Larry Harmon v. Ben Gordon

712 F.3d 1044, 2013 WL 1150204, 2013 U.S. App. LEXIS 5555
CourtCourt of Appeals for the Seventh Circuit
DecidedMarch 21, 2013
Docket11-3176
StatusPublished
Cited by74 cases

This text of 712 F.3d 1044 (Larry Harmon v. Ben Gordon) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Larry Harmon v. Ben Gordon, 712 F.3d 1044, 2013 WL 1150204, 2013 U.S. App. LEXIS 5555 (7th Cir. 2013).

Opinion

FLAUM, Circuit Judge.

In 2004, Larry Harmon entered into an agreement on behalf of Larry Harmon & Associates, P.A. (“LHA”), to provide Chicago Bulls rookie Ben Gordon with financial and consulting services. Although the contract stated that Harmon would serve as Gordon’s financial and tax advisor for the “duration of [his] playing career,” it outlined a compensation arrangement only for the length of Gordon’s rookie contract with the Bulls. In 2007, Gordon became unsatisfied with Harmon’s services, based in part on what he viewed to be a breach *1047 of a fiduciary duty relating to a bad investment, and prematurely terminated the parties’ financial and consulting services agreement. Litigation ensued. Gordon first sued Harmon, claiming Harmon had breached a promissory note between the parties and had breached his fiduciary duties. In the course of that lawsuit, Harmon asserted counterclaims against Gordon for breach of the financial services and consulting agreement and tortious interference with prospective business advantage. The district court dismissed Harmon’s tortious interference claim under Rule 12(b)(6) and dismissed his breach of contract claim under Rule 12(b)(1). Harmon then refiled his breach of contract claim in Illinois state court and also alleged malicious prosecution, abuse of process, and tortious interference with prospective business advantage claims. After Gordon removed the case to federal court, the district court dismissed each of Harmon’s tort claims and granted summary judgment in Gordon’s favor on Harmon’s breach of contract claim, concluding that the parties had intended their agreement to last only for the length of Gordon’s rookie contract. Harmon timely appealed the district court’s summary judgment ruling and its dismissal of his malicious prosecution and tortious interference claims. For the reasons set forth below, we affirm.

I. Background

A. Factual Background

In 2004, Gordon signed a three-year rookie contract with the Chicago Bulls, which included an option for the Bulls to extend his contract for a fourth year. On May 17, 2004, Gordon entered into a financial services and consulting agreement with Harmon 1 (the “Agreement”), which stated that Harmon would provide his services to Gordon for the “duration of [Gordon’s] playing career.” Despite this language, the parties agreed to a compensation arrangement that would last only through the end of Gordon’s rookie contract. The Agreement provided that in exchange for Harmon’s services, Gordon would pay Harmon $4,000 per month during his first season, $5,000 per month during his second season, and $6,000 per month during his third and (potential) fourth seasons. The Agreement also stated that at the end of Gordon’s rookie contract, Harmon would “evaluate the amount of work” performed on Gordon’s behalf and provide Gordon “with a new engagement letter at that time.”

On May 5, 2006, Harmon emailed Gordon and informed him that the Agreement’s monthly payments would be replaced by a percentage-based fee equal to 1.5% of Gordon’s annual income beginning with Gordon’s April 2006 invoice. Gordon paid monthly invoices pursuant to the modified fee schedule from April 2006 to June 2007. In August 2006, however, Gordon expressed his concern to Harmon about the fee change during an email discussion, and the debate over the fee change continued into the fall of 2006 and the winter of 2006-07. The exchange concluded with an April 10, 2007 email sent to Gordon, in which Harmon stated, “[y]ou and I have had many discussions about fees in your second contract and have agreed to come up with a working resolution when that time comes, based on the prior history of your account, which I think is more than fair, for the both of us.” *1048 During the course of the parties’ dealings in 2006, Harmon brought a California real estate project to Gordon’s attention. Gordon alleged that Harmon had described the project as an investment opportunity in a commercial real estate development and that he believed he would obtain an ownership interest in the project if he invested. Harmon asserted, however, that Gordon was never promised ownership in the property. In February 2007, Gordon transferred $1,000,000 to Vitalis Partners (“Vitalis”), an entity affiliated with Harmon, and the parties executed a promissory note. The transaction was structured in the form of a loan to Vitalis without an ownership interest attached, and the promissory note provided that Vi-talis would pay Gordon monthly interest payments on the loan. Vitalis failed to make such payments in March through June of 2007.

Dissatisfied with Harmon’s performance, Gordon terminated Harmon’s services and discontinued his monthly payments on July 1, 2007. His rookie contract with the Chicago Bulls continued into 2008.

B. Procedural Background

Gordon filed suit against Harmon, Vital-is, and one other individual in September 2007 (the “Gordon lawsuit”), alleging that Vitalis breached the parties’ promissory note by failing to make interest payments and that Harmon breached his fiduciary duty to Gordon in connection with the fee change and the real estate project. In his answer, Harmon asserted counterclaims against Gordon for breach of the Agreement and tortious interference with prospective business advantage. The district court dismissed the tortious interference counterclaim for failure to state a claim under California law, but denied Gordon’s motion to dismiss with respect to the other counterclaim. Gordon then moved for summary judgment on his breach of contract claim, and Harmon moved for summary judgment on Gordon’s breach of fiduciary duty claim. After determining that Harmon had breached the promissory note, the district court entered judgment in Gordon’s favor in the amount of $1,386,666.67. Finally, the district court granted summary judgment for Harmon on Gordon’s breach of fiduciary duty claim and dismissed for lack of jurisdiction Harmon’s breach of contract claim relating to Gordon’s repudiation of the Agreement because Harmon did not plead an amount in controversy.

On March 2, 2010, Harmon re-filed his breach of contract and tortious interference claims in the Circuit Court of Cook County under Illinois law (the “Harmon lawsuit”). Gordon removed the case to the district court on March 23, 2010. Harmon then filed an amended complaint adding claims against Gordon for malicious prosecution and abuse of process. The district court dismissed Harmon’s tort claims on January 27, 2011. With respect to Harmon’s tortious interference claim, the district court held that the claim was barred by the prior dismissal of the same claim in the Gordon lawsuit. Because Harmon based the tortious interference claim in the Gordon lawsuit on California law and his re-filing of the claim on Illinois law, the district court also held that Harmon was judicially estopped from “adopt[ing] two different postures in two cases arising out of the same facts.” As to the malicious prosecution claim, the district court held that Harmon did not plead special damages as required under Illinois law.

The parties subsequently filed cross motions for summary judgment on Harmon’s breach of contract claim based on Gordon’s termination of the Agreement.

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712 F.3d 1044, 2013 WL 1150204, 2013 U.S. App. LEXIS 5555, Counsel Stack Legal Research, https://law.counselstack.com/opinion/larry-harmon-v-ben-gordon-ca7-2013.