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Main St. Baseball, LLC v. Binghamton Mets Baseball Club, Inc. - 103 F. Supp. 3d 244 (N.D.N.Y. 2015)

Rule:

A party seeking a preliminary injunction must demonstrate: (1) a likelihood of success on the merits or sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the plaintiff's favor, (2) a likelihood of irreparable injury in the absence of an injunction,(3) that the balance of hardships tips in the plaintiff's favor, and (4) that the public interest would not be disserved by the issuance of an injunction.

Facts:

Main Street Baseball was a Florida limited liability company. David Heller ("Heller") was Main Street Baseball's principal and president. Minker was an investor and co-owned the Wilmington Blue Rocks with Heller. Binghamton Mets Baseball Club owned the BMets. Michael Urda ("Urda") was president of the BMets. Beacon Sports was an investment banking firm for the professional sports industry; they brokered the BMets transaction that was at issue. Richard Billings ("Billings") was principal of Beacon Sports.

Heller and Minker began discussions with Billings regarding their desire to purchase the BMets, and signed a confidentiality agreement to obtain relevant information regarding the team. Heller and Minker reached an agreement with Urda and Billings regarding the sale of the BMets. As was customary in the industry, a Letter of Intent ("LOI") was to be drafted by attorneys to memorialize the terms. The LOI was executed on January 5, 2015. It contained a 60-day "no shopping" period during which Binghamton Mets Baseball Club could not negotiate with other buyers. The LOI provided for the negotiation of, and ultimate execution, of an Asset Purchase Agreement ("APA").

Heller and Urda exchanged drafts of the APA at Urda's suggestion to save on legal fees. Urda advised that his attorney would review the APA. Fifty-one days into the 60-day no shopping period, Urda forwarded his lawyer's comments. Terms were not finalized. Binghamton Mets Baseball Club informed Main St. that it remained interested in selling but that the 60-day no shopping period had expired and they would simultaneously consider other offers. Heller and Minker allege that on March 19, they heard that the BMets had already entered into a LOI with another buyer.

Heller and Minker argued that the LOI was a binding contract for the purchase of the team. Binghamton Mets Baseball Club and Beacon Sports contended the LOI was not binding, and expired at the end of the 60-day period. Urda spoke with Joseph McEacharn, president of the Eastern League of Professional Baseball Clubs, Inc. who was aware of the LOI between the parties. McEacharn advised that he knew of another interested buyer. Binghamton Mets Baseball Club executed a LOI with the new potential buyer

Main Street Baseball and Minker sought to preliminarily enjoin Binghamton Mets Baseball Club and Beacon Sports from discussing, negotiating, or agreeing with any other party concerning the sale of the BMets baseball team for six months. They contended the parties could take expedited discovery during the next six months, followed by a hearing on the merits of plaintiffs' claims. Binghamton Mets Baseball Club urged that the temporary restraining order in place should be vacated and the preliminary injunction denied, but if granted, Main Street Baseball and Minker should be required to post a bond for $8.5 million, the purchase price of the team.

Issue:

Did Binghamton Mets Baseball Club breach any contractual obligations?

Answer:

Yes.

Conclusion:

Although on the current record there was no conclusive proof that defendants violated the no shopping period, the quick timing in which defendants signed a LOI with a new buyer (at most two days after informing plaintiffs the deal was off), suggested the possibility that defendants violated the exclusivity period by engaging in discussions or negotiations with another buyer. Further, there were serious questions going to the issue of good faith negotiations. Heller and Minker met their burden of demonstrating there was a sufficiently serious question as to the merits of their breach of contract claim and the balance of hardships tipped in their favor. They satisfied the second element for a preliminary injunction.

A showing that irreparable injury will be suffered before a decision on the merits may be reached is the most significant condition a plaintiff must demonstrate to obtain a preliminary injunction. Main Street Baseball and Minker contended they would suffer irreparable harm if a preliminary injunction was not issued because the team was unique property and a monetary award would not be adequate compensation. Specifically, the opportunity to own the BMets was unique and irreplaceable because it met all of plaintiffs' requirements for a team to purchase: it was the only Double-A team that was for sale, that was portable, that was affiliated with a New York or Philadelphia Major League Baseball franchise, that was affordable to plaintiffs, and whose relocation would be likely approved by various baseball authorities. They argued the harm was not just in their inability to purchase the BMets, but also in a possible lost deal that they had negotiated for the Wilmington Blue Rocks. Finally, plaintiffs cited the six months they worked to negotiate the instant transaction, and assert that the damage to Heller and Minker from losing the value of those efforts is incalculable. Plaintiffs satisfied the second element for a preliminary injunction.

Balance of hardships tipped in Heller and Minker’s favor. They satisfied the third element for a preliminary injunction as they stood to lose their opportunity to purchase the BMets if an injunction was denied. By contrast, Binghamton Mets Baseball Club did not stand to suffer the same sort of harm.

The public interest factor does not appear to tip in favor of either party. Neither party has called to the court's attention any public interest that would be served or disserved by granting an injunction.

Heller and Minker carried their burden to establish that there were sufficiently serious questions going to the merits of their breach of contract claim; they were likely to suffer irreparable harm in the absence of a preliminary injunction restraining defendants from selling the BMets to another buyer; the balance of equities tipped in their favor; an injunction would not be contrary to the public interest. For these reasons, a preliminary injunction was entered into enjoining Binghamton Mets Baseball Club from selling the BMets to another buyer.

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