Stormy, With A Chance Of Lawsuit!

The Titans of Mavericks event is currently eyeballing a west swell that could give the Half Moon Bay big-wave contest the green light to run this weekend (Friday, January 20 is a blackout day and the contest can’t run). The impending swell, providing it doesn’t come with an atmospheric river, comes as good news after an otherwise bleak winter in California.

But even if the swell and conditions materialise, it won’t stop the legal storm that continues to engulf Cartel Management, the owners and operators of the Mavericks contest. 

Bit of back story: On October 31, 2016, a jury ruled against Cartel and model/entrepreneur Marissa Miller in a breech-of-contract case, against a group called Segler Holdings LLC, in a lawsuit that dealt with a tanning salon (Miller and Cartel-owner Griffen Guess are married). It was deemed that Cartel/Miller jointly owed $1 million in damages. At the time, the result of the lawsuit was not reported by Stab because, frankly, it had nothing to do with surfing. But today, the plot thickens.

A letter sent by the Lanza Law Firm to Mr. Steve McGrath, the General Manager of the San Mateo Harbor District, expressed concern that Cartel was moving forward with the Titans of Mavericks contest without addressing the money owed from the previous lawsuit.

“As of the date of this letter, Cartel has not satisfied the Judgment. It is my understanding that Cartel may be using funds and assets to pay the San Mateo County Harbor District for permits, insurance, promotions, advertising, and related security expenses, instead of satisfying the Federal Court’s Final Judgment,” reads the letter by attorney Nick Lanza. “I am concerned that Cartel may become insolvent if and when it makes these payments. Moreover, I am concerned that Cartel may be commingling assets with Titans of Mavericks, LLC, to avoid satisfying the Court’s Judgment against Cartel. Such transfers may violate the California Voidable Transactions Act.”

In short: Cartel needs to begin paying back the money they owe (Miller owes $300k of the million dollar judgment and Cartel in 700k plus lawyers fees and interest works out to well over 800k), before they even think of throwing a big-wave surf contest.

The rebuttal from Attorney Tyler M. Paetkau of the Hartnett, Smith and Paetkau law firm, reads as follows: “Attorney Lanza’s letter admittedly speculates regarding Cartel’s financial condition… Lanza provides no facts, no documents and no evidence to support his admitted speculation; he never states what facts, documents or evidence on which he bases his ‘understanding’. In any case… This is nothing more than an unsupported, intentional and improper attempt to interfere with, disrupt and undermine Cartel’s existing business and legal relationships, including with the Harbor District.”

Twiggy Baker navigates the Mavs drop-off. Photo: Frank Quirarte

The document goes on to say, “Ironically, Cartel’s ability to continue its operations would actually improve Cartel’s business and financial position, thus making it more likely – not less likely – that Cartel could satisfy any ultimate debt to Segler Holdings, if the judgment stands.”

In other words, show us some proof – and oh yeah, the only way we’re going to make money to pay you is if Mavs pumps this weekend, bro. But it could mean that unless Cartel has a boat load of extra cash handy, Segler Holdings could potentially end up with ownership of the five-year San Mateo County Harbor District Event Permit. Ask Jeff Clark how much that’s worth. At this point, it’s all in the hands of the court system.

And by happenstance, if you were wondering if things could get worse for the embattled Cartel group… yes, yes they could. At present it does not appear they have obtained the Coast Guard permit, which is typically the last one issued. Additionally, Cartel allegedly owes the Harbor District $6,684.01 (plus interest) from last season’s event. This makes them not in compliance with the terms of the Harbor District event permit.

As this story goes to pixels, the Half Moon Bay Harbor District’s board is meeting, and Cartel’s issues are number 21 on the docket. Could legal issues put an injunction on the contest? Potentially.

But even if Cartel does untangle this mess, in the words of Jim Morrison, “No one gets out alive.” In October, 2016, L.A. County Superior Court allowed Body Glove to proceed with a lawsuit against Cartel Management Inc, Mavericks Invitational Inc, and Griffin Guess for breech of contract, unfair business practices, and tortious interference. The lawsuit is expected to go to trial in the spring of 2017.

“Here, the Court has already found that Plaintiff (Body Glove) adequately alleged a claim against Cartel and Guess for intentionally interfering with its contract with Mavericks Invitational, Inc. This interference has led to potential consumer and sponsor confusion over the sponsorship status of the surfing event and the source of its event-branded sportswear. Given that a sufficient claim for intentional interference with contract has been stated, the court “need go no further to conclude that Plaintiff (Body Glove) has adequately alleged a violation by (Cartel and Guess) of the UCL by alleging (Cartel and Guess) engaged in an ‘unlawful’ business practice.”

See what happens when people get the lawyers involved? Remember when it used to just be about taking off deep behind the bowl?