Judge Declines to Issue Restraining Order on Sale of ClassicStar Mares
Updated: Wednesday, October 4, 2006 6:18 PM
Posted: Tuesday, October 3, 2006 8:27 PM
A federal judge in a Lexington courthouse on Oct. 3 declined to issue temporary restraining orders that might have impacted the dispersal sale of ClassicStar-affiliated horses at the Nov. 5 Fasig-Tipton winter mixed sale.
But U.S. District Judge Joe Hood left the door open for some sort of action if certain documents aren't produced by Oct. 23 in the multi-million dollar civil lawsuit against ClassicStar and other defendants named in the case as affiliates of the controversial broodmare lease operator.
Motions filed on behalf of plaintiffs who claim they were frauded out of at least $20 million had originally asked, among other requests, that the court consider restraining the assets ClassicStar, including proceeds that would have been generated from the sale of 73 mares grouped in the dispersal offering.
Following an hour-long hearing that featured lively commentary by Hood on various attorneys' arguments, the judge said he didn't think he needed to rule on any order that would ultimately stop the dispersal sale, which feature a number of high-profile mares accumulated in recent years by ClassicStar and/or former director of marketing David Plummer.
But Hood quickly added that if his dictates weren't met by the Oct. 23 deadline, he would not hesitate to "enjoin the sale," an act which could include postponing the ClassicStar dispersal, or possibly tie up the monies realized from that particular segment of the auction, although the judge did not elaborate on the statement from the bench.
Much of the proceeds of the dispersal sale are believed to be earmarked for those to which ClassicStar has financial obligations, including Fifth Third Bank, Taylor Made Sales Agency and Fasig-Tipton, among others.
A Fasig-Tipton official contacted Oct. 3 by cell phone at the company's fall yearling sale in Timonium, Md., said plans are for the dispersal to go forward unless it is ordered otherwise.
"Ultimately, whatever the court decides is what is going to happen," said Boyd Browning, Fasig-Tipton chief operating officer and executive vice-president. "We have no influence over the court's decision."
Plummer, who was not at the hearing, was ordered through his attorney Burl McCoy to produce detailed information about the alleged breeding of Quarter Horses supposedly located at his Performance Horse ranch in Utah. ClassicStar was directed to provide certain financial statements to the plaintiffs. The company has been headed up by managing partner Tony Ferguson since Plummer exited the company just weeks before Internal Revenue Service agents raided ClassicStar Farm near Versailles, Ky. on Feb. 23.
Pacific Northwest-area plaintiffs West Hill Farms, Arbor Farms and Nelson Breeders say that combined, they were sold more than $56 million worth of programs that involved Thoroughbreds only. The investments packages were allegedly marketed as both potential tax shelters and vehicles for producing substantial financial returns. The plaintiffs also claim that collectively they only have eight Thoroughbred foals valued at $1 million produced from their contracted 50-plus mares.
Hood took particular exception to the allegations that Plummer may have acted wrongly in substituting Quarter Horses for Thoroughbreds, and that he sold lease interests to Quarter Horse mares that he owned independent of ClassicStar.
"I don't know much about rodeo," Hood said in reference to Plummer's cutting-horse operation in Utah, "but I know a little about basketball. And if you are expecting a 7-footer and you get Joe Hood, you might be disappointed. If someone tells me that they own something and they don't, that's a problem to me."
Lexington attorney Brian M. Johnson, who is part of the legal team representing ClassicStar, Ferguson and a company affiliated with Ferguson called GeoStar, defended the Quarter Horse breedings as a legitimate lease item. He claims the plaintiffs spent hundreds of hours riding Quarter Horses in Utah, and other time studying pedigrees of the horses, prior to signing on with the programs.
"They knew what they were buying into," Johnson said. The defendants are still working on detailed responses to the original complaint filed in late July, and are still within court guidelines to do so.
Plummer recently filed a response to the temporary restraining orders in which he claims that he never had any ownership interest in ClassicStar, but merely sold a predecessor company to GeoStar in 2001. Pursuant to supporting filing titled as a termination agreement from his marketing postion with ClassicStar, Plummer said he returned all documents to the company prior to his departure in Feburary. He also claims that a member of the plaintiffs' legal team visited his Utah ranch in November 2005 and spent two days inspecting them with an "independent appointed appraiser."
Early in the hearing, Hood said that he heard settlement negotiations were underway, but Lexington attorney Barry D. Hunter, who is part of the legal team representing the plaintiffs, said there were no active talks.
The balance of the Fasig-Tipton November select mixed sale catalogue hasn't been released, but Browning said that no foals from ClassicStar-affiliated mares were among the 60-some weanlings that will be offered.
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