereto as Exhibit 10 is a true and accurate copy of the February 22, 2012, Amendment to the Ft. Worth Franchise Agreement, Bates-Numbered TUR03506-TUR03509.

52. Attached hereto as Exhibit 11 is a true and accurate copy of the February 22, 2012, Amendment to the Burleson Franchise Agreement, Bates-Numbered TUR03484-TUR03487.

53. Attached hereto as Exhibit 12 is a true and accurate copy of the February 22, 2012, Amendment to the Cedar Hill Franchise Agreement, Bates-Numbered TUR03488-TUR03491.

54. Attached hereto as Exhibit 13 is a true and accurate copy of the February 22, 2012, Amendment to the Dallas Franchise Agreement, Bates-Numbered TUR03492-TUR03501.

55. Attached hereto as Exhibit 14 is a true and accurate copy of the July 2, 2012, Amendment to the Carrollton Franchise Agreement, Bates-Numbered TUR03516-TUR03526.

56. Attached hereto as Exhibit 15 is a true and accurate copy of Representations And Acknowledgement Statement signed by Defendants on February 22, 2012, Bates-Numbered SHAS00000177-SHAS00000180.

57. Attached hereto as Exhibit 16 is a true and accurate copy of Representations And Acknowledgement Statement signed by Defendants on July 2, 2012, Bates-Numbered TUR03536-TUR03539.

58. Attached hereto as Exhibit 17 is a true and accurate copy of a March 4, 2012, Sublease between SAHS and Appliance Alliance, LLC, Bates-Numbered TUR03561-TUR03581.

59. Attached hereto as Exhibit 18 is a true and accurate copy of a July 22, 2012, Sublease between SAHS and Appliance Alliance, LLC, Bates-Numbered TUR03157-TUR03178.

60. Attached hereto as Exhibit 19 is a true and accurate copy of a May 28, 2010, Promissory Note executed by Appliance Alliance, LLC, Bates-Numbered TUR01034-TUR01038.

61. Attached hereto as Exhibit 20 is a true and accurate copy of a March 4, 2012, Promissory Note executed by Appliance Alliance, LLC, Bates-Numbered TUR03531-TUR03535.

62. Attached hereto as Exhibit 21 is a true and accurate copy of a July 22, 2012, Promissory Note executed by Appliance Alliance, LLC, Bates-Numbered TUR03340-TUR03345.

63. Attached hereto as Exhibit 22 is a true and accurate copy of SHAS's May 2009 Franchise Disclosure Document, Bates-Numbered TUR00371-TUR00625.

64. Attached hereto as Exhibit 23 is a true and accurate copy of an FDD Receipt signed by Defendants on December 9, 2009, Bates-Numbered TUR00626.

65. Attached hereto as Exhibit 24 is a true and accurate copy of an FDD Receipt signed by Defendants on May 5, 2011, Bates-Numbered TUR03270.

66. Attached hereto as Exhibit 25 is a true and accurate copy of an FDD Receipt signed by Defendants on May 21, 2012, Bates-Numbered SHAS00000483.

67. Attached hereto as Exhibit 26 is a true and accurate copy of SHAS's 2010 Home Appliance Showroom Franchise Operations Manual, Bates-Numbered SHAS00012008-12155.

68. Attached hereto as Exhibit 27 is a true and accurate copy of SHAS's July 15, 2013, HA Showroom Operations Manual, Bates-Numbered SHAS00011948-12007.

69. Attached hereto as Exhibit 28 is a true and accurate copy of SHAS's March 24, 2014, HA Showroom Manual, Bates-Numbered SHAS00011888-SHAS00011947.

70. Attached hereto as Exhibit 29 is a true and accurate copy of Appliance Alliance's 2010 Tax Return, Bates-Numbered Turley 003583-Turley 003594.

71. Attached hereto as Exhibit 30 is a true and accurate copy of Appliance Alliance's 2011 Tax Return), Bates-Numbered Turley 003596-Turley 003607.

72. Attached hereto as Exhibit 31 is a true and accurate copy of Appliance Alliance's 2012 Tax Return, Bates-Numbered Turley 003608-Turley 003618.

73. Attached hereto as Exhibit 32 is a true and accurate copy of Appliance Alliance's 2013 Tax Return, Bates-Numbered Turley 003629-Turley 003638.

74. Attached hereto as Exhibit 33 is a true and accurate copy of Appliance Alliance's 2014 Tax Return, Bates-Numbered Turley 003619-Turley 003627.

75. Attached hereto as Exhibit 34 is a true and accurate copy of Appliance Alliance's 2015 Tax Return, Bates-Numbered TUR3642-TUR3652.

76. Attached hereto as Exhibit 35 is a true and accurate copy of a letter from S. Cooper, dated September 14, 2011, Bates-Numbered SHAS00002880-SHAS00002881.

77. Attached hereto as Exhibit 36 is a true and accurate copy of an email from E. Turner, dated September 23, 2011, Bates-Numbered SHAS00003110-SHAS00003117.

78. Attached hereto as Exhibit 37 is a true and accurate copy of an email from E. Turner, dated September 21, 2011, Bates-Numbered SHAS00002921-SHAS00002922.

79. Attached hereto as Exhibit 38 is a true and accurate copy of an email from E. Turner, dated October 4, 2011, Bates-Numbered SHAS00002874-SHAS00002875.

80. Attached hereto as Exhibit 39 is a true and accurate copy of a letter from N. Nelson, dated October 12, 2011, Bates-Numbered SHAS00002593.

81. Attached hereto as Exhibit 40 is a true and accurate copy of an email from C. Fojo, dated October 26, 2011, Bates-Numbered SHAS00002666.

82. Attached hereto as Exhibit 41 is a true and accurate copy of an email from G. Reda, dated January 25, 2012, Bates-Numbered SHAS00011473-SHAS00011474.

83. Attached hereto as Exhibit 42 is a true and accurate copy of an email from J. Phillips, dated June 20, 2012, Bates-Numbered SHAS00011619.

84. Attached hereto as Exhibit 43 is a true and accurate copy of an email from W Powell, dated June 20, 2012, Bates-Numbered SHAS00011619.

85. Attached hereto as Exhibit 44 is a true and accurate copy of an email from S. Nichols, dated June 26, 2012, Bates-Numbered SHAS00011477.

86. Attached hereto as Exhibit 45 is a true and accurate copy of an email from B. Turley, dated August 30, 2012, Bates-Numbered SHAS00011630-SHAS00011631.

87. Attached hereto as Exhibit 46 is a true and accurate copy of an email from B. Turley, dated January 11, 2013, Bates-Numbered SHAS00011508-SHAS00011509.

88. Attached hereto as Exhibit 47 is a true and accurate copy of an email from T. Foley, dated June 13, 2013, Bates-Numbered SHAS00002657-SHAS00002658.

89. Attached hereto as Exhibit 48 is a true and accurate copy of an email from W. Wright, dated February 4, 2014, Bates-Numbered SHAS00011467-SHAS00011468.

90. Attached hereto as Exhibit 49 is a true and accurate copy of an email from G. Frye, dated May 1, 2014, Bates-Numbered SHAS00011520.

91. Attached hereto as Exhibit 50 is a true and accurate copy of an email from W. Powell, dated May 16, 2014, Bates-Numbered SHAS00011715.

92. Attached hereto as Exhibit 51 is a true and accurate copy of an email from W. Wright, dated May 29, 2014, Bates-Numbered SHAS00011721-SHAS00011722.

93. Attached hereto as Exhibit 52 is a true and accurate copy of an email from W. Wright, dated May 29, 2014, Bates-Numbered SHAS00011723.

94. Attached hereto as Exhibit 53 is a true and accurate copy of an email and attached default letter from W. Wright, dated June 6, 2014, Bates-Numbered SHAS00001754-SHAS00001758.

95. Attached hereto as Exhibit 54 is a true and accurate copy of an email from R. Mazak, dated February 16, 2015, Bates-Numbered SHAS00003944-SHAS00003953.

96. Attached hereto as Exhibit 55 is a true and accurate copy of an email from S. Wilks, dated January 7, 2015, Bates-Numbered SHAS00005505-SHAS00005506.

97. Attached hereto as Exhibit 56 is a true and accurate copy of an email from P. Salem, dated April 6, 2015, Bates-Numbered SHAS00001993-SHAS00002003.

98. Attached hereto as Exhibit 57 is a true and accurate copy of a default letter from R. Mazak, dated February 23, 2015, Bates-Numbered TUR02085-TUR02088.

99. Attached hereto as Exhibit 58 is a true and accurate copy of an email from D. Meyer, dated March 25, 2015, Bates-Numbered SHAS00002357-SHAS00002358.

100. Attached hereto as Exhibit 59 is a true and accurate copy of an email from D. Meyer, dated March 30, 2015, Bates-Numbered SHAS00002019-SHAS00002024.

101. Attached hereto as Exhibit 60 is a true and accurate copy of an email from D. Meyer, dated March 30, 2015, Bates-Numbered SHAS00002031-SHAS00002039.

102. Attached hereto as Exhibit 61 is a true and accurate copy of an email from D. Meyer, dated April 2, 2015, Bates-Numbered SHAS00002315-SHAS00002316.

103. Attached hereto as Exhibit 62 are true and accurate copies of a default and termination letters from R. Mazak, dated April 13, 2015, Bates-Numbered SHAS00001779-SHAS00001790.

104. Attached hereto as Exhibit 63 is a true and accurate copy of a default and termination letter from R. Mazak, dated April 14, 2015, Bates-Numbered TUR01900-TUR01902.

105. Attached hereto as Exhibit 64 is a true and accurate copy of an email from B. Turlcy, dated April 15 2015, Bates-Numbered SHAS00004346-SHAS00004348.

106. Attached hereto as Exhibit 65 is a true and accurate copy of an email from B. Turley, dated April 15, 2015, Bates-Numbered SHAS00004349.

107. Attached hereto as Pxhibit 66 is a true and accurate copy of an email from J. Sances, dated April 15, 2015, Bates-Numbered SHAS00003604-SHAS00003608.

108. Attached hereto as Exhibit 67 is a true and accurate copy of an Occupancy Agreement for the Euless store, dated April 15, 2015, Bates-Numbered SHAS00003638-SHAS00003641.

109. Attached hereto as Exhibit 68 is a true and accurate copy of an email from J. Sances, dated April 20, 2015, Bates-Numbered SHAS00003673-SHAS00003674.

110. Attached hereto as Exhibit 69 is a true and accurate copy of an email from R. Mazak, dated April 20, 2015, Bates-Numbered SHAS00004334-SHAS00004335.

111. Attached hereto as Exhibit 70 is a true and accurate copy of an email from D. Silverman, dated April 24, 2015, Bates-Numbered SHAS00003871-SHAS00003872.

112. Attached hereto as Exhibit 71 is a true and accurate copy of an email from W. Powell, dated April 29, 2015, Bates-Numbered SHAS00011837-SHAS00011839.

113. Attached hereto as Exhibit 72 is a true and accurate copy of an email from D. Meyer, dated April 29, 2015, Bates-Numbered SHAS00002328-SHAS00002330.

114. Attached hereto as Exhibit 73 is a true and accurate copy of a letter from R. Webster, dated May 15, 2015, Bates-Numbered OneSource00001158.

115. Attached hereto as Exhibit 74 is a true and accurate copy of an email from W. Killion, dated 2015.

116. Attached hereto as Exhibit 75 is a true and accurate copy of excerpts from the deposition-of Bieht Turkey, lakedon November 1, 2016.

117. Attached hereto as Exhibit 76 is a true and accurate copy of Defendant Appliance Alliance, Inc.'s Answers and Objections to Plaintiff 2720 SH 121 LP's First Interrogatories, Bates-Numbered 2720SH00000249-2720SH00000255.

118. Attached hereto as Exhibit 77 is a true and accurate copy of the Declaration of S. Gunter, dated June 22, 2016, Bates-Nwubered 2720SH00000439-2720SH00000447.

119. Attached hereto as Exhibit 78 is a true and accurate copy of an email from J. Miller, dated May 13, 2014, Bates-Numbered SHAS00003967-SHAS00003968.

120. Attached hereto as Exhibit 79 is a true and accurate copy of Sears Hometown and Outlet Stores, Inc.'s Form 10-K, dated January 28, 2017, also available online at http://shos.com/wp-content/uploads/2017/03/SHO-1.28.17-10K-r816 final 3_3 0_I7.pdf.

121. Attached hereto as Exhibit 80 is a true and accurate copy of Defendants' Answers to Interrogatories, dated July 7, 2016.

I declare under penalty of perjury under the laws of the United States of America and the State of Illinois that the foregoing is true and correct.

Executed in Cook County, Illinois on this the 11 day of August, 2017,

RUDY MAZAK EMELINDA L. RAMOS Official Seal Notary Public — State of Illinois My Commission Expires Jun 6, 2020

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

SEARS HOME APPLIANCE SHOWROOMS, No. 15-cv-04414 LLC, et al., Plaintiffs/Counter-Defendants and DECLARATION OF JON PHILLIPS Third Party Defendants, v. APPLIANCE ALLIANCE, LLC, et al., Judge John Z. Lee Defendants/Counter-Plaintiffs. Magistrate Judge Maria Valdez

I, Jon Phillips, hereby state and declare as follows:

1. I am Divisional Vice President, Business Development with Sears Authorized Hometown Stores, LLC. I have personal knowledge of each fact stated herein and am competent to testify thereto.

2. I have calculated the total damages owed by Defendants as follows:

CATEGORY AMOUNT BASIS Breach of Promissory Remaining Principle: $490,323.87 5/28/2010 Promissory Note Note Accrued Interest (through August $820,160 31, 2018): $134,185.75 Initial Interest Rate: 7.0% per annum Total: $624,509.62 "Every amount overdue under this Note shall bear interest from and after the date on which such amount first became overdue at an annual rate of 18% or the highest legal rate of interest, whichever is lower." Remaining Principle: $191,064.81 3/4/2012 Promissory Note Accrued Interest (through August $247,500 31, 2018): $52,288.24 Initial Interest Rate: 7.0% per annum Total: $243,353.05 "Every amount overdue under this Note shall bear interest from and after the date on which such amount first became overdue at an annual rate of 18% or the highest legal rate of interest, whichever is lower." Remaining Principle: $196,957.25 7/22/2012 Promissory Note Accrued Interest (through August $247,500 31, 2018): $53,900.82 Initial Interest Rate: 7.0% per annum Total: $250,858.07 "Every amount overdue under this Note shall bear interest from and after the date on which such amount first became overdue at an annual rate of 18% or the highest legal rate of interest, whichever is lower." SUBTOTAL $1,118,720.74 Breach of Franchise Net Sales, April 2014 to March 5/6/2010 Euless, TX Agreement 2015: $1,040,879 Section 15.1. "net present value of the Net Commissions, April 2014 to March Sales (less Commissions to which you 2015: $319,546 would be entitled under sections 2.B(1) and Net Sales less Commissions, April 2.B(2)) and the Fund contributions that 2014 to March 2015: $721,333 would have become due from the date of Fund Contribution (2% Net Sales), termination to the scheduled expiration date April 2014 to March 2015: of this Agreement. For this purpose, the $20,818 damages are calculated based on Net Sales Total: $742,151 ($61,846/mo.) of the Showroom for the 12 months preceding the termination date." Total from April 2015 to May 2017 (26 months): $1,607,996 Net present value (12.5% WACC): $1,332,955 Net Sales, April 2014 to March 5/6/2010 Ft. Worth, TX 2015: $2,013,835 Section 15.1. "net present value of the Net Commissions, April 2014 to March Sales (less Commissions to which you 2015: $469,128 would be entitled under sections 2.B(1) and Net Sales less Commissions, April 2.B(2)) and the Fund contributions that 2014 to March 2015: $1,544,707 would have become due from the date of Fund Contribution (2% Net Sales), termination to the scheduled expiration date April 2014 to March 2015: of this Agreement. For this purpose, the $40,277 damages are calculated based on Net Sales Total: $1,584,984 ($132,082/mo.) of the Showroom for the 12 months Total from April 2015 to May 2017 preceding the termination date." (26 months): $3,434,131 Net present value (12.5% WACC): $2,846,739 Net Sales, April 2014 to March 5/6/2010 Burleson, TX 2015: $989,489 Section 15.1. "net present value of the Net Commissions, April 2014 to March Sales (less Commissions to which you 2015: $290,102 would be entitled under sections 2.B(1) and Net Sales less Commissions, April 2.B(2)) and the Fund contributions that 2014 to March 2015: $699,387 would have become due from the date of Fund Contribution (2% Net Sales), termination to the scheduled expiration date April 2014 to March 2015: of this Agreement. For this purpose, the $19,790 damages are calculated based on Net Sales Total: $719,177 ($59,931/mo.) of the Showroom for the 12 months preceding the termination date." Total from April 2015 to May 2017 (26 months): $1,558,216 Net present value (12.5% WACC): $1,291,691 Net Sales, April 2014 to March 5/6/2010 Cedar Hill, TX 2015: $1,110,587 Section 15.1. "net present value of the Net Commissions, April 2014 to March Sales (less Commissions to which you 2015: $346,607 would be entitled under sections 2.B(1) and Net Sales less Commissions, April 2.B(2)) and the Fund contributions that 2014 to March 2015: $763,980 would have become due from the date of termination to the scheduled expiration date of this Agreement. For this purpose, the Fund Contribution (2% Net Sales), damages are calculated based on Net Sales April 2014 to March 2015: of the Showroom for the 12 months $22,212 preceding the termination date." Total: $786,192 ($65,516/mo.) Total from April 2015 to May 2017 (26 months): $1,703,415 Net present value (12.5% WACC): $1,412,053 Net Sales, April 2014 to March 2/22/2012 Dallas, TX 2015: $1,202,971 Section 15.H. "net present value of the Net Commissions, April 2014 to March Sales of Merchandise and Protection 2015: $335,892 Agreements (less Commissions to which Net Sales less Commissions, April you would be entitled under sections 2.B(1) 2014 to March 2015: $891,138 and 2.B(2)) and the Marketing Fund Contribution (2% Net Sales), Contributions that would have become due April 2014 to March 2015: from the date of termination to the $24,059 scheduled expiration date of this Total: $915,917 ($76,266/mo.) Agreement." Total from April 2015 to March 2022 (84 months): $6,406,382 Net present value (12.5% WACC): $4,111,342 Net Sales, April 2014 to March 7/2/2012 Carrollton, TX 2015: $587,713 Section 15.H. "net present value of the Net Commissions, April 2014 to March Sales of Merchandise and Protection 2015: $180,387 Agreements (less Commissions to which Net Sales less Commissions, April you would be entitled under sections 2.B(1) 2014 to March 2015: $437,326 and 2.B(2)) and the Marketing Fund Contribution (2% Net Sales), Contributions that would have become due April 2014 to March 2015: from the date of termination to the $11,754 scheduled expiration date of this Total: $449,080 ($37,423/mo.) Agreement." Total from April 2015 to July 2022 (87 months): $3,123,548 Net present value (12.5% WACC): $1,977,416 SUBTOTAL $12,972,195 Other Consequential Euless, TX Expenses to take over and operate stores Damages Payroll & Incentive: $33,495 following termination Benefits & P/R Tax: $3,945 Outside Services/Associations: $183 Equipment: $6,201 Occupancy Repairs: $43,083 Utilities & Telephone: $12,284 Display: $77 Supplies & Postage: $2,164 Insurance: $76 V-Check: $111 V-Bank Card: $8,855 V-Off. Cash Over/Short: $128 V-Operating Services: $140 V-Customer Expenses: $2,952 DS/PS Handling Fee: $0 Store Closing Real Estate: $12,000 Total: $125,694 Fort Worth, TX Payroll & Incentive: $2,836 Benefits & P/R Tax: $397 Outside Services/Associations: $0 Equipment: $7,666 Occupancy Repairs: ($45,409) Utilities & Telephone: $604 Display: $327 Supplies & Postage: $790 Insurance: $88 V-Check: $106 V-Bank Card: $8,551 V-Off. Cash Over/Short: $1,879 V-Operating Services: $246 V-Customer Expenses: $1,044 DS/PS Handling Fee: ($8) Store Closing Real Estate: $0 Total: ($20,883) Burleson, TX Payroll & Incentive: $4,707 Benefits & P/R Tax: $656 Outside Services/Associations: $283 Equipment: $7,248 Occupancy Repairs: $5,263 Utilities & Telephone: $8,110 Display: $166 Supplies & Postage: $514 Insurance: $88 V-Check: $103 V-Bank Card: $3,634 V-Off. Cash Over/Short: ($1,899) V-Operating Services: $171 V-Customer Expenses: $520 DS/PS Handling Fee: $0 Store Closing Real Estate: $0 Total: $29,564 Cedar Hill, TX Payroll & Incentive: $10,001 Benefits & P/R Tax: $1,394 Outside Services/Associations: $605 Equipment: $3,931 Occupancy Repairs: $377 Utilities & Telephone: $9,047 Display: $221 Supplies & Postage: $562 Insurance: $80 V-Check: $567 V-Bank Card: $520 V-Off. Cash Over/Short: $0 V-Operating Services: $0 V-Customer Expenses: ($555) DS/PS Handling Fee: $0 Store Closing Real Estate: $0 Total: $26,750 Dallas, TX Payroll & Incentive: $149,420 Benefits & P/R Tax: $16,894 Outside Services/Associations: $481 Equipment: $6,547 Occupancy Repairs: $197,715 Utilities & Telephone: $25,343 Display: $505 Supplies & Postage: $1,907 Insurance: $2,533 V-Check:$203 V-Bank Card: $14,110 V-Off. Cash Over/Short: $3,059 V-Operating Services: $4,874 V-Customer Expenses: $2,007 DS/PS Handling Fee: ($8) Store Closing Real Estate: $0 Total: $425,590 Carrollton, TX Payroll & Incentive: $96,553 Benefits & P/R Tax: $26,817 Outside Services/Associations: $536 Equipment: $6,018 Occupancy Repairs: $224,738 Utilities & Telephone: $25,914 Display: $551 Supplies & Postage: $985 Insurance: $10,654 V-Check: ($1,457) V-Bank Card: $7,572 V-Off. Cash Over/Short: $639 V-Operating Services: $6,052 V-Customer Expenses: $5,420 DS/PS Handling Fee: ($8) Store Closing Real Estate: $0 Total: $410,984 SUBTOTAL $997,699 TOTAL $15,088,614.70 (through August 31, 2018)

I declare under penalty of perjury under the laws of the United States of America and the State of Illinois that the foregoing is true and correct.

Executed in Cook County, Illinois on this the 17 day of 09, 2018,

JON PILLIPS I PEGGY M. DEROSE I Official I Notary Public — State of Illinois My Commission Expires Feb 3, 2020.

EXHIBIT C

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

SEARS HOME APPLIANCE SHOWROOMS, LLC, et al., Plaintiffs/Counter-Defendants and No. 15-cv-04414 Third Party Defendants, v. APPLIANCE ALLIANCE, LLC, et al., Judge John Z. Lee Defendants/Counter-Plaintiffs. Magistrate Judge Maria Valdez

PLAINTIFFS' MOTION FOR JUDGMENT OR IN THE ALTERNATIVE FOR DEFAULT JUDGMENT

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

SEARS HOME APPLIANCE SHOWROOMS, No. 15-cv-04414 LLC, et al., Plaintiffs/Counter-Defendants and Judge John Z. Lee Third Party Defendants, Magistrate Judge Maria Valdez v. APPLIANCE ALLIANCE, LLC, et al., Defendants/Counter-Plaintiffs.

DECLARATION OF BRIAN R. SCHNELL

I, Brian R. Schnell, hereby state and declare as follows:

1. I am a partner with Faegre Baker Daniels, LLP, and counsel for Plaintiff/Counter-Defendants Sears Home Appliances Showrooms, LLC and Sears Authorized Hometown Stores, LLC and Third-Party Defendants Samantha Wilks, Sears, Roebuck & Co, Sears Holding Corporation and Sear Hometown and Outlet, Inc. (collectively referred to as "Plaintiffs").

2. Because of my representation of Plaintiffs and my review of Faegre Baker Daniels LLP's billing records, I have personal knowledge of the facts set forth in this affidavit.

3. Plaintiffs have incurred $506,590.82 in legal fees and costs in connection with the commencement, prosecution, and defense of this action from May 12, 2015 through August 30, 2018. Our monthly invoices provided to Plaintiffs set forth the attorneys' fees, costs, and expenses that Plaintiffs incurred to collect and enforce four Franchise Agreements and several promissory notes. I reviewed the time records and final invoices sent to the client, and attest that the work actually performed was necessary for the proper representation of Plaintiffs.

4. I also attest that the fees noted above reflect the billing rates of the attorneys and professional support staff who worked on this matter between May 12, 2015 through August 30, 2018. The following table reflects each timekeeper's standard billing rate each year, and the discounted rate billed in this matter.

Timekeeper Title 2015 2016 2017 2018 Rates Discount Standard Discount Standard Discount Standard Bokyung St. Clair, *See below Sylvia B. Associate 330 375 330 425 Daugherty, Justin M. CTS Staff 220 235 Flesher, Margaret M. Paralegal 295 310 310 310 325 Gray-Reed, Tracey R. Other Harris, Matthew B. Associate 405 455 455 455 510 Hogan, Lindsey M. Associate 370 445 Killion, William L. Counsel 680 680 720 Kragness, John D. CTS Staff 225 235 Lemmon, Shaun S. Paralegal 235 260 Mulligan, Sarah G. Researcher 265 280 Schnell, Brian B. Partner 605 Sear, Caroline H. Associate 325 325 Smiricky, Stacey L. Partner 475 500 500 500 530 500 565 Stover, Jason J. Counsel 435 Summer, Amy R. Other 265 265 Thul, Nicholas J. CTS Staff 220 220 220 235 Uren, Zachay R. CTS Staff 200 200 200 215 Woessner, Ryan R. Associate 305 Han, Chanelle K. Associate 315 315 Bokyung St. Clair, 245.00 245.00 Sylvia B. Work prior to 10/1 Work after 10/1 330.00 330.00

5. The billing rates shown are based on the experience, reputation, and ability of the attorneys and professional support staff, and are consistent with the fees customarily charged by attorneys and staff with similar experience and skill in our community.

6. The amounts sought for expenses ("Non-Fee Billed") are the costs incurred by Faegre Baker Daniels LLP. A summary of the costs and expenses is as follows:

Invoice period Total (month-year) Billed Fees Billed Non-Fee Billed 06-15 25,437.15 25,289.00 148.15 07-15 28,773.25 27,676.50 1,096.75 08-15 14,663.51 12,078.00 2,585.51 09-15 13,891.00 13,891.00 0.00 10-15 19,756.27 19,334.00 422.27 11-15 4,048.00 3,948.00 100.00 12-15 1,765.00 1,740.00 25.00 01-16 1,298.55 1,241.00 57.55 02-16 7,413.80 7,413.80 0.00 03-16 26,759.50 26,385.50 374.00 04-16 13,890.50 13,636.50 254.00 05-16 27,456.00 27,456.00 0.00 06-16 4,179.50 4,204.50 (25.00) 07-16 13,420.80 12,625.00 795.80 08-16 28,447.35 27,292.50 1,154.85 10-16 16,380.37 15,256.50 1,123.87 10-16 13,042.52 12,328.50 714.02 11-16 1,819.00 1,819.00 0.00 12-16 28,495.00 28,495.00 0.00 01-17 48,607.95 44,859.00 3,748.95 02-17 22,341.57 19,567.50 2,774.07 03-17 6,178.00 6,198.00 (20.00) 04-17 35,470.40 35,120.00 350.40 05-17 1,842.29 1,826.00 16.29 07-17 2,809.10 2,175.00 634.10 08-17 32,385.72 32,409.00 (23.28) 09-17 27,961.07 27,494.00 467.07 11-17 25,757.15 25,281.00 476.15 12-17 2,584.50 2,584.50 0.00 08-18 2,499.00 0 0 09-18 7,217.00 0 140.00 Totals 506,590.82 489,200.30 17,390.52

7. The services rendered were necessary and reasonable to represent Plaintiffs in this matter, including the defense of counterclaims that are indistinguishable from Plaintiffs' claims, arose from the same transactions, and where the same facts required to prosecute the claims were required to defend against the counterclaims.

8. The costs and expenses incurred also were necessary and reasonable. The expenses include, but are not limited to, charges for copy costs, filing fees, postage, travel expense, data processing, court reporter, and legal research.

9. These are the total amounts of attorneys' fees, costs, and expenses that Plaintiffs incurred to collect and enforce the Franchise Agreements and promissory notes, and defend against Defendants' counterclaims. Therefore, the amount that Plaintiffs seek for attorneys' fees, costs, and expenses is $506,590.82 (through August 30, 2018).

I declare under penalty of perjury under the laws of the United States of America and the State of Minnesota that the foregoing is true and correct.

Executed at Minneapolis, Minnesota

On this theo 27th of September, 2018.

Brian R. Schnell

Source: Leagle

Lawyers who claimed

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Citations

15-cv-04414.

Counsels

William L. Killion
Lindsey M. Hogan
Sylvia B. St. Clair
Stacey Lynn Smiricky
Emil Lippe, Jr.
Jeffrey E. Crane
William Jeffrey Factor

Sears Home Appliance Showrooms, LLC v. Appliance Alliance, LLC, 15-cv-04414. (2018)

PLAINTIFFS' MOTION FOR JUDGMENT OR IN THE ALTERNATIVE FOR DEFAULT JUDGMENT

EXHIBIT A

PLAINTIFFS' MOTION FOR JUDGMENT OR IN THE ALTERNATIVE FOR DEFAULT JUDGMENT

SHO: Appliance Alliance Damages Calculation

EXHIBIT B

PLAINTIFFS' MOTION FOR JUDGMENT OR IN THE ALTERNATIVE FOR DEFAULT JUDGMENT

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

EXHIBIT C

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

PLAINTIFFS' MOTION FOR JUDGMENT OR IN THE ALTERNATIVE FOR DEFAULT JUDGMENT

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

DECLARATION OF BRIAN R. SCHNELL

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Sears Home Appliance Showrooms, LLC v. Appliance Alliance, LLC, 15-cv-04414. (2018)

PLAINTIFFS' MOTION FOR JUDGMENT OR IN THE ALTERNATIVE FOR DEFAULT JUDGMENT

EXHIBIT A

PLAINTIFFS' MOTION FOR JUDGMENT OR IN THE ALTERNATIVE FOR DEFAULT JUDGMENT

SHO: Appliance Alliance Damages Calculation

EXHIBIT B

PLAINTIFFS' MOTION FOR JUDGMENT OR IN THE ALTERNATIVE FOR DEFAULT JUDGMENT

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

EXHIBIT C

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

PLAINTIFFS' MOTION FOR JUDGMENT OR IN THE ALTERNATIVE FOR DEFAULT JUDGMENT

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

DECLARATION OF BRIAN R. SCHNELL

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