Five Star Athlete Mgmt., Inc. v. Davis

• Decision Date: 24 June 2020
• Docket Number: A20A0085
• Citation: 845 S.E.2d 754,355 Ga.App. 774
• Parties: FIVE STAR ATHLETE MANAGEMENT, INC. et al. v. DAVIS.
• Court: Georgia Court of Appeals

355 Ga.App. 774

845 S.E.2d 754

FIVE STAR ATHLETE MANAGEMENT, INC. et al.

v.DAVIS.

A20A0085

Court of Appeals of Georgia.

June 24, 2020

Mark G. Trigg, Matthew Scott Johns, for Appellant.

Von Avery DuBose, for Appellee.

Coomer, Judge.

This appeal arises out of a dispute over services rendered under an alleged oral contract. Five Star Athlete Management, Inc. f/k/a France Allpro Athlete Management and Todd France ("France") (collectively, "Five Star") appeal the trial court's partial denial of their motion for summary judgment in a lawsuit filed against them by Luther Davis. Five Star contends the trial court erred in denying summary judgment in their favor on Davis’ quantum meruit claim, in determining that the alleged oral agreement was not void and unenforceable on the ground of illegality, and in denying summary judgment as to Davis’ Georgia civil Racketeer Influenced and Corrupt Organization (RICO) Act claims. Because we find the alleged oral contract was illegal and thus unenforceable, and because the trial court's construction of the term "personal property" under Georgia's civil RICO Act was erroneous, we agree and reverse.

This Court reviews de novo a grant or denial of summary judgment, viewing the evidence and all reasonable conclusions and inferences drawn from it in the light most favorable to the nonmovant. Norton v. Cobb , 284 Ga. App. 303, 303-304, 643 S.E.2d 803 (2007). "Summary judgment is proper when there is no genuine issue of material fact ... and the movant is entitled to judgment as a matter of law." Id. at 303, 643 S.E.2d 803 ; see OCGA § 9-11-56 (c).

So viewed, the record shows that France is an NFL player agent. Davis contacted France in December 2011 and represented that he was managing the NFL agent selection process for Fletcher Cox, a football player from Mississippi State University who expected to be drafted into the NFL. Davis offered to steer Cox into signing with Five Star and told France that Davis would serve as Cox's manager after Cox was drafted into the NFL. The specifics are disputed, but Davis contends that France orally agreed to pay Davis one percent of the proceeds derived from Cox's NFL contracts, whereas France contends that they only had preliminary discussions about how Davis would be compensated if: (1) Davis were to serve as Cox's manager subsequent to Cox's entry into the NFL; and (2) Cox were to agree to the arrangement.

In January 2012, Cox entered into an agency contract with Five Star. Davis alleges that he provided services to France which helped France secure Cox as a client. In April 2012, Cox was drafted into the NFL by the Philadelphia Eagles. Davis never served as Cox's manager and never had an agreement with Cox about payment for any services. Five Star never paid Davis for any alleged recruiting services. Cox later signed his second NFL contract worth $103,000,000. Shortly thereafter, Davis filed a lawsuit against Five Star alleging (1) fraudulent inducement; (2) breach of contract; and (3) quantum meruit. Davis amended his complaint adding a claim under the Georgia civil RICO Act.

Five Star filed a motion for summary judgment as to all claims. In support of their motion for summary judgment, Five Star introduced the deposition testimony of Cox, France, and Davis. With respect to Davis’ quantum meruit claim, Five Star argued that Davis cannot recover as the alleged oral contract was void and unenforceable and entirely illegal because Davis was not permitted to induce or solicit Cox to enter into an agency contract under Mississippi law. Five Star argued that the civil RICO claim failed because it was based on the alleged theft of Davis’ recruiting services, which do not constitute personal property under the Georgia RICO Act. Five Star also argued that Davis failed to establish the predicate acts necessary to form the basis of a RICO claim.

The trial court held a hearing on Five Star's motion for summary judgment, and entered an order granting Five Star summary judgment as to the breach of contract and fraudulent inducement claims, but denied summary judgment as to the quantum meruit and RICO claims. Five Star obtained a certificate of immediate review and this Court granted its application for interlocutory appeal. This appeal followed.

1. Five Star first argues that the trial court erred in denying summary judgment on the quantum meruit claim because the alleged oral agreement is void and unenforceable as violating Mississippi law.¹ We agree.

In order to recover under a quantum meruit theory, [Davis] must show (1) his performance as agent of services valuable to [Five Star]; (2) either at the request of [Five Star] or knowingly accepted by [Five Star]; (3) [Five Star's] receipt of which without compensating [Davis] would be unjust; (4) [and Davis’] expectation of compensation at the time of the rendition of the services."

Artrac Corp. v. Austin Kelley Advertising, Inc. , 197 Ga. App. 772, 777 (5), 399 S.E.2d 529 (1990) (citation and punctuation omitted). "A quantum meruit recovery may be prohibited where the nature of the contract itself rendered it entirely void for being in contravention of public policy in its totality." Remediation Svcs., Inc. v. Georgia-Pac. Corp. , 209 Ga. App. 427, 434 (2), 433 S.E.2d 631 (1993). "Similarly, where a contract is illegal only in part, recovery is allowed on a quantum meruit basis for the part of the services which was legal." Id.

In Georgia, a contract to do an illegal thing is void. But a contract does not fall within this principle unless its object or purpose is illegal. The prohibition does not apply where the object of the contract is not illegal or against public policy, but where the illegality is only collateral or remotely connected to the contract.

Smith v. Saulsbury , 286 Ga. App. 322, 323-324 (1) (b), 649 S.E.2d 344 (2007) (citations, punctuation, and emphasis omitted).

Here, Five Star argues that the alleged recruiting services provided by Davis were illegal under the Mississippi Uniform Athlete Agents Act (the "Agent Act"), Miss. Code Ann. § 73-42-1 et seq. Under the Agent Act, an "athlete agent" is "an individual who ... directly or indirectly, recruits, induces or solicits a student-athlete to enter into an agency contract." Miss. Code Ann. § 73-42-3. Pursuant to the Agent Act, "an individual may not act as an athlete agent ... before being issued a certificate of registration[.]" Miss. Code Ann. § 73-42-7. Athlete agents are prohibited from initiating contact with a student-athlete unless they are registered under the Agent Act. See Miss. Code Ann. § 73-42-27 (2) (a). A violation of the Agent Act is a felony punishable by a fine up to $10,000, or imprisonment up to 2 years, or both. See Miss. Code Ann. § 73-42-29.

In denying the motion for summary judgment, the trial court relied on Shannondoah, Inc. v. Smith , 140 Ga. App. 200, 202, 230 S.E.2d 351 (1976) where this Court reversed a trial court's ruling that a contract to operate a tavern was void as illegal where one of the parties to a contract was operating the tavern without a license to sell alcoholic beverages. In reversing the trial court, we held that the contract was not void because the purpose of the contract was not for an illegal thing and that it did not require a violation of the ordinance in order for the contract to be performed. See id. at 202-203, 230 S.E.2d 351.

Here, however, the alleged oral agreement between Davis and Five Star was for an illegal thing: for an unlicensed person (Davis) to induce Cox (student-athlete) to enter into an agency contract with France. And, "[w]here a statute provides that persons proposing to engage in a certain business shall procure a license before being authorized to do so, and where it appears from the terms of the statute that it was enacted not merely as a revenue measure but was intended as a regulation of such business in the interest of the public, contracts made in violation of such statute are void and unenforceable." Bowers v. Howell , 203 Ga. App. 636, 636-637 (1), 417 S.E.2d 392 (1992) (citations and punctuation omitted). Although Davis argues that even if this Court concluded that some portions of the agreement were void for illegality, Davis could still be entitled to seek recovery for providing "intelligence regarding Cox's recruiting process and arranging critical meetings (between Five Star and Cox)," this is the type of illegal conduct prohibited by the Agent Act. See Miss. Code Ann. § 73-42-27 ("An athlete agent may not engage in any of the following activities, within this state or otherwise, with the intent to induce a student-athlete to enter into an agency contract ... (c) [f]urnish anything of value to any individual other than the student-athlete or another registered athlete agent.... An athlete agent may not intentionally ... (a) [i]nitiate contact with a student-athlete unless registered under this chapter[.]").

Georgia courts have long held that where the illegality of a contract is only collateral or remotely connected with the contract, the part of the contract that is based on legal and binding consideration is severable and may nevertheless be enforceable. See Adams v. Trust Co. Bank , 206 Ga. App. 554, 555-556 (2), 426 S.E.2d 36 (1992). However, "[t]he test for determining whether a demand connected with an illegal transaction is capable of enforcement at law is whether plaintiff requires any aid from the illegal transaction to establish his case." Id. 556 (2), 426 S.E.2d 36 (citation omitted). In the present case, the only evidence proffered by Davis to establish his claim is evidence of Davis’ illegal recruiting activities. Accordingly, the trial court erred by denying summary judgment on Davis’ quantum meruit claim.

2. Five Star next argues that the trial court erred in denying summary judgment in its favor on Davis’ civil RICO claims because "services" are not included within the definition of the term "personal property" under the RICO Act. We agree.

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