Donald Sterling meets with potential Clippers buyer Steve Ballmer
JUL 21, 2014 5:30p ET
Embattled Los Angeles Clippers owner Donald Sterling met with the team’s prospective buyer, former Microsoft executive Steve Ballmer, for 90 minutes Monday afternoon – but nothing was resolved, FOX Sports has learned.
Ballmer’s $2 billion offer for the team has been the subject of an ongoing court fight between Donald Sterling and his estranged wife, Shelly Sterling. The meeting came hours after an abbreviated court session where Donald Sterling’s lawyers called no witnesses and suggested they were relying on one legal argument – that Los Angeles Superior Court doesn’t have the jurisdiction to bless the deal reached with Ballmer.
Donald Sterling requested the meeting after his attorneys told him he was likely to lose in court and that a judge was expected to confirm Shelly Sterling’s right to sell the team, a source close to the case told FOX Sports.
Among those at the meeting, which was held at Donald Sterling’s Beverly Hills home, was Adam Streisand, an attorney for Ballmer, and Pierce O’Donnell, an attorney for Shelly Sterling, the source said.
Attorneys for Donald Sterling and for Shelly Sterling are scheduled to return to court Tuesday to continue their battle over the future of the sale agreement she negotiated with Ballmer.
The meeting came hours after Donald Sterling’s fight to hang onto the Los Angeles Clippers resumed Monday with a whimper – what was supposed to be a full day of testimony was over in less than an hour.
Donald Sterling's lawyers' argument is simple: that Donald Sterling dissolved the family trust that controlled the Clippers on June 9 – two days before Shelly Sterling went to court seeking approval of the $2 billion deal she negotiated to sell the team to Ballmer and that, as a result, the judge in the case has no jurisdiction to sanction the sale.
“When the petition was filed, there was no trust,” Bobby Samini, one of Donald Sterling’s lawyers, said outside the downtown Los Angeles courthouse. “There’s no trust to control as of June 9, so any action after June 9 is problematic.”
Shelly Sterling’s lawyers, however, are just as confident that Judge Michael Levanas can sign off on the sale as an obligation incurred by the Sterling Family Trust before Donald Sterling dissolved it.
And Streisand, who represents Ballmer, scoffed at the notion that all the legal wrangling could leave Donald Sterling in control of the Clippers when the new NBA season tips off in late October.
“That ain’t going to happen,” Streisand said.
He said he believes Levanas will ultimately sign off on the sale and it will proceed before the Aug. 15 deadline outlined in the agreement Ballmer and Shelly Sterling signed.
“They’re making every possible effort to try and block and delay,” Streisand said. “So far, we got them on the run. I think we’re going to get this sale. And look, I mean, the NBA is not going to let this happen. The NBA is going to take this team away from this madman if this sale doesn’t go through.”
The messy intra-family fight that has pitted Donald Sterling against his wife of 58 years has unfolded in the wake of the April disclosure of a tape recording of the longtime NBA owner telling a female friend not to bring African Americans to Clippers games and not to post photos of herself with them on social media websites.
Donald and Shelly Sterling, who amassed a business empire worth billions on the strength of real estate investments, have not lived together for some time but have – until recently – continued to enjoy an amicable business relationship. They purchased the Clippers in 1981 for $12.5 million, moving the team to Los Angeles from San Diego.
After decades of struggles – the team made the playoffs only four times in the first 30 years the Sterlings owned it – the Clippers have surged in recent seasons with stars like Blake Griffin and Chris Paul.
Sterling has long been a controversial figure in Los Angeles – twice he was sued for housing discrimination. But it wasn’t until the recording of Sterling talking to a mistress, V. Stiviano, that public opinion galvanized against him. Within days, NBA commissioner Adam Silver announced that he would ban Sterling from the league for life and fine him $2.5 million. And he threatened to have other NBA owners vote to strip him of the team and sell it if he didn't sell it on his own.
Shelly Sterling, who was an equal decision maker in the affairs of the Sterling Family Trust, began negotiating the sale of the team, ultimately reaching the deal with Ballmer. But Donald Sterling – after publicly backing the sale – refused to sign the agreement.
On May 29, Shelly Sterling removed him from decision-making authority in the trust after two doctors concluded that he had dementia, likely as a result of Alzheimer’s disease, and could no longer manage his own affairs.
On June 9, Donald Sterling “revoked” the trust, which had the practical effect of dissolving it. Under that scenario, the assets it holds – which includes much of the couple’s business empire – returns to them as individuals.
Two days later, Shelly Sterling filed a petition in Los Angeles Superior Court under the state’s probate law seeking approval of the sale.
In rulings last week, Judge Levanas undercut many of the arguments of Donald Sterling’s attorneys – concluding, for example, that nothing in the law gave him the authority to consider whether the businessman’s medical privacy was breached when his medical records were shared with his estranged wife.
Instead, Levanas is considering three issues:
* Whether the probate court is the appropriate place to determine the actions that should be taken to wind down the trust.
* Whether Donald Sterling's removal as a trustee was proper.
* Whether the court should issue an order allowing the sale to proceed even though Donald Sterling would likely pursue an appeal.
Shelly Sterling must prevail on all three questions for the judge to sign off on the sale. If Donald Sterling prevails on any one of them, he will effectively block the sale.
Monday’s testimony was limited to Darren Schield, the chief financial officer and controller of Beverly Hills Property – the company at the center of Donald and Shelly Sterling’s business empire. According to Schield, the Sterlings own approximately $2.5 billion in real estate – much of it in apartment buildings – and have mortgages on the property totaling approximately $480 million.
Those loans fell into default, Schield said, when Donald Sterling dissolved the Sterling Family Trust. As a result, he said, the company may have to sell property at below-market values or accept new loans at higher interest rates to pay off the debts.
Shelly Sterling’s attorneys asserted that if the sale of the Clippers is allowed to proceed, money from that transaction could also be used to cover the debt.
But when Max Blecher, Donald Sterling’s longtime attorney, suggested that taking the family business public could also be an option, Schield said that finding someone willing to be a business partner with the controversial businessman would be difficult.
“There’s huge reputational issues” he said.
After Schield testified, the two sides asked the judge to conclude the trial for the day. Shelly Sterling’s lawyers plan to call one more witness.
More significantly, Donald Sterling’s lawyers indicted they may call only two witnesses – Shelly Sterling, who has already testified extensively, and a sports-marketing expert.
Outside court, Streisand pointed to the failure of Donald Sterling to put on much of a case as a positive sign for Ballmer and Shelly Sterling’s hope of closing the deal.
“This is Donald Sterling’s opportunity to put on his case, and what we’ve heard is that their case is going to consist of calling Shelly Sterling back to the stand,” Streisand said. “That’s their whole case. After giving us a witness list of 10 witnesses, at the end of the day, the only witness they’ve got is calling Shelly Sterling back to the stand and I don’t think that’s going to get them very far.”
When Donald Sterling’s lawyer spoke a few minutes later, a reporter asked, “Where are all your witnesses?”
“We have witnesses coming in from all over,” Samini said. “They’re flying in from different places, so we’ll coordinate that so we’ll have some of our witnesses on Wednesday and some on Tuesday.”
He also made it clear that the fight over the sale of the team may continue long after this judge makes a decision.
“It could,” Samini said. “And I think there’s probably a high likelihood that it will, but I don’t want to speculate on any of those things. I think this trial will conclude on schedule and depending on the judge’s ruling there will be, I am sure, appeals on one side or the other.”