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Dec 10, 2008 6:36 am US/Central
David McDavid Wins $316 Million Lawsuit
ATLANTA (AP / CBS 11 NEWS) ―
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Marvin Williams of the Atlanta Hawks takes down Rajon Rondo of the Boston Celtics in Game Seven of the 2008 Eastern Conference Quarterfinals. Hawks' owner Turner Broadcasting System lost a $316 million breach of contract lawsuit against David McDavid.
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Turner Broadcasting System should pay $316 million to a Texas businessman who claims the major cable network operator breached a contract that he was negotiating to buy the city's pro basketball and hockey teams, a jury ruled Tuesday.
The verdict in favor of David McDavid does not affect the NBA Hawks and NHL Thrashers, both of which are now owned by an eight-man group known as Atlanta Spirit.
McDavid signed a letter of intent with Turner, a unit of Time Warner Inc., to purchase the two teams in April 2003. The proposed deal also included operating rights to Philips Arena, home of both the Hawks and Thrashers.
McDavid's exclusive negotiating rights expired 45 days later, but the two sides continued to talk. Then, in September 2003, Turner announced it was selling the teams and the arena rights to the Spirit.
The spurned bidder filed a $450 million lawsuit in Fulton County Superior Court, accusing executives of sharing his confidential financial information with the group that now owns the teams.
"We're just very glad to have our day in court," McDavid told The Atlanta Journal-Constitution in the courtroom immediately after the verdict. "It's been five long years. We're glad that a jury of 12 Georgians saw the validity of our claim. To us, it was never about the money, it was about the principle."
Misty Skedgell, a Turner spokeswoman, said the company was considering an appeal.
"We are disappointed with the decision of the court and the jury's interpretation of the facts in what was a complex business transaction," she said. "We will carefully consider all options, including appeal, and will announce any plans at the appropriate time."
The jury said McDavid was due $281 million for breach of contract and $35 million for additional violations. However, the panel also ruled that Turner did not share confidential information and did not commit fraud.
McDavid was seeking the difference between the contract price and the value of the teams and the arena rights when Turner allegedly breached the contract. He also sought punitive damages, interest and an amount equal to McDavid's projection of the teams' value had the deal not collapsed, according to documents.
McDavid's lawyers claimed the sale to the Spirit was an "inside job," meant to benefit a group that included the son and son-in-law of media pioneer Ted Turner, founder of the Atlanta-based company. Turner is a cable company that includes CNN, TBS, TNT, Cartoon Network, Turner Classic Movies and truTV. It was acquired by Time Warner in 1996.
Turner company once owned three of the city's four major professional teams, but has since sold them all. Last year, Liberty Media Corp. purchased baseball's Braves from Turner in a deal that valued the franchise at $450 million.
During the trial, McDavid introduced evidence that he claimed was proof of a deal for the Hawks and Thrashers, including a letter from Turner to Time Warner's board asking for approval to sell the teams to McDavid, a draft press release announcing the deal with McDavid, and reams of documents that represented a purchase-and-sale agreement.
Turner's attorneys said the company memos and press releases were routine during the course of negotiations and that none of the documents between the company and McDavid were ever signed. Also, Turner executives and several Spirit investors testified they never spoke about the deal with Ted Turner, who no longer has an active role with the company.
The Spirit is involved in a separate legal battle between co-owner Steve Belkin and the remaining members of the group for control of the teams. At dispute is how much the franchises are worth and how much Belkin should receive for selling his 30 percent stake.
McDavid is best known for the string of car dealerships throughout Texas that bear his name. He sold most of the company in 1998.
McDavid also used to be part owner of the Dallas Mavericks, but sold his stake to Mark Cuban in 2000.
Click here for more on the trial.
(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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