*Photo via Twitter | Jake Peavy and Mobile Mayor Sandy Stimpson
Attorneys for the former manager of Mobile native and former San Francisco Giants pitcher Jake Peavy have asked for a nearly $15 million lawsuit against their client to be dismissed or transferred to a federal court in California.
The suit was recently moved to U.S. District Court in Mobile from Mobile County Circuit Court, Jim Newman, an attorney for defendant Barry Axelrod, said. The move is “fairly common,” he said, when two parties live in different states. The defense team will seek to transfer the case to Axelrod’s home state of California in order to make it more convenient for the witnesses and the involved parties.
The original lawsuit, which was filed in late February by attorneys for Peavy, claims Axelrod, acting as Peavy’s business manager at the time, did not properly monitor investments made in a startup by a wealth management consultant on Peavy’s behalf. The investments resulted in a $15 million loss, according to the suit, which claims breach of fiduciary duty, breach of contract and fraudulent concealment.
Axelrod and Peavy formed a relationship shortly after the pitcher graduated high school. Axelrod was Peavy’s player agent “from the beginning of his career” and helped him navigate his first Major League Baseball contracts, according to the suit.
“The relationship grew over time such that Axelrod also became the Peavys’ manager of their business affairs, which included managing their finances, monitoring their investments and managing their personal affairs so that [Peavy] could focus on his baseball career,” the suit reads. “The Peavys paid Axelrod for his services and heavily relied on his management services and advice, especially as [Peavy’s] career took off and his [MLB] earnings increased.”
Attorneys for Axelrod denied he became Peavy’s agent at the beginning of his career. Instead, according to court documents, they claim he became Peavy’s agent in 2003.
Axelrod helped Peavy select Ash Narayan as a wealth and investment manager in 2004. In a meeting that year with Narayan and Axelrod, Peavy said it was his desire to save money for retirement, according to the suit.
Later, Peavy set up a trust and had assistance from Narayan in setting up a brokerage account in the name of the trust. Statements from Charles Schwab were addressed to Axelrod’s California office, as were many of Peavy’s personal bills, according to the suit.
While Axelrod’s attorneys agree the agent paid bills for the pitcher, including payments to investment advisers, they deny Axelrod made “investment decisions” or gave Peavy “investment advice.”
Axelrod was charged with monitoring Narayan’s investment activity, according to the suit.
“Axelrod had a key role in the execution of the plan to preserve Peavy’s income for retirement and served as the intermediary between Narayan and the Peavys,” the suit reads. “[Peavy] authorized Axelrod to to speak to Narayan on his behalf. [Peavy’s] paycheck was deposited into a Wells Fargo account over which Axelrod had power of attorney to disburse funds.”
Axelrod’s attorneys deny Axelrod was to be “monitoring investments or investment advisers” as part of his services to Peavy. In court documents, Axelrod’s attorneys also deny he was a point of contact for Narayan, or had access to all of Peavy’s financials.
Peavy’s lawsuit claims he, Axelrod and Narayan would meet before and after each baseball season to discuss the pitcher’s finances. The suit describes it as a regular pattern of meetings.
The investments in question began without Peavy’s knowledge in 2011, according to the suit. Narayan began transferring large amounts of money from Peavy’s trust as loans and investments into a startup venture called the Ticket Exchange, according to the suit.
The suit alleges Axelrod, who would have received the brokerage statements, never communicated the investment to Peavy.
Axelrod and his attorneys deny this, according to court records. Axelrod claims large wire transfers “were not out of character” for Peavy. He also denies he was supposed to monitor the brokerage statements, “other than to provide a summary of the ending value shown on the statements.”
Axelrod agrees large transfer were made, but he did not communicate this to Peavy because “that was Narayan’s role,” according to court documents. Axelrod also claims to have no knowledge of whether the Peavys knew about the transfers.
Axelrod also denies he concealed anything from the Peavys, or that he cost them millions of dollars, according to court documents.
The first indication Peavy had of involvement in the startup was when he was in the process of purchasing real estate in downtown Mobile in December 2015, according to the suit. He became aware of the investment when he requested financial information for a loan application.
Peavy’s suit claims Axelrod and Narayan tried to talk him out of purchasing the property in Mobile. The suit claims Axelrod reached out to Joan Dunlap, who was described in the suit as part of a group of individuals “assisting Peavy with his charitable foundation and investments in Mobile.” At the time, Dunlap was also the executive director of Mayor Sandy Stimpson’s Bloomberg grant-funded Innovation Team, which is charged with documenting and resolving blight in the city.
The suit claims Axelrod shared his concerns with Dunlap and informed her the pitcher was “in financial ruin.” Peavy did not receive a similar call from Axelrod, according to the suit.
Axelrod admits the conversation with Dunlap, according to court documents, but stated it was over concerns about Peavy’s charitable foundation. He admits he did not talk to Peavy about it, but denies he did not try to contact him.
Dunlap resigned from the Innovation Team the same month the conversation took place. Peavy, meanwhile, who has invested in Mobile-area real estate and whose foundation sponsors the annual TenSixtyFive music festival, among other events, has enjoyed career earnings of more than $125 million, according to sporttrac.com.
CORRECTION: This story originally noted Joan Dunlap resigned from the Innovation Team “the same month the lawsuit was filed.” In fact, it was the same month her conversation with Axelrod took place, in February 2016. The lawsuit was filed in February 2017.