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BLOOMINGTON PARTNERS, LLC. v. CITY OF BLOOMINGTON

April 11, 2005.

BLOOMINGTON PARTNERS, LLC, a limited liability company, Plaintiff,
v.
CITY OF BLOOMINGTON, an Illinois municipal corporation, Defendant.



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

ORDER

Following a hearing held on April 1, 2005, in which both parties were fully heard by this court, this court DENIED Plaintiff's Second Motion for T emporary Restraining Order and Preliminary Injunction (#23). This court stated that a written order would be entered setting out the reasons for this court's ruling. Accordingly, this Order sets out this court's factual findings and analysis of the law.

  FACTS

  Plaintiff, Bloomington Partners, LLC (BP), filed it is Verified Complaint (#1) against Defendant, the City of Bloomington (the City), on December 10, 2004. BP stated that its members are: Beacon Sports Properties, LLC, a Delaware limited liability company; Richard Adams, a citizen and resident of New Jersey; the Sporting Life, LLC, a California limited liability company; and Kemp Entertainment, LLC, a Nevada limited liability company. On December 20, 2004, BP submitted a Notice of Jurisdictional Statement (#14) which set out the citizenship of all of BP's members and showed that none of its members are Illinois residents or citizens. This court therefore entered an Order (#15) and concluded that this court has jurisdiction over this case based upon diversity of citizenship. See Belleville Catering Co. v. Champaign Marketplace, LLC, 350 F.3d 691, 692 (7th Cir. 2003).

  In its Verified Complaint, BP sought an injunction requiring the City to engage in the dispute resolution procedures set out in Paragraph 16.2 of the Development and Management Agreement (Management Agreement) between BP and the City. Count I of the Complaint alleged breach of contract and Count II was based upon promissory estoppel.

  On December 13, 2004, a hearing was held on BP's original Motion for Temporary Restraining Order (#3) which was filed on December 10, 2004. BP sought a temporary restraining order enjoining the City from repudiating BP's Management Agreement and from negotiating or approving a new agreement with a third party, pending arbitration proceedings, as required by the Management Agreement. At the hearing, BP's counsel argued that "[t]here's no way the City could in good faith participate in that dispute resolution procedure if it had already entered into a contract with someone else."

  After reviewing the exhibits presented, hearing argument and hearing the testimony of David LeFevre, principal in Beacon Sports Properties, this court concluded that BP had not met its burden to establish that an unambiguous, complete, and fully executed contract existed between the parties. This court noted that BP had provided only an unsigned copy of the Management Agreement. This court also agreed with the City's argument that it was unclear whether the exhibits referred to in the agreement had been submitted at the time the City Council adopted and approved the agreement on April 26, 2004. This court also concluded that BP failed to show that the City made unambiguous promises that were relied upon by BP. This court further noted that BP had not shown a reasonable likelihood of success on the merits or that it had an inadequate remedy at law. This court indicated that damages for breach of contract would be "easily determinable." This court therefore concluded that the requirements for injunctive relief had not been met. Accordingly, BP's original Motion for Temporary Restraining Order (#3) was DENIED.

  On March 24, 2005, BP filed its Second Motion for Temporary Restraining Order and Preliminary Injunction (#23), with attached exhibits, and a Memorandum of Law in Support (#24). BP stated that it had received written discovery responses from the City which erased "any possible doubt" that BP and the City entered into an unambiguous agreement in April 2004. BP also stated that, after this court denied its original Motion for Temporary Restraining Order on December 13, 2004, the City Council, that same evening, approved a new development and management agreement with an entity named BNAM, LLC, also known as Bloomington-Normal Arena Management, Inc. BP stated that the BNAM Agreement was substantially similar to BP's agreement with the City and even referenced many of the same exhibits. In its Motion, BP requested that this court enter an Order stating: 1. A temporary restraining order shall issue immediately ordering the City, whether directly or indirectly, alone or in concert with other person(s) [is] immediately enjoined and restrained until further order of this Court from performing any term of the BNAM Agreement or directly cooperating with BNAM in the performance of any such contract, or negotiating a management or development agreement with any other person or entity until further order of court.

 
2. The parties are directed to pursue dispute resolution procedures set forth in par. 16.2 of the BP Agreement as to all disputes which have been or could be raised between Bloomington Partners and the City of Bloomington. All proceedings herein between Bloomington Partners and the City are stayed pending final resolution of the disputes.
  The documents attached to BP's Motion, which include a transcript of the December 13, 2004, hearing before this court, show the following facts. John Butler and Michael Nelson are Bloomington locals and have been involved in the planning of an indoor sports arena (Arena Project) in Bloomington since at least 2000. In June 2000, they approached Richard Adams regarding the Arena Project . According to Adams' affidavit, Nelson, Butler and Adams worked together throughout 2000, 2001, 2002, and early 2003 to bring a hockey team to the City and to establish themselves as the management of the Arena Project. Adams subsequently brought LeFevre into the project and also recruited Barry Kemp, the principal of Kemp Entertainment, LLC.

  In January 14, 2002, the City entered into a Consulting and Sales Agreement with Central Illinois Arena Management, Inc. (CIA), an Illinois corporation. Nelson is president of CIA and Butler is its secretary. The agreement stated that the City "hereby appoints CIA as its exclusive agent providing consulting services related to the design and marketing of the [Arena] Project and to procure third party funding sources for the development of the Project."

  According to LeFevre's affidavit, in the months following July 2003, Kemp, Adams, Butler, Nelson, and LeFevre agreed among themselves to jointly make a proposal to the City in the name of "Bloomington Partners," a to-be-formed entity, under which BP would manage the Arena Project, provide one or more anchor tenants, furnish food and beverage concession equipment, and otherwise give financing guarantees for the Arena Project. Contract negotiations continued during the latter months of 2003. A proposed Agreement, with attached Exhibits A-H, was sent to the City on December 3, 2003. In addition, during this time, the five individuals involved provided extensive financial and planning services to the City in connection with the Arena Project.

  During January, February and March of 2004, LeFevre engaged in contract negotiations with the City regarding the content of the Management Agreement. A final draft of the Management Agreement was submitted to the City on or about April 7, 2004. No changes were made to the Exhibits which had been provided to the City in December 2003. On April 26, 2004, a public meeting was held, and the City Council accepted and approved the Management Agreement by an 8-0 vote. On April 27, 2004, Mayor Judy Markowitz signed the Management Agreement on behalf of the City. The Management Agreement, drafted by LeFevre, provided, in pertinent part:
WHEREAS, the City is in the process of considering the development of a sports and entertainment center, currently known as the Bloomington Sports and Entertainment Center (the "Center"), to be located in downtown Bloomington and serving the surrounding regional markets;
. . .
WHEREAS, in furtherance of the development of the Center, the City has previously entered into a Consulting and Sales Agreement (the "CS Agreement"), a copy of which has been attached hereto as Exhibit A-1, with Central Illinois Arena Management, Inc. ("CIA");
WHEREAS, the CS Agreement provides that CIA will provide, as the City's exclusive agent, comprehensive services with respect to the development of the Center, such services to include assistance to the City in the design of the Center, the marketing and sale of key revenue generating sources for the Center, including naming rights, suites and club seats and sponsorships, the securing of primary tenants and the procurement of private and third-party funding sources for the Center;
WHEREAS, the CS Agreement also provides certain rights of CIA with respect to future management and operations of the Center;
WHEREAS, the parties acknowledge that the principals of CIA are principals of BP and that, by mutual agreement of the City and CIA, the CS Agreement will be terminated simultaneously with the execution of this Agreement in accordance with Exhibit A-2 hereof;. . . .
Exhibit A-2 was an unsigned Termination Agreement terminating the CS Agreement between the City and CIA. The Management Agreement, among other things, provided that BP would purchase naming rights for the Arena Project for $2 million and had the right to resell the naming rights to a third party.

  The Management Agreement included paragraph 16.2, which set out a lengthy cooperation/mediation provision. Paragraph 16.2 provided that "any dispute arising hereunder will first be referred to the parties' respective agents or representatives prior to either party initiating a legal suit, who will endeavor in good faith to resolve any such disputes within the limits of their authority and within ninety (90) days after the commencement of such discussions." Paragraph 16.2 provided that, if any dispute remained unresolved, it would be subject to mediation and, if that was unsuccessful, arbitration. Paragraph 16.2(h) provided that a party could file a complaint to seek a preliminary injunction if such action was necessary to avoid irreparable damage or to preserve the status quo.

  On May 3, 2004, Articles of Organization were filed establishing Bloomington Partners LLC as a limited liability company. On May 10, 2004, a press release was issued. The press release was prepared by Nelson and approved by Tom Hamilton, City Manager for the City. It stated that BP had signed a 10-year facility management agreement with the City, set out some of ...


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