Unfavorable rulings by judge convinced the former owner that case was unwinnable

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Four months into a contentious and costly legal fight against Clay Bennett to return the Sonics to Seattle and restore his battered reputation, Howard Schultz surrendered.

The Starbucks CEO filed a motion in U.S. District Court on Friday to drop his lawsuit against Bennett and the Professional Basketball Club, allowing the team to start a new beginning in Oklahoma City in October.

Before filing his motion to dismiss, Schultz e-mailed his former ownership group, stating: “Unfortunately, showing that the Bennett Group lied is not enough to turn back the clock and return the Sonics. As a result, I am withdrawing the lawsuit.”

Schultz filed his suit against Bennett on April 22, asking that the 2006 sale be rescinded because Bennett had purchased the team with fraudulent claims that he would make a sincere effort to keep the Sonics in Seattle. Schultz cited e-mails among new Oklahoma City owners that expressed intent to immediately relocate the team.

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After Mayor Greg Nickels and the Seattle City Council accepted a $45 million buyout from Bennett in July, allowing him to break his KeyArena lease and move the team to Oklahoma City, Schultz continued with his case despite pressure from city officials and NBA commissioner David Stern to withdraw.

It wasn’t until two recent unfavorable U.S. District Court rulings by Judge Marsha Pechman that Schultz determined the case was unwinnable.

She denied a motion filed by Schultz attorney Richard Yarmuth to bifurcate the case, which would have allowed her to render a decision on Schultz’s claims that he was duped into selling the team before hearing arguments on how she might remedy it.

She also ruled to allow the NBA to intervene in the suit.

“As a result of these developments, our legal team and I no longer believe we can be successful with this litigation,” Schultz wrote in his e-mail.

In Oklahoma City, where four moving vans arrived in the morning carrying equipment from the Furtado Center, the team’s former training facility in Seattle, Bennett declared victory.

“We are pleased to now be able to move on,” he said in a statement through spokesman Dan Mahoney. “We look forward to an exciting future of NBA basketball in Oklahoma City.”

The team will officially announce its new name Wednesday, though league sources indicate the team will be called the Oklahoma City Thunder.

The NBA had no comment on the end of the litigation.

Save Our Sonics co-founder Steven Pyeatt was suspicious of Schultz’s timing of the announcement, which came Friday afternoon before the three-day holiday weekend.

“At the very least it’s unusual and his reasons are questionable,” he said. “We haven’t had a chance to talk to [his attorney] or any folks to find out what they’re thinking.”

Seattle City Attorney Tom Carr said the city had remained neutral about the Schultz lawsuit. However, Carr said the failure of the lawsuit makes it clear an arena deal is still the key to getting another NBA team in Seattle.

“The key is what the Legislature does now,” said Carr.

Seattle Mayor Greg Nickels has said he will push the state Legislature to authorize Seattle or King County taxes to pay for a KeyArena renovation. A legislative task force has been meeting to look at such requests, but other groups also are lining up to seek funding for projects ranging from a Husky Stadium renovation to Puget Sound cleanup.

“Given the recent city settlement, we have received feedback that a continuing adversarial relationship with the NBA was not politically useful to the city’s ongoing efforts to secure a future franchise,” Schultz wrote. “Thus, the prevailing wisdom … is that Seattle’s best chance for a professional basketball franchise is to end this litigation and allow the city, state Legislature and other parties to begin the necessary fence mending with the NBA.”

Pyeatt said Schultz, who bought the team in 2001 for $200 million and sold it for $350 million in 2006, determined his legacy Friday.

“In the beginning everybody was talking about him trying to fix his image and doing this for PR reasons,” Pyeatt said. “But the fact that they kept very quiet and they didn’t go out and hire a PR firm to pat themselves on the back for doing this, I was leaning toward thinking he was doing it for the right reasons. But now it sounds like he was just doing it for the PR. Now that it’s getting a little more difficult and little more costly, he’s backing out. That’s going to be the public perception.

“There’s a lot of people in our group that weren’t off the Starbucks boycott. They were at least open-minded to the possibility of getting off it, but I think it might be worse for him now than if he’d never gotten involved. Now you’re starting to feel like everybody sold you out. The mayor sold you. The governor sold you out, and now Schultz sold you out.”

Seattle Times reporter Jim Brunner contributed to this report.

Percy Allen: 206-464-2278 or

pallen@seattletimes.com