Affliction Entertainment filed a countersuit against M-1 Global, the management and promotional group that reps Fedor Emelianenko, in Los Angeles federal court on Thursday, asking for declaratory relief on the validity of a “Consultation Agreement” signed into by the two parties in April 2008 -- allegedly under false pretenses. Affliction is also asking the court to rule that M-1 Global return $2.4 million in consulting fees it was paid in conjunction with two Affliction MMA events the two groups co-promoted in July 2008 and January 2009.
In the filings obtained by Sherdog.com, Affliction claims it, under M-1 Global’s directive, entered into two separate agreements with Emelianenko and the Holland-based organization to procure the services of the world’s No. 1 heavyweight as a headliner for three events.
According to Affliction, the California-based promotion inked a “Fight Agreement” that tendered $300,000 to Emelianenko per bout he participated in, while Affliction was directed to pay the remaining $1.2 million of Emelianenko’s $1.5 million asking purse per bout directly to M-1 Global under the auspice of a “Consultation Agreement.”
“The reason for the two agreements, Affliction was told, was for personal tax implications,” reads the countersuit.
Affliction claims no consultation was ever agreed upon or given by the M-1 Global group for the two events.
“Because the consulting agreement was a sham contract designed to avoid tax obligations, M-1 had no obligations to perform pursuant to the consulting agreement and therefore rendered no performance under the consulting agreement,” alleges Affliction’s filings.
Affliction is asking the court to deem the consulting agreement unlawful and that M-1 Global refund the $2.4 million it initially collected for the two events, plus a 10 percent interest rate per year along with attorney’s fees.
“We deny the allegations in the cross-claim,” said M-1 Global’s attorney Marc S. Hines on Friday.
In January, a Los Angeles federal judge denied Affliction’s motion to dismiss several claims made in a breach of contract lawsuit filed in October 2009 by Emelianenko and M-1 Global against their former partners.
In its suit, M-1 Global claims Affliction breached both Emelianenko’s “Fight Agreement,” as well as the “Consultation Agreement” by denying both parties a third fight for the Russian when the U.S. promotion decided to cancel its co-promoted “Trilogy” event in August 2009 on a week’s notice. An advertised headlining bout between Emelianenko and Josh Barnett was cancelled when Barnett was denied a license in California for an alleged positive steroids test two weeks before the event.
M-1 Global claims that Affliction did not undertake “all reasonable efforts” to find a fighter to replace Barnett, and also argue that Affliction ceased promoting the third bout partly because it had a competing objective to repair its soured relationship with competing promoter, Zuffa LLC., parent company to the UFC. Hours after Affliction’s decision to cancel the event, the UFC announced that it had reached a sponsorship agreement to allow the previously banned clothing brand back into its shows.
Emelianenko and M-1 also claim Affliction breached the “Consulting Agreement” by failing to pay the third consulting fee installment, reimburse certain expenses and also breached a third contract, a “Letter Agreement,” by failing to hand over M-1’s final payment. Emelianenko and M-1 are demanding “no less than $10 million in damages for breach of the Fight Agreement, $2 million in damages for breach of the Consulting Agreement and $500,000 in damages for breach of the Letter Agreement.”
That case is set to go to trial in April 2011.
J.R. Riddell contributed to this report. Riddell, an attorney at the global law firm Orrick, Herrington & Sutcliffe, is experienced in various matters related to the business of MMA. A more detailed background regarding his experience is available through his lawyer profile at www.orrick.com. This article does not provide legal advice, and any opinions expressed in this article are solely those of the author and do not reflect the views of his law firm. Riddell can be reached at [email protected]