On the heels of granting an early win for the Dallas Mavericks in its contract dispute with the Dallas Stars, Texas Business Court Judge Bill Whitehill will hold a hearing Tuesday morning to determine where the jury trial in the case will take place.
Judge Whitehill trimmed the claims for trial by granting summary judgment for the Mavericks, finding that when the Stars moved its headquarters, it meant the franchise failed to comply with the “location commitment” in the agreement between the professional sports teams that required the headquarters be in Dallas. The Stars moved its headquarters to Frisco, north of Dallas, in 2003.
The franchises argued their positions to the court in a March hearing. Almost exactly a month later, the court granted the Mavericks’ declaratory judgment and affirmative defenses motions.
“Further, the evidence conclusively establishes that at all relevant times the Mavericks have complied with this requirement — and the Stars have not,” Judge Bill Whitehill wrote in his 92-page opinion. The requirement in the contract is that the franchises’ office headquarters be in Dallas city limits.
Late last year, the Dallas Mavericks sued the Dallas Stars seeking to enforce the terms of partnership contracts the teams signed nearly 25 years ago. The Mavericks claim the Stars breached their American Airlines Center lease by having their primary headquarters outside Dallas city limits.
The Stars contend that the Mavericks’ silence over the past two decades, despite knowing the location of their offices, means they waived the argument they have now lodged in court. They also claim that the Mavericks’ own designation of Las Vegas as its location of business is inconsistent with its attempt to exercise redemption rights under the agreements.
Jackson Walker partner Chip Babcock said the opinion has narrowed the issues.
“At the end of the day, it gets down to, were we damaged? And if so, how much?” Babcock said.
Judge Whitehill wrote that accepting the Stars’ argument “would lead to the absurd result that the agreement gives the Mavericks the right to case the redemption without the Stars’ consent and simultaneously give the Stars the power to block the Mavericks from exercising their redemption rights.”
He further wrote that the Mavericks could have but weren’t required to use a direct corporate vote to accomplish the redemptions which is when there is a relocation event, the redeeming party must pay the redeemed party $100 for the partnership interest and $10 for the general partner membership interest.
Since the partnership is split 50-50, the Stars could block the vote and produce a deadlock. Judge Whitehill wrote that it was “reasonable” for the parties to provide an alternative redemption method.
“We are very pleased with the court’s summary judgment decision, and the fact that the Texas Business Court was able to resolve these important contractual issues so quickly. The Mavericks are ready to have this behind us so the Mavericks can focus on what matters most, which is their deep commitment to the future in the city of Dallas and their fans. The Mavericks are moving forward with their plans to invest in Dallas and deliver a best-in-class experience for this community,” Jackson Walker partner Chris Bankler wrote to The Texas Lawbook in an email.
The Mavericks’ tortious interference claims, in which the basketball club alleges the Stars’ refusal to acknowledge the redemptions and the termination of the Stars’ board positions tortiously interferes with the Mavericks’ contract right to approve necessary arena expenditures, were not addressed in the ruling and are expected to be argued at trial. The case is scheduled for jury trial on May 11.
“As legendary UCLA basketball coach John Wooden is known to have said, ‘Don’t mistake activity for achievement.’ This is a case about a power grab by new out-of-state owners attempting to seize complete control of the American Airlines Center for $110 cash,” the Stars’ counsel Joshua Sandler of Winstead told The Lawbook. “It is a story a jury needs to hear and decide. We respect the court’s ruling on the parties’ motions for summary judgment, and we understand there are numerous issues to be decided at trial. And we are certainly looking forward to presenting our case and telling our story to the jury and the citizens of Dallas.”
The franchises’ lease on the American Airlines Center ends in 2031, and both teams are looking to play in new locations. The Mavericks are looking at Dallas City Hall, whereas the Stars are looking at The Shops at Willow Bend in Plano.
Frank Carroll, Cory C. Johnson, John David Janicek and Andrew J. Patterson of Winstead are also representing the Stars.
Sarah Starr of Jackson Walker is also representing the Mavericks.
The case is Dallas Sports Group, LLC and Radical Arena LTD v. DSE Hockey Club L.P., 25-BC01B-0049.