The 5th Court of Appeals in Dallas has upheld a trial court’s decision to dismiss a lawsuit filed against Mark Cuban, the billionaire owner of the Dallas Mavericks, which alleged the team was being mismanaged.
The plaintiffs in the case were Hillwood Properties III and its owner Ross Perot Jr. Perot is the former owner of the Mavericks and is now a minority owner of the team. They alleged in a lawsuit that Cuban had been “careless and reckless,” resulting in a loss of substantial investment value to the now minority owners. Further, they alleged the team was on the verge of insolvency, and that a receiver should be appointed to take over management of the Mavericks.
The case attracted national headlines, at least in the legal community, because Cuban’s legal team at Fish & Richardson filed a motion for summary judgment that featured a photo of Cuban and his team hoisting the 2011 NBA Championship trophy. The plaintiffs emphasized in the motion that “under Hillwood’s ownership, the team was deemed the ‘worst franchise’ in all of professional sports. Under Cuban’s stewardship the Mavericks have become one of the league’s most successful teams and are now NBA champions. Accordingly, there can be no genuine question that Hillwood’s claims of mismanagement lack merit and Hillwood’s claims should be disposed of on summary judgment.”
In affirming the ruling of the trial court, the appeals court agreed that there was no evidence that the Mavericks were in financial distress.
“Hillwood cites no authority, and we have found none, to support an interpretation of insolvency that would involve disregarding a historical and ongoing pattern of continuing financial contributions from third parties,” the appeals court wrote.
“Further, even assuming the test for the inability to pay debts as they come due is a ‘forward-looking test,’ the test remains whether the entity is insolvent or in imminent danger of insolvency. While the test for insolvency may ‘look forward,’ it may only look forward to determine whether insolvency is ‘imminent.'”
To see the opinion, visit: http://600commerce.com/wp-content/uploads/2014/08/Hillwood-Investment-Props.-III-Ltd.-v.-Radical-Mavericks-Mgmt.-LLC.pdf
