A recent decision from the Texas Business Court (First Division) provides guidance on nonwaiver clauses and the importance of defined terms in contract interpretation under Texas law.
Introduction
On April 2, 2026, Judge Whitehill (Business Court, First Division) issued an opinion and order in Dallas Sports Group, LLC v. DSE Hockey Club, L.P., addressing disputes between the ownership groups of the Dallas Mavericks and the Dallas Stars over control of the American Airlines Center. The court’s ruling — that the Mavericks validly redeemed the Stars’ 50% ownership interests in the arena’s operating entities for a total of just $110 — showcases a tactful application of Texas contract law. This blog post summarizes the decision for business owners, in-house counsel, and practitioners structuring joint ventures and closely held entities.
Background of Dispute
The Mavericks and the Stars co-owned two entities that operate the American Airlines Center: (1) Center Operating Company, L.P. (the “COC”); and (2), its general partner, Center GP, LLC. The Mavericks and the Stars held equal 50-50 interests in each entity as part of an arrangement supporting Dallas’s bond financing for the construction of American Airlines Center.
Through earlier (and separately) executed franchise agreements with the city of Dallas, the Mavericks and the Stars agreed to “Location Commitments” requiring that “the Owner[s] shall continuously designate the City as the location (a) in which the Home Games shall be played, and (b) in which the principal corporate and executive offices of the Team shall be maintained.” Dallas Sports Grp. LLC et al. v. DSE Hockey Club, L.P. et al., No. 25-BC01B-0049, 2026 WL 913184, 2026 Tex. Bus. 15, ¶ 3 (Tex. Bus. Ct. Apr. 2, 2026).
In turn, the COC and Center GP company agreements contained “Relocation Events” clauses providing for a redemption right to each respective party. Particularly, if a party breached its Location Commitments to the city of Dallas prior to 2031 (i.e., the expiration of the franchise agreements), the non-breaching party could redeem the breaching party’s ownership interests for nominal consideration ($100 for the partnership interest and $10 for the LLC interest).
In October 2024, the Mavericks delivered such a redemption letter – asserting that the Stars had triggered a Relocation Event by failing to maintain their principal corporate and executive offices in Dallas when they moved their administrative offices and practice facilities to Frisco in 2003.
The Stars rejected the redemption, causing the two sports franchises to go to loggerheads.
The Core Dispute: Does a Contractual Nonwaiver Provision Permit Redemption for a 21-Year-Old Breach?
The Mavericks and the Stars filed seven different summary judgment motions relating to their contract interpretation and affirmative defense arguments, addressing issues including standing, impossibility, limitations, and others. Ultimately, the opinion turned on waiver / nonwaiver arguments.
The Stars made three waiver arguments opposing the Mavericks’ exercise of their redemption rights:
(1) That the Mavericks impliedly waived their redemption right because they knew the whereabouts of the Stars’ offices and did nothing for 20-plus years;
(2) That the Mavericks had relocated their principal office, principal place of business, or mailing address from Dallas to Las Vegas, Nevada, resulting in a waiver by estoppel; and
(3) That the Mavericks, by designating Las Vegas as their principal office and place of business, waived both the nonwaiver provision and the Mavericks’ redemption rights in the company agreements.
Id. ¶ 111.
The first two arguments were belied by evidence and the contracts’ language. As to the third argument, the Court found for the Mavericks, denying the Stars’ waiver arguments. Applying the holdings from Chalker and Shields, the First Division held that (i) inaction cannot waive a nonwaiver provision since waiver requires “intentional conduct that is unequivocally inconsistent with [claiming] the known right at issue,” and (ii) the alleged affirmative conduct did not waive the nonwaiver provision because it had no nexus to “redemption rights, nor do they involve the act of redeeming anything.” Id. ¶¶ 131 (first quote), 136 (second quote) (citing Chalker Energy Partners III, LLC v. Le Norman Operating LLC, 595 S.W.3d 668 (Tex. 2020); Shields Limited P’ship v. Bradberry, 526 S.W.3d 471 (Tex. 2017)).
Left with no defenses, and because Frisco is clearly not Dallas, the First Division granted the Mavericks’ declaratory relief motion, declaring that the Mavericks had effectively caused a redemption of the Stars’ interests and that the Stars’ board members were terminated from the Center GP Board. The Court left several other matters (including a tortious interference claim) for trial, set to begin on May 11, 2026. The Mavericks subsequently nonsuited their tortious interference claim on April 9, 2026, casting doubt on a May 11, 2026 jury trial. See Alexa Shrake, Mavs Drop Tortious Interference Claim as Case Heads Towards Resolution, THE TEX. LAWBOOK (Apr. 9, 2026).
Key Takeaways
- Defined Terms Control. The court emphasized that defined terms in contracts must be honored as written. Courts cannot rewrite agreements to change clear definitions.
- Redemption Rights Can Be Exercised Without Formal Corporate Action. The Stars argued that only the entities themselves (through formal board votes) could effectuate redemptions. The court rejected this argument, noting that such an interpretation would render the redemption provisions meaningless in a 50-50 deadlock. The contracts’ second redemption path – allowing a “Remaining Partner” to “cause” the redemption – provided an alternative method.
- Nonwaiver Clauses Are Enforceable. Texas public policy favors the parties’ freedom to order their relationship through contractual agreements, absent violation of law or public policy. A nonwaiver by inaction clause is a bargained for agreement that the non-breaching party can delay acting on without forfeiting its right to act later.
- The Texas Business Courts Have Demonstrated a Willingness to Engage in Extensive Dispositive Motion Practice.
- The Texas Business Courts Expect Litigants to Be Familiar With the Full Range of Contract Interpretation Tools Under Texas Law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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