An entity headed by California horse owner Jerry Jamgotchian has filed suit against Lane’s End Stallions, contending the syndicate manager for the stallion Lemon Drop Kid has failed to comply with terms of the syndicate agreement pertaining to disclosure of records.
The suit was filed March 22 in U.S. District Court in Lexington by KNC Investments, whose primary agent is horse owner Jerry Jamgotchian. KNC earlier this year purchased the Lemon Drop Kid share for $350,000 after a protracted dispute with Lane’s End over terms and conditions under which the stallion share was purchased and sent through the syndicate. That dispute was resolved through a court order after Jamgotchian filed suit.
Lemon Drop Kid stands at Lane’s End Farm in Woodford County for a $35,000 fee.
Upon his purchase of the Lemon Drop Kid share, Jamgotchian said he would immediately request an audit of the books of the syndicate and he has subsequently been diligent in making requests for records from Lane’s End.
In the suit, Jamgotchian said he had requested records that, according to the syndication agreement, must be made available to syndicate members upon request. Included in the records requested by Jamgotchian are a list of all syndicate members (by name, address, and pertinent information) and a general ledger of the syndicate’s books, according to the suit.
Jamgotchian’s suit said Lane’s End Stallions had produced only some of the records he requested, and, as a result, failed in its fiduciary duty to the syndicate.
In its poll of syndicate members about whether they wanted their names, addresses, and other information disclosed to Jamgotchian, Lane’s End recommended how the members should vote, a further breach of its fiduciary duty, the suit claims.
Bill Hoskins, an attorney representing Lane’s End Satllions, said the farm had received 50 e-mails from Jamgotchian over a 15-day period requesting various syndicate records. In response, Hoskins said, “Lane’s End Stallions provided Mr. Jamgotchian with copies of each and every document he was entitled to receive under the syndicate agreement.”
Lane’s End and Jamgotchian also agreed to a March 21 meeting at which the share owner could inspect other records at the farm. Jamgotchian later cancelled that meeting, Hoskins said, and “hadn't availed himself of the opportunity to review those records before he filed suit on March 22.”
Hoskins said Lane’s End also suggested to Jamgotchian that an audit be conducted of the Lemon Drop Kid syndication books by an independent accountant, but that Jamgotchian has not acted on the suggestion.
The syndicate manager also sent correspondence to each syndicate member to see if they wanted their personal information released to Jamgotchian as well as Jamgotchian’s request for a meeting of the shareholders.
As of March 25, Hoskins said none of the syndicate members had agreed to the release of their names, addresses and other information in response to the correspondence sent them March 9. Also, none of the syndicate members had voted in favor of shareholders’ meeting. Under the syndicate agreement, a favorable vote from 18 shareholders is needed for the meeting to be held.