The opinion of the court was delivered by: HIGGINBOTHAM
This opinion constitutes the most recent chapter to an increasing number of directives and rulings issued by the Court -- some sua sponte -- over the past couple of weeks. These declarations heretofore were not prescribed to indulge any whims of the Court but unfortunately were necessitated by the numerous motions filed with the Court on a regular basis by the remaining parties to this antitrust litigation.
The instant matter pertains to the motion of Metropolitan Hockey Club, Inc. ("Metropolitan") and Golden Blades Hockey, Inc. ("Golden Blades") of the World Hockey Association ("WHA") to compel Harold E. Kohn, Esquire, and his firm, Harold E. Kohn, P.A., to produce for inspection and copying by Metropolitan and Golden Blades all legal papers and documents served by or upon Kohn and his firm prior to the settlement of portions of this litigation. Exclusive of Metropolitan and Golden Blades, the other member clubs of the WHA have executed a Consent Decree with the member clubs of the National Hockey League ("NHL"), said Consent Decree being approved by the Court on February 19, 1974.
Incident to the resolution of the aforementioned motion is the determination of the validity of an attorney's lien asserted by Kohn and his firm on all the papers falling within that category and now in their possession. Metropolitan and Golden Blades contend, inter alia, that Kohn had been retained by WHA as lead counsel to prosecute this litigation and consequently the status of Metropolitan and Golden Blades as members of WHA entitles them to copies of all legal documents in Kohn's possession. Consistent with that position, Metropolitan and Golden Blades insist that they are not required to pay Kohn any monies for inspection and receipt of said materials, except the nominal costs for reproduction and duplication.
For reasons which are hereinafter set forth, the Court concludes that Harold E. Kohn and his firm do have a legitimate general or retaining attorney's lien which attaches to all papers relating to and arising out of this litigation and now under their control. Before such documents are to be released, Metropolitan and Golden Blades must satisfy the full amount of the lien established by the Court as due and owing to Kohn or otherwise post adequate security to ensure adequate surety indemnification in the event of their subsequent noncompliance.
A. METROPOLITAN HOCKEY CLUB, INC.
1. In the early part of 1972, Metropolitan acquired a franchise to operate a team of the new WHA within 100 miles of New York City Hall.
2. Metropolitan was one of the original twelve clubs assigned franchises in the newly created WHA.
3. After paying only two player payrolls in the fall of 1972, Metropolitan failed to pay its financial obligations, including players' payroll.
4. The WHA then stepped in and paid that payroll and the other expenses of the team until some time prior to May 11, 1973.
5. An agreement between Metropolitan and WHA was entered into on November 16, 1972, wherein Metropolitan agreed to pass a corporate resolution empowering the WHA's designee to be named operating manager of Metropolitan.
6. (a) Metropolitan and WHA intended jointly to seek a new owner for the team.
(b) Under the agreement between WHA and Metropolitan dated November 16, 1972, it was agreed that any and all sums to continue day-to-day operations of Metropolitan were to be reimbursed out of the proceeds of the sale of the assets and franchise of Metropolitan.
7. Messrs. Ralf Brent, Lawrence Stern and Lee Matison were willing to acquire a WHA franchise in the New York metropolitan area.
8. Messrs. Brent, Stern and Matison entered into an agreement with the WHA dated April 11, 1973 and Raiders Hockey, Inc., now Golden Blades, entered into an agreement with Metropolitan dated March 26, 1973 in respect of the acquisition of the assets and certain liabilities of Metropolitan.
9. The unpaid Metropolitan obligations included about $270,000 in unpaid withholding taxes.
10. The purchase price recited in the agreement of April 11, 1973 between Messrs. Brent, Stern and Matison and WHA is $1,500,000. In addition, Raiders Hockey, Inc. was required by WHA to acquire all of the assets of Metropolitan, which acquisition was consummated at a purchase price of 200,000 shares of Golden Blades Common Stock.
B. GOLDEN BLADES HOCKEY, INC.
11. By agreement dated March 26, 1973, Raiders Hockey, Inc., now Golden Blades, acquired all of the assets and certain liabilities of Metropolitan.
12. On May 11, 1973, Messrs. Brent, Stern and Matison fulfilled all of the terms of their agreement of April 11, 1973 with WHA except that they requested additional time to arrange for the issuance of a $500,000 promissory note. WHA agreed to this request and on May 14, 1973, the sum of $500,000 was paid WHA in cash in lieu of the issuance of said promissory note.
13. Raiders Hockey, Inc., a Delaware corporation, had been formed prior to the closing with WHA. Subsequently, that corporation's name was changed to Golden Blades Hockey, Inc. Messrs. Brent, Stern and Matison assigned all of their rights under the WHA agreement to Golden Blades and a franchise was subsequently issued by the WHA to Golden Blades.
14. Metropolitan owns 200,000 of the 1,040,000 outstanding shares of Golden Blades Common Stock.
16. The WHA Litigation Report of October 11, 1973, ...