Free Answer to Complaint - District Court of Delaware - Delaware

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE DELAWARE STATE UNIVERSITY STUDENT HOUSING FOUNDATION, a Delaware Corporation., Plaintiff, v. AMBLING MANAGEMENT COMPANY, Defendant. ) ) ) ) ) ) ) ) ) ) ) )

C.A. NO. 07-610 (JJF)

JURY TRIAL DEMAND

ANSWER, AFFIRMATIVE DEFENSES AND COUNTERCLAIM OF AMBLING MANAGEMENT COMPANY COMES NOW, Ambling Management Company ("AMC" or "Defendant"), Defendant in the above-captioned matter, and files this its Answer, Affirmative Defenses and Counterclaim to the Complaint (the "Complaint") of Delaware State University Student Housing Foundation (the "Foundation" or "Plaintiff") as follows. Without assuming the burden of proof where it otherwise lies upon Plaintiff, Defendant pleads the following defenses: FIRST DEFENSE Defendant pleads the affirmative defense that Plaintiff's Complaint fails to state a claim upon which relief can be granted. SECOND DEFENSE Defendant pleads the affirmative defense that Plaintiff's Complaint fails to state a claim against AMC for declaratory judgment relief, and to the extent Plaintiff seeks declaratory judgment relief in this action any such purported claim should be dismissed.

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THIRD DEFENSE Defendant pleads the affirmative defenses of waiver and estoppel. FOURTH DEFENSE Defendant pleads the affirmative defenses of lack of consideration and failure of consideration. FIFTH DEFENSE Defendant pleads that Plaintiff was the first material breacher of the Management Agreements by failing to meet certain obligations under thereunder. SIXTH DEFENSE Some or all of the claims in the Plaintiff's Complaint are barred by the express language of the Management Agreements. SEVENTH DEFENSE Defendant pleads the defense of set-off. EIGHTH DEFENSE Defendant pleads that AMC is not a stranger to the contracts or relationships it has allegedly interfered with. NINTH DEFENSE To the extent that Plaintiffs request equitable relief, Defendant pleads the affirmative defenses of unclean hands. TENTH DEFENSE Defendant pleads that it was never in default under the terms of the Management Agreements.

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ELEVENTH DEFENSE Defendants pleads that it timely repaired and addressed all issues regarding the subject properties of which it was given sufficient notice as required under the Management Agreements. ANSWER As to the allegations in Plaintiff's Complaint, Defendant answers by denying that it is liable for the amounts claimed by Plaintiff, or any amounts whatsoever, and responds to the specifically enumerated paragraphs of the Complaint as follows: Nature of the Action 1. Defendant admits that it was a party to Management Agreements (the "Management

Agreements") with the Foundation and Delaware State University ("DSU") as sole member of the Foundation to manage, maintain and operate the Foundation's two properties, the University Courtyard Apartments (the "Courtyard") and the University Village (the "Village'). The Management Agreements are writings which speak for themselves. Defendant denies the allegations contained in Paragraph 1 of the Complaint to the extent such allegations are inconsistent with the written terms of the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 1 of the Complaint. The Parties 2. Upon information and belief, Defendant admits allegations contained in Paragraph 2 of

the Complaint. 3. 4. Defendant admits the allegations contained in Paragraph 3 of the Complaint. Defendant admits that the Federal District Court for the District of Delaware has

jurisdiction over Defendant.

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The Contracts 5. Defendant is without knowledge or information sufficient to form a belief as to the truth

or falsity of the allegations contained in Paragraph 5 of the Complaint, and for this reason denies the same. 6. 7. Defendant admits the allegations contained in Paragraph 6 of the Complaint. Defendant admits that the Foundation entered into an Amended and Restated

Management Agreement with AMC on or about January 1, 2004, appointing AMC as an independent contractor to manage and lease the Courtyard property (the "Courtyard Agreement"). The Courtyard Agreement is a writing which speaks for itself. Defendant denies the allegations contained in Paragraph 7 of the Complaint to the extent such allegations are inconsistent with the written terms of the Courtyard Agreement. Defendant denies all remaining allegations contained in Paragraph 7 of the Complaint. 8. Defendant admits that the Foundation entered into an Amended and Restated

Management Agreement with AMC on or about August 1, 2005, appointing AMC as an independent contractor to manage and lease the Village property (the "Village Agreement"). The Village Agreement is a writing which speaks for itself. Defendant denies the allegations contained in Paragraph 8 of the Complaint to the extent such allegations are inconsistent with the written terms of the Village Agreement. Defendant denies all remaining allegations contained in Paragraph 8 of the Complaint. 9. Denied. The Management Agreements are writings which speak for themselves.

Defendant denies the allegations contained in Paragraph 9 of the Complaint to the extent such allegations are inconsistent with the written terms of the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 9 of the Complaint.

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10.

The Management Agreements are writings which speak for themselves. Defendant

denies the allegations contained in Paragraph 10 of the Complaint to the extent such allegations are inconsistent with the written terms of the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 10 of the Complaint. 11. The Management Agreements are writings which speak for themselves. Defendant

denies the allegations contained in Paragraph 11 of the Complaint to the extent such allegations are inconsistent with the written terms of the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 11 of the Complaint. 12. The Management Agreements are writings which speak for themselves. Defendant

denies the allegations contained in Paragraph 12 of the Complaint to the extent such allegations are inconsistent with the written terms of the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 12 of the Complaint. 13. The Management Agreements are writings which speak for themselves. Defendant

denies the allegations contained in Paragraph 13 of the Complaint to the extent such allegations are inconsistent with the written terms of the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 13 of the Complaint. 14. Defendant admits that it received management fees pursuant to the Management

Agreements. Defendant denies all remaining allegations contained in Paragraph 14 of the Complaint. 15. The Management Agreements are writings which speak for themselves. Defendant

denies the allegations contained in Paragraph 15 of the Complaint to the extent such allegations are inconsistent with the written terms of the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 15 of the Complaint.

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16.

The Management Agreements are writings which speak for themselves. Defendant

denies the allegations contained in Paragraph 16 of the Complaint to the extent such allegations are inconsistent with the written terms of the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 16 of the Complaint. 17. The Management Agreements are writings which speak for themselves. Defendant

denies the allegations contained in Paragraph 17 of the Complaint to the extent such allegations are inconsistent with the written terms of the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 17 of the Complaint. 18. The Management Agreements are writings which speak for themselves. Defendant

denies the allegations contained in Paragraph 18 of the Complaint to the extent such allegations are inconsistent with the written terms of the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 18 of the Complaint. The Alleged Breach/Default 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. Denied. Denied. Denied. Denied. Denied. Denied. Denied. Denied. Denied. Denied.

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29. 30. 31.

Denied. Denied. Defendant is without knowledge or information sufficient to form a belief as to the truth

or falsity of the allegations contained in Paragraph 31 of the Complaint, and for this reason denies the same. 32. Defendant is without knowledge or information sufficient to form a belief as to the truth

or falsity of the allegations contained in Paragraph 32 of the Complaint, and for this reason denies the same. 33. Defendant is without knowledge or information sufficient to form a belief as to the truth

or falsity of the allegations contained in Paragraph 33 of the Complaint, and for this reason denies the same. 34. 35. 36. Denied. Denied. Defendant admits that it received a letter from Mr. Mohammadi dated August 17, 2007.

Defendant denies all remaining allegations contained in Paragraph 36 of the Complaint. 37. Defendant admits that it received a letter from Mr. Mohammadi dated August 17, 2007.

Defendant denies all remaining allegations contained in Paragraph 37 of the Complaint. 38. Defendant admits that it received a letter from Mr. Mohammadi dated August 17, 2007.

Defendant denies all remaining allegations contained in Paragraph 38 of the Complaint. 39. Defendant admits that it received a letter from Mr. Mohammadi dated August 17, 2007.

Defendant denies all remaining allegations contained in Paragraph 39 of the Complaint. 40. Defendant admits that it received a letter from Mr. Mohammadi dated August 17, 2007.

Defendant denies all remaining allegations contained in Paragraph 40 of the Complaint.

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41. 42.

Denied. Defendant admits that William Barkwell wrote a letter dated August 22, 2007, which

speaks for itself. Defendant denies the allegations contained in Paragraph 42 of the Complaint. 43. Defendant admits that it received a letter from Mr. Mohammadi dated August 31, 2007.

Defendant denies all remaining allegations contained in Paragraph 43 of the Complaint. 44. Defendants admit that Mr. Barkwell wrote the Foundation in a letter dated September 4,

2007. Mr. Barkwell's letter is a writing and the terms thereof speak for themselves. Defendant denies all remaining allegations contained in Paragraph 44 of the Complaint. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. Denied. Denied. Denied. Denied. Denied. Denied. Denied. Denied. Denied. Denied. Denied. Defendant is without knowledge or information sufficient to form a belief as to the truth

or falsity of the allegations contained in Paragraph 56 of the Complaint, and for this reason denies the same. 57. Denied.

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58.

Defendant is without knowledge or information sufficient to form a belief as to the truth

or falsity of the allegations contained in Paragraph 58 of the Complaint, and for this reason denies the same. 59. 60. 61. Denied. Denied. Defendant is without knowledge or information sufficient to form a belief as to the truth

or falsity of the allegations contained in Paragraph 61 of the Complaint, and for this reason denies the same. 62. The Management Agreements are writings which speak for themselves. Defendant

denies the allegations contained in Paragraph 62 of the Complaint to the extent such allegations are inconsistent with the written terms of the Management Agreements. Defendant is without knowledge or information sufficient to form a belief as to the truth or falsity of the remaining allegations contained in Paragraph 62 of the Complaint, and for this reason denies the same. 63. Defendant admits it received a letter from Mr. Mohammadi dated September 12, 2007

wrongfully terminating the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 63 of the Complaint. 64. Defendant admits it received a letter from Mr. Mohammadi dated September 12, 2007

wrongfully terminating the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 64 of the Complaint. 65. Defendant is without knowledge or information sufficient to form a belief as to the truth

or falsity of the allegations contained in Paragraph 65 of the Complaint, and for this reason denies the same.

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Count I: Declaratory Judgment 66. Defendant incorporates by reference its responses to Paragraphs 1-65 of the Complaint as

if fully stated herein. 67. The Management Agreements are writings which speak for themselves. Defendant

denies the allegations contained in Paragraph 67 of the Complaint to the extent such allegations are inconsistent with the written terms of the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 67 of the Complaint. 68. 69. 70. Denied. Denied. The Foundation has wrongfully terminated the Management Agreements. Denied. Count II: Breach of Contract 71. Defendant incorporates by reference its responses to Paragraphs 1-70 of the Complaint

as if fully stated herein. 72. The Management Agreements are writings which speak for themselves. Defendant

denies the allegations contained in Paragraph 72 of the Complaint to the extent such allegations are inconsistent with the written terms of the Management Agreements. Defendant denies all remaining allegations contained in Paragraph 72 of the Complaint. 73. 74. Denied. Denied. Count III: Tortious Interference with Business Relations 75. Defendant incorporates by reference its responses to Paragraphs 1-74 of the Complaint

as if fully stated herein.

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76.

Defendant is without knowledge or information sufficient to form a belief as to the truth

or falsity of the allegations contained in Paragraph 76 of the Complaint, and for this reason denies the same. 77. 78. 79. 80. Denied. Denied. Denied. Defendant denies any and all allegations contained in the Complaint to which it has not

specifically responded to herein. WHEREFORE, Defendant prays for the following relief: (a) that the all claims alleged in the Complaint against the Defendant be dismissed with prejudice; (b) (c) (d) trial by jury; that all costs of this action be taxed to the Plaintiff; and for such other and further relief as this Court deems just, equitable and proper.

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COUNTERCLAIM COMES NOW, Ambling Management Company ("AMC") and, subject to and without waiving its above stated defenses and incorporating by reference paragraphs 1 - 80 of its Answer to the Complaint as if fully set forth herein, file this Counterclaim against Delaware State University Student Housing Foundation ("Foundation") pursuant to Federal Rule of Civil Procedure 13, and show the Court as follows: PARTIES, JURISDICTION AND VENUE 1. AMC is a Georgia corporation having its principal office and place of business at 348

Enterprise Drive, Valdosta, Georgia 3160. 2. Upon information and belief, the Foundation is a Delaware corporation with its principal

office and place of business located at 1200 N. Dupont Highway, Dover, Delaware 19901. 3. 4. 1332. 5. Venue is proper pursuant to 28 U.S.C. § 1391. FACTUAL BACKGROUND THE MANAGEMENT AGREEMENTS 6. Ambling Management Company is one of the nation's most successful and experienced Jurisdiction and venue are proper in this Court as to the Foundation. This Court has subject matter jurisdiction over this Counterclaim pursuant to 28 U.S.C. §

property managers of student, affordable, conventional and military housing. 7. On September 1, 2000, AMC entered into a Management Agreement with DSU Student

Housing, LLC (the "Original Management Agreement") to manage and lease the University Courtyard Apartments located on the main campus of Delaware State University (the "University").

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8.

On February 1, 2002, the Original Management Agreement was amended by the First

Amendment to Management Agreement. 9. The Original Management Agreement, as amended was assigned to the Foundation by an

Assignment and Assumption of Assumed Agreements, Mortgage and Ground Lease dated March 1, 2002. 10. On January 1, 2004, the Foundation and AMC entered into an Amended and Restated

Management Agreement for the management and leasing of the University Courtyard Apartments (the "Courtyard Agreement"). 11. 12. The term of the Courtyard Agreement was to expire on July 31, 2016. In the Summer of 2005, due to AMC's demonstrated ability to successfully manage

student housing for DSU, the Foundation asked AMC to take over management of University Village, another student housing facility then managed by the University. 13. On August 1, 2005, the Foundation and AMC entered into a Management Agreement for

the management and leasing of University Village (the "Village Agreement"). 14. 15. The term of the Village Agreement was also to expire July 31, 2016. Pursuant to the Courtyard Agreement and the Village Agreement (collectively the

"Management Agreements"), AMC was to provide all services reasonably necessary, proper, desirable and appropriate for the successful management and operation of the University Courtyard Apartments and the University Village (the "DSU Properties") in a "First Class Manner" as that term is defined by the Management Agreements. 16. In accordance with its obligations under the Management Agreements, AMC did provide

all services reasonably necessary, proper, desirable and appropriate for the successful management and operation of the DSU Properties in a First Class Manner.

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17.

From the beginning of the relationship between AMC and the University until the

beginning of 2007, AMC managed the DSU Properties without any major complaints from the University or the Foundation. THE FOUNDATION'S NEW PRESIDENT 18. In Summer of 2006, Mr. Amir Mohammadi was hired by DSU as its Vice President of

Student Affairs and the President of the Foundation. 19. At the end of 2006, AMC's Property Manager for the DSU Properties resigned, and

despite repeated requests from AMC, and the presentation of qualified candidates, Mr. Mohammadi refused to let AMC hire a new property manager to manage the DSU Properties. 20. At the request of Mr. Mohammdi, AMC hired two University Employees to help manage

the properties. 21. These University employees neglected their duties and hindered AMC's ability to

effectively manage the properties. 22. In the Spring of 2007, Hugh Hodge, AMC's Vice President of Student Housing, was

invited to meeting of the Foundation's Board of Directors (the "Board"). 23. At the Board meeting, Mr. Hodge was told that the Foundation intended to take the

management of student housing at the University in a different direction and bring the management of the DSU Properties in-house. 24. When Mr. Hodge questioned the Board about what issues the Foundation had with

AMC's management and performance under the contract, no response was given. 25. At that Board meeting, a vote was taken by the Board of Directors of the Foundation

whereby the Board approved the Foundation taking over operations and management of the DSU Properties.

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26.

As early as May 2007, representatives of the Foundation then began telling students and

students' parents that the University was going to take over control and management of the DSU Properties for the Fall of 2007. 27. Upon information and belief, the Foundation also began hiring contractors to prepare the

units on the DSU Properties for re-leasing. 28. Concerned that the Foundation intended to wrongfully terminate the Management

Agreements, Bill Barkwell, President of AMC, sent a letter to Mr. Mohammadi dated June 26, 2007, wherein Mr. Barkwell advised that the Foundation could not terminate the Management Agreements without cause, notice of default and an opportunity to cure. A true and accurate copy of the June 26, 2007 letter is attached hereto as Exhibit A. 29. The June 26, 2007 letter also informed Mr. Mohammadi that AMC was not in default

under the Management Agreements, and that AMC had received no notice alleging any default. 30. The June 26, 2007 letter then proposed the Foundation could buy out the remaining term

of the agreements if it wished to terminate. 31. In response, AMC received a letter from the Foundation's attorney accusing AMC of

using "hostile tactics" and stating incorrectly that the Foundation had identified a list of breaches by AMC. A true and accurate copy of the June 28, 2007 response letter is attached hereto as Exhibit B. 32. The Foundation's June 28, 2007 letter requested that AMC contact the Foundation's

attorney to arrange a meeting to discuss the Management Agreement issues. 33. During the entire month of July 2007, counsel for AMC repeatedly attempted to arrange a

meeting between the Foundation and AMC, but was unable to set a meeting due to the Foundation's non-responsiveness.

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THE SCHEME 34. During July and August 2007, the Foundation engaged in a series of wrongful acts

specifically aimed at terminating the Management Agreements before their stated termination dates, and causing AMC's employees to terminate their employment contracts with AMC, so that the University and the Foundation could assume AMC's role as property manager of the DSU properties in an effort to cut costs. 35. Upon information and belief, the Foundation had decided to improperly and illegally

terminate the Management Agreements with AMC, motivated by bad faith and the desire to cut costs at AMC's expense. 36. In July, a critical period in which the DSU Properties are refurbished, representatives of

the Foundation began interfering with AMC's ability to "turn" the units located in the DSU Properties in preparation for the beginning of Fall classes. 37. This interference included, among other things, requiring AMC employees to attend

mandatory training sessions for multiple hours during key times during the day and "turn" process, and requiring AMC employees to perform work unrelated to the DSU Properties. 38. Representatives of the Foundation continued to tell students, students' parents and even

AMC employees that the Foundation would be taking over management of the DSU Properties prior to giving notice of any alleged defaults to AMC. 39. The Foundation's actions caused the property managers for each of the DSU Properties to

resign during this critical period and terminate their employment contracts and employment relationships with AMC.

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40.

The Foundation's comments also caused great consternation among AMC employees

who feared their jobs were in jeopardy, and many AMC employees began searching for employment elsewhere. 41. Several of AMC's employees resigned their positions due to the Foundation's wrongful

and improper statements that the Foundation would be taking over management of the DSU properties. 42. On July 30, 2007, counsel for AMC again attempted to arrange a meeting, and again

reiterated that the Foundation had no right to terminate the agreements and that the Foundation had not provided notice to AMC of any as required under the Management Agreements. and accurate copy of the July 30, 2007 letter is attached hereto as Exhibit C. 43. In early August, during the early stages of the turn period, Mr. Mohammadi met with A true

Deena Downey, a Regional Manager for AMC, and informed Ms. Downey that the Foundation would be conducting an inspection the next day. 44. Ms. Downey requested that the Foundation give AMC 24-28 hours notice of any

inspections. 45. 46. Mr. Downey's request was ignored by the Foundation. On August 20, 2007, AMC received a letter from Mr. Mohammadi dated August 17,

2007 which purported to give notice of a list of items that the Foundation considered instances of default, and attached pictures of the units in need of repair. A true and accurate copy of the June 26, 2007 letter is attached hereto as Exhibit D. 47. Many of the pictures were taken during a period when students were moving out of the

units and before the units could be cleaned and repaired before the new students move in.

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48.

To the extent the August 17, 2007 letter purported to list only certain "instances" or

"examples" of alleged defaults, the letter failed to comply with the notice provisions of the Management Agreements in that it failed to put AMC on notice of any specific defaults other than those specifically stated in the letter. 49. To the extent the August 17, 2007 letter purported to list only certain "instances" or

"examples" of alleged defaults, the letter was defective as a notice of default as it failed to provide AMC with an ability to cure the alleged defaults. 50. On August 22, 2007, AMC responded to Mr. Mohammadi's letter and informed him that

AMC would make repairs to the units identified by the Foundation and that Herman Sikes, AMC's Director of Construction Services, who is certified in mold abatement, had met with the Foundation's consultant regarding the mold issues identified and had agreed on a remediation plan. A true and accurate copy of the August 22, 2007 letter is attached hereto as Exhibit E. 51. In an email dated August 22, 2007, AMC informed the Foundation and Mr. Mohammadi

of the remediation plan agreed upon by Mr. Sikes and the Foundation's consultant to address the mold issue. A true and accurate copy of the August 22, 2007 email is attached hereto as Exhibit F. 52. On August 23, 2007, after receiving no response from Mr. Mohammadi, AMC again

followed up with Mr. Mohammadi via email asking for approval of the remediation plan. A true and accurate copy of the August 23, 2007 follow up email is attached hereto as Exhibit G. 53. In an effort to remedy the mold issues addressed in the Foundation's August 17, 2007

letter in a timely manner, AMC moved forward with the remediation plan after receiving no response or direction from Mr. Mohammadi or the Foundation.

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54.

By letter dated September 4, 2007, AMC informed Mr. Mohammadi and the Foundation

that all of the items of default identified in the Foundation's August 17, 2007 letter had been corrected, remedied or cured, with the exception of one broken window that had been ordered but not delivered yet. A true and accurate copy of the September 4, 2007 letter is attached hereto as Exhibit H. 55. At 11:10 a.m. on September 4, 2007, Mr. Mohammadi faxed a letter to AMC informing

it of an inspection by the Foundation on September 5, 2007, and requested that AMC notify all residents of such inspection under the 24 hour notice requirement in the current leases. A true and accurate copy of this September 4, 2007 letter is attached hereto as Exhibit I. 56. AMC responded immediately by letter sent via facsimile informing Mr. Mohammadi that

due to the Foundation's late notice to AMC of the inspection, the 24 hour notice requirement could not be accomplished by the next day. A true and accurate copy of this September 4, 2007 response letter is attached hereto as Exhibit J. 57. This surprise inspection was to occur in the middle of the move-in inspections where

residents identify issues upon move-in that AMC would then address. 58. Issues identified during the students' move-in inspections are usually addressed within a

week or two of the inspection. 59. On September 5, 2007, Mr. Barkwell wrote a letter to Mr. Mohammadi and the

Foundation putting them on notice that the Foundation was in breach of the Management Agreements. A true and accurate copy of the September 5, 2007 letter is attached hereto as Exhibit K. 60. Section 2.7 of the Courtyard Agreement and the Village Agreement both provide:

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Each party shall cooperate fully in all matters relating to the management, leasing, operation, Financing of the Premises . . . Owner and University shall promptly respond to all reasonable requests by Manager for information or consultation necessary for the management, leasing and operations of the Premises" 61. Mr. Barkwell's September 5, 2007 letter identified several instances in which the

Foundation was in default under the Management Agreements, including: a. Agitating residents, residents' parents and AMC's staff by telling them the University was taking over management of the property; b. Scheduling mandatory meetings for AMC's staff during the critical time when the units are being turned to prepare for the incoming students; c. Scheduling inspections after students had moved out, but before AMC could repair the damages done by students; d. Scheduling surprise inspections without giving AMC adequate time to comply with the notice requirement in the students' leases; e. Failing to cooperate in the hiring of a property manager after the AMC property manager resigned in December 2006; and f. Refusing to meet with AMC despite AMC's efforts to arrange a meeting for over two months. 62. The Foundation's actions prevented AMC from effectively managing the DSU

Properties.

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THE WRONGFUL TERMINATION 63. On September 12, 2007, AMC received a letter from Mr. Mohammadi stating that the

Foundation was exercising its right to terminate both agreements, effective immediately. A true and accurate copy of September 12, 2007 letter is attached hereto as Exhibit L. 64. The September 12, 2007 letter did not allege that AMC had failed to cure the alleged

defaults noticed in the August 17, 2007 letter. 65. On or before September 12, 2007, no Event of Default had occurred, no notice of default

had been sent to AMC that complied with notice provisions of the Management Agreements, AMC had not failed to cure any deficiencies or defaults alleged and noticed by the Foundation, and the Foundation did not have a right under the Management Agreements to terminate all management services with AMC. 66. On or before September 12, 2007, the Foundation knew or should have known that an

Event of Default had not occurred, that AMC had not failed to cure any deficiencies, and that the Foundation did not have the right to terminate the Management Agreements. 67. The September 12, 2007 letter from the Foundation failed to comply with the notice

provisions of the Management Agreements. 68. On September 12, 2007, the Foundation unilaterally and improperly, without justification

or cause, terminated the Management Agreements with AMC. COUNT I: BREACH OF CONTRACT 69. AMC incorporates by reference its responses to Paragraphs 1-80 of the Complaint as

well as all allegations in Paragraphs 1-68 of the Counterclaim as if fully stated herein.

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70.

The Foundation had a contractual duty to AMC to allow it to continue to manage the

DSU Properties until the expiration of the terms of the Management Agreements on July 31, 2016. 71. At all times relevant to the underlying action, AMC performed all of its obligations under

the Management Agreements and was not in default under any of their terms. 72. The Management Agreements required the Foundation to cooperate with AMC in all

matters related to the management, leasing, and operation of the property. 73. The Foundation failed to fulfill this obligation, and through its actions hindered and

interfered with AMC's ability to effectively manage the DSU Properties. 74. As result of the Foundations actions, several employees of AMC resigned further

hindering AMC's ability to effectively manage the DSU Properties. 75. The Foundation improperly terminated the Management Agreements without justification

in breach of its duty and obligations to AMC under the agreements. 76. The Foundation breached its duty to AMC to act in good faith and engage in fair dealing

when it unilaterally and improperly, without cause or justification, terminated the Management Agreements. 77. As a result of the Foundation's breaches and wrongful termination of the Management

Agreements, AMC has suffered damages in excess of $2.5 million dollars. COUNT II: TORTIOUS INTERFERENCE WITH BUSINESS RELATIONS 78. AMC incorporates by reference its responses to Paragraphs 1-80 of the Complaint as

well as all allegations in Paragraphs 1-78 of the Counterclaim as if fully stated herein. 79. Upon information and belief, agents, servants and/or employees of the Foundation or

University contacted employees of AMC with the intention of causing them to leave the

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employment of AMC to prejudice the ability of AMC to properly and effectively administer its responsibilities and obligations under the Management Agreements. 80. The Foundation also used other tactics as described hereinabove, to harass AMC

employees and prevent them from effectively doing their jobs. 81. AMC had a business relationship and an expectancy of a continued business relationship

with its employees. 82. The conduct of the Foundation was intentional, willful and calculated to cause damage to

AMC's lawful business by causing AMC's to terminate their employment contracts and business relationship with AMC, thereby effectively hindering AMC's ability to effectively and properly administer its responsibilities and obligations under the Management Agreements. 83. The conduct of the Foundation was perpetrated with malice and with the intentional,

improper and unlawful purpose of causing damage and loss, without right or justifiable cause. 84. The conduct of the Foundation in communicating with employees of was malicious,

intentional, willful and calculated to cause damage to AMC's lawful business and ability to effectively and properly administer its responsibilities and obligations under the Management Agreements. 85. As a result of the conduct and actions of the Foundation, several key employees resigned

from AMC during a critical period in AMC's performance of its obligations under the Management Agreements, terminating their employment contracts with AMC. 86. As a result of the conduct and actions of the Foundation, AMC has been damaged in an

amount to be determined at trial.

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WHEREFORE, AMC prays for the following relief: (a) an award of damages, including attorneys' fees and related costs, against the Foundation for breach of contract and tortious interference in an amount not less than $2.5 million; (b) for an award of punitive damages against the Foundation in an amount to be determined by the enlightened conscience of the jury to deter the Foundation from engaging in similar willful, wanton, malicious and tortious conduct in the future; (c) (d) (e) trial by jury; that all costs of this action be taxed to the Foundation; and for such other and further relief as this Court deems just, equitable and proper.

Respectfully submitted this 23rd day of October, 2007.

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WOMBLE CARLYLE SANDRIDGE & RICE, PLLC A Professional Limited Liability Company

By:

/s/ AnnaMartina Tyreus_____________________ Gerard M. O'Rourke(DE #3265) Anna Martina Tyreus (DE # 4771) 222 Delaware Avenue, 15th Floor Wilmington, DE 19801 Main Number: (302) 252-4320 Main Fax: (302) 252-4330 [email protected] [email protected] Robert R. Ambler, Jr. (GA #014462) John G. Perry (GA#141609) WOMBLE CARLYLE SANDRIDGE & RICE, PLLC One Atlantic Center, Suite 3500 1201 West Peachtree Street Atlanta, Georgia 30309 Phone: (404) 872-7000 Fax: (404) 888-7490 [email protected] [email protected] Attorneys for Ambling Management Company

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CERTIFICATE OF SERVICE I hereby certify that on October 23, 2007, I electronically filed the foregoing Answer, Affirmative Defenses and Counterclaim with the Clerk of the Court using CM/ECF, which will send notification of such filing to the following: Kathleen Furey McDonough Sarah E. DiLuzio Potter Anderson & Corroon, LLP 1313 N. Market Street P.O. Box 951 Wilmington, DE 19899-0951 (302)984-6000 I hereby certify that on October 23, 2007, I caused the foregoing document to be served upon the following in the manner so indicated: BY FIRST-CLASS MAIL Kathleen Furey McDonough Sarah E. DiLuzio Potter Anderson & Corroon, LLP 1313 N. Market Street P.O. Box 951 Wilmington, DE 19899-0951 (302) 984-6000 This 23rd day of October, 2007.

/s/ AnnaMartina Tyreus______________________ Anna Martina Tyreus (DE # 4771)

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