Triple-A Baseball Club Associates v. Northeastern Baseball, Inc.

832 F.2d 214 (1^st Cir. 1987)

Facts:

McGee wanted to bring a Triple-A baseball team to Scranton, Pa. (a garden spot according to Prof. Markell). However, he did not have the franchise rights from the International League and the National Association of Professional Baseball Leagues; nor, did Scranton have a stadium suitable for a Triple-A team. McGee convinced the local county commissioners to form a municipal corporation to build a suitable stadium, thus the county formed MPSA to build the stadium. McGee then purchased, through Northeastern Baseball, Inc. (NBI), a Double-A baseball team from Connecticut that was to move to the new stadium when completed.

McGee then approached Korbitz who, through the limited partnership Triple-A Baseball Club (TBC), was the major owner of a Triple-A baseball team in Maine. After two drafts, the two parties came to a final agreement where NBI would purchase the Triple-A team from TBC and TBC would purchase the Double-A team from NBI. The contract had three precedent conditions to the exchange – 1) the approval of the transaction by the board of directors of NBI; 2) the approval of the limited partners of TBC; and, 3) the approval of the International League. The parties obtained all three of these approvals before the September 11, 1986 deadline.

The agreement also stated “the transfer of the Double-A franchise is subject to the approval of the Eastern League of Professional Baseball Clubs.” None of the sections of the agreement made this statement a condition precedent. The agreement further stated “In the event that the Eastern League of Professional Baseball Clubs shall refuse to approve the sale of the Double-A Franchise to” TBC, “then this Agreement shall continue in full force and effect” and the new price for the Triple-A team was set at $2 million as opposed to the $2.4 if the sale of the Double-A team had been approved.

As luck would have it, the Eastern League did not approve of the sale of the Double-A team to TBC. McGee attempted to close the deal for the $2 million; however, Korbitz informed McGee that he was not going to follow through with the sale of the Triple-A club.

TBI brought suit asking for a declaratory judgment holding that the contract terminated under its own terms because of failure of certain required conditions to occur. NBI counterclaimed alleging that they did not repudiate or breach the contract and Korbitz should convey the Triple-A franchise in accordance with the agreement and sought specific performance or damages.

Disposition Below:

The lower court held that portions of the contract were ambiguous and allowed in extrinsic evidence, and held that the refusal of the Eastern League to approve the sale of the Double-A team terminated the agreement.

Questions Presented:

1. Were the terms of the contract ambiguous?

2. If not, what are the proper damages?

Short Answers:

1. No, therefore the lower court should not have admitted extrinsic evidence.

2. Specific performance of the agreement.

Holding:

The failure of the Eastern League to approve the sale of the Double-A club did not terminate the agreement and did not excuse the parties from performance, since the plain language of the agreement indicated that performance of remaining terms of the agreement was not contingent upon completion of the sale of the Double-A team. Specific performance is an allowed damage since the contract terms were unambiguous, the Triple-A team was unique, and the damages for breach were not quantifiable.

The court reversed and states “A specific performance decree shall issue from the district court ordering” specific performance of the agreement.

Rules (related to specific performance):

The granting of specific performance is a matter of judicial discretion.

The court will not grant specific performance unless the terms of the contract are clear enough to enable a court to fashion an appropriate order.

Specific performance will not be granted where there exists and adequate remedy at law.

The party seeking specific performance must show an attempt to tender its own full performance, unless such tender would be futile.

Contracts for the sale of realty may be specifically enforced.

Maine law allows for specific performance on contracts for personalty, in certain circumstances.

Discussion:

The appellate court found the agreement to be clear on the issue as to whether or not the approval of the Eastern League was a condition precedent. The court found the plain language of the agreement to indicate that the remaining terms of the agreement were not contingent upon the approval of the sale of the Double-A team by the Eastern League.

The court has the discretion to grant specific performance or to impose monetary damages. The court also found that the facts of the case bring it well within the rules allowing specific performance. The contractual terms of the agreement were clear and not ambiguous. There would be no problem for the court to draft a clear order outlining each party’s required performance. NBI showed an ability and willingness to purchase the Triple-A team. A Triple-A franchise is unique. Finally, calculating damages would be difficult if not impossible and probably could not duplicate or be the substantial equivalent of the promised performance.

Since the court has the discretion to grant specific performance or not to grant specific performance, there is not a great amount of precedential value to an order granting specific performance. The same court, at a later date and upon hearing the same facts would not be bound to grant specific performance. The reasoning for this lies in the history of the courts of equity and the judge having the discretion to determine equitable damages (or at least I think that is what Markell said in class).