Montgomery County Circuit Court Judge Durke G. Thompson ruled Monday that the contract the owners reached that would allow the seven owners to buy out Boston-based Steve Belkin was too ambiguous.
The judge encouraged the owners to settle the feud, based in part on a disagreement on the value of Belkin's 30 percent share of the teams, without outside intervention.
Also at stake are the operating rights to Philips Arena, where the Hawks and Thrashers play.
Michael Gearon, one of the Atlanta-based owners, celebrated Thompson's decision, delivered in a 38-page ruling.
"We won on every single point," Gearon said.
"The court did exactly what we asked it to do. We are back under the operating agreement which we think is a good agreement. We no longer have any obligation to buy out Belkin nor does Belkin have any right to purchase the Hawks and Thrashers."
Belkin can appeal the ruling.
The ownership split began in 2005 over Belkin's objection to the Hawks' decision to trade Boris Diaw, two first-round draft picks and a $4.9 million trade exception to the Phoenix Suns for guard Joe Johnson.
The ownership group, led by Gearon and Rutherford Seydel in Atlanta and by Washington businessmen Bruce Levenson and Ed Peskowitz, had the support of NBA commissioner David Stern. Gearon replaced Belkin as the NBA governor in the group.
Belkin asked the other owners to buy out his 30 percent share of the partnership called Atlanta Spirit LLC. But the parties could not agree on the value of Belkin's share. Then they could not agree on who should set the value.
Belkin, backed by a 2006 Maryland circuit court ruling that was later overturned, then contended he was entitled to buy out his fellow owners at cost and take over the teams.
Thompson said the eight should closely consider how they might reopen the negotiation for the seven to buy out Belkin's interest. The judge said "the parties would be well served if they were to reach an agreed buyout price on their own without relying on investment bankers to make such a vital decision for them."
Added Thompson: "Much of what has become a stumbling block in this case would be avoided had this been the procedure originally adopted."