By Bryanna Fissori
Breach of Contract, Fiduciary Duty and Fraud. . . Beibut Shumenov v Goossen Tutor Promotions
“Is it really over?” That’s the question Light Heavyweight Champion Beibut Shumenov is asking the Clark County, Nevada District Court to answer. On March 17, 2011 Shumenov filed a lawsuit against Goossen Tutor Promotions (GTP) alleging three causes of action; breach of contract, breach of fiduciary duty and fraud and deceptive trade practices.
The contract was set to extend for three years from May 15, 2010 and required GTP to promote a minimum of two bouts per year. As of January 2011, Shumenov considered the agreement with GTP terminated due to the causes of action asserted, but without court confirmation the promotions company may be able to turn the tables and go after Shumenov for contract breach.
Shumenov also owns promotional company, KZ Event Productions, with his brother Chingis. According to the claim filed Shumenov had been doing his own promotions as well and wanted to be able to focus on his training. He also wanted to establish a relationship with a third party promoter who had television contracts and industry knowledge. The two enterprises worked together on Shumenov’s last two bouts.
The first bout was in July of 2010 against Vyacheslav Uzelkov, which Shumenov won by unanimous decision to defend his belt. The bout took place at Tachi Palace in Lemoore, California. This was a significantly smaller venue than Shumenov’s bouts recently preceding and according to Section 18 of the general allegations of the complaint (complaint), GTP did not inform Shumenov that the venue was outdoors until after it was finalized. Temperatures in Lemoore during the summer easily exceed 100 degrees. The complaint also alleges that terms of the contract expressly required Shumenov to pay the purse for this specific bout, but according to Section 20 of the complaint, GTP “reported to the California Boxing Commission and the IBA and WBA that GTP would pay Shumenov a $200,000 purse for the fight. This was untrue. . .” Nothing was paid by GTP and Shumenov also paid $14,000 in taxes on the phantom purse to GTP, which was allegedly not received by the State of California.
The second bout with GTP on board was January 8, 2011 against William Joppy, which Shumenov finished with a sixth round-round knockout. Joppy was a last minute stand in on the card for original opponent Juergen Braehmer, who supposedly fell ill a few days before the event. Shumenov had his eye on Braehmer since August of 2010 and requested GTP to set up the match for an HBO or Showtime broadcast. It was not until Shumenov offered again to pay the purse, that GTP made efforts toward procurement. The bout took place in Kazakhstan. According to Section 33 and 34 of the complaint GTP was supposed to have obtained $150,000 in event cancellation insurance with the $500,000 advanced granted by Shumenov. GTP’s failure to do so was not discovered until Braehmer pulled out of the fight.
In order to prevail on the claim for breach of contract and achieve declaratory judgment Shumenov must prove that the breach was material to the core of the agreement and served to devastate the value of the contract, thus entitling him to force GTP to provide specific performance of the agreement or money damages and termination of the contract. Shumenov is requesting money damages and attorneys fees. The cause of action for the breach is based on numerous claims which include the following:
(1) “GTP failed to perform under the Promotional Agreement and subsequent related agreements in connection with the promotion of Shumenov in accordance with their terms and materially below industry standards and customary practices with respect to the performance of the duties of a promoter for boxing matches and with respect to Shumenov’s career.”
(2) “GTP failed to arrange for bouts and bear the expenses of the bouts, entered into bout agreements contrary to the terms of the Promotional Agreement (and governing jurisdictions) and related agreements, violated express agreements between Shumenov and GTP, caused Shumenov to pay taxes and sanctioning fees on phantom purses and failed to promote the bouts in any reasonable fashion (and well below the contractual promise to promote “first class boxing matches”). GTP has further failed to make good-faith offers of bouts, failed to perform its promise that it would procure HBO or Showtime for his bouts after a defeat of Uzelkov and cannot meet the contractual requirement of promoting two bouts per year under the Promotional Agreement.”
(3) “GTP has also breached its contractual obligations by, without limitation, failing to properly account for the $500,000 advanced towards the failed Braehmer bout, failing to return all of the funds advanced, making improper expense charges against those advanced funds, failing to timely pay purses and failing to procure event cancellation insurance.”
(4) “GTP’s actions and inactions in performance of the Promotion Agreement are further a breach of the covenant of good faith and fair dealing implied into every contract. GTP has acted and failed to act in deliberate contravention of the purpose and spirit of the Promotion Agreement and thwarted the justified expectations of Shumenov under the Promotional Agreement and subsequent related agreements.”
(5) “GTP has further failed to honor its promise to rescind the Promotional Agreement and walk away if Shumenov became dissatisfied with GTP.”
If the breach is found to be minor as opposed to material, then GTP may still retain the contract as valid but be required to provide full performance or actual damages for the breach. Shumenov may still be liable for the remainder of the agreement if the breach was not material.
The second claim is for breach of fiduciary duty, which by definition is an obligation to act in the best interest of another party. There should be no contention that a fiduciary duty was in fact owed. The court will serve to determine whether GTP’s actions were motivated by another interest not beneficial to Shumenov. Shumenov asserts that not only was the fiduciary duty breached, but it was done willfully and maliciously giving rise to the claim of fraud. To succeed on the fraud claim Shumenov must prove that GTP made a misrepresentation of a material fact. Shumenov asserts that GTP made many misrepresentations including GTP’s capability of securing opponents and broadcasting contract. A claim of fraud also entitles Shumenov to request punitive damages, which he has.
In an interview with ESPN Sports, promoter Dan Goossen stated, “We have a valid and enforceable contract and will pursue our legal rights, and have formally informed Shumenov, advising him of that.”
Attorneys for GTP are likely already at work on a “motion to dismiss,” which is a fairly standard first line of defense. To succeed, the GTP must show that the claims asserted by Shumenov have no merit and therefore no remedy for recovery. This motion may be followed by a response and so forth as litigation ping pong goes. There is no way to tell how quickly the Clark County District Court docket is moving, but in the mean time Shumenov will likely proceed with his career as if the contract is void since the court decision will be necessary to prove its enforceability.
“We hope Goossen Tutor will correctly assess the situation and step aside. If no, the lawsuit will be vigorously pursued on our part until resolution by the Court,” commented Cary Redlin of KZ Event Productions to BoxingInsider.com on behalf of KZ and Beibut Shumenov, “Beibut greatly appreciates the support of his fans and looks forward to fighting again in the near future. He will continue to pursue his quest to unify the light-heavyweight titles and considers his disputes with GTP just one more obstacle he will overcome.”
Bryanna Fissori is BoxingInsider.com’s legal analyst.