Los Angeles Clippers owner Donald Sterling, left, and his wife Shelly, right. (Photo: Mark J. Terrill/AP)
A judge in Los Angeles on Monday ruled against Los Angeles Clippers owner Donald Sterling, tentatively allowing the $2 billion sale of the team negotiated by his wife to go through.
Los Angeles County, Calif., Superior Court Judge Michael Levanas, overseeing a trial that began when Sterling moved to revoke the family trust that owns the team, said from the bench that he found “no credible or compelling evidence” that his estranged wife, Shelly Sterling, had conspired with her lawyers to outflank him on the deal.
Shelly Sterling’s lawyers had argued that her husband had resorted to desperate measures in leveling conspiracy theories.
“She thought her husband was dealing in good faith,” litigator Pierce O’Donnell said during closing statements in the bench trial in probate court. “But he used her. She became a pawn. Donald flip-flopped like a fish out of water.”
The court battle played out as the proposed record sale to former Microsoft chief executive officer Steve Ballmer remained on hold.
Donald Sterling attorney Maxwell Blecher countered that it was Shelly Sterling’s actions—primarily, getting two doctors to certify that her husband was mentally incompetent to serve as co-trustee so that she could sell the team—that constituted bad faith.
“Unclean hands? Filthy hands!” he said. “She feathered her nest in a very sweetheart deal with Mr. Ballmer.”
Outside the courtroom, Blecher said that Donald Sterling had vowed to appeal the decision.
Donald Sterling came under pressure to sell the Clippers after entertainment website TMZ.com published disparaging comments he made about blacks to a friend. Shelly Sterling, claiming that her husband was mentally unfit, arranged the sale to Ballmer. Although he appeared originally on board with the sale, Donald Sterling came to insist that he would never sell the team and argued that his wife, her attorneys and the doctors who examined him conspired to oust him.
Levanas had broken down the case into three legal issues, all of which Shelly Sterling needed to win for the deal to go through.
The first was whether Shelly Sterling properly removed her husband from the trust.
“The doctors certified that Donald is incapacitated. That is the end of the matter,” said O’Donnell, of counsel to Greenberg Glusker Fields Claman & Machtinger, representing Shelly Sterling with the Los Angeles firm’s rainmaker partner Bertram Fields, during the hearing. “With his proper removal, Shelly is the sole trustee.”
Shelly Sterling pushed for the medical exams out of genuine concern for her husband, he said.
Blecher, founding partner of Los Angeles-based Blecher Collins Pepperman & Joye, accused Shelly Sterling of attempting an “egregious grab” based on “lies and shenanigans.” She had expressed no concern as of six months before the exams about her husband’s mental health, he said, but called for the tests on the same day she met with National Basketball Association Commissioner Adam Silver.
“You cannot approve and order the sale on terms and conditions which facially constitute a breach of her obligation as a wife and co-trustee,” said Blecher, representing Donald Sterling with Gary Ruttenberg of Bloom & Ruttenberg in Los Angeles and Bobby Samini, managing partner of the ASG Samini Law Group in Costa Mesa, Calif.
The second legal issue was whether Shelly Sterling could complete the sale now that the trust had been revoked. Adam Streisand, chairman of the trusts-and-estates litigation department at Loeb & Loeb in Los Angeles, who represents Ballmer, also a petitioner in the case, said Shelly Sterling retained the right to wind down the trust.
Ruttenberg argued that the assets associated with the team would revert to a corporation in which Donald Sterling is sole shareholder.
The third issue would determine whether Levanas could issue a rare ruling that would allow the sale to go forward even if Donald Sterling appeals. Ballmer’s offer is good through Aug. 15; should it fall through, the National Basketball Association, which fined Donald Sterling $2.5 million and banned him from the league for life, could seize the team by Sept. 15.
After ruling for Shelly Sterling on the first issue, Levanas turned to the language of California probate law to determine that Shelly Sterling retained authority to sell the team, even though the trust was revocable.
On the third issue, he discounted much of Donald Sterling’s expert testimony as to the financial implications for the trust should the deal fall apart. Based on testimony by Shelly Sterling’s witnesses, the next best offer would be $1.6 billion—a loss of $400 million to the trust—and the team could suffer additional losses, such as the withdrawal of sponsors, should Donald Sterling remain the owner.
“The risk of harm is not speculative,” he said.
The battle has been acrimonious, with Sterling at one point referring to his wife as a “pig” and Fields as a “smartass.”
Fields was lead attorney for Jamie McCourt in a similar battle with her ex-husband, Frank McCourt, over the $1.2 billion sale of the Los Angeles Dodgers to an investment consortium led by Los Angeles Lakers star Magic Johnson.
As with that case, the legal battles weren’t limited to one courtroom. On May 30, Donald Sterling filed an antitrust suit against the NBA in U.S. District Court for the Central District of California. And on July 22, Sterling sued his wife, the NBA and Silver for fraud and other claims in Los Angeles Superior Court.
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