Dallas Sports Group, LLC and Radical Arena, Ltd. v. DSE Hockey Club, L.P., et al.

Summary

The Business Court of Texas addresses cross-motions for summary judgment concerning the construction of franchise, partnership, and company agreements involving the Dallas Mavericks and Dallas Stars. The court holds that the agreements require the principal corporate and executive offices of each team to be maintained in Dallas and concludes that the Mavericks established a contractual basis for redeeming the Stars’ ownership interests. The court denies the Stars’ motions and grants the Mavericks’ declaratory judgment and affirmative-defense motions, while leaving tortious-interference and other issues for later proceedings.

Holdings

1. The redemption provisions provided an alternative path by which a Remaining Partner or Member could cause the partnership or company to redeem the relocating party's interests. Plaintiffs therefore could effect the redemption through their notice and tender without first obtaining a formal corporate vote.
2. The Location Commitment unambiguously required the Owners to designate and maintain in Dallas the principal corporate and executive offices of the relevant Team, meaning the publicly understood players, coaches, trainers, and administrative employees, rather than the Owner's or an affiliate's corporate offices.
3. The contractual capital-account adjustments were automatic and ministerial; completed bookkeeping entries were not conditions precedent to effective redemption.
4. Defendants did not conclusively establish a limitations defense because the declaratory-judgment controversy accrued when defendants rejected plaintiffs' redemption notice, not necessarily when defendants allegedly moved their offices years earlier.
5. The nonwaiver clauses barred waiver based merely on plaintiffs' delay or inaction, and defendants failed to produce evidence of affirmative conduct unequivocally inconsistent with plaintiffs' redemption rights. Defendants also failed to establish the elements of laches.

Questions Presented

1. Whether plaintiffs could cause redemption of defendants' partnership and limited-liability-company interests without a formal vote or entity action.
2. Whether the Location Commitment required the Team's principal corporate and executive offices, rather than the Owner's or affiliated entities' offices, to be maintained in Dallas.
3. Whether the defendants established limitations, original impossibility, waiver, or laches defenses as a matter of law or raised a genuine issue of material fact.
4. Whether bookkeeping entries reducing capital accounts were conditions precedent to effective redemption.
5. Whether plaintiffs effectively redeemed defendants' interests and thereby terminated designated members of the Center GP board.

Disposition

other