Contract analysis

I. INTRODUCTION Respondent Pellegrino Capital Group LLC ("PCG" or "Respondent") respectfully submits this Preliminary Conference Statement in advance of the preliminary conference scheduled before the Honorable Margaret Liu Chen (Ret.) for May 15, 2023. This statement is submitted in accordance with the JAMS Comprehensive Arbitration Rules & Procedures and is intended to assist the Arbitrator in organizing these proc

II. SUMMARY OF THE DISPUTE A. The Joint Venture and the Property Palmetto Grand Ventures LLC is a Florida limited liability company that was formed on June 15, 2017, for the express purpose of acquiring, renovating, and operating The Palmetto Grand Resort & Spa (the "Hotel" or the "Property"), a 312-room full-service luxury beachfront hotel located at 650 Mandalay Avenue, Clearwater Beach, Florida 33767. The Hotel in

Section 12.4 of the Operating Agreement grants PCG, as the managing member, the right to purchase MSH's entire membership interest in PGV following the fifth anniversary of the Effective Date of the Operating Agreement. The Effective Date is June 15, 2017; accordingly, the call-option right became exercisable on or after June 15, 2022. Section 12.4 provides that the purchase price for the redeemed interest shall be "

III. ISSUES FOR ARBITRATION PCG respectfully identifies the following issues to be resolved by the Arbitrator in this proceeding. PCG presents these issues for the Arbitrator's consideration in structuring the proceedings and anticipates that the parties may further refine the framing of the issues during the preliminary conference and through subsequent briefing. A. Primary Valuation Issue The central issue in this

IV. APPOINTMENT OF NEUTRAL THIRD APPRAISER UNDER OA SECTION 12.4(c) PCG respectfully brings to the Arbitrator's attention the provisions of Section 12.4(c) of the Operating Agreement, which establishes a mechanism for the appointment of a neutral third appraiser in the event that the parties' respective appraisals diverge by more than a specified threshold. Section 12.4(c) provides, in relevant part: "In the event th

V. ANTICIPATED EXPERT WITNESSES PCG provides the following information regarding the expert witnesses it anticipates designating in this proceeding, as well as its understanding of MSH's anticipated expert witnesses, for the Arbitrator's consideration in scheduling the proceedings. A. PCG's Expert(s) PCG intends to designate the following expert witness: Gerald K. Whitfield, MAI Whitfield Realty Advisors LLC 500 East

VI. PROPOSED DISCOVERY SCHEDULE PCG recognizes the importance of establishing a clear and reasonable discovery schedule at the outset of these proceedings. To that end, PCG proposes the following schedule, which is designed to ensure that the parties and the Arbitrator have access to all relevant evidence while minimizing unnecessary delay and expense. This proposed schedule is subject to modification by the Arbitrat

VII. PROPOSED PROCEDURAL RULES AND HEARING LOGISTICS A. Governing Rules This arbitration is governed by the JAMS Comprehensive Arbitration Rules & Procedures, as specified in Section 15.2 of the Operating Agreement. The seat of the arbitration is Jacksonville, Florida, as mandated by Section 15.2. The substantive law governing the parties' rights and obligations is the law of the State of Florida, including the Flori

VIII. OTHER MATTERS FOR THE PRELIMINARY CONFERENCE PCG raises the following additional matters for the Arbitrator's consideration at the May 15, 2023 preliminary conference. A. Bifurcation PCG respectfully requests that the Arbitrator consider whether the bad-faith claim asserted by MSH under Section 12.7 of the Operating Agreement should be bifurcated from the primary valuation determination. PCG submits that bifurc

IX. CONCLUSION For the foregoing reasons, Respondent Pellegrino Capital Group LLC respectfully requests that the Arbitrator:

1. Set a procedural schedule for these proceedings consistent with the proposals set forth in Section VI of this Statement, or such other schedule as the Arbitrator deems appropriate in light of the parties' positions;

2. Direct the parties to jointly select and retain a neutral third MAI-certified appraiser pursuant to Section 12.4(c) of the Operating Agreement, with the selection to be completed within fourteen (14) days of the preliminary conference and the neutral appraisal to be completed within sixty (60) days of retention;

3. Address the procedural matters identified in Sections VII and VIII of this Statement, including the proposed hearing format, confidentiality protections, bifurcation of the bad-faith claim, and the parties' efforts to stipulate to undisputed facts; and

4. Grant such other and further relief as the Arbitrator deems just and appropriate. PCG is prepared to proceed efficiently toward the resolution of this dispute. PCG remains committed to the arbitration process and to working cooperatively with MSH's counsel and the Arbitrator to ensure that these proceedings are conducted in a fair, orderly, and cost-effective manner. Respectfully submitted, CALDERWOOD & HARKNESS L