Arnold Heft testified yesterday he did not talk to Abe Pollin about his concern over the Washington Bullets' and Washington Capitals' mounting debts in the early 1980s because "he has the obligation to contact me, not me him."
Testifying in Prince George's County Circuit Court, Heft, a limited partner in Capital Centre, said he saw several quarterly financial statements from 1978 to 1982 that showed the teams' debts had increased from $269,000 to more than $853,000. He said he and his attorney and accountant decided in 1982 to delay any action until Heft heard from Pollin, the general partner in the arena, or they received more financial statements.
Heft has filed a civil suit against Pollin, who he contends made in late June 1982 several secret, unilateral adjustments in license agreements between Capital Centre and the Bullets and Capitals. Pollin also owns the Bullets and Capitals. Heft asks that the adjustments, which at that time returned more than $860,000 to the financially struggling teams from the profit-making Centre, be rescinded and that an accounting of their effect be made.
Yesterday, as the trial entered its 10th day, Heft concluded two days of testimony. Under cross-examination, he repeatedly said he made no effort to contact Pollin regarding the teams' mounting losses or any efforts Pollin might make to reduce them.
"I don't think it's the responsibility of the limited partner to ask the general partner" for details, Heft testified in response to a question by Burton Schwalb, an attorney for Pollin. "As the general partner, he has the fiduciary responsibility of keeping a limited partner apprised."
Pollin holds two-thirds interest in the arena and Heft one-third. Heft and his attorney, Stephen Grafman, have contended that Pollin signed two agreements in which he agreed to consult Heft on all important business matters regarding the Centre.
Schwalb asked Heft if he recognized that in day-to-day dealings with the Centre and the Capitals, Pollin "in effect would be dealing inside himself." Heft said yes.
Schwalb asked if Heft knew from the start that Pollin had duties regarding all three entities. Heft acknowledged he did.
He then was asked if he understood in some circumstances, the teams might benefit and in others it would be the arena.
"Not necessarily so," Heft replied.
Later, Schwalb, asserting that Heft's accountant had an opportunity in May 1982 to examine the Centre's books, asked why Heft had not asked then about the interest-free loans made by the arena to the Bullets and Capitals that were included in their liabilities.
"They didn't tell us what was going on behind the papers," Heft testified. "We didn't ask because we didn't know." He said he assumed part of the debts was "nonpayment of rent."
Stuart Bindeman, a limited partner in the Capitals and an attorney who occasionally has represented Heft, testified that in late June 1982 Pollin arranged a meeting in which he told Bindeman about several proposals to aid the hockey team. These included seeking to reduce the Capitals' rent at the Centre, which was set at 15 percent of ticket revenue under its bond agreement.
Bindeman said he was requested to attend the meeting as a partner in the Capitals, but when Pollin listed some of the proposals, Bindeman asked "as an attorney for Arnie" that Heft be advised. "He said, 'Fine,' " Bindeman testified.
Bindeman, noting he and Pollin went to the same synagogue and until his death in 1979, his father Jack had been Heft's attorney, said that during the summer of 1982 he suggested to Heft that "the two of you get together and work it out . . . I thought I could serve a purpose as a middleman. I wanted them to see me as a friend, not as an adversary . . . I had made a number of suggestions he call Abe."
When Schwalb asked what Heft's reaction was, Bindeman answered, "I don't know if he ever made any response."