JAMS ARBITRATION
JAMS Reference No. 1440032871
Before the Honorable Margaret Liu Chen (Ret.), Arbitrator
MERIDIAN SHORES HOSPITALITY LLC, a Delaware limited liability company, 220 Royal Palm Way, Suite 300, Palm Beach, FL 33480,
Claimant,
v.
PELLEGRINO CAPITAL GROUP LLC, a Florida limited liability company, 1900 Bayshore Boulevard, Suite 1400, Tampa, FL 33606,
Respondent.
RESPONDENT PELLEGRINO CAPITAL GROUP LLC'S RESPONSE TO DEMAND FOR ARBITRATION AND COUNTERCLAIM FOR DECLARATORY RELIEF
Filed: April 5, 2023
Respondent Pellegrino Capital Group LLC ("PCG" or "Respondent"), by and through its undersigned counsel, Calderwood & Harkness LLP, hereby submits this Response to the Demand for Arbitration filed by Claimant Meridian Shores Hospitality LLC ("MSH" or "Claimant") and asserts its Counterclaim for Declaratory Relief as set forth below.
I. PRELIMINARY STATEMENT
Respondent Pellegrino Capital Group LLC ("PCG" or "Respondent") submits this Response and Counterclaim in answer to the Demand for Arbitration filed by Claimant Meridian Shores Hospitality LLC ("MSH" or "Claimant") on March 20, 2023. This filing is made in accordance with the JAMS Comprehensive Arbitration Rules and Procedures and the arbitration clause set forth in Section 15.2 of the Operating Agreement of Palmetto Grand Ventures LLC, dated June 15, 2017.
PCG is the 65% majority member and the sole Manager of Palmetto Grand Ventures LLC ("PGV" or the "Joint Venture"), a Florida limited liability company formed on June 15, 2017, for the express 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 "Hotel" or the "Property"). MSH holds the remaining 35% minority membership interest in PGV. The Joint Venture has been a commercially successful enterprise, owing in significant part to PCG's diligent stewardship and management of the Property since its acquisition in August 2017.
The present dispute arises from PCG's lawful and contractually authorized exercise of its call option under Section 12.4 of the Operating Agreement of Palmetto Grand Ventures LLC, dated June 15, 2017 (the "Operating Agreement" or "OA"), to purchase MSH's 35% membership interest at Fair Market Value (as that term is defined and operationalized by OA Section 12.4). This call option became exercisable after the fifth anniversary of the Operating Agreement's Effective Date—that is, after June 15, 2022. PCG exercised this option on January 9, 2023, well within the permissible window and in strict compliance with every procedural and substantive requirement of the Operating Agreement.
In connection with the exercise of the call option, and as required by OA Section 12.4, PCG retained an independent MAI-certified appraiser, Whitfield Realty Advisors LLC ("Whitfield"), led by Gerald K. Whitfield, MAI, a highly respected appraisal professional with over thirty years of experience in Gulf Coast luxury hotel valuations. Whitfield concluded, in a comprehensive appraisal report dated February 10, 2023, that the Fair Market Value of 100% of PGV's real property and operating assets was $118.0 million as of the valuation date of December 31, 2022. This conclusion was derived through a rigorous application of market-standard methodologies, including both the income approach (employing direct capitalization at a 9.5% capitalization rate and a discounted cash flow analysis at a 10.75% discount rate) and the sales comparison approach, with the two approaches weighted 40% and 60%, respectively. This blended methodology reflects best practices in the appraisal of luxury resort properties and is fully consistent with the Uniform Standards of Professional Appraisal Practice ("USPAP").
Based on the Whitfield appraisal, PCG calculated a buyout price for MSH's 35% interest of $41.3 million, comprising MSH's pro rata share of joint venture net equity ($24,290,000) plus MSH's accrued and unpaid preferred return ($17,010,000). PCG tendered this amount to MSH on March 1, 2023, in full compliance with the Operating Agreement's closing mechanics set forth in OA Section 12.5. MSH rejected the tender on March 10, 2023.
MSH's claims of bad faith and material undervaluation are entirely without merit. MSH's own appraisal, prepared by Beacon Valuation Group Inc. ("Beacon"), led by Dr. Priya Ramanathan, CFA, ASA, concluded that the Fair Market Value of 100% of PGV's assets was $151.5 million—a figure that exceeds Whitfield's conclusion by 28.4%. However, the Beacon appraisal is materially flawed in several critical respects. First, the Beacon appraisal relies exclusively on the income approach—specifically, a discounted cash flow analysis—and entirely omits the sales comparison approach, which is a recognized and widely employed methodology in hotel valuation. Second, Beacon employs an aggressively low 8.5% discount rate and a 7.75% terminal capitalization rate, both of which are well below market norms for luxury beachfront resort properties on the Gulf Coast as of the valuation date. Third, the Beacon appraisal includes a speculative $8.2 million adjustment for alleged "deferred maintenance"—a claim that has no basis in the record, was never raised by MSH before this dispute, and improperly inflates the valuation far beyond any reasonable measure of Fair Market Value.
MSH's demand of $70.0 million—comprising an inflated equity share, the accrued preferred return, and a purported "bad faith" penalty of $16,975,000 under OA Section 12.7—is excessive, unsupported, and contrary to the plain language of the Operating Agreement. The bad-faith penalty provision of OA Section 12.7 requires affirmative evidence that the Manager exercised the call option "in bad faith or with the intent to materially understate Fair Market Value." No such evidence exists. PCG retained a reputable, independent appraiser, received a professionally prepared and methodologically sound appraisal, and tendered a buyout price calculated in direct accordance with the appraisal's conclusions and the Operating Agreement's formula. A good-faith disagreement between two competing appraisals—which is precisely the scenario contemplated by the third-appraiser mechanism in OA Section 12.4(c)—does not constitute bad faith.
PCG exercised its contractual rights in full compliance with the Operating Agreement and in good faith. PCG is entitled to declaratory relief confirming that the $41.3 million buyout price tendered to MSH represents the proper Fair Market Value determination under OA Section 12.4, or alternatively, that the Fair Market Value shall be determined through the third-appraiser mechanism under OA Section 12.4(c), and that no bad-faith penalty is owed under any circumstances.
II. THE PARTIES
A. Respondent. Pellegrino Capital Group LLC is a Florida limited liability company with its principal office located at 1900 Bayshore Boulevard, Suite 1400, Tampa, Florida 33606. PCG is organized under the Florida Revised Limited Liability Company Act, Chapter 605, Florida Statutes, and has been in continuous good standing with the Florida Department of State, Division of Corporations, since its formation.
PCG is a family office and private investment firm with approximately $1.2 billion in assets under management across a diversified portfolio of investments spanning the hospitality, multifamily residential, and alternative-asset strategies. PCG has deep experience in the acquisition, development, renovation, and operation of luxury hospitality properties throughout the southeastern United States and the Gulf Coast region.
Dominic R. Pellegrino is the Managing Member of PCG and controls 100% of its membership interests. Mr. Pellegrino founded PCG in 2004 and has over thirty-five years of experience in real estate investment and development, with particular expertise in the luxury hospitality sector.
Adriana Pellegrino-Voss serves as Senior Vice President of Investments at PCG and has day-to-day oversight of the firm's hospitality portfolio, including The Palmetto Grand Resort & Spa. Ms. Pellegrino-Voss has been instrumental in the strategic direction and operational management of the Hotel since PGV's acquisition of the Property in August 2017.
Marcus Thiel serves as Chief Financial Officer of PCG and is responsible for the firm's financial reporting, capital-markets activities, and treasury functions. Mr. Thiel oversaw the financial analysis underlying PCG's exercise of the call option and the calculation of the buyout price tendered to MSH.
B. Claimant. Meridian Shores Hospitality LLC is a Delaware limited liability company with its principal office located at 220 Royal Palm Way, Suite 300, Palm Beach, Florida 33480. Upon information and belief, MSH was formed for the purpose of making investments in hospitality real estate.
Nathaniel "Nate" Cordero is the Managing Member of MSH. Upon information and belief, Mr. Cordero controls the operations and investment decisions of MSH and has served in that capacity since MSH's formation.
Elena Cordero is a Member of MSH holding approximately 40% of MSH's membership interests. Upon information and belief, Ms. Cordero is a passive investor in MSH who does not participate in the day-to-day management or investment decisions of that entity.
C. The Joint Venture Entity
Palmetto Grand Ventures LLC is a Florida limited liability company bearing Florida Filing No. L17000124583 and Employer Identification Number 82-5063921. PGV was formed on June 15, 2017, and its registered office is located at 1900 Bayshore Boulevard, Suite 1400, Tampa, Florida 33606, which is also the principal office of PCG.
PGV's membership is held as follows: PCG owns a 65% membership interest, and MSH owns a 35% membership interest. Pursuant to the Operating Agreement, PCG serves as the sole Manager of PGV and has exclusive authority over the management of PGV's business and affairs, subject to the limited consent rights reserved to MSH under specific provisions of the Operating Agreement (including, as relevant here, consent rights with respect to capital calls exceeding $2 million).
The sole purpose for which PGV was formed was the acquisition, renovation, and operation of The Palmetto Grand Resort & Spa, a 312-room luxury beachfront hotel and resort located at 650 Mandalay Avenue, Clearwater Beach, Florida 33767. PGV has at all times conducted its business in accordance with this stated purpose and the terms of the Operating Agreement.
III. JURISDICTION AND GOVERNING LAW
This arbitration is conducted pursuant to Section 15.2 of the Operating Agreement, which provides in relevant part:
Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination, or validity thereof, shall be settled by binding arbitration administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures then in effect, before a single arbitrator mutually selected by the parties. The seat of arbitration shall be Jacksonville, Florida. The decision of the arbitrator shall be final and binding upon the parties, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
The Operating Agreement is governed by the laws of the State of Florida, specifically the Florida Revised Limited Liability Company Act, Chapter 605, Florida Statutes, as set forth in OA Section 15.1. The parties consented to this choice of law at the time of execution of the Operating Agreement and have at no point disputed its applicability.
The Arbitrator, the Honorable Margaret Liu Chen (Ret.), was mutually selected by the parties in accordance with the JAMS Comprehensive Arbitration Rules and Procedures and has accepted appointment to adjudicate this matter. The Arbitrator has jurisdiction over all disputes arising out of or relating to the Operating Agreement, including, without limitation, the interpretation and application of OA Sections 12.4 (Call Option), 12.5 (Closing Mechanics), 12.7 (Bad Faith Penalty), and 8.3 (Capital Expenditure Obligations), each of which is directly at issue in this proceeding.
PCG acknowledges and does not contest the jurisdiction of the Arbitrator or the applicability of the JAMS Comprehensive Arbitration Rules and Procedures to this dispute. PCG further acknowledges that the Counterclaim for Declaratory Relief asserted herein falls within the scope of the arbitration clause set forth in OA Section 15.2, as it arises directly from the same underlying transaction and the same provisions of the Operating Agreement that are at issue in MSH's Demand for Arbitration.
IV. FACTUAL BACKGROUND
A. Formation of the Joint Venture and Acquisition of the Hotel
On June 15, 2017, PCG and MSH executed the Operating Agreement of Palmetto Grand Ventures LLC, thereby forming PGV as a Florida limited liability company for the purpose of acquiring, renovating, and operating The Palmetto Grand Resort & Spa. The Operating Agreement was the product of extensive arm's-length negotiations between the parties, each of whom was represented by independent legal counsel. PCG was represented by Calderwood & Harkness LLP, and MSH was represented by Hargrove, Dunlap & Castillo LLP—the same firm that now serves as counsel to MSH in this arbitration. Both parties had ample opportunity to review, negotiate, and revise all material terms of the Operating Agreement, including the call-option provisions at issue in this dispute.
On August 1, 2017, PGV acquired The Palmetto Grand Resort & Spa for a total purchase price of $87.5 million. At the time of acquisition, the Hotel was a 312-room beachfront property in Clearwater Beach, Florida, with significant potential for value enhancement through strategic renovation and repositioning.
The acquisition was funded through a combination of third-party debt and member equity contributions. PGV obtained a $61.25 million commercial real estate loan from Gulf Atlantic National Bank ("GANB") (Loan No. CRE-2017-06284), representing a loan-to-value ratio of approximately 70%. The remaining acquisition costs were funded through equity contributions from the members.
The total equity required at acquisition, inclusive of approximately $2,307,700 in closing costs (consisting of legal fees, title insurance, transfer taxes, lender fees, and other customary transactional expenses), was $28,557,700. In accordance with OA Section 4.1, PCG contributed $18,562,500, representing 65% of the total equity requirement. MSH contributed $10,000,000, which was the agreed-upon basis for MSH's 35% membership interest as set forth in OA Section 4.1. The modest disparity between MSH's proportionate share of total equity (which would have been $9,995,195 at exactly 35%) and its actual contribution of $10,000,000 was the result of the negotiated rounding reflected in OA Section 4.1.
In addition, the Hotel is managed under a franchise agreement with Aurelian Hotels & Resorts Inc. (the "Franchise Agreement"), which was executed on July 15, 2017. The Franchise Agreement has a twenty-year term expiring on July 14, 2037, and provides for a franchise fee of 5% of gross room revenue plus a 2% marketing fund contribution. The Aurelian brand affiliation has been a significant contributor to the Hotel's market positioning and revenue performance.
B. Renovation and Capital Contributions
Between 2017 and 2019, PGV invested a total of $24.3 million in comprehensive renovations to The Palmetto Grand Resort & Spa. These renovations were undertaken under PCG's direction and management in its capacity as sole Manager of PGV and were designed to transform the Hotel from a well-maintained but dated beachfront property into a premier luxury destination capable of commanding top-tier room rates and occupancy levels.
The renovation program was funded entirely through additional equity contributions from the members in proportion to their respective membership interests. PCG contributed $15,795,000, representing 65% of the total renovation investment, and MSH contributed $8,505,000, representing 35%. These additional capital contributions were approved by the members in accordance with the procedures set forth in the Operating Agreement, and MSH's contributions were made voluntarily and without objection at the time they were called.
In total, MSH's cumulative capital contributions to PGV amount to $18,505,000, consisting of the initial equity contribution of $10,000,000 at the time of acquisition and additional renovation-related capital contributions of $8,505,000. PCG's cumulative capital contributions total $34,357,500 ($18,562,500 initial plus $15,795,000 renovation).
The renovation program was comprehensive in scope and included the following major elements, among others:
• Complete renovation of all 312 guest rooms and suites, including 42 premium suites, with upgraded finishes, furnishings, fixtures, and technology throughout;
• Construction and fitout of two full-service restaurants featuring distinct culinary concepts;
• Design and construction of a rooftop bar and lounge with panoramic views of the Gulf of Mexico;
• Development of an 18,000-square-foot spa and wellness center featuring treatment rooms, a fitness center, a hydrotherapy circuit, and a relaxation lounge;
• Renovation and expansion of approximately 22,000 square feet of meeting and event space, including a 10,000-square-foot grand ballroom, multiple breakout rooms, and pre-function areas;
• Enhancement of the Hotel's beachfront amenities, including installation of a premium cabana service program; and
• Upgrades to common areas, the lobby, landscaping, pool areas, and back-of-house facilities.
The result of this renovation program was the transformation of The Palmetto Grand Resort & Spa into a premier luxury beachfront destination that consistently ranks among the top-rated properties in the Clearwater Beach market. The success of the renovation program is reflected in the Hotel's strong operating performance, as discussed below.
C. Hotel Performance
Since the completion of the renovation program, The Palmetto Grand Resort & Spa has delivered strong and consistent financial performance. For the fiscal year ended December 31, 2022—the valuation date used in both the Whitfield and Beacon appraisals—the Hotel's key operating metrics were as follows:
These figures reflect a property operating at a high level of efficiency and profitability, consistent with its positioning as a luxury beachfront resort in one of Florida's premier tourism markets. The Hotel's RevPAR of $289 places it comfortably within the upper tier of comparable luxury hotel properties on the Gulf Coast.
As of December 31, 2022, the outstanding balance on PGV's mortgage loan with GANB was $48.6 million, having been amortized from the original principal amount of $61.25 million over the approximately five-and-a-half-year period since origination. The loan bears interest at a floating rate of SOFR + 2.25% (having been converted from a LIBOR-based rate in 2022 in connection with the market-wide transition away from LIBOR) and has a maturity date of August 1, 2027. PGV has at all times been current on its debt-service obligations and has maintained full compliance with all financial covenants under the loan agreement with GANB.
D. Operating Agreement Key Provisions
The Operating Agreement contains several provisions that are directly relevant to this dispute. PCG sets forth below the key provisions and their material terms.
OA Section 12.4 — Call Option. Section 12.4 of the Operating Agreement provides that, after the fifth anniversary of the Effective Date (i.e., after June 15, 2022), PCG, as the Manager, has the right to purchase MSH's entire membership interest in PGV at "Fair Market Value" as determined by an independent MAI-certified appraiser selected by PCG, subject to MSH's right to obtain its own appraisal at MSH's expense. The Operating Agreement defines Fair Market Value by reference to the appraised value of 100% of PGV's real property and operating assets, from which outstanding debt obligations are deducted to arrive at joint venture net equity, with the minority member's share calculated on a pro rata basis by reference to its percentage membership interest.
OA Section 12.4(c) — Third Appraiser Mechanism. Section 12.4(c) provides that, if the appraisals obtained by PCG and MSH differ by more than 10%, the parties shall jointly select a third independent MAI-certified appraiser. The Fair Market Value shall then be determined as the average of the two appraisals that are closest in value. This mechanism was specifically negotiated to provide an orderly process for resolving valuation disagreements without the need for adversarial proceedings.
OA Section 12.5 — Closing Mechanics. Section 12.5 provides that payment of the buyout price shall be due within 90 days of the final determination of Fair Market Value.
OA Section 12.7 — Bad Faith Penalty. 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. This provision was negotiated as a protection for the minority member against abusive or fraudulent conduct by the Manager; it was not intended to penalize good-faith disagreements over appraisal methodology or valuation conclusions.
OA Section 8.3 — Capital Expenditure Obligations. Section 8.3 provides that the Manager shall maintain the Property in "first-class condition" consistent with the standards applicable to luxury hotel properties of similar quality and character. This provision imposes a duty of ongoing maintenance and capital reinvestment, which PCG has faithfully discharged throughout its tenure as Manager.
OA Section 5.2 — Preferred Return. Section 5.2 provides for a preferred return of 8% per annum on unreturned capital contributions, cumulative and compounding annually. The preferred return accrues in favor of each member on its respective unreturned capital and is payable prior to any profit distributions under the waterfall set forth in OA Section 5.3.
OA Section 5.3 — Distribution Waterfall. Section 5.3 establishes the following distribution waterfall: (i) first, return of capital contributions; (ii) second, payment of the accrued 8% preferred return; (iii) third, profits split 70/30 between PCG and MSH, respectively; and (iv) fourth, above a 15% internal rate of return threshold, the profit split shifts to 75/25 between PCG and MSH, respectively.
E. Exercise of the Call Option
The fifth anniversary of the Operating Agreement's Effective Date occurred on June 15, 2022, after which date PCG's call option under OA Section 12.4 became exercisable. PCG determined to exercise the call option after careful consideration of the Joint Venture's performance, the current state of the Gulf Coast luxury hotel market, and the strategic direction of PCG's broader hospitality portfolio.
On January 9, 2023, PCG delivered written notice to MSH exercising the call option under OA Section 12.4. The notice was delivered to MSH's principal office at 220 Royal Palm Way, Suite 300, Palm Beach, Florida 33480, by overnight courier (Severin Partners LLC tracking number 7749-3821-0056), with a copy delivered simultaneously to MSH's counsel at Hargrove, Dunlap & Castillo LLP. The notice identified the effective date of exercise, referenced the applicable provisions of the Operating Agreement, and informed MSH that PCG had retained an independent MAI-certified appraiser to determine Fair Market Value as required by OA Section 12.4.
In connection with the call-option exercise, PCG retained Whitfield Realty Advisors LLC, an independent MAI-certified appraisal firm located at 500 East Broward Boulevard, Suite 900, Fort Lauderdale, Florida 33394. The engagement was led by Gerald K. Whitfield, MAI, the firm's founder and principal appraiser. Mr. Whitfield holds the MAI designation from the Appraisal Institute and has over thirty years of experience appraising luxury hospitality properties throughout the southeastern United States and the Gulf Coast region. Mr. Whitfield has appraised over 150 hotel and resort properties during his career and is widely recognized as a leading authority in the field.
Whitfield completed its appraisal of 100% of PGV's real property and operating assets on February 10, 2023. The appraisal report, which comprises approximately 180 pages of analysis and supporting documentation, concluded that the Fair Market Value of 100% of PGV's real property and operating assets was $118,000,000 as of the valuation date of December 31, 2022.
Whitfield's valuation conclusion was derived from the application of two recognized approaches to value:
Income Approach. Whitfield applied the income approach using two methods: (i) direct capitalization of the Hotel's stabilized net operating income at a capitalization rate of 9.5%, and (ii) a ten-year discounted cash flow analysis at a discount rate of 10.75%. The direct capitalization method yielded an indicated value of $117.2 million, and the DCF method yielded an indicated value of $119.4 million. Whitfield reconciled these two income-approach indications at $118.5 million.
Sales Comparison Approach. Whitfield identified and analyzed eight comparable luxury hotel transactions on the Florida Gulf Coast and broader southeastern United States market, all of which occurred between January 2020 and December 2022. After appropriate adjustments for differences in location, quality, size, condition, brand affiliation, date of sale, and other relevant factors, the sales comparison approach yielded an indicated value of $117.7 million.
Reconciliation. Whitfield assigned a weight of 40% to the income approach and 60% to the sales comparison approach, resulting in a reconciled Fair Market Value conclusion of $118.0 million. The greater weight assigned to the sales comparison approach reflects the availability of highly comparable transaction data in the relevant market during the period under analysis.
F. Derivation of the $41.3 Million Buyout Price
Based on the Whitfield appraisal, PCG calculated the buyout price for MSH's 35% membership interest in PGV as follows:
The accrued preferred return of $17,010,000 represents the cumulative, compounded 8% annual preferred return on MSH's unreturned capital contributions of $18,505,000 from the dates of contribution through December 31, 2022, calculated in accordance with OA Section 5.2. This calculation was performed by PCG's Chief Financial Officer, Marcus Thiel, and has been independently verified by PCG's outside accountants.
On March 1, 2023, PCG formally tendered the buyout price of $41,300,000 to MSH, accompanied by a written communication specifying the basis for the calculation, a copy of the Whitfield appraisal report, and a proposed closing timeline in accordance with OA Section 12.5. The tender was delivered to MSH's principal office and to MSH's counsel of record.
On March 10, 2023, MSH rejected the tender. In its written rejection, MSH asserted—for the first time—that the Whitfield appraisal materially understated the Fair Market Value of PGV's assets and that PCG had acted in bad faith in connection with the call-option exercise. MSH did not, at the time of its rejection, provide any competing appraisal or other evidence in support of its contentions.
G. MSH's Demand for Arbitration
On March 20, 2023—only ten days after rejecting PCG's tender and before MSH had obtained or commissioned any competing appraisal—MSH filed a Demand for Arbitration with JAMS, initiating this proceeding under JAMS Reference No. 1440032871. The timing of MSH's filing is notable: MSH elected to commence adversarial proceedings before it had any independent basis for its claim that the Whitfield appraisal was flawed, and before it had attempted to invoke the third-appraiser mechanism under OA Section 12.4(c), which was specifically designed to resolve valuation disputes in an orderly and non-adversarial manner.
After filing the Demand for Arbitration, MSH retained Beacon Valuation Group Inc. ("Beacon"), an appraisal and advisory firm located at 2600 South Bayshore Drive, Suite 1050, Miami, Florida 33133. The Beacon appraisal was led by Dr. Priya Ramanathan, CFA, ASA, a principal of the firm. Beacon completed its appraisal on April 14, 2023—more than three weeks after MSH had already filed the Demand for Arbitration—and concluded that the Fair Market Value of 100% of PGV's real property and operating assets was $151,500,000 as of the valuation date of December 31, 2022.
The Beacon appraisal employed a single valuation methodology: the income approach, specifically a discounted cash flow analysis, using a discount rate of 8.5% and a terminal capitalization rate of 7.75%. Notably, the Beacon appraisal did not employ the sales comparison approach at all, despite the availability of highly comparable luxury hotel transaction data in the relevant market. In addition, the Beacon appraisal included an adjustment of $8.2 million for purported "deferred maintenance," based on Beacon's assertion that PCG had failed to maintain the Property in first-class condition and that the Hotel's physical plant required significant capital investment to cure alleged maintenance deficiencies. The Beacon appraisal also included an upward adjustment for the purported "below-market" value of the Aurelian Hotels & Resorts franchise agreement.
Based on the Beacon appraisal, MSH demands a total buyout price of $70,000,000, calculated as follows:
The divergence between the two appraisals is 28.4% (calculated as ($151,500,000 − $118,000,000) ÷ $118,000,000), which exceeds the 10% threshold set forth in OA Section 12.4(c) and would ordinarily trigger the third-appraiser mechanism. However, rather than pursue the orderly contractual process for resolving the valuation dispute, MSH chose to file this arbitration and assert claims of bad faith and breach that are wholly unsupported by the record.
V. RESPONSE TO CLAIMANT'S ALLEGATIONS
A. Responses to Specific Paragraphs of the Demand
PCG responds to the specific allegations set forth in MSH's Demand for Arbitration, paragraph by paragraph, as follows:
1. PCG admits that PGV was formed on June 15, 2017, as a Florida limited liability company, and that the Operating Agreement was executed by PCG and MSH on that date.
2. PCG admits that the ownership of PGV is held as follows: PCG 65%, MSH 35%.
3. PCG admits that PCG serves as the sole Manager of PGV under the Operating Agreement.
4. PCG admits that PGV acquired The Palmetto Grand Resort & Spa on August 1, 2017, for a purchase price of $87.5 million, funded in part by a $61.25 million loan from Gulf Atlantic National Bank.
5. PCG admits that the members made equity contributions at the time of acquisition: PCG contributed $18,562,500 and MSH contributed $10,000,000.
6. PCG admits that PGV invested $24.3 million in renovations to the Hotel between 2017 and 2019, funded by additional equity contributions from the members in proportion to their respective membership interests.
7. PCG admits that the Operating Agreement contains a call option in OA Section 12.4 that became exercisable after the fifth anniversary of the Effective Date.
8. PCG admits that on January 9, 2023, PCG delivered written notice to MSH exercising the call option under OA Section 12.4.
9. PCG admits that it retained Whitfield Realty Advisors LLC as an independent MAI-certified appraiser to determine Fair Market Value in connection with the call-option exercise.
10. PCG admits that the Whitfield appraisal concluded that the Fair Market Value of 100% of PGV's real property and operating assets was $118.0 million as of December 31, 2022.
11. PCG admits that on March 1, 2023, PCG tendered a buyout price of $41,300,000 to MSH.
12. PCG admits that MSH rejected the tender on March 10, 2023.
13. PCG denies MSH's allegation that PCG acted in bad faith or with the intent to materially understate Fair Market Value in connection with the exercise of the call option or the retention of Whitfield Realty Advisors LLC. PCG selected Whitfield through a transparent and commercially reasonable process, and at no time did PCG seek to influence, direct, or constrain Whitfield's independent appraisal conclusions.
14. PCG denies MSH's allegation that the Whitfield appraisal was "flawed," "unreliable," or that the $118.0 million valuation conclusion materially understated the Fair Market Value of PGV's assets. The Whitfield appraisal was prepared by a highly qualified MAI-certified appraiser, employed two recognized valuation approaches, and reached conclusions that are well within the range of reasonable market values for the Property.
15. PCG denies MSH's allegation that PCG breached OA Section 8.3 or any other provision of the Operating Agreement relating to capital expenditure or maintenance obligations. PCG, as sole Manager, invested $24.3 million in comprehensive renovations between 2017 and 2019 and has maintained the Property in first-class condition at all times in accordance with its contractual obligations. The Hotel's consistent performance at premium RevPAR levels and its high guest satisfaction scores are evidence of the Property's excellent physical condition.
16. PCG denies that it is liable for any penalty under OA Section 12.7. The bad-faith provision requires affirmative evidence that the Manager exercised the call option "in bad faith or with the intent to materially understate Fair Market Value." MSH has not alleged, and cannot demonstrate, any fraudulent, deceptive, or dishonest conduct by PCG. The existence of a valuation divergence between two party-retained appraisers is the ordinary and expected result of the appraisal process and does not constitute bad faith.
17. PCG denies that the $8.2 million deferred-maintenance adjustment claimed by MSH and included in the Beacon appraisal is valid or properly included in a Fair Market Value determination. This claim is speculative, was never raised by MSH prior to this dispute, and is based on a selective and misleading characterization of the Property's physical condition.
18. PCG denies that MSH is entitled to a total buyout price of $70,000,000 or any amount in excess of the $41,300,000 properly tendered by PCG on March 1, 2023, and reserves its right to contest any alternative amount determined through the third-appraiser mechanism to the extent it includes any component for a bad-faith penalty.
19. To the extent any allegation in MSH's Demand for Arbitration is not specifically addressed above, PCG denies such allegation and puts MSH to its proof.
B. Response to Bad-Faith Claim (OA Section 12.7)
MSH's claim for a bad-faith penalty under OA Section 12.7 is the centerpiece of its demand, accounting for $16,975,000 of the $70.0 million total it seeks. This claim is entirely without merit and should be rejected in its entirety.
OA Section 12.7 provides, in relevant part:
"If the Manager exercises the Call Option in bad faith or with the intent to materially understate Fair Market Value, the purchase price for the redeemed Interest shall include a penalty in an amount up to twenty-five percent (25%) of the determined Fair Market Value of the redeemed Interest."
The plain language of this provision establishes a high threshold: it requires proof that the Manager exercised the call option "in bad faith" or "with the intent to materially understate Fair Market Value." This is a scienter standard. It requires affirmative evidence of dishonest purpose, fraudulent intent, or a deliberate scheme to deprive the minority member of fair value. A mere disagreement between two appraisals—even a substantial disagreement—does not satisfy this standard.
PCG selected Whitfield Realty Advisors LLC as the independent appraiser for the call-option exercise. Whitfield is a reputable, independent, MAI-certified appraisal firm with extensive experience in the Gulf Coast luxury hotel market. Mr. Whitfield has no financial interest in the outcome of this dispute, no prior relationship with PCG beyond arm's-length professional engagements, and no incentive to produce anything other than a fair and accurate appraisal. PCG did not seek to influence, direct, or constrain Whitfield's appraisal in any way. The engagement was conducted in strict compliance with OA Section 12.4, which expressly grants PCG the right to select the initial appraiser.
The Whitfield appraisal employed two recognized valuation approaches—the income approach and the sales comparison approach—weighted 40% and 60%, respectively. This dual-methodology approach is broadly accepted as best practice in the hotel appraisal industry and is more comprehensive than the Beacon appraisal, which relied on a single approach. The capitalization rates and discount rates employed by Whitfield (9.5% cap rate; 10.75% discount rate) are well within the range of market-supported rates for luxury Gulf Coast hotel properties as of the December 31, 2022 valuation date, as evidenced by published industry surveys and comparable transaction data.
A good-faith disagreement over valuation methodology does not constitute bad faith within the meaning of OA Section 12.7. The parties negotiated and agreed to the third-appraiser mechanism in OA Section 12.4(c) precisely because they anticipated that reasonable appraisers could reach different conclusions as to value. The existence of the third-appraiser mechanism confirms that the Operating Agreement contemplates valuation disagreements as a normal occurrence, not as evidence of bad faith.
Moreover, MSH's claimed bad-faith penalty of $16,975,000 is improperly calculated. Even assuming arguendo that bad faith were established—which it cannot be—OA Section 12.7 provides for a penalty of "up to twenty-five percent (25%) of the determined Fair Market Value of the redeemed Interest." MSH's $16,975,000 penalty figure represents approximately 32% of MSH's claimed equity share plus preferred return under the Beacon appraisal ($36,015,000 + $17,010,000 = $53,025,000; $16,975,000 ÷ $53,025,000 = 32.0%), which exceeds the 25% cap on its face. In any event, the 25% penalty cap should be applied to the "determined" Fair Market Value—that is, the Fair Market Value ultimately determined through the appraisal and arbitration process, not the inflated value asserted by MSH's retained appraiser.
For all of these reasons, MSH's bad-faith claim under OA Section 12.7 fails as a matter of law and fact, and the Arbitrator should deny it in its entirety.
C. Response to Deferred-Maintenance Claim (OA Section 8.3)
MSH's claim that PCG breached OA Section 8.3 by failing to maintain the Property in first-class condition is equally without merit and appears to have been manufactured for the purpose of inflating the Beacon appraisal.
PCG, as the sole Manager of PGV, has at all times fulfilled its obligations under OA Section 8.3 to maintain the Property in first-class condition consistent with the standards applicable to luxury hotel properties of similar quality and character. The record in this regard is unambiguous:
First, PGV invested $24.3 million in comprehensive renovations between 2017 and 2019, transforming the Hotel into a premier luxury beachfront destination. This investment represents approximately 28% of the original acquisition price—a level of capital expenditure that is extraordinary by industry standards and that resulted in a substantially improved physical plant.
Second, following the completion of the major renovation program, PCG has maintained reasonable and appropriate annual maintenance and capital expenditure budgets consistent with industry standards for a 312-room luxury resort. PGV's annual capital expenditure budgets have been presented to MSH in the ordinary course as part of the annual budgeting process, and at no time prior to this dispute did MSH object to, challenge, or raise concerns about the level of maintenance spending.
Third, the Hotel's consistent performance at premium RevPAR levels ($289 in 2022), its high guest satisfaction scores on major review platforms, and its strong competitive positioning within the Clearwater Beach luxury hotel market are powerful evidence that the Property has been maintained in excellent physical condition. A hotel suffering from $8.2 million in deferred maintenance would not be achieving these results.
Fourth, MSH's $8.2 million deferred-maintenance claim is speculative and was not raised until this dispute arose. MSH is a passive member of PGV; however, the Operating Agreement provides MSH with specific consent rights on capital calls exceeding $2 million (OA Section 4.3). At no time did MSH invoke these consent rights to compel additional maintenance spending, request a capital call for deferred maintenance, or otherwise indicate to PCG that it believed the Property was not being properly maintained. MSH's silence and inaction over the entire duration of the Joint Venture undermine its belated claim that PCG has failed in its maintenance obligations.
Fifth, the Beacon appraisal's inclusion of an $8.2 million upward adjustment for alleged deferred maintenance is methodologically inappropriate and results in an improper inflation of the Fair Market Value conclusion. The deferred-maintenance adjustment in the Beacon appraisal is based on a selective and incomplete assessment of the Property's physical condition and does not reflect the actual condition of the Hotel as it exists on the ground. A Fair Market Value appraisal should reflect the property's value as of the valuation date in its current condition, not as hypothetically improved by a speculative future capital expenditure that the appraiser believes should have been made. The $8.2 million adjustment is, in substance, a litigation device designed to increase the spread between the two appraisals and support MSH's bad-faith narrative.
For all of these reasons, MSH's claim of breach of OA Section 8.3 should be rejected, and the $8.2 million deferred-maintenance adjustment should be excluded from any determination of Fair Market Value.
VI. AFFIRMATIVE DEFENSES
PCG asserts the following affirmative defenses to MSH's claims, without thereby assuming the burden of proof on any issue for which MSH bears the burden:
First Affirmative Defense: Compliance with Contractual Procedure
PCG exercised the call option in strict compliance with every procedural and substantive requirement of OA Section 12.4. PCG delivered timely written notice of its exercise of the call option on January 9, 2023, which was after the fifth anniversary of the Effective Date of the Operating Agreement (June 15, 2022). PCG retained an independent MAI-certified appraiser, Whitfield Realty Advisors LLC, as expressly required by OA Section 12.4. Whitfield completed its appraisal in accordance with the Uniform Standards of Professional Appraisal Practice ("USPAP") and concluded that the Fair Market Value of 100% of PGV's real property and operating assets was $118.0 million as of December 31, 2022. PCG thereafter calculated the buyout price in accordance with the Operating Agreement's formula, including the deduction of outstanding debt and the addition of MSH's accrued preferred return, and tendered the resulting $41,300,000 buyout price to MSH on March 1, 2023, within the time permitted under the Operating Agreement. PCG's compliance with the contractual procedure is complete and bars MSH's claims that the call-option exercise was improper.
Second Affirmative Defense: Good Faith
PCG acted in good faith in all respects in connection with the exercise of the call option, the selection of Whitfield Realty Advisors LLC as the independent appraiser, the review of the Whitfield appraisal, and the calculation and tender of the $41,300,000 buyout price. PCG harbored no intent to understate Fair Market Value, did not seek to influence or direct Whitfield's appraisal conclusions, and tendered a buyout price that it believed in good faith to be fair, reasonable, and consistent with the requirements of the Operating Agreement. Good faith is a complete defense to MSH's claims under OA Section 12.7.
Third Affirmative Defense: Absence of Bad Faith Under OA Section 12.7
The bad-faith penalty under OA Section 12.7 requires proof that PCG exercised the call option "in bad faith or with the intent to materially understate Fair Market Value." No such proof exists. The mere existence of a valuation divergence between two party-retained appraisers—a divergence of the type expressly anticipated by OA Section 12.4(c)'s third-appraiser mechanism—does not establish bad faith or intent to understate value. MSH has not alleged, and cannot demonstrate, any specific act of fraud, dishonesty, deception, or self-dealing by PCG in connection with the call-option exercise. Absent such proof, the bad-faith penalty is inapplicable as a matter of law and contract.
Fourth Affirmative Defense: Failure to Mitigate / Waiver
MSH failed to exercise its contractual remedies under the Operating Agreement in a timely and good-faith manner. Specifically, MSH failed to invoke the third-appraiser mechanism under OA Section 12.4(c) before initiating this arbitration. The third-appraiser mechanism was specifically designed to resolve valuation disputes in an orderly and efficient manner, and MSH's decision to bypass that mechanism and proceed directly to adversarial proceedings—before MSH had even obtained its own appraisal—suggests that MSH's motivation in filing the Demand for Arbitration was tactical rather than substantive. MSH's delay in commissioning the Beacon appraisal, which was not completed until April 14, 2023—more than three weeks after MSH filed the Demand for Arbitration on March 20, 2023—further supports this inference. To the extent MSH's failure to invoke the contractual dispute-resolution mechanism has resulted in increased costs, delay, or other prejudice, MSH should bear the consequences of its own choices.
Fifth Affirmative Defense: MSH's Own Appraiser's Methodology Is Unreliable
The Beacon appraisal is unreliable as a measure of Fair Market Value and should be accorded little or no weight by the Arbitrator. The Beacon appraisal suffers from multiple material deficiencies, including: (i) its reliance on a single valuation methodology (the income approach, using a discounted cash flow analysis), to the exclusion of the sales comparison approach, despite the availability of highly comparable transaction data; (ii) its use of an unusually low 8.5% discount rate, which is below the range of market-supported discount rates for luxury Gulf Coast hotel properties as of the valuation date; (iii) its use of a 7.75% terminal capitalization rate, which implies a level of long-term income growth and value stability that is not supported by market data; and (iv) its inclusion of an unsupported $8.2 million adjustment for alleged deferred maintenance, which has no basis in the Property's actual condition and was not raised by MSH at any time prior to this dispute. These deficiencies, individually and collectively, render the Beacon appraisal an unreliable basis for determining Fair Market Value.
Sixth Affirmative Defense: The Penalty Calculation Is Improper
MSH's claimed bad-faith penalty of $16,975,000 is improperly calculated and exceeds the maximum penalty permitted under OA Section 12.7. Even if bad faith were established—which it cannot be—OA Section 12.7 limits the penalty to "up to twenty-five percent (25%) of the determined Fair Market Value of the redeemed Interest." MSH's claimed penalty of $16,975,000 represents approximately 32% of the sum of MSH's claimed equity share and preferred return, which exceeds the 25% cap. Moreover, the penalty should be calculated on the basis of the "determined" Fair Market Value—i.e., the value ultimately determined through the appraisal and arbitration process—not the inflated value asserted by MSH's retained appraiser. MSH's penalty calculation is based on an inflated equity value derived from the unreliable Beacon appraisal and is not contemplated by the plain language of the Operating Agreement.
Seventh Affirmative Defense: Reservation of Additional Defenses
PCG reserves the right to assert additional affirmative defenses as discovery and the arbitration process proceed and additional facts become known. This reservation is made without prejudice to any defense or argument available to PCG under the Operating Agreement, applicable law, or the JAMS Comprehensive Arbitration Rules and Procedures.
VII. COUNTERCLAIM FOR DECLARATORY RELIEF
PCG, as Counterclaim-Claimant, hereby asserts the following Counterclaim for Declaratory Relief against MSH, as Counterclaim-Respondent.
A. Parties to the Counterclaim
The Counterclaim-Claimant is Pellegrino Capital Group LLC, a Florida limited liability company, the 65% majority member and sole Manager of Palmetto Grand Ventures LLC.
The Counterclaim-Respondent is Meridian Shores Hospitality LLC, a Delaware limited liability company, the 35% minority member of Palmetto Grand Ventures LLC.
B. Jurisdiction. The Arbitrator has jurisdiction over this Counterclaim pursuant to OA Section 15.2, which provides for binding arbitration of "any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination, or validity thereof." This Counterclaim arises directly from the same provisions of the Operating Agreement and the same underlying facts and circumstances as MSH's Demand for Arbitration, and is therefore squarely within the scope of the arbitration clause. Jurisdiction is also proper under the JAMS Comprehensive Arbitration Rules and Procedures, which permit the assertion of counterclaims in the same proceeding.
C. Factual Allegations in Support of the Counterclaim
PCG incorporates by reference the factual allegations set forth in Sections I through V of this Response as though fully set forth herein.
In addition, PCG alleges the following facts in support of its Counterclaim:
1. On January 9, 2023, PCG delivered written notice to MSH exercising its call option under OA Section 12.4 to purchase MSH's 35% membership interest in PGV at Fair Market Value.
2. In connection with the call-option exercise, PCG retained Whitfield Realty Advisors LLC, an independent MAI-certified appraiser led by Gerald K. Whitfield, MAI, as required by OA Section 12.4.
3. Whitfield completed its appraisal on February 10, 2023, and concluded that the Fair Market Value of 100% of PGV's real property and operating assets was $118,000,000 as of December 31, 2022. Whitfield employed market-standard income and sales comparison approaches, weighted 40% and 60% respectively, and reached its conclusion in accordance with the Uniform Standards of Professional Appraisal Practice.
4. PCG properly calculated MSH's buyout price as follows: Joint Venture Net Equity of $69,400,000 ($118,000,000 gross asset value less $48,600,000 outstanding debt) multiplied by MSH's 35% membership interest, yielding $24,290,000, plus MSH's accrued preferred return of $17,010,000, for a total buyout price of $41,300,000.
5. On March 1, 2023, PCG tendered the buyout price of $41,300,000 to MSH, accompanied by the Whitfield appraisal report and a proposed closing timeline, in accordance with OA Section 12.5.
6. On March 10, 2023, MSH rejected the tender without proper basis, alleging bad faith and material undervaluation without having obtained any competing appraisal or other evidence in support of its contentions.
7. On March 20, 2023, MSH filed its Demand for Arbitration with JAMS, again without having obtained a competing appraisal.
8. MSH subsequently retained Beacon Valuation Group Inc., which completed its appraisal on April 14, 2023—after the filing of the Demand for Arbitration—and concluded that FMV was $151,500,000, based on an income-only approach using aggressive assumptions and an unsupported deferred-maintenance adjustment.
9. The 28.4% divergence between the two appraisals exceeds the 10% threshold under OA Section 12.4(c), which would ordinarily trigger the third-appraiser mechanism.
10. PCG acted in good faith in all respects in connection with the call-option exercise and at no time harbored any intent to understate Fair Market Value.
D. Count I: Declaratory Relief — Fair Market Value
11. PCG reasserts and incorporates by reference paragraphs 1 through 10 above.
12. An actual, justiciable controversy exists between PCG and MSH as to the proper Fair Market Value of MSH's 35% membership interest in PGV under OA Section 12.4 and, consequently, the proper buyout price payable to MSH.
13. PCG seeks a declaration from the Arbitrator that the $41,300,000 tendered by PCG on March 1, 2023 constitutes the proper buyout price for MSH's 35% membership interest in PGV under OA Section 12.4, calculated in accordance with the Whitfield appraisal and the formula set forth in the Operating Agreement.
14. In the alternative, PCG seeks a declaration that the proper Fair Market Value of PGV's assets shall be determined through the third-appraiser mechanism set forth in OA Section 12.4(c), and that the buyout price shall be calculated accordingly on the basis of the Fair Market Value so determined, without any bad-faith penalty under OA Section 12.7 or any deferred-maintenance adjustment.
15. PCG is entitled to such declaratory relief in order to establish its rights and obligations under the Operating Agreement and to resolve the parties' dispute with finality.
E. Count II: Declaratory Relief — No Bad Faith
16. PCG reasserts and incorporates by reference paragraphs 1 through 15 above.
17. An actual, justiciable controversy exists between PCG and MSH as to whether PCG exercised the call option in bad faith or with the intent to materially understate Fair Market Value within the meaning of OA Section 12.7.
18. PCG did not exercise the call option in bad faith. PCG retained a reputable, independent, MAI-certified appraiser; received a professionally prepared and methodologically sound appraisal; and tendered a buyout price calculated in strict accordance with the appraisal's conclusions and the Operating Agreement's formula. At no time did PCG seek to influence, manipulate, or constrain the appraiser's conclusions.
19. PCG did not harbor any intent to materially understate Fair Market Value. The Whitfield appraisal's conclusion of $118,000,000 is well within the range of reasonable market values for the Property and was derived through the application of recognized valuation methodologies using market-supported inputs.
20. A good-faith disagreement over valuation methodology and conclusions between two party-retained appraisers does not constitute bad faith within the meaning of OA Section 12.7. The Operating Agreement's third-appraiser mechanism in OA Section 12.4(c) was specifically negotiated to address such disagreements.
21. PCG seeks a declaration from the Arbitrator that PCG did not exercise the call option in bad faith or with the intent to materially understate Fair Market Value, and that MSH is not entitled to any penalty under OA Section 12.7.
F. Count III: Declaratory Relief — No Breach of OA Section 8.3
22. PCG reasserts and incorporates by reference paragraphs 1 through 21 above.
23. An actual, justiciable controversy exists between PCG and MSH as to whether PCG has breached its obligations under OA Section 8.3 to maintain the Property in first-class condition, and whether the $8.2 million deferred-maintenance adjustment claimed by MSH is valid and may properly be included in the Fair Market Value determination.
24. PCG has not breached OA Section 8.3. PCG invested $24.3 million in comprehensive renovations between 2017 and 2019, and has maintained reasonable and appropriate annual maintenance and capital expenditure budgets at all times since. The Hotel's strong operating performance, premium market positioning, and high guest satisfaction ratings confirm that the Property has been maintained in first-class condition.
25. The $8.2 million deferred-maintenance claim asserted by MSH is speculative, was never raised prior to this dispute, and is based on a selective and misleading characterization of the Property's physical condition. MSH, as a passive member with consent rights on capital calls exceeding $2 million, never invoked those consent rights to compel additional maintenance spending—an omission that is inconsistent with its current claim that the Property has suffered from material deferred maintenance.
26. The Beacon appraisal's inclusion of the $8.2 million deferred-maintenance adjustment is methodologically improper and serves only to inflate the Fair Market Value conclusion beyond any reasonable measure of market value.
27. PCG seeks a declaration from the Arbitrator that PCG has not breached OA Section 8.3, that the $8.2 million deferred-maintenance claim is without merit, and that no deferred-maintenance adjustment may be included in the Fair Market Value determination.
VIII. PRAYER FOR RELIEF
WHEREFORE, Respondent and Counterclaim-Claimant Pellegrino Capital Group LLC respectfully requests that the Arbitrator enter an award as follows:
1. Deny and dismiss all of Claimant Meridian Shores Hospitality LLC's claims asserted in the Demand for Arbitration in their entirety, with prejudice;
2. Enter a declaratory award that the buyout price of $41,300,000 tendered by PCG on March 1, 2023 is the proper Fair Market Value purchase price for MSH's 35% membership interest in Palmetto Grand Ventures LLC under OA Section 12.4, or, in the alternative, that the Fair Market Value of PGV's assets shall be determined through the third-appraiser mechanism set forth in OA Section 12.4(c), and that the buyout price shall be calculated accordingly on the basis of the Fair Market Value so determined, without any bad-faith penalty;
3. Enter a declaratory award that PCG did not exercise the call option in bad faith or with the intent to materially understate Fair Market Value within the meaning of OA Section 12.7, and that no penalty is owed to MSH under that provision;
4. Enter a declaratory award that PCG has not breached its obligations under OA Section 8.3 to maintain the Property in first-class condition, that the $8.2 million deferred-maintenance claim asserted by MSH is without merit, and that no deferred-maintenance adjustment may be included in the Fair Market Value determination;
5. Award PCG its costs of arbitration, including all JAMS filing fees, arbitrator fees and expenses, and other costs incurred in connection with this proceeding;
6. Award such other and further relief as the Arbitrator deems just and proper under the circumstances.
IX. SIGNATURE BLOCK AND VERIFICATION
Dated: April 5, 2023
Respectfully submitted,