Opinion ID: 464998
Heading Depth: 1
Heading Rank: 3

Heading: Condition Precedent--1974 Agreement

Text: 35 Northwest Sports contends that the district court erred in ruling, as a matter of law, that the condition precedent in the 1974 Agreement had not been met and by directing judgment for Abbey and Barnes on Northwest Sports' breach of contract claim arising out of the 1974 Agreement. The 1974 Agreement provided: 36 This Agreement (with the exception of this paragraph) shall only be effective if, prior to June 30, 1974, the National Hockey League announces that it shall grant a National Hockey League Franchise to Totems or to N.H.L.-Seattle and shall be effective as of the date of such announcement. 37 On June 12, 1974, the NHL announced that it would grant a franchise to the Abbey group, subject to the fulfillment of several conditions. The district court found that the announcement of the grant of a conditional franchise to the Abbey group on behalf of Seattle did not satisfy the condition precedent because the 1974 agreement was conditioned upon the announcement of the granting of an actual NHL franchise, which never occurred. (Emphasis added.) 38 The ambiguity in the 1974 contract 9 arises from the parties' failure to specify whether they meant the announcement of a conditional franchise or the announcement of an actual or final franchise or the announcement of any kind of franchise, conditional or final. The record shows that Northwest Sports owned one NHL team and that the 1972 Agreement provided for the buyback of Totems' stock for Northwest Sports if the Totems were awarded an NHL franchise. The 1974 Agreement, which provided the terms of the buyback, conditioned its effectiveness on the announcement of a franchise before a specified date. 39 It is significant that the 1974 Agreement required only an announcement, not the actual award of a franchise. In addition, it was apparently not unusual for the NHL to condition franchise awards upon the receipt of franchise payments and assurance of a facility. The parties may not have even contemplated that, once the long-awaited Seattle NHL franchise was granted, Abbey and Barnes would be unable to obtain the necessary financial backing and that a conditional franchise would not mature to an actual franchise. 40 We conclude that the parties intended the 1974 Agreement to be effective upon the announcement that Seattle would get a franchise, even if that announcement was conditioned on the securing of a facility and the making of franchise payments. Had Abbey and Barnes complied with those conditions, and the 1974 agreement, they would have been full owners of the Totems at the time a franchise was entered into. The district court erred by interpreting the condition precedent in the 1974 Agreement to require the announcement by the NHL of the grant of an actual franchise to Seattle. We reverse the district court's dismissal of Northwest Sports' counterclaim for breach of the 1974 Agreement and remand. 41 AFFIRMED AS TO APPEAL; REVERSED AND REMANDED AS TO CROSS APPEAL.