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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: October 29, 2018

Complaint Withstands Motion to Dismiss Based on In Pari Delicto/Illegality Defense

On October 22, 2018, Justice Fisher of the Kings County Supreme Court issued a decision in Juan Carlos Nunez v. Athletes’ Careers Enhanced and Secured, Inc., No. 502950/2018 (Supreme Court, Kings County), declining to dismiss an action due to an in pari delicto/illegality defense, explaining:

In Nunez, the plaintiff, a former employee of a prominent sports agency in Brooklyn known as ACES, sued his past employer for unpaid commissions he earned when the agency signed baseball players from the Dominican Republic that plaintiff introduced. Some of those players were ultimately caught up in baseball’s steroids scandal, and plaintiff pleaded guilty in a federal criminal proceeding for his role in assisting certain ACES players obtain performance-enhancing drugs (PEDs).

ACES moved to dismiss the action on grounds of in pari delicto and illegality, asserting that plaintiff’s guilty plea prohibited him from seeking any relief against ACES from the court. Justice Fisher disagreed, upholding the complaint:

Here, plaintiff’s own allegations regarding his involvement in arranging for kickbacks, as well as the allegations in the complaint and admissions in the guilty plea regarding plaintiff’s involvement in steering players to Anthony Bosch and regarding his involvement in the attempted PED cover-up, all constitute illegal or immoral conduct that could bar contractual recovery (McConnell, 7 NY2d at 4 71). Nevertheless, the allegations of the complaint and the guilty plea do not show, as a matter of law, “that the illegality [was] central to or a dominant part of the plaintiff’s whole course of conduct in performance of the contract” (McConnell, 7 NY2d at 471; see Alpha Interiors, Inc. , 101 AD3d at 661; R.A.C. Group, Inc. v Board of Educ. of City of NY, 21 AD3d 243,249 [2005]).

The court held that because plaintiff’s contractual right to commissions attached when the players were signed, the later illegal conduct did not foreclose recovery as a matter of law.

NOTE: Schlam Stone & Dolan LLP represents plaintiff Juan Carlos Nunez in the case.

This does not come up often, but this case reminds us that the court’s will not enforce an illegal contract. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.

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