Court: District Court, S.D. New York; October 1, 2014; Federal District Court
Plaintiffs Vladimir Hrunov and Andrey Ryabinskiy, operating as World of Boxing (WOB), have filed a lawsuit against defendant Don King, a boxing promoter. The case arises from an Agreement In Principle made on January 28, 2014, where King was to produce Guillermo Jones for a boxing match against Denis Lebedev on April 25, 2014. The match was canceled when Jones tested positive for furosemide, a banned substance, which WOB claims constituted a breach of the Agreement by King for failing to provide a clean fighter. King defends himself by arguing that his obligation was limited to doing everything within his control to ensure Jones's participation and that the positive drug test was beyond his control. Additionally, he contends that any breach should be excused due to impossibility of performance. King has also filed counterclaims asserting that WOB violated the Agreement. WOB has moved for partial summary judgment, seeking a determination of King's liability, dismissal of his counterclaims, and reimbursement from a disputed escrow account. The court granted WOB's motion regarding King's liability and the dismissal of his counterclaims, but deferred judgment on the escrow funds.
On May 17, 2013, Jones defeated Lebedev in a Cruiserweight Title Fight in Moscow, sanctioned by the WBA, but subsequently tested positive for furosemide, leading to an investigation. On October 17, 2013, the WBA found Jones guilty of using a banned substance, stripped him of the title, and suspended him for six months. A rematch was arranged for April 25, 2014, with an Agreement stipulating that Jones would arrive in Moscow at least seven days prior and undergo drug testing to prevent further violations. On April 25, Jones tested positive for furosemide again, prompting Lebedev to withdraw from the fight. The WBA deemed this withdrawal justified, citing the necessity of upholding its rules. Subsequently, the WBA suspended Jones for two years and named Lebedev the champion. WOB filed a lawsuit against King for failing to ensure Jones's participation in the rematch, while King counterclaimed, alleging breach of contract by WOB due to Lebedev's unilateral withdrawal. Summary judgment standards require that, when viewing evidence favorably for the non-moving party, there must be no genuine material issue for trial for the moving party to prevail.
New York law governs the interpretation and enforcement of the Agreement in this diversity action. Under New York law, contract interpretation focuses on the parties' intended meaning derived from the contract's language, considering reasonable implications rather than literal meanings. If a contract references external rules, those rules are incorporated into the contract's terms. For a breach of contract claim, a plaintiff must establish four elements: the existence of a contract, the plaintiff's performance, the defendant's breach, and resulting damages. The primary dispute here is whether King breached the contract.
A breach can be excused under the defense of 'impossibility' if the breaching party can demonstrate that a 'supervening event,' unforeseen by both parties, made performance impossible. Such an event must not have been anticipated; otherwise, the breaching party is considered to have assumed the risk.
In this case, King breached the contract, which required him to ensure Jones's participation in a WBA match against Lebedev. The Agreement incorporates WBA rules, which state that a boxer testing positive for banned substances is disqualified for at least six months. Jones tested positive for furosemide, preventing his participation. As a result, King could not fulfill his obligation to cause Jones's participation, constituting a breach. King's claims of ambiguity in the contract and the unreasonable nature of his obligations do not negate the breach; rather, they pertain to whether his non-performance might be excused, which is a separate issue from the fact of the breach itself.
Impossibility as a defense to breach of contract is generally limited to situations where an unforeseen event renders performance objectively impossible. King argues that his obligation to perform was extinguished when Jones ingested furosemide, disabling him from participating in a bout. He cites a precedent where a theater manager was excused from performance when a lead singer fell ill unexpectedly. However, New York law stipulates that an impossibility defense applies only to truly unanticipated events. Two key facts undermine King's argument: Jones had a prior history of doping, including a positive test for furosemide that led to the vacating of a title match; and the contract included a provision for mandatory pre-bout drug testing due to the 2013 WBA Resolution. King's claim of shock at the positive test is contradicted by his own acknowledgment that he believed the drug testing would prevent another instance of doping. This indicates that King anticipated the possibility of a second positive test, and his mistaken belief in the efficacy of the drug testing does not excuse his breach of contract. Ultimately, the court is likely to conclude that King cannot escape his contractual obligations based on the claimed impossibility of performance.
King contends he should not be liable for breach of the Agreement due to Jones's independent choice to take furosemide, which he argues was beyond his control. However, this argument overlooks King’s own decision not to negotiate more protective contract terms. The court notes that WOB could similarly argue that it had no means to prevent the economic loss resulting from Jones's actions. The pivotal issue is determining which party—King or WOB—should bear the costs associated with Jones's poor decision-making. Legally, the responsibility falls on King, as he assumed the risk of foreseeable events that could hinder his contractual obligations, particularly since the Agreement included mandatory testing to mitigate such risks.
King's counterclaims, which suggest that Lebedev's withdrawal breached or dissolved the Agreement, are rejected. Once Jones tested positive, both WOB and Lebedev were justified in treating the contract as breached since Jones's participation was essential. Thus, King's assertion that Lebedev breached the Agreement fails, as the breach occurred due to King’s own failure when Lebedev withdrew. Consequently, King’s counterclaims are dismissed. The court grants WOB’s partial motion for summary judgment on liability and sets a briefing schedule for damages, directing that WOB submit its moving papers by October 10, King's opposition by October 17, and WOB's reply by October 24.
Carlos Chavez, the WBA supervisor, initially ruled that a positive urine test was unofficial and allowed a scheduled bout to proceed. However, Gilbert Mendoza, Jr., the WBA President, later reversed this decision, canceling the bout. Despite these developments, it was established that the key issue was that the fighter, Jones, had tested positive for a prohibited substance, which rendered him ineligible to fight according to WBA Rule C.45. This rule prohibits any boxer who tests positive from being rated or participating in a sanctioned bout for at least six months. The court emphasized that the dispute over Chavez's and Mendoza's decisions was irrelevant since Jones's positive test meant he could not fight, and the only matter for consideration was King’s obligation to produce him for the bout and whether any breach of obligation was excused. Additionally, it was noted that New York law requires that for an impossibility defense to be valid, the event causing impossibility must be unanticipated. King's attempts to argue ambiguity in his obligations were dismissed, affirming that he was required to ensure Jones's participation.
A distinction exists between a promise to perform an action and a promise to attempt that action. The parties had the option to negotiate terms that would only require King to exert his best efforts to ensure Jones's participation, which is a common contractual provision. However, the actual terms agreed upon were more demanding, obligating King to ensure Jones's participation, rather than merely attempting to do so. The language of the contract is clear and does not necessitate further factual investigation. King's argument that a strict interpretation would leave him without recourse if Jones were unable to participate due to death, injury, or refusal is incorrect; he could assert an impossibility defense in such scenarios. Relevant case law supports this view, emphasizing that the key issue is whether the event preventing performance was foreseeable and should have been addressed in the contract.
