Judge Bergin of the Maricopa County Superior Court issued a temporary restraining order (TRO) in the IceArizona v. City of Glendale case on June 12.
The order stopped Glendale from canceling the Professional Management Services and Arena Lease Agreement (“Agreement”) between the two parties and ordered the status quo be maintained.
Subsequent to that TRO, Glendale filed a motion to modify it so that it would not have to make the $3.75 million dollar payment it owed to the Coyotes on July 1.
Monday’s hearing was originally scheduled to discuss the mundane issues of discovery but much more happened, and it gave us more insight as to what the parties will be arguing starting on July 31.
Judge Bergin was on a mission the second she walked into the courtroom. She immediately started discussing Glendale’s request to withhold the payment (or put it into escrow).
From the start the judge clued the parties into what her initial thoughts and questions were and then asked the attorneys to address those specific points. The judge was very involved in the discussion and it was obvious she had read everything and was up to speed on all the issues.
As a side note, it was refreshing to see a court proceeding happen in public, start on time and get right to the point.
There were several arguments and points flying back and forth. Discussing those would get me too far into the weeds (as Mac and Gaydos often say).
That being said, there were several interesting things that came out of the hearing.
This entire case revolves around Arizona Revised Statute 38-511, which allows the city to cancel the agreement if there was significant involvement in the negotiations/drafting by a Glendale employee that then went to work for the Coyotes within three years of the deal being inked.
The statute also makes reference to the fact that upon the cancellation, Glendale can receive any monies paid under the agreement.
If the court determines (under this law) Glendale can recover all monies paid to the Coyotes then it can recover the $15 million paid each year. The Coyotes obviously hate this idea (for good reason) and argued the statute is referring to only the monies paid to the employees that switched sides; which in this case is significantly less than the $15 million per year.
The Coyotes made an interesting point but the judge indicated she wasn’t buying what they were selling. Luckily for the Coyotes this was not an issue that had to be resolved today.
Another interesting argument made by the Coyotes was that it wasn’t fair to make it adhere to the status quo but to allow the city to withhold the money that is arguably owed to the Coyotes. That would essentially be requiring only one party, the Coyotes, to adhere to the order while Glendale doesn’t have to.
The judge seemed to agree when she made her ruling from the bench requiring the city to make the payment.
The next interesting point was again made by the Coyotes (they were on a roll).
While discussing a case that deals with a similar statute, counsel for the Coyotes explained, several times there is no “self-dealing” in this case. (Remember, 38-511 is affectionately referred to as the “self-serving statute.”)
Neither the judge nor Glendale disputed this. And, up to this point, there is no evidence that has been disclosed showing any type of “self-dealing” from former city attorney Craig Tindall or former assistant city manager Julie Frisoni.
That should make Tindall and Frisoni feel good but in the end it may not matter whether there was actual self-dealing or not.
Lastly, counsel for the Coyotes raised the waiver issue. This is the issue that the court of public opinion seems to have a problem with and it has to do with fairness. Many have asked how Glendale could back out of the agreement when it knew for at least two years that its former employees went to work for the Coyotes.
In fact, counsel stated “we are here about the new city council’s desire to renegotiate a contract that the old city council negotiated.”
Essentially because they don’t like the deal anymore. In other words, its not fair to wait this long, reap the benefits and then try to back out.
Glendale was ready for this argument and simply stated that the Coyotes were warned Glendale could use this statute to back out and it was specifically put into the agreement. Thus, the Coyotes assumed the risk this would happen.
The end result was that Judge Bergin ordered Glendale to pay the $3.75 million to the Coyotes. However, she ordered the Coyotes increase its bond to $1 million.
What do I take away from this proceeding?
That the parties are not backing down, that each have a legal and factual basis to go forward and that the judge has a tough decision to make since there seems to be no other Arizona case that has had to deal with this law.
It will make for interesting courtroom argument and drama.
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