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Horrow Sports Ventures, LLC v. Anschutz Entertainment Group

October 20, 2008

HORROW SPORTS VENTURES, LLC, PLAINTIFF-APPELLANT,
v.
ANSCHUTZ ENTERTAINMENT GROUP, INC.; RED BULL NEW YORK, INC. A/K/A NEW YORK RED BULLS AND F/K/A METROSTARS; ANSCHUTZ NJ SOCCER STADIUM, INC.; AND RED BULL STADIUM, LLC, DEFENDANTS-RESPONDENTS.



On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-180-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: September 10, 2008

Before Judges Parrillo and Lihotz.

This controversy requires review of the scope of the Real Estate Brokers and Salespersons Act (Act), N.J.S.A. 45:15-1 to -29.5. Plaintiff, Horrow Sports Ventures, LLC (HSV), a Delaware limited liability company, filed an action to enforce an alleged contractual obligation for payment of a "success premium" due when funds were secured to construct a soccer stadium. The Law Division granted summary judgment and dismissed plaintiff's complaint, relying on N.J.S.A. 45:15-3, which prohibits actions for commissions by unlicensed real estate brokers. Plaintiff maintains it "did not act as a real estate broker in any way" and the success premium was not a real estate commission. Thus, in dismissing his complaint, the court read the statute too expansively. We disagree and affirm.

These are the facts, giving plaintiff the benefit of all reasonable factual inferences, as alleged in the complaint. F.G. v. MacDonell, 150 N.J. 550, 556 (1997). HSV is a "prominent sports management compan[y] . . . [that] provides consulting, planning, and negotiating services regarding the development of major sports and entertainment facilities to professional sports teams" and "is particularly expert in the area of public/private financing for sports stadiums." The Empire Soccer Club, L.P. (Empire), which is owned by Metromedia Company (MC), operated a soccer team known as the MetroStars. Empire contacted Richard Horrow (Horrow), HSV's Chief Executive Officer, to locate construction financing, as well as a physical site for a soccer stadium in the New York/New Jersey area.

The parties executed a "Facility Development Agreement" on August 2, 2000. Plaintiff characterized its obligation this way: "to identify a location and formulate a public-private financing concept for a stadium." The relevant portions of the initial three-year contract describing HSV services stated:

1. Services

a. Horrow agrees to provide strategic advice and a written development and action plan to support the development, site selection and financing of up to two facilities in the New York metropolitan area, which is defined to included New York City and its surrounding suburban region in Westchester, Nassau and Suffolk counties, Northern New Jersey, southern Connecticut and eastern Pennsylvania . . . . This shall include, but not be limited to, identifying and, as requested by Empire Soccer, negotiating directly with the appropriate governmental officials at the state, municipal, county and local levels, community and public interest groups, sports clubs and authorities, etc., and identifying and, as requested by Empire Soccer, negotiating directly with the appropriate technical experts, financial analysts, underwriters, architects and engineers, construction contractors, facility management groups, parking/traffic /transportation consultants and real estate development professionals, all to support the selection of sites and financing for the development of the Facility or Facilities.

b. Horrow agrees to solicit, identify, review and present site selection alternatives for the Facilities and to present at least four alternative site selections to Empire Soccer within three months of the signing of this Agreement. These proposed sites shall be consistent with the cost, stadium size, territory, transportation and financing criteria set forth herein;

c. Horrow agrees to prepare a facility financing plan acceptable to Empire Soccer that will maximize all available public revenue sources and that will support the development by Empire Soccer of a Facility at the site or sites it selects. In connection therewith, Horrow will also help Empire Soccer secure a commitment for financing for one or more of the Facilities by preparing the appropriate financial and business documentation and by preparing such other materials as may be needed and requested by Empire Soccer to secure said commitment.

In exchange for these services, Empire agreed to compensate HSV at a monthly rate of $8,500 and to pay approved expenses. Additionally, [u]pon the issuance of a written commitment of construction financing for a Facility or Facilities that has been arranged through the efforts of Horrow pursuant to the terms and conditions of this Agreement, Horrow will receive a "success premium" that will constitute two percent (2%) of the value of the total amount of public assistance that has been committed to the Facility or Facilities, if and only if the financing that has been arranged consists of non-recourse funding, grants or interest-free financing. If the financing that has been arranged consists of recourse funding, the success fee will constitute 1% of the amount financed.

In November 2001, Anschutz New York Soccer, Inc. (ANYSI), a subsidiary of Anschutz Entertainment Group (AEG), acquired Empire and became the owner and operator of the MetroStars. HSV was assured ANYSI would honor Empire's agreement obligations and continued its performance under the agreement.*fn1

In early 2002, a preliminary proposal was formulated for a stadium in Harrison. Generally, the plan provided that Harrison or a redevelopment agency would buy the site within the Harrison development area and the HCIA would acquire the land and construct a stadium. The HCIA would lease the constructed stadium to the MetroStars on an annual basis. A necessary precondition for HCIA to finance the project was State approval of the development area as a "Sports Entertainment District," which never materialized. Defendants concede HSV ...


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