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Companies controlled by Dallas Mavericks owner Mark Cuban were sued by Hillwood Center Partners, LP, holder of a limited partnership with a 7.5% interest in Radical Arena, a Cuban-controlled entity holding the remaining 92.5% interest in roughly one-third stake in the American Airlines Center stadium where the Mavericks play.
The lawsuit accuses Cuban-controlled companies of failing to distribute profits to the arena's owners, and instead "wrongfully divert[ing profits] to the Mavericks to make up for the substantial cash shortfalls" of the team, "personally benefiting Cuban at the expense of Radical Arena and its owners."
This derivative action seeks to hold Cuban-controlled companies jointly and severally liable for Hillwood's damages. Ross Perot, Jr. is affiliated with Hillwood.
The suit seeks to have an auditor go through Radical Arena's books and records, and hold Cuban-controlled partnerships liable for unjust enrichment stemming from allegedly forbidden diversions of money and non-arms length-transactions to other Cuban-controlled partnerships, instead of making distributions to Radical Arena's partners.
Instead of making proper distribution payments to the Cuban-controlled entity's partners as required under a limited partnership agreement, Hillview charges that Cuban-controlled Radical Arena allowed the Dallas Mavericks not to repay a $21 million loan, extended the loan's maturity date, and reduced the Mavericks' loan interest rate to a below-mark 3.5% rate without giving any collateral or loan guaranty for security.
Hillwood is represented by Figari & Davenport, LLP, the Dallas litigation firm that successfully obtained a $7 million arbitration award in deferred compensation award, fees, and costs for former Dallas Mavericks coach Don Nelson when he became the Golden State Warriors head coach in 2006.
Commenting on the suit to the Dallas Business Journal, Cuban alleged that Perot Jr. "must be desperate" for filing the suit.
Looking back on his decision to acquire a controlling interest in the Mavericks, Cuban waxed "that the biggest mistake I made in buying the Mavs was in not completely buying out [Perot Jr.'s] interest."
You can read Hillwood Center Partners' lawsuit against Mavericks owner Mark Cuban here:
Last Friday July 17,2009, a federal court dismissed the S.E.C.'s insider trading case against Mark Cuban.