New York Breach of Fiduciary Duty Battle over America’s Cup Continues
Posted on Jan 01, 2016
After refusing to compete against a challenger, the holder of the America’s Cup yachting trophy is now facing a court battle over allegations of breach of fiduciary duty. The defendant is the Golden Gate Yacht Club, which captured the cup at the 2010 competition in Spain. In order to receive the right to defend the cup, Golden Gate must defeat a group of American teams. The African Diaspora Maritime Corp., based out of North Carolina, sought to challenge Golden Gate. Golden Gate, however, refused.
As a result, ADM filed suit against Golden Gate, alleging breach of fiduciary duty, breach of trust, and breach of contract. ADM claims that Golden Gate improperly denied the club’s timely challenge application and payment of the $25,000. ADM states that it was a qualified challenger of Golden Gate and further claimed that it had the financial backing in order to complete the challenge. ADM filed its lawsuit in New York. The America’s Cup is governed by a Deed of Gift, a trust instrument under New York state law.
Under the terms of the trust, the holder of the cup must not “unreasonably favor the interests of any competitor over another.” In ADM’s complaint, the plaintiff asserts that Golden Gate’s rationale for denying ADM’s application was based on false claims that the application lacked a signature and that it further lacked proof of payment of the fee.
In its defense, Golden Gate argued that it had the discretion to decide who is a worthy challenger. A Supreme Court judge in Manhattan dismissed the case, finding in favor of Golden Gate. A three-judge panel of the Appellate Division’s First Department, however, reversed the decision on June 25, allowing the claim to go forward.
To learn more about breach of fiduciary duty and other business litigation matters, contact a New York breach of fiduciary duty attorney today at (888) 497-3410.