Consignor Ordered to Pay Missing Sales Money to Owners

The Kentucky Supreme Court, reversing lower court rulings, ordered that damages be awarded in a lawsuit filed by two owners against a consignor.

Hickstead Farm and Ken Ramsey claimed base monetary damages of more than $350,000 because proceeds due from the sale of several of their horses in 2013 were not received from Dapple Stud and Dapple Sales. According to the Supreme Court opinion, a substantial portion of the sale proceeds were allegedly diverted by then-Dapple manager Mike Akers.

After prolonged litigation that included two stops in the Kentucky Court of Appeals, the high court ruled Oct. 24 that both lower courts erroneously decided Ramsey and Hickstead did not hold an enforceable contract with Dapple. The Supreme Court ordered Fayette Circuit Court in Lexington, where the case originated, to calculate appropriate damages.

Ramsey consigned seven horses to Dapple to be sold at the Fasig-Tipton October 2013 Fall Yearling Sale and at the Fasig-Tipton Midlantic 2013 December Mixed Sale in exchange for a flat fee of $1,500 and a 3% commission on proceeds over $20,000, "consistent with prior dealings between Ramsey and Dapple Stud," Chief Justice Lawrence VanMeter wrote. Fasig-Tipton subsequently sent checks totaling $161,084.35 to Dapple Stud.

Hickstead agreed to use Dapple Stud to sell two horses at the 2013 Keeneland September Yearling Sale on terms similar to the Ramsey deal.

"These transactions were (also) consistent with prior dealings," VanMeter wrote. After the horses sold, Keeneland issued a check to Dapple for $513,500.

According to details in the court ruling, "Akers apparently transferred (the Ramsey) funds to his personal or business accounts." In the Hickstead transactions, "According to an affidavit from Jeffrey Bowen, one of Dapple Stud’s managing members, Hickstead was owed $495,000, after Dapple Stud’s commission and expenses. Dapple Sales subsequently remitted $294,482 to Hickstead, leaving an unpaid balance of $200,518. Bowen alleged that Akers wrote a check from Dapple Sales’ account to his separately owned corporation, Mike Akers, Inc., which had adopted the assumed name of Dapple Bloodstock."

Writing for the court, VanMeter concluded, "At the time the consignment contracts were agreed, Dapple Stud’s and Dapple Sales’ longtime manager was Mike Akers, who apparently misappropriated moneys from Dapple Sales’ checking account into which sale proceeds had been deposited. Akers’ post-sale actions, however, do not alter Dapple Stud’s obligations under its contracts with Ramsey and Hickstead."

Civil litigation against Dapple began 10 years ago. Ramsey and Hickstead initially prevailed in Fayette Circuit Court on their claims for breach of contract, but the Court of Appeals reversed the rulings and sent the matter back to the lower court for further development of the facts.

Ramsey and Hickstead lost the second round in Fayette Circuit Court and were ordered by judge Kimberly Bunnell to make restitution to Dapple because, before their judgments for breach of contract were overturned by the court of appeals, Dapple "had paid, at least in part, the sale proceeds to Hickstead and Ramsey," according to VanMeter. Kentucky Court of Appeals judges Glenn E. Acree, Donna Dixon, and J. Christopher McNeill affirmed Bunnell's decision, before the Supreme Court reversal.

Presumably, Dapple will be ordered to return the restitution money to Hickstead and Ramsey along with any other amounts due under the contracts and may be liable for interest, punitive damages, and attorney fees.

Hickstead and Ramsey also pursued claims against Akers, but not until 2020. The Supreme Court affirmed dismissal of those claims by the lower courts, agreeing they were filed too late. A search of Kentucky and federal court dockets by BloodHorse for criminal charges against Akers did not yield any results.