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May 28, 2010

Updated With Attorney Comment: Tribunal Orders 2009 Superbike World Champion Ben Spies To Pay Former Agent $1.9 Million For Wrongful Termination Of Contract

By Michael Gougis

An American Arbitration Association Commercial Arbitration Tribunal has found Speez Racing LLC--and Ben Spies personally--liable for wrongfully terminating a contract with former agent Doug Gonda's company Protac, Inc. and has ordered that Protac be paid $1.9 million in damages and arbitration costs.

The contract included a clause specifying that any disputes be resolved through binding arbitration rather than litigation.

At issue were 15% commissions due on deals negotiated by Protac's Gonda. According to a Final Arbitration Award document issued by the Tribunal, instead of paying commissions, Speez Racing LLC's Mary Spies in April 2009 terminated Protac's contract to represent Speez Racing in commercial dealings "for unspecified breaches by Protac."

The Final Arbitration Award document stated that Speez Racing later claimed that Protac had breached the contract by failing "to negotiate a contract for Spies to race in MotoGP, leaving Spies to race in the World SuperBike circuit instead; that Protac failed to negotiate the rider agreement ultimately entered into by Speez Racing; that Protac does not deserve credit for any increase in endorsement fees with the pre-existing sponsors of Spies who extended their agreements; and that Protac's coordination of international logistics was deficient in that there were problems at three international races prior to Protac's termination."

After detailing the evidence, the Final Arbitration Award document concluded, "...the Panel finds the Agreement was terminated without justification, there having been no material breaches. Thus, Speez Racing's termination of the Agreement was wrongful."

In addition, the three-person Panel found that "a preponderance of the evidence shows a propensity by Spies/Speez Racing to enter into contracts with third parties--and then reneging on them based on legal technicalities known to Respondents (Spies/Speez Racing) at the inception of the agreement. These facts support a finding of a bad faith modus operandi by Respondents to exploit third parties by entering into and obtaining services under contracts that they did not intend to pay on."

The panel found that contrary to the claims made by Spies' attorneys and by Spies, the racer was not an "employee" of Speez Racing, but was personally responsible for the business activities of Speez Racing. Spies, the panel found, co-mingled funds with Speez Racing, drew no salary from Speez Racing, and "failed to keep personal and corporate assets separate."

The panel wrote, "Speez Racing is the alter ego of Spies." And during discovery, Spies "refused to answer questions about his financial dealings with Speez Racing or claimed a total lack of knowledge or recollection regarding any such matters, which the panel did not find credible."

According to testimony by Ben's mother Mary Spies, and confirmed by documents submitted during binding arbitration hearings held January 20-22 in Los Angeles, Mary Spies owns 51% of Speez Racing LLC while Ben owns 48% and Ben's older sister Lisa owns 1%. Also according to her testimony during the arbitration hearing, Mary Spies has a power of attorney from Ben Spies and handles all his business affairs and effectively controls all his money.

Three-time AMA Superbike Champion, 2009 FIM Superbike World Champion and current MotoGP racer Ben Spies testified that he only learned that his mother had majority ownership and control of Speez Racing LLC when he was shown documents (provided under discovery) during a deposition.

The award was based on 15% of Ben Spies' 2009 racing-related income, plus 15% of the Tribunal's estimate of what Spies will make racing in 2010 and 2011. The contract between Spies and Protac covered 2009-2011.

Spies was represented in the arbitration proceedings by lawyer (and former racer) Rodger Doyle along with lawyer Hayes Michel, who appeared before the arbitration panel.

Gonda and Protac were represented by lawyer Phil Olsen.

The Commercial Arbitration Tribunal issued the Final Arbitration Award document on May 20th.

The Final Arbitration Award document became public record when it was filed in District Court.

This just in:

Attorney: "Speez Racing Invented Reasons To Fire Doug ..."

By Michael Gougis

In response to an inquiry from Roadracing World, attorney Phil Olsen, who represented agent Doug Gonda and Gonda's firm Protac in their dispute with 2009 World Superbike Champion and current MotoGP rider Ben Spies, issued this statement:

"Doug Gonda worked as Ben Spies's agent for 22 months and succeeded in putting Ben in position to win the 2009 World Superbike Championship. Speez Racing invented reasons to fire Doug as soon as it was time to start paying him substantial compensation. A talented rider like Ben Spies needs competent representation by a professional whose interests do not conflict with Ben's. The rider always has the power to terminate the contract, but he doesn't always have the right to do so. We are very pleased with the result and hope it will encourage integrity in the motorcycle racing business."

As of post time, a phone call and e-mail seeking comment from Roger Doyle, who represented Spies and Speez Racing, had not been returned.
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