Full opinion text
JUDGMENT GENE CARTER, District Judge. At the joint request of the parties herein the Court enters its judgment in the above entitled matter, the Court’s Opinion to follow in due course. It is hereby ORDERED that judgment enter in Civil No. 86-0331-P as follows; I. Plaintiffs’ Claims (1) Judgment on Counts I, II, IV and V of the Plaintiffs’ complaint to enter for the defendant, Northeastern Baseball, Inc.; (2) Judgment on Count III of the Plaintiffs’ complaint to enter for Plaintiffs on plaintiffs’ claim for a declaratory judgment and it is hereby DECLARED and ADJUDGED that the September 3, 1986 purchase and sale agreement between the Plaintiffs Triple-A Baseball Club Associates, Jordan Kobritz, and Triple-A Baseball Club of Maine, Inc., general partners, and Northeastern Baseball, Inc. is null, void and without further force or effect having terminated by its own terms on the failure of an implied condition precedent to performance of the agreement; Plaintiffs to return forthwith the contract deposit of One Hundred Thousand Dollars ($100,000) with accrued interest thereon in accordance with Paragraph 14 of said agreement. II. Claims of Northeastern Baseball, Inc. Judgment is entered on the counterclaims of the Counterclaim Plaintiff Northeastern Baseball, Inc., against the Plaintiffs Triple-A Baseball Club Associates, Jordan Kobritz, and Triple-A Baseball Club of Maine, Inc., general partners, as follows; (1) Judgment on Count I of the counterclaim to enter for the Counterclaim Defendants, Triple-A Baseball Club Associates, et al.) (2) Judgment on Count II of the counterclaim to enter for the Counterclaim Defendants, Triple-A Baseball Club Associates, et al. It is hereby ORDERED that judgment enter in Civil No. 86-0360-P as follows; I. Plaintiffs’ Claims Against the International League of Professional Baseball Clubs (1) Judgment to enter on Count I for the Plaintiffs, Triple-A Baseball Club Associates, et al. on the claim for equitable relief and it is hereby ORDERED that the Defendant, International League, restore the Plaintiff, Triple-A Baseball Club Associates, to full membership rights in the Defendant, International League, in accordance with the provisions of the Constitution, By-laws, and Rules and Regulations of the Defendant, International League; (2) Judgment to enter on Count II for the Defendant, International League of Professional Baseball Clubs; (3) Judgment to enter on Count III for the Defendant, International League of Professional Baseball Clubs; (4) Judgment to enter on Count IV for the Defendant, International League of Professional Baseball Clubs; (5) Judgment to enter on Count V for the Defendant, International League of Professional Baseball Clubs. II. Claims of International League Against Plaintiffs Judgment is entered on the claims of the International League against plaintiffs, Triple-A Baseball Club Associates et al., Northeastern Baseball, Inc. and Multi-Pur-pose Stadium Authority as follows; (1) Judgment is RESERVED on the cross-claim of the International League against Northeastern Baseball, Inc. and Multi-Purpose Stadium Authority seeking contribution and indemnification as these claims were bifurcated for purposes of trial and remain PENDING for later disposition; (2) Judgment on Count II seeking a declaration that the International League has exclusive jurisdiction to determine whether the Plaintiff Triple-A Baseball Club Associates or Defendant, Northeastern Baseball, Inc. holds membership in the league not to enter, the claims having become MOOT on the stipulation at trial of the defendant, International League, that it would honor the Court’s decision determining the ownership of the Triple-A franchise as determinative of membership in the International League as between the Plaintiff Triple-A Baseball Club Associates and Defendants Northeastern Baseball, Inc. and MultiPurpose Stadium Authority; (3) Judgment to enter on Count III alleging tortious interference with the league’s business relationships for the Plaintiffs, Triple-A Baseball Club Associates, et al., and Defendants Northeastern Baseball, Inc. and Multi-Purpose Stadium Authority; and (4) Judgment to enter on Count IV alleging a breach of contract by failure to comply with the International League’s constitution for Plaintiffs, Triple-A Baseball Club Associates, et al., and Defendants Northeastern Baseball, Inc. and Multi-Purpose Stadium Authority. III. Plaintiffs’ Claims Against the Multi-Purpose Stadium Authority Judgment is entered on the claims of ( Plaintiffs against the Defendant, MultiPurpose Stadium Authority, as follows; (1) Judgment on Count I to enter for Defendant, Multi-Purpose Stadium Authority; (2) Judgment on Count II to enter for Defendant, Multi-Purpose Stadium Authority. IV. Costs All prevailing parties shall recover costs as provided by law. FINDINGS OF FACT, CONCLUSIONS OF LAW AND OPINION These consolidated actions grow out of a business deal involving the sale of two minor league baseball franchises — the Triple-A Maine Guides and the Double-A Waterbury Indians — and a related dispute over membership in the Triple-A International League of Professional Baseball Clubs. Jurisdiction is based upon diversity of citizenship; the parties stipulate that Maine law controls all issues with the exception that Virginia law controls the formation and corporate status of the International League. The case was tried without a jury, and the Court herein sets forth its findings of fact and conclusions of law as required by Fed.R.Civ.P. 52(a). Before doing so, the Court will give a brief introductory overview of the parties, the dispute, and the resulting causes of action. Plaintiffs are Triple-A Baseball Club Associates, a Maine Limited Partnership (hereinafter “the Limited Partnership”); Jordan Kobritz, general partner of the Limited Partnership (“Kobritz”); and Triple-A Baseball Club of Maine, Inc., another general partner of the Limited Partnership. (Kobritz owns all the stock in his corporate general partner.) Defendants are Northeastern Baseball, Inc., a Pennsylvania nonprofit corporation (“NBI”); the Multi-Pur-pose Stadium Authority of Lackawanna County, Pennsylvania, an entity of the Commonwealth of Pennsylvania (“MPSA”); and the International League of Professional Baseball Clubs, Inc., a Virginia nonprofit corporation (“International League”). Although not parties, two other important actors in the case are the Eastern League of Professional Baseball Clubs, Inc., (“Eastern League”), and the National Association of Professional Baseball Leagues (“National Association”), the governing body of minor league baseball. Both the International League and the Eastern League are members of the National Association and are bound to operate in accordance with its rules, known as the National Association Agreement. The main dispute grows out of a September 3,1986 agreement between the Limited Partnership, its two general partners, and NBI. Under this agreement, the Limited Partnership agreed to sell its Triple-A International League franchise, the Maine Guides, to NBI for $2.4 million and NBI agreed to sell its Double-A Eastern League franchise, the Waterbury (Connecticut) Indians, to the Limited Partnership for $400,-000. The agreement was contingent upon the approval of both leagues, with the proviso that if the Eastern League “refuse[d] to approve” the sale of the Double-A franchise to the Limited Partnership, the agreement would remain in effect but the price of the Triple-A franchise would be reduced to $2 million. A September 4, 1986 side agreement between Kobritz individually and NBI provided in part that if in spite of the parties’ best efforts the Eastern League refused to approve the sale of the Double-A franchise both to the Limited Partnership and to Kobritz individually, NBI would pay Kobritz individually a consulting fee of not less than $400,000. This agreement was contingent upon NBI’s acquisition of the Triple-A franchise pursuant to the September 3 agreement. The International League approved the assignment by the Limited Partnership of the Triple-A franchise to NBI and subsequently permitted NBI, rather than the Limited Partnership, to vote at International League meetings. But the Eastern League never approved the transfer of the Double-A franchise either to the Limited Partnership or to Kobritz individually. NBI appeared at the scheduled closing, ready to pay the Limited Partnership $2 million for the Triple-A team but not to convey the Double-A franchise to either the Limited Partnership or Kobritz; Plaintiffs refused to convey the Triple-A franchise. Plaintiffs assert five causes of action against NBI. Counts I, II, and III all assert that under the September 3 agreement, NBI had a duty to act in good faith and that, because the Eastern League never actually “refuse[d] to approve” the transfer, NBI had a duty to convey the Double-A franchise. Count I asserts that NBI repudiated and Count II that NBI breached its obligations; Count III asserts that the September 3 agreement terminated by its own terms. All three counts seek a declaration that the September 3 agreement is without force or effect and Counts I and II further seek consequential damages resulting from an alleged delay in the Limited Partnership’s preparations for the 1987 baseball season. Count IV asserts that NBI converted Plaintiffs’ Triple-A franchise by wrongfully exercising membership rights in the International League without holding title to the franchise; Count IV seeks consequential damages as just described plus damages equal to the value of the franchise itself and an injunction against NBI’s further exercise of the Limited Partnership’s league membership rights. Count V asserts that NBI’s bad faith and failure to use its best efforts to obtain Eastern League approval constitute a breach of the September 4 side agreement between NBI and Kobritz individually; Plaintiffs seek damages in an amount equal to the value of the Double-A franchise plus consequential damages. Plaintiffs assert two causes of action against MPSA, both resulting from NBI’s assignment to MPSA of NBI’s rights under the September 3 agreement. Count I alleges conversion, asserting the same theory and seeking the same relief as in Count IV of Plaintiffs’ complaint against NBI. Count II alleges that the assignment from NBI to MPSA was fraudulent because it was made for less than fair consideration and because NBI had no property interest in the Triple-A franchise that it could assign; Plaintiffs seek an avoidance of the transfer and an injunction against MPSA’s further exercise of the Limited Partnership’s International League membership rights. Plaintiffs, assert five causes of action against the'International League, all based on the league’s recognition of NBI (or MPSA) rather than the Limited Partnership as a league member and franchise owner. Count I asserts a violation of the International League’s duty to operate in accordance with its constitution; Plaintiffs seek a declaration that the International League has violated such a duty, and an injunction against further violations. Count II asserts that the International League, its officers, and a majority of its directors have acted oppressively and in breach of fiduciary duties toward the Limited Partnership as a minority member of the league; Plaintiffs seek relief similar to that sought in Count I as well as damages. Count III asserts that the International League wrongfully removed Kobritz from his position as a director of the league; Kobritz seeks a declaration that he remains a director and an injunction against the International League’s refusal to treat him as such. Count IV asserts that the International League tortiously interfered in contractual relations between the Limited Partnership and NBI; Plaintiffs seek the value of their bargain with NBI plus consequential damages and an injunction against the International League’s refusal to recognize the Limited Partnership as owner of the Triple-A franchise. Count V asserts that the International League converted the Limited Partnership’s property and seeks relief similar to that sought in Count IV. NBI asserts two counterclaims against the Limited Partnership. Count I seeks a declaration that the September 3 agreement remains in effect and an order for specific performance of that agreement for the alternative consideration ($2 million for the Triple-A franchise) provided for therein. Count II asserts that Plaintiffs’ refusal to close constituted a breach of the September 3 agreement and requests incidental and consequential damages and an order for specific performance. The International League has filed four claims. Count I is a claim against NBI and MPSA seeking a declaration that they are contractually obligated to hold the league harmless for any money judgment entered against the league in this action; this claim has been bifurcated from the others for later disposition. Count II seeks a declaration that the International League has exclusive jurisdiction to determine whether the Limited Partnership or NBI holds membership in the league. Count III asserts that Plaintiffs, NBI, and MPSA have tor-tiously interfered with the league’s business relationships and prospective business advantage and seeks monetary relief. Count IV asserts that Plaintiffs, NBI and MPSA breached a contract by failing to comply with the International League’s constitution and similarly seeks monetary relief. Having previously issued its judgment in this matter in order to accommodate the parties’ need for the earliest possible resolution of the dispute, the Court now issues its findings of fact and conclusions of law as required by Fed.R.Civ.P. 52(a). FINDINGS OF FACT During 1984 John McGee, president of Northeastern Baseball, Inc. (NBI), explored the possibility of building a Triple-A baseball stadium in the Scranton, Pennsylvania area and purchasing a Triple-A franchise to play in it. He also explored the possibility of obtaining a Double-A franchise to play in the proposed stadium until a Triple-A franchise could be obtained, in the event a Triple-A franchise could not be obtained before or upon completion of the stadium. McGee learned that a Double-A franchise, the Waterbury (Connecticut) Indians of the Eastern League, was for sale, and he arranged to buy it. McGee later became solicitor to the Multi-Purpose Stadium Authority of Lackawanna County, Pennsylvania, (MPSA), a government entity created to build the stadium. On September 22, 1984, McGee appeared before a meeting of the eight Eastern League directors (one from each member franchise) to seek approval of the franchise ownership transfer as required by the Eastern League constitution. McGee was asked about his plans for owning and operating the Waterbury Indians; he told the league directors of his plans to build a stadium for the 1987 season in Scranton and to operate the team in Waterbury in 1985 and 1986. McGee also told the league directors that he hoped ultimately to bring a Triple-A franchise to Scranton but that the Waterbury team would be moved to Scranton if no Triple-A franchise had been acquired by the time the stadium was ready. Although some Eastern League members felt that McGee would be required to move the Waterbury team to Scranton once the stadium was completed, the minutes of the meeting reflect two separate votes, neither of which established such a requirement. One vote approved the transfer of the franchise to an NBI subsidiary contingent upon a satisfactory closing of the deal with the franchise’s then-current owners; the other vote authorized the Waterbury franchise to move to Scranton contingent upon the completion of a stadium satisfying Eastern League standards. At the same meeting the Eastern League held two more formal votes conditionally approving the transfer of another Eastern League franchise to a new owner and a new city. These votes and the votes on the transfer of the Waterbury franchise were in accordance with the Eastern League’s usual procedure for considering and voting on a request for approval of the transfer of a franchise. In March of 1985, McGee wrote to Eastern League president Charles Eshbach requesting that the Eastern League approve NBI’s exploration of the possibility of obtaining a Triple-A franchise for Scranton. The letter noted that although NBI was not at the time operating in Scranton, such approval was required by Section 10.08(f) of the National Association Agreement, the set of rules governing minor league baseball. That section requires that “[b]efore a franchise operator ... may explore the possibility of elevating his city to a league of higher classification, he must first obtain the written permission of a majority of the directors of the league of which his club is a member” or face a $2500 fine. A Triple-A league such as the International League is a league of “higher classification” than the Double-A Eastern League. After polling the Eastern League directors, Eshbach wrote to McGee in June of 1985 conditionally granting permission for “the Waterbury/Scranton franchise” to explore elevation, emphasizing that the league had not approved of Scranton actually elevating to Triple-A nor had the league waived its right to “compensation” from NBI in the event NBI actually elevated. Eshbach’s mention of “compensation” referred to a payment that would be made to the Eastern League to compensate the league for the loss of its asserted “territorial rights” in Scranton. Territorial rights are created by Section 10.06 of the National Association Agreement; such rights basically cover a ten-mile radius around the city in which a franchise is granted, “provided the franchise holder operates a [club] within such protected territory.” Both the league and the club hold these territorial rights, the effect of which is that no club in any league party to the National Association Agreement may play within the protected territory of another club and league without first obtaining the consent of that club and league. Under Section 10.08 of the National Association Agreement, a league and club of higher classification (e.g., Triple-A) may acquire or “draft” the territory belonging to a league and club of lower classification (e.g., Double-A). Section 10.08 requires the acquiring league and club to pay compensation to the league and club giving up the territory; the amount may be determined by agreement of the parties, or, failing agreement, by binding arbitration. Section 10.08 thus appears to contemplate a four-party transaction in which, for example, a Triple-A league and club acquire the territory of and pay compensation to a Double-A league and club. The Double-A league and club may then draft (and pay compensation for) Single-A territory into which to relocate the displaced Double-A club. This is to be distinguished from a three-party transaction in which a club itself, e.g., a Double-A club, seeks to leave a Double-A league and join a Triple-A league, i.e., to “elevate.” In such a case the Double-A league would be losing both territory and a club. Although Section 10.08 does not on its face require that the Double-A league be compensated in case of elevation, in practice a club elevating from a Double-A league to a Triple-A league has itself paid “indemnification” to compensate the Double-A league for its loss of territorial rights. In 1984 an Eastern League club in Buffalo, New York paid the Eastern League $16,000 in exchange for permission to leave that league for a Triple-A league. Also in 1984, a Double-A club in Nashville, Tennessee paid its Double-A league between $170,000 and $250,000 for permission to leave that league for a Triple-A league. Eshbach’s June 1985 letter to McGee, conditionally approving NBI’s exploration of elevation to Triple-A, notified McGee that the Eastern League directors felt that, concerning compensation, the Buffalo precedent was not applicable and that any indemnification would be strongly influenced by the Nashville settlement. By this Eshbach meant that the Eastern League had a stronger interest in having a franchise in Scranton than it did in Buffalo, and thus the amount of indemnification that the Eastern League would seek if NBI sought to elevate to Triple-A would be closer to the $170,000-$250,000 Nashville figure than the $16,000 Buffalo figure. At a July 15, 1985 Eastern League meeting, NBI’s request to investigate elevation to Triple-A was once again discussed. McGee stated his view that tying indemnification to that request was premature; an Indemnification Committee was formed to make recommendations on what indemnification ultimately to seek if NBI elevated. McGee, Eshbach, and two other league directors (Jerry Mileur and Stuart Revo) agreed to serve on the committee. The league then voted to grant NBI “permission to explore elevation to Triple-A with the understanding that approval to make such elevation will be forthcoming from the league’s Directors only if Scranton (the current Waterbury club) and the league can reach full and formal agreement on the amount and payment of indemnification by Scranton to the league without resorting to arbitration or litigation.” McGee was thus on notice that the Eastern League directors believed the league had territorial rights in Scranton, even though NBI’s club was at the time playing in Waterbury rather than Scranton. McGee expressed at this time his view that the league had no such rights. The Indemnification Committee met in November of 1985 and discussed various criteria for determining the amount of indemnification that NBI should pay if it elevated to Triple-A. The committee discussed a possible range of $50,000 to $250,-000, within which the criteria would be used to set an exact amount, but the committee did not finally agree on a recommendation to the league as a whole. The committee met again in December of 1985. Revo asked if NBI would agree then and there to pay the Eastern League $200,000 at such time in the future as Scranton elevated to Triple-A; McGee refused. The committee again failed to agree on a recommendation to the league. In June of 1986, McGee approached Jordan Kobritz, a general partner of Triple-A Baseball Club Associates, a Maine Limited Partnership (“the Limited Partnership”), about the possibility of purchasing the Maine Guides, a franchise in the Triple-A International League, and selling NBI’s Double-A franchise. The Triple-A franchise would move to Scranton and the Double-A franchise would move to Maine. McGee offered Kobritz the Double-A franchise plus $400,000 for the Triple-A franchise. Kobritz said that $400,000 was not enough. McGee also discussed his intentions with regard to the stadium to be built by MPSA in Scranton. In July of 1986 McGee increased the cash portion of his offer to 2 million dollars. McGee told Kobritz he felt that the Eastern League had no territorial rights to Scranton but that the League might nevertheless seek money in connection with the proposed transfer. On July 30, McGee forwarded to Kobritz a $100,000 deposit and drafts of two agreements, one providing that NBI would buy the Triple-A franchise from the Limited Partnership for $2.4 million and the other providing that Kobritz individually would buy NBI’s Double-A franchise for $400,000. Kobritz never signed these agreements; he retained the $100,000 check without depositing it. On August 20, Kobritz forwarded to McGee a draft agreement between NBI and the Limited Partnership, Kobritz as general partner, and Triple-A Baseball Club of Maine, Inc., the other general partner. (Kobritz is the sole shareholder of his general partner Triple-A Baseball Club of Maine, Inc.) The net effect of the agreement was to transfer the Double-A franchise and $1.2 million from NBI to the Limited Partnership, to transfer the -Triple-A franchise from the Limited Partnership to NBI, and to transfer $800,000 from NBI to the general partners. Kobritz intended to use some of that $800,000 to buy out those of his limited partners who were not interested in operating a Double-A franchise. This agreement contained four “conditions precedent”: the approval by September 11, 1986 of the NBI board, Ko-britz’s limited partners, the International League, and the Eastern League. The agreement also made the transfer of the Triple-A franchise expressly contingent upon receipt of the Double-A franchise. Kobritz obtained his limited partners’ approval of this agreement on August 24, but McGee never signed the agreement. Late in August, Kobritz and McGee agreed to contact their respective league presidents to discuss seeking approval of the two franchise transfers as required by the league constitutions. On August 28, both McGee and Kobritz called International League president Harold Cooper, informing him that an agreement had been reached. Kobritz told Cooper that he and McGee had a “firm understanding” and he requested that Cooper call a special meeting of the International League so that the franchise could be transferred. Kobritz said he needed the meeting as soon as possible so that a player development contract could be signed with the Philadelphia Phillies. Cooper was not informed about any of the specific terms of the deal between Kobritz and McGee. Cooper scheduled an International League meeting to approve the sale for September 9 in Rochester, New York. On August 29, 1986 McGee informed Eastern League president Eshbach that NBI had reached an agreement with Jordan Kobritz and the Limited Partnership involving the transfer of the Double-A franchise to the Limited Partnership and the Triple-A franchise to NBI. • Eshbach advised McGee to submit a formal written request (1) that the Eastern League approve the transfer of the Double-A franchise to Kobritz or the entity he represented and (2) that the Eastern League permit NBI to “elevate” from Double-A to Triple-A. Eshbach also informed McGee that the Indemnification Committee would have to meet to discuss the issue, at which point McGee asked to be removed from the committee to avoid a conflict of interest. Esh-bach agreed to do so and subsequently appointed Ben Bernard of the Albany franchise to replace McGee on the committee. Also on August 29, Kobritz called Eshbach, who told Kobritz that he would call a special Eastern League meeting at which Ko-britz would make a presentation to the league, league members would ask him questions, and then would vote on the transfer. Eshbach said that the meeting would probably be on September 6. Also on August 29, Kobritz held a press conference to announce the sale; on McGee’s instructions, he identified the purchaser of the Triple-A franchise as MPSA. McGee drafted a letter to Eshbach and read the draft to International League president Harold Cooper on August 30 or 31. Cooper had just recently talked to Johnny Johnson, president of the National Association (the governing body of minor league baseball). Johnson had told Cooper that there was a dispute over whether Scranton was Eastern League territory, that he (Johnson) was not familiar with all the facts of the case, that he had never ruled on the question, and that no “exception” had been granted under Section 10.-06(b) giving the Eastern League or NBI territorial rights in Scranton. After McGee read Cooper the draft letter, Cooper told McGee that in his view Scranton was open rather than Eastern League territory; he reported that Johnson had said no exception had been granted covering the Scranton situation. Cooper also told McGee that the Scranton territorial issue had to be resolved before the September International League meeting called to consider Kobritz’s request to approve the transfer of the Triple-A franchise to NBI. Cooper wanted to avoid the inter-league friction that would be created by the transfer of an International League team into territory as to which the Eastern League had an unsatisfied territorial claim. On September 1, 1986, McGee sent the letter to Eshbach requesting that the Eastern League approve the sale of the Double-A franchise to Kobritz or an entity in which Kobritz had or would have an interest. McGee stated that he had an agreement to purchase Kobritz’s Triple-A franchise and move it to Scranton. He noted that although in his view Scranton was not Eastern League territory, if the Eastern League believed that it was and if the National Association had so determined, then the letter should also be treated as a request to “elevate” to Triple-A. Because the question was open, McGee’s letter continued, it was inappropriate at that time to enter into an indemnification agreement with the Eastern League; instead, he recommended “that the Eastern League determine an amount which it deems equitable and then ask the National Association to rule on the amount of damages should the National Association make a determination that Scranton is Eastern League territory.” On August 31 and September 1 Eshbach called the other Indemnification Committee members to set up a meeting for September 4, and he tentatively arranged a full Eastern League directors meeting for September 6 to consider the formal written request he anticipated receiving from McGee. Eshbach told the league directors what little he knew about the terms of the Kobritz-McGee deal, including the fact that the deal involved the transfer of the Double-A franchise to Maine. None of the directors expressed reservations about approving the transfer to Maine; their only concern was the need to resolve the indemnification issue with NBI. On September 1 Eshbach spoke to Kobritz, telling him of the Eastern League meeting tentatively set for September 6, discussing with him what to expect at the meeting, and advising him of the issues that Eshbach thought the Eastern League would want addressed regarding who would own the franchise, where it would play, and the status of a rumored dispute between Kobritz and some of his limited partners. On September 3, McGee and Robert Tam-bur, a member of the NBI board, flew to Portland to finalize the terms of the agreement with Kobritz. They proceeded directly to the office of Richard Spencer, Ko-britz’s attorney; McGee showed Kobritz a copy of McGee’s September 1 letter to Esh-bach discussing the territorial rights dispute, mentioning indemnification damages, and requesting Eastern League approval of the transfer of the Double-A franchise. McGee also showed Kobritz documents indicating MPSA’s involvement in financing the deal. Before Spencer entered the room, Kobritz said that there might be a problem in securing Eastern League approval of the transfer of the Double-A franchise to the Limited Partnership because of dissent that had arisen among some of his limited partners. These dissenters did not want to operate a Double-A team and were challenging the legal validity of the August 24 limited partners’ vote approving the August 20 agreement. The dissenters opposed that agreement because it made the sale of the Triple-A franchise expressly contingent upon acquisition of a Double-A franchise by the Limited Partnership. The dissenters were making public statements that were uncomplimentary to the Eastern League. Kobritz stated that if the Eastern League refused to approve the transfer of the Double-A franchise to the Limited Partnership, he wanted a side agreement whereby he would acquire the Double-A franchise individually and then operate it with those of his limited partners who wanted to do so. Kobritz felt a side agreement assuring his individual acquisition of the Double-A franchise was necessary because the dissenters would not approve the main agreement if it appeared to assure that the Limited Partnership would be acquiring a Double-A franchise. McGee and Tambur stated that they had no objections to such an arrangement. Neither McGee, Tambur, nor Kobritz considered the possibility that the Eastern League might not approve the transfer for reasons other than the dissent among the limited partners — e.g., because of the territorial rights dispute. Spencer then brought in a new draft agreement that provided for NBI to purchase the Triple-A franchise for $2.4 million and the Limited Partnership to purchase the Double-A franchise for $400,000. Unlike the August 20 draft, however, this agreement did not make the transfer of the Triple-A franchise expressly contingent upon the transfer of the Double-A franchise to the Limited Partnership. Instead, the new agreement provided that if the Eastern League “shall refuse to approve the sale” to the Limited Partnership, the agreement would “remain in full force and effect;” the sale of the Triple-A franchise would nevertheless go through, but NBI would pay $2 million instead of $2.4 million to the Limited Partnership. By “refuse to approve the sale” the Court finds that the parties meant “refuse to approve the sale on its merits.” The new agreement also dropped “approval of the Eastern League by September 11” from the list of “conditions precedent” in the August 20 draft; instead, the new draft merely stated that the transfer of the Double-A franchise was subject to Eastern League approval. Because of these differences, the new draft also required the approval of the Limited Partners; Kobritz hoped the changes would satisfy the dissenters and render moot any dispute over the legal validity of the August 24 limited partners’ vote approving the August 20 draft. McGee asked that the closing date on the new draft be changed from September 14 to October 21, to allow him sufficient time to obtain $2 million in public financing with which to purchase the Triple-A franchise. Kobritz agreed to this change. Kobritz did not ask that the draft be changed to provide for NBI to pay $2.4 million even if the Eastern League refused to approve the transfer of the Double-A franchise to the Limited Partnership. Spencer left the room and Kobritz began drafting the side agreement between himself individually and NBI. The draft recited that NBI had recently entered into an agreement to purchase the Limited Partnership’s Triple-A franchise and that the Limited Partnership had recently entered into an agreement to purchase NBI’s Double-A franchise. It further recited that “Whereas [NBI] and [Kobritz] agree to use their best efforts to obtain Eastern League approval of the purchase by [the Limited Partnership] of [NBI’s] Double-A franchise; and Whereas, if even after using their best efforts to obtain such approval the Eastern League shall fail to approve the purchase of [NBI's] Double-A franchise by the [Limited Partnership],” the side agreement would become effective. Under the side agreement, Kobritz would purchase the Double-A franchise from NBI for $500,000; NBI would hire Kobritz as a consultant for a fee of $500,000. (The Court finds that the parties intended the words “fail to approve” to have the same meaning as the words “refuse to approve” in the September 3 main agreement.) Because the two payments canceled each other, the stated price was irrelevant to the net effect of this agreement. McGee had suggested, therefore, that the franchise be assigned a value of $500,000 (rather than the $400,000 specified in the main agreement); he believed that the Eastern League directors would be pleased to see one of their league’s franchises valued so highly and would thus be more likely to approve the transfer to Kobritz. Spencer returned to the room with a new copy of the agreement between NBI and the Limited Partnership, incorporating the modifications agreed upon earlier in the meeting. The parties signed both the main and side agreements and McGee and Tam-bur returned to Scranton. Kobritz then assigned his rights under the side agreement to the Limited Partnership in order to make clear, should any question arise, that he was acting in the Limited Partnership’s rather than his own interest. At a limited partners meeting that evening, Kobritz presented the main agreement in detail and described the side agreement in general terms as a guarantee that the Limited Partnership would enjoy the financial benefits of ownership of the Double-A team. Kobritz did not go into detail because he feared that the dissenters would view the two agreements and the assignment, taken together, as equivalent to the August 20 draft agreement which they had opposed. The limited partners then approved the main agreement by a show of hands and later by a written vote. As they returned to Scranton on September 3, McGee and Tambur discussed modifying the side agreement to clarify what might happen if the Eastern League refused to approve the transfer to Kobritz individually. They had no specific reason to believe that such a refusal might occur, other than that the dissent among Ko-britz’s limited partners might somehow adversely affect the league’s view of Kobritz individually. But McGee and Tambur nevertheless felt that the side agreement should be modified to provide Kobritz with a consulting fee in the event the Eastern League refused to approve the transfer to him individually. They felt that such a provision would also make the September 3 agreement with the Limited Partnership clearer and more final. Early on September 4, Eshbach received McGee’s letter of September 1. Eshbach wrote to International League president Cooper telling him of the Eastern League’s position that Scranton was Eastern League territory and requesting that the International League refrain from acting pending Eastern League action on the dispute with McGee. Eshbach also wrote to McGee reiterating the Eastern League’s position that it had territorial rights in Scranton and informing McGee that the Eastern League was “withholding its permission for the Scranton club to elevate to Triple-A, pending further discussions and agreement on the issue of indemnification.” The letter also noted that an Indemnification Committee meeting was scheduled for that night (September 4) and that Eshbach would brief McGee on any progress; Eshbach stated that he hoped an agreement could be reached by the following week and finalized at an Eastern League meeting. On September 4, Tambur called Kobritz and suggested that the side agreement be changed to provide Kobritz with a consulting fee in the event the Eastern League refused to approve the transfer to him individually. Kobritz asked, “What do you know that I don’t know?” Tambur replied that there was nothing, that he and McGee merely felt Kobritz needed additional protection. Kobritz asked to talk to McGee before agreeing to any modifications. McGee then called Kobritz, who asked what was going on. McGee said, “Nothing.” Kobritz asked why McGee wanted to modify the side agreement; McGee explained that he wanted to provide for a consulting fee to Kobritz in case of Eastern League nonapproval so that the NBI board, at its meeting scheduled for September 5, would not view the deal as potentially void (i.e., for want of consideration). At 2:24 p.m. McGee transmitted a facsimile of (“faxed”) the side agreement with proposed modifications to Kobritz, asking Kobritz to call back if he had questions. Eshbach’s wife left a message with McGee’s office at 3:18 p.m. on the afternoon of September 4 notifying McGee that the Eastern League meeting tentatively scheduled for September 6 had been postponed and that Eshbach would be in touch. Eshbach left a similar message at Kobritz’s office. Kobritz then called McGee, asking why the Eastern League meeting had been canceled. McGee replied that he had received a similar message from Eshbach but that he did not know the reason for it. Kobritz asked if the modifications to the side agreement changed the deal in any way; McGee replied that they did not. Kobritz again asked if there was anything he should be aware of and McGee replied, “Not that I know of.” (The Court finds that at this time neither Kobritz nor McGee knew or reasonably should have known that the Eastern League would not approve the transfer to Kobritz individually or that the Eastern League would demand that NBI relinquish the franchise to the league.) Kobritz made some minor modifications clarifying how he would be paid his con-suiting fee. This side agreement expressly superseded the side agreement signed on September 3. It was identical to the September 3 side agreement in most respects, including the “best efforts” language and other recitals and the agreement that if the Eastern League failed to approve the transfer to the Limited Partnership, NBI would sell the franchise to Kobritz for $500,000 and would pay Kobritz a consulting fee of $500,000. But the September 4 side agreement provided for an additional contingency: that in the event the Eastern League “denie[d] approval” of the sale not only to the Limited Partnership but also to Kobritz individually, NBI would reduce Ko-britz’s consulting fee, but not below $400,-000, by the amount of indemnification damages if any that NBI was required to pay to the Eastern League. (The Court finds that the parties intended the words “de-nie[d] approval” to have the same meaning as the words “refuse to approve” in the September 3 main agreement.) The September 4 side agreement was made expressly contingent upon NBI’s acquisition of the Triple-A franchise from the Limited Partnership. Kobritz signed the agreement and “faxed” it back to McGee at 3:28 p.m., at which time McGee also signed it. Kobritz then assigned to the Limited Partnership his rights under the September 4 side agreement. At 4:40 p.m. on September 4, Kobritz called Eshbach to ask why the Eastern League meeting of September 6 had been canceled. Eshbach replied that there was a two-part problem, the first part of which he did not identify but said needed to be resolved before the Eastern League could consider the second part — approval of the transfer of the Double-A franchise to Maine. (By the “first part” of the problem Eshbach meant the territorial rights indemnification issue.) Kobritz asked if the first part of the problem directly affected him or the transfer of the Double-A franchise to Maine, and Eshbach responded that it did not. At 4:58 p.m. on September 4, the Eastern League Indemnification Committee met by conference call; participating were Bernard, Mileur, Revo, and Eshbach. The members expressed strong opposition to permitting Scranton to elevate to Triple-A; they felt that the Eastern League had expended time and effort in assisting NBI, that the proposed Scranton stadium would be the flagship facility of .the league, that Scranton fit well with the league geographically, and that Scranton’s elevation would hurt the league’s reputation. The members felt that McGee’s September 1 letter to Eshbach disputing the Eastern League’s territorial rights was not in good faith, given that McGee had requested permission to explore elevation to Triple-A, had previously served on the Indemnification Committee, and in the members’ view had previously offered to settle. Mileur then suggested that the Eastern League withhold permission for Scranton to elevate to Triple-A unless Scranton relinquished its Double-A franchise to the Eastern League. The Eastern League would then sell the franchise to a new owner of its choice and either divide the proceeds among the remaining member franchises or use the proceeds for league purposes. This would not only compensate the league for losing the Scranton territory but also give the league ultimate control over the placement of the franchise in a new city with a new owner. The committee instructed Eshbach to seek full Eastern League approval by phone of the following two-part response to the request contained in McGee’s letter of September 1. First, the league would not consider any proposed transfer of NBI’s Double-A franchise unless NBI first satisfied the Eastern League’s right to indemnification for the loss of the Scranton territory. Second, the Eastern League would not give NBI permission to elevate to Triple-A unless NBI relinquished its Double-A franchise to the Eastern League as such indemnification. The committee meeting ended without any substantial discussion of the merits of Ko-britz or the Limited Partnership as potential owners or the merits of Maine as a potential location of the Double-A franchise. At least one committee member, Revo, felt that focusing on indemnification by NBI and refusing to even consider the proposed transfer to Maine might be a way to keep Scranton in the Eastern League while at the same time reducing the chance of the Eastern League being sued by Ko-britz or the Limited Partnership. Before the September 4 Indemnification Committee meeting, the idea of franchise relinquishment as indemnification had been raised only once, in passing, in a conversation in August between Eshbach and Mil-eur. Until the September 4 meeting no one in the Eastern League seriously considered franchise relinquishment as an option in dealing with NBI, and neither McGee nor Kobritz was aware that relinquishment was even a possibility until after September 4. Such a demand is unprecedented in minor league baseball. Between September 5 and 7 Eshbach attempted to contact the other Eastern League directors to obtain approval for the Indemnification Committee’s recommended response to McGee’s September 1 request. On September 6 Eshbach phoned McGee and told him of the committee’s recommendation. This was the first McGee had heard of relinquishment; he was shocked and promised to get back to Eshbach. Later on September 6 McGee phoned Cooper, told him of the Eastern League’s position, and asked for National Association president Johnson’s home phone number. Cooper gave McGee the number and told McGee once again that the International League viewed Scranton as open territory. By September 7 Eshbach had obtained the approval of all the Eastern League directors (other than McGee) and called McGee again to tell him that the league’s demand for franchise relinquishment was official. McGee responded with a two-pronged offer: Scranton would either (1) pay $250,000 to the Eastern League and agree not to appeal to the National Association the questions of the existence of territorial rights to Scranton or the appropriate amount of indemnification or (2) agree to seek a National Association determination of territorial rights to Scranton and not on the question of the amount of indemnification; if the National Association decided that Scranton was not Eastern League territory, NBI would nevertheless pay $100,-000 to the Eastern League. McGee told Eshbach that he needed the indemnification dispute decided before the International League met on September 9 to consider the proposed transfer of the Triple-A franchise to Scranton; Cooper had told McGee that Scranton would have to be open territory in order for the International League to approve the transfer. On September 8 the Indemnification Committee met again by conference call and Eshbach reported McGee’s two-pronged offer. There was no discussion of the merits of the transfer to Maine, of asking McGee for more than $250,000, or of how to respond if he made a higher offer. In light of the Eastern League directors’ unanimous (excepting McGee) endorsement of the Indemnification Committee’s recommendation, and the directors’ feeling that there was no serious basis for asserting that Scranton was not Eastern League territory or for submitting the question to the National Association, the committee instructed Eshbach to inform McGee that the Eastern League’s position was nonnegotiable. At noon on September 8 McGee called National Association president Johnson. McGee asked what effect submission of the territorial rights question to the National Association would have on the International League’s expected September 9 approval of the transfer of the Triple-A franchise to Scranton. Johnson replied that if the issue were submitted to him, the International League’s approval of the transfer of the Triple-A franchise to Scranton would not be given any effect unless and until Johnson determined that Scranton was open rather than Eastern League territory. McGee told Johnson that the International League viewed Scranton as open territory; Johnson was already aware of the two leagues’ respective positions, including the Eastern League’s position that NBI should relinquish its Double-A franchise as indemnification. Johnson stated that, based on what he had been told about the terms of NBI’s admission to the Eastern League— i.e., that the team was a Scranton team with a two-year holding period in Waterbury until the Scranton stadium was complete — that no exception under Section 10.-06 would be necessary to make Scranton Eastern League territory. Regarding the amount and type of indemnification, Johnson said that the Buffalo and Nashville monetary settlements were distinguishable and that he was sure that somewhere in the National Association Agreement he could find authority to force relinquishment of a franchise as indemnification for a loss of territorial rights. McGee had not (in fact, never) examined Section 10.06 of the National Association Agreement, one of the two sections most germane to these questions. Nor was McGee aware of any provision of that Agreement giving the Eastern League the right to demand that he relinquish his franchise as indemnification for territorial rights. At about 2:30 p.m. on September 8, McGee met with Eshbach, who informed him that the Eastern League had rejected McGee’s two-pronged offer. McGee asked Eshbach how much cash it would take to resolve the problem without relinquishing the franchise. McGee also asked whether, if the National Association were asked to decide and did decide that Scranton was not Eastern League territory, the Eastern League would then be inclined to approve the transfer to Kobritz and the Maine group. Eshbach replied that he could not guarantee such approval because there were other locations, such as Harrisburg, Pennsylvania, that were more attractive to the Eastern League than Maine. Finally, McGee asked Eshbach to write a letter stating that the Eastern League refused to approve the transfer of the Double-A franchise to Maine; McGee wanted something in writing to give to Kobritz the next day. Eshbach and McGee began drafting the letter; Eshbach then called Revo, who asked if McGee would still have a deal with the Limited Partnership if he could not transfer the Double-A franchise. Eshbach relayed this question to McGee who answered in the affirmative, showing Esh-bach the alternative cash provision in the September 3 agreement. Eshbach relayed this to Revo, who then advised Eshbach not to give McGee the requested letter. Esh-bach then put McGee on the line, and McGee told Revo that he wanted to settle the matter by paying the Eastern League money. Revo responded that the Eastern League wanted the franchise rather than money, and McGee said that Eshbach had been telling him the same thing. Revo also told McGee that the Eastern League wanted NBI to agree to hold the league harmless in the event of a suit by Kobritz or the Limited Partnership based on the league’s actions in blocking the transfer. At 7:00 a.m. on the morning of September 9, before the International League meeting, McGee telephoned Eshbach and agreed that NBI would relinquish the Double-A franchise to the Eastern League, but McGee said he had no authority to agree to hold the league harmless against a suit by Kobritz or the Limited Partnership. McGee asked Eshbach to attend the NBI board meeting scheduled for the evening of September 10, present the league’s demand to be held harmless, and allow NBI to make another attempt to get the league to accept a cash settlement. McGee agreed to relinquish the franchise because of five factors. First, he believed the Eastern League would not accept a cash settlement of the territorial rights dispute. Second, he believed that even if the dispute could be settled with cash, the Eastern League would not approve the transfer to the Limited Partnership or to Kobritz because the league preferred locations other than Maine. Third, he believed the Eastern League would take any action necessary, including litigation or arbitration before the National Association, to enforce its territorial rights claim; in view of these possibilities, McGee felt he could not issue a “no threat of litigation” opinion letter, required to obtain the $2 million in public financing to purchase the Triple-A franchise, unless he settled the Eastern League’s claim. Fourth, McGee believed it would be fruitless to seek a National Association determination on the territorial rights question, because he believed that Johnson had already made up his mind both that Scranton was Eastern League territory and that forced franchise relinquishment was authorized by the National Association Agreement. Fifth, McGee believed that the International League would not approve the transfer of the Triple-A franchise to Scranton at its September 9 meeting unless he could represent to the league that he had settled the Eastern League’s claim of territorial rights to Scranton. McGee met with Cooper on the morning of September 9 before the International League meeting and told Cooper that he had bad news for Kobritz: NBI could not deliver a Double-A franchise to Kobritz because it was relinquishing the franchise to the Eastern League as indemnification. Cooper asked whether that affected McGee’s deal to acquire the Triple-A franchise from Kobritz; McGee responded that it did not because of the alternative cash provision. Cooper replied that in that case it was a private matter between McGee and Kobritz and he would therefore not raise it at the International League meeting. By this time Cooper had received Eshbach’s September 4 letter asserting that Scranton was Eastern League territory, noting that the Eastern League was working with McGee regarding his desire to elevate, and asking the International League not to act until the Eastern League had acted. After this conversation with Cooper, but before the International League meeting, McGee met with Kobritz at breakfast. McGee told Kobritz that the Eastern League had rejected his offer of $100,000 (the second prong of McGee’s two-pronged offer) and had asked him to relinquish the Double-A franchise instead. McGee mentioned a $250,000 figure and told Kobritz that he would try to get the NBI board to offer a cash settlement to Eshbach so that Kobritz could get the Double-A franchise. But McGee said that in order to get the Scranton territory open in time for the International League meeting, he had told Eshbach that he would relinquish the Double-A franchise. McGee also told Kobritz that there were locations other than Maine where the Eastern League would like to have a Doublé-A franchise. Cooper opened the September 9 meeting by saying that the league was going to vote on the transfer of the Maine franchise from Old Orchard Beach to Scranton. He then turned the meeting over to Kobritz who said that the parties had “in effect, worked out an arrangement that is, I think, satisfactory to both parties individually and now I think it’s a matter that is in order for presentation to the league for its approval.” Cooper raised the issue of territorial rights over Scranton by saying that the league believed Scranton to be open territory but that “whatever might happen between Scranton and the Eastern League is their business, not the International League’s business.” He insisted that the league include in its motion approving the sale a provision that the International League would be held harmless for any claims or damages that arise and that NBI assume any such liability. McGee, in response to questioning by Cooper, indicated that he believed that he had satisfied the Eastern League; Kobritz remained silent throughout this conversation. The terms of the agreement between Kobritz and McGee were never discussed and Kobritz’s initial statement that the parties had “worked out an arrangement ... that is in order for presentation to the league for its approval” was never modified or contradicted. Immediately after the vote approving the assignment (upon McGee’s request, to MPSA rather than NBI), the league members voted to move the franchise from Maine to Scranton. Kobritz, who still had not indicated that his deal with McGee was anything less than final, did not make any comment at this point suggesting that it was premature to move the franchise because he was still the owner. The league then turned to a discussion of the 1987 schedule and it was suggested that they might approve a schedule as early as Octe-ber. Kobritz did not speak up at this point and state that his deal was not final and that, therefore, scheduling should be delayed until it was certain who would own the eighth franchise. Cooper referred to the Scranton representatives as the “new owners” and Kobritz did not object to this designation. Kobritz did, however, respond to an invitation to attend the league’s next meeting in late September by mentioning that he wouldn’t be a member “beyond that date,” suggesting that he, at least, considered himself to still be a member. Eshbach attended the NBI board meeting on the evening of September 10. He told the board that the Eastern League would only approve NBI’s elevation to Triple-A if NBI relinquished the Double-A franchise to the Eastern League as indemnification. Eshbach said that if NBI refused to agree, there would be a lengthy appeal to the National Association. Without offering any specific amounts, NBI board members asked if the Eastern League would accept a cash settlement; Eshbach responded in the negative, explaining that the league wanted the Double-A team to either stay in Scranton or be relinquished to the league. When asked if the league would approve the transfer to Kobritz, Eshbach responded that the league would not approve the transfer to anyone. Eshbach also told the NBI board that both he and National Association president Johnson considered Scranton to be Eastern League territory. Neither Esh-bach nor McGee raised the issue of the Eastern League’s demand to be held harmless in case of a lawsuit by Kobritz or the Limited Partnership. Eshbach then left the meeting and there was further discussion, little or none of which focused on NBI’s contractual obligations to Kobritz or the Limited Partnership. McGee reported that Cooper viewed Scranton as open territory, but McGee pushed for a decision that evening. The NBI board then voted to relinquish the Double-A franchise and to waive its right to a determination of whether Scranton was Eastern League territory, both contingent upon NBI’s acquisition of the Triple-A franchise by October 21, 1986. The board also authorized McGee to make additional agreements with the Eastern League; McGee wanted this authority in the eyent that Eshbach renewed his demand for a “hold harmless” agreement. On September 11, McGee hand-delivered a letter to Eshbach reciting his understanding that the Eastern League had refused to accept a cash settlement or to approve the transfer of the Double-A franchise to anyone other than the Eastern League itself. Although specifically refusing to admit that Scranton was Eastern League territory, the letter stated that NBI accepted what it characterized as the Eastern League’s “offer” of permission to operate a Triple-A franchise in exchange for relinquishment of the Double-A franchise (contingent upon a successful closing with the Limited Partnership on October 21, 1986) and waiver of NBI’s right, through litigation or arbitration, to obtain a determination of the territorial rights and indemnification questions. McGee then called Kobritz and told him that the NBI board had agreed to relinquish the Double-A franchise to the Eastern League; McGee