Mammoth Mountain vs. Mammoth Outdoor Sports

MMSA files civil suit against MOS for breach of contract.

On June 27, Mammoth Mountain Ski Area (MMSA) filed a civil suit against Mammoth Outdoor Sports (MOS) for breach of contract and fraud. MMSA is asking for damages in excess of $120,000.

According to court documents, MMSA sold merchandise to MOS in August, 2013 for $220,000 with the written agreement that MOS would not resell the items in Mammoth Lakes and make payments to MMSA from November, 2013 through January, 2014.

MMSA claims that as of March 2014, MOS still owes $70,000 for the merchandise that was resold in Mammoth Lakes, in violation of the agreement. MMSA is asking for the $70,000 plus 10% interest, as well as attorney fees and damages for reselling the items in Mammoth. MMSA is also claiming fraud on the basis that MOS president Phil Herzog, “always intended to resell the merchandise in Mammoth Lakes” which “undercut [MMSA’s] own retail operations.”

Phil Hertzog talked to the Sheet about MMSA’s allegations. He explained the outstanding debt of $70,000 as owing to MMSA and Mammoth Lakes Tourism’s failure to properly advertise and bring business to Mammoth.

“There are certain points that are important factually,” Hertzog said. “I talked with Rusty and John Urdi and they explained to me the TBID and how it was going to be a good thing, how marketing and advertising for Mammoth would be done in Southern California. Well that just didn’t happen. We had the worst year in 10 years, which put tremendous pressure on us.

“We’ve worked with all of our suppliers to carry over unsold product to the new season. In fact, the Mountain has done the same thing and even more aggressively. They’re suing us for the same thing that they are doing.”

As for the allegations of fraud, Hertzog said it was an oversight. “We had good intentions,” he said. “As I discussed with Rusty, 95 percent of all the product we had in our stores wasn’t from them … We inadvertently had 5 percent, maximum,” he said.

“The Mountain is advertising the Mammoth Mart Outlet, even in your paper, selling discounted product,” he said. (Ed. note: The ad runs irregularly, and last ran in the July 5 issue.) “They are taking product and selling it below market price in a massive way. What [are they] doing, accusing me of having a few items in my stores?”

Wave Rave owner, Steve Klassen, had a few things to say about the lawsuit as well.

“I don’t like how [MOS] does business. I don’t like being around people who blatantly lie as part of their business practice. I have dealt with Mr. Hertzog in the past and he was so comfortable telling untruths. That’s one reason I moved here, was to get away from people like that.”

Klassen said he was surprised that MMSA did business with MOS, but agreed that it was their choice. “Like many other people, they just ended up getting burned by them,” he said.

Klassen said Burton has pulled its merchandise from Hertzog’s stores because they never got paid and they cancelled their contract with MOS. He also said he heard of several other vendors who have sued Hertzog, although “it always seems like he ends up settling the day before. Maybe that’s just how he does business, but that’s not how we do business …

“I’ve been here 25 years and to my knowledge I have never seen Mammoth Mountain sue a local business,” Klassen concluded.

When asked about Klassen’s allegations, Hertzog responded: “Steve Klassen runs a great business. People can buy the same product at 30 percent less from us and that’s what he doesn’t like.”

MMSA declined to comment on the matter. CAO Ron Cohen said only that the lawsuit is “a private matter between MMSA and MOS.”

Mammoth Outdoor Sports, through its attorney Rick Wood, filed a general denial to MMSA’s claims. The case has been assigned to Judge Stan Eller at the Mono County Superior Court in Mammoth and the first case management is scheduled for January 8, 2015.