Appeals Court Sides with Power Agent in Contract Dispute over Referral Fee
A California appeals court has affirmed a trial judge’s decision that sports agent Ted Marchibroda, Jr. failed to sufficiently allege an implied agreement between himself and fellow agent Marvin Demoff in a case in which Marchibroda “referred” clients to Demoff and sought additional money as part of the commission for referring those clients.
For background purposes, the court noted that in 2005, Marchibroda and Demoff were contract advisors certified by the National Football League Players’ Association (NFLPA). In December 2005 and January 2006, Marchibroda and Demoff jointly met with Chad Greenway, who was then ranked as a top college football player and a potential pick in the first round of the upcoming NFL draft. On January 16, 2006, Greenway entered into a NFLPA standard representation agreement with Demoff. After the Minnesota Vikings selected Greenway in the 2006 NFL draft, Demoff negotiated a five-year contract for him with that team. Later, Marchibroda met with Demoff regarding Greenway, and proposed that he be paid a fee equal to one-half of Demoff’s compensation from Greenway. Demoff rejected Marchibroda’s proposal, but paid him a portion of the compensation he received with respect to Greenway’s first five seasons in the NFL.
In 2009, Alex Mack, a college football player, was a potential pick in the first round of the upcoming NFL draft. In January 2009, Marchibroda learned that Mack was seeking an agent to negotiate his contract and contacted Demoff regarding Mack. Mack later entered into a representation agreement with Demoff, who negotiated a contract for Mack with the Cleveland Browns.
In June 2011, Marchibroda sued Demoff, alleging that he breached contracts with Marchibroda associated with the referral of clients to Demoff. In addition to breach of contract, he alleged anticipatory repudiation and declaratory relief in connection with Greenway, and claims for breach of contract and declaratory relief in connection with Mack.
Regarding Greenway, Marchibroda claimed Demoff agreed to pay him one-third of the fees he received from Greenway throughout his NFL career, but that he never followed through on that promise.
Regarding Mack, Marchibroda claimed Demoff agreed to pay him “the reasonable value of his services for persuading Mack to enter into the representation agreement, … (or) one-third of all the fees Demoff would receive from Mack throughout his NFL career.” Demoff, alleged Marchibroda, never followed through on that agreement.
In June 2012, Demoff moved for summary judgment. Among other things, he alleged Marchibroda “performed his services before Demoff offered to make any payments to him.” Six months later, the trial court granted summary judgment, finding that “the purported Greenway-related contract failed for want of consideration, and that there were no triable issues of fact regarding the existence of the alleged Mack-related contract.”
Marchibroda appealed.
“The key issues before us concern whether Demoff breached any contract with Marchibroda, to the extent the complaint alleges the existence of contracts between them,” wrote the appeals court. “Generally, contracts may be express or implied-in-fact. (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 246). The primary difference between these types of contracts lies in the manner by which their existence is proved. (Id. at p. 246.) As our Supreme Court has explained, ‘the terms of an express contract are stated in words, while those of an implied agreement are manifested by conduct.’ (Ibid.)”
The appeals court went on to note, “as it is undisputed that Marchibroda and Demoff entered into no written contract, we examine the requirements for pleading oral and implied-in-fact contracts.”
Addressing Greenway first, the court quoted Demoff’s perspective: “Prior to June 2005, Marchibroda and Demoff never worked together regarding the representation of any player or potential player in the NFL. In July 2005, after meeting Greenway, Marchibroda decided to refer him to a more established agent, such as Demoff. When Marchibroda phoned Demoff regarding Greenway, Demoff expressed an interest in representing Greenway and asked Marchibroda to ‘keep in touch.’ According to Demoff, during the conversation, Marchibroda mentioned no fee sharing arrangement, and Demoff had no expectation that Marchibroda would request compensation. In a declaration, Demoff stated: ‘I did not have any expectation that Marchibroda would request, or require, compensation, or that any compensation would be paid. Had I had such expectation, I would have negotiated the amount of the compensation prior to taking any further action.’
“After the 2005 college football season ended, Marchibroda arranged for Demoff to meet with Greenway. In December 2005 and January 2006, Marchibroda and Demoff twice visited Greenway. Marchibroda never suggested that he sought compensation prior to the visits. On January 17, 2006, Demoff entered into a representation agreement with Greenway. When he phoned Marchibroda to announce the agreement, Marchibroda did not raise the issue of compensation. Marchibroda had no further involvement in Demoff’s representation of Greenway.
“After the Minnesota Vikings selected Greenway in the first round of the 2006 NFL draft, Demoff negotiated a five-year contract for Greenway with that team. Later, Demoff met with Marchibroda, who suggested that he should be paid a fee equal to 50 percent of the compensation Demoff received from Greenway while Demoff represented him. Demoff rejected the suggestion, but gratuitously offerred to pay Marchibroda one-third of the fees he received with respect to Greenway’s initial NFL contract.” Marchibroda, ultimately accepted the offer.
With regard to Mack, the court again quoted Demoff’s perspective: “In January 2009, Marchibroda attended the Senior Bowl to recruit players as potential clients. According to Demoff, Marchibroda did not do so at his request. While at the Senior Bowl, Marchibroda learned that Mack did not have an agent for purposes of negotiating his NFL contracts, and that Mack was working with another agent, Timothy M. Younger, to find such an agent. Marchibroda then contacted Demoff to determine whether he was interested in representing Mack. During their conversation, Marchibroda never suggested that he expected a fee for bringing Mack to Demoff’s attention, and Demoff did not believe that he sought any compensation. Respondents denied the existence of any agreement between Marchibroda and Demoff relating to Mack.
“Later, in February 2009, Younger contacted the NFLPA to identify candidate agents for Mack. At the NFLPA’s recommendation, Younger inquired whether Demoff would act as Mack’s agent. After Demoff agreed, he negotiated Mack’s initial NFL contract.” Demoff claimed “Marchibroda played no role in Younger’s selection of Demoff or in Demoff’s representation of Mack.”
In both cases, Marchibroda argued that there was an implied-in-fact agreement in place.
Taking Greenway first, the appeals court noted that the complaint was devoid of allegations “supporting an implied promise on Demoff’s part to compensate Marchibroda. Regarding the circumstances preceding the express oral agreement, the complaint alleges only that Demoff and Marchibroda were NFLPA contract advisors, that Marchibroda met with Greenway, and that Marchibroda’s efforts were a substantial factor in persuading Greenway to hire Demoff. Notably absent are any allegations regarding a course of conduct involving Demoff and Marchibroda prior to the express agreement that would support the existence of an implied-in-fact agreement.”
The court reached the same conclusion when considering Mack: “We agree with the trial court that the complaint alleges no implied-in-fact agreement. For the reasons discussed above, to state such an agreement, a complaint must contain more than a bare allegation of an agreement.” Hentzel v. Singer Co. (1932) 138 Cal.App.3d 290, 304
Ted Marchibroda, JR., v. Marvin Demoff et al.; Ct. App. Calif., 2d App. Dist. Div. 4; B246689, 2013 Cal. App. Unpub. LEXIS 9010; 12/17/13
Attorneys of Record: (for Plaintiff and Appellant) Sullivan, Workman & Dee, Charles D. Cummings, D. Daniel Pranata and Karyn A. McCreary. (for Defendants and Respondents) Freedman & Taitelman, Bryan J. Freedman and Bradley H. Kreshek.
