Alabama Football, Inc. v. Greenwood, Civ. A. No. 76-125.

• Decision Date: 30 May 1978
• Docket Number: Civ. A. No. 76-125.
• Citation: 452 F. Supp. 1191
• Parties: ALABAMA FOOTBALL, INC., an Alabama Corporation, Plaintiff, v. L. C. GREENWOOD, an Individual, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

452 F. Supp. 1191

ALABAMA FOOTBALL, INC., an Alabama Corporation, Plaintiff, v. L. C. GREENWOOD, an Individual, Defendant.

Civ. A. No. 76-125.

United States District Court, W. D. Pennsylvania.

May 30, 1978.

Wm. H. Dickey, Jr., Pittsburgh, Pa., for plaintiff.

Robert L. Potter, Pittsburgh, Pa., for defendant.

OPINION

MARSH, District Judge.

Defendant, L. C. Greenwood, (hereinafter Greenwood) a professional football player, signed a contract to play football for the plaintiff, Alabama Football, Inc., (hereinafter AFI) beginning in 1975. AFI is an Alabama corporation which operated a professional football franchise known as the Birmingham Americans in the World Football League (hereinafter WFL). Neither Greenwood nor the Birmingham Americans played football in the WFL during 1975 or thereafter. AFI has brought this breach of contract action seeking to recover general damages and a $50,000 bonus it paid to Greenwood. In our opinion AFI is not entitled to recover either.

After review of the testimony and other evidence presented at the non-jury trial, and after consideration of the briefs and reply briefs submitted by the parties, the court makes the following findings of fact and conclusions of law.

I

On May 31, 1974, AFI and Greenwood entered into a WFL player's contract (Pl. Exhibit 1). The contract is a standard form of five pages with blanks which were filled in to show the name of the WFL team, the name of the player, the term of the contract, the compensation, and the effective date of the contract.

The compensation section of the contract states that AFI will pay Greenwood a bonus in three installments: $25,000 upon signing of the contract, $25,000 in September, 1974, and $25,000 in April, 1975. In addition, Greenwood was to receive a salary of $90,000 in 1975, $100,000 in 1976, and $110,000 in 1977. The parties indicated in the contract that they desired the contract to be effective on May 31, 1974, and that the contract was for a term of three years. If AFI failed to make any payment due to Greenwood under the contract, the payment was to be made by the WFL which then could exercise an option to have the contract assigned to the WFL as property of the league.

The WFL player's contract required Greenwood to report to AFI in good physical condition, to participate in their football games to the best of his ability, and to give his loyalty to the team and the WFL and to participate in their promotions and publicity (Pl. Exhibit 1, paragraph 4). Greenwood granted and assigned to AFI the right to use his name, likeness, and biographical sketch in connection with any matter associated with the team's or the league's business on publicity (Pl. Exhibit 1, paragraph 5).

Greenwood had played football during the 1973 season with the Pittsburgh Steelers in the National Football League. Testimony at trial indicated that all parties understood at the time the contract was signed that Greenwood would be obligated under an option clause in his 1973 Pittsburgh contract to play football during the 1974 season with the Steelers. Although not stated explicitly in the contract, it is clear from the testimony that the parties understood that Greenwood would not play football for AFI until the beginning of AFI's 1975 season.¹

When the contract was signed on May 31, 1974, Greenwood and his agent, Glenda Patterson, received checks totalling $25,000 from AFI representing the first installment of the bonus. The second $25,000 payment was received by Greenwood in September, 1974. AFI made no further payments to Greenwood.

AFI began its first and only football season on July 10, 1974. At AFI's request, Greenwood came to Birmingham to be present for the opening game (Transcript, p. 119). He also appeared at a reception where he met local bankers, political figures and members of the local press (Transcript, p. 125).

AFI's 1974 season was marked with financial difficulties. The AFI balance sheet for July 31, 1974, shows liabilities of $2,200,000 and assets of $1,700,000. As the season continued, cash flow problems became severe. In October, 1974, AFI stopped paying Internal Revenue Service the money which AFI was withholding from its player's salaries for tax purposes. This money was used by AFI to pay salaries and other operating expenses (Transcript, p. 98). Eventually, AFI stopped paying the players their salaries. The players of the Birmingham Americans were not paid for the final five games of the season played between October 16, 1974, and November 13, 1974 (Transcript, p. 99). In mid-October, the team received notice from the WFL that AFI was in default on its payments to the league (Transcript, p. 115).

In spite of these difficulties, AFI had a good season on the football field. The Birmingham Americans won most of their games and qualified to play in the first WFL World Championship Game in December, 1974. Birmingham won the game, but on the following day the team's uniforms were seized by the sporting goods firm which had not received payment for them. Shortly thereafter, the telephones at AFI's offices in Birmingham were disconnected (Transcript, pp. 82, 83). AFI's financial difficulties were widely reported in the press. Greenwood learned of them personally from his friend and former college roommate, Clarence Washington, who lived in Birmingham and who played football for the AFI team during most of the 1974 season (Transcript, p. 148).

The WFL, at a meeting of its Board of Governors held January 16, 1975, apparently passed a resolution declaring AFI to be in default on its payments to the league and cancelling AFI's membership in the WFL. On approximately January 22, 1975, WFL officials announced to the press that AFI's franchise in Birmingham had been terminated. At a subsequent meeting on February 13, 1975, the WFL Board of Governors ratified, confirmed and approved the previously passed resolution of default against AFI. The WFL authorized its officers to pursue negotiations with persons or entities capable of meeting the requirements of operating a WFL club in Birmingham in 1975 (Def. Exhibit N; Transcript, p. 80).

In a letter dated January 23, 1975, Lee H. Goldberg, an attorney who then represented Greenwood, advised the President of the WFL, Cris Hemmeter, that Goldberg had been unable to contact AFI because its telephone had been disconnected. Goldberg stated that he was giving written notice on behalf of Greenwood that AFI had failed to comply with two provisions of the WFL contract and he requested Hemmeter to respond (Pl. Exhibit 15; Def. Exhibit J).² In response, Goldberg received a telephone call from Donald J. Reagan, General Counsel of the WFL. Following this telephone conversation, Goldberg formally advised Reagan in a letter dated February 10, 1975, that Greenwood was terminating the contract which had been executed with AFI the previous May 31 (Pl. Exhibit 2). Thereafter, Greenwood and the WFL executed a mutual release and agreement not to sue. That agreement, which was signed by Reagan on March 10, 1975, and by Greenwood on March 18, 1975, released Greenwood from any further obligations to the WFL under the terms and conditions of the player's contract (Pl. Exhibits 4A and 4B).

In a mailgram subsequently sent to Goldberg on March 31, 1975, Reagan stated that he had been told that, contrary to previous statements by Goldberg, Greenwood had received a $25,000 installment payment in September, 1974. Reagan advised Goldberg that if this were true and if Greenwood's contract had not been breached by AFI, then the WFL stood ready to assume the player's contract (Pl. Exhibit 6).

At trial, AFI's Chairman of the Board William R. Putnam testified that he first learned of the possibility that Greenwood would not honor the player's contract in March or April, 1975, from his discussions with news reporters. He testified that AFI did not make the third $25,000 bonus payment on April 1, 1975, because of the questionable status of the Greenwood contract (Transcript, p. 45). Putnam acknowledged that as of April 1, 1975, AFI had no funds for the $25,000 payment but stated that he personally would have put up the money for AFI.

The first direct correspondence between AFI and Greenwood in 1975 occurred on April 18 when Putnam wrote to Greenwood's attorney Goldberg advising him that AFI intended to operate in the WFL during the 1975 season and that AFI considered its contract with Greenwood to be valid and binding (Pl. Exhibit 8). This letter from Putnam was prompted when he learned of an earlier letter Goldberg had sent to the Internal Revenue Service after Goldberg learned that the Greenwood contract was listed among the items to be sold by the Internal Revenue Service at a tax sale of AFI's assets. Goldberg had informed the IRS that any potential bidder should be advised that Greenwood's contract was in default and that Greenwood intended to terminate the contract. The tax sale never took place, and Goldberg's letter was turned over to Putnam.

At trial, Putnam admitted that as of the time of his letter to Goldberg on April 18, 1975, the AFI franchise had been cancelled by the WFL and the WFL had issued the Birmingham territory franchise to another corporation operating as the Birmingham Vulcans. He testified that at the time of the letter AFI was contesting the cancellation of its franchise (Transcript, p. 47) and that AFI intended to relocate and operate a team in some other city during the 1975 WFL season. Putnam wrote to Greenwood on May 16, 1975, stating that Putnam had developed an interest in the New York area and that Putnam would contact Greenwood "within the next two weeks to give you all of the details" (Def. Exhibit V). Greenwood testified that he did not hear from Putnam again. The evidence shows that AFI did not operate a team in 1975, and that the WFL ceased operation prior to completion of the 1975 season.

On June 18, 1975, Greenwood executed a contract to play football for the ...