Judge Bill Whitehill heard arguments Friday afternoon in one of the most-watched cases before the Texas Business Court, the dispute between the Dallas Mavericks and the Dallas Stars over their contract with American Airlines Center, where the two professional sports franchises play.
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.
A handful of students sat in the gallery of the Walsh Classroom in Southern Methodist University’s Underwood Law Library Friday afternoon to take in the legal arguments.
Jackson Walker partner Chip Babcock argued against the motion for summary judgment and stated that the Stars’ office in Frisco, which is north of Dallas, doesn’t comply with the contract.
Babcock displayed photos from October 2024 to December 2024; the word “executive” was removed from the Frisco office so that it only read “Dallas Stars Office” on the building.
Babcock displayed a photo of the American Airlines Center for the court.
“It is absolutely a magnificent structure,” Babcock said, and then took a long pause.
“Keep going,” Judge Whitehill said.
“No, I want you to look at it,” Babcock said, getting laughs from the audience.
“I’ve been there a few times. I’ve seen it,” Judge Whitehill said.
Babcock then continued to explain that the building needs to be maintained, and it takes a lot, but the agreement between the two teams is that it is supposed to be split equally.
“Someone has to be in charge, or in six years, we, the citizens of Dallas, are going to face with this magnificent building the same problems we’re facing with city hall,” Babcock said.
The debate over whether to demolish Dallas City Hall has been ongoing. Throughout the city, yard signs saying “Save City Hall” can be seen in protest against demolishing the building. The building was not maintained and is estimated to require millions in repairs.
“That’s why this case is important, not only to the parties, but to the city, and somebody has got to be in control,” Babcock said.
The lease for the American Airlines Center ends in 2031.
Babcock said this litigation was triggered by meetings in which the problems with the building and the lease expiration were discussed. It was during that time that the alleged violation of the agreement was brought up.
“One of their summary judgment arguments says it is impossible for us to comply with that. We’ve never been in the city. We weren’t at the time of this agreement, and we weren’t after that, and we’re still not,” Babcock said. “Well then you shouldn’t have signed this agreement.”
Judge Whitehill asked why it took so long to raise the issue.
“I think that the fair answer to that question is nobody wanted to rock the boat,” Babcock said.
“Did the city of Dallas express concerns?” Judge Whitehill asked.
“They certainly expressed concerns about it and asked the Stars to move back,” Babcock said. “We offered to help facilitate that if we could and the court should not have any doubt, nor should anybody in this room or listening. The Mavericks are committed to this building and they are committed to the city of Dallas.”
Babcock told Judge Whitehill there is a non-waiver provision in the agreement. Babcock then referred to Oct. 25, 2024, as “redemption day.”
“Redemption day” is when the Stars took down the sign that said “executive offices” on their building in Frisco and rented a one-bedroom apartment at the South Side on Lamar in Dallas that Babcock called a “crash pad.”
“I guess they thought that maybe that could be their corporate offices. But saying so doesn’t, doesn’t make it so,” Babcock said.
He stated that the Stars then rented space from a pickleball company on Ross Avenue in Dallas.
“No signage, I guess the building’s not too proud to have a principal corporate and executive offices of the Stars in their building. But … that’s where they went next. But there’s nothing in the record to suggest who’s in there, what’s in there, but we do know that the offices in Frisco remain,” Babcock said.
Winstead partner Joshua Sandler argued that the issue of location is waived due to the Mavericks’ silence.
He explained that in 1999 the Stars’ office was in Irving and in 2003 it moved to Frisco, where it still is.
Sandler, referencing Babcock’s comment of “not wanting to rock the boat,” said that constitutes waiver.
“Isn’t the point of a non-waiver clause is being able to sit back and wait?” Judge Whitehill asked.
Sandler argued that the Mavericks didn’t just sit back and wait, but rather took affirmative actions because it was well known that the Stars’ offices were in Frisco.
He further argued that the Mavericks were also in violation and showed that their mailing address, and principal office, as of 2023 are in Las Vegas. He stated that the Mavericks should have told them before they put more money into the arena.
“I do love the idea of a redemption day. It seems like a religious experience,” Sandler said. “But when we resisted redemption day, according to them, then that’s when we breached the contract.”
He said they are really saying the breach occurred with the 2003 move to Frisco, but that the claim is “stale” because the statute of limitations would apply.
Winstead partner Frank Carroll addressed contractual standing in his argument.
Judge Whitehill asked who breached first. Carroll responded it was the Stars in 2003, but the Mavericks brought it up in 2024.
“Mr. Babcock said that someone has to be in charge. Well, who they’re alleging should be in charge is this DSG entity. They’re saying they’re controlling the Mavericks. And so, who is DSG? Well, it’s a Vegas corporation that traded Luka for a bag of magic beans,” Carroll said.
Carroll added that this litigation is not about the cost of office space.
“This is about the cost of a time machine to go back in time and designate your offices prior to 1998 when the franchise agreement was executed, designate them in Dallas and have them physically located in Dallas,” Carroll said. “That is impossible.”
Jackson Walker partner Chris Bankler stated on rebuttal that the Stars didn’t display the disputed section of the contract because they didn’t want to show it says “location commitment.”
“We respect the agreements that are drafted between the parties, negotiated between the parties, and ultimately executed by the parties,” Bankler said. “That’s all we’re asking the Stars to do, is to live up to their contractual commitments and to the Texas requirements that you interpret a contract as written, as agreed and as signed, there was a very clear location commitment.”
Bankler said that the Mavericks’ executive office space is in plain view in Dallas despite having an address in Las Vegas.
“They have not met their burden,” Bankler said.
Judge Whitehill asked what if he were to rule that the language is ambiguous. Bankler said they would be prepared for briefing and have the city of Dallas come and explain the agreement.
The Stars are currently exploring a new home arena in Plano. The Mavericks are looking at areas in Dallas as their new arena. One location they have considered is Dallas City Hall.
Judge Whitehill took the matter under advisement and will issue a ruling at a later date. The Mavericks are asking for an opinion. Babcock said he anticipates a decision within a few weeks, but an opinion could take longer.
A jury trial is scheduled for May 11. The parties have participated in mediation, but say they are prepared to go to trial.
“I wouldn’t be a very good attorney if I did not expect to go to trial,” Sandler said after the hearing.
He added that Judge Whitehill was very prepared.
“We hope that the court sees it our way,” Sandler said.
Babcock added that he was happy with how the hearing went.
“I thought it was [a] very high-quality argument. The court is terrific, and the judge is really, really bright. He asked great questions and I think we got the better side of it,” Babcock said.
Jackson Walker associate Sarah Starr is also representing the Mavericks.
Cory C. Johnson, John David Janicek and Andrew J. Patterson of Winstead are also representing the Stars.
The case is Dallas Sports Group, LLC and Radical Arena LTD v. DSE Hockey Club L.P., 25-BC01B-0049.