Legal Questions on Clay Bennett Side Deals w/Oklahoma City

[Jammer]

I just read this article

http://sports.espn.go.com/nba/columns/s ... id=3396046

explaining some of the side deals that Clay Bennett, Seattle Supersonics lead owner, has signed with Oklahoma City.

The article suggests that the team is obligated to move to Oklahoma City, or pay $150 million or possibly more in damages to Oklahoma City if the move does not occur. The agreement transcends the current owner, even if the sale were to be rescinded and the team returned to the Starbucks founder who sold it to Bennett.

The question that I have is I would think that Bennett has overstepped is legal bounds within the NBA, since the NBA never approved a move to Oklahoma City, how can Bennett commit to moving the team in the absence of NBA approval.

I would think that Bennett did not have the authority to bind the NBA to the move, or the team to the city.

He committed fraud, I suspect.

Yet, I see no mention of this in the article detailing Bennett's side agreements.

And I can't see how the former owner of the team, or any future owner should they buy it from Bennett, be obligated (the Supersonics, that is) to pay Oklahoma City anything.

If there are any claims to be made, I would think that Clay Bennett would be personally responsible, since he didn't have the capacity to committ moving the team without the blessing of the NBA Board of Governors, which Bennett did not have.

Are there any lawyers out there.

Anyone know someone in the legal department of the NBA?????

Something is not right here, and I think that it's fraud on the part of Clay Bennett.

[The Rebel]

I could have swore that the Owners committee approved the move a couple of months ago.

[jman3134]

The article did say that Bennett would be liable to pay damages, no?

I'm pretty sure that if a court overturns the decision to grant primary ownership of the franchise to Bennett, they cannot also enforce an injunction based on an agreement that Bennett made. Legally speaking, I do not believe that this is possible. So, I'm assuming, this hinges on whether or not Bennett's ownership of the franchise is overturned.

I'm sure he could argue that it was forseeable that the move could have been overturned from Oklahoma City's perspective. (if he made it clear that it hinged on NBA's approval, which was almost certainly guaranteed) I'm sure that would be his defense, assuming the NBA did not approve it.

[Jammer]

I could have swore that the Owners committee approved the move a couple of months ago.

The owners approved the move perhaps one month ago.

Any agreements that Bennett signed with Oklahoma City before that would be in question.

[Mr. Sun]

The question that I have is I would think that Bennett has overstepped is legal bounds within the NBA, since the NBA never approved a move to Oklahoma City, how can Bennett commit to moving the team in the absence of NBA approval.

I would think that Bennett did not have the authority to bind the NBA to the move, or the team to the city.

Final NBA approval was a prerequisite between OKC and Bennett, and to a degree, with the NBA. Lease and funding in OKC would only go forward upon NBA approval, and NBA would only approve if Bennett could show OKC was serious to do what was required to bring the team there. Nothing improper here.

I think OKC is threatening to sue the wrong party if ownership changes. If ownership changes OKC will have to go after Bennett & Company for damages and not the new owners.

[Atlanta Hawk Fan]

We don't have enough information to answer this question. A business owner can certainly obligate a business to certain commitments that would survive a change in ownership. Even someone without actual authority to bind a company can do so under certain circumstances (under a doctrine called apparent authority that might apply here because everyone held Bennett out to have that authority). The article doesn't mention it but there may also be conflicting obligations in the two lease agreements in Seattle and OK which would create a huge mess and might represent actual fraud (ala selling property to two different people).

Anyway, for any real legal analysis you would need to know a lot more about the details and contractual language to give an educated opinion.

Man, I feel bad for the people in Seattle.

[Magilla_Gorilla]

Lester Munson - the writer of the article - knows what he is talking about. He's read over the OKC document, and obviously believes it has some merit.