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In re Score Board

July 30, 1999

IN RE:
THE SCORE BOARD, INC. AND THE SCORE BOARD HOLDING CORP.,



The opinion of the court was delivered by: Irenas, District Judge:

HONORABLE JOSEPH E. IRENAS

OPINION

I. BACKGROUND

During the Spring of 1996, Appellant Kobe Bryant ("Bryant"), then a seventeen-year old star high school basketball player, declared his intention to forego college and enter the 1996 lottery draft of the National Basketball Association. On May 8, 1996, The Score Board Inc. ("Debtor"), then a New Jersey based company in the business of licensing, manufacturing and distributing sports and entertainment- related memorabilia, contacted Bryant's Agent, Arn Tellem ("Tellem" or "Agent") in anticipation of making a deal with Bryant. In negotiations of a contract to market products using the Kobe Bryant name, the parties began to discuss compensation for Bryant, including the number of complementary cards.

Following the initial negotiations, by letter dated May 10, 1996, Debtor and Bryant's father, former NBA star Joe "Jelly Bean" Bryant, agreed to increase the number of complimentary cards that Bryant was to receive to 1,000. On May 13, 1996, Tellem sent a letter to Debtor's Vice President, Michael A. Balser ("Balser"), indicating that the parties mutually agreed on several terms, such as the amount of complimentary cards, again referencing the parties intension to negotiate the formation of a contract.

In early July 1996, after the above negotiations, Debtor prepared and forwarded a signed written licensing agreement ("agreement") to Bryant. The agreement granted Debtor the right to produce licensed products, such as trading cards, with Bryant's image. Bryant was obligated to make two personal appearances on behalf of Debtor and provide between a minimum of 15,000 and a maximum of 32,500 autographs. Bryant was to receive a $2.00 stipend for each autograph, after the first 7,500. Under the agreement, Bryant could receive a maximum of $75,000 for the autographs.

In addition to being compensated for the autographs, Bryant was entitled to receive base compensation of $10,000. Moreover, Debtor agreed to pay Bryant $5,000, of the $10,000, within ten days following receipt of the fully executed agreement. Finally, Bryant was entitled to a $5,000 bonus if he returned the agreement within six weeks.

Bryant rejected the above agreement, and on July 11, 1996, while still a minor, Bryant made a counter-offer ("counter-offer"), signed it and returned it to Debtor. The counter-offer made several changes to Debtor's agreement, including the number of autographs. Bryant also changed the amount of prepaid autographs from 7,500 to 500.

Balser claimed that he signed the counter-offer and placed it into his files. The copy signed by Debtor was subsequently misplaced, however, and has never been produced by Debtor during these proceedings. Rather, Debtor has produced a copy signed only by Bryant.

On August 23, 1996, Bryant turned eighteen. Three days later, Bryant deposited a check for $10,000 into his account from Debtor. On or about September 1, 1996, Bryant began performing his obligations under the agreement, including autograph signing sessions and public appearances. He subsequently performed his contractual duties for about a year and a half.

By late 1997, Bryant grew reluctant to sign any more autographs under the agreement and his Agent came to the conclusion that a fully executed contract did not exist. By this time, Tellem became concerned with Debtor's financial condition because it failed to make certain payments to several other players. Debtor claims that the true motivation for Bryant's reluctance stems from his perception that he was becoming a "star" player, and that his autograph was "worth" more than $2.00.

On February 12 and 19, 1998, President and CEO of Debtor, John White, sent letters to Tellem hoping to formulate a new and more inclusive contract with Bryant. During the course of these negotiations, Debtor maintained that a valid contract existed between the parties.

On March 17, 1998, Debtor sent Bryant a check for $1,130 as compensation for unpaid autographs. Bryant alleges that he was entitled to $10,130, not $1,130. The Bankruptcy Court found that Bryant was owed $10,130 and the check for $1,130 was based on a miscalculation.

On March 18, 1998, Debtor filed a voluntary Chapter 11 bankruptcy petition. On March 23, 1998, Tellem returned the $1,130 check upon learning of Debtor's financial trouble. Included with the check was a letter that questioned the validity of the agreement between Bryant and Debtor.

The letter directed Debtor to "immediately cease and desist from any use of" Kobe Bryant's name, likeness or other publicity rights. On March 31, 1998, Debtor insisted that a contract existed. Tellem told Debtor to, "immediately provide me with a copy of the signed contract between Kobe Bryant and [Debtor] to verify that a valid agreement exists between the parties." On April 15, 1998, Patrick Wucjik, Debtor's general counsel, replied, enclosing a copy of the contract signed by Bryant verifying that a valid agreement existed between the parties. This was Bryant's counter-offer, still not signed by anyone on Debtor's behalf. On April 20, 1998, Tellem stated that no contract existed because the counter-offer was never signed by Debtor and there was never a meeting of the minds. Tellem added that the counter-offer expired and that Kobe Bryant withdrew from the counter-offer.

Subsequently, Debtor began to sell its assets, including numerous executory contracts with major athletes, including Bryant. Bryant argued that Debtor could not do this, because he believed that a contract never existed. In the alternative, if a contract was created, Bryant contended that it was voidable because it was entered into while he was a minor.

On July 31, 1998, the Bankruptcy Court temporarily resolved this dispute by signing an order which approved break-up fees and bidding procedures, and authorized the sale of most of Debtor's assets under 11 U.S.C. § 363 to The Oxxford Express, Inc. ("Oxxford"). However, the Bankruptcy Court required that Bryant's consent be obtained before Debtor could assume and assign the Bryant contract. Alternatively, Debtor could assume and assign the contract after the entry of a final and non-appealable order adjudging that the assets of Debtor included a valid and enforceable executory contract with Bryant.

On August 6, 1998, Bryant filed a motion to vacate or to modify the automatic stay to permit him to repudiate the disputed contract by reason of infancy. On December 21, 1998, the Honorable Gloria M. Burns ruled in her memorandum opinion that Debtor accepted Bryant's counter- offer and, therefore, a valid contract existed between Bryant and Debtor. In the alternative, the Bankruptcy Court held that even if Bryant's counter-offer was not signed by Debtor, the parties' subsequent conduct demonstrated their acceptance of the contractual obligation by ...


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