Appeals court sides with Cabarrus County in $80 million dispute with Bruton Smith
10/01/2013 2:56 PM
10/02/2013 11:20 AM
Bruton Smith’s second trip to court in his fight with Cabarrus County over $80 million in promised racing improvements ended like his first.
No deal. Literally.
In a ruling handed down Tuesday, the N.C. Court of Appeals unanimously upheld a lower court’s ruling dismissing Smith’s claims. The judges’ reasoning: Smith and the speedway did not have a formal contract with local governments for the county to violate.
“It was a clear and simple ruling, and we think it was the correct decision,” said Charlotte attorney Dan Bishop, who headed the county’s defense team.
Smith’s attorney, Bill Diehl, did not return a call Tuesday seeking comment.
The dispute arose in 2007, when Smith, one of racing’s most powerful figures, announced plans to build a drag strip in Concord near his Charlotte Motor Speedway.
The city of Concord objected. Smith responded by threatening to move the speedway and build the dragway somewhere else.
The speedway hosts three major NASCAR races each year, drawing tens of thousands of fans from across the country and generating about $420 million for the area economy, according to a recent report.
Chastened by Smith’s threat, Concord backtracked on its opposition to the dragway. The city and Cabarrus County also offered to provide $60 million to improve infrastructure at Smith’s racing complex.
Smith’s company, Speedway Motorsports Inc., refused the offer.
The next day, the local governments raised their stake. On Nov. 21, 2007, the county commissioners chairman and Concord’s mayor sent a letter to Smith, committing to $80 million in tax breaks, grants and other “city and county controlled revenues” to pay for speedway improvements.
According to court documents, Smith called Concord Mayor Scott Padgett back the same day. “We have an agreement,” Smith said.
Smith built his drag strip, which opened Aug. 20, 2008. The next day the city and county sent over a proposed agreement that would formalize their $80 million commitment.
Court documents say it required Smith and his companies to make their speedway improvements within three years. But the terms would have given the local governments up to 40 years to reimburse the speedway for their work.
Smith and the speedway filed suit against the city and county. After the city settled, the speedway filed a new lawsuit against Cabarrus County.
In it, speedway attorneys claimed that the proposed terms for the $80 million payout “were never agreed upon or discussed and are wholly unreasonable.”
It accused the county of breach of contract and fraud, among other claims, while arguing that the 2007 letter from the local governments served as “a valid and enforceable contract.” The speedway also said it agreed to keep the speedway in Concord and start work on the dragway based on the terms set out in the letter.
In response, the county argued that no contract had been approved and asked that Smith’s complaint be thrown out.
In March 2012, Superior Court Judge Robert Ervin agreed. Smith and the speedway appealed.
In Tuesday’s decision, the appeals court again homed in on the central question: Did the county break a formal agreement with Smith?
The three-judge panel ruled unanimously that it did not, saying that the 2007 letter “is too indefinite to constitute a binding contract.”
One of those loose ends involved when Smith and the speedway would make improvements to the racing complex and when they would be reimbursed.
It’s unclear how Tuesday’s ruling will affect Smith’s tempestuous relationship with Cabarrus officials.
While the appeals court was hearing his case against the county, Smith told a Charlotte TV station that he might move the October race from Concord to Las Vegas – one of seven other speedways he owns.
Smith later retracted the statement, saying he had spoken out of anger.
Because the appeals court ruling was unanimous, it limits Smith’s legal moves. His attorneys can ask the appeals court for a rehearing or petition the state Supreme Court to pick up the case. Neither is guaranteed.
Cabarrus County attorney Rich Koch said Tuesday that the county has no financial obligation to the speedway since “there was no meeting of the minds on the essential terms of an agreement” before Smith filed suit. Nor has the county paid out any of the tax breaks originally discussed.
Koch said he believes the county wants “a great relationship” with Smith and the track “because it’s mutually beneficial for the county, its residents and the speedway.”
“Sometimes you get into disputes with your corporate citizens that you need to resolve. Unfortunately, this one had to be resolved in the courts,” he said.
“But I don’t think that changes the underlying happiness that the speedway is in Cabarrus County.” The Associated Press contributed.