Thursday, November 21, 2002
S.C. Leaves Intact Ruling That Compels Arbitration Of Golden State Warriors Arena Dispute
By a MetNews Staff Writer
A First District Court of Appeal ruling that the NBA Golden State Warriors must arbitrate disputes regarding payments owed to local officials in connection with the financing of the team’s arena was denied review yesterday by the state Supreme Court.
Justices voted 5-1 not to hear a further appeal in Oakland-Alameda County Coliseum Authority v. CC Partners, 101 Cal.App.4th 635, decided by the First District’s Div. Four on Aug. 27. Justice Ming Chin voted to grant review and Justice Kathryn M. Werdegar was recused.
The high court’s decision not to hear the case may allow the authority to collect more than $20 million under a ruling by arbitrator Eugene Lynch, a retired judge of the U.S. District Court for the Northern District of California.
Lynch’s award came in one of the larger disputes in a series of disagreements between the authority and CC Partners, which has owned the team for eight years. The head of CC Partners, Chris Cohan, was described in a recent San Francisco Chronicle feature as “an owner who seems more comfortable in the courtroom than he does around the basketball court.”
The case concerns a “License Agreement,” which is one of several contracts that were signed when Cohan and the authority agreed to team up to do a complete remodeling of the arena where the team plays. The Warriors spent a year in San Jose while the construction proceeded, then inaugurated the “New Arena” in November 1997.
The complex series of transactions was designed to satisfy the authority’s desire to retain the Warriors without loading more debt on taxpayers already burdened by the expansion of the baseball/football stadium adjacent to the arena and by contracts to keep the A’s baseball club and the NFL Raiders in Oakland.
The authority agreed to create a state-of-the-art basketball arena in return for a lease by the team to play in that venue for at least 20 years and to help pay for it. Specifically, the license agreement required that the Warriors pay $7.4 million a year in revenue from the sale of premium seating to help retire construction debt, beginning upon “substantial completion” of the stadium.
Two weeks after that agreement was signed, the authority and the team signed a financing agreement with the Canadian Imperial Bank of Commerce. That agreement required that the premium seating revenues for the first year be deposited with the bank no later than the date of the first home game, Nov. 8, 1997.
When the revenues were not deposited, the team demanded arbitration under the broad arbitration clause contained in the licensing agreement.
The Warriors argued that the arena had not been substantially completed, so no payment was due. But Lynch ruled that the Canadian Imperial deposit agreement had modified the earlier contract, so that the payment was due on the date of the first home game whether the project was finished or not.
Both a San Francisco Superior Court judge and the First District panel rejected Cohan’s contention that Lynch had exceeded his authority by interpreting the deposit agreement, since it did not contain an arbitration clause.
Presiding Justice Laurence Kay, writing for the Court of Appeal, said that since the license agreement authorized arbitration not only of disputes arising out of that particular agreement, but also disputes “relating” to it, Lynch acted within his role as arbitrator.
Kay also rejected the Warrior’s reliance on a recent Court of Appeal decision holding invalid an arbitration agreement which, like the clause in the license agreement, purported to grant the courts authority to review an arbitration award for legal error. The clause was severable, Kay said.
Copyright 2002, Metropolitan News Company