More News on Sonics Lawsuit

So if the judge rules in favor of Schultz would he have to pay back the money to PBC? Or place the money in the trust? I can't see him getting the sale reversed and keeping the money too.

You're not following all the assumptions that were made before we even began discussing this entirely hypothetical question.

Kerry was following, though.

I'm not asking for billable hours here, we're just walking down the legal yellow brick road and seeing where it goes.

Your legal insight is valuable and fills in the gaps nicely, but we're talking more about what would be argued, not what would actually happen or what would actually be ruled.

If the PBC is found guilty of fraud and the city is in any way harmed, then it should look for remedy. You're right that they may not want to sue the "favorite sons", but the city in no way should be waiving that right at this point in time and the legal posturing makes a lot of sense.

You're right that fraud may not be the right cause of action. Sorry it came off as absurd. I just didn't have the energy or time for research to find the correct one.

That's exactly why he filed suit in this manner: he does want to keep the money. Under this scenario, the Trust is established for the purpose of selling the team, the proceeds of which go to PBC. Schultz keeps the original proceeds, PBC gets the proceeds of the forced sale and the new hypothetical owner keeps the team. I don't think it will happen but that is what Schultz wants. Dumb isn't it?

I'd have to read the sales contract, but doesn't it state that no third party shall be thought to have any claim under the sales contract? I could have sworn that was in there.

What OKC's remedies are depends on what the judge does if she does anything. We can't even begin to guess until PBC has lost and the judge has started carving things up.

__________________
It's a friendlier OKCTalk!

Under contract law, whenever you file suit to rescind a contract, (regardless of the grounds, including allegations of fraud), then if the court orders rescission, the parties are put back into the position they were prior to the execution of the contract. In this case, Schultz gets the team back and PCB gets their $350 million back. Then you throw in monies they might both be out that returns them to their pre-contract state. I have never seen or heard of a rescission wherein the person asking for rescission of the contract gets to keep the proceeds of the sale, and then in some fashion gets the product back. I know they are saying some sort of trust to be held for sale...but that is just outlandish. I can not ever see a court finding that sort of resolution as equitable. And this is a suit in equity.

I think we (I) were just continuing the line of thought created by OKC's counsel, which was obviously motivated by a hypothetical, or guess, that they could lose. Obviously it's all posturing and amounts to no real legal action or position. But, again, I think me and some others were just taking their motivation for writing the letter and seeing how it could possibly play out. Nothing more than that. I know it's just an undergraduate exercise to some, but was kind of a fun diversion until June 25 or so.

That would be correct, if SChultz had filed for rescission. He did not. His requested remedy is a constructive trust.

Is this why it's believed it will be thrown out? If a trust is used to sell the team then it could be sold for way below market value. I would think the judge would know that. I would think she would toss the case based on that alone.

Rabid -- not really, there are lots of reasons people doubt this suit is all that worthy:

Doug Dawgz Blog: April 2008

Doug pretty much says it all.

__________________
It's a friendlier OKCTalk!

Schultz is NOT asking rescission. He doesn't want the team back. He is asking for a constructive trust

As much as I want to hope most of what you all are saying is true, that this will get thrown out, what scares me is the following.

Munson, who is the top espn sports lawyer writes an article saying this suit has no chance at all (before actually reading it) and then a couple days after reading it writes a whole new article doing a complete 360 and going on a couple radio shows saying he was 100% shocked and goes on to detail why gives Schultz a 60% chance of winning his lawsuit.

I don't buy the argument that ESPN is doing this for ratings, the whole thing scares me and as much as I want to believe what some of you are posting, I have to put more weight with what Munson is saying.

ESPN - E-mails key in Schultz's suit to reverse Sonics sale - NBA

A question & answer session posted with a legal expert from ESPN, just a couple of the questions here (please see link for all of them)

Q: Schultz has been reviled in Seattle since he sold the team. Isn't this just a public relations stunt to allow Schultz to improve his public image?

A: The lawsuit is more than a public relations stunt. The allegations against Bennett and his group are serious and seem to indicate a fraud at the time of the sale. The chronology of the e-mails is compelling evidence that will allow Schultz to push Bennett and his group into a bad corner. If it were a PR stunt, both Schultz and Yarmuth would be holding press conferences and making dramatic statements. Neither would comment to ESPN.com beyond what is said in the lawsuit. The language of the suit is lean and spare. If anything, it understates the case. Their conduct and their lawsuit are clear indications they are serious about their allegations and their attempt to undo the sale.

Q: How does Schultz's suit relate to the city of Seattle's lawsuit to bind Bennett to the KeyArena lease, which is scheduled to go to trial June 16?

A: Both lawsuits are in the same courthouse and could easily end up before the same judge. The lease litigation led to the discovery of the damning e-mails that are the basis for Schultz's case. The cases, added together, present Bennett with serious problems. Both jeopardize his bid to move the team to Oklahoma City. If he loses the lease case, he can still try to buy his way out of the lease by increasing his offer beyond the $26 million bid that the city rejected. If he offered $50 million or a bit more, the city would likely be obligated to give it serious consideration. Even if the city were to reach a buyout agreement with Bennett before the six-day trial begins in June, the Sonics owner will still need to deal with Schultz's suit. If Bennett loses the Schultz case, he loses the franchise.

If either suit is successful in postponing the Sonics' move beyond the start of the 2008-09 season, according to the NBA Constitution, Bennett's group will need to reapply for relocation before the NBA Board of Governors.

Lester Munson, a Chicago lawyer and journalist who reports on investigative and legal issues in the sports industry, is a senior writer for ESPN.com.

Munson also gave the Seattle a 55 to 60 % chance of winning this suit and keeping the sonics in ESPN chat and in a radio interview.

Does Munson talk about the standing issue?

I don't really see much of an argument to even get past that.

__________________
It's a friendlier OKCTalk!

I've talked to at least five friends who are lawyers about this, one of whom is a law professor. They all think the suit is laughable and several called it an attempt to get good pr in Seattle without risking much. There are clearly differing opinions on the validity of this suit.

Nathaniele,
In my humble opinion, unless these espn "experts" cite any relevant case law to back their argument, then they are full of it. If someone is a legal expert why not cite several examples using case law on how Shultz's lawsuit has a 50-60% chance. It should be very easy since they are "experts". Unless they are only pandering to increase readership. All I have seen posted with case law is how the Shultz lawsuit is D.O.A. Courts are built upon case law and the evidence and I have seen many experts fail to report on this.
On a side note, I read a Seattle news report on how the Shultz lawsuit "has legs". The legal expert says the emails and other evidence "COULD BE enough for Schultz to get a HEARING on the merits of the case"....... Even the Seattle lawyer is not willing to say the lawsuit is good enough to go to trial. The ESPN writer even starts his report with how the lawsuit is a long shot.

All of the Washington/Seattle politicians are loving how this has taken the pressure off of them to do anything regarding an arena. How many people are talking about getting an arena deal done?

I forgot to add that if someone were to cite case law in a well thought out argument, then I might start to think Clay has a fight in front of him. I still do not believe a court would try to force a sale. How much would Clay be forced to sell for? Would he recoup all of his money he has spent up to this point? What about the signed lease with OKC? There seem to be way to many questions with no answers.

If you missed earlier link(s), Doug Dawg has a fairly well thought out take on things. Doug Dawgz Blog: What's This Crud About No Movie Tonight?

zcamaro, unlike the great state of Oklahoma, Washington does not give you free access to their case law in a searchable database. To do so would take access to Westlaw and more time than I'm interested in investing (I do have access to the Washington Westlaw database, but I have no interest in trying to find a bunch of Oklahoma companion cases).

I'm not 100% case law is going to be a big deal here anyhow. Issues of standing are similar from state to state. Standing is going to be a hell of a hurdle for the Schultz group. Then, to prove Fraud, they have a tough burden there as well.

I linked Doug Loudenback's legal memo earlier, which admittedly was written using Oklahoma law (you should expect that from an Oklahoma lawyer), still hit all of the high points and addressed them with what should be the black-letter law in Washington, Oklahoma (and according to Obama) th eother 55 states.

__________________
It's a friendlier OKCTalk!

The blog posting at Doug Dawgz blog was what I was referring to in my mini rant. I have seen several articles talking about how Shultz's lawsuit has "legs" or "teeth" yet there is nothing to go with it. All the lawyer "experts" talk about are the emails, never anything about the merits that must be met. Everything that I have read using lawyer "speak" ie: what must he prove and to what degree of proof; says Shultz has no chance. I guess that would not make for good reading.

After reading Doug's blog I almost have to laugh at Schult's lawsuit, and I do laugh at Munson's take on the situation. I love the part in the sales contract that says any other promises made, either written or oral, that are not part of the contract are not vaild. That pretty much seals the deal for me.

If keeping the team in Seattle was such a big deal to BCOS why didn't they include it in the contract? Oh that's right, Schulz wanted to and Bennett said no. Now somehow Schultz feels he was mislead. Really Schultz? When did you figure that out? When Bennett said no to putting a binding requirement in the sales contract or when he applied for relocation?

__________________
Oklahoma City - The surprise your family has been looking for.

Here's another article by Munson about the letter OKC sent last week. Nothing new really just more discussion material:

ESPN - OKC's latest demands muddle Sonics' future even more - NBA