Judge freezes assets in suit seeking $1.2M for contract breach arbitration awards
A federal court judge in Massachusetts granted the request of a Finland-based sports management company to freeze the assets of a sports agency and its American owner while the Finnish company seeks more than $1.2 million for arbitration awards against the defendants for breach of a contract to represent players in the National Hockey League.
Benjamin J. Wish and Grace C. Bayman persuaded the judge to block the owner and his agency from "transferring, dissipating, liquidating, or otherwise disposing of any personal or business assets" absent court approval, except for necessary medical costs and the agency’s ordinary business expenses. The judge also ordered that the agency would be subjected to audits of its expenditures.
The firm’s client, Professional Sport Service FI OY, and the defendants, Jay Grossman and a related corporate entity, in 2012 agreed to jointly develop and represent Finnish players in the NHL and split commissions on salaries earned by the players.
The client won two arbitration awards from the Finnish Arbitration Institute against the defendants for failing to make payments under the agreement.
In his order, U.S. District Court Judge Nathaniel S. Gorton determined that the firm’s client would likely succeed on the merits of its lawsuit including to pierce the corporate veil because Grossman "has used the corporate form to evade plaintiff's attempt to collect on two arbitration awards in Finland."
The judge found that "Grossman has had complete and full control of each of the entities under which he has conducted his sports agency business. There is sufficient evidence to satisfy this court that Grossman systematically misused the corporate form to thwart collection of the judgments."
The complaint asserts that Grossman “has deceptively weaponized the corporate form to defraud [the firm’s client] of the monies to which it is entitled," and, as a result, seeks to pierce the corporate veil.
In an article published by Law360, Mr. Wish said, “For years, Mr. Grossman hid behind entity after entity to avoid paying the judgments Professional Sport Services won against Mr. Grossman's business. This is exactly the species of conduct that requires piercing the corporate veil. The court's order should send a clear message to Mr. Grossman: He cannot avoid paying his entities' debts."