On November 12, 2015, U.S. District Judge G. Murray ruled that former Phoenix Coyotes owner Jerry Moyes is liable to the NHL for attorneys’ fees and other damages that resulted from the team’s bankruptcy back in 2009.
The NHL initiated its action against the former Coyotes owner after he declared Chapter 11 bankruptcy and the NHL purchased the team for $140 million. The suit was brought in 2010 to recover $145.9 in damages, which included more than $112 in operating expenses, $6.5 million in unpaid salary to the team’s former coach Wayne Gretzky, roughly $11.6 million in creditor claims paid by the league, and attorneys’ fees in the amount of $15 million . The Arizona District Court referred the case to U.S. Bankruptcy Judge Redfield T. Baum who largely found in favor of Moyes. In January of 2015, Judge Baum recommended that the District Court grant a motion for summary judgment in Moyes’ favor with respect to the claims for attorneys’ fees and creditor’s claims paid by the league. Later, in October of 2015, the court dismissed the remaining claims for operating expenses and salaries owed to Gretzky.
However, last week U.S. Judge G. Murray provided a contrary finding, holding that the NHL may recover for payments made to unsecured creditors, limited attorneys’ fees, and for salaries owed to Gretzky. Although the District Court’s ruling differs in part from Judge Baum’s recommendation, the court maintained the position that the NHL could not recover for operating expenses and losses incurred during the league’s ownership.
In concluding that the NHL can recover for limited attorneys’ fees, Judge Murray determined that Moyes may be held liable under contract to indemnify the league for losses resulting from the team’s actions and may therefore be held liable for attorneys’ fees resulting from filing the Chapter 11 bankruptcy action and the antitrust adversary action. Moreover, Judge Murray found that the NHL’s payments to unsecured creditors entitled it to collect on the debts, thereby obligating the Moyes family to reimburse the NHL, capped at $15 million under the owner’s guaranty agreement. Finally, the District Court held Moyes liable to compensate the former coach for salaries owed in the amount of $6.5 million.
Although the District Court’s ruling seems to be a big win for the NHL, the league was unable to recover for operating expenses and losses—a large portion of their claim.