## Facts

- Billy R. Sims, a Detroit Lions player, retained Jerry A. Argovitz as his agent in 1980 and relied heavily on him for professional and financial advice.
- While representing Sims in contract-extension negotiations with the Lions (roughly 1982–1983), Argovitz pursued and obtained a substantial ownership and management role in a Houston USFL franchise, the Houston Gamblers, including serving as president.
- Sims was aware Argovitz had some involvement with the Gamblers but did not know material details of Argovitz’s financial exposure and compensation tied to the franchise.
- During negotiations with the Lions, the Lions made a proposed offer that included a multi-year, multi-million dollar package with additional financial benefits.
- Argovitz arranged for a USFL partner to negotiate directly with Sims for the Gamblers, despite the partner’s limited knowledge of player valuation and Argovitz’s superior information.
- The court found Argovitz misrepresented or manipulated the status of Lions negotiations, contributing to Sims’s belief that the Lions would not deal fairly.
- Argovitz brought Sims and his wife to Houston, where Sims signed a five-year contract with the Gamblers on July 1, 1983.
- Argovitz structured his compensation so that he would receive a remaining agency fee through a loan component associated with the Gamblers deal.
- During the Houston negotiations, Argovitz declined to speak with a Lions representative who called, and Sims signed without a full, candid presentation of material information and alternatives.
- After the signing, Argovitz had Sims execute additional documents presented as contract paperwork, including a waiver releasing claims against Argovitz for breach of fiduciary duty.

## Issues

1. Whether an athlete’s agent breaches fiduciary duties by negotiating the athlete’s contract with a team in which the agent has a substantial ownership/management interest without full disclosure and informed consent.
2. Whether nondisclosure and self-dealing by the agent render the resulting player contract voidable and subject to equitable rescission.
3. Whether a waiver of claims against the agent is enforceable when obtained during the same conflicted representation without full disclosure and independent advice.

## Decision

- The district court held that Argovitz committed a severe breach of fiduciary duty to Sims by engaging in conflicted self-dealing and failing to provide full and fair disclosure of material facts.
- The court rescinded the July 1, 1983 Gamblers contract as an equitable remedy, concluding denial of rescission would be unconscionable given the nature of the fiduciary breach.
- The court treated the waiver of Sims’s claims against Argovitz as invalid because it was procured under the same conflict-driven circumstances without meaningful informed consent.
- On appeal, the Sixth Circuit affirmed the rescission and remanded only for consideration of motions to amend pleadings.

## Legal Principles

- An agent owes a client strict fiduciary duties of loyalty, candor, and full disclosure in matters within the agency relationship.
- When an agent’s personal financial interest directly conflicts with the client’s interest in the same transaction, the agent must make full disclosure of material facts and obtain informed consent; otherwise, the transaction is voidable in equity.
- Material nondisclosure and self-dealing in a confidential relationship can support a presumption of unfairness or fraud and justify rescission.
- A release or waiver obtained by a fiduciary from a dependent client may be unenforceable absent full disclosure and a meaningful opportunity for independent advice, especially where the waiver arises from the fiduciary’s conflicted conduct.

## Conclusion

The court rescinded a professional football contract because the player’s agent, who had an undisclosed ownership and managerial stake in the signing team, manipulated negotiations and failed to disclose material conflicts and information, making the agreement (and a related waiver) voidable for egregious breach of fiduciary duty.


Detroit Lions, Inc. v. Argovitz, 580 F. Supp. 542 (E.D. Mich. 1984)