Opinons Differ on Curlin Sale Motion
Updated: Thursday, July 10, 2008 1:41 PM
Posted: Wednesday, July 9, 2008 8:23 AM
Photo: Reed Palmer
The minority owners of Curlin (shown working at Churchill Downs in June) have asked a judge to order an outright sale of the 2007 Horse of the Year.
A Kentucky judge is being asked to order the sale of 2007 Horse of the Year Curlin, but attorneys representing the ownerships interests of the champion colt question the merit of the request..
Plaintiffs in a high-profile civil lawsuit involving Curlin’s minority owners, Shirley Cunningham Jr. and William Gallion, recently filed a motion asking the court to force the outright sale of Curlin, arguing that the bidding on the minority interest would force a reduced value. The minority interest is officially controlled by a Kentucky entity called Tandy LLC.
Angela M. Ford, an attorney representing more than 400 plaintiffs who are former clients of the attorneys in a class-action lawsuit involving the diet drug Fen-Phen, is asking Special Judge Roger Crittenden to sell all of Curlin to avoid “impairment of value” of the minority interest.
“While the law favors a physical partition of property between co-owners where possible, courts will not hesitate to order a sale of the whole where the diminution in value of a proportionate share is clear,” Ford wrote in a pleading filed in the Boone County Circuit Court.
Ford, who helped litigate a $42-million judgment against a group of defendants named in the civil action that include Cunningham and Gallion, argued that contractual rights included in the original 80% purchase of Curlin by Stonestreet Stables and others in early 2007 should be waived for the benefit of her clients.
“The Plaintiffs respectfully state that Stonestreet should not be permitted to experience a windfall profit from a below-market value purchase of Tandy's interest in Curlin because it had the foresight to require Tandy's owners to waive its right to partition,” Ford wrote. “As the owner of all of the rest of the horse, Stonestreet Farm has every incentive to acquire Tandy's retained interest, but only wishes to do so at the lowest possible price.”
When contacted for comment, Ford said she preferred to let the pleadings speak for themselves. Stonestreet Stables now solely owns the 80% interest in Curlin after buying out previous partners George Bolton and Padua Stables.
An attorney representing Stonestreet Stables called the motion “ill-founded.”
“There is no legal basis for her argument,” said attorney Richard Getty, who planned to fashion a detailed response to the motion. “And I don’t think it is serving the best interests of her clients. The way the market value for the 20% will be established is at an auction sale, where fully informed bidders can determine it.”
Getty took umbrage with the pleading’s allegation that Stonestreet has not made an attempt to buy out the minority interest.
“That’s totally false,” he said. “There are factual misstatements in it.”
Andre Regard, an attorney who represents Tandy, is still questioning a recent order
signed by Crittenden which turned the management of Tandy over to a court-appointed receiver. Regard, who has not yet filed a response to the most recent motion, said he hopes Crittenden will wait for all of the facts to be presented before making this ruling.
“I think what she has written is premature,” he said, noting that Crittenden previously indicated he would eventually rule on how to deal with Tandy and other “alter ego” entities affiliated with Cunningham and Gallion. “And Angela is acting as if she already owns it. Until something is ordered, it’s not ordered.”
Ford's filings include a copy of the sales agreement to purchase the 80% interest by Stonestreet Stables, Bolton, and Padua Stables, placing the acquisition at $2.64 million. The purchase price was not previously divulged, but had been rumored to be in the $3.5 million range.
The motion may be argued at a scheduled July 10 hearing, but may not be heard, as the deadline for Getty and Regard to respond will not have passed.
Cunningham, Gallion and other attorneys are accused of mishandling a $200-million settlement earned in the class-action suit by keeping upwards to $64 million for themselves. A separate federal criminal action recently ended with a mistrial for Cunningham and Gallion after the 12-member jury couldn’t reach a verdict. Published reports said the jury was hung on a 10-2 vote to acquit the two lawyers. A third lawyer involved in the trial, Melbourne Mills Jr., was acquitted. Mills is still an active defendant in the civil action.
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