Debit or Credit: Magic Johnson to Pay $730,000

Former Laker star Earvin "Magic" Johnson must pay nearly $730,000 to a Florida-based company for backing out of a deal to promote a debit card, under a judgment approved today by a Los Angeles judge.

Los Angeles Superior Court Judge Yvette M. Palazuelos had previously confirmed an arbitrator's decision that directed the athlete-turned-entrepreneur to pay the money to Florida-based Magic Cards International Inc.

Today, she finalized the award by approving the judgment.

MCII alleged in court papers filed in June 2006 that Johnson and his company, June Bug Enterprises Inc., did not fulfill a five-year agreement to allow MCII the exclusive right to market, sell and distribute debit cards bearing his name and image.

After 2 1/2 years, Johnson ended the agreement. He said he had no further obligations because the card was never produced and launched nationwide as MCII had promised, according to his court papers.

But MCII maintained that by pulling out, Johnson prevented the project from going forward and being successful.

MCII lawyer Breton A. Bocchieri said one of the most significant developments in the case was that the arbitrator found Johnson in breach of a contract. He also contended Johnson's actions hurt consumers who have difficulty in obtaining credit, creating a sharp contrast to his image as a benefactor for urban America.


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"This card would have helped urban America," Bocchieri said.

Both sides sought arbitration under a clause in the contract requiring that disputes be settled in that fashion. MCII claimed millions of dollars in lost profits.

Arbitrator Charles Vogel initially ruled in favor of Johnson before reversing himself and finding that the retired NBA star and June Bug were in breach.

In November, Bocchieri filed court papers maintaining that the amount Vogel ordered Johnson to pay was too low and should have been in the range of $7 million to $30 million. However, Palazuelos in February declined to vacate or change the award.

In their court papers, Martin Singer and other lawyers for Johnson stated that MCII turned down a $950,000 settlement offer that could have avoided the arbitration. They, too, objected to Vogel's award against Johnson and argued that MCII should have been ordered to pay their client more than $465,000.

Palazuelos also denied that request.

Johnson, 49, was inducted into the Basketball Hall of Fame in 2002.

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