In re The Score Board, Inc.
| Decision Date | 30 July 1999 |
| Docket Number | Civil Action No. 99-259 JEI. |
| Citation | 238 BR 585 |
| Parties | In re THE SCORE BOARD, INC. and the Score Board Holding Corp., Debtors. |
| Court | U.S. District Court — District of New Jersey |
COPYRIGHT MATERIAL OMITTED
Joseph E. Sales, Haekyoung Suh, Norris, McLaughlin & Marcus, Somerville, NJ, for Oxxford Express, Inc.
Mark E. Felger, Cozen & O'Connor, Philadelphia, PA, for the Score Board, Inc.
Steven R. Neuner, Neuner & Ventura, Marlton, NJ, for Kobe Bryant.
I. BACKGROUND
During the Spring of 1996, Appellant Kobe Bryant ("Bryant"), then a seventeen-year old star high school basketball player, declared his intention to forego college and enter the 1996 lottery draft of the National Basketball Association. On May 8, 1996, The Score Board Inc. ("Debtor"), then a New Jersey based company in the business of licensing, manufacturing and distributing sports and entertainment-related memorabilia, contacted Bryant's Agent, Arn Tellem ("Tellem" or "Agent") in anticipation of making a deal with Bryant. In negotiations of a contract to market products using the Kobe Bryant name, the parties began to discuss compensation for Bryant, including the number of complimentary cards.
Following the initial negotiations, by letter dated May 10, 1996, Debtor and Bryant's father, former NBA star Joe "Jelly Bean" Bryant, agreed to increase the number of complimentary cards that Bryant was to receive to 1,000. On May 13, 1996, Tellem sent a letter to Debtor's Vice President, Michael A. Balser ("Balser"), indicating that the parties mutually agreed on several terms, such as the amount of complimentary cards, again referencing the parties intention to negotiate the formation of a contract.
In early July 1996, after the above negotiations, Debtor prepared and forwarded a signed written licensing agreement ("agreement") to Bryant. The agreement granted Debtor the right to produce licensed products, such as trading cards, with Bryant's image. Bryant was obligated to make two personal appearances on behalf of Debtor and provide between a minimum of 15,000 and a maximum of 32,500 autographs. Bryant was to receive a $2.00 stipend for each autograph, after the first 7,500. Under the agreement, Bryant could receive a maximum of $75,000 for the autographs.
In addition to being compensated for the autographs, Bryant was entitled to receive base compensation of $10,000. Moreover, Debtor agreed to pay Bryant $5,000, of the $10,000, within ten days following receipt of the fully executed agreement. Finally, Bryant was entitled to a $5,000 bonus if he returned the agreement within six weeks.
Bryant rejected the above agreement, and on July 11, 1996, while still a minor, Bryant made a counter-offer ("counter-offer"), signed it and returned it to Debtor. The counter-offer made several changes to Debtor's agreement, including the number of autographs. Bryant also changed the amount of prepaid autographs from 7,500 to 500.
Balser claimed that he signed the counter-offer and placed it into his files. The copy signed by Debtor was subsequently misplaced, however, and has never been produced by Debtor during these proceedings. Rather, Debtor has produced a copy signed only by Bryant.
On August 23, 1996, Bryant turned eighteen. Three days later, Bryant deposited a check for $10,000 into his account from Debtor. On or about September 1, 1996, Bryant began performing his obligations under the agreement, including autograph signing sessions and public appearances. He subsequently performed his contractual duties for about a year and a half.
By late 1997, Bryant grew reluctant to sign any more autographs under the agreement and his Agent came to the conclusion that a fully executed contract did not exist. By this time, Tellem became concerned with Debtor's financial condition because it failed to make certain payments to several other players. Debtor claims that the true motivation for Bryant's reluctance stems from his perception that he was becoming a "star" player, and that his autograph was "worth" more than $2.00.
On February 12 and 19, 1998, President and CEO of Debtor, John White, sent letters to Tellem hoping to formulate a new and more inclusive contract with Bryant. During the course of these negotiations, Debtor maintained that a valid contract existed between the parties.
On March 17, 1998, Debtor sent Bryant a check for $1,130 as compensation for unpaid autographs. Bryant alleges that he was entitled to $10,130, not $1,130. The Bankruptcy Court found that Bryant was owed $10,130 and the check for $1,130 was based on a miscalculation.
On March 18, 1998, Debtor filed a voluntary Chapter 11 bankruptcy petition. On March 23, 1998, Tellem returned the $1,130 check upon learning of Debtor's financial trouble. Included with the check was a letter that questioned the validity of the agreement between Bryant and Debtor.
The letter directed Debtor to "immediately cease and desist from any use of" Kobe Bryant's name, likeness or other publicity rights. On March 31, 1998, Debtor insisted that a contract existed. Tellem told Debtor to, "immediately provide me with a copy of the signed contract between Kobe Bryant and Debtor to verify that a valid agreement exists between the parties." On April 15, 1998, Patrick Wucjik, Debtor's general counsel, replied, enclosing a copy of the contract signed by Bryant verifying that a valid agreement existed between the parties. This was Bryant's counter-offer, still not signed by anyone on Debtor's behalf. On April 20, 1998, Tellem stated that no contract existed because the counter-offer was never signed by Debtor and there was never a meeting of the minds. Tellem added that the counter-offer expired and that Kobe Bryant withdrew from the counter-offer.
Subsequently, Debtor began to sell its assets, including numerous executory contracts with major athletes, including Bryant. Bryant argued that Debtor could not do this, because he believed that a contract never existed. In the alternative, if a contract was created, Bryant contended that it was voidable because it was entered into while he was a minor.
On July 31, 1998, the Bankruptcy Court temporarily resolved this dispute by signing an order which approved break-up fees and bidding procedures, and authorized the sale of most of Debtor's assets under 11 U.S.C. § 363 to The Oxxford Express, Inc. ("Oxxford"). However, the Bankruptcy Court required that Bryant's consent be obtained before Debtor could assume and assign the Bryant contract. Alternatively, Debtor could assume and assign the contract after the entry of a final and non-appealable order adjudging that the assets of Debtor included a valid and enforceable executory contract with Bryant.
On August 6, 1998, Bryant filed a motion to vacate or to modify the automatic stay to permit him to repudiate the disputed contract by reason of infancy. On December 21, 1998, the Honorable Gloria M. Burns ruled in her memorandum opinion that Debtor accepted Bryant's counter-offer and, therefore, a valid contract existed between Bryant and Debtor. In the alternative, the Bankruptcy Court held that even if Bryant's counter-offer was not signed by Debtor, the parties' subsequent conduct demonstrated their acceptance of the contractual obligation by performance, thereby creating an enforceable contract. Judge Burns denied Bryant's claims of mutual mistake, infancy and his motion for stay relief.
On December 23, 1998, Debtor moved to assume several executory contracts, pursuant to 11 U.S.C. § 363, including the contract with Bryant, and assign them to Oxxford. On December 28, 1998, Bryant filed an objection, arguing that under the July 30, 1998, order, no assumption or assignment could take place until entry of a final non-appealable order, which did not yet occur. On December 29, 1998, the Bankruptcy Court granted Debtor's motion, subject to the terms and limitations of the July 31, 1998, order.
On December 29, 1998, Bryant filed a notice of appeal of Judge Burns' December 21, 1998, Order. On January 6, 1999, Bryant amended his notice of appeal. He clarified that the appeal encompassed not only the adjudication of the Bryant dispute, but also the Bankruptcy Court's Order approving assumption and assignment of that contract and denying Bryant's motion for stay relief.
On February 2, 1999, the Bankruptcy Court entered its final orders: (1) granting Debtor's motion to assume its executory contract with Bryant and assign it to Oxxford; and (2) overruling Bryant's objection to the sale.
II. STANDARD OF REVIEW
The standard of review applied by a district court when reviewing the ruling of a bankruptcy court is determined by the nature of the issues presented on appeal. Findings of fact are not to be set aside unless they are "clearly erroneous." See Fed.R. of Bankr.P. 8013; In re Indian Palms Assocs., Ltd., 61 F.3d 197, 203 (3d Cir.1995); J.P. Fyfe, Inc. v. Bradco Supply Corp., 891 F.2d 66, 69 (3d Cir.1989). Questions of law are subject to de novo or plenary review. See In re Brown, 951 F.2d 564, 567 (3d Cir.1991); J.P. Fyfe, 891 F.2d at 69.
III. DISCUSSION
Bryant argues that this Court should reverse the Bankruptcy Court's Orders because: (1) there was never a signed contract tendered to Bryant; (2) Debtor's conduct did not constitute acceptance; (3) the Bankruptcy Court improperly shifted the burden of proof from Debtor to Bryant; and (4) Bryant cannot ratify a contract made while a minor because he did not have full knowledge of the facts. Finally, Bryant contends that even if a contract exists, the Bankruptcy Court incorrectly determined that there was not cause to lift the automatic stay to allow Bryant to void his contractual obligations. Having considered Bryant's arguments, this Court finds that the Bankruptcy Court correctly determined that a contract existed and that there was no cause to lift the automatic stay. This Court will address each of Bryant's arguments in turn.1
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