## Facts

- In 2005, NASCAR driver Kurt Busch entered a written “Representation Agreement” with John Caponigro and Caponigro’s related entities: Sports Management Network, Inc. (SMN), a sports-representation agency, and Frasco, Caponigro, Wineman & Scheible, PLLC (FCWS), a law firm.
- The agreement covered both sports representation/management services and legal services, with Caponigro acting in an attorney role while also serving as SMN’s chief executive officer.
- The parties continued their business relationship after the original agreement, including an extension in 2010.
- SMN asserted that, in 2012, the parties reached a modified representation agreement intended to begin in 2013 (the “2013 RA”), which altered compensation to a percentage-based structure tied to Busch’s income.
- Busch never signed the 2013 RA. SMN claimed it was still binding based on the parties’ communications and performance.
- In 2016, Busch terminated the relationship and stopped making payments. SMN continued to invoice under the 2013 RA’s percentage approach, and Busch and Kurt Busch, Inc. (KBI) refused to pay.
- SMN sued Busch and KBI in the Eastern District of Michigan for breach of the 2013 RA.
- Busch and KBI responded that, even if a contract was formed, the 2013 RA was unenforceable because it combined legal representation with a compensation arrangement and relationship structure that violated the Michigan Rules of Professional Conduct. Busch and KBI also asserted counterclaims that brought Caponigro and FCWS into the case as counter-defendants.

## Issues

1. Whether the alleged 2013 representation agreement—combining sports-management services and legal services and using a percentage-based fee—was enforceable, or instead void as against public policy because it violated the Michigan Rules of Professional Conduct.
2. Whether SMN could enforce the 2013 RA as a separate corporate entity when the agreement and the claimed compensation were tied to legal services provided by Caponigro/FCWS.
3. Whether defendants were entitled to summary judgment on SMN’s breach-of-contract claim based on the agreement’s unenforceability, regardless of disputes about formation (including the lack of Busch’s signature).

## Decision

- The court applied Michigan law in this diversity action.
- The court granted summary judgment for Busch and KBI on SMN’s breach-of-contract claim seeking to enforce the 2013 RA.
- The court held that the 2013 RA could not be enforced as SMN sought because the agreement, as structured, ran afoul of Michigan attorney professional-conduct rules governing lawyer conflicts and fee/relationship arrangements in attorney-client representations.
- The court rejected the attempt to treat SMN’s corporate status as a way to obtain enforcement where the agreement was intertwined with legal services provided by an attorney who controlled both SMN and FCWS.
- In the same order resolving the dispositive motions, the court addressed the counterclaims and related motions, granting and denying relief in part and leaving only some counterclaim theories for further litigation.

## Legal Principles

- A court applying Michigan law may refuse to enforce an attorney-client fee or representation agreement that violates the Michigan Rules of Professional Conduct, treating the ethical violation as a public-policy bar to contractual enforcement.
- When a single representation agreement merges legal services with non-legal management/agency services and the compensation terms are tied to that combined relationship, a party cannot avoid ethics-based limits on enforcement by characterizing the claim as “non-legal” or by suing through a closely related non-law-firm affiliate.
- On summary judgment, a defendant may prevail on a breach-of-contract claim by showing that, even assuming contract formation, the agreement is unenforceable as a matter of law because enforcement would conflict with governing professional-responsibility rules.

## Conclusion

The district court concluded that SMN could not recover contract damages under the alleged 2013 representation agreement because the agreement blended legal services with sports-management services in a way that violated Michigan attorney-ethics rules, and SMN could not sidestep those limits through its corporate form; the court therefore entered summary judgment for Busch and KBI on SMN’s breach claim while narrowing, but not fully ending, the parties’ remaining counterclaim disputes.


Sports Management Network v. Busch, 2019 U.S. Dist. LEXIS 35663 (2019)