Triple-A Baseball Club Associates v. Northeastern Baseball, Inc.
| Decision Date | 31 July 1987 |
| Docket Number | TRIPLE-A,87-1266 and 87-1307,Nos. 87-1239,s. 87-1239 |
| Citation | 832 F.2d 214 |
| Parties | BASEBALL CLUB ASSOCIATES, et al., Plaintiffs, Appellees, v. NORTHEASTERN BASEBALL, INC., Defendant, Appellant.BASEBALL CLUB ASSOCIATES, et al., Plaintiffs, Appellants, v. NORTHEASTERN BASEBALL, INC., Defendant, Appellee.BASEBALL CLUB ASSOCIATES, et al., Plaintiffs, Appellees, v. NORTHEASTERN BASEBALL, INC., et al., Defendants, Appellees. International League of Professional Baseball Clubs, Defendant, Appellant. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
Thomas B. Wheatley with whom John A. Hobson, Perkins, Thompson, Hinckley & Keddy, Portland, Me., John F. Wendel and Wendel & Chritton, Chartered, Lakeland, Fla., were on brief, for Northeastern Baseball, Inc. and Multi Purpose Stadium Authority of Lackawanna County.
Keith A. Powers with whom Michael Kaplan and Preti, Flaherty, Beliveau & Pachios, Portland, Me., were on brief, for Triple-A Baseball Club Associates, Triple-A Baseball Club of Maine, Inc. and Jordan Kobritz.
Frank A. Ray with whom Frank A. Ray Co., L.P.A., Columbus, Ohio, was on brief, for Intern. League of Professional Baseball Clubs.
Before BOWNES, TORRUELLA and SELYA, Circuit Judges.
All parties have appealed in this diversity contract case which was tried without a jury by the district court.
The plaintiffs are: Triple-A Baseball Club, a Maine limited partnership; Jordan Kobritz, general partner of the limited partnership; and Triple-A Baseball Club of Maine, Inc., another general partner of the limited partnership, all of whose stock is owned by Kobritz. Plaintiffs will be referred to as "the partnership" and/or "Kobritz," as the reference requires.
Defendants are Northeastern Baseball, Inc. (NBI), a Pennsylvania nonprofit corporation; the Multi-Purpose Stadium Authority (MPSA) of Lackawanna County, Pennsylvania, a county and state entity; and the International League of Professional Baseball Clubs, Inc., a nonprofit corporation organized under the laws of the State of Virginia. The International League is also a third-party plaintiff.
Before we step onto the playing field for this contract case, a little baseball background is necessary. Baseball is organized into Major Leagues and Minor Leagues. There are two leagues within Major League Baseball, the American League and the National League, containing a total of twenty-six Major League teams.
The Minor Leagues of Professional Baseball are organized as members under the National Association of Professional Baseball Leagues. The Minor Leagues have entered into the National Association Agreement with the Major Leagues. The Minor Leagues are divided into four classifications, Triple-A, Double-A, Single-A, and Rookie Leagues.
There are three Triple-A Leagues containing a total of twenty-six teams, one for each Major League team. One of the Triple-A Leagues is the International League, which is governed by a constitution, bylaws and rules.
There are three Double-A Leagues, also containing a total of twenty-six teams, one for each Major League team. One of the Double-A Leagues is the Eastern League, which is governed by bylaws, rules and regulations.
Since the goal of most Minor League players is to play in the Major Leagues and since the Major League teams obtain most of their players from the Minor Leagues, the Major League teams have player development contracts with Triple-A and Double-A teams. The game now begins.
John McGee was a man with a self-imposed mission. Indeed, it could be described as an obsession. He wanted to bring Triple-A Baseball to Scranton, Pennsylvania. But there were two problems. One, Scranton did not have a Triple-A franchise, that is, it did not have a right to have a Triple-A team play there. Such a franchise could be granted only by permission of the International League and the National Association of Professional Baseball Leagues, the governing body of Minor League baseball. 1 McGee's second problem was that Scranton did not have a stadium suitable for Triple-A baseball. McGee, however, was not deterred. He first convinced the county commissioners of Lackawanna County, in which Scranton is located, that a municipal corporation ought to be formed to build a stadium that would meet Triple-A requirements; MPSA was formed and McGee became its legal advisor. At about the same time, McGee and several associates from the Scranton area purchased the Double-A franchise of the Waterbury, Connecticut, Indians that was for sale. It was McGee's intent, and he so informed the directors of the Eastern League who had to approve the sale, to operate the Indians in Waterbury in 1985 and 1986 and move the team to Scranton in 1987, when the new stadium was completed. McGee made no bones about his ultimate goal of operating a Triple-A team in Scranton. NBI was formed and became the owner of the Waterbury Indians.
In his quest for a Triple-A franchise, McGee, on June 18, 1986, approached Kobritz who, through the partnership, was the major owner of the Maine Guides, a Triple-A team that played in Old Orchard Beach, Maine. McGee offered to buy the Triple-A franchise and Kobritz indicated an interest in selling. Negotiations continued On September 3, 1986, the partnership and NBI signed a contract which was drafted in final form by Kobritz' attorney. It provides as follows. The partnership agrees to sell its Triple-A franchise to NBI for $2.4 million. NBI agrees to sell its Double-A franchise to the partnership for $400,000. Paragraph 5 of the contract states: "In the event that the Eastern League of Professional Baseball Clubs shall refuse to approve the sale of the Double-A Baseball Franchise to Triple-A, then this Agreement shall continue in full force and effect with the following modifications: ...." The modifications made the purchase price of the Triple-A franchise $2 million payable by a deposit of $100,000 (which Kobritz already had) and $1.9 million at the closing. Paragraphs 6, 7, and 8 made the agreement subject to the approval on or before September 11, 1986, of the board of directors of NBI, the limited partners of the partnership, and the International League. All three approvals were obtained prior to September 11. Paragraph 9 states: "The transfer of the Double-A franchise is subject to the approval of the Eastern League of Professional Baseball Clubs." Paragraph 10 makes the approvals required under paragraphs 6, 7, and 8 "conditions precedent" and restates them in subparagraphs A, B, and C. It is to be noted here that, in contrast to paragraph 10, paragraph 9 does not make the approval of the sale of the Double-A franchise a condition precedent of the contract. Paragraph 11 set the closing for October 21, 1986, at Portland, Maine. Paragraph 12 provides that at the direction of NBI the partnership "shall sign a Player Development Contract with the Major League team selected" by NBI on or before September 14, 1986. On September 9, 1986, the partnership, at NBI's direction, signed a Player Development Contract with the "Phillies" of the National League, a Major League team. Paragraph 13 imposed the obligation to sign a player development contract with the Major League team selected by the partnership on NBI. This was not done because, on September 10, 1986, NBI transferred its Double-A franchise to the Eastern League.
through the summer. On July 30, McGee sent to Kobritz two contract drafts. One draft provided that NBI would buy the Triple-A franchise for $2.4 million, the other that Kobritz individually would buy NBI's Double-A franchise for $400,000. A check for $100,000 accompanied the drafts. Kobritz did not sign the drafts; he kept the check but did not deposit it. On August 20, Kobritz sent a proposed draft contract to McGee. Kobritz' proposal was more complicated than McGee's because he had some reluctant partners to deal with. In effect, Kobritz proposed that NBI pay $1.2 million to the limited partnership and $800,000 to the general partners. Kobritz' proposal also made the transfer of the Triple-A franchise to NBI contingent upon the transfer to the partnership of NBI's Double-A franchise.
On the same day, September 3, and at practically the same time, Kobritz individually and NBI entered into a side agreement. Kobritz handwrote the side agreement while his attorney was making final changes to the main contract. It provided: Both parties agreed "to use their best efforts to obtain Eastern League approval" of the purchase by the partnership of NBI's Double-A franchise. It was then provided that "if even after using their best efforts the Eastern League failed to approve such sale," the parties do hereby agree as follows:
1. Seller [NBI] agrees to sell to Buyer [Kobritz] and Buyer agrees to purchase from Seller the Double-A franchise currently owned by Seller for the purchase price of Five Hundred Thousand Dollars ($500,000.00) payable as follows:
Fifty Thousand Dollars ($50,000.00) per year for ten years commencing on September 30, 1987, and continuing on each September 30th thereafter to and including September 30, 1996.
2. Seller and Buyer shall enter into a consulting agreement for a period of ten years, whereby Buyer shall provide services to Seller for such ten year period. Seller...
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