Wednesday, December 19, 2007

Rodriguez's Odds at Getting Out of Buyout

Now comes word that Rich Rodriguez plans to sue in an attempt to get out of the $4 million buyout clause in his contract he signed last Aug. 31 with West Virginia. It's a tactic used in April by former Mountaineer basketball coach John Beilein, who also bolted for Michigan. Beilein successfully got his $2.5 million buyout cut to $1.5 million.

So can Rodriguez win? The Wiz went to the smartest man in the legal profession to find out. Attorney Tom Kirkendall, whose site Houston's Clear Thinkers is a must-read, gave us his opinion:

"This is really pretty straightforward stuff from a legal standpoint, although one has to overlay West Virginia state law on the contract issues.

"Whether Rodriguez has a valid fraudulent inducement claim largely depends on the terms of the contract. In most cases of a contract of this magnitude, it will contain a merger clause that will provide something to the following effect:

"The parties confirm that, in entering into this contract, they have relied only on the representations and warranties included in this contract and that all prior representations made between the parties — whether oral or written — are null and void and of no force and effect. This contract is the sole agreement between the parties and cannot be modified except in writing approved by both parties."

"If such a provision is contained in the contract, Rodriguez's fraudulent inducement claim would be dismissed on summary judgment in most jurisdictions.

"My sense is that this is much ado about nothing. If Rodriguez pursues the claim, he better hope that things work out at Michigan because he will never get another offer in big-time college football.

"The current market conditions for these coaches is dispositive proof that big-time college football should be reformed into AAA minor league professional football."


Anonymous said...

If so, then how did Beilein get his buy out reduced? I suspect that it is less etched in stone than your Texas legal guru let you know.

Anonymous said...

This link might help answer #1:

Anonymous said...

It isn't a slam dunk that a merger clause is going to obliterate a fraud in the inducement claim. A merger clause just prevents a party from claiming that the other party breached the agreement by failing to meet some unwritten obligations. Rodriguez isn't claiming breach, he's claiming fraud. Rodriguez is basically saying that WVU committed fraud that prevented him from negotiating a fair deal. It isn't that he's saying WVU should do what it promised, but that he would not have signed the deal in the first place had WVU not fraudulently claimed it would do what it promised. The effect of the merger clause may depend on whether the judge views the promises as enough to be fraud, or just part of the negotiations that didn't end up in the deal. To be clear, I'd much rather be in WVU's legal position if the buyout is challenged.