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Legally Speaking: Who won in D-backs and Maricopa County decision?

The interior of Chase Field is pictured Sunday Aug. 30, 2015 in Phoenix. Chase Field is home of the Arizona Diamondbacks. (Cronkite News Photo/Jacob Stanek)
LISTEN: Monica Lindstrom, Legal Analyst

A dispute between the Arizona Diamondbacks and Maricopa County over Chase Field in downtown Phoenix will head to arbitration, a judge ruled Thursday.

If you ask them, they will each claim victory. Maricopa County Superior Court Judge Karen Mullins issued her latest ruling in this landlord-tenant dispute sending the case to arbitration.

What is arbitration? It is a form of alternative dispute resolution. Instead of a judge in a courtroom deciding the matter, a private-neutral third party is hired to decide the dispute. When it comes to the Arizona Diamondbacks and Maricopa County, the contract requires a “panel” of three arbitrators: a neutral evaluator, a panelist selected by the D-backs and one selected by Maricopa County.

I spoke with the attorneys for both parties about the court’s decision and they are satisfied with the outcome. This could be because arbitration proceedings are typically quicker and less expensive than fighting it out in a courtroom. In fact, according to the contract, the arbitration hearing is to be commenced within 30 days of the selection of the arbitrators. That is fast!

The D-backs are pushing, and will continue to push, for the arbitration to start as soon as possible; wherein Maricopa County believes significant discovery and investigation is needed before they can start the arbitration. It is up to the arbitration panel when the hearing will start.

An inspection and facility assessment report were commissioned by both parties several years ago that listed the actual and expected repairs and upgrades for the life of the lease. The number on the bottom of that report has grown to around $187 million dollars. Maricopa County points out that is for both the actual repairs/upgrades needed now and those that are anticipated in the future. Maricopa County holds, and common sense dictates, the report will likely need to be reviewed, edited and discussed by experts.

The main issue in this dispute – who is responsible for the “repairs” and “upgrades” to Chase Field over the life of the contract, which goes through 2027 – is not a complicated question, but the difficulty comes into play when trying to determine what a repair is and what an upgrade (or capital improvement) is. You see, as a rule of thumb, the D-backs are responsible for stadium operation, maintenance and repairs and the County is responsible for capital improvements/repairs. That is why the definition of both is needed and right now, the parties can’t figure it out together.

Let’s get down to reality and think about what could happen.

The arbitration panel is only allowed to award certain relief, “the Arbitration Panel shall be without authority to award punitive damages or to terminate this [lease]…” In other words, the panel is not allowed to cancel the contract. The panel cannot rule the contract was breached and it is now canceled, thus allowing the D-backs to move out of Chase Field. The panel cannot rule that taxpayers have to pay more.

Neither Maricopa County nor the D-backs want the taxpayers to pay additional money. According to the D-backs, the taxpayers have been repaid in full and with interest for their initial investment in Chase Field. Additionally, the County believes it has enough money in the reserve bank accounts to pay for those items that it is responsible for under the contract.

So, as of right now, we know the ballgame must be played out in arbitration. Let’s travel down a couple roads of possible resolution. Let us assume the panel rules what Maricopa County is responsible for and what the D-backs are responsible for.

If the panel rules Maricopa County is responsible for items on that assessment, and Maricopa County cannot pay for those items then the D-backs could step in and try to settle. They could offer to pay for those items and in return, the County would have to give up equity in Chase Field or abate (reduce) the rent the D-backs have to pay.

At the extreme, this could result in D-backs having most if not all equity in Chase Field and the D-backs could become the owners.

Would this really be that bad? After all, the taxpayers have already been repaid for the initial investment made plus interest. Then the D-backs could do whatever they wanted with Chase Field. However, they could also let it fall into disrepair with the intent to stop using it and leave a dilapidated, enormous stadium in downtown Phoenix while it builds a new beautiful stadium elsewhere, perhaps on Indian land. This greatly concerns Maricopa County. I think that is the worst-case scenario and find it highly unlikely based on my discussions with the team representatives. The D-backs would like to stay at Chase Field.

On the other hand, if the panel rules Maricopa County is responsible for items on the assessment and the County pays for those, then the issue of “who pays” would be resolved. If Maricopa County cannot pay then we are right back to the above paragraph; however, the question of who pays for what would be resolved. If it can pay, and it does, then all should be calm at Chase Field; at least until the end of the lease.

Here is my take, #LegallySpeaking – The legal team on each side are powerhouses, strong and intelligent. Each side has a legitimate gripe. Each side believes Maricopa County is responsible for some of the costs and the D-backs are responsible for others. However, they cannot agree; partly because the contract between them is fairly ambiguous and confusing in multiple significant areas.

What they do agree on is that neither want the taxpayers to pay anything more and they want the D-backs to stay in Arizona. Additionally, they want this game resolved quickly, which, in my opinion will not happen without some give and take on each side.

In this author’s humble opinion the parties should try mediation first. Mediation is another form of alternative dispute resolution where the D-backs and Maricopa County work together with an independent, neutral, third party to resolve the dispute and hopefully get to a win-win. Arbitration gives a decision; mediation allows the parties to decide a resolution for themselves…with some help.

Granted, the parties might be shaking their heads right now and saying no way. But let’s think about it:

• Both sides want a fantastic, state of the art stadium.
• Both want quick resolution.
• Both want fans to be happy which brings revenue to the team and City/County.
• Neither want a dilapidated, enormous structure in downtown Phoenix that cannot be used.
• Both want to clean up and clarify the contracts between them.
• Both want to declare victory for their side.
• Both want to save money.

There has been a SIGNIFICANT breakdown in communications between the D-backs and the County, egos have gotten involved and emotions have become heated. This has resulted in an overall feeling of disgust and frustration with fans and taxpayers (what I call unintended consequences). I have heard this directly from all sides.

Set aside the history; set aside the egos; set aside the emotions; think about the fans and the future of Phoenix and the D-backs. Realistically, look at the problems, look at the money that exists to handle it and figure it out.

• Yes, the County will have to pay for items on the assessment, more than it wants.
• No, the County will not be able to pay for everything.
• Yes, the D-backs will have to reach into their own pockets again for items on the assessment.
• No, the D-backs will not be able to leave Chase Field anytime soon.
• Yes, both sides need to concede to get to the win-win; and above all…
• Yes, this will take hard work, drive and commitment.

The parties are at a tipping point: Make the right decision and keep the fans, MLB and taxpayers confident and happy; make the wrong one and have to deal with the unintended consequences which will result in a lose-lose.

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