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JOHN R. BAILEYNevada BarNo. 0137BAILEY.:. KENNEDY8984 Spanish Ridge AvenueLas Vegas, Nevada 89148Telephone: (702) 562-8820Facsimile: (702) 562-8821jbailey@baileykennedy.com

Arbitrator

DISTRICT COURT

CLARK COUNTY, NEVADA

MILTON J. WOODS and CIRRUS )AVIATION SERVICES, INC., a Washington )corporation, )

))))))))))))))))

Case No. A546250Dept. No. XI

Plaintiffs,

vs.

EAGLE JET AVIATION, INC., a Nevadacorporation; ALEX PENL Y; STUART M.WARRN; PRIVATE JET SERVICES, INC.,a Nevada corporation; MILT'S EAGLE, LLC,Nevada limited liabilty company; andDOES I-X, inclusive,

DECISION ON DEFENDANTS' ANDCOUNTERCLAIMANTS' MOTION TO

MODIFY OR CORRCTARITRATION AWARD

Defendants.

Before this Arbitrator is Defendants' And Counterclaimants' Motion To Modify Or

Correct Arbitration Award (the "Motion"). i In the Motion, Defendants/Counterclaimants (for

ease of reference, "Defendants") seek to modify/correct the Arbitration Award in the following

areas:

27 Plaintiffs/Counterdefendants timely fied an opposition to the Motion, and Defendants timely fied a Reply.In Defendants' Reply, they ask this Arbitrator to take judicial notice of Plaintiffs/Couterdefendants' Motion to

28 Confirm Award fied with the Court on February 23, 2015, and their assertion that such motion contained falserepresentations. I leave it to the Court to address those concerns.

BAILEY.:.KENNEDY8984 SPANISH RIDGE AVE

LAS VEGAS, NEVADA 89148PHONE (702) 562-8820

FAX (102) 562-8821 Page 1 of 6

BAILEY.:.KENNEDY8984 SPANISH RIDGE AVE

LAS VEGAS, NEVADA 89148PHONE (702) 562-8820

FAX (102) 562-8821

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1. Clarify what, if any, sanction should be imposed on plaintiff Milton Woods

("MW oods") due to his alleged spoliation of evidence;

2. Revoke the bonus awarded to MWoods; and

3. Recalculate or eliminate the arbitration award that is based on defendant Alex

Penly's ("Penly") breaches of fiduciary duties.

While Defendants use the correct statutory citation for seeking relief to modify or correct

an arbitration award (i.e., NRS 38.237) and have timely filed the Motion, it is clear from

reviewing the substance of their Motion that much of the relief requested is not based on a need

to modify and/or correct an evident mathematical miscalculation or mistake. Indeed, Defendants

spend much of their Motion arguing for a completely different outcome - one that favors them.

Nonetheless, each area of concern wil be addressed.

ANALYSIS

A. Spoliation of Evidence.

Defendants lodge various concerns that MWoods was never sanctioned for alleged

discovery abuses, unlike the sanctions imposed on Defendants (i.e., $80,000.00). Defendants

are correct. The reason is threefold; namely: (i) the vast majority of discovery issues involved

the missing business and financial records of Defendant Eagle Jet Aviation Inc. ("EJA"), whose

responsibilty for their custody was ultimately that ofPenly (see, Section I(B) of the Arbitration

Award); (ii) there was no credible or admissible evidence that MWoods either destroyed or

intentionally withheld any requested documents (unlike the multiple boxes of documents that

Penly failed to disclose); and (ii) any pary was able to have subpoena duces tecums issued to

third-party financial institutions to obtain copies of needed business or financial records - for

example, Penly was not prohibited from seeking copies (via a subpoena duces tecum) of

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BAILEY.:.KENNEDY8984 SPANISH RIDGE AVE

LAS VEGAS, NEVADA 89148PHONE (702) 562.8820

FAX (102) 562.8821

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MWood's credit card statements directly from the credit card company. Consequently, while all

paries and their respective counsel were at times less than cooperative during the discovery

process and continuously accused each other of discovery abuses, there was no credible

evidence that MW oods engaged in spoliation; hence, no sanctions were imposed against him.

B. MWoods' Bonus.

After reviewing the Motion, the Opposition, and the Reply, no party disputes that

MWoods received $86,750.00 from the interpled funds, that EJA received $111,750.00 from the

interpled funds, and that Ban of Nevada received $1,500.00 as attorneys' fees from the balance

of the interpled funds. Since MWoods was, at the time he took his bonus, entitled to his bonus,

EJA owed him $111,750. (See, Section I(D) of the Arbitration Award.) There are no

mathematical miscalculations or evident mistakes. Indeed, Defendants simply want to reargue

whether MWoods was entitled to the bonus, an issue which has already been ruled upon. Id.2

While perhaps disingenuous, the fact that MW oods argued that he should be awarded

$200,000.00 in the face of knowing that he had already received $86,750.00 from the interpled

funds does not somehow negate the fact that all he was entitled to through this arbitration is

$111,750.00 - the difference between the amount of his bonus award and the amount he

received from the interpled funds.

3

C. Penly's Breaches of Fiduciary Duty.

Defendants assert that: (i) they are focused on "purely mathematical errors pertaining to

the damage award for the breaches of fiduciary duties;" (ii) the "Arbitration Award contains a

26 2 Defendants assert that there were insuffcient funds in EJA accounts to pay the bonuses at the time theywere awarded (i.e., December 29, 2006); however, admitted Plaintiffs' Exhibits 124 (Bates #MW0335 - showing a

27 balance of $683,294.73) and 126 (Bates #MW000789 - showing a beginning balance of $309,375.69) contradictthat assertion.

283

See, Footnote 7 of the Arbitration Award.

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BAILEY.:.KENNEDY8984 SPANISH RIE A VENU

LAS VEGAS, NEVADA 89148PHONE (702) 562.8820

FAX (102) 562.8821

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evident mathematical miscalculation when it takes as a starting point a $2 milion valuation for

Woods' shares based off of a reference in Warren's email to a potential forthcoming offer

(which was never made) based on circumstances (Woods agreeing not to compete and to be

supportive) which were the primary staring points and which never were put into place;" and

(ii) the "evident mathematical miscalculation in the Arbitration A ward regarding the starting

point of the valuation of Cirrs' shares was further compounded by the evident mathematical

miscalculation pertaining to the diminishment of value of Cirrs' shares." 4 .The fudamental

misconception that belies Defendants' assertions is that the valuation in the e-mail from Stuart

Waren was the "staring point" of this Arbitrator's analysis. Not true. The damage award was

arived at by considering factors, including all of the testimony elicited at the arbitration hearing

and all of the documents admitted into evidence; the undersigned's knowledge, training and

experience; and the information contained in the Stuart Warren e-maiL. Indeed, the undersigned,

as set forth in the Arbitration Award, recognized the deficiencies in the substance of Stuart

Warren's e-mail.5

Further, the fact that the value ofEJA (and therefore the value of Cirrs' shares in EJA)

varied over a period of time was clearly an issue that the undersigned considered in arriving at

the damage award. 6

II II

II II

II II

4 See, Reply pg. 5 at n. 17-19; and Motion pg. 6 at n. 18-25, respectively.

5See, Footnote 10 of the Arbitration Award.

6 See, Arbitration Award, pg. 6, n. 15-20.

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BAILEY.:.KENNEDY8984 SPANISH RIE AVE

LAS VEGAS, NEVADA 8914&PHONE (702) 562-8820

FAX (102) 562-8821

DECISION

Based on the foregoing, the Motion (and the relief sought therein) shall be, and hereby is,

DATED this 2nd day of April, 2015.

BAILEY.:. KENNEDY

By: ~~~~:BLE~evada Bar No. 0137

8984 Spanish Ridge AvenueLas Vegas, Nevada 89148

Arbitrator

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BAILEY.:.KENNEDY8984 SPANISH RIE AVE

LAS VEGAS, NEVADA 89148PHONE (702) 562-8820

FAX (102) 562-8821

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CERTIFICATE OF SERVICE

I hereby certify that on the /p'lday of April, 2015, a copy ofthe foregoing DECISION

ON DEFENDANTS' AND COUNTERCLAIMANTS' MOTION TO MODIFY OR CORRCT

ARBITRATION A WARD was served by sending a copy via electronic mail and by depositing a

true and correct copy in the U.S. Mail, first class postage prepaid, and addressed to the following

at their last known addresses:

Gus W. Flangas, Esq.(E-mail: GWF~fdlawlv.com)Michelle Di SÌÝestro Alanis, Esq.(E-mail: mda~fdlawlv.com)FLANGAS DA ACAS LAW GROUP3275 South Jones Blvd., Suite 105Las Vegas, Nevada 89146Phone: (702) 307-9500Fax: (702) 382-9452

Attorneys for Plaintiffs

Mark C. Fields(E-mail: fields~arkfieldslaw.com)Law Offces of ark C. Fields, APC333 South Hope StreetThirty-Fifth FloorLos Angeles, CA 90071

and

Jay A. Shafer, Esq.(E-mail: JShafer@premierlegalgroup.com)Premier Legal Group1333 N. Buffalo Drive, #210Las Vegas, Nevada 89128

Attorneys for Defendants/CounterclaimantsEagle Jet Aviation Inc. and Alex Penly

~6.ktfouise B. Hil, an Employee ofBAILEY.:. KENNEDY

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