An Omaha judge has ordered a nearly $2.5 million judgment against Steven Sherwood of Lincoln, Sandhills Aviation and Sierra Bravo Aviation over Sherwood's purchase of 50% ownership interest in the companies in 2019 from his former business partner of four years.
Dave Bentley, Nathan and Kelli Bentley, Bentley Aviation Services and Meadowlark Aviation LLC sold their interest in Sandhills, which was based out of the Wahoo Airport, for $3.5 million in March 2019.
By September 2019, they had sued Sherwood, alleging he had breached their contract, which required Sherwood to give Bentley Aviation the first opportunity to perform all maintenance and repair services on the aircraft owned by his companies.
Their attorney, Scott Jochim, alleged Sherwood hadn't honored the agreement and, up until the filing of the lawsuit, "merely offered plaintiffs repair and maintenance work on some of the planes, but not all of them, as required."
Jochim later amended the complaint to allege that Sherwood had no intention of complying with the right-of-first-refusal when he signed the agreement, which Sherwood denied.
He alleged they had $3.6 million in damages because of it.
In his order June 14, Douglas County District Judge Horacio Wheelock said that amount would be punitive based on the evidence in the record and instead awarded $2,462,882.
The decision followed a bench trial in Omaha this spring that was initially expected to take four days but evolved into 11 days.
"Over the course of trial, the court heard extensive testimony and received numerous exhibits regarding the events leading up to the buyout of Sandhills and Sierra Bravo, the expectations of the parties’ concerning the buyout, and the aftermath of the buyout," Wheelock wrote in his 62-page order.
The business relationship between Sherwood and Dave Bentley started in May 2015, when they formed and became 50-50 owners and members of Sandhills, a company that provided aerial surveillance services.
Sherwood had a background in geography and remote sensing, and Dave Bentley was a pilot.
In August 2017, the two formed Sierra Bravo Aviation to perform aircraft maintenance services.
The Bentleys formed Meadowlark Aviation three months later.
By fall 2018, Sherwood and the Bentleys decided it was time to part ways and started talking about Sherwood buying out their interests in Sandhills Aviation and Sierra Bravo, which was finalized the following March.
Less than a year later, the Bentleys filed the lawsuit.
Wheelock said he found their testimony more credible than Sherwood's.
"Despite his testimony at trial that he sincerely wanted the Bentleys to succeed in their efforts regarding the right-of-first-refusal at issue, many of his own communications that preceded the parties’ execution of the agreement directly contradicted his trial testimony and clearly demonstrate that Sherwood actually intended the contrary — that is, to phase the Bentleys out of the very contractual right Sherwood was claiming he wanted to protect," he wrote.
Wheelock said Sherwood admitted he didn't tell anyone, including his business partners or employees, about the right-of-first-refusal and tried to defend not sending planes to the Bentley shops by saying that his only client, EagleView, forbade it.
Sherwood alleged there were problems with the Bentleys' maintenance.
In a written closing argument, Sandhills' attorney, Robert Sherrets, said it was Sandhills that was damaged by the Bentleys' interference with its relationship with EagleView by seizing leased aircraft, including EagleView's multi-million-dollar camera systems, a move they knew would cause Sandhills to lose its business relationship with EagleView.
He contended Sandhills lost $4 million in value as a result.
But the judge said the defendants hadn't established that the Bentleys' interference was unjustified. And Sherwood's explanations for why he didn't send planes to them for maintenance were unbelievable and "left the court scratching its head in disbelief."
"The direct, constant, and unequivocal evidence proves by the greater weight of the evidence and beyond all doubt that Sherwood was doing everything he could to 'PHASE OUT' the Bentleys by not sending them aircraft to service at their shop so he could capture that money for his own maintenance businesses," Wheelock said.
He said Sherwood’s representation that he would use the Bentleys for certain maintenance services was a material factor the Bentleys considered when deciding to sell their businesses for $3.5 million, instead of $7 million.
"However, Sherwood’s representation was false, and he knew it," the judge said.
Texts sent by Sherwood outlined his plan to phase out Bentley Aviation Services and Meadowlark Aviation LLC.
Wheelock said the record established that the Bentleys suffered damages. They had to close the maintenance shop without Sherwood sending planes for maintenance and repairs. He said the evidence also clearly established their claim for fraudulent misrepresentation.
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