Howard Schultz to sue to get the Sonics back

[bennith13]

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Det, first of all you need to relax, I said I did not know what was going on and I never purported to having knowledge about the situation. I don't care if the Sonics move or not, I'm approaching this question from a legal prospective.

Whether or not Oklahoma City is building a new arena is irrelevant, the fact remains that they agreed to upgrade their facilities to a level acceptable to Bennett. Seattle on the other hand has not proposed any sort of upgrade, despite an offer from Bennett to keep the team if a new arena was to be built. To break it down, Oklahoma is offering a new arena and Seattle has offered nothing. Good faith does not mean one has to accept an offer, it means one has to consider the offer and not reject it from the outset. You can question Bennett intentions all you want (as do I) but the law does not operate on speculation, and the facts indicate he made an offer to the city that was rejected.

Keeping the team in Seattle through 2010 is a separate question. If the side agreement is admissible in Court, the Sonics may have to stay in Seattle for 2 more years but in the end it won't really mean much as the team would bolt as soon as it could legally do so.

Thats the thing. Multiple offers for new or rebuilt arenas were put out there that Bennett flat out rejected before looking at. Nothing Seattle or the state was or would have been good enough.

[colombianbrew]

Bennett was only interested in a $500 million new arena in Seattle, but was willing to work with $100 million renovation in OKC. Those are fairly different scenarios and I believe quite clearly show that there were double standards being applied to the cities.

[KB20]

He has no hope and just because he said he MIGHT (though I doubt it) keep them in Seattle doesn't mean he can get the team back.

[elbowthrower]

whoops I screwed up
sorry

[ilikecb4]

well from day 1 we knew what Bennet's intentions were...

shouldn't have sold the team in the first place

we really need more Mark Cuban's in the NBA

if you jsut take a look at what he has done for that Dallas franchise it's amazing

their home games are packed every night, team is a title contender year in and year out...

[dm17415]

Howard Schultz is doing the right thing by suing, even though he sold the team with the understanding it'll be relocated, the deal was that the Bennett would keep the Sonics there until 2010 while looking to improve the stadium and obviously Bennett didn't even try to fulfill his end of the agreement.

[Texas Longhorns]

We all know Howard is not going to win, but it is a good effort by him. It's an awkward time though because I think it's way too late now.

[Seattlesun]

its perfect timing actually. bringing the dishonesty, lack of integrity and collusion to light right before the BOG vote is perfect.

[splifton]

I'd be curious to hear everyone's views on whether the radio interview (see my link from the previous page) is admissible. I know there's an exception for hearsay being admitted as proof of state of mind, but it seems like there are a whole bunch of issues here. It would also seem to implicate the parol evidence rule

Federal Rules of Evidence:

Federal Rule of Evidence 803(1) provides a hearsay exception for certain statements made by a person while, or immediately after, perceiving an event. This ''present sense impression'' exception to the hearsay rule specifically applies to statements ''describing or explaining an event or condition made while the declarant was perceiving the event or condition, or immediately thereafter.''

Three requirements must be met to qualify a statement as a present sense impression under Federal Rule of Evidence 803(1):2

1) The declarant must have personally perceived the event described

2) The declaration must be a simple explanation or description of the event

3) The declaration and the event described must be contemporaneous

I would appear that there is a good chance the interview would make in on to the record.

Parol Evidence:

Here is what Corbin on Contract has to say:

The UCC clearly indicates that, as is true also of evidence of trade usage and evidence of course of dealing, evidence of course of performance is an exception to the parol evidence rule. Although course of performance can function to add a non-contradictory term to the contract, this is accomplished without inquiring whether the parties intended their agreement to be complete and exclusive, i.e., completely integrated, a question that would be asked under the parol evidence rule. (The parol evidence rule is otherwise applicable when a party seeks to add a previously or contemporaneously agreed upon term to a written agreement.) The UCC provides that the parties' agreement ''may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented ... by course of performance.'' (As to ''evidence of consistent additional terms,'' the section imposes the limitation of the parol evidence rule: such evidence is admissible ''unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.'' This limitation is not imposed upon course of performance, nor upon trade usage or course of dealing.)

This is a little more difficult question. Was the sales agreement a "completely integrated" document? Hard to tell. The addendum of the separate letter between the Howard and Clay would have the answer.

[jefe]

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Jefe, good faith is implied in every contract, but that speaks to general performance. This contract needed a specific provision stating that Bennett would need to try and keep the team in Seattle, otherwise the contract would have been satisfied being the Bennett has paid for the team and not breached the terms of the agreement.

Exactly (you restated the first sentence of my post!), but parties are free - as part of their contractual autonomy - to define what constitutes good faith. This seems to be the case here, because (supposedly) there is a separate side agreement (assuming it's incorporated into the contract, or else this entire suit/theory would have no legs at all) on that point. The irony is that when parties opt to explicitly define "good faith" ex ante, it can actually limit ex post judicial inquiry into good faith.

[jefe]

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This is why I think a recission would have to be grounded in fraud, for which good faith would only be a consideration.

Indeed the side letter seems to be the "smoking gun" which might provide such a basis.

From my understanding of contracts (granted it was last year; and, of course, my understanding is limited to my professor's perspective on the subject), there is no consideration of a parties intent in breach of contract actions (i.e. an intentional breach is treated just the same as an inadvertant breach - unlike other areas of law ... say criminal), because courts want to encourage efficient breaches.

Generally, courts are loathe to grant any equitable relief unless it can be shown that money damages are not sufficient to make the party whole - the most obvious application of this concept is an order for specific performance when the contract pertains to a unique (i.e. one of a kind) good.

[5DOM]

I don't know how Schultz is to blame for selling the team to investors in OKC.

He is a businessman. He obviously wants to sell the team to the highest bidder.

[elbowthrower]

My understanding is that the legal language used is not "good faith", which is vague and weak, but "best efforts" which is stronger and easier to define.

But I'm not a lawyer.

[jefe]

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I know parties can contract into a higher standard, but I'm not sure what exactly constitutes "best efforts." Granted, I'm still in first year, but I've busted my ass in contracts this semester. Through about 2000 pages of material, I've seen nothing about "best efforts" or what such a standard might imply.

Could anyone with a more extensive legal background try and shed some light on this?

Look to UCC 2-306 & Wood v. Lucy, Lady Duff Gordon (should be somewhere in a 1L contracts book).

[jefe]

I'd be curious to hear everyone's views on whether the radio interview (see my link from the previous page) is admissible. I know there's an exception for hearsay being admitted as proof of state of mind, but it seems like there are a whole bunch of issues here. It would also seem to implicate the parol evidence rule

Federal Rules of Evidence:

Federal Rule of Evidence 803(1) provides a hearsay exception for certain statements made by a person while, or immediately after, perceiving an event. This ''present sense impression'' exception to the hearsay rule specifically applies to statements ''describing or explaining an event or condition made while the declarant was perceiving the event or condition, or immediately thereafter.''

Three requirements must be met to qualify a statement as a present sense impression under Federal Rule of Evidence 803(1):2

1) The declarant must have personally perceived the event described

2) The declaration must be a simple explanation or description of the event

3) The declaration and the event described must be contemporaneous

I would appear that there is a good chance the interview would make in on to the record.

Parol Evidence:

Here is what Corbin on Contract has to say:

The UCC clearly indicates that, as is true also of evidence of trade usage and evidence of course of dealing, evidence of course of performance is an exception to the parol evidence rule. Although course of performance can function to add a non-contradictory term to the contract, this is accomplished without inquiring whether the parties intended their agreement to be complete and exclusive, i.e., completely integrated, a question that would be asked under the parol evidence rule. (The parol evidence rule is otherwise applicable when a party seeks to add a previously or contemporaneously agreed upon term to a written agreement.) The UCC provides that the parties' agreement ''may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented ... by course of performance.'' (As to ''evidence of consistent additional terms,'' the section imposes the limitation of the parol evidence rule: such evidence is admissible ''unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.'' This limitation is not imposed upon course of performance, nor upon trade usage or course of dealing.)

This is a little more difficult question. Was the sales agreement a "completely integrated" document? Hard to tell. The addendum of the separate letter between the Howard and Clay would have the answer.

I disagree with you on the radio interview. Note the temporal aspect of the hearsay exception - the declaration must be a "present" sense impression, meaning that it was ''describing or explaining an event or condition made while the declarant was perceiving the event or condition, or immediately thereafter." At the radio interview, the declarant is immediately perceiving the interview itself, the studio, the interviewer sitting across from him/her etc. - not the subject that he's discussing.

As far as the parol evidence rule, it doesn't seem to be applicable - unless Shultz is (attempting to) offer(ing) the "contents" of the interview to interpret the terms of the contract. It seems to me that he would be offering the interview for another purpose (i.e. intent of the speaker, failure to perform, etc.).


Edit: Sorry for the numerous posts in the thread today, I'd been away from here since I last posted on page 5 or so.

[Malinhion]

From my understanding of contracts (granted it was last year; and, of course, my understanding is limited to my professor's perspective on the subject), there is no consideration of a parties intent in breach of contract actions (i.e. an intentional breach is treated just the same as an inadvertant breach - unlike other areas of law ... say criminal), because courts want to encourage efficient breaches.

Whether or not the breach was wilful will go a long way in making a determination of "good faith" or "best efforts." However, there is going to be a high burden of proof on Schultz. If the agreement is fully integrated, he's going to have a nearly impossible task of doing so.

Generally, courts are loathe to grant any equitable relief unless it can be shown that money damages are not sufficient to make the party whole - the most obvious application of this concept is an order for specific performance when the contract pertains to a unique (i.e. one of a kind) good.

Well, this is clearly one of those cases. Monetary damages aren't an appropriate remedy.

I spoke to my professor today. He said that Schultz could be helped by bringing the league into the suit, for antitrust reasons. I'm trying to find the case he mentioned now.

[splifton]

Note the temporal aspect of the hearsay exception - the declaration must be a "present" sense impression, meaning that it was ''describing or explaining an event or condition made while the declarant was perceiving the event or condition, or immediately thereafter." At the radio interview, the declarant is immediately perceiving the interview itself, the studio, the interviewer sitting across from him/her etc. - not the subject that he's discussing

Disagree with your characterization of the facts. The interview was given on the day the contract between the parties was announced/signed. We are not talking about an "excited utterance", this is one of the parties (on the day they signed a contract) Explaining the facts as he perceived them on that day.

I am not a lawyer, I just play one on TV.

[colombianbrew]

I don't know how Schultz is to blame for selling the team to investors in OKC.

He is a businessman. He obviously wants to sell the team to the highest bidder.

That's the thing, it seems like he actually didn't. Reports have claimed that there was a second offer, from a San Jose group, but they were very blatant that they wanted to move the team. Schultz too Bennett's offer as he was willing to take on the requirement of trying to keep the team in Seattle. If Schultz has documented proof of the San Jose offer I think it would be very beneficial to him in court.

[Malinhion]

THe leading antitrust case is Finley v. Kuhn 569 F.2d 527

I skimmed it but I'm not sure what Schultz' attorney thinks he can do with it.