Larry North seeks to end contract with investors

Fitness expert’s lawsuit describes agreement as ‘indentured servitude’

By: Lisa M. Whitley – Staff Writer - September 17-23, 1999

Park Cities – Health and fitness guru Larry North wants to terminate his contract granting 25% of his earning over a 50-year time period to financial wizard Andrew Tobias, author Jim Halperin and local businessman Steve Ivy. Halperin and Ivy own Dallas-based Heritage Capital Corp. – one of the world’s largest coin wholesalers. After years of unsuccessful negotiations with Halperin and the others to “fairly” terminate the contract, North said he finally filed suit against the trio in a Dallas County court earlier this summer under his company name, North Bodies Inc. That suit seeks an initial $250,000, plus attorney’s fees and damages under Texas usury laws, which carry stiff penalties if it is determined that excessive interest rates were charged.

According to the suit, North met Halperin and Ivy in 1990 when they became members of his Highland Park North Bodies gym. At the time, North was in considerable financial trouble – behind on tax payments and his payroll. In late 1991, North said, he shared his financial concerns with Halperin, who offered to make North a loan. “I was so desperate, I was willing to go to his office right then and sign the agreement,” North said. “I didn’t even have the money to get my own attorney.” The problem, North said, was that the contract kept becoming more demanding as his desperation increased. “As I became more desperate, the noose tightened,” he said. That resulted in North selling Halperin, Ivy and Tobias 25% ownership in all of his health and fitness ventures for 50 years for $100,000, he said.

In return, North was granted a salary of $50,000 per year with an allowance for raises based on the consumer price index, a revolving credit agreement in the amount of $125,000 (of which only $25,000 was ever borrowed, according to North) and 75% of any profits. North would have to live to be 82 years old in order to fulfill the terms of this contract, he said. “Taking 25% of someone’s income for the rest of their life is troubling under any circumstances,” said Alan Trust of Trust Becker Law Firm P.C., who is representing North. His lawsuit claims the contract was a form of “indentured servitude,” a claim that North supports. “This was about controlling another human being,” he said. Ivy, Heritage’s president, contends it was a fair deal. “If he never made any money, we were toast,” he said. “North did become profitable but the investment went south. We weren’t investing in a single gym. The gym itself was losing money. … We were investing in Larry North’s fitness and entertainment ventures. When you say 50 years, people think that’s a long time, but when you buy stock, it doesn’t have an expiration date.”

Ivy asserts that North excluded him and his partners from investment opportunities like North’s successful infomercials. North denies the allegations and said he has offered several settlement options to sever his contract. “No one has ever told these people to just go away,” he said. “I have made every fair attempt to come up with a solution.” Settlement offers don’t fulfill contracts, said Tom Shaw, Halperin and company’s attorney in this case. “When you’re handed a contract, the law presumes you read it and understood it,” he said. That’s not necessarily true said Alan Trust, North’s attorney. “Just because a document is signed doesn’t mean the law will or should enforce it,” he said. Shaw, however, says the contract with his client is valid. “The bottom line is North was happy to take their money when he didn’t have any of his own,” Shaw said. “Now, he doesn’t want to honor it when he’s making money. He’s not a (naïve) little old lady in tennis shoes who didn’t know what he was getting into.”

But, North says he’s always been gullible. “I’ve been naïve and too (trusting) my whole life,” he said. “Hopefully, as a result of these bumps and bruises, I’m becoming a bit more caution. I still like partners; I’m just being a little choosier about who I pick.” The owners of Heritage are also embroiled in another lawsuit that claims unfair contractual obligations. That suit was filed in U.S. District Court in 1997 by Louisiana-based Blanchard and Co. Inc. “There’s an irony involved in the similarities between these two lawsuits,” Ivy said. “Both relationships went well until they didn’t need us anymore. … We’re big boys when we have an investment loss but, at the same time, when you have a success, you want to collect. People would stop taking risks if every time you were successful the other party could hire a bunch of attorneys and get out of their obligations.” Currently, both North and Blanchard’s contracts are under confidential binding arbitration proceedings. Blanchard’s arbitration is expected to conclude by the end of the year. The North Bodies lawsuit has been put on hold pending the conclusion of arbitration proceedings on Nov. 5. At that time the lawsuit is expected to be heard in judge Robert Jenevein’s Dallas County courtroom.

In the News