PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
DEPOSITION OUTLINE
NATHANIEL "NATE" CORDERO
Managing Member, Meridian Shores Hospitality LLC
Prepared by: Simone Laroche, Lead Associate Jeffrey Park, Working Associate Calderwood & Harkness LLP
Reviewed by: Francesca Morano, Responsible Partner
Date: October 2023
PRIVILEGE DESIGNATION: This memorandum is protected by the attorney-client privilege and the work-product doctrine. It reflects the mental impressions, conclusions, opinions, and legal theories of attorneys at Calderwood & Harkness LLP. This document was prepared in anticipation of litigation and for the purpose of providing legal advice to Pellegrino Capital Group LLC. Do not distribute outside Calderwood & Harkness LLP without the express authorization of Francesca Morano.
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I. DEPOSITION OBJECTIVES
A. Primary Objectives
The overarching purpose of this deposition is to develop the factual record necessary to support PCG's position that the call-option exercise was contractually proper, that Whitfield Realty Advisors' appraisal reflects a sound and independent determination of Fair Market Value, and that Meridian Shores Hospitality LLC's claims of bad faith and inflated valuation demands are unsupported by the evidence. The following primary objectives should guide the examination of Nathaniel Cordero:
1.  Establish Cordero's understanding and acceptance of the call-option mechanism at formation. The examination should demonstrate that Cordero understood, at the time the Operating Agreement of Palmetto Grand Ventures LLC was executed on June 15, 2017, that OA Section 12.4 granted PCG, as sole Manager, the unilateral right to exercise a call option to purchase MSH's entire membership interest after the fifth anniversary of the OA (i.e., on or after June 15, 2022). The testimony should confirm that Cordero was represented by independent counsel at the time and that the call-option provisions were the subject of negotiation and review. Cordero should be pressed to confirm that he understood PCG held the right to select the initial independent MAI-certified appraiser to determine Fair Market Value.
2.  Demonstrate that Cordero understood PCG's right to select the initial appraiser. A central element of MSH's current grievance appears to be dissatisfaction with the Whitfield appraisal's conclusions. The deposition should establish that Cordero understood at the time of signing that the OA vested in PCG the right to choose the first appraiser and that this right was not conditioned on MSH's consent or approval. By locking in this testimony, we foreclose any argument that PCG acted outside the scope of the OA in retaining Whitfield.
3.  Elicit testimony undermining Meridian's "bad faith" theory under OA Section 12.7. MSH has alleged that PCG exercised the call option "in bad faith or with the intent to materially understate Fair Market Value," triggering the penalty provision of OA Section 12.7. The deposition should probe the factual basis for this allegation rigorously. Cordero should be asked to identify every specific fact, document, or communication supporting the bad-faith claim. The examination should demonstrate that PCG's engagement of Whitfield Realty Advisors and the resulting appraisal process were consistent with the OA and standard industry practice for luxury hospitality assets.
4.  Explore Cordero's involvement in and influence over the Beacon Valuation Group appraisal. The Beacon appraisal, prepared by Dr. Priya Ramanathan, concluded a Fair Market Value of $151.5 million — a figure that diverges from the Whitfield appraisal by 28.4% and from the Linden Park preliminary indication of value by a meaningful margin as well. The deposition should explore the degree to which Cordero directed, shaped, or influenced Beacon's assumptions, including the use of an 8.5% discount rate (versus Whitfield's 10.75%), the inclusion of a $8.2 million deferred-maintenance adjustment, and the decision to rely solely on the income approach without a sales-comparison analysis. If Cordero provided advocacy-driven inputs to Dr. Ramanathan, this testimony will be critical to challenging the reliability of the Beacon report at the arbitration hearing.
5.  Test Cordero's knowledge of specific deferred-maintenance items underlying MSH's claim under OA Section 8.3. MSH has alleged that PCG breached its obligation under OA Section 8.3 to maintain The Palmetto Grand Resort & Spa in first-class condition, and has incorporated a $8.2 million deferred-maintenance adjustment into the Beacon appraisal. The deposition should test whether Cordero can identify the specific maintenance items comprising this figure, whether MSH ever raised these items contemporaneously with PCG before the call-option exercise, and whether MSH exercised any of its consent rights to request capital calls to address these purported deficiencies. The goal is to establish that the deferred-maintenance claim is a post-hoc litigation position manufactured to inflate the valuation, not a genuine operational concern that was raised in the ordinary course.
6.  Probe MSH's financial expectations and motivations. The examination should explore whether MSH's true grievance is with the valuation methodology or whether it stems from a desire to remain in the joint venture and continue benefiting from the future appreciation of The Palmetto Grand Resort & Spa. If Cordero's real objection is to being forced out of the JV — rather than to the accuracy of the Fair Market Value determination — this testimony will be valuable in demonstrating that MSH's valuation demands are inflated as a negotiating tactic rather than a good-faith assessment of the property's worth.
7.  Lock in Cordero's testimony on key factual matters. Regardless of the specific answers obtained, the deposition should serve the critical function of fixing Cordero's testimony under oath. This testimony will be available for use at the arbitration hearing before Hon. Margaret Liu Chen (Ret.) and in settlement negotiations. Inconsistencies between Cordero's deposition testimony and any subsequent hearing testimony can be used for impeachment.
B. Secondary Objectives
In addition to the primary objectives outlined above, the following secondary objectives should be pursued as time and circumstances permit:
1.  Develop a record on Cordero's communications with Beacon before and during the appraisal process. While the substance of communications between Cordero and MSH's counsel at Hargrove, Dunlap & Castillo LLP will be shielded by attorney-client privilege, communications between Cordero and Beacon Valuation Group are not privileged (Beacon was retained as an appraiser, not as a consulting expert under the arbitrator's scheduling order). The deposition should explore the timing, frequency, and substance of all communications between Cordero and Dr. Ramanathan or anyone else at Beacon, including any written instructions, data packages, or draft reviews.
2.  Explore Cordero's understanding of the 10% divergence threshold in OA Section 12.4(c) and the neutral appraiser process. It is important to establish whether Cordero understood the contractual mechanism that would be triggered by a divergence exceeding 10% between the two party appraisals, and whether Cordero's engagement of Beacon was, in part, strategically designed to generate an appraisal sufficiently divergent from Whitfield's to trigger the third-appraiser process and thereby obtain a higher blended value.
3.  Identify all documents Cordero reviewed or relied upon in connection with MSH's rejection of the $41.3 million tender on March 10, 2023. The rejection letter is sparse and does not articulate a detailed basis for MSH's position. The deposition should elicit the full scope of materials Cordero reviewed, the analysis he performed or received, and the advice (to the extent not privileged) on which he relied in deciding to reject the tender.
4.  Assess Cordero's credibility and demeanor as a potential arbitration witness. With 25 or more years of experience in Southeast luxury hospitality, Cordero is expected to be a sophisticated and articulate witness. The deposition provides an opportunity to evaluate his presentation style, his tendency (if any) to volunteer information or deliver speeches, his comfort level with technical valuation concepts, and his ability to maintain composure under sustained cross-examination. This assessment will inform our preparation for the arbitration hearing and our strategic recommendations to the client.
II. WITNESS BACKGROUND AND CREDIBILITY
A. Professional Background
The examination should begin with a thorough exploration of Cordero's professional history in order to establish his sophistication as a real estate investor and hospitality industry participant. This foundation is critical: the more experience and sophistication we can attribute to Cordero, the more difficult it becomes for MSH to argue that Cordero did not understand the call-option provisions of the OA when he signed it, and the more credible our position that Cordero knowingly accepted the contractual framework — including the risk that PCG might exercise the call option at a time or price that MSH found unfavorable.
The witness's full name is Nathaniel "Nate" Cordero. He currently serves as Managing Member of Meridian Shores Hospitality LLC, the entity that holds the 35% membership interest in Palmetto Grand Ventures LLC at issue in this dispute. Cordero has over 25 years of experience in the Southeast luxury hospitality sector, during which he has operated and developed multiple hotel properties.
Key questions for this section include:
•  Please state your full name for the record.
•  What is your current title and role at Meridian Shores Hospitality LLC?
•  Describe your educational background, including any undergraduate and graduate degrees.
•  Do you hold any professional certifications or licenses relevant to the hospitality industry, real estate, or finance?
•  How many years have you been working in the hotel and hospitality industry?
•  What specific luxury hotel properties have you developed or operated prior to The Palmetto Grand Resort & Spa? For each property, identify the name, location, number of rooms, and approximate value.
•  In your career, have you previously been involved in partnership buyouts, call-option exercises, or valuation disputes involving hotel properties?
•  Have you ever served as an expert witness or provided expert testimony in any litigation or arbitration proceeding?
•  Have you ever been a party to any lawsuit or arbitration proceeding other than this one?
The goal of this line of questioning is to develop a comprehensive picture of Cordero's experience level, which will be referenced throughout the remainder of the deposition whenever MSH attempts to portray Cordero as a passive or unsophisticated party who was taken advantage of by PCG.
B. Relationship to Meridian Shores Hospitality LLC
The examination should next turn to the structure and governance of MSH itself. MSH is a Delaware limited liability company with its principal office at 220 Royal Palm Way, Suite 300, Palm Beach, Florida 33480. Cordero serves as Managing Member. His spouse, Elena Cordero, is listed as a Member holding 40% of MSH. The remaining 60% is believed to be held by Cordero, though this should be confirmed on the record.
Key questions for this section include:
•  Meridian Shores Hospitality LLC — is that a Delaware limited liability company?
•  Where is MSH's principal office located?
•  What is your ownership percentage of MSH?
•  Your wife, Elena Cordero, also holds an interest in MSH — is that correct? What percentage does she hold?
•  Other than yourself and Elena Cordero, does any other person or entity hold any membership interest, economic interest, or beneficial interest in MSH?
•  Who makes decisions on behalf of MSH regarding the Palmetto Grand Ventures joint venture — is it solely you, or does Elena Cordero participate in the decision-making process?
•  Does MSH have any employees other than you?
•  Does MSH have any other investments or business operations beyond its interest in PGV?
Understanding the decision-making structure of MSH is important for two reasons. First, if Cordero is the sole decision-maker for MSH, then his testimony binds MSH completely, and we need not be concerned about a separate MSH representative offering conflicting testimony. Second, if Elena Cordero is involved in decision-making, we may need to consider whether to depose her as well, particularly with respect to any communications she may have had with Beacon or with opposing counsel.
C. Cordero's Role in the Joint Venture
MSH holds a 35% membership interest in Palmetto Grand Ventures LLC, the entity formed for the acquisition, renovation, and operation of The Palmetto Grand Resort & Spa. Under the Operating Agreement, MSH is a passive member. PCG serves as sole Manager with broad authority over the day-to-day operations of the JV and the hotel. MSH's contractual rights are limited to consent rights on certain major decisions: capital calls exceeding $2 million, dispositions of all or substantially all of the property, refinancings, and the incurrence of new indebtedness.
Despite MSH's contractually passive role, it is important to explore Cordero's actual level of involvement with the property. If Cordero was actively engaged in monitoring the hotel's operations and condition, it undermines the deferred-maintenance claim — because it suggests he would have been aware of any maintenance deficiencies and would have raised them in real time. If Cordero was truly disengaged, it raises questions about the basis for his current opinions regarding property condition and value.
Key questions for this section include:
•  Under the Operating Agreement of PGV, what is MSH's membership interest?
•  Who is the Manager of PGV under the Operating Agreement?
•  What was your day-to-day involvement, if any, with The Palmetto Grand Resort & Spa during the period from 2017 through January 2023?
•  How frequently did you visit the property during that period? Can you estimate the number of visits per year?
•  Did you attend management meetings, operations reviews, or board meetings relating to the hotel? If so, how frequently?
•  How frequently did you communicate with Adriana Pellegrino-Voss or Dominic Pellegrino regarding hotel operations?
•  What was the nature of those communications — phone calls, emails, in-person meetings?
•  Did you ever serve in any operational capacity at the hotel — for example, as a consultant, advisor, or interim manager?
•  Would you characterize MSH's role in PGV as that of a capital partner, or did MSH play a more active role?
III. FORMATION OF THE JOINT VENTURE AND ORIGINAL EXPECTATIONS
A. Genesis of the JV Relationship
The Operating Agreement of Palmetto Grand Ventures LLC was executed on June 15, 2017. PGV was formed as a Florida limited liability company for the specific purpose of acquiring, renovating, and operating The Palmetto Grand Resort & Spa, a 312-room luxury beachfront hotel located at 650 Mandalay Avenue, Clearwater Beach, Florida 33767. The acquisition of the property closed on August 1, 2017, at a purchase price of $87.5 million.
Understanding the circumstances surrounding the formation of the joint venture is essential to our case. We need to establish that the relationship between PCG and MSH was a negotiated, arm's-length transaction between sophisticated parties, each represented by counsel, and that the terms of the Operating Agreement — including the call-option provisions — were the product of genuine negotiation rather than adhesion.
Key questions for this section include:
•  How did you first come into contact with the Pellegrino family or with Pellegrino Capital Group LLC?
•  When did you first meet Dominic Pellegrino? When did you first meet Adriana Pellegrino-Voss?
•  Who originated the idea to acquire The Palmetto Grand Resort & Spa?
•  Did you identify the property, or did PCG bring the opportunity to you?
•  Was the 65/35 ownership split between PCG and MSH the result of negotiation? If so, describe the negotiation process.
•  What drove the specific 65/35 split? Was it based on relative capital contributions, relative expertise, or some other factor?
•  Were any other ownership structures discussed before the parties agreed on 65/35?
•  Before agreeing to the 65/35 split, did you consider or propose any alternative structures — for example, a 50/50 split, a different capital structure, or a preferred equity arrangement?
B. Counsel and Advisors at Formation
A critical element of our case is establishing that Cordero was represented by competent, independent counsel when he negotiated and executed the Operating Agreement. If Cordero had counsel who reviewed and advised on the call-option provisions, the bad-faith penalty provision, and the dispute-resolution clause, then MSH's current position — that the call option was exercised in bad faith or that the contractual valuation mechanism is somehow unfair — is significantly undermined.
Key questions for this section include:
•  Were you represented by independent legal counsel when you negotiated and executed the Operating Agreement of PGV?
•  If yes, please identify the law firm and the specific attorney who represented you.
•  Did your counsel review the entire Operating Agreement before you signed it?
•  Did your counsel specifically review and advise you on the call-option provisions set forth in OA Section 12.4?
•  Did your counsel specifically review and advise you on the bad-faith penalty provision set forth in OA Section 12.7?
•  Did your counsel specifically review and advise you on the dispute-resolution clause set forth in OA Section 15.2, which provides for binding arbitration before JAMS?
•  Did you or your counsel propose any changes, revisions, or modifications to the call-option language in Section 12.4?
•  Were any changes proposed by you or your counsel to the call-option language that were rejected by PCG?
•  Did you or your counsel propose any changes to the bad-faith penalty provision in Section 12.7?
•  At the time you signed the Operating Agreement, did you have any objection to any of its terms? If so, which terms and what was the nature of your objection?
The goal of this line of questioning is to establish, unequivocally, that Cordero voluntarily entered into the OA with full awareness of PCG's call-option rights, with the benefit of independent legal advice, and with the opportunity to negotiate the terms. This testimony will be devastating to MSH's position if, as we expect, Cordero confirms he had counsel who reviewed the call-option provisions and either proposed no changes or proposed changes that were resolved through negotiation.
C. Capital Contributions
The capital contributions made by MSH are an undisputed element of the case, but they are relevant to the valuation dispute because MSH's preferred return accrues on unreturned capital contributions. Confirming the amounts on the record also eliminates any possibility that MSH will later attempt to claim additional contributions that were not documented.
Under OA Section 4.1, MSH contributed $10.0 million at the time of acquisition, representing the agreed-upon capital contribution for MSH's 35% interest. Subsequently, during the renovation period from 2017 through 2019, MSH contributed an additional $8.505 million in renovation capital, representing 35% of the total $24.3 million renovation budget. MSH's total capital contributions accordingly sum to $18.505 million.
Key questions for this section include:
•  Please confirm for the record the amount of MSH's initial capital contribution to PGV at the time of acquisition. Was it $10.0 million?
•  Please confirm the total amount of renovation capital contributed by MSH. Was it $8.505 million?
•  Were the renovation capital contributions made in a single payment or in multiple installments? If multiple, please describe the timing and amount of each installment.
•  Were any of the renovation capital calls disputed or contested by MSH at any point?
•  Did MSH ever object to any capital call issued by PCG in connection with the renovation?
•  Was MSH's capital contribution funded from your personal wealth, or was there any third-party equity, investor capital, or borrowed funds behind MSH's contributions?
•  Did MSH borrow any money to fund its capital contributions to PGV?
D. Financial Expectations at Formation
Exploring Cordero's financial expectations at the time of formation serves two purposes. First, it contextualizes the current dispute by showing whether Cordero's expectations were aligned with the contractual framework or whether he harbored unstated assumptions about exit timing or pricing that deviated from the OA terms. Second, if Cordero expected a certain hold period or return profile, his testimony may reveal that the current dispute is less about valuation accuracy and more about disappointment that the investment is being liquidated at a time Cordero considers premature.
Key questions for this section include:
•  When you entered the joint venture in June 2017, what return on your investment did you expect to earn?
•  Did you have a target hold period in mind when you invested in PGV? If so, what was it?
•  Did you anticipate that PCG might exercise the call option at some point? If so, when did you expect that to occur?
•  Did you understand the 8% cumulative compounding preferred return structure set forth in the OA? Was that a negotiated term?
•  Before entering the joint venture, did you perform or commission any independent valuation or financial modeling of The Palmetto Grand Resort & Spa?
•  Did you develop or review any projections of the hotel's future revenue, NOI, or value?
•  At the time you entered the joint venture, what did you believe the property would be worth after the renovation was completed?
•  Did you share your expectations regarding hold period or return targets with anyone at PCG?
E. Understanding of the Call Option at Formation
This is one of the most critical sections of the deposition and should receive substantial attention. OA Section 12.4 provides that, after the fifth anniversary of the Operating Agreement (i.e., on or after June 15, 2022), PCG has the right to purchase MSH's entire membership interest at "Fair Market Value" as determined by an independent MAI-certified appraiser selected by PCG. Under OA Section 12.4(c), if the appraisals submitted by the two parties diverge by more than 10%, a third appraiser is to be jointly selected by the parties, and the Fair Market Value is determined as the average of the two appraisals that are closest in value.
Key questions for this section include:
•  I'd like to direct your attention to Section 12.4 of the Operating Agreement. Before we look at the document, can you describe in your own words what the call option in Section 12.4 provides?
•  Did you understand that, under Section 12.4, PCG had the right to select the initial independent MAI-certified appraiser?
•  Did you ever request that MSH be given the right to select the initial appraiser, or that the parties jointly select the initial appraiser?
•  Did you ever request a reciprocal put option — that is, a right for MSH to require PCG to purchase MSH's interest? Was a put option discussed during the negotiation of the OA? Was it proposed and rejected?
•  Did you understand the 10% divergence threshold set forth in Section 12.4(c)?
•  Did you understand that, if the two party appraisals diverged by more than 10%, a third appraiser would be jointly selected and the FMV would be the average of the two closest appraisals?
•  At the time you signed the Operating Agreement, did you believe the call-option provisions in Section 12.4 were fair to MSH?
•  Has your view of the fairness of the call-option provisions changed since then? If so, when did your view change, and why?
•  At the time you signed the Operating Agreement, did you have any concern that PCG might exercise the call option at a time or price unfavorable to MSH?
IV. HOTEL OPERATIONS AND RENOVATION PERIOD (2017–2022)
A. The Renovation
The total renovation capital invested in The Palmetto Grand Resort & Spa during the 2017–2019 period was $24.3 million. The property consists of 312 rooms, including 42 suites, and features two restaurants, a rooftop bar, an 18,000-square-foot spa and wellness center, approximately 22,000 square feet of meeting and event space, and beachfront cabana service. The hotel is operated under a franchise agreement with Aurelian Hotels & Resorts Inc., dated July 15, 2017, with a 20-year term expiring July 14, 2037. The franchise fee structure comprises 5% of gross room revenue plus a 2% marketing fund contribution.
Cordero's involvement in the renovation is relevant to the deferred-maintenance claim. If Cordero was actively involved in planning and overseeing the renovation, it is harder for him to claim that the renovation left material maintenance deficiencies unaddressed. If the renovation was comprehensive and addressed all known capital needs of the property at the time, the $8.2 million deferred-maintenance claim asserted five to six years later is more vulnerable to attack.
Key questions for this section include:
•  Were you involved in planning the renovation of The Palmetto Grand Resort & Spa?
•  Did you participate in selecting the architect, contractor, or design team for the renovation?
•  Did you approve the renovation scope and budget?
•  Was the renovation scope designed to address all material capital needs of the property?
•  Was the renovation completed on time?
•  Was the renovation completed within budget, or were there cost overruns?
•  At the conclusion of the renovation, did you believe that all material capital needs of the property had been addressed?
•  Were there any items that you believed should have been included in the renovation scope but were not?
•  If so, did you raise those items with PCG at the time?
•  After the renovation was completed, were you satisfied with the condition of the property?
B. Hotel Performance
The financial performance of The Palmetto Grand Resort & Spa is central to the valuation dispute. For the fiscal year ending December 31, 2022 — the date as of which both party appraisals assessed Fair Market Value — the hotel generated total revenue of $62.8 million, a Revenue Per Available Room (RevPAR) of $289, Net Operating Income (NOI) of $18.4 million, and EBITDA of $19.7 million. These figures are important because they form the basis for the income-approach valuations performed by both Whitfield and Beacon.
Key questions for this section include:
•  Were you satisfied with the financial performance of The Palmetto Grand Resort & Spa in 2020?
•  Were you satisfied with the hotel's financial performance in 2021?
•  Were you satisfied with the hotel's financial performance in 2022?
•  Did you receive regular financial reports from PCG or from the hotel management company during this period?
•  How frequently did you receive those reports — monthly, quarterly, annually?
•  Did you review the financial reports when you received them?
•  Did you ever raise concerns about the hotel's operational performance with Dominic Pellegrino or Adriana Pellegrino-Voss?
•  Did you ever raise concerns about management decisions or strategies with anyone at PCG?
•  Did you believe the hotel was performing at, above, or below its potential as of the end of 2022?
C. Distributions
The distribution history is relevant both to the valuation of MSH's interest (because the preferred return accrues on unreturned capital contributions) and to Cordero's financial expectations and motivations. Under the Operating Agreement, MSH is entitled to a preferred return of 8% per annum on unreturned capital contributions, cumulative, compounding annually. After return of capital and the 8% preferred return, the promote/waterfall structure allocates distributions 70/30 (PCG/MSH). Above a 15% IRR threshold, the split shifts to 75/25.
The parties have stipulated that MSH's accrued and unpaid preferred return through December 31, 2022, totals $17.01 million. This figure is incorporated into the tender calculation and is not in dispute. However, the distribution history informs Cordero's motivations and expectations.
Key questions for this section include:
•  What distributions, if any, did MSH receive from PGV during the period from 2017 through 2022?
•  For each year, can you approximate the amount of distributions received?
•  Were the distributions you received consistent with your expectations when you entered the joint venture?
•  Did you ever raise concerns with PCG about the level or timing of distributions?
•  Under the Operating Agreement, MSH is entitled to an 8% cumulative compounding preferred return on unreturned capital contributions — is that your understanding?
•  Did MSH ever receive distributions sufficient to begin returning the preferred return, or has the entire preferred return accrued and remained unpaid?
•  Do you agree that, as of December 31, 2022, MSH's accrued preferred return totaled $17.01 million?
V. DEFERRED MAINTENANCE — OA SECTION 8.3 CLAIMS
A. The $8.2 Million Claim
MSH has asserted that PCG breached its obligations under OA Section 8.3, which requires the Manager to maintain the property in "first-class condition consistent with the standards of comparable luxury beachfront resort properties in the Gulf Coast market." MSH claims that PCG failed to fund approximately $8.2 million in deferred maintenance items, and Beacon's appraisal incorporated this figure as a downward adjustment to the property's value. This section of the deposition is designed to test the factual basis for the deferred-maintenance claim and, ideally, to establish that it is a post-hoc litigation position that was manufactured after the call-option exercise to inflate the valuation, rather than a contemporaneous operational concern that MSH raised in real time.
Key questions for this section include:
•  MSH has claimed that PCG failed to fund approximately $8.2 million in deferred maintenance at The Palmetto Grand Resort & Spa. Are you familiar with that claim?
•  When did you first identify or become aware of deferred-maintenance issues at the property?
•  Was that before or after PCG exercised the call option on January 9, 2023?
•  Can you identify the specific items that comprise the $8.2 million? Please list them for me.
•  For each item you identify, when did you first become aware of that particular maintenance need?
•  Did you ever raise any deferred-maintenance concerns with PCG in writing at any time before the call-option exercise on January 9, 2023?
•  Did you ever raise deferred-maintenance concerns with PCG orally before the call-option exercise?
•  Under the Operating Agreement, MSH has consent rights on capital calls exceeding $2 million. Did MSH ever exercise those consent rights to request or approve a capital call to address maintenance items at the property?
•  Did MSH ever request that PCG issue a capital call to fund deferred-maintenance work?
•  If MSH was aware of $8.2 million in deferred maintenance, why did MSH not request a capital call to address those items?
The goal here is to demonstrate a disconnect: if the deferred-maintenance issues were genuinely known to Cordero and MSH, they had the contractual tools available to address them and chose not to. If the issues were not known to Cordero until after the call-option exercise, the question becomes how Cordero identified and quantified $8.2 million in deferred maintenance in the few months between the exercise (January 9, 2023) and the Beacon appraisal (April 14, 2023).
B. Property Condition Reports and Inspections
The examination should explore what documentary or physical evidence supports the existence and magnitude of the alleged deferred-maintenance items. If Cordero cannot point to an independent property condition assessment, engineer's report, or similar documentation, the $8.2 million figure becomes vulnerable to attack as speculative.
Key questions for this section include:
•  Did you ever commission an independent property condition assessment of The Palmetto Grand Resort & Spa?
•  If so, when was the assessment performed, who performed it, and what were the results?
•  If not, on what basis did you determine that $8.2 million in deferred maintenance existed?
•  When was the last time you personally inspected the property before the call-option exercise on January 9, 2023?
•  During that inspection, did you observe any material maintenance deficiencies? If so, what specifically did you observe?
•  Are you aware of whether the Aurelian Hotels & Resorts brand conducted any property condition inspections of The Palmetto Grand Resort & Spa? If so, when, and what were the results?
•  Were any capital expenditure budgets submitted to MSH for approval during 2020, 2021, or 2022?
•  Did those budgets include line items for the maintenance items that MSH now claims were deferred?
•  Did MSH approve those budgets?
C. Cordero's Basis of Knowledge
The connection between the $8.2 million deferred-maintenance figure and the Beacon appraisal is a critical vulnerability in MSH's position. If Cordero provided the figure to Beacon rather than Beacon developing it independently through its own analysis, the reliability and independence of the Beacon appraisal are called into question.
Key questions for this section include:
•  Did you provide the $8.2 million deferred-maintenance figure to Beacon Valuation Group?
•  Did you provide Dr. Priya Ramanathan with a list of specific deferred-maintenance items and associated cost estimates?
•  Or did Beacon develop the $8.2 million figure independently through its own analysis?
•  If Beacon developed the figure independently, do you know what methodology Beacon used to arrive at $8.2 million?
•  Was the $8.2 million figure based on an engineer's report? If so, who prepared the report, and when?
•  Was the $8.2 million figure based on a contractor's estimate? If so, who provided the estimate, and when?
•  Did you discuss the deferred-maintenance issue with Dr. Ramanathan before or during the appraisal process?
•  Did you ask Dr. Ramanathan to include a deferred-maintenance adjustment in the appraisal?
VI. THE CALL-OPTION EXERCISE AND VALUATION DISPUTE
A. PCG's Call-Option Notice
PCG delivered its written notice exercising the call option under OA Section 12.4 on January 9, 2023, approximately seven months after the earliest exercise date of June 15, 2022 (the fifth anniversary of the Operating Agreement). The examination should explore the circumstances surrounding the exercise, including what Cordero knew or expected in advance.
Key questions for this section include:
•  On January 9, 2023, PCG delivered a written notice exercising its call option under OA Section 12.4 of the Operating Agreement. Do you recall receiving that notice?
•  When did you first learn that PCG intended to exercise the call option?
•  Were you surprised by the exercise, or had it been discussed with you in advance?
•  Did you have any communications with Dominic Pellegrino about the call option before the formal notice was delivered? If so, when, and what was discussed?
•  Did you have any communications with Adriana Pellegrino-Voss about the call option before the formal notice was delivered? If so, when, and what was discussed?
•  After you received the notice, what was your initial reaction?
•  Did you believe, at the time you received the notice, that PCG had the contractual right to exercise the call option?
•  Did you raise any objection to PCG's right to exercise the call option when you received the notice?
B. Whitfield Appraisal and Tender
Whitfield Realty Advisors, through Gerald K. Whitfield, MAI, completed its appraisal on February 10, 2023, concluding that the Fair Market Value of 100% of the JV's assets was $118.0 million as of December 31, 2022. Based on the Whitfield appraisal, PCG calculated MSH's buyout price as follows: ($118.0 million minus $48.6 million in outstanding indebtedness) multiplied by MSH's 35% interest, yielding $24.29 million, plus $17.01 million in accrued preferred return, for a total tender of $41.3 million. PCG tendered $41.3 million to MSH on March 1, 2023. MSH rejected the tender on March 10, 2023.
Key questions for this section include:
•  Did you receive a copy of the Whitfield Realty Advisors appraisal report dated February 10, 2023?
•  Did you review the Whitfield appraisal?
•  How much time did you spend reviewing it?
•  Did you review it alone, or did you review it with your counsel or with any other advisor?
•  What was your reaction to the Whitfield appraisal's conclusion that the Fair Market Value of the property was $118.0 million?
•  What specific aspects of the Whitfield appraisal do you disagree with?
•  Do you disagree with Whitfield's comparable sales analysis? If so, which comparables do you take issue with and why?
•  Do you disagree with Whitfield's capitalization rate? If so, what capitalization rate do you believe is appropriate and why?
•  Do you disagree with Whitfield's income projections? If so, in what respects?
•  Before rejecting the $41.3 million tender, did you consult with anyone? If so, whom?
•  Did MSH provide PCG with a written explanation of the basis for rejecting the tender?
•  What was the specific basis for the rejection?
C. Engagement of Beacon Valuation Group
Dr. Priya Ramanathan, CFA, ASA, of Beacon Valuation Group Inc. (located at 2600 South Bayshore Drive, Suite 1050, Miami, Florida 33133) completed her appraisal of the property on April 14, 2023. Beacon concluded that the Fair Market Value of 100% of the JV's assets was $151.5 million — a figure $33.5 million higher than Whitfield's conclusion. The Beacon appraisal relied exclusively on the income approach (a discounted cash flow analysis using an 8.5% discount rate and a 7.75% terminal capitalization rate), and included adjustments for the purported "below-market" value of the Aurelian franchise agreement and the $8.2 million in alleged deferred maintenance.
This section is one of the most important areas of the deposition. The degree to which Cordero directed or influenced Beacon's assumptions and methodology goes directly to the reliability of the Beacon appraisal and to the question of whether Beacon was functioning as an independent appraiser or as an advocacy tool.
Key questions for this section include:
•  When did you first contact Beacon Valuation Group or Dr. Priya Ramanathan?
•  Was that before or after MSH rejected the $41.3 million tender on March 10, 2023?
•  How did you come to select Beacon? Was Beacon selected based on a prior professional relationship, a referral from counsel, or some other basis?
•  Had you ever worked with Beacon or Dr. Ramanathan on a prior engagement?
•  What instructions did you provide to Beacon when you retained them?
•  What materials or documents did you provide to Beacon at the outset of the engagement?
•  Did you provide Beacon with a target value, a value range, or any expression of your view on the property's Fair Market Value?
•  Did you tell Dr. Ramanathan what you believed the property was worth?
•  Did you or anyone at MSH review drafts of the Beacon appraisal before it was finalized?
•  If you reviewed drafts, did you provide comments or feedback on the drafts?
•  Did you suggest or request that Beacon include the $8.2 million deferred-maintenance adjustment in the appraisal?
•  Did you suggest or request that Beacon include the "below-market" franchise agreement adjustment?
•  Do you know why Beacon used only the income approach — the discounted cash flow method — and did not also perform a sales-comparison approach?
•  Did you discuss with Dr. Ramanathan the selection of the 8.5% discount rate?
•  Are you aware that Whitfield used a 10.75% discount rate? Did you discuss this difference with Dr. Ramanathan?
•  Did you discuss with Dr. Ramanathan the selection of the 7.75% terminal capitalization rate?
•  How many times did you communicate with Dr. Ramanathan during the appraisal process — by phone, email, or in person?
•  Were any of those communications documented in writing?
•  Did you meet with Dr. Ramanathan in person? If so, when and where?
•  Did you accompany Dr. Ramanathan on a visit to the property?
The goal of this entire line of questioning is to explore the degree to which Beacon's conclusions were shaped by advocacy inputs from Cordero or MSH's counsel, rather than being the product of independent professional judgment by Dr. Ramanathan.
D. The Appraisal Divergence
The divergence between the Whitfield and Beacon appraisals is substantial. The Whitfield appraisal concluded a Fair Market Value of $118.0 million; the Beacon appraisal concluded $151.5 million. The divergence calculated as an absolute percentage is |$151.5M − $118.0M| / $118.0M = 28.4%, which far exceeds the 10% threshold specified in OA Section 12.4(c). This divergence triggered the contractual right to jointly appoint a third, neutral appraiser.
Key questions for this section include:
•  When you received the Beacon appraisal concluding a Fair Market Value of $151.5 million, were you surprised by that number?
•  Did you anticipate that the Beacon appraisal would diverge so significantly from the Whitfield appraisal?
•  Before receiving the Beacon appraisal, did you have a view on what the property's Fair Market Value was?
•  Did you understand at the time that a divergence of more than 10% between the two party appraisals would trigger the third-appraiser mechanism under OA Section 12.4(c)?
•  Did the possibility of triggering the third-appraiser mechanism play any role in your decision to retain Beacon or in any instructions you gave to Beacon?
VII. BAD-FAITH ALLEGATION — OA SECTION 12.7
A. Basis for the Bad-Faith Claim
OA Section 12.7 provides that if the Manager exercises the call option "in bad faith or with the intent to materially understate Fair Market Value," the purchase price shall include a penalty of up to 25% of the determined Fair Market Value of the redeemed interest. MSH has asserted a bad-faith claim and has demanded a "bad-faith premium" of $16.975 million as part of its total demand of $70.0 million. This is a serious allegation that impugns the integrity of PCG and the Whitfield appraisal, and Cordero must be pressed to identify the specific factual basis for the claim.
Key questions for this section include:
•  MSH has alleged that PCG exercised the call option in bad faith or with the intent to materially understate Fair Market Value. Is that correct?
•  What specific facts do you rely on to support that allegation?
•  Please identify each fact, document, or communication that supports your contention that PCG acted in bad faith.
•  Do you contend that PCG instructed Gerald Whitfield to understate the Fair Market Value of the property?
•  Do you have any evidence — any emails, memoranda, letters, text messages, or notes of verbal statements — suggesting that PCG sought to manipulate or influence the Whitfield appraisal?
•  Did you or anyone at MSH ever communicate directly with Gerald Whitfield or anyone at Whitfield Realty Advisors?
•  Do you believe that Gerald Whitfield is an incompetent appraiser?
•  Do you believe that Gerald Whitfield was biased in favor of PCG?
•  If so, what is the basis for that belief?
•  Other than the fact that PCG selected Whitfield — which it was contractually entitled to do under OA Section 12.4 — what evidence do you have that the Whitfield appraisal was anything other than an independent, good-faith assessment of the property's Fair Market Value?
•  Are you aware that OA Section 12.7 caps the bad-faith penalty at 25% of the Fair Market Value of the redeemed interest?
•  MSH has claimed a bad-faith premium of $16.975 million, which represents approximately 32% of certain calculations. How do you reconcile that demand with the 25% cap in Section 12.7?
The goal of this line of questioning is to pin down the factual foundation for the bad-faith claim. In our experience, bad-faith claims in contractual buyout disputes are difficult to sustain absent direct evidence of collusion between the exercising party and the appraiser. If Cordero cannot identify specific evidence of manipulation — and we do not believe such evidence exists — this testimony will be a powerful tool for seeking dismissal of the bad-faith claim on summary adjudication or at the arbitration hearing.
B. Derivation of the $16.975 Million Penalty Demand
MSH's total demand in this proceeding is $70.0 million, which MSH has calculated as follows: 35% of $102.9 million in net equity (i.e., $151.5 million less $48.6 million in debt) = $36.015 million, plus $17.01 million in accrued preferred return, plus $16.975 million in the bad-faith premium, totaling $70.0 million.
Key questions for this section include:
•  Who calculated the $16.975 million bad-faith premium figure — was it you, your counsel at Hargrove, Dunlap & Castillo LLP, or Beacon Valuation Group?
•  Walk me through the math: how was the $16.975 million derived?
•  How does MSH reconcile a $16.975 million premium — which represents approximately 32% of MSH's claimed equity value — with the 25% cap on the bad-faith penalty set forth in OA Section 12.7?
•  Is it MSH's position that the 25% cap does not apply? If so, on what basis?
•  Has your counsel advised you about any Florida case law or arbitral precedent supporting a bad-faith penalty of this magnitude in a comparable contractual buyout dispute?
•  Setting aside the bad-faith premium, what does MSH contend is the correct purchase price for MSH's interest?
VIII. NEUTRAL APPRAISER PROCESS
A. Appointment of Linden Park Advisory LLC
Because the divergence between the Whitfield and Beacon appraisals exceeded the 10% threshold under OA Section 12.4(c), the parties jointly retained a neutral third appraiser. On June 1, 2023, the parties executed a joint stipulation appointing Linden Park Advisory LLC, and specifically Thomas Carraway, MAI, FRICS, to serve as the neutral appraiser. Linden Park delivered a preliminary indication of value on July 14, 2023, placing the Fair Market Value of 100% of the JV's assets in a range of $130.0 million to $138.0 million. A formal report was never finalized, as the parties entered settlement discussions.
This section presents a significant opportunity. If Cordero can be brought to acknowledge that the Linden Park preliminary range is a reasonable indicator of Fair Market Value, it dramatically narrows the valuation dispute and undermines the credibility of the Beacon $151.5 million figure. Even the top end of the Linden Park range ($138.0 million) is $13.5 million below Beacon's conclusion.
Key questions for this section include:
•  Were you involved in selecting Linden Park Advisory LLC or Thomas Carraway as the neutral appraiser?
•  Did you have any input into the selection process?
•  Had you previously worked with Thomas Carraway or Linden Park on any engagement?
•  Did you have any communications with Thomas Carraway or anyone at Linden Park during the appraisal process?
•  Did you provide any materials or information to Linden Park?
•  You are aware that Linden Park delivered a preliminary indication of value on July 14, 2023, correct?
•  That preliminary indication placed the Fair Market Value of the property in a range of $130.0 million to $138.0 million — is that correct?
•  What was your reaction when you received the Linden Park preliminary indication?
•  Were you surprised by the range?
•  Were you disappointed by the range?
•  Do you agree that the Linden Park range of $130.0 million to $138.0 million is a reasonable indicator of Fair Market Value?
•  If not, why not? What specific aspect of Linden Park's analysis do you disagree with?
•  Do you believe that Thomas Carraway, as a jointly selected neutral appraiser, was biased in any way?
•  Do you have any reason to question the independence or competence of Linden Park?
B. Implications for Settlement Posture
The midpoint of the Linden Park range is $134.0 million. Using this midpoint and accounting for the $48.6 million in outstanding debt, the net equity of PGV would be $85.4 million. MSH's 35% share would be $29.89 million, and adding the $17.01 million in accrued preferred return yields a total of $46.9 million. This figure is substantially below MSH's total demand of $70.0 million but approximately $5.6 million above PCG's original tender of $41.3 million.
Key questions for this section include:
•  After receiving the Linden Park preliminary indication of $130.0 million to $138.0 million, did you consider revising MSH's demanded purchase price?
•  Did you discuss settlement with your counsel after the Linden Park indication was received?
•  Without revealing the content of those discussions, did you receive advice from your counsel regarding the implications of the Linden Park preliminary range for MSH's litigation position?
•  Are you aware that, using the midpoint of the Linden Park range, MSH's 35% interest plus accrued preferred return would total approximately $46.9 million — less than MSH's total demand of $70.0 million?
•  Is MSH willing to adjust its demand in light of the Linden Park preliminary indication?
IX. MSH'S FINANCIAL CONDITION AND MOTIVATIONS
A. MSH's Current Financial Position
Understanding MSH's current financial condition is relevant to assessing whether Cordero's positions in this dispute are driven by a genuine belief in a higher valuation or by financial pressure that creates an incentive to maximize the buyout price. While we expect opposing counsel to object to this line of questioning on relevance grounds, we can frame the questions in terms of bias and motivation.
Key questions for this section include:
•  What are MSH's current sources of income and assets apart from its investment in PGV?
•  Does MSH hold any other investments or business interests?
•  Is MSH or are you personally under any financial pressure that affects MSH's position in this dispute?
•  Has MSH pledged its interest in PGV as collateral for any loan or line of credit?
•  Has MSH incurred any debt or financial obligations that depend on the outcome of this dispute?
•  Does MSH have the financial resources to continue pursuing this arbitration through a final hearing?
•  Have you personally incurred any significant financial obligations since the call-option exercise that affect your litigation posture?
If opposing counsel objects, the examining attorney should frame these questions as going to bias, credibility, and motivation, which are proper subjects of deposition inquiry under the Federal Rules of Civil Procedure (applicable by analogy to JAMS proceedings) and the JAMS Comprehensive Arbitration Rules.
B. MSH's Preference to Remain in the JV
A critical element of our case theory is that MSH's real grievance is not with the valuation but with the forced exit. If Cordero would have preferred to remain in the joint venture and continue benefiting from the future appreciation of The Palmetto Grand Resort & Spa, his valuation demands may be colored by that preference rather than by a genuine assessment of what the property is worth today.
Key questions for this section include:
•  Would you have preferred to remain as a member of PGV rather than be bought out?
•  Did you ever ask Dominic Pellegrino or Adriana Pellegrino-Voss not to exercise the call option?
•  If so, when did you make that request, and what was their response?
•  Is it fair to say that you would rather not be exiting this investment at this time?
•  Is MSH's challenge to the valuation motivated by a genuine belief that the Fair Market Value of the property is $151.5 million?
•  Or is MSH's position motivated, at least in part, by a desire to extract the maximum possible price because the call option is forcing an involuntary exit?
•  If you genuinely believed the property was worth $151.5 million in December 2022, would you have been willing to purchase PCG's 65% interest at that valuation?
X. COMMUNICATIONS AND DOCUMENT REQUESTS
A. Pre-Dispute Communications with PCG
Key questions for this section include:
•  Between June 15, 2022 — the fifth anniversary of the Operating Agreement and the earliest date the call option could be exercised — and March 20, 2023 — the date of MSH's demand for arbitration — did you have any communications with Dominic Pellegrino regarding the call option, the value of the hotel, or a potential buyout?
•  Please describe each such communication, including the approximate date, the medium (phone, email, text, in-person), and the substance of the discussion.
•  During the same period, did you have any communications with Adriana Pellegrino-Voss on these topics?
•  Were any of these communications oral only — that is, not documented in any written form?
•  Did you keep notes, memoranda, or any other records of these conversations?
•  Did you send or receive any text messages or instant messages with anyone at PCG regarding the call option or the value of the hotel?
•  Have those text messages been preserved and produced in discovery?
B. Communications with Counsel and Experts
While the substance of communications between Cordero and MSH's counsel at Hargrove, Dunlap & Castillo LLP is protected by the attorney-client privilege, questions about the timing and existence of the attorney-client relationship (as opposed to the content of communications) may be explored. Similarly, the timing of MSH's engagement of Beacon Valuation Group is a factual matter that is not privileged.
Key questions for this section include:
•  When did you first consult with a lawyer about the call-option exercise?
•  When did you first consult with Hargrove, Dunlap & Castillo LLP specifically?
•  Was that before or after you received the call-option exercise notice on January 9, 2023?
•  When did MSH first engage Beacon Valuation Group to appraise the property?
•  Was Beacon engaged before or after MSH rejected the $41.3 million tender on March 10, 2023?
•  If Beacon was engaged before the rejection, what was the purpose of the engagement?
The timing of Beacon's engagement is significant. If MSH engaged Beacon before rejecting the tender, it may suggest that MSH had predetermined its objection to the Whitfield appraisal and the tender amount, and that the engagement of Beacon was part of a preconceived litigation strategy rather than a genuine effort to determine Fair Market Value.
C. Documents Provided to Beacon
Key questions for this section include:
•  What documents did you or anyone at MSH provide to Dr. Ramanathan in connection with the Beacon appraisal?
•  Did you provide Beacon with the Whitfield appraisal report?
•  Did you provide Beacon with any internal MSH memoranda, financial models, or valuation analyses?
•  Did you provide Beacon with any documents reflecting MSH's view of the property's value or MSH's position on the appropriate valuation methodology?
•  Did you provide Beacon with any draft demand letters, litigation pleadings, or correspondence with opposing counsel?
•  Did you provide Beacon with any communications between you and PCG regarding the call option?
•  Did you provide Beacon with any property condition reports, engineering assessments, or contractor estimates?
•  Did you provide Beacon with the PGV financial statements for 2020, 2021, and 2022?
•  Other than the materials you provided, are you aware of any materials Beacon obtained independently — for example, from public sources or from third parties?
XI. ANTICIPATED AREAS OF DIFFICULTY AND OBJECTIONS
A. Expected Objections from Opposing Counsel
Based on prior experience with Victoria Castillo and the legal issues implicated by this deposition, we anticipate the following objections and should be prepared to respond:
1.  Attorney-client privilege. Castillo will almost certainly invoke the attorney-client privilege with respect to any question that seeks to elicit the content of communications between Cordero and Hargrove, Dunlap & Castillo LLP. This is proper, and we should not press for privileged content. However, we can and should explore the timing and existence of the relationship, the identity of the attorneys involved, and the dates of significant events (e.g., when counsel was first retained, when Beacon was first engaged). These are factual matters outside the scope of the privilege.
2.  Settlement privilege. Castillo may instruct the witness not to answer regarding settlement discussions, particularly if informal settlement conversations occurred before the formal mediation or before the JAMS proceeding. Under JAMS Comprehensive Arbitration Rule 26 and Florida Evidence Code Section 90.408, settlement communications are generally inadmissible to prove liability or the validity of a claim. We should be careful to distinguish between settlement discussions (which may be protected) and factual discussions about value, the call option, or property condition (which are not protected merely because they occurred in a settlement context).
3.  Relevance objections on financial condition. Castillo will likely object to questions about MSH's or Cordero's financial condition on the grounds that such information is not relevant to the valuation dispute. Our response should be that MSH's financial condition is relevant to bias and motivation — specifically, whether financial pressure is driving MSH to adopt an inflated valuation position. Under the JAMS rules and general arbitral practice, questions going to bias and credibility are broadly permissible in depositions.
4.  Form objections and speaking objections. Castillo may attempt to coach the witness through speaking objections. The examining attorney should object to any speaking objections and remind opposing counsel that, under the JAMS rules and Florida Rule of Civil Procedure 1.310(c), objections should be stated concisely and in a non-suggestive manner.
Strategy: Frame financial-condition questions in terms of "motivations" and "bias" rather than as direct inquiries into net worth. Ask about specific financial events (e.g., loan obligations, pledges of the PGV interest) rather than asking broad questions about Cordero's overall wealth.
B. Potential Areas of Witness Difficulty
Cordero has over 25 years of experience in Southeast luxury hospitality and is expected to be an articulate, well-prepared witness. He will have been extensively prepared by Victoria Castillo and Ryan Matsuda at Hargrove, Dunlap & Castillo LLP. The following areas of difficulty should be anticipated:
1.  Volunteering speeches. Cordero may attempt to use open-ended questions as opportunities to deliver speeches about PCG's alleged mismanagement, the unfairness of the call option, or the superiority of the Beacon appraisal. The examining attorney should maintain control through focused yes/no questions and, where necessary, move to strike non-responsive answers.
2.  Claiming ignorance of OA provisions. Cordero may attempt to disclaim familiarity with specific provisions of the Operating Agreement, particularly the call-option mechanism and the bad-faith penalty cap. If Cordero claims ignorance, counter by establishing his sophistication (25+ years of industry experience), his representation by independent counsel at formation, and his prior involvement in comparable transactions.
3.  Distancing from Beacon. There is a strategic dilemma for Cordero in his relationship to the Beacon appraisal. If Cordero distances himself from Beacon's assumptions — claiming he did not direct the inclusion of the deferred-maintenance adjust