A Franklin County, Kentucky, Circuit Court judge has ruled against a proposed sale of a 20% interest in Horse of the Year Curlin to majority owner Jess Jackson for $4 million. The ruling by Judge Roger Crittenden came in a hearing on Monday involving the 20% owned by disbarred attorneys Shirley Cunningham and William Gallion, who have been hit with a $42-million judgment in a civil lawsuit involving the fees they charged clients in a class-action lawsuit against the manufacturer of a diet drug. Cunningham and Gallion also face criminal charges stemming from the case. The ruling against the sale was not based on the judge’s disapproval of the $4-million appraisal on the 20% interest, but because two parties objected to the sale: Gallion and Cunningham’s attorney, Andre Regard; and the attorney for the class-action plaintiffs, Angela Ford. The judge’s decision effectively ends a lengthy legal battle involving Jackson’s Stonestreet Farm’s and Cunningham and Gallion’s Midnight Cry Stable (also doing business as Tandy LLC). Midnight Cry originally owned 100% in Curlin and sold Jackson and two other partners an 80% interest after the son of Smart Strike broke his maiden early in 2007. Jackson eventually bought out the other two partners, Satish Sanan and George Bolton. Regard said his clients were looking forward to being partners in Curlin as he enters his new career at stud at Lane’s End Farm in Versailles, Ky., where he will stand for a first-year stud fee of $75,000, payable when the foal stands and nurses. "He’s going to be a very popular horse," Regard said.
The objections of attorneys Regard and Ford were based on the appraisal provided in court by bloodstock consultant Ric Waldman, who testified in November that the current weakened market conditions placed Curlin’s overall value at $20 million as a stallion prospect. A court-ordered receiver arranged for a sealed-bid sale of the 20% through the Keeneland auction company in early November, but when there were no bids, Jackson offered to buy the interest for $4 million. Ford said the receiver had numerous conversations with Stonestreet representatives about the sale but never consulted with her as representative of the plaintiffs. "I think the evaluation is extremely low and I think it’s something we have to contest," she told Crittenden. Richard Getty, attorney for Jackson, told the court that a "bird in the hand — $4 million, which is a million and a half dollars more than I think it’s worth — is better than a bird in the bush. The current market conditions are horrible. … If they are not smart enough to figure out this is a very good deal, given the market conditions, I feel sorry for them. … A year and a half or two years from now this interest may not be worth $4 million." Regard said the court had been told repeatedly by Jackson’s attorney that no stallion farm would stand Curlin as long as Gallion and Cunningham were minority owners. "Lane’s End is the premier stallion farm in the world," Regard said. "Lane’s End was Tandy’s first choice last year, but disagreements between Mr. Jackson and Mr. Farish concerning some other issues in the industry prevented that. … Entering into a contract (with Lane’s End) proves that there were no legal issues related to Tandy’s ownership in Curlin that would prevent him from going to stud. Lane’s End saw no obstacle to standing the horse." Getty said after the ruling he was not aware of any "disagreements" between Jackson and Farish, and also said he was not aware that Jackson was prepared to make any further offers to Gallion and Cunningham for their interest in the horse. Getty pointed out to Crittenden that Lane’s End is receiving a management fee to stand Curlin and that Gallion and Cunningham would be liable for $1 million in expenses between now and April 2010 for management of the horse, insurance premiums and advertising/marketing costs. "Who’s going to pay the $1 million," he asked the judge. He also cited the fact some top race horses, including two-time Horse of the Year Cigar, can be infertile as stallions. "If they want to run the risk of intertility, we can’t help them," Getty said.
Regard responded that Lane’s End’s will be compensated after stud fees are paid. "The largest part of those expenses are going to be paid upon the receipt of the stud fee income," Regard said.
In the end, Crittenden sustained the objections of Ford and Regard to not go forward with the sale of the 20% in Curlin. "If both parties object, then this court does not intend to rule that the receiver accept the offer," Crittenden said. He ruled that the court-ordered receiver will wrap up its role, but be available in the event of any further offers. Copyright © 2008, The Paulick Report Visit the Paulick Report for all the latest news throughout the racing world. Sign up for our Email Flashes to get the latest news, analysis and commentary from Ray Paulick
Tags: andre regard, Curlin, horse of the year, jess jackson, Lane's End, midnight cry, Paulick Report, Ray Paulick, Ric Waldman, richard getty, roger crittenden, shirley cunningham, stonestreet stables, tandy llc, thoroughbred stallions, william gallion, William S. Farish
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December 1st, 2008 at 1:33 pm
I’m sorry, but I don’t think these “stealing attorneys” should have ANY say in the remaining 20% interest in Curlin & I’m tired of them objecting to the 20% interest being sold to Jess Jackson, who is willing to pay $4 million & be done with it. Poor Curlin, he is a Super Horse & should not have this litigation matter (crap) lingering over him, especially now that he has retired from racing. Perhaps if the disbarred attorneys, Shirley Cunningham and William Gallion had not ripped off their clients, they wouldn’t be in this sinking boat of theirs !! I pray Mr. Jess Jackson is allowed to aquire the remaining 20% interest of “The Mighty Curlin”, Because in our eyes, he is the only owner that is right for Curlin !!
December 1st, 2008 at 1:40 pm
As Mr. Bumble said, “the law is a ass…”
December 1st, 2008 at 1:58 pm
I wonder if the thieves were not as politically-connected as Gallion and Cunningham that this situation would have even reached this point. Justice is blind only for those with a bankroll and/or attorneys who can somehow paint crooks as victims on a canvas that is being presented to a judge who obviously was looking for the easy way out of this case.
Lost in all of this is the class-action plaintiffs, who seem to be riding in the caboose and seem to be on the line to paying years and years of additional attorney fees and no end on the horizon. Hopefully, they will at least get a horse shoe from Curlin, because they are probably only going to keep seeing attorney bills in this mess.
December 1st, 2008 at 2:10 pm
I like the gamble taken by Regard and Ford. It will be neat to see if it pays off. I say it does.
December 1st, 2008 at 2:43 pm
Interesting. I’m still curious about how their ownership of Einstein will eventually be resolved. I’d be happy to take him off their hands.
December 1st, 2008 at 3:03 pm
I think that there is a lot more to the case involving Gallion and Cunningham than most people know. Their case is still on appeal; it’s a little early to be calling them crooks and thieves. Also, they were the original owners of Curlin and have done nothing to impede his career. It’s quite easy to judge things from media coverage. It’s quite different to judge it knowing all the facts.
December 1st, 2008 at 3:14 pm
I don’t see why they have to resolve the 20% interest other than that would enable Jackson to sell or syndicate the horse - let the phen fen victims and the jailbirds fight over the 20% of stud fee revenue and subtract the 20% expenses for Curlin from their share.
Einstein would be signed sealed and delivered to Dubai by now without the legal entanglement of his ownership - there is a silver lining in every cloud, right?
December 1st, 2008 at 3:34 pm
Superfecta…What happens to the ownership of Einstein and any other horses in Midnight Cry (or Tandy LLC) apparently is now up to Angela Ford, the attorney for the class-action plaintiffs. I’ve been told she has at least a couple of different options, including something akin to foreclosure proceedings.
Complicating Einstein’s future are licensing issues of the owners: some states apparently will not license Cunningham and Gallion. He’s a top-class horse as evidenced by Friday’s win in the Clark and Churchill and you have to think he’d been invited to Dubai for the World Cup or the turf race.
December 1st, 2008 at 3:54 pm
What do you think the value should be? Didn’t Afleet Alex syndicate for $39 million with a stud fee of $40,000. I’m not familiar with how value/synication value/stud fee are related. Anyone else have thoughts?
Also, doesn’t $1 million to manage 20% of Curlin for 18 months seem like a lot?! So total management cost for Curlin for that period would be $5 million. Are the Lane’s End fees included or do they get their money based on percentage of stud fee? I would guess the $5 million would include all monies paid to Lane’s End. Just curious how these deals work.
December 1st, 2008 at 4:17 pm
Sew….Some experts value syndicated horses (which Curlin is not) on a multiple of 350-400 times the initial stud fee (some as high as 500 times stud fee if the horse is also going to stand in the Southern Hemisphere).
As for the management fees, Jackson attorney Richard Getty said he understood that a significant amount would be spent on advertising and marketing Curlin at stud. If that’s the case, we sincerely hope Lane’s End will be promoting Curlin on the Paulick Report!
December 4th, 2008 at 2:51 pm
[...] for feeding me information from the real world). From Judge Crittendon’s unsurprising ruling against the sale of the 20% minority interest in Curlin, to Judge Ishmael’s reprimand of Jess Jackson’s [...]