Zayat Suit: Hill 'n' Dale Files Motion to Dismiss

The march of defendants filing motions to dismiss property claims by a New York investment firm involved with a fraud and breach of contract lawsuit against Zayat Stables continued March 9 with Hill 'n' Dale Farms.

Hill 'n' Dale filed its motion to prevent MGG Investment Group from taking ownership of the grade 1-placed winner and broodmare American Cleopatra, who the farm bought for $1.3 million in a private sale that occurred after the mare was a $1.9 million buy-back at Fasig-Tipton's 2017 The November Sale.

American Cleopatra, a full sister to 2015 Triple Crown winner American Pharoah , was in foal at the time with an Uncle Mo  filly, who has since been named Mo Emma. She has since produced a colt by Tapit  and is expecting a foal this year by 2018 Triple Crown winner Justify .

MGG included American Cleopatra in a Feb. 11 amended complaint that also sought to repossess nine breeding rights to American Pharoah, the stallions Solomini  and El Kabeir, and the race mares Lemoona and Amandrea because they were collateral for tens of millions of dollars in loans made to Zayat Stables in 2016. MGG additionally sought to have any proceeds from stud fees or the sale of the horses or their progeny put into a trust for the company's benefit.

In Hill 'n' Dale's motion to dismiss, attorneys David Royse and John Roach argued that MGG could not claim a security interest in American Cleopatra because the firm is outside a two-year statute of limitations to do so and also cited a provision in the U.S. Food Security Act that states: "… a buyer who in the ordinary course of business buys a farm product from a seller engaged in farming operations shall take free of a security interest created by the seller, even though the security interest is perfected; and the buyer knows of the existence of such interest."

Kentucky state law makes an exception for farm products if there is security interest but the motion to dismiss notes that the U.S. Food Security Act "explicitly preempts state law."

Even if Hill 'n' Dale were aware of MGG's security interest in American Cleopatra, the farm acquired the mare Nov. 15, 2017, and the investment firm did not assert its claim on the horse until Feb. 11, which is more than three months outside the two-year window allowed by Kentucky state law to pursue the recovery of taken property.

The moment the clock starts ticking on the statute of limitations can be affected if the person involved in the taking tried to abscond or conceal the transaction or took action to deceive MGG from pursuing legal action, but Hill 'n' Dale's attorneys noted none of that occurred nor was it even alleged in MGG's amended complaint.

A hearing on this motion has been scheduled for March 20.

Among seven defendants named in MGG's amended complaint, Thomas Clark Bloodstock and Yeomanstown Stud already have had their claims dismissed. Thomas Clark Bloodstock was involved in the purchase of Lemoona at auction and Yeomanstown Stud had acquired El Kabeir for stud duty.