On May 26, 2010, Affliction filed counterclaims against M1 Global seeking (1) a declaration from the Court concerning whether the Consulting Agreement between Affliction and M-1 is valid and enforceable; and (2) rescission and restitution of the Consulting Agreement. Affliction is seeking $2,400,000 with interest.
The crux of Affliction's claim is that it agreed to pay Fedor $1,500,000 per fight (for Fedor's two fights out of what was supposed to be three with Affliction). Affliction claims it paid Fedor $300,000 per fight under a Fight Agreement with Fedor and paid $1,200,000 per fight to M1 Global under a Consulting Agreement. Affliction claims "[t]he reason for the two agreements, Affliction was told, was for personal tax implications."
Specifically, Affliction claims that the "Consulting Agreement was a sham as there were no obligations created under the Consulting Agreement, other than the payment of $1,200,000 per bout directly to M-1 as opposed to Fedor."
It is on this basis, i.e. that the Consulting Agreement was created in "contravention to an express provision of the [tax] law," that Affliction is seeking to rescind the Consulting Agreement and get back $2,400,000.In response to my post describing the counterclaims, I did a follow-up post (with the caveat that I was not a tax lawyer) setting forth the applicable law concerning whether Affliction could have been setting itself up for criminal liability by asserting its counterclaims.
The notice of withdrawal of the counterclaim does not provide the reason, but I think this likely had something (or everything) to do with it.
Fight Lawyer
