Minogue v. Modell

Citations: 384 F. Supp. 2d 821; 2005 U.S. Dist. LEXIS 14800; 2005 WL 1714309Docket: CIV.CCB-03-3391

Court: District Court, D. Maryland; July 22, 2005; Federal District Court

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The Phyllis Andrews Family Trust has initiated litigation against Arthur B. Modell to enforce a February 1963 letter agreement, wherein Modell promised a 5% finder's fee to Vincent Andrews contingent upon Modell's complete divestiture of his stock interest in the Cleveland Browns. The Trust claims that Modell's sale of the Ravens to Stephen Bisciotti between 2000 and 2004 triggered this payment obligation. Modell, however, contests the claim, asserting that he still holds a 1% interest through an entity and therefore owes nothing. He has filed for summary judgment, which the court is considering.

The background reveals that Modell acquired the Cleveland Browns in 1961, with Vincent Andrews facilitating the introduction to the deal. Andrews had initially intended to invest but could not secure funding, subsequently releasing any claims to a finder's fee in January 1961. A business arrangement followed, leading to the 1963 letter agreement confirming quarterly payments that continued until Andrews's death in 1969. After Andrews's estate, which was insolvent, failed to close, his wife, Phyllis Andrews, became involved in 1996 when Modell relocated the team to Baltimore, renaming it the Ravens.

In 1999, Modell negotiated a $600 million sale of the Ravens to Bisciotti. Around this time, Andrews's sons established the Trust, acquiring the letter agreement from their mother for $200,000. The sale of the Ravens occurred in two phases, with Bisciotti first acquiring a 49% stake and retaining an option for the remaining 51% by December 2005. In 2003, the Trust filed the lawsuit, stating Modell could retain a 1% interest, which he later did through a newly formed entity after the sale was finalized in 2004.

Modell's motion for summary judgment is primarily based on the argument that his retention of the 1% interest negates any obligation to pay the finder's fee, although he presents additional arguments for support. The court has fully briefed the motions and conducted oral arguments on May 18, 2005.

Modell challenges the Trust’s standing to bring the suit, arguing that the Trust cannot demonstrate ownership of the letter agreement. The Trust claims ownership based on a Purchase Agreement dated January 27, 2000, where Mrs. Andrews stated she was the record owner and had taken necessary actions to authorize the sale of the letter agreement to the Trust. However, this agreement was not sworn, and Mrs. Andrews, in her 2004 deposition, could not recall being informed that the letter agreement was an asset of her husband's estate or whether it ever became her property. There is no evidence in the probate file confirming that Mrs. Andrews transferred ownership of the letter agreement from the estate to herself, nor does it appear that it would have passed to her by law due to the estate being insolvent and not fully closed. Consequently, the Trust has not established its rights to assert ownership or enforce the letter agreement, leading to the conclusion that Modell’s motion for summary judgment based on the Trust's lack of standing will be granted. Furthermore, Modell contends that the promised 5% fee is unenforceable due to lack of consideration, asserting that the only consideration was Andrews's prior actions related to finding the Browns. The Agreement's ambiguity regarding consideration complicates this issue, as it specifies a business manager fee of $3,000 per year while also promising 5% of net gains from the sale of the Browns.

Modell's interpretation of the phrase "In addition to the foregoing, and as a finder's fee" as a mere transition between sections is contested by the Trust, which argues that Modell promised Andrews both quarterly payments and a 5% net gain in exchange for future services as his business agent. This differing interpretation creates a factual dispute, preventing summary judgment for Modell. The Trust asserts that a triggering event for payment has occurred, despite Modell retaining an interest through Nevermore, LLC, arguing that this interest is a debt obligation rather than a stock interest. Expert opinions presented create further material disputes for the jury.

The Trust also invokes the doctrine of "prevention" under Ohio law, alleging that Modell's retention of a 1% interest was conducted in bad faith to evade the finder's fee obligation. Evidence exists that could support a jury's conclusion that Modell's motive was to avoid the fee. However, Modell argues that the letter agreement does not require him to sell all his stock, citing legal precedents that distinguish his situation from cases where a party had a contractual obligation to act in good faith.

Modell also claims the letter agreement is voidable due to potential conflicts of interest involving attorney John Wells, with ongoing factual disputes about Modell's knowledge and consent regarding Wells's representation. Any remedy for Modell may be a malpractice suit against Wells. The court's order reflects these findings, granting and denying various motions for summary judgment, ultimately ruling in favor of Modell and closing the case.

Modell filed three motions for summary judgment: one challenging the Trust's standing to enforce a letter agreement, one asserting the letter agreement was unenforceable due to lack of consideration and conflict of interest, and one claiming the triggering event of the agreement had not occurred. Modell identified an alternate source of funds. Andrews confirmed a business management arrangement in a letter, detailing a retainer from January 1, 1963, to December 31, 1970, with specific payment terms and a finder's fee of 5% on stock transactions involving the Cleveland Browns, payable by his estate or beneficiaries in the event of his death. The Trust's co-trustees are Thomas O. Callaghan and Thomas E. Minogue. The Trust contends Modell lacks standing to challenge its standing, asserting he has no financial interest in Vincent Andrews, Sr.'s estate, while Modell argues he is questioning the transfer of the letter agreement, not the estate's administration. Evidence from 1980 indicates the estate was still active and the letter agreement was an estate asset. The Trust does not claim the agreement automatically passed to Mrs. Andrews. If the Trust lacks standing, the court lacks subject matter jurisdiction over other issues; however, the court will still address the separate motions for efficiency. The Trust's argument regarding a recent "liquidation" of BRLP for tax purposes does not align with the agreement's terms regarding complete liquidation of the Browns.