Penalty for Tampa Bay|Storm End-Around

(CN) - A Florida doctor who cut his associates out of a deal to buy an arena-football team cannot punt a $3.5 million arbitration award, a state appeals court ruled.

Thomas Begley, Jay Mize, Doug Graber and Eric Snow formed a partnership in 2005 with the intention of buying the Tampa Bay Storm.

Dr. Robert Nucci signed a confidentiality agreement with them two years later, as he was interested in joining the partnership and sought to review the other partners' financial information.

After he did so, however, Nucci entered direct negotiations to buy the team without the partners' knowledge. When he asked to be released from the confidentiality agreement, the partners agreed but reminded Nucci that he could not negotiate to buy the team for a year without their consent.

The partners also asked Nucci to return their confidential financial information. Nucci failed to comply, so the partners declined to release him from the confidentiality agreement.

Nucci eventually bought 51 percent of the team for $9.6 million. He could acquire the rest of the team in two future installments for a total of $18.8 million.

The partners sued Nucci for injunctive relief and started arbitration proceeding under the confidentiality agreement.

Nucci argued that the partners waived their arbitration rights by suing him, but the arbitrator would not dismiss the case.

After the arbitrator awarded the partners $3.5 million in damages, Nucci appealed to the Lakeland-based Second District Court.

A three-judge panel affirmed Friday.

"We find no merit to Dr. Nucci's argument that the partners waived the right to arbitrate by suing him for injunctive relief in the trial court and conducting discovery in that case," Judge Edward LaRose wrote for the court.

"The partners exercised their rights in accordance with their confidentiality, nondisclosure and noncircumvention agreement with Dr. Nucci," he added. "They did not waive their right to arbitrate."

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