Tracy Files Lawsuit Against Former Owner Forsythe
http://www.tsn.ca/auto_racing/story/...ry_auto_racing
Paul Tracy has filed a lawsuit against former Champ Car team owner Gerald Forsythe, claiming breach of contract.
The lawsuit, filed last week in U.S. District Court in Chicago, claims Tracy is owed more than $2.3-million as per his contract at the time Forsythe Racing ceased operation in the former Champ Car series.
In the complaint, Tracy's attorney claims the racer's contract called for a $1-million buyout to be paid in the event the team ceased operation in Champ Car. Terms of Tracy's contract also show that he was to have been paid $2.25-million for the 2008 Champ Car season, plus any bonuses. However, Tracy says he's been paid for February, March and April and nothing since.
Tracy's lawsuit did not specify any specific monetary damage, calling instead for compensatory as well as other damages.
No date has been set for the lawsuit and Forsythe has yet to respond to allegations.
"Forsythe has, since at least late 2007, engaged in a pattern of conduct to injure .. the career of Paul Tracy in the sport of automobile racing", claims the lawsuit.
The lawsuit claims a Termination Fee would be "payable in the event that Champ Car dissolved and Forsythe Racing chose to cease operations rather than race in an equivalent series".
In March 2008, Champ Car filed for bankruptcy and eventually ceased operations after agreeing to a merger with the Indy Racing League. The lawsuit claims that Forsythe was one of the principles of the decision to put Champ Car into bankruptcy and that he declined to join the IRL along with several other former Champ Car teams.
"Forsythe Racing had the discretion under the Agreements to cease operations and/or decline to offer Paul Tracy the opportunity to drive its racecars in the IRL or in any successor or equivalent league or circuit. Forsythe Racing breached the implied covenant of good faith and fair dealing by exercising this discretion unreasonably, without proper motive, arbitrarily, capriciously and/or in a manner inconsistent with the reasonable expectations of the parties."
Documents show that in 2002, Tracy and Forsythe agreed to a two year deal which paid the Canadian $3-million a year plus bonuses starting in December 2003. As part of the deal, Tracy would be paid $1-million if the team decided not to take part in the series due to "budget restrictions" prior to August 1, 2003. If the team ceased operations after August 1, 2003, then Tracy would get his full salary paid out to him for the duration of the 2004 season.
There was also a provision in the original deal which allowed Forsythe to place Tracy with another team if it was unable to participate in the 2004 season "due to budget restrictions or its incapacity to secure necessary sponsorship". The new team would have to have a budget of no less than $8-million. If Tracy refused, then he would be paid the $1-million buyout.
In August 2004, a contract extension was signed through 2006. Tracy's salary was reduced to $2.25-million a year, which took effect December 1, 2004. If the team folded after September 1, 2004 but before August 31, 2005, then Tracy was to have been paid his full salary for 2005 and receive a $1-million payment to cover the 2006 season. If the team ceased operation after August 31, 2005, then Tracy was to be paid his full salary for 2006 plus bonuses earned.
In May of 2006, a second extension to the deal was worked out which tied Tracy to the team through 2011. Tracy's salary remained $2.25-million a year and under this extension, if the team ceased operation on or before August 31, 2010, then Tracy was to be paid a Termination Fee equal to his salary plus a $1-million buyout.
According to the claim filed by Tracy, Forsythe attempted to renegotiate the deal in the fall of 2007, asking Tracy to take "significant cut" in compensation. An email from team vice president Neil Micklewright to Tracy's representative, David Stevenson, asks for a 70% cut in pay to $650,000 a year. If he refused, then the $1-million buyout would be exercised.
Tracy and Stevenson declined the request to renegotiate and stressed that they expected both sides to live up to the terms of the deal.
"We understand that if Jerry chooses to shutdown the team and withdraw from the Champ Car series, that he has the option to end his contract with Paul by paying him the termination fee," writes Stevenson. "Short of that rather drastic step we expect Jerry to honor his commitment to Paul."
In December 2007, stories began to circulate about the future of Forsythe Racing and that the team had asked Tracy to take a pay cut in order to remain with the team.
Micklewright phoned Stevenson to say that Forsythe was "very angry" with the stories and accused Tracy of making "less than useful comments in the press about his current contract situation" and accusing the driver of being "destructive".
On December 11, 2007, Micklewright contacted Stevenson by email and indicated Forsythe wanted to terminate Tracy's contract and asked that they propose a "reasonable settlement amount". That led to a meeting on December 27th in Chicago at which time Forsythe indicated he would field a race team in 2008 and that Champ Car was close to signing a major sponsor for the series. At no time was the potential of the series possibly folding discussed and the two sides left the meeting without making any changes to Tracy's contract.
However, in January and February, Forsythe was negotiating with IRL boss Tony George about merging the two open-wheel series. The two sides announced a merger in February 2008 and in March, Champ Car filed for bankruptcy.
On February 28th, Micklewright sent an email to Stevenson informing them that Forsythe would be closing down the team and was prepared to excercise their option to terminate Tracy's contract. A March 11th fax to Forsythe and Micklewright reminding them of their responsiblity to pay Tracy what he was owed under terms of his contract drew a sharply worded response on March 26th in which the team disputed that it owed Tracy any kind of Termination Fee, claiming that the contract was for racing in the CART/Champ Car series and that "Champ Car no longer exists" due to the bankruptcy and that "there is no longer a series in which either party is contracted to participate".
