Trone et al v. Peanut Corporation of America

Filing 24

Trone et al v. Peanut Corporation of America

Doc. 24 Att. 17

EXHIBIT

17

TO DECLARATION OF OCONNOR
Dockets.Justia.com

THE

RESOLUTION

EXPERTS

July

31 2008

Re

Nelson Don vs Dallas

Basketball

Limited

Dallas

Mavericks

JAMS Ref

No

1310016794

Dear Counsel

Enclosed

please find the

INTERIM
any

AWARD

executed

by

Hon

Glen

Ashworth

Please contact

me

if you have

questions

Sincerely

Megan
Case

Moyer

mmoyer
Fax [phone]

Manager

End

8401

CENTRAL

EXPRESSWAY

SUITE

610

DALLAS

TX 75225

2147445267

2147206010

DON NELSON
Claimant Matter
in

Arbitration

JAMS
DALLAS BASKETBALL LIMITED DALLAS MAVEIUCKS

Reference

No

1310016794

lb

Respondent

INTERIM

AWARD

Parties follows

and Counsel

The

parties

are

identified

in the

caption

and

are

represented

as

Mark

Talbot Davenport
Colleluori

Donald Ryan
Figari

McComber
Davenport

LLP

3400 Bank
901

of America Plaza Street

Main

LB

125

Dallas

TX

752023796

Ph 2149392000
and

Fax [phone]

John

OConnor
San Francisco

Associates

One Embarcadero

Center

Suite

1020

Ph

4156939960

CA 94111 Fax [phone]
CounterRespondent

Counsel

for Claimant

Geoffrey Steven

Harper
Stodghill

Thomas

Melsheimer

Natalie Arbaugh Fish 1717 Richardson

PC
5000

Main

Street Suite 75201

Dallas

TX

Ph

2147475070

Fax [phone]
CounterClaimant

Counselfor

Respondent

Arbitrator

Hon Glen JAMS The
8401 Dallas

Ashworth
Resolution

Ret
Experts
Suite

Central Expressway

610LB32

TX

75225

Ph 2147445267
Case Manager

Fax [phone]

Megan

Moyer The Resolution
Experts
Suite

JAMS
8401 Dallas

Central Expressway

610LB32

TX75225

Ph 2148914525
Email
In accordance with the parties agreement

Fax [phone]

and pursuant

to

Section

8b

of the

Fifth

Amendment

to

the

Employment

Agreement

all

matters

in

controversy

were

submitted

to

binding

arbitration

before

Hon

Glen

Ashworth

serving

as

the

parties

sole

Arbitrator

The

arbitration

was convened

in Dallas

Texas

over two days

beginning

June

23

2008

The

parties

proceeded

to

present

their

offers

of

proof

including

statements

of counsel

testimony

of witnesses

depositions

and

documentary

evidence

Thereafter

the parties

submitted

postarbitration

briefing

for consideration

By
and

agreement

of the parties the issue

of attorneys

lees

and

costs

was

bifurcated

deferred pending

this Interim

Award

All

issues

have

been determined

by the evidence

presented during

the Arbitration

The

standard

of proof

is

based

on

preponderance

of the

evidence

unless

otherwise

stated

On

February

1997

Claimant

Don

Nelson

Nelson
Manager

executed

an

Employment

Agreement

Agreement
dina

to

become

General

of the Respondent

Dallas

Basketball

Limited

Dallas

Mavericks

Mavericks
with

Thereafter

the

Agreement

was

amended

five

times beginning

December

1997

First

Amendment

to

reflect

Nelsons

assumption

of

duties

as

Read

Coach

through

the

remainder

of the

19971998

NBA
as

season

Second Amendment became

effective

July

1998

to

retain

Nelson

Read

Coach through

June

30 2000

as

well

as

General

Manager through Read

June

30 2003
June

The Third Amendment was executed

to

employ Nelson

as

Coach through

30 2003

General Manager

through

June

30 2006 and 2003

as

Consultant

from July

2006 through

June

30 2011

Effective

August

Fourth

Amendment was
event of Nelsons

executed

to

address scheduled

deferred

compensation

payments

in the

death

Finally

the

Fifth

Amendment became

effective

July

2003

and

extended

Nelsons

head coaching

responsibilities

through

June

30 2006

The

Fifth

Amendment was
While
the

in effect

during the time period

of this dispute

Agreement

was

amended

several

times

it

was

an

integrated

contract

which remained

in

effect

subject

to

control

or

modification

by

provision

of

more

recent

conflicting

Amendment

It

is

the

Fifth

Amendment which
and

essentially

contains

all

the

operative

terms regarding

Nelsons

employment

duties

compensation including

deferred

compensation

Under

its

terms Nelson was

to

receive

annually

35

million for

serving

as

Read

Coach

16

million for serving

as

General

Manager and 900000
he

in

deferred

compensation through

June

30 2006

Thereafter

was

to

receive

200000

per year as

Consultant

through

June

30 2011
current

In

January

2000

the

Mavericks

were

purchased

by

its

majority

owner

Mark Cuban
Cuban and

Cuban

By

all

accounts

initially

good

relationship

existed

between

Nelson

however

by

the

time

of the

Fifth

Amendment
as

it

had deteriorated

On March 19 2005 Nelson
an agreement with

stepped

down from his Amendment

duties

Head

Coach
remained

but pursuant

to

Cuban

his Fifth

to

the

Agreement

in effect

and

there

was no evidence

it

was ever terminated

in accordance

with

Section

8A
head

or

of the

Agreement

The

remainder

of the

season

was

completed

under

new

coaching

regime

On
in

July

2006
the

Nelson

was

to

begin the

consulting portion of his

employment

accordance

with

terms

of the

Fifth

Amendment

The

first

consulting payment

approximately

8000
payment

was

due

on

July

15 2006

along

with

the

larger

deferred

compensation

approximately

40000
was not

While

the

deferred

compensation

payment

was made

the

consulting payment

The testimony

reflects

that

Nelson

and Mavericks

CFO

Floyd

Jahner

discussed the

nonpayment
according
to

as well

as

either

lump

sum payment

according

to

Jahner

or

buyout

Nelson

Regardless

no

consulting payment

was made

nor again on July

31 2006
the

Nelsons personal

attorney

John

OConnor

sent

notice

of breach

letter

to

Mavericks

on August

2006

and

yet the third consulting payment

was not made on August 15 2006 head coaching

On
Golden

August 30 2006

Nelson accepted

position

with

the

NBA

State

Warriors

On

August 3l 2006 Nelson did not receive

either

his consulting

salary

or

his

scheduled

payment

for

deferred

compensation

The

Mavericks

did

however

send

Nelson

notice

of breach

letter

for

taking

the

Golden

State

position

and

gave

him 30 days

to

cure the breach

The

evidence

supports

that

since

that

time

no

further

consulting

or

deferred

compensation

payments have

been

paid by the Mavericks

and

Nelson continues

to

serve

as

Head

Coach of

the

Warriors

The

Agreement

and

its

five

subsequent

Amendments

constitute

one

valid

integrated

contract

and

the

threshold issue

is

to

determine

whether

an

ambiguity

exists

which

would

require

the

consideration

of

parol

evidence

This

determination

is

question

of law and must be

decided

by looking

at the

contract

as

whole

in light

of the

circumstances

surrounding

its

formulation

The

primary

concern

is

to

ascertain

parties

intentions

from

the

four

corners of

the

agreement

and

to

give

the

contractual

language

its

plain

grammatical

meaning

Reilly

Rangers

Mgt

Inc 727

SW2d

525

Tex 1987

From

review

of the entire Agreement

and

in concurrence

with the parties

acknowledgment

the Agreement

is

found

to be

unambiguous

Significant

parol evidence

was

offered

during

the

arbitration

hearing

and while

anecdotal

such

extrinsic

testimony

was

irrelevant

to

any

interpretation

of the Agreement

Union

Fire Ins

Co

CBIIndus Inc
Deferred

907

SW2d

517

Tex 1995

The

terms

of

Nelsons

compensation

including

deferred

compensation

are

principally

found

in

Section

and

Exhibit

of the

Fifth

Amendment

The

clear

and

plain

reading

of

the

entire

Agreement

including

the

aforementioned

Section

and

Exhibit

reflect

that

while

the

deferred

compensation

was

to

be

payable
his

in

future

years

it

was

both

earned

and

accrued
on June

by

Nelson

during

tenure

as

Head

CoachGeneral

Manager

ending

30

2006

All relevant

language

in

the

Agreement

supports

this conclusion

Section

4a

provides

that

the

deferred

compensation

earned

in

the

Fifth

Amendment

term

July

2003

June

30 2006

was

in

addition

to

the

deferred

compensation

already

earned

and

accrued

by Employee

during

the

period

beginning

July

1998

through

June

30 2003
by Employee

Likewise

Section

4c

provides

that

The

deferred

compensation

earned

for

each

12month

period

as referenced

in Paragraph

4a

above

shall

be earned

prorata

over

such

12 month

period

Indeed Exhibit

also

clearly

reflects

the

periods

in

which

the

deferred

compensation

was

earned
no

When

harmonizing

this

language

with

the

entire

Agreement

there

is

simply

contractual

support

that

Nelson had not

fully

earned

his

entire

deferred

compensation

amount

by

June

30

2006

nor

was

there

any

clear

language

which

tied

it

to

any

contractual

performance

after

it

had accrued

Pursuant

to

the

terms

of the

Agreement

and

according

to

the

undisputed

testimony

including

that

of

Floyd

Jahner

Nelson had

fully

earned

66

million in

deferred

compensation

that

remained

unpaid

as of June

30 2006

Although

scheduled

to

be

payable

in

future

years

Nelson

had

fully

performed

all

of his contractual

obligations

as

Head

CoachGeneral

Manager

and

had

the

vested

right to

receive

the

balance

of his

fully

earned

and

accrued

deferred

compensation

following

the

termination

of

the

Agreement

Finally

the testimony

supports

and

the

parties

concur

that

the Agreement

was not

terminated

pursuant

to

either

Section

cause

or

8B

without

cause

Inasmuch

as

the

provisions

of Section

of the

Agreement

contemplate

possible offset

following

an

8B
and

termination

which

did not

occur

and

furthermore

since

there

was

no remaining

unearned

deferred

compensation

due

at

the

time of the

any

offset

from

the

Golden

State

employment

is

inapplicable

under

the

Agreement

The

parties

are in agreement

and

the

evidence

supports that Nelsons

Employment

Agreement

did not terminate pursuant

to

Section

but rather

ceased

to

operate pursuant

to

breach

Each

party has

correctly

cited

Mustang

Pipeline

Co

Driver

Pipeline

Co
one

134

SW3d

195

Tex 2004
material

for the

fundamental

principle

of

contract

law

that

when

party

commits

breach

of contract

the

other

party

is

discharged

or

excused

from

further

performance

Additionally

materiality

is

question

of fact

and

is

subject

to

an

analysis

such

as

found

in

Hernandez

Gulf Group

Lloyds 875

SW2d

691

Tex

1994
The evidence
reveals that the

Mavericks

failed

to

pay Nelson

his consulting salary

beginning

on July

2006

While

there

were

discussions

within

the

Mavericks

organization

as well as

some

negotiations

between

Jahner and

Nelson

the

salary

was not

paid

Likewise

the

consulting

salary

was

again

not

paid

on July 31

2006

Even

fcllowing

an

August

2006

letter

from Nelsons

attorney

John

OConnor

the

August

2006 consulting

salary

was not paid

Certainly

the

approximately

8000
Head

consulting

payments

were

small

in

comparison

to

the

previously

earned

Gener

Manager

salaries

in

former

years

but at the time of

nonpayment

they represented Nelsons

salary

and

benefit

of the

bargain

going forward

Additionally

there

is

no evidence

that

the

Mavericks

ever cured

this

breach

with

payment

Using

Mustang

PipelineHernandez

analysis

the

non
of the

payment

was

material

breach

and

was

the

operative

basis

for

the

termination

Agreement

While

Nelsons

deferred

compensation

was

previously

earned

regardless

the

Agreement

ceased

to

operate

pursuant

to

the

Mavericks

initial

breach

Nelson was

therefore

relieved

contractually

from

his ongoing

consulting position

as well

as the

non

competition

provision of Section

which was only

applicable

during

the

term

of the

Agreement
the

Consequently inasmuch

as

he

was no longer

contractually

committed

to

Mavericks

pursuant

to

the

Agreement

there

were no

legal

impediments

to

prevent

Nelson from taking the head

coaching

job with the Warriors

on August 30 2006

By way
duty

of

the

Mavericks

aver that

Nelson breached

his

fiduciary

by taking

the

Warriors

head coaching

position

and

should

be

subjected

to

an

equitable

disgorgement

of his Golden

State

compensation

At

the

outset

to

prevail

on

breach

of

fiduciary

claim

the

Mavericks

must

establish

that

the

parties

had

fiduciary

relationship

Nelson breached

fiduciary

duty

and

Nelsons

breach

resulted

in

either

injury

to

the

Mavericks

or

benefit

to

Nelson

Kelly

Gaines

181

394

Tex App
determination

Waco
of

2005
fiduciary

The

duty

must be decided

on

case

by case basis

Johnson

Brewer

Pc

73

SW3d
to the

193

Tex 2002
with

Beginning

July

2006 Nelson

served only as

Consultant

Mavericks

no

specific

duties

or

responsibilities

under

the

Agreement

and

he was

without

any

authority

to

bind

the

organization

In fact

the

testimony

reflects

that

his

services

were

not

utilized

in

this

position

at

all

Based on

the

evidence

presented

the

Mavericks

have

failed

to

establish

that

they

reposed

any

trust

in

Nelson

as

Consultant

or

that

fiduciary

relationship

existed

Certainly

no

fiduciary

relationship

existed

after the

Agreement

terminated

by

the

Mavericks

own breach
the

Additionally

second

prong

is

likewise

ndh

factually

insufficient

Although

Section

10

of

the

Agreement

did contain

and

clause

there

was

insufficient

evidence

to

support

that

Nelson

violated

its

terms

upon

leaving

the

Mavericks

organization

To

the

contrary

the

greater

weight

of the evidence

supports

that

upon termination

Nelson

did not

use

or disclose

any of the Mavericks

proprietary

or confidential

information

but

rather

left

with

only his

over

40 years of

NBA

experience

Finally

any

claim for an equitable

disgorgement

under

the

evidence

is

legally

and

factually

inapplicable

Therefore

the

Mavericks

counter

claims

against

Nelson

are

DENTED

The

Mavericks

materially

breached

the

Agreement

initially

by nonpayment

of

Nelsons

consulting

salary

beginning

July

15 2006 and
on August 31

further

they

failed

to

pay

Nelsons

deferred

compensation

payment

2006

and

thereafter

The

evidence

also

supports

that

due

to

the

repudiation of the Agreement

Nelson

is

entitled

to

recoyer

immediately

the

total

amount of deferred

compensation

that

would

otherwise

have

been

paid to him over several

years

The

parties

have

agreed

and

stipulated

that

through

June

30 2008 1875000
deferred

deferred

compensation

has

not

been

paid

Additionally

future

compensation

that

has not been

paid discounted

to present

value

as of June

30 2008

is

424257553
June

The

total

of which

is

611757553
at

The

interest

on

the

past due

amounts through

30 2008

is

13253425
These

per annum

and

carries

per diem of

25685
Nelsons

Hearing

Tr pp 584585
under
the

stipulated

amounts were used

to

calculate

damages

Agreement

as of the

date

of this Interim

Award

For the foregoing

reasons

it

is

ORDERED
of contract

that

Nelsons breach

claim against

the Mavericks

is

GRANTED

Nelson

is

AWARDED

damages

as follows

195833300
2008

in past

due

deferred

compensation

through

July

31

14674084
accruing
at

interest

on

past

due

payments

through

July

31 2008

26826day
as the

and

417156462
compensation

present

day

value

of

future

deferred

payments

TOTAL
All awarded

AWARD

is

therefore

627663846
interest at the prevailing

amounts

shall

bear postjudgment

statutory

rate

Mavericks

counter

claims are

DENIED

10

With

the

exception

of the biftrcated

issue

of attorneys

fees

and

costs

all

other

relief not

expressly granted

is

DENIED
attorneys

In

the

event

the parties

are

unable to reach

an

agreement

on

the

fees

and

costs

issue

within

days

of

this

Interim

Award

they

are

instructed

to

contact

the

Case

Manager

to

set

up

conference

with

the

Arbitrator

to

establish

hearing

procedure

This

Interim

Award

is

interlocutory

and

the

Arbitrator

shall

continue

to

retain

jurisdiction

pending

entry

of

Final

Award

herein

DAUD

2008

HON GLEN
Arbitrator

ASHWORTH Ret

Re

Nelson Don vs Dallas Basketball

Limited

Dallas Mavericks

Reference

No

1310016794

Cynthia

Cleaveland

not

party

to

the within

action

hereby declare that

on July 31
and

2008

served the

attached

Interim

Award on
in sealed

the

parties

in

the

within

action

by Email

by
in

depositing true

copies thereof enclosed

envelopes

with postage

thereon

fully prepaid

the United

States

Mail

at Dallas

TEXAS

addressed

as follows

John

Esq
Associates Center

Geoffrey Fish 1717
Suite

Harper

Esq

OConnor

Richardson

PC

One Embarcadero

Main
5000

Street

1020
San Francisco

CA

94111

USA

Dallas

TX

75201

Tel [phone] Email

Tel [phone] Email harperfrcom Fax [phone]

sbcglobalnet
Esq
Plaza

Mark
Figari

Talbot Davenport Davenport

Donald
Figari

Colleluori

Esq

LIP

Davenport

LLP
Plaza 125

3400 901

Bank

of America

3400

Main Street LB 125

1h

Dallas

TX

inS
TX

Bank

of America

LB

752023

796

Dallas

52023796

Tel [phone] Email

Tel [phone] Email

figdavcom
McComber
Davenport

donco1leluori

Fax [phone]

Ryan
Figari

Esq

Thomas
Fish 5000 1717

lsh
Richardson

Esq

LLP
Plaza 125

PC

3400 901

lreet
TX
752023796

Bank

of America

Bank

One Center

Main St

Dallas

Dallas

TX

75201

Tel [phone] Email rmccomberfigdavcom

Tel [phone] Email melsheimerfrcom Fax [phone]

Michael Fish 5000 1717

Hilgers Esq Richardson

Natalie

Arbaugh Esq
Richardson

PC

Fish 5000 1717

PC

Bank

One Center

Bank

One Center

Main St

Main St

Dallas

TX

75201

Dallas

TX

75201

Tel [phone] Email

Tel [phone] Email arbaughfrcom Fax [phone]

hilgers

declare

under

penalty

of perjury the

foregoing

to

be

true

and correct Executed

at

Dallas

TEXAS

on July 31 2008

Cynthia

Cleaveland

ckcleave1and