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Oquendo v. Ccc Terek

United States District Court, S.D. New York

May 22, 2015

CCC TEREK, d/b/a Terek Box Event, Defendant.


RONNIE ABRAMS, District Judge.

Plaintiff Fres Oquendo, a professional boxer, brings this state law action for breach of contract against Defendant CCC Terek, a German company that promotes prizefights. The parties' dispute centers around a bout for the World Boxing Association's ("WBA") world heavyweight championship held in Grozny, Chechnya on July 6, 2014. Oquendo lost the fight, which was promoted by Terek, to Ruslan Chagaev, an Uzbek boxer who now holds the WBA world heavyweight title. Oquendo claims that Terek did not pay him the full amount of the contracted $1 million purse and failed to schedule a rematch between him and Chagaev as Terek promised in the event Oquendo lost the bout. He seeks damages and injunctive relief. Terek's principal defense is that the contract is unenforceable.

The straightforward nature of the legal claims at issue belies the unusual, if not sensational, facts of this case. The underlying events began with a business meeting in Lima, Peru and ultimately resulted in a fight for the world heavyweight title watched by some 30, 000 spectators in Grozny, which the parties agree was "one of the most extraordinary sights anybody has ever seen in the sport of boxing." Tr. 205. Indeed, one press account characterized the fight as "surreal" and described witnessing "folk singing, children dancing, an enormous psychedelic gazebo[, ] Chagaev wandering through a mock medieval [Chechen] village on his way to the ring, " and personal intervention during the bout by Chechen president Ramzan Kadyrov. Plf.'s Ex. 25; see also Plf.'s Ex. 35 (video recording of the fight). The bout was not the only unconventional aspect of the case, which included references to the FBI and KGB, missing passports, and boxing promoters carrying $200, 000 in cash and a firearm at a Chechen airport.

A consolidated preliminary injunction hearing and bench trial was held on April 2, April 3, and April 7, 2015. The Court now finds for Oquendo on both claims. Accordingly, Terek will be ordered pay damages of $775, 000, together with interest at the prevailing statutory rate, and will be enjoined from promoting any bout for Chagaev within the next 18 months unless it first schedules the promised rematch.


Oquendo, at the time proceeding pro se, commenced this action on December 12, 2014. After Terek failed to answer or otherwise appear, the Clerk of Court issued a certificate of default and the Court signed an order on January 7, 2015 directing Terek to appear for a hearing on February 3, 2015 to show cause why a default judgment should not be entered against it. Richard D. Simon, Esq. made an appearance on behalf of Terek the night before the scheduled default hearing, advising that he had only just been retained.

At the February 3 hearing, Terek stated its intention to file a motion to dismiss, and the Court set a briefing schedule for the motion. A hearing on Oquendo's request for a preliminary injunction and Defendant's motion was scheduled for April 2, 2015. After seeking an extension of the briefing schedule, Terek answered-instead of moving to dismiss-on March 2. The same day, Oquendo retained Judd Burstein, Esq. and Peter B. Schalk, Esq. as counsel.

The Court held a status conference on March 5. At the conference, the parties agreed to a consolidated hearing on the preliminary injunction and bench trial, pursuant to Fed.R.Civ.P. 65(a)(2), which would begin the same day the hearing had originally been scheduled, April 2. The parties also agreed to an accelerated discovery schedule and further agreed that discovery would proceed informally. Terek, but not Oquendo, waived depositions.

On March 13, Terek requested that the hearing and trial on the merits be severed so it could have more time to assemble expert testimony concerning a failed drug test by Oquendo. Oquendo opposed that request because, inter alia, he was no longer challenging the results of the test. On March 16, the Court denied Terek's request for severance and referred this case to Magistrate Judge Francis for settlement and discovery management.

On March 23, as a result of alleged violations of Judge Francis' discovery orders, Oquendo moved before Judge Francis for sanctions under Fed.R.Civ.P. 37, asking that Terek's answer be stricken and that a default judgment be entered in favor of Oquendo. A hearing before Judge Francis on the motion was set for March 31.

The parties' joint pretrial order, proposed findings of fact and conclusions of law, and other pretrial materials were submitted on March 26. In accordance with the Court's customary practice for non-jury proceedings, the direct testimony of witnesses under a party's control were submitted via affidavit with the pretrial order. Oquendo submitted affidavits from five witnesses: himself, Robert Goodman, Dino Spencer, Tom Tsatas, and John Wirt. Terek submitted affidavits from Timur Dugazaev, its president, and Malte Müller-Michaelis, an individual with whom Terek had previously asserted it had no association.

On March 27, one day after Terek submitted its direct affidavits, Oquendo sought a conference with Judge Francis. He asked Judge Francis to direct Terek to either withdraw Müller-Michaelis' affidavit or produce him for a deposition. The same day, Judge Francis ordered "Mr. Michaelis [to] appear for [a] deposition on March 31, 2015, at a time agreed to between counsel, failing which he shall not testify at trial and his affidavit shall not be admitted." Dkt. 56. Müller-Michaelis did not appear for his deposition.

On March 30, Terek wrote to the Court requesting an adjournment of Dugazaev's deposition, which had been previously scheduled for April 1 by agreement between the parties, and of the consolidated hearing and trial. Terek argued the adjournments were necessary because Dugazaev "had taken ill with an infection and thus couldn't travel to New York for the deposition/trial" from Germany. Def.'s Letter Mot., Dkt. 66. The Court denied that request and ordered that Dugzaev's testimony would not be admitted if he failed to appear for the deposition at the agreed time. Dkt. 69. Dugazaev did not appear for his deposition.

On April 1, the day after the hearing on Oquendo's motion for Rule 37 sanctions, Judge Francis issued his report and recommendation ("R&R"). Judge Francis concluded that Terek had failed to comply with the Court's discovery orders, that Terek's non-compliance was "plainly willful, " and that "[g]iven the breadth of the defendant's noncompliance, [it was] doubtful that sanctions less severe than judgment by default would be effective." R&R at 7, Dkt. 76. In the alternative, Judge Francis suggested that in the course of trial, the Court might "be able to better identify specific issues as to which the plaintiff is prejudiced by Terek's conduct, and then tailor a more specific remedy by precluding evidence or drawing an adverse inference against the defendant." Id. at 7-8. Terek's objections and Oquendo's response were filed on April 16 after the consolidated hearing and bench trial. In his response, Oquendo withdrew his request for default judgment in light of the fact that there had since been a full trial on the merits. Plf.'s Resp. to Def.'s Obj. at 1, Dkt. 98. He now asks for more narrowly tailored relief, which the Court will address in the course of the discussion that follows. See n. 19, infra.

The consolidated hearing and bench trial was held on April 2, April 3, and April 7. Neither Dugazaev's nor Müller-Michaelis' affidavits were admitted, since neither appeared for depositions, as noted above. Terek elected to cross-examine all of Oquendo's witnesses save for Spencer. Goodman was qualified as an expert witness, without objection.

At the conclusion of the trial, the Court issued a preliminary injunction prohibiting Terek from promoting any bout for Chagaev unless it first scheduled the promised rematch. Dkt. 92. That injunction was subsequently clarified on April 24. Dkt. 110.

On April 17, after statements by Dugazaev in the press threatening to commence litigation in Moscow relating to the parties' dispute, Oquendo moved for a temporary restraining order ("TRO"). At a conference held on April 24, the Court instructed Plaintiff to move by way of formal motion if he sought an anti-suit injunction. Plaintiff did so, and the Court signed an order to show cause on April 29 and set a hearing date of May 7. Dkt. 111. The same day, the Court granted Simon's motion to withdraw as Terek's counsel for non-payment of fees. Dkt. 114.

On May 6, one day before the scheduled hearing on Oquendo's motion for an anti-suit injunction, the Court received an emailed letter from Dugazaev through an intermediary. See Letter from Timur Dugazaev, Dkt. 115, Ex. 1. In the letter, Dugazaev requested a 30-day adjournment to afford Terek more time to find substitute counsel. The same day, the Court granted Terek a seven-day adjournment until May 14 and issued a TRO barring Terek from bringing any litigation in Moscow related to this dispute. Dkt. 115. Terek failed to appear at the May 14 hearing and the Court converted the TRO to a preliminary injunction. Dkt. 120.

On May 13, Oquendo moved for an order holding Terek in contempt for violating the preliminary injunction. The Court entered an order to show cause the same day, and a hearing was initially scheduled for May 21. Dkt. 116. That hearing has since been adjourned until June 4 on Oquendo's request. Dkt. 124.

As of the date of this opinion, Terek has yet to retain substitute counsel despite multiple admonitions to do so. Dkt. 114 & 115; see also Jones v. Niagara Frontier Transp. Auth., 722 F.2d 20, 22 (2d Cir. 1983) ("The rule that a corporation may litigate only through a duly licensed attorney is venerable and widespread.").


A. The Parties

Oquendo, known in the industry as "Fast Fres" and the "Big O, " is a 42-year-old man who began boxing in 1987. He turned professional in 1997 and has a record of 37 wins and eight losses with 24 of his wins coming by knockout. He has fought for world heavyweight titles on three occasions and is considered one of the top heavyweight fighters in the world, having competed against the likes of Evander Holyfield, James Toney, and Oliver McCall. In July 2014, Oquendo was rated No. 4 in the world by the WBA. Tr. 155; Oquendo Decl. ¶¶ 4-5; Plf.'s Ex. 4-5, 35. He is a U.S. citizen and a resident of Illinois. Oquendo Decl. ¶ 2.

During the events relevant here, Oquendo was surrounded by a bevy of advisors and agents. The most significant were John Wirt and Tom Tsatas. Wirt is the chief executive officer of Square Ring, Inc. ("SRI"), which acts as a promoter and agent for professional boxers, including Oquendo. He is also an attorney, having worked earlier in his career at the law firm now known as Sidley Austin LLP and served as in-house counsel to Don King Productions, Inc., a leading boxing promoter. Wirt Decl. ¶ 1, 4, 11-13, 22, 27. Tom Tsatas, who does not have a formal title, has been a friend and advisor to Oquendo for roughly 10 years and played a key role in negotiating the bout. Tsatas Decl. ¶ 2; Tr. 235. Oquendo was also represented at various times relevant to this action by Bobby Hitz, the president of Hitz Entertainment Corporation ("HEC"), and Lee Holliday, the principal of Lee Productions Co., LLC. Plf.'s Ex. 11 at Bates No. 1860-65; Plf.'s Ex. 15.

Defendant Terek is a Hamburg, Germany-based company that promotes prizefights. Timur Dugazaev, a former boxer himself, is the company's president. Tsatas Decl. ¶ 2; Plf.'s Ex. 2, 13. Because Dugazaev is not conversant in English, Malte Müller-Michaelis acted as Terek's authorized agent with regard to the bout at issue in this case.[2] Tr. 196; Tsatas Decl. ¶ 4; Wirt Decl. 27-29; see also Plf.'s Ex. 7-10, 14, 16-23, 27, 36-38, 40.

B. Planning for the Oquendo-Chagaev Bout

1. Initial Discussions Between Wirt and Müller-Michaelis

In or around October 2013, Wirt travelled to Lima, Peru to attend the WBA's 92nd Annual Convention with the goal of lobbying the organization to recognize Oquendo as the No. 1 contender for the WBA's then-vacant world heavyweight title and to have the WBA sanction a bout between Oquendo and Chagaev. Wirt Decl. ¶ 7-8; Plf.'s Ex. 5. The WBA is one of the four most influential sanctioning organizations in professional boxing.[3] As part of its efforts to promote the sport of professional boxing, the organization sanctions certain matches as WBA title fights. The winner of such a fight is recognized as the WBA world champion in the applicable weight class. Such recognition yields sizeable financial benefits for a fighter as well as intangible benefits such as fame and the chance to make a mark on the history of the sport. Oquendo Decl. ¶ 6; Goodman Decl. ¶¶ 8, 16.

In Lima, Wirt was approached by Müller-Michaelis, whom Wirt did not previously know. Müller-Michaelis informed Wirt that he was authorized to negotiate on behalf of the exclusive promoter of Chagaev, another highly ranked heavyweight professional boxer, to fight for the vacant WBA world heavyweight championship. Wirt Decl. ¶ 9. It is unclear whether Müller-Michaelis explicitly identified Terek by name. Wirt proposed a purse of $1.4 million for Oquendo, which would have been divided between Oquendo and his promoters.[4] Tr. 62, 144-45. No agreement was reached in Lima and, on October 23, Wirt received an email from Müller-Michaelis advising Wirt that he had secured the WBA's sanction of a bout between Chagaev and Luis Ortiz, another boxer, for the heavyweight title. Wirt Decl. ¶ 10; Plf.'s Ex. 6. As Müller-Michaelis explained in that email, "I had to go with the best economical solution in order to protect the interests of the party I represented in Lima." Plf.'s Ex. 6.

2. Oquendo Proceeds Independently

By the late spring or early summer of 2014, Oquendo was of the view that his promotional agreement with SRI and HEC had concluded and that he was then a free agent.[5] Accordingly, he undertook to secure fights on his own, with the assistance of Tsatas. Oquendo Decl. ¶ 8. At some point in May 2014, Müller-Michaelis reached out to Tsatas on behalf of Terek to negotiate terms for an Oquendo-Chagaev bout for the WBA heavyweight championship to occur in or around June 2014. Tsatas Decl. ¶ 3. Tsatas had never heard of Müller-Michaelis before, but relayed the offer to Oquendo. Tr. 290-91. Oquendo was "obviously interested." Oquendo Decl. ¶ 9. The parties began negotiating and, on May 9, Müller-Michaelis emailed Tsatas a proposed bout agreement. Plf.'s Ex. 7. It is unclear how Müller-Michaelis knew to contact Tsatas.

The parties ultimately reached an agreement dated May 10, 2014 pursuant to which Oquendo would fight Chagaev for the WBA world heavyweight title on June 7, 2014 in Grozny for a purse of $225, 000 (the "May 10 Contract"). Plf.'s Ex. 8. A fully-executed copy of that contract-with Dugazaev's signature on behalf of Terek-was emailed to Tsatas by Müller-Michaelis on May 19, 2014. Id. For reasons that are unclear-and not relevant to the present dispute-Terek sought to change the date of the bout to July 6, 2014. A contract to that effect was memorialized on May 28, 2014 (the "May 28 Contract"). Def.'s Ex. E-52-56; Tr. 238. That second agreement states that Oquendo's purse is $75, 000-apparently so the parties could avoid paying certain fees to the WBA-but there is no disagreement between the parties that Oquendo's purse at that time was understood to be an unchanged $225, 000. Tr. 67-68, 233, 246, 239, 298, 396; Def.'s Ex. E-72-73.

Oquendo had been reluctant to move the fight to July 6 from June 7 because his wife was due to give birth to their child in late June or early July. His wife had complications with the birth of one of their older children and Oquendo was concerned that her current pregnancy might also prove to be challenging. Oquendo Decl. ¶¶ 15, 17. Tsatas had warned Müller-Michaelis of the risk of a bout so close to the baby's due date and the challenge it posed for Oquendo. Nevertheless, both sides "hoped for the best." Tr. 314. The difficulty with the date notwithstanding, Oquendo was hopeful he could fight-and motivated by having a shot at the world title.

After the May 28 contract had been signed, Tsatas sought $10, 000 for training expenses from Müller-Michaelis "due to the change of [the bout's] date, " which would permit Oquendo to pay a sparring partner. Tr. 299, 306-07, 315; Oquendo Decl. ¶ 18. That amount was received by Oquendo via wire transfer on June 19. See Plf.'s Ex. 26 (bank records).

3. The Birth of Oquendo's Child

In light of the complications Oquendo's wife had experienced in giving birth to her older child, her physicians recommended inducing labor around June 24, 2014. Oquendo realized that this timing would allow him to be present for the birth of his child notwithstanding his commitment to fight Chagaev on July 6. His wife's physicians induced labor on June 24, and the Oquendos' son was born the same day. Oquendo Decl. ¶¶ 21-22.

By June 27, however, Oquendo's wife had become ill and was back in the hospital. See Plf.'s Ex. 12 (medical records). On June 28, Tsatas wrote to Müller-Michaelis: "Everything was perfect until yesterday. I just pray his wife is ok." Def.'s Ex. E-80. His newborn son, too, became sick at approximately the same time and was admitted to the hospital. Oquendo Decl. ¶ 25; Tr. 265. Oquendo testified that his recollection of those days is weak because "[m]y world at that time was my family." Tr. 178; see also Tr. 248. As he also explained, his family situation took a toll on him because "boxing is [a] 90 percent mental sport." Tr. 162. In the days that followed, Oquendo relied heavily on Tstatas to manage his professional affairs.

The May 28 Contract, like the May 10 Contract, contained language permitting Oquendo not to proceed with the bout under certain circumstances, including where "a physician certifies that BOXER and/or OPPONENT is/are mentally or physically disabled to such an extent that one or both cannot or should not participate in BOUT as scheduled." The contract provided that if a physician so certified, the parties would mutually agree whether to reschedule the bout within 90 days or terminate their agreement. Def.'s Ex. E-52-56, § 16 (May 28 Contract); see also Plf.'s Ex. 8 at Bates No. 4516-20, § 16 (May 10 Contract).

4. SRI and HEC Sue Oquendo

At some point in May, Wirt learned of the arrangement between Terek and Oquendo and approached the WBA with his concern that Oquendo had gone around him in arranging the bout. Def.'s Ex. E-57; Tr. 58, 69. Müller-Michaelis was aware of Wirt's actions by May 20, when he emailed Tsatas seeking confirmation that Oquendo was a free agent because "John Wirt is trying to cause trouble." Def.'s Ex. E-57. Oquendo was copied on the message. Specifically, Wirt was seeking to have the WBA withhold its sanction of the bout. Tr. 323. Without the sanction, there would be no world heavyweight championship on the line-and little incentive for either fighter to proceed.

On June 20, SRI and HEC filed a lawsuit in the Circuit Court of Cook County, Illinois against Oquendo, Tsatas, and Holliday (the "Chicago action") alleging, among other things, breach of contract and tortious interference. See Plf.'s Ex. 11. The gravamen of the complaint was that the promotional agreements between Oquendo, on the one hand, and SRI and HEC, on the other, were still in effect, and that Oquendo was in breach by having gone around SRI and HEC to independently arrange the bout with Chagaev. SRI and HEC alleged-incorrectly, as it turns out- that "Oquendo, and others acting in concert with him, are to receive in excess of $1, 400, 000.00 for the championship Bout in Russia on July 6, 2014." Id., Compl. ¶ 19. That amount, as noted above, was what Wirt had initially sought to negotiate when he had met Müller-Michaelis in Lima.

Oquendo did not learn of the Chicago action until June 24-the same day his son was born-when Wirt personally sent him a copy of the summons and complaint via email. Oquendo Decl. ¶ 24; Wirt Decl. ¶ 14; Plf.'s Ex. 11; Tr. 175. Müller-Michaelis and the WBA's legal counsel, among others, were copied on that message. Plf.'s Ex. 11. On June 30, with just a week before the bout, SRI and HEC filed an emergency motion for a TRO seeking, among other things, to bar Oquendo from participating in the bout with Chagaev. Wirt Decl. ¶ 15; Tsatas Decl. ¶ 16; Oquendo Decl. ¶ 24. The TRO was not granted, but a hearing on SRI and HEC's motion for a preliminary injunction was set for July 2. Tr. 82.

Tsatas, who had helped Oquendo negotiate the bout, was upset with Wirt and Hitz for initiating the Chicago action. Tr. 320-21. On June 28, he wrote to Müller-Michaelis to complain about how Wirt and Hitz were "strong arming you and us" and how he hoped that an attorney could "destroy these guys in court." Def.'s Ex. E-80.

5. Oquendo Seeks To Quit the Bout

In the days immediately after the Chicago action was filed-and with the July 6 bout mere weeks away-Oquendo, Wirt, Tsatas, Holliday, and Müller-Michaelis began discussions in an attempt to resolve their differences. Oquendo Decl. ¶ 27; Wirt Decl. ¶ 16; Tsatas Decl. ¶ 17. Indeed, the same day that SRI and HEC filed for the TRO, Terek arranged for Wirt to fly to Moscow in an attempt to reach some resolution. Wirt Decl. ¶ 17; Tr. 79; Plf.'s Ex. 38 at Bates No. 2684. A letter dated June 30 from Dugazaev to Wirt states: "We will be happy to sit down with you and negotiate all pending matters regarding this fight. We apologize for any misunderstandings or miscommunication in the past." Plf.'s Ex. 13. Because Dugazaev spoke no English, Wirt expected he would be negotiating with Müller-Michaelis. Tr. 87, 103.

As Wirt arrived in Moscow, the parties confronted two discrete challenges. First, there was the problem Oquendo and Tsatas had caused by going around SRI and HEC to arrange the bout directly with Terek through Müller-Michaelis. Wirt had contacted Müller-Michaelis to seek $500, 000 as a promotional fee for SRI and HEC, although he was prepared to negotiate. Tr. 62-63, 83; Plf.'s Ex. 38 at Bates No. 1999-2001. As Wirt testified, "[w]e wanted our rights respected." Tr. 83. In his view, Müller-Michaelis had "messed up" by going "directly to the fighter [on behalf of Terek], and that's what caused all these problems, ultimately." Tr. 88.

Second-and more significantly, given his wife's and son's respective medical conditions-Oquendo had interrupted his training in order to care for his family and was now refusing to commit to the fight. Tr. 160, 178-79. A clearly worried Müller-Michaelis ...

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