Trib appraisal is ruled an arbitration

Former managers of the Salt Lake Tribune must prove a New Jersey appraisal firm acted fraudulently or in bad faith if they are to prevail in their challenge of the firm's assessment that ultimately set the paper's purchase price at $355.5 million.

U.S. District Judge Ted Stewart ruled Thursday that the appraisal process was an arbitration, which severely limits the grounds on which Management Planning Inc.'s valuation can be overturned.

The decision came after a hearing on two motions to dismiss Salt Lake Tribune Publishing Co.'s June lawsuit alleging Management Planning officials failed to conform to professional appraisal standards. Stewart granted the motions "in a limited fashion," allowing SLTPC attorneys two weeks to file additional evidence supporting their claim that the appraisal should be tossed out.

The Federal Arbitration Act allows arbitrations to be vacated only in specific situations, such as those of corruption, fraud or undue means.

Though not an outright victory, attorneys for Management Planning and Tribune owner MediaNews Group Inc. deemed the judge's ruling a success.

"The standard is very high," Management Planning attorney Robert Clark said following Thursday's hearing. "It would be very difficult under that standard to succeed in getting it set aside."

MediaNews attorney Kevin Baine agreed. "You've got to come in and demonstrate that the arbitrator knew what he was supposed to apply and chose not to. It erects such a high barrier that it is virtually impossible to reach."

SLTPC attorney Gary Bendinger said Thursday that Management Planning exceeded its authority by showing "manifest disregard for facts and law" in the case. Though he had also argued the appraisal was not a form of arbitration, Bendinger said he was not concerned about meeting the higher standard of proof.

"We're still confident we'll get it set aside," he said.

Management Planning was asked to evaluate the fair market value of the Tribune after two previous appraisals set the figure at widely disparate values. A firm hired by MediaNews assessed the paper at $380 million, and an SLTPC-commissioned firm valued it at $218 million. Stewart helped the two parties select Management Planning after they were unable to agree on a third, independent appraiser.

The $355.5 million purchase price is reached by averaging Management Planning's $331 million figure with the next closest assessed value, $380 million.

That price is central to ongoing litigation over ownership of the Salt Lake Tribune. SLTPC seeks to exercise a 1997 option agreement and purchase the newspaper from MediaNews, which bought the Tribune for $200 million in January 2001.