David J. Lanzman Racing Stable has filed suit against IEAH Stables, claiming breach of contract in connection with IEAH’s purchase of half-interest in I Want Revenge , the morning-line favorite for this year’s Kentucky Derby Presented by Yum! Brands (gr. I) who was scratched the day of the classic.
Filed in Fayette (Lexington) Circuit Court, the suit alleges that IEAH breached its contract with Lanzman, who bred the Wood Memorial Stakes (gr. I) winner, by conveying a portion of its ownership interest to another party without complying with terms of the agreement.
On March 25, IEAH purchased a 50% interest in I Want Revenge, a son of Stephen Got Even, from Lanzman. According to the agreement of purchase and sale, one of the exhibits in the suit, IEAH agreed to buy half-interest in I Want Revenge for a purchase price of $3,175,000. Under the terms of the agreement, IEAH agreed to pay Lanzman $1,750,000 in cash and convey to Lanzman a 25% interest in the top IEAH-owned filly Stardom Bound.
If IEAH sold more than 10% of the colt, the money from the sale would be placed in escrow to secure IEAH’s payment obligations, according to the suit. There were also additional contingencies in the contract, including a stipulation that if IEAH desired to sell 10% of the total interest in the colt (20% of IEAH’s ownership), it could do so only by providing Lanzman with a copy of all documents related to such sale and agreement acknowledging Lanzman’s security interest in the colt, according to the lawsuit.
The lawsuit contends IEAH sold more than a 10% interest in the colt without complying with the terms of the contract, including not notifying Lanzman in writing prior to the sale nor providing him with executed copies of the documents. Also, the purchase price of such sale was not paid into Lanzman’s attorney’s escrow account, according to the suit.
The Churchill Downs program for the Kentucky Derby listed I Want Revenge as being owned by Lanzman, IEAH, Puglisi Racing, Charles Winner, Michael Dubb, and Steven Marshall.
Lanzman’s suit is seeking payment of the purchase price of sales by IEAH into Lanzman’s attorney’s escrow account.
The lawsuit provides the first documentation of the financial aspects of the I Want Revenge/Stardom Bound deal between Lanzman and IEAH.
As part of the deal, Lanzman’s 25% interest in Stardom Bound was subject to a mandatory “put and call” under which the 25% interest in the filly would be conveyed back to IEAH by Lanzman for $1,425,000 paid to Lanzman, according to the suit, which stated the put and call was exercisable on the first day following the 2009 Breeders’ Cup Championships.
Additional terms of the contract provided that IEAH would pay Lanzman an additional $1 million should I Want Revenge win the Wood Memorial (which he did) and an additional $1 million if the colt won the Derby. The agreement further stipulated that if I Want Revenge won either/or both the Wood and Derby, the purse money earned would be maintained with the horsemen’s bookkeepers at the respective tracks and would be applied to the additional purchase price to Lanzman should IEAH fail to make either payment when due, the suit stated.
Efforts to reach representatives of IEAH for comment on the suit were unsuccessful.