City Lawsuit PDF

[TheUrbanZealot]

http://www.king5.com/sharedcontent/northwest/pdf/4-Lawrence-exhibits3.pdf

I skimmed through about half of this, trying to find the relevant parts...here is pretty much what we are hinging our hopes on (with Schultz' pending lawsuit)

PAGE 108, EXHIBIT 21, ARTICLE 5.3:

"For a period of 12 months after Closing Date, Buyer shall use good faith best efforts to negotiate an arena lease, purchase, use or similar arrangement in the King, Pierce, or Snohomish Counties of Washington as a venue for the Teams' games, to be used as a successor venue to Key Arena, provided, however, that the process described in this section 5.3 and the entering into of any such arena lease, purchase, use or similar arrangement shall be at the Buyer's' sole discretion".


There are two words/phrases that bother me in that article. PROCESS and SOLE DISCRETION. That essentially implies that Clay Bennett could decide "how" he wanted to go about his best efforts attempt at finding an arena (not to mention moving into one if the effort was made). Herein lies the problem w/ contracts w/out concrete specifics. While "best efforts" is a typical legal term, Bennett is protected by the implication that the "process" he deems a best effort is at his discretion.

Unless Howard's lawyers' can prove to the judge that 3rd party subjective, "logical" interpretation of of "best efforts" overrides self interpretation (or at least provides proof of precedence), it's going to be very very very difficult for Schultz to get around the the "process at buyers discretion" deal.

You guys, I have been as excited as anyone at the prospectus of keeping the Sonics in Seattle, but that article just took the wind out of my sails. I thought there was something a bit more concrete or at least something not giving Bennett any room to breathe, but the article is clear as day. You have to be completely biased as a Seattlite to not understand what it entails.

Right now, we can only rest our hope on the city winning it's case, and basically doing something really extreme to force a sale: e.g. boycotting all Sonics games through 2010. Bennett though, already indicated he is "a man possessed". I don't think even losing 100 million over the next couple of years will prevent him from having his wishes honored.






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[KingInExile]

I was afraid of something like this when I first heard about Schultz' plan. Bennett's not a stupid guy and I didn't think he would agree to language that would tie his hands to Seattle. I agree that the clause you point out will be a key arguing point for the defense. The only way that Schultz' lawyers can overcome that may be to prove that Bennett entered into the contract without any intent to keep the team in Seattle. Doing that could render that clause meaningless and show that Bennett entered into the contract under fraudulent circumstances.

[wiff]

I'm not a lawyer, I don't play one on T.V., and I did not say at a Holiday Inn last night, but I was under the assumption that Howard was going at this with the Anti-Trust angle.

Am I wrong in thinking that?

I know the MLB can be a Monopoly but the NBA doesn't have the same kind of freedom from the Federal government.

To be honest I feel like I am speaking out of my "Clavid" hole so if someone can clear this up for me I'd appreciate it.

[TheUrbanZealot]

I'm not a lawyer, I don't play one on T.V., and I did not say at a Holiday Inn last night, but I was under the assumption that Howard was going at this with the Anti-Trust angle.

Am I wrong in thinking that?

I know the MLB can be a Monopoly but the NBA doesn't have the same kind of freedom from the Federal government.

To be honest I feel like I am speaking out of my "Clavid" hole so if someone can clear this up for me I'd appreciate it.

ALmost impossible to prove- even if he found proof that the team planned on moving before the sale was even made, there no breach of contract at that point. As far as I know you can have INTENTIONS of moving all along. That's not the issue. The issue is whether or not Bennett made an EFFORT to keep the team in Seattle. To Bennett's defense, he made an effort to get 400 million in public funding (albeit a deplorable effort). The effort in Bennett's eyes could have been HIS perceived best...

In all honesty the more I think of this Schultz case the more something fishy comes up. Something tells me Schultz will try to settle with Bennett before spending more potential millions on legal fees...

[Mr. Sun]

This is irrelevant to the dispute... it only deals with negotiating a new lease, not honoring the existing lease.

[TheUrbanZealot]

This is irrelevant to the dispute... it only deals with negotiating a new lease, not honoring the existing lease.

I'm merely referencing it. It has everything to do w/ Howard Schultz case against the Sonics, which ultimately is the primary way we are banking on keeping the team in Seattle beyond 2010 (provided the city wins the lease lawsuit and Clay Bennett sticks to his guns regarding not selling)

There is no way Clay Bennett sells the franchise now...NO WAY. Not after the city AND government approval for measures to help lure the Sonics even more... Bennett would have to sell for over 400 million just to BREAK EVEN at this point, that isn't even counting his pending losses if we boycott the next 2 years... He's in too deep right now...

[Sweezo]

I hate to piss in anyone's cornflakes but the Schultz case just isn't going to go anywhere. I think it's cool that Schultz is putting up a fight, but even someone like me who has but a passing familiarity with contract law knows that case is stillborn.

[Mr. Sun]

^^ The league would not had fined McClendon $250,000 if it didn't fear a potential contract breach.

The dispute will come down to the significance of Bennett's "good faith" pledge in securing the sale. If it can be shown without it the Sonics would never been sold, then Shultz has a legit dispute.

[TheUrbanZealot]

^^ The league would not had fined McClendon $250,000 if it didn't fear a potential contract breach.

The dispute will come down to the significance of Bennett's "good faith" pledge in securing the sale. If it can be shown without it the Sonics would never been sold, then Shultz has a legit dispute.

You have to remember Aubrey is a minority owner for one, and unless the judge considers ALL non-principals liable, it won't matter in court.

Also, the article clearly states that the process of searching for an arena as a good faith effort is up to Bennett's discretion.

So basically- you are left with banking on the judge using McClendon's public statement(s )as reasonable intent.

We would need the most biased Seattle judge of all time- like one that attended the 1st Sonics game. Or one that met Shawn Kemp, who in turn gave his daughter an autograph, or something like that.

[colombianbrew]

We still don't know what is said in Schultz's addendum to the contract do we?

[Mr. Sun]

-= original quote snipped =-
So basically- you are left with banking on the judge using McClendon's public statement(s )as reasonable intent.

We would need the most biased Seattle judge of all time- like one that attended the 1st Sonics game. Or one that met Shawn Kemp, who in turn
gave his daughter an autograph, or something like that.

Golly, hasn't a federal judge already ruled owners statements are admissible?

[TheUrbanZealot]

-= original quote snipped =-


Golly, hasn't a federal judge already ruled owners statements are admissible?

No- the judge actually ok'd the court case over whether the Sonics can buy out of the lease or not...

[Ex-hippie]

I hate to piss in anyone's cornflakes but the Schultz case just isn't going to go anywhere. I think it's cool that Schultz is putting up a fight, but even someone like me who has but a passing familiarity with contract law knows that case is stillborn.

I know a thing or two about contract law as well and I respectfully disagree. I've even run it by corporate colleagues at my own firm (an AmLaw 20 firm), as well as one litigation partner at a major Chicago-base firm and a corporate counsel at a Boston-based firm. All of us agree that the case, while perhaps an uphill battle, is far from frivolous. "Stillborn" is not the word I would use to describe it.

[Ex-hippie]

Anyway, the newly released e-mails, about the "sweet flip" and such, don't seem to add much to the case. I think the greatest smoking gun by far is the "man possessed" e-mail, and Bennett's lame attempt to explain it away just makes it look worse.

If the "sweet flip" e-mail does add anything, I think it just helps show intent. Remember that two different potential buyers have approached Bennett's group and each time he said the team was "not for sale." So let's get it straight: team with a bad arena situation and potential move = not for sale. Team with a good arena situation that has to stay there = for sale. It certainly casts doubt on the sincerity of Bennett's efforts.

Where it's still an uphill battle is the fact that "good faith best efforts" don't necessarily require that Bennett do it with a smile on his face. He can very well believe, deep in his heart, that he'd rather fail than succeed. Even if we can prove conclusively what was in his head subjectively, it doesn't matter if his actions objectively amounted to "good faith best efforts." Did they? I don't know. He certainly gave the appearance of being someone who wanted the alienate everyone around him by never engaging the city (and bad-mouthing local officials and even the local media behind their backs).

[Bulltalk]

It just totally blows that the state dropped the ball about ponying up its 25% stake in rehabbing Key Arena, and beginning the rehab of Seattle Center, which is desperately in need of it. Christine Gregoire sucked eggs when it came to leadership on this issue. As far as I was able to tell, this was a good deal for the state, a worthwhile endeavor, especially considering there is so much development going on in that neck of the city.

She's lost my vote for this and other reasons.

I just think we'd be fighting from a stronger position with such a deal passed among the private group, city, and the state.

[Mr. Sun]

Golly, hasn't a federal judge already ruled owners statements are admissible?

No- the judge actually ok'd the court case over whether the Sonics can buy out of the lease or not...

Judge Pechman ruled the email messages between the co-owners were pertinent for the discovery phase, i.e., they would be admissible in court if they pertain to motive or wrong doing. It has been judicially decided that e-mails are records that are admissible in trials.

[colombianbrew]

having looked at those PDFs more closely now, I think the court may side with the NBA with respect to the document discovery and Stern's deposition. They make a good case that this lawsuit is about whether or not monetary damages can compensate the city, which is nothing to do with Stern. I do think he may get drawn into the Schultz case though.

[BenjaminH]

Ex-Hippie, legally speaking, what do "good faith best efforts" consist of?

[elbowthrower]

It just totally blows that the state dropped the ball about ponying up its 25% stake in rehabbing Key Arena, and beginning the rehab of Seattle Center, which is desperately in need of it. Christine Gregoire sucked eggs when it came to leadership on this issue. As far as I was able to tell, this was a good deal for the state, a worthwhile endeavor, especially considering there is so much development going on in that neck of the city.

She's lost my vote for this and other reasons.

I just think we'd be fighting from a stronger position with such a deal passed among the private group, city, and the state.

Doing some "back of the envelope" math, I figured out that a $400-$500 million investment on the part of the local government does not pay off over 10 years (which is when we can expect the team to demand a new facility). But if the investment is $150 million, we come pretty darn close to breaking even, and that's just with basketball.

What's frustrating is that the politicians (especially Frank Chopp) won't look into the numbers and see what kind of return that investment generates- and then sell it to the naysayers out there who seem against the notion that the city should be "paying" for pro sports.

Kevin Calabro was on the BJ Shea show this morning talking about different events we're losing because of the arena. Just one example was some ice-skating competition held in Spokane that generated over $30 million for the local economy over a weekend. He then gave a bunch of other examples that a renovated Key Arena could host. Seems like a $150 million investment from the city and state is a no-brainer.

But Frank Chopp's myopic stubbornness will get us about as far with the arena as it has in resolving the region's transportation issues. Make no mistake- he's a major problem in this situation.

[Sweezo]

I know a thing or two about contract law as well and I respectfully disagree. I've even run it by corporate colleagues at my own firm (an AmLaw 20 firm), as well as one litigation partner at a major Chicago-base firm and a corporate counsel at a Boston-based firm. All of us agree that the case, while perhaps an uphill battle, is far from frivolous. "Stillborn" is not the word I would use to describe it.

I think the situation looks far more favorable now than it did when I made my smartass comment.