McConnell v. Hunt Sports Ent.
| Decision Date | 31 August 1999 |
| Docket Number | No. 98AP-1386 and 98AP-1459.,98AP-1386 and 98AP-1459. |
| Parties | McCONNELL et al., Appellees, v. HUNT SPORTS ENTERPRISES et al., Appellants. |
| Court | Ohio Court of Appeals |
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Zeiger & Carpenter, John W. Zeiger and Steven W. Tigges; Vorys, Sater, Seymour & Pease, L.L.P., Thomas B. Ridgley and David S. Cupps, for appellees John H. McConnell and Wolfe Enterprises, Inc. Dinsmore & Shohl, L.L.P., Anthony J. Celebrezze, John W. Beatty, Joel S. Taylor and Wendy L. Andersen, for appellants Hunt Sports Enterprises, Hunt Sports Enterprises, L.L.C. and Hunt Sports Group, L.L.C.
Wiles, Boyle, Burkholder & Bringardner Co., L.P.A., Jay B. Eggspuehler and Mark C. Melko, for appellant Columbus Hockey Limited, by its Liquidating Trustee, Michael L. Close.
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On June 17, 1997, John H. McConnell and Wolfe Enterprises, Inc. filed a complaint for declaratory judgment in the Franklin County Court of Common Pleas against Hunt Sports Enterprises, Hunt Sports Enterprises, L.L.C., Hunt Sports Group, L.L.C. ("Hunt Sports Group"), and Columbus Hockey Limited ("CHL"). CHL was a limited liability company formed under R.C. Chapter 1705. A brief background of the events leading up to the formation of CHL and the subsequent discord among certain of its members follows.
In 1996, the National Hockey League ("NHL") determined it would be accepting applications for new hockey franchises. In April 1996, Gregory S. Lashutka, the mayor of Columbus, received a phone call from an NHL representative inquiring as to Columbus's interest in a hockey team. As a result, Mayor Lashutka asked certain community leaders who had been involved in exploring professional sports in Columbus to pursue the possibility of applying for an NHL hockey franchise. Two of these persons were Ronald A. Pizzuti and McConnell.
Pizzuti began efforts to recruit investors in a possible franchise. Pizzuti approached Lamar Hunt, principal of Hunt Sports Group, as to Hunt's interest in investing in such a franchise for Columbus. Hunt was already the operating member of the Columbus Crew, a professional soccer team whose investors included Hunt Sports Group, Pizzuti, McConnell, and Wolfe Enterprises, Inc. Hunt expressed an interest in participating in a possible franchise. The deadline for applying for an NHL expansion franchise was November 1, 1996.
On October 31, 1996, CHL was formed when its articles of organization were filed with the secretary of state pursuant to R.C. 1705.04. The members of CHL were McConnell, Wolfe Enterprises, Inc., Hunt Sports Group, Pizzuti Sports Limited, and Buckeye Hockey, L.L.C.1 Each member made an initial capital contribution of $25,000. CHL was subject to an operating agreement that set forth the terms between the members. Pursuant to section 2.1 of CHL's operating agreement, the general character of the business of CHL was to invest in and operate a franchise in the NHL.
On or about November 1, 1996, an application was filed with the NHL on behalf of the city of Columbus. In the application, the ownership group was identified as CHL, and the individuals in such group were listed as Pizzuti Sports Limited, McConnell, Wolfe Enterprises, Inc., and Hunt Sports Group. A $100,000 check from CHL was included as the application fee. Also included within the application package was Columbus's plan for an arena to house the hockey games. There was no facility at the time, and the proposal was to build a facility that would be financed, in large part, by a three-year countywide one-half percent sales tax. The sales tax issue would be on the May 1997 ballot.
On May 6, 1997, the sales tax issue failed. The day after, Mayor Lashutka met with Hunt, and other opportunities were discussed. The mayor also spoke with Gary Bettman, commissioner of the NHL, and they discussed whether an alternate plan for an arena was possible. Also on May 7, 1997, Dimon McPherson, chairman and chief executive officer of Nationwide Insurance Enterprise ("Nationwide"), met with Hunt, and they discussed the possibility of building the arena despite the failure of the sales tax issue. McPherson testified that he chose Hunt because: Hunt was interested, and Nationwide began working on an arena plan. On or about May 9, 1997, the mayor spoke with Bettman and let him know that alternate plans would be pursued, and Mr. Bettman gave Columbus until June 4, 1997 to come up with a plan.
By May 28, 1997, Nationwide had come up with a plan to finance an arena privately and on such date, Nationwide representatives met with representatives of Hunt Sports Group. Hunt Sports Group did not accept Nationwide's lease proposal. McPherson told Hunt that City Council would be meeting on Monday, June 2, 1997, to vote on an ordinance that, in general terms, included an authorization for the city to enter into an agreement with Nationwide to build a downtown arena. Nationwide informed Hunt Sports Group that it needed an answer by Friday, May 30, 1997 as to whether, in general terms, the lease proposal was acceptable. On May 29, 1997, Nationwide representatives again met with representatives of Hunt Sports Group. Again, Hunt Sports Group indicated that the lease proposal was unacceptable and that the NHL team would lose millions with this proposal. The June 4, 1997 NHL deadline was discussed. Hunt Sports Group stated that it would continue to evaluate the proposal, and it wanted the weekend to do so. Nationwide informed appellant that it needed an answer by close of business Friday, May 30.
On May 30, 1997, McPherson called McConnell and requested that they meet and discuss "where they were on the arena." McPherson "could see that the situation now was slipping away, and he just didn't want that to happen," so he went to see McConnell for advice and counsel. McConnell testified that the conversation was McPherson told McConnell about appellant's rejection of the lease proposal and discussed the NHL's June 4 deadline. McConnell stated that if Hunt would not step up and lease the arena and, therefore, get the franchise, McConnell would. Hunt Sports Group did not contact Nationwide on May 30, 1997.
On Saturday, May 31, McPherson told Nationwide's board of directors that there was not yet a lease commitment but that if Hunt Sports Group did not lease the arena, McConnell would. On Monday, June 2, 1997, City Council passed the resolution that set forth the terms for Nationwide to build an arena downtown. Also on June 2, 1997, McPherson met with Bettman and told him that Nationwide would be building an arena in downtown Columbus. McPherson also told Bettman that if need be, McConnell would purchase the franchise on his own. On or about Tuesday, June 3, McConnell was informed that appellant had not yet accepted the lease proposal. On June 3, Hunt spoke with Robert J. Woodward, Jr., executive vice-president and chief investment officer of Nationwide, and asked him to fax a copy of the ordinance passed by City Council. On that same date, Hunt Sports Group told Nationwide that it still found the terms of the lease to be unacceptable. On June 3 or June 4, McConnell, in a conversation with the NHL, orally agreed to apply for a hockey franchise for Columbus. On June 4, McPherson returned a call from Hunt, and Hunt informed McPherson that he was still interested in pursuing an agreement with Nationwide.
On June 4, 1997, the NHL franchise expansion committee met. Bettman informed the committee that Nationwide would build an arena, and McConnell was prepared to go forward with the franchise even if he had to do it himself. The committee was told that Hunt Sports Group's involvement was an open issue, but McConnell as an owner was more than adequate. The expansion committee recommended Columbus to the NHL board of governors as one of four cities to be granted a franchise.
On June 5, 1997, the NHL sent Hunt a letter requesting that he let the NHL know by Monday, June 9, 1997 whether he was going forward with his franchise application. In a June 6, 1997 letter to the NHL, Hunt responded that CHL intended to pursue the franchise application. Hunt informed the NHL that he had arranged a meeting with the members of CHL to be held on June 9, 1997. Hunt indicated that the application was contingent upon entering into an appropriate lease for a hockey facility.
On June 9, 1997, a meeting took place at Pizzuti's office. Those present at the meeting included McConnell, Hunt, Pizzuti, John F. Wolfe, chairman of Wolfe Enterprises, Inc., and representatives of Buckeye Hockey, L.L.C. and Ameritech. The NHL required that the ownership group be identified and that such ownership group sign a lease term sheet by June 9, 1997. Brian Ellis, president and chief operating officer of Nationwide, presented the lease term sheet to those present at the meeting, left the meeting, and went to a different room.
Hunt indicated the lease was unacceptable. Ameritech and Buckeye Hockey, L.L.C. indicated that if Hunt found it unacceptable, then they too found it unacceptable. Pizzuti and Wolfe agreed to participate along with McConnell. John Christie, president of JMAC, Inc., the personal...
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