Abele v. Phoenix Suns Ltd. Partnership
73 F.3d 218 (1996)
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Rule of Law:
Under Arizona law, a mere expectation or opportunity to renew an interest, such as sports season tickets, is not a property right if the offering party retains the discretion to withdraw the opportunity. Such an expectation is considered a "speculation on chance," not a legally enforceable interest that can be part of a bankruptcy estate.
Facts:
- A debtor who filed for bankruptcy held season tickets for the Phoenix Suns ('Suns') professional basketball team.
- The Suns generally permitted season ticket holders the opportunity to purchase playoff tickets and renew their season tickets for the following year.
- In written notices sent to season ticket holders each year, the Suns explicitly stated that the opportunity to renew is a 'privilege granted by the SUNS and may be withdrawn in the SUNS’ discretion.'
- The Suns' written policy further specified that 'season ticket holders are not guaranteed this opportunity.'
Procedural Posture:
- The bankruptcy court issued orders permitting the bankruptcy trustee, Robert P. Abele, to sell the debtor's Phoenix Suns season tickets and the opportunity to renew them.
- An appeal was taken to the U.S. District Court.
- The district court reversed in part and vacated in part the bankruptcy court's orders, concluding that the opportunity to renew season tickets is not a property right under Arizona law.
- The Trustee, as appellant, appealed the district court's decision to the U.S. Court of Appeals for the Ninth Circuit.
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Issue:
Does the opportunity to renew season tickets constitute a property right under Arizona law that can be included in a debtor's bankruptcy estate under 11 U.S.C. § 541(a)(1)?
Opinions:
Majority - Per Curiam
No. The opportunity to renew season tickets is not a property right under Arizona law that can be included in a bankruptcy estate. While federal bankruptcy law defines the estate broadly, it looks to state law to determine the existence and scope of a debtor's interest in property. Under Arizona precedent, a mere expectation of renewal of an interest is not a property right when one party retains the unilateral right to not renew. Because the Suns explicitly reserved the right to withdraw the renewal opportunity at their discretion, the ticket holder possesses no legally enforceable right, but merely a 'speculation on chance.' Therefore, this revocable privilege is not property of the bankruptcy estate.
Analysis:
This decision reinforces the principle that the definition of 'property' for bankruptcy purposes is determined by state law, which can lead to different outcomes for similar assets in different jurisdictions. It establishes that in states following Arizona's approach, valuable but legally unenforceable expectancies, like the right to renew sports tickets, cannot be treated as assets in a bankruptcy estate. This ruling protects the rights of licensors, such as sports franchises, to control their ticketing policies and customer relationships, even when a licensee (the ticket holder) files for bankruptcy.
