Contractual Issues

Adams v. George Karl: Contractual Ambiguity And Laches

The following article was written by Benjamin Haynes, Esq.

Former Denver Nuggets head coach George Karl during the press conference announcing him NBA coach of the year at the Pepsi Center. Photo Credit: Chris Humphreys-USA TODAY Sports
Former Denver Nuggets head coach George Karl during the press conference announcing him NBA coach of the year at the Pepsi Center. Photo Credit: Chris Humphreys-USA TODAY Sports

On September 11, 2013 Bret Adams filed a federal complaint in the Southern District of Ohio against former Denver Nuggets Coach, George Karl. Bret Adams had been Karl’s attorney and agent for nearly two decades. Allegedly, there was a contract between the two parties which required Karl to pay Mr. Adams $10,000 a month. Further, Coach Karl was allegedly required to provide new business opportunities by introducing/referring Mr. Adams to other coaches, in order to provide possible business opportunities. According to this alleged agreement, Coach Karl was to continue to pay these payments regardless of his employment status.

This past summer, specifically on June 6, 2013, Coach Karl was fired by the Denver Nuggets. This came after a 57 win season with the Denver Nuggets. However, even though Coach Karl was fired in June of this year, the Complaint alleges that Coach Karl stopped paying Adams in January of this year. If true, this would mean that Coach Karl breached the agreement before his termination occurred.

While there is no contract attached to the Complaint, because federal rules do not require an attachment of said contract, like most state courts, we can assume for purposes of this article that said contract actually exists.

Ambiguous Contractual Language Construed Against the Drafter

During law students’ first month of contracts class, they will undoubtedly learn the principle called “contra proferente.” This Latin term means any ambiguous contractual language will be construed against the drafter of the contract in court. “[T]he rule is well established that where there is doubt or ambiguity in the language of a contract it will be construed strictly against the party who prepared it.  Smith v. Eliza Jennings Home, 176 Ohio St. 351 (1964).  In other words, he who speaks must speak plainly or the other party may explain to his own advantage.”  McKay Mach. Co. v. Rodman, 11 Ohio St.2d 77, 80 (1967).

According to the Complaint, George Karl was supposed to “grant Plaintiff new business opportunities by introducing and/or referring him to other coaches in need or representation, including Defendant’s own assistant coaches.” This contractual clause is problematic for several reasons. First, how many business opportunities is George Karl required to introduce to Mr. Adams? The Complaint does not allege a specific amount, which, according to the doctrine of contra proferenete, will be construed against the drafter. Therefore, George Karl will be able to explain this clause to his own advantage, which he will most likely advise the court that this clause only required George Karl to introduce Adams to a few coaches. Based on their 20 year relationship, this should not be too hard to prove. Therefore, the breach of contract as to this specific provision will be much more difficult to prove for Adams.

Doctrine of Laches

The Doctrine of Laches is an equitable defense which bars recovery for a plaintiff because of the plaintiff’s undue delay in seeking relief. To successfully invoke the doctrine, the party invoking the doctrine must establish, by a preponderance of the evidence, the following four elements: (1) unreasonable delay or lapse of time in asserting a right; (2) absence of an excuse for the delay; (3) knowledge, actual or constructive, of the injury or wrong; and (4) prejudice to the other party.  See State ex rel. Meyers v. Columbus, 71 Ohio St.3d 603, 605, 646 (1995).

While this doctrine is an equitable doctrine, it is a tough doctrine to prove in court. Still, George Karl could potentially establish 1) that it was an unreasonable delay for Mr. Adams to wait nine months to assert his right; 2) that Mr. Adams does not have a sufficient excuse for this delay; 3) that Mr. Adams was aware, either through actual or constructive notice, that George Karl was neglecting to pay the $10,000 a month; and 4) that Mr. Karl was prejudiced because Mr. Adams essentially waited to bring this lawsuit until after George Karl had been fired, thus prejudicing Coach Karl because he is unemployed and does not have the funds he did while employed by the Denver Nuggets.

While it is easy to plug in facts to the above factors, the court also emphasizes the point that the person invoking the doctrine must show that the delay caused material prejudice. See Connin v. Bailey (1984), 15 Ohio St.3d 34, 35, 472 N.E.2d 32. Therefore, Coach Karl will have to show that this delay was materially prejudicial to him, which seemingly will be a difficult task.

Bret Adams is seeking damages in excess of $75,000. Mr. Karl has until October 10, 2013 to file a response to the Complaint.