A New York state trial court has found that management agreements entered into between a pair of boxing managers and a boxer is invalid because the boxing managers were not properly licensed as boxing managers and, as a result, are precluded from enforcing the agreements.
Thus, the managers, as the plaintiffs, were denied the commissions allegedly owed them by the defendant, boxer Joe Greene, Jr. However, the court let stand the claim for unjust enrichment, suggesting that a more fully developed record is needed.
In early 2005, Jack Halpern and Jack Stanton, who is an attorney, met the defendant in a gym. At that time, Greene, Jr. was a 19-year-old aspiring amateur boxer. Shortly after their introduction, Stanton and Greene, Jr. entered into a management agreement on February 4, 2005. In the two subsequent years, the plaintiffs provided Greene, Jr. with “substantial financial assistance and logistical support. … As a result of plaintiffs’ efforts, Greene, Jr. remained undefeated and rose quickly in the boxing community, which resulted in his ranking as one of the top 10 boxers in the Middleweight Division.”
In April of 2007, both parties renewed the 2005 management agreement for an additional three years. Included as part of the agreement were payments totaling $20,800 to be paid to Greene, Sr., for his involvement in his son’s career. In an attempt to further promote Greene, Jr. and assure him greater exposure and publicity, plaintiffs secured the services of a boxing promoter, Leon Margules. During the negotiations with Margules, Greene, Jr., at his father’s direction, demanded a $40,000 signing bonus from Margules. Because Margules refused to pay any signing bonus, the plaintiffs secured the full payment of the requested bonus from a close friend of Halpern, who created a new corporate entity, Road Runner, Inc. Shortly after the execution of the 2007 Management and Promotional Agreement, Greene, Sr. fired the plaintiffs and become his son’s manager. To that end, Greene, Sr. increasingly minimized all communication between the plaintiffs and his son, while increasing the communication with Margules. On February 23, 2008, the day of Green, Jr.’s fight at Madison Square Garden, Greene, Sr. allegedly screamed at the plaintiffs in front of other people in the dressing room. Greene, Sr. later prohibited the plaintiffs from visiting Greene, Jr. in either the dressing room or the ring. In preparation for an April 23, 2008 fight, the plaintiffs paid for Greene, Jr. to travel to Florida to prepare with a world-class strength trainer and boxing trainer at a cost of approximately $12,000. Over the entire course of the plaintiffs’ relationship with the defendants, the plaintiffs transferred or advanced in excess of $225,000 in payments and expenses to further Greene, Jr.’s career.
The plaintiffs would ultimately sue, alleging that they have not had any communication with Greene, Jr. and have not been paid any commissions since they entered into the 2007 management agreement. The plaintiffs raised four causes of action, including enjoining the defendants “from continuing their behavior whom [sic] have shown an utter disregard for their contractual obligations;” a claim of quantum meruit and unjust enrichment against both the defendants; a claim of tortious interference with the 2007 management agreement as against defendant Greene, Sr., and breach of contract against defendant Greene, Jr.
The defendants moved to dismiss the claim, arguing that the plaintiffs were not licensed as a manager, and therefore under New York law, the management agreement was void and cannot be enforced. They further argued that because the plaintiffs induced them to enter into the agreements in violation of state law, the plaintiffs should not be allowed to recover under the theory of unjust enrichment, as this would circumvent the intent of the law requiring promoters to be licensed.
In addressing the validity of the 2005 and 2007 management contracts, the court noted that for the past 89 years, boxing in New York State has been heavily regulated by the State Athletic Commission, which is vested with “the sole direction, management, control and jurisdiction over all such boxing and sparring matches or exhibitions to be conducted, held or given within the state of New York.”
It added that the “state regulation of boxing parallels the federal legislation encapsulated in the Professional Boxing Safety Act (15 USC 6301 et seq.), also known as the Muhammad Ali Boxing Reform Act. The federal regulation of boxing is predicated on the need to protect ‘the rights and welfare of professional boxers on an interstate basis by preventing certain exploitive, oppressive and unethical business practices.’”
“In this case, it is undisputed that the plaintiffs were not properly licensed as managers in New York as of the date of execution of both the 2005 and 2007 management agreements …. Therefore, both the 2005 and 2007 contracts are invalid under the New York law.”
“Greene, Jr. cannot be held liable for breach of an illegal management contract he signed with the plaintiffs. Such a contract is void. Therefore, because the 2005 and 2007 management agreements are illegal, the plaintiffs’ claims of breach of contract and for injunctive relief must be dismissed. The plaintiffs’ third cause of action for tortious interference with the 2007 agreement brought against defendant Greene, Sr. must also be dismissed for failure to establish the existence of a valid license.”
Similarly, the court sided with the defendants on the quantum meruit claim.
“Here, the defendants argue that one of the plaintiffs, Stanton, is an attorney authorized to practice law in the state of New York, and as such could hardly claim ignorance of the law nor should he be permitted to profit from any claimed ignorance,” wrote the court. “They argue that to permit plaintiffs to recover could arguably undermine the Athletic Commission’s ability to enforce the regulations designed to protect boxers. This case, however, presents facts that are materially distinct from the precedents precluding any recovery by individuals evading the state’s licensing scheme. The plaintiffs’ complaint and Stanton’s affidavit proffered as part of the opposition to the motion, set forth detailed allegations of plaintiffs’ comprehensive involvement with and contribution to every aspect of defendant Greene, Jr.’s personal and professional life, from paying certain sums of money for his coaching, marketing, and professional development to paying for his basic living expenses, with substantial payments also going to Greene, Sr. The plaintiffs contend their relationship with Greene, Jr. transcended the boundaries of business interests and morphed into one of mutual friendship and one better characterized as a mentor-mentee relationship.
“At no point prior to becoming a high-ranking professional boxer is Greene, Jr. alleged to have complained about his relationship with the plaintiffs or rejected their substantial financial assistance. According to the complaint, the plaintiffs did not engage in any improper or unscrupulous conduct of the type that the Athletic Commission’s regulations were designed to prevent. Stanton’s affidavit avers that plaintiffs took no managers’ fees on ‘at least 6 fights,’ ‘always took a reduced fee on the rest,’ and took no fees on the last two fights. The affidavit describes many of the expenses the plaintiffs made, and while most of them could be understood to be of the type that they contracted to provide and for which they were to be reimbursed, there are other more personal expenses, such as paying ‘extra money’ to Greene, Jr. to help him out, paying his cell phone bills when his phone was cut off, paying for the oil heat for the homes of Greene, Jr. and his mother, buying extra tickets to Greene, Jr.’s fights so that his family could attend, and flying Greene, Jr.’s mother to the fights in Florida. Further, the agreement to make payments to Greene, Sr., could be found to differ from expenses made on behalf of Greene, Jr.
“While the court must not allow the plaintiffs to reap financial benefit from their failure to comply with the statutory and administrative regulations, the court shall not dismiss the claim of unjust enrichment and allow the defendants to retain the plaintiffs’ direct financial contributions which are separate and apart from any earnings Greene, Jr. may have made. Therefore, for the purposes of this pre-answer motion to dismiss, plaintiffs have made sufficient allegations to state a claim for quantum meruit and the motion to dismiss the second cause of action is denied.
“Whether the complaint’s characterization of this relationship and the accuracy of its depiction will stand up to the rigors of the discovery stage of the litigation is unknown to the court at the present time. If the court is to make an informed decision on the issue of availability of the equitable relief to plaintiffs, the court must have the benefit of a fully developed record. Accordingly, the defendants’ pre-answer motion to dismiss plaintiffs’ second cause of action is denied.”
Jack Halpern and Jack Stanton v. Joe Greene, Jr., and Joe Greene, Sr.; N.Y.S.Ct.; No. 108302/2008; 9/15/09
Attorneys of Record: (for plaintiffs) Hantman and Associates by Robert J. Hantman, Esq. (for defendants) Robert M. Simels, P.C. by Robert M. Simels, Esq., New York.