Judge orders Glendale to pay Coyotes $3.75 million

A Maricopa County Superior Court judge Monday ordered Glendale to ante up $3.75 million to the Arizona Coyotes, a payment that is due Wednesday.

Judge Dawn Bergin denied Glendale's motion to withhold the payment or hold it in an escrow account because of the city's contract dispute with the NHL team.

But Bergin did provide some security for the city by increasing the Coyotes' required bond to $1 million from $250,000.

"What I need to do is protect the city if they prevail," she said.

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Glendale sought to withhold the payment in the event that it wins its legal dispute with the Coyotes over an arena management agreement approved two years ago.

At issue is a state conflict-of-interest law intended to prevent self-dealing government employees from crafting a contract favorable to the other party and then going to work for the other party within three years.

Cynthia Ricketts, an attorney for Glendale, said the city could be entitled to damages and might be forced to sue the Coyotes to recover the $3.75 million if it won the case.

The Glendale City Council voted June 10 to kill its 15-year, $225 million agreement with the Coyotes. The city claimed it was entitled to terminate the agreement because two former city employees, Craig Tindall and Julie Frisoni, were involved in securing the deal and later worked for the Coyotes.

Tindall is a former city attorney who ended his full-time employment with Glendale in April 2013, three months before the City Council approved the Coyotes agreement. He went to work for the Coyotes as general counsel in August 2013.

Frisoni is a former communications director and assistant city manager who left the city in April. The Coyotes hired her as a consultant in May to work on a bid for a world junior hockey tournament.

Attorneys for the Coyotes have said Tindall and Frisoni were not substantially involved in the formation of the contract.

The team went to court June 12 to secure a temporary restraining order that keeps the contract in place.

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Coyotes attorney James Condo said Monday that withholding the payment would have undermined the temporary restraining order and allowed the city to escape payment for services the Coyotes already provided under the contract.

He also complained that Glendale waited nearly two years to invoke the contract of interest claim, even though it knew of Tindall's employment with the Coyotes as early as September 2013.

Ricketts said state law gives Glendale three years to terminate the contract based on the conflict-of-interest law.

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Bergin, in trying to set bond for the Coyotes, pressed City Attorney Michael Bailey on the city's losses over the arena management agreement.

Bailey said the losses were as high as $10 million annually but it varied by quarter.

"I understand that losses on a contract, those are not damages," Bergin said. "You make a bad deal, you make a bad deal, right? I'm trying to look forward to determine what might be a measure of damages if (the Coyotes) did not prevail."

With that she ordered the city to make its fourth-quarter payment and increased the Coyotes' bond to $1 million.

Coyotes President Anthony LeBlanc said the team was "pleased with the ruling and will continue to pursue our rights."

Glendale officials also expressed pleasure with the ruling.

"We're satisfied with the outcome," said Dick Bowers, Glendale's acting city manager. "We've said all along that our primary obligation is to our citizens. The judge's ruling enforcing an increase in the bond payment is an assurance for our taxpayers that we're looking out for their best interests."

The two sides will start with depositions July 7, and evidentiary hearings are set for July 31, Aug. 7 and Aug. 10.

The Coyotes are scheduled to play their regular-season home opener Oct. 10 at Gila River Arena.

Glendale officials say they want the team to play in the arena but want the team to renegotiate a more favorable contract for the city.

The Coyotes say the team has followed the contract and they expect the city to do the same.