Sum of $7.3 million on the line in lawsuit centering on 1986 agreement.

Last updated: April 03. 2013 11:47PM - 4843 Views
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SCRANTON — Lawyers representing Luzerne and Lackawanna counties faced off in court Wednesday over who gets to keep $7.3 million from the sale of a Triple-A baseball franchise both counties purchased for $1 million each in 1986.

The hearing was scheduled before Lackawanna County Court of Common Pleas Senior Judge Richard Saxton in Scranton to air Luzerne County’s request for the judge to make a decision now instead of proceeding with additional evidence gathering and a trial.

Saxton did not issue a ruling but said he is strongly leaning toward rejecting Luzerne County’s request.

Pittsburgh-based attorney Tim Murray, representing Luzerne County, repeatedly pointed to the 1986 franchise purchase agreement as the reason Luzerne County should receive $7.3 million, or half the $14.6 million paid when the New York Yankees and Mandalay Baseball Properties bought the franchise through their joint SWB Yankees LLC venture a year ago.

The 1986 agreement says the two counties shall share equally in the distribution of “any such proceeds” if the franchise is sold after the Lackawanna County Multi-Purpose Stadium Authority receives up to $345,000 for its cost to bring the franchise here.

Murray pointed to the use of the word “any” before proceeds.

“What else could that mean?” he said.

Murray said the contract allows “only one rational interpretation” and accused Lackawanna of violating “every canon of contract law” by refusing to turn over $7.3 million.

“They’re trying to rewrite the contract through the back door,” Murray said.

Lackawanna attorney James Doherty implored the judge to reject the request for an immediate ruling, saying Luzerne is asking him to “hand over” $7.3 million without additional evidence discovery.

Lackawanna filed a counter suit arguing Luzerne County isn’t entitled to any proceeds and owes Lackawanna millions of dollars for past baseball stadium repairs.

Doherty said the 1986 agreement was completed in the “11th hour” and is only three pages, compared to typical agreements that would be at least 25 pages with explicit definitions of terminology such as proceeds.

He argued the agreement means net proceeds after stadium repairs, not gross proceeds as maintained by Luzerne County. Doherty said a deposition verified county officials never discussed specifics on net or gross proceeds in 1986.

“That bothered me when I read that,” the judge said.

Doherty said Luzerne must prove the agreement “is so clear that no discovery is needed” for a judge to issue a ruling now.

“There’s no way possible you could come to this conclusion,” Doherty said.

The two sides also disagreed on Lackawanna’s assertion that Luzerne is owed nothing because it didn’t help pay for stadium repairs over the past 25 years.

Murray said Luzerne County never had a legal or contractual obligation to fund the stadium, which is located in Moosic, Lackawanna County. He said Lackawanna’s arguments that this failure to support the stadium was “not fair” are political or policy statements with no legal basis.

Luzerne County didn’t benefit from Lackawanna’s stadium investments because no franchise or stadium operation profits came to Luzerne County, he said. Luzerne County also had no say in who received stadium jobs, he noted.

Stadium authority attorney Frank Tunis described Murray’s stance as “absurd,” saying there would be no franchise without stadium repairs. The authority also was named in the suit.

The International League, which oversees Triple-A franchises, had threatened to revoke the local franchise two years ago if field drainage issues were not addressed, Tunis said. Though it wasn’t obligated, Lackawanna County funded repairs to protect the franchise for both counties while Luzerne County “stood passively on the sidelines” refusing to provide funding, he said.

“Now they’re coming to the table with their hand out,” Tunis said, referring to Luzerne County. “The stadium and franchise coexist.”

The stadium’s $43 million reconstruction and team — the Scranton/Wilkes-Barre RailRiders — are part of a “regional effort” that benefits Luzerne County, he said.

Saxton said he will issue a ruling soon because he believes the litigation has “languished too long.” Luzerne County filed its suit in 2010.

Luzerne County Councilman Stephen A. Urban, who supported the litigation as a county commissioner, requested an upcoming public update on the status of the litigation during Tuesday’s council meeting.

“The people of Luzerne County deserve that funding,” he said.

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