Motion for Summary Judgment Granted – Failure to produce clean boxer results in Breach of Contract
Plaintiffs Vladimir Hrunov and Andrey Ryabinskiy are Russian boxing promoters who do business as World of Boxing ("WOB"). Defendant Don King ("King") is an American boxing promoter who does business as Don King Productions. On January 28, 2014, King and WOB entered into an Agreement In Principle ("Agreement"), in which King promised to produce Guillermo Jones ("Jones") for a bout against Denis Lebedev ("Lebedev") on April 25, 2014. “The day the bout was supposed to take place, Jones tested positive for furosemide, an illicit, performance-enhancing diuretic. The positive drug test precluded Jones from competing, and the bout was called off.”
World of Boxing alleges that King breached the contract because Jones tested positive. In defense, King alleges that (1) he did everything within his control to prevent the breach and that (2) performance was impossible. On August 22, 2014, World of Boxing moved for partial summary judgment on the question of contract liability. WOB seeks (1) a ruling that King is liable for breaching the Agreement,
Jones had tested positive for this performance enhancing drug before (2013). He was to have a rematch against Lebedev in Moscow, Russia. Part of the contract called for Jones to arrive seven (7) days before the match in Moscow and for Jones to submit to a drug test. The day before the match, April 23, 2014, a urine sample was collected and tested. It was positive for performance enhancing drugs. As a result, World of Boxing and Lebedev withdrew from the boxing match. “On May 23, 2014, after reviewing the test results more carefully, the WBA issued a resolution (1) affirming the finding that Jones's urine contained furosemide, (2) suspending Jones from WBA-sanctioned bouts for two years, and (3) naming Lebedev Cruiserweight champion.” The suit was brought on a breach of contract theory – the Plaintiff alleged that King failed to ensure that Jones participated in the bout.
Law: Under New York law, contracts are given "the meaning intended by the parties, as derived from the language of the contract in question." Contract construction is not simply a matter of examining "literal language." It requires courts to consider what can be "reasonably implied" from the contract's language, in order to determine what "a reasonable person in the position of the promisee would be justified in understanding [the contract to] include[]." As a matter of law, if a contract makes reference to extraneous rules or regulations, the content of those rules or regulations is incorporated into the contract's terms. Breach of contract claims are subject to a four-part test. To prevail, a plaintiff must show: "(1) the existence of a contract between [the plaintiff] and [the] defendant; (2) performance of the plaintiff's obligations under the contract; (3) breach of the contract by [the] defendant; and (4) damages to the plaintiff caused by [the] defendant's breach." Here, the only element in dispute is the third prong of the test.
Law – Impossibility: To sustain an impossibility defense, the "supervening event" must have been "unanticipated" by the parties. As the Supreme Court has explained, if an event "was foreseeable," it "should have been [provided] for it in the contract, and the absence of such a provision gives rise to the inference that the risk was assumed" by the party whose performance was frustrated. In other words, an impossibility defense only excuses non-performance if the "unanticipated event [] could not have been foreseen or guarded against in the contract."
The Court analyzed the contract and the rules set forth by World of Boxing. “Under WBA rules — which the Agreement incorporates by reference — any boxer who tests positive for a banned, performance-enhancing substance is disqualified from WBA-sponsored bouts for no less than six months” Holding that if Jones could not participate, even more to reason because of drugs, King breached the contract. Justice Schiendlin reasoning that “it is possible that [King’s] contractual obligations were too onerous to be enforceable. But that question goes to whether King's failure to perform may be excused, not to whether King in fact failed to perform…”
As to impossibility, the Court found no such defense to exist. The Court stated that “New York law is very clear, however, that an impossibility defense is only available if the frustration of performance was ‘produced by an unanticipated event that could not have been foreseen or guarded against in the contract.’” (internal citations omitted). Jones had taken the same performance enhancing drug previously, Jones had contracted for the testing and the resolution of the boxing association called for the testing. The Court completely dismissed King’s argument and representations. In contrast to the impossibility defense, the Court opined that “[b]ecause the risk of a second positive test was foreseeable — so foreseeable, in fact, that the Agreement set out a mandatory testing provision to lessen its likelihood — King's breach”
World of Boxing’s motion is GRANTED as to liability, and GRANTED as to the dismissal of King's counterclaims. However, judgment on the escrow funds is reserved…The case is World of Boxing LLC v. King, 14-cv-3791 (SAS), NYLJ 1202672577813, at *1 (SDNY, Decided October 1, 2014)
