Harmon et al v. Gordon
Filing
81
MEMORANDUM OPINION signed by the Honorable Charles P. Kocoras on 8/25/2011.Mailed notice(sct, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
LARRY HARMON and HARMON,
)
CASTILLO, LLP f/k/a LARRY HARMON )
& ASSOCIATES, P.A.,
)
)
Plaintiff,
)
)
vs.
)
)
BEN GORDON,
)
)
Defendant.
)
10 C 1823
MEMORANDUM OPINION
CHARLES P. KOCORAS, District Judge:
The parties to this action have filed cross-motions for summary judgment
pursuant to Federal Rule of Civil Procedure 56. Plaintiffs Larry Harmon (“Harmon”)
and Harmon-Castillo, LLP, (collectively, “LHA”) filed a motion for summary judgment
and Defendant Ben Gordon (“Gordon”) filed a cross-motion for summary judgment. For
the reasons set forth below, Harmon’s motion is denied and Gordon’s motion is granted
as stated herein.
BACKGROUND
Plaintiff Harmon is an individual residing in California and Harmon-Castillo,
LLP, is a California-based entity serving as accountant and business manager for
professional athletes. Defendant Gordon is a professional basketball player currently
employed by the Detroit Pistons of the National Basketball Association (“NBA”).
Gordon was drafted by the Chicago Bulls in 2004 and signed a three-year rookie
contract with an option for the Chicago Bulls to extend his contract to a fourth year. On
May 17, 2004, Gordon entered into a consulting agreement (the “Agreement”) with
LHA, whereby Gordon engaged LHA as his consultant and financial adviser. The
Agreement stated that LHA’s financial services would be provided for the “duration of
[Gordon’s] playing career.” However, the parties agreed to a prospective compensation
arrangement only for the duration of Gordon’s rookie contract. The Agreement provided
that, in exchange for its services, LHA would receive flat monthly payments of $4,000
during Gordon’s rookie season, $5,000 during his second season, and $6,000 during his
third and possibly fourth season. The Agreement also provided that after Gordon’s
rookie contract, the parties would evaluate the “amount of work” performed by LHA
and LHA would provide Gordon with “a new engagement letter.”
In April 2006, Harmon contacted Gordon to discuss a change in the fee structure
of the Agreement. On May 5, 2006, Harmon informed Gordon by e-mail that, starting
April 2006, the flat monthly payments would be replaced by a new percentage-based
fee amounting to 1.5% of Gordon’s annual income. From April 2006 to June 2007,
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monthly invoices were sent to Gordon and, pursuant to the modified fee schedule, all
invoices were paid.
On February 12, 2007, Gordon agreed to transfer $1,000,000 to Vitalis Partners,
an entity affiliated with LHA, and the parties executed a promissory note memorializing
their agreement. Gordon alleges that Harmon described the transaction as though the
money being transferred would be used to acquire an ownership interest in real estate
property. LHA asserts that Gordon was never promised an ownership interest in the
property and that the instrument the parties signed expressly disclosed that the
transaction was a loan obligating LHA to repay the funds within a certain period of
time. Ultimately, we ruled in Gordon’s favor based on Vitalis Partners’ failure to timely
repay the borrowed money. See Gordon v. Vitalis Partners, LLC, No. 07 C 6807, 2010
WL 381119, at *2 (N.D. Ill. Jan. 27, 2010). We also held that the transaction constituted
a loan with no ownership interest conferred to Gordon. Id.
On July 1, 2007, Gordon terminated LHA’s services. His rookie contract
continued into 2008.
On March 2, 2010, LHA filed suit against Gordon asserting a breach of contract
claim. The parties dispute the exact duration of the Agreement. According to LHA, at
no time did the parties intend or agree to limit the duration of their engagement. LHA
claims that the parties agreed that LHA would provide its services throughout Gordon’s
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entire NBA career. On the other hand, Gordon alleges that the parties intended the
Agreement to be in force only for a maximum of four years since the Agreement
anticipated that at the end of his rookie contract the parties would evaluate LHA’s
performance and sign a new engagement letter. Each party now moves for summary
judgment.
LEGAL STANDARD
Summary judgment is appropriate only when the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled to
a judgment as a matter of law. Fed. R. Civ. P. 56(c). A genuine issue of material fact
exists when the evidence is such that a reasonable jury could find for the nonmovant.
Buscaglia v. United States, 25 F.3d 530, 534 (7th Cir. 1994). The movant bears the
burden of demonstrating the absence of a genuine issue of material fact by specific
citation to the record; if the party succeeds in doing so, the burden shifts to the
nonmovant to set forth specific facts showing that there is a genuine issue of fact for
trial. Fed. R. Civ. P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). In
considering motions for summary judgment, a court construes all facts and draws all
inferences from the record in favor of the nonmoving party. Anderson v. Liberty Lobby
Inc., 477 U.S. 242, 255 (1986).
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When parties file cross-motions for summary judgment, each motion must be
assessed independently, and denial of one does not necessitate the grant of the other. M.
Snower & Co. v. United States, 140 F.2d 367, 369 (7th Cir. 1944). Rather, each motion
evidences only that the movant believes it is entitled to judgment as a matter of law on
the issues within its motion and that trial is the appropriate course of action if the court
disagrees with that assessment. Miller v. LeSea Broad., Inc., 87 F.3d 224, 230 (7th Cir.
1996). With these principles in mind, we turn to the parties’ motions.
DISCUSSION
LHA argues that it is entitled to summary judgment on its breach of contract
claim. To establish a breach of contract claim under Illinois law, LHA must prove (1)
the existence of a valid and enforceable contract, (2) performance by LHA, (3) breach
by Gordon, and (4) resulting injuries to LHA. Gallagher Corp. v. Russ, 721 N.E.2d 605,
611 (Ill. App. Ct. 1999).1 Gordon argues that the parties had not agreed on a valid
contract for the duration of Gordon’s playing career and that he was entitled to
terminate the Agreement because of LHA’s wrongdoings. We will address each
argument in turn.
1
The parties do not dispute that Illinois law governs their relationship.
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I.
The Duration of the Agreement
LHA argues that the language contained in the Agreement is subject to only one
reasonable interpretation: the Agreement was to be in effect for the duration of
Gordon’s NBA career. Gordon argues that the language is equivocal but still subject to
one reasonable interpretation: the parties intended the Agreement to expire with
Gordon’s rookie contract and that a new contract had to be agreed upon. The facts
established during discovery indisputably establish that Gordon’s interpretation is the
correct one.
To establish the formation of a valid and enforceable contract, a plaintiff must
establish that the essential terms of the contract were definite and certain. Midland
Hotel Corp. v. Reuben H. Donnelley Corp., 515 N.E.2d 61, 65 (Ill. 1987). A contract
is sufficiently definite and certain if the court is able “under proper rules of construction
. . . to ascertain what the parties have agreed to do.” Id. In construing a contract, a court
must give effect to the parties’ intent. Gallagher v. Lenart, 874 N.E.2d 43, 58 (Ill.
2007). A court looks to the language of the contract alone, “as the language, given its
plain and ordinary meaning, is the best indication of the parties’ intent.” Id. If a contract
is ambiguous, the parties may submit extrinsic evidence to decipher the meaning of the
ambiguity and ascertain the parties’ intent. Regency Commercial Assocs, LLC v. Lopax,
Inc., 869 N.E.2d 310, 316 (Ill. App. Ct. 2007). Ambiguity may be found where the
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language of the contract is “reasonably susceptible to more than one meaning.” Cent.
Ill. Light Co. v. Home Ins. Co., 821 N.E.2d 206, 213 (Ill. 2004). Generally, contractual
ambiguity is a question of fact and therefore not susceptible to decision at the summary
judgment stage. Cont’l Cas. Co. v. Nw. Nat. Ins. Co., 427 F.3d 1038, 1041 (7th Cir.
2005). However, “if a contract is ambiguous, its interpretation is a question of law for
the court as long as the extrinsic evidence bearing on the interpretation is undisputed.”
Id. In such cases, summary judgment is appropriate.
Harmon was deposed in this case on November 6, 2008. A transcript of his
testimony, in its relevant aspects, reflects the following:
Q.
A.
Q.
A.
Q.
A.
Q.
A.
Q.
A.
Q.
Is this a form letter you used for all of your NBA clients at
the time?
Yes. At the time, yes.
There’s a three-part fee structure discussed in this
engagement letter. Is this the fee structure that was originally
agreed upon by Mr. Gordon and you?
Yes.
So this would have been 4,000 per month plus out-of-pocket
expenses in Year 1, then 5,000 per month plus out-of-pocket
expenses in Year 2, and then 6,000 per month plus out-ofpocket expenses in Year 3 and 4?
Yes.
How were you going to determine at that point in time as of
May 2004, how were you going to determine what Mr.
Gordon would pay you after the fourth year?
After sitting down and talking about it.
Would there be a new contract executed at that time?
That’s correct.
Okay. So it was contemplated at the time of this contract that
in four years - in three or four years, depending on whether
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his option was exercised, whether you and Mr. Gordon
would execute another contract?
Correct.
A.
[. . .]
Q.
Do you have any idea what that new contract would have
said?
A.
What that new contract would have said?
Q.
Yeah.
A.
At that particular time?
Q.
Yeah.
A.
No.
Q.
Do you have any idea what the fee agreement would have
been at that particular time?
A.
It says right here “amount of work we performed on your
account” - “provide you with a new letter.”
Q.
That would be a negotiation between you and Mr. Gordon at
that time, right?
A.
Correct.
Q.
It was contemplated at the time of May of 2004 that this
contract would be in force or effect for three or four years,
and then you’d execute another contract with Mr. Gordon?
A.
That’s correct.
Q.
As you sit here today, there’s no way you could have
predicted what that contract would have said?
A.
Correct.
Q.
In fact, there is no way you could have predicted if
Mr. Gordon would have even signed another contract; is that
correct?
A.
Never prediction of that.
Q.
Okay. So it would be all speculation to say that Mr. Gordon,
after three or four years, would have signed another contract
with you?
A.
You would think that most of the work you do, most of your
clients are lifetime contracts, but you don’t know.
Q.
Did Mr. Gordon ever sign another written contract with you
after this?
A.
Not a signed, but - the answer is no.
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Harmon’s deposition testimony indicates that at the end of Gordon’s rookie
contract, the parties intended to evaluate LHA’s work performance and potentially enter
into a new contract. However, there was no evaluation of work performed, no provision
of a new engagement letter, no meeting of the minds as to the work to be performed, no
agreement as to the fees to be charged for any work to be performed, or the length of
time any new agreement would have legal force and effect. All of these issues constitute
material terms necessary to the creation of a contract and required a meeting of the
parties’ minds for any future reliance thereon. Harmon’s testimony reflects an
understanding, consistent with Gordon’s, that there was to be a second or succeeding
negotiation at which a meeting of the minds would occur and provide the terms material
to an executed and enforceable contract. That did not happen here.
Indeed, the friction that developed between Gordon and Harmon during the
course of the original agreement militated against a set of terms compatible with the
parties’ desires and objectives. Although this court has previously found that Gordon
was bound to the changed fee structure unilaterally proposed by Harmon by virtue of
his conduct, Gordon’s actions in paying fees under the revised structure was neither
bargained for nor affirmatively accepted.
Additionally, Gordon expressed displeasure and disagreement with Harmon’s
treatment of Gordon’s $1,000,000 advance to Harmon and the failure to repay the
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money. Harmon’s words reflect that a discussion of fees was called for so that a mutual
agreement could be reached. No such discussions or mutual agreement as to the fee
question were ever achieved. Indeed, as described previously, virtually all of the
material terms of this type of relationship were never agreed upon, and the contract of
May17, 2004, had run its course. As a matter of fact and law, the 2004 contract cannot
be relied upon to accept Harmon’s contentions that the percentage fee he was collecting
under the 2004 contract would apply for the duration of Gordon’s professional career.
Attempts by Harmon to recant his sworn deposition testimony by a supplemental
affidavit are ineffectual. A party cannot submit an affidavit whose statements contradict
prior deposition or sworn testimony. Buckner v. Sam’s Club, Inc., 75 F.3d 290, 292 (7th
Cir. 1996).
Accordingly, there is no material issue of fact that the parties entered into only
one contract which was intended to be in force for three, and were the Chicago Bulls
to exercise their option, four years. It is also undisputed that once the fourth year
finished, the rookie contract between Harmon and Gordon terminated. Since no new
contract between the parties was entered into, Gordon’s legal obligations to continue
paying Harmon ended in June 2008.
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II.
Damages
Gordon argues that he was entitled to terminate the Agreement in July 2007
because he lost trust in Harmon when Harmon unilaterally changed the fee structure;
when Harmon failed to repay the money Gordon had advanced; and when Harmon
represented that Gordon was loaning money to acquire an ownership interest in real
estate. Gordon, however, is precluded from relitigating issues that have been decided
in our previous ruling. While these events suggest that Gordon was not of a mind to
reengage Harmon to deal with his professional financial affairs in the future, this court’s
prior rulings preclude a revisitation of those issues.
Harmon’s damages claim of $1,254,782.08 is based on the premise that Gordon
was contractually obligated to employ LHA to act as his advisors and consultants for
the duration of his playing career and to pay them accordingly, in accordance with the
May 17, 2004 contract. Both of Harmon’s assertions are belied by his own deposition
testimony that a new contract would have to be executed by the parties after
negotiations were had. There was never a new contract discussion, no material terms
such as services to be rendered, fees to be paid, or term of contract agreed upon or
resolved. When the May 17, 2004 contract was signed, it was the contemplation of all
the parties that these things would take place. Accordingly, the parties’ mutual rights
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and obligations terminated upon completion of Gordon’s fourth season as a professional
basketball player.
CONCLUSION
For the reasons expressed above, Gordon’s motion for summary judgment is
granted and LHA’s motion for summary judgment is denied.
Charles P. Kocoras
United States District Judge
Dated:
August 25, 2011
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