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Closing arguments held in Broncos vs. Kaiser estate right-of-first-refusal trial

Judge Gilman not expected to issue final ruling until after holidays. Broncos want potential ROFR impediment cleared for potential 2022 team sale.

DENVER — By her own admission, Denver District Court Judge Shelley Gilman has plenty of work ahead as she goes through the process of reaching a verdict in the right-of- first-refusal case that matched companies of the Kaiser estate against Broncos ownership entities.

"This is a complicated case," Judge Gilman said following nearly 3 hours of closing arguments Tuesday morning in Denver court room 424. "A lot of layers."

>>Video above: Legal questions continue to surround Broncos ownership

Dan Reilly and his Fennemore attorney group representing PDB (Patrick D. Bowlen) Sports and BSI (Bowlen Sports Inc.), the entities that own the Denver Broncos, used their five court days to present testimony and evidence as to why the right-of-first-refusal agreement between Pat Bowlen and Edgar J. Kaiser Jr. as part of their buy-sell transaction of the club on June 1, 1984, is no longer enforceable.

The crux of Reilly’s argument was that Kaiser and Bowlen have since died and therefore their right-of-first-refusal (ROFR) agreement no longer exits. But the Broncos ownership group also argues that the intent of the right of first refusal was a personal one between Kaiser and Bowlen and was not legally transferred to a subsidiary, as Kaiser did in 2005 to a company called ROFR Holdings LTD.

Officially terminating the right of first refusal would eliminate a huge impediment to a potential sale of the Broncos’ franchise after this season. Joe Ellis, one of three trustees to the Patrick D. Bowlen Trust, and the Broncos’ chief executive officer, has said a transfer of the team’s controlling owner from essentially the trustees of the Patrick D. Bowlen Trust to either an outside investor through sale, or to one of the Bowlen children, most likely middle daughter Brittany, would begin sometime after the 2021 football season.

"We’re very pleased with the way the evidence came in and the court was very attentive to it," Reilly told 9NEWS outside Judge Gilman’s court room at the conclusion of the trial. "We’re confident in our case and believe that Edgar Kaiser’s right terminated upon his death. That was what he and Pat understood and intended 37 years ago."

Credit: Courtesy: Susan Reilly
Dan Reilly, lead attorney for Broncos ownership, confers with Pat Bowlen trustees Mary Kelly and Rich Slivka outside Denver District Court room where Kaiser estate right of first refusal trial was held Friday, Sept. 24, 2021.

The Kaiser estate argued that Kaiser properly transferred his right of first refusal with the Broncos to ROFR Holdings Limited in 2005 and therefore the right of first refusal still exists and belongs to those behind ROFR Holdings and Twelve LLC. Scott Schirmer, a community-designed real estate developer and investor from Phoenix, is legally and financially supporting the Kaiser estate’s case.

"Our legal position is that the entity ROFR Holdings LTD. currently has an enforceable right of first refusal that it had received from Mr. Kaiser," James Kilroy, attorney for the Kaiser estate, told 9News at the conclusion of the trial. "And that the sale agreement between Mr. Kaiser and Mr. Bowlen had a successors and assigns provision which permitted both Mr. Kaiser to assign the right of first refusal and required Mr. Bowlen to obligations, successors and assigns. We’ve just got through the trial, evidence came in and it’s completely up to the judge."

Included in Reilly’s one hour, 17-minute closing argument were two video clips of Kaiser’s deposition from July 10, 2001 as part of the John Elway 10 percent minority option in U.S. District Court. (After that case ruled in Bowlen’s favor, the 10 percent option was no longer available to Elway).

"This is not a sale I’m happy about," Kaiser said in his taped testimony while explaining why he insisted to Bowlen in 1984 the ROFR agreement be included in the sale. He said that if Bowlen later sold the team, Kaiser would like to repurchase the team, "should my family situation be in a better position than it is today. And I told him that (not having the ROFR) was a deal breaker."

Reilly contended that Kaiser wanted the ROFR in his sale agreement for three personal reasons:

1. He was a reluctant seller who eventually wanted back in as Broncos owner.

2. Kaiser didn’t want to be embarrassed by a quick sale by Bowlen for profit.

3. Kaiser wanted the right to approve or reject the next owner.

Bowlen testified in 2004 that he agreed to the ROFR because he never intended to sell the team so it never gave him any “heartache.”

Judge Gilman gave attorneys for the plaintiffs (Broncos entities) and defendants (Kaiser estate’s ROFR Holdings) until November 8 to submit their proposed findings on how they wish the court to rule. Judge Gilman said she would then make a final ruling 45 to 90 days after she receives the attorney’s findings, pointing out this meant she would be working on the case through the holiday break.

RELATED: Opening statements made in Broncos vs. Kaiser estate right of first refusal trial

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