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JOHN R. BAILEY
Nevada

BarNo. 0137

BAILEY.:. KENNEDY
8984 Spanish Ridge Avenue

Las Vegas, Nevada 89148

Telephone: (702) 562-8820

Facsimile: (702) 562-8821
jbailey@baileykennedy.com

Arbitrator
DISTRICT COURT

CLARK COUNTY, NEVADA

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MILTON J. WOODS and CIRRUS )

corporation, )

AVIATION SERVICES, INC., a Washington ) Case No. A546250

)
Plaintiffs,
)
)
vs.
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EAGLE JET AVIATION, INC., a Nevada
)
corporation; ALEX PENL Y; STUART M.
)
WARRN; PRIVATE JET SERVICES, INC., )
a Nevada corporation; MILT'S EAGLE, LLC, )
Nevada limited liabilty company; and
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DOES I-X, inclusive,
)
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Defendants.
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)
)
)

Dept. No. XI

DECISION ON DEFENDANTS' AND

COUNTERCLAIMANTS' MOTION TO
MODIFY OR CORRCT

ARITRATION AWARD

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

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

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

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areas:

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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 false
representations. I leave it to the Court to address those concerns.

BAILEY.:.KENNEDY

562-8821 Page 1 of 6

8984 SPANISH RIDGE AVE

LAS VEGAS, NEVADA 89148

PHONE (702) 562-8820

FAX (102)

1.

Milton Woods

Clarify what, if any, sanction should be imposed on plaintiff

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

2. Revoke the bonus awarded to MWoods; and

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3.

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

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Penly's ("Penly") breaches of

fiduciary duties.

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

filed the Motion, it is clear from

an arbitration award (i.e., NRS 38.237) and have timely

reviewing the substance of their Motion that much of the relief requested is not based on a need
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to modify and/or correct an evident mathematical miscalculation or mistake. Indeed, Defendants

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

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Nonetheless, each area of concern wil be addressed.

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ANALYSIS

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A. Spoliation of Evidence.

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Defendants lodge various concerns that MWoods was never sanctioned for alleged

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

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

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the missing business and financial records of

Defendant Eagle Jet Aviation Inc. ("EJA"), whose

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

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the Arbitration

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

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

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

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

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

BAILEY.:.KENNEDY
8984 SPANISH RIDGE AVE
LAS VEGAS, NEVADA 89148

PHONE (702) 562-8820

FAX (102) 562-8821

Page 2 of6

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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.
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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

Nevada received $1,500.00 as attorneys' fees from the balance

interpled funds, and that Ban of

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of

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

the Arbitration Award.) There are no

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EJA owed him $111,750. (See, Section I(D) of

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

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

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While perhaps disingenuous, the fact that MW oods argued that he should be awarded
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knowing that he had already received $86,750.00 from the interpled

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$200,000.00 in the face of

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

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

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received from the interpled funds.

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C. Penly's Breaches of

Fiduciary Duty.

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

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the damage award for the breaches of

fiduciary duties;" (ii) the "Arbitration Award contains a

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26 2 Defendants assert that there were insuffcient funds in EJA accounts to pay the bonuses at the time they

were 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) contradict
that assertion.

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See, Footnote 7 of

the Arbitration Award.

BAILEY.:.KENNEDY
8984 SPANISH RIDGE AVE
LAS VEGAS, NEVADA 89148

PHONE (702) 562.8820

FAX (102) 562.8821

Page 3 of6

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

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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
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Waren was the "staring point" of

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this Arbitrator's analysis. Not true. The damage award was

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

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and all of

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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,

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as set forth in the Arbitration Award, recognized the deficiencies in the substance of Stuart
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Warren's e-mail.5

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Further, the fact that the value ofEJA (and therefore the value of

time was clearly an issue that the undersigned considered in arriving at

varied over a period of

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the damage award.

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II II

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II II

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II II

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

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See, Footnote 10 of

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the Arbitration Award.

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

BAILEY.:.KENNEDY
8984 SPANISH RIE A VENU
LAS VEGAS, NEVADA 89148

PHONE (702) 562.8820

FAX (102) 562.8821

Cirrs' shares in EJA)

Page 4 of6

DECISION

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sought therein) shall be, and hereby is,

Based on the foregoing, the Motion (and the relief

denied.

DATED this 2nd day of April, 2015.

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BAILEY.:. KENNEDY

By:
~~
~~:BLE~
Bar
No. 0137
evada
8984 Spanish Ridge Avenue

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Las Vegas, Nevada 89148

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Arbitrator

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BAILEY.:.KENNEDY
8984 SPANISH RIE AVE
LAS VEGAS, NEVADA 8914&

PHONE (702) 562-8820

FAX (102) 562-8821

Page 5 of6

CERTIFICATE OF SERVICE
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I hereby certify that on the /p'lday of April, 2015, a copy ofthe foregoing DECISION
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ON DEFENDANTS' AND COUNTERCLAIMANTS' MOTION TO MODIFY OR CORRCT

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ARBITRATION A WARD was served by sending a copy via electronic mail and by depositing a
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true and correct copy in the U.S. Mail, first class postage prepaid, and addressed to the following
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at their last known addresses:

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Gus W. Flangas, Esq.

(E-mail: GWF~fdlawlv.com)
Michelle Di Sestro Alanis, Esq.
(E-mail: mda~fdlawlv.com)

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FLANGAS DA ACAS LAW GROUP

3275 South Jones Blvd., Suite 105

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Las Vegas, Nevada 89146

Phone: (702) 307-9500

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Fax: (702) 382-9452

Attorneys for Plaintiffs

Mark C. Fields
(E-mail: fields~arkfieldslaw.com)

Law Offces of ark C. Fields, APC

333 South Hope Street
Thirty-Fifth Floor
Los Angeles, CA 90071
and

Jay A. Shafer, Esq.

(E-mail: JShafer@premierlegalgroup.com)
Premier Legal Group

1333 N. Buffalo Drive, #210

Las Vegas, Nevada 89128

Attorneys for Defendants/Counterclaimants

Eagle Jet Aviation Inc. and Alex Penly

~6.kt

fouise B. Hil, an Employee of

BAILEY.:. KENNEDY

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BAILEY.:.KENNEDY
8984 SPANISH RIE AVE
LAS VEGAS, NEVADA 89148

PHONE (702) 562-8820

FAX (102) 562-8821

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