African-American Cup syndicate wins appeal for breach of contractPosted on
An appellate court ruling breathed new life into an African-American syndicates suit against the Golden Gate Yacht Club for denying its application to race against Oracle Team USA for the right to defend the Americas Cup this summer in San Francisco.
Justice Roland Acosta, of the Appellate Division of the New York Supreme Court, said in his June 13 ruling that when African Diaspora Maritime, a Raleigh, N.C.-based sailing syndicate, filed its application with the Golden Gate Yacht Club and paid a $25,000 entry fee, African Diaspora and the club entered into a contract requiring the Golden Gate Yacht Club to act in good faith in reviewing the application.
ADM alleges facts sufficient to raise the question whether GGYC acted in bad faith, Acosta wrote. Specifically, ADM alleges that GGYC attempted to sabotage its efforts to submit an application of defense by excluding it from the competitor forum, thereby preventing it from obtaining information critical to the application; GGYC initially sought to deny ADMs application of defense on various technicalities, including that it was not signed and did not include a document evidencing payment of the $25,000 fee; GGYC falsely asserted that ADM had lied about its proposed team, claiming that [David] Pedrick, ADMs yacht designer, had denied being a member of ADMs team; and GGYC falsely claimed that it rejected ADMs application of defense because it was not satisfied that ADM [would] have the necessary resources to compete, even though Americas Cup teams do not obtain funding until after their applications are accepted.
The lower court the New York Supreme Court which dismissed African Diasporas complaint in January, ruled there was no breach of contract because there could be no contract between the Golden Gate Yacht Club and African Diaspora until the yacht club approved the application and accepted African Diaspora as a defender candidate. And even if there was a contract, the Cup protocol the regatta rules adopted by the Golden Gate Yacht Club and the challenger of record expressly affords GGYC unfettered discretion to decide if an applicant meets the qualifications to compete.
The Golden Gate Yacht Club was bound to accept only applicants it is satisfied have the necessary resources (including but not limited to financial, human and technological) and experience to have a reasonable chance of winning the Americas Cup defender series, the protocol reads.
In its rejection letter dated April 15, 2011, the Golden Gate Yacht Club told African Diaspora that it was not satisfied that African Diaspora had the resources or experience to do that, according to African Diasporas complaint. African Diaspora denied the assessment, saying its team includes three Olympic and one All-American sailor; additional talented, experienced and award-winning sailors; Pedrick, an experienced Americas Cup yacht designer; and some wealthy backers.
African Diaspora Maritime, led by Charles M. Kithcart, an African-American yachtsman and professional mariner, was conceived not only as a Cup syndicate but also as a vehicle for motivating, inspiring and teaching youth math and science through the sport of sailing, publicizing the history of black mariners, and connecting people of African descent worldwide. Kithcart said African Diaspora had worked out a plan with the North Carolina departments of commerce and tourism to build a boat park in Raleigh to pique media interest and had recruited wealthy African-Americans to support the campaign.
Were creating a new template for the Americas Cup of cooperation along cultural, economic, racial and social lines on our team, said Kithcart. Thats the strength of this country diversity. He says African Diasporas campaign also can help move the marine industry toward greater diversity.
Justice Acosta, while upholding the lower courts dismissal of two other counts breach of trust and breach of fiduciary duty by self-dealing said there was an enforceable contract between the Golden Gate Yacht Club and African Diaspora and enough grist for the lower court to consider whether the Golden Gate Yacht Club had acted in bad faith in reviewing African Diasporas application.
Essentially the court ruled that the one remaining claim breach of contract presents factual issues that cannot be decided on a motion to dismiss, Golden Gate Yacht Club vice commodore Tom Ehman said. GGYC looks forward to proving, in the appropriate forum at the appropriate time, that it acted in good faith and that ADMs claims are meritless.
Acosta seemed to be in African Diaporas corner, arguing for giving the little guy a chance to race against billionaire Larry Ellisons mighty Cup machine. In the end, this is a sporting competition, and the winner should be decided in the open waters rather than in a courtroom, he wrote. After all, it is not a competition if the defender wins by default.