The Golden State Warriors LLC must continue servicing debt incurred to renovate its former home arena in Oakland, Calif. until 2027 because it terminated an agreement with the Oakland-Alameda County Coliseum Authority by allowing it to expire, a state appeals court affirmed Tuesday.
In 2019, an arbitrator found that under the terms of an agreement governing the team’s use of the Oracle Arena, the Warriors would help pay down the debt incurred to renovate the arena until 2027, and would continue to do so if it terminated the agreement. It did so by allowing the agreement to expire in 2017, amid plans to construct a new arena across the bay in San Francisco, the arbitrator found, and a trial court affirmed the award.
The arbitrator’s interpretation of the agreement was factual, not legal, and therefore wasn’t subject to judicial review, the California Court of Appeals, First District ruled.
But even assuming the arbitrator had addressed a question of law, intrinsic evidence including a memorandum of understanding, a memorandum from the Authority’s counsel, and an agreement between the team’s former owner and the Canadian Imperial Bank of Commerce all indicated that the parties intended the phrase “terminates this License Agreement for any reason” to encompass a termination by failure to renew, Presiding Justice Barbara J.R. Jones wrote for the court.
The MOU outlined a key compromise whereby the Warriors would sign a 20-year lease with four five-year options to renew, allowing them to leave after ten years by paying the renovation debt in full, or after 20 years by making debt service payments until 2027. The arbitrator found, and the court agreed, that the parties had sought to adhere to the terms of the MOU during drafting of the licensing agreement.
Because the team didn’t exercise their options to renew, it must continue making payments on the Oakland stadium, the court said.
Justices Mark B. Simons and Henry E. Needham Jr. joined the opinion.
Morrison & Foerster LLP and Greines, Martin, Stein & Richland LLP represented the Warriors. Keker, Van Nest & Peters represented the Authority.
The case is Oakland-Alameda County Coliseum Authority v. Golden State Warriors LLC, Cal. Ct. App., 1st Dist., No. A157688, 8/18/20.