Legally Speaking: Did Glendale have the right to cancel the Coyotes lease agreement?

The Glendale City Council voted to cancel the professional management services and arena lease agreement with the Arizona Coyotes on Wednesday. After brief comments by the Council and an hour of public comments, including statements by Coyotes’ attorney Nick Wood and co-owner Anthony LeBlanc, the Council voted 5-2 for the cancellation.

Many, including the Coyotes, want to know the reasons behind the surprise decision. The Glendale City Council did not give much away but its reasoning appears to revolve around former Glendale City Attorney Craig Tindall and Arizona Revised Statute 38-511, titled “Cancellation of political subdivision and state contracts.”

The relevant portions of this law state:

A. The state…may, within three years after its execution, cancel any contract, without penalty or further obligation, made by the state…if any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the state is…at any time while the contract…is in effect, an employee or agent of any other party to the contract in any capacity or a consultant to any other party of the contract with respect to the subject matter of the contract.

In citing this statute, the City Council is pointing its finger at Craig Tindall as its reason to cancel the contract.

Here is some brief background: Tindall left Glendale in April of 2013. The contract with the Coyotes was inked in July 2013. Tindall started working for the Coyotes in August 2013. Arguably Tindall was intimately involved with the negotiating and drafting of the contract.

Since the three year window has not yet closed, and Tindall went to work for the Coyotes within the three years, it is Glendale’s position that it can cancel the contract.

The city may be right.

However, counsel for the Coyotes aptly pointed out that the bulk of the negotiations and drafting of the contract took place in June and July 2013, after Tindall left his post in Glendale and before he went to work for the Coyotes. Thus, how can it be said that Tindall was “significantly involved” in the process?

Good point, though it may not be enough to overcome the city’s argument.

During the meeting, the Coyotes made it very clear that it disagrees with the city council and its reliance on the cited Arizona law.

Wood told the council to “step away from the cliff,” that it was incorrect, making a big mistake and that “there would be no coming back from the mistake.”

Apparently his words had no effect.

Now that the vote is over, the city attorney will take the necessary steps to cancel the contract.

According to the same law mentioned above, the cancellation shall become effective when written notice of the cancellation is received by the Coyotes. Soon thereafter we can expect the Coyotes to go straight to the courthouse steps to request an injunction.

In its quest to obtain a court ordered injunction, the Coyotes will explain to the court what transpired at the city council meeting, why the city is wrong and why it is the Coyotes who have the winning argument. They will also explain to the court why it is necessary to stop the city from acting on the cancellation and that it is necessary to maintain the status quo until the court makes a decision on the validity of the cancellation and the city’s actions.

What does all this mean for the fans, the taxpayers and you and me?

It means this situation has the potential to be a long, drawn-out, expensive legal battle between two powerhouses. Money will be spent, bad things will be said, reputations will be damaged and events and revenue will be lost.

I write “potential” because the two could come together and decide to talk this through and re-negotiate the contract to satisfy both sides. Which, incidentally, is exactly what the Glendale city manager, city attorney and mayor asked the Coyotes to do a day before the announcement of the special meeting. The answer from the Coyotes then, and now, is no, there will be no re-negotiation.

Some argue in the end the Coyotes will leave Glendale. Maybe so, but for right now, according to the Coyotes, the organization wants to stay in Glendale and that may just be enough to work things out with the city.