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partners of Essex and their partnership interests were as
follows:
Partner Partnership Interest
Eulich-Management 47.500
IRA 26.125
Holding Co. 21.375
Connolly 5.000
Although the Essex partnership agreement required its
partners to contribute any capital needed to operate the
partnership, very little, if any, actual capital contributions
were ever required from them. The Essex partnership had no
office, equipment, or employees.
In late 1981, Gateway Corp. entered into a management
contract with Prudential to operate the Gateway Hotel and entered
into a second management contract effective February 1, 1982, to
operate another Hilton-franchised hotel that Prudential owned at
Midland, Texas (the Midland Hotel).19
The Essex partnership entered into "Representation and
Marketing" agreements with Eulich-Management and Gateway Corp.,
also effective January 1, 1982.20 At the time, Eulich-
19
Although Ostroff and Prudential ultimately awarded the
Midland, Texas, hotel's management contract to Gateway Corp.,
Gateway Corp. and Eulich-Management had each submitted bids on
the Midland hotel's management contract. During this time,
Prudential usually obtained bids from at least three hotel
management companies for a particular hotel's management
contract.
20
The Eulich-Management agreement indicates that, although it
was effective as of Jan. 1, 1982, it was executed as of July 5,
(continued...)
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