Midnight Cry's Interest in Curlin Intact, Attorney Claims
Attorney Andre Regard, who represents the Tandy LLC entity that is doing business as the Midnight Cry Stables interest Gallion and Cunningham share in Curlin, said Nov. 3 that contrary to what rival attorney Angela Ford believes, her clients in the fen-phen settlement lawsuit have no claim to ownership in the colt.
“The Charging Order does not affect the actual ownership of Curlin in any fashion,” Regard wrote in an e-mail concerning the order issued Nov. 1 by Boone County (Ky.) Circuit Court judge William Wehr. “The Order states that the judgment creditors will be treated as assignees of Tandy LLC as to any cash distributions made by the Company. This means that if Tandy LLC distributes cash or assets to members of the LLC, to the extent cash or assets are distributed to Cunningham or Gallion, then the judgment creditors may be eligible to receive them.”
“The judgment creditors do not have title to any assets of the company and no role in the management of the company.”
Regard drove his point home in a follow-up telephone interview, particularly with reaction to Ford’s comments in a Nov. 1 The Blood-Horse article that the fen-phen plaintiffs she represents have taken over Midnight Cry's ownership interest in Curlin, who recently won the Breeders’ Cup Classic – Powered by Dodge (gr. I) at Monmouth Park Oct. 27.
“This idea that 418 people own part of Curlin is ludicrous and totally without legal merit,” he said. “They do not have voting rights, and they do not have membership rights (in Tandy LLC).”
Ford agrees in part with what Regard said, saying her clients do not have decision-making authority in regards to the management of Curlin.
“The charging order does not … change the name on the ownership papers of any of the horses owned by Tandy, including Curlin,” Ford wrote in part in an e-mail to The Blood-Horse. “What the charging order does is dictate who is entitled to the earnings from races and the proceeds from the sale of Curlin and all other assets owned by Tandy.
“The bottom line as to Curlin is that no one can sell or buy any horse owned by Tandy LLC without satisfying the liens filed against Tandy or any individual horses, including Curlin. So, for counsel for the jailed attorneys to suggest that a buyer has no obligations to my clients would be incorrect.”
Gallion, Cunningham, and fellow attorney Melbourne Mills Jr. -- who is not a Curlin partner -- are accused of taking $64 million that should have gone to their clients in the $200-million settlement of the diet drug case. A judgment of $42 million was previously ordered in a civil suit. The three attorneys are incarcerated in a Boone County jail as part of a separate federal criminal action involving the fen-phen settlement.
Regard contends if Tandy LLC receives any funds -- such as winnings from the Classic purse -- and does not distribute them to its members, then the fen-phen plaintiffs would have no claim on them. He said he did not know if there were additional shareholders in Tandy other than Gallion and Cunningham.
“I don’t know the full representation,” he said, adding Tandy LLC also involves ownership interests in other horses.
Regard feels Ford is actually hurting Curlin’s chance of sale at auction, which he feels is a real and viable plan for the colt.
“All Angela is doing is shooting herself in the foot,” he said. “She could solve this real easily if she said, ‘I’ll go after the interests in the horse after it is sold.’ The horse’s peak value is now. To say the things she is saying is just clouding up the whole situation.”
Ford feels her clients must be protected.
“Interested buyers want to make certain that they take clear title, and like the title owners, we want interested buyers to know that they can take clear title,” she wrote. “They just have to make sure my clients interests are satisfied to protect themselves.”
“Gallion and Cunningham have not exactly demonstrated that they intend to honor any obligations to their former clients which is why we are where we are today.”
Regard said selling the horse at auction will clear up all ownership claims and title issues on Curlin, per Kentucky law.
“The guy who buys the horse is not going to care who gets the money,” he said. “He just wants to know that when he stands the horse, no one is gong to come knocking on his door looking for money.”
A private sale would be a different story.
“Who is going to buy this horse?” Regard asked. “Who would want to mess with all of this?”
Regard said that all of the owners are in agreement to sell the horse to maximize its value. Two of the other three ownership interests -- Jess Jackson’s Stonestreet Stables and George Bolton -- have not publicly stated their wishes in regards to a sale of Curlin.
But an attorney affiliated with Satish and Anne Sanan's Padua Stables told the Associated Press a public auction would be welcome.
"The best way for us to find out (Curlin's value) is to have an auction," attorney Michael Meuser said in the article.
Fasig-Tipton and Keeneland officials contacted Nov. 3 said Curlin is not entered in either sale.
“If he is offered at public auction, we would love the opportunity to sell him,” said Boyd Browning, Fasig-Tipton chief operating officer and executive vice-president.
Regard said his clients can appeal Wehr’s order within 10 days of when it was entered into court.
“We are discussing that right now,” he said. “This order is something we have to deal with internally, as Tandy LLC. Whether we appeal it or not, it still has nothing to do with the title of the horse, or decision-making of the horse.”
View the Motion for the Charging Order
View the Charging Order
Copyright © 2014 The Blood-Horse, Inc. All Rights Reserved.