The Court of Appeals recently decided an important business law and contract dispute case involving the operation of the Portland Meadows horse racing track. The decision wasn’t important so much for its legal decision and precedent so much as for its practical lesson to Portland businesses: Keep your contracts fresh.
Portland Meadows has long been considered a Portland institution, and the contractual relationship between the owners of the real property upon which the Portland Meadows track sits and the operators of the track is almost as old. You don’t have to be a horse racing enthusiast to appreciate the significance of this decision to Oregon business law attorneys and their clients.
The owners of the race track entered into an operations agreement with Jensen Racing, Inc. The contract contained two provisions for how Jensen was to pay the owners a fee for race track operations. One provision provided a fee for regular racing season meets. The second provision provided a higher price for special purpose racing.
At the time the contract was entered into, Oregon law provided for live racing only. Wagering on simulcasting was illegal. Now, stop right here for the point of this posting: Regulatory changes can impact the meaning of a pre-existing contract. A contract that was perfectly clear for one activity might only loosely or confusingly cover another activity. When that happens, you must talk to your attorney about how to best update your contract and make it relevant to the current regulatory environment.
In any event, you can now likely see where we’re headed. When the Oregon legislature changed the law to allow off-race-course mutuel wagering, Portland Meadows started simulcasting other races. A number of lawsuits ensued, and the this latest involved the question of whether the simulcasts were “race meets” that occurred during the “regular racing season,” such that the lower operations rate applied. The court strained, employing traditional contract interpretation principles to a scenario that the parties clearly did not anticipate at the signing of the original agreement.
The operator ‘won,’ and was able to pay the lower contract price. But, in reality, nobody won, except maybe the lawyers. Three large pieces of Oregon business litigation later, all three of which went to at least the level of the Oregon Court of Appeals, and finally a result was won that could have been dealt with via a simple contract modification.
When faced with regulatory alterations, or other changes in the business environment, contact your business lawyer. Whether it is Slinde Nelson or someone else, a relatively small amount of time spent now might ultimately save you from instead having to later contact your litigation attorneys over something you could have been easily solved.