The Keeneland Association has filed a motion to dismiss a lawsuit filed last year by trainer Michael Dickinson stemming from his attempt to collect $395,874 a federal judge said Martin Collins Surfaces & Footings – a defunct company co-owned by a Keeneland subsidiary – owes him on a license agreement.
The case stems from a 2008 contract between Martin Collins Surfaces & Footings, which manufactured Polytrack synthetic surfaces installed at Turfway Park, Keeneland and other tracks, and Dickinson's company, which makes a synthetic surface known as Tapeta. The deal was meant to end a dispute between the two synthetic surface companies and would recognize Dickinson's 1999 U.S. patent for a “Sport and Rcreational Surface.”
Dickinson was to be paid $1.25 million over 10 years with equal installments of $125,000 per year, according to the terms of the non-exclusive agreement, which included a termination option if Martin Collins Surfaces & Footings “ceases to make, use, sell, offer to sell and import synthetic surfaces.”
One payment of $125,000 was made in 2008 and Dickinson sued in May 2011 after the company failed to make its 2009 and 2010 payments. In September 2011, Martin Collins Surfaces & Footings – a Kentucky limited liability company co-owned by Martin Collins International Ltd. and Keeneland Ventures PT, LLC (a Keeneland subsidiary) – was dissolved.
After failing to collect on the judgment from an entity that no longer existed, Dickinson unsuccessfully fought to “pierce the corporate veil” of Martin Collins Surfaces & Footings in an effort to prove that Keeneland Association should be responsible for payment.
Since losing the final ruling on that case in November 2012, Dickinson acquired new information from Anthony Paul James, a former Martin Collins International employee who made a written declaration suggesting, among other things, that Martin Collins Surfaces & Footings was the “alter ego” of Keeneland and utilized many of the Lexington company's employees.
In its motion to dismiss the suit, filed Monday by Steven B. Loy of Stoll Keenon Ogden, Keeneland cites the 2012 ruling against Dickinson's attempt to “pierce the veil” and said the 2015 lawsuit “relies on bare legal conclusions and unsupported factual inferences.”
In relation to the standard for piercing a corporate veil, the motion to dismiss stated: “Kentucky law recognizes the fundamental premise that (a) corporate parent which owns the shares of a subsidiary does not, for that reason alone, own or have legal title to the assets of the subsidiary; and it follows with even greater force, the parent does not own or have legal title to the subsidiaries of the subsidiary.”
In this case Martin Collins Surfaces & Footings is a subsidiary co-owned by Keeneland Ventures PT, a subsidiary of the Keeneland Association.
The motion further states: “It is clear Plaintiff's only basis for piercing MCSF's corporate veil is its own inability to collect on the judgement and, without more, that motivation is not an appropriate basis to pierce the veil and pursue recovery against Keeneland.
“Based on the foregoing,” the motion continues, “Plaintiff has not carried its burden to prove either of the elements required in order to pierce MCSF's corporate veil: (1) domination of the corporation resulting in a loss of corporate separateness or (2) circumstances under which continued recognition of the corporation would sanction fraud or promote injustice.”
The case has been assigned to Judge Karen Caldwell in U.S. District Court for the Eastern District of Kentucky.
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