Judge Denies Motion to Sell Curlin
A Kentucky judge denied a motion July 10 requesting a forced sale of 2007 Horse of the Year Curlin, a decision that was applauded by majority owner Stonestreet Stables, which clearly stated it has no desire to sell its part of the champion horse.
Judge Roger Crittenden denied the request during a hearing at Franklin County Circuit Court, rejecting a plea from plaintiffs in a civil lawsuit that includes as defendants Curlin’s minority owners, suspended attorneys Shirley Cunningham Jr. and William Gallion.
Crittenden ruled the motion to force a partition sale filed by plaintiffs’ attorney Angela M. Ford was inappropriate at this juncture of the case, which has already seen a $42-million judgment awarded for the role the defendants played in alleged mishandling of a class-action settlement in the high-profile fen-phen trial.
“The motion is premature,” Crittenden said about an hour into the 90-minute hearing. “The plaintiffs are not the appropriate people to bring this motion at the present time.”
Crittenden pointed out early in the hearing that Ford’s clients are not the owners of the 20% minority interest, despite an interim order he signed July 2 that gave management of the lesser ownership to a court-appointed receiver. The minority interest is housed under the auspices of a Kentucky entity affiliated with Cunningham and Gallion, Tandy LLC.
The judge agreed with Stonestreet Stables’ arguments that only the owners of a property, in this case Curlin, could request a partition sale to satisfy a dispute.
“That burden of proof has not been established,” Crittenden said.
Stonestreet Stables’ representative attorney Richard Getty on the day of the hearing filed a reply in opposition to the motion, which was filed just a few days earlier on July 6. Getty argued during the hearing that the court and the receiver, not the plaintiffs, should determine the best way to get the minority interest sold.
“You don’t jeopardize the 80% controlling interest by forcing a sale when the owner has no desire to sell that interest, and shouldn’t be forced,” Getty said in a post-hearing interview. “And the judge agreed with me.”
Ford argued in her motion that the minority interest would be “impaired” if sold separately, further damaging her clients, and would be best resolved to help satisfy the judgment with a 100% sale of Curlin. She further alleged in her filing that Stonestreet Stables had “every incentive to acquire Tandy's retained interest, but only wishes to do so at the lowest possible price.”
Following the hearing, Ford told The Blood-Horse she anticipated the negative ruling from Crittenden, acknowledging the judge needed to first issue a written order regarding how her clients may obtain assets from the “alter ego” companies of Cunningham and Gallion, including Tandy. In a previous hearing, Crittenden from the bench indicated he was ready to act on ways to get at the alter egos, and in April indicated he would sign orders “to be made effective some time in the next two to three weeks.”
“That would have to come before the motion for partition, and we knew that,” Ford said. “And he still after five months is not ready to issue it. One of the reasons to file it now is to show how the alter egos apparently work in regards to high-dollar value assets. That was the reason for getting it in there, even though we clearly understood that one had to come before the other. I’m just not sure when that timetable is.”
Crittenden during the hearing said he held off on issuing any such orders for a variety of reasons, personal and otherwise, including the presence of a separate criminal trial on the Fen-Phen settlement involving Cunningham and Gallion. That trial ended in a mistrial, with the 12-person jury reportedly hung on a 10-2 verdict for acquittal.
Getty said Stonestreet Stables, which is headed by Jess Jackson and his wife, Barbara Banke, will be happy with Crittenden’s decision.
“We did not want any further delays,” he said. “There have been numerous other incidents where questions had been raised in regard to this great horse, and we wanted to get behind this with a favorable ruling from the court.
“This is not the first instance where counsel for plaintiffs has made statements that have raised issues with respect to Curlin, and we very much wanted to expedite the process. There is at this point little doubt that under Stonestreet’s stewardship, Curlin has excelled on the racing circuit. This is truly a great horse which should be appreciated by everyone. It’s disappointing that certain individual are detracting from the great legacy of this horse, and the inspiration of racing fans all over the world.”
Getty’s reply in opposition to the partition motion claimed that since Stonestreet had bought out former partners George Bolton and Padua Stables, Curlin has earned nearly half of his near-record $9,396,800 in race earnings, which is third-best all-time behind Cigar and Skip Away. "(This is) money that would not have been earned but for Stonestreets' exceptional efforts in managing and promoting Curlin,” he wrote.
Attorneys for Cunningham and Gallion said the civil case has been appealed to the Kentucky Court of Appeals, with initial briefs filed July 10. Attorney Andre Regard, who represents Tandy LLC, also said he would shortly file a motion to reconsider Crittenden’s order for transfer of Tandy’s management to a receiver, which is scheduled to be heard July 24.
Regard during the hearing said his clients support a total sale of Curlin to maximize value.
“I can tell you from speaking to people in the industry, people do not want to buy 20% of Curlin,” he told Crittenden. “The best interest of resolving the valuation issue is that the horse would be sold in its entirety.”
But an affidavit filed with Getty’s reply suggested that only two entities would probably be able to buy 100% of Curlin, Darley Stable and Ashford Stud, thereby minimizing the minority interest.
“Based on my knowledge of the Thoroughbred breeding business, I believe there would be many more possible purchasers if the 20% interest owned by Tandy LLC was sold by itself,” wrote attorney Robert M. Beck Jr., who drafted the February 2007 agreement for the 80% purchase of Curlin from Tandy.
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