Florida Appellate Court Rules in FTBOA's Favor

A legal challenge regarding whether the Florida Thoroughbred Breeders' and Owners' Association could legally administer the state's Thoroughbred breeders' awards was blocked by a district court of appeal decision Jan. 12.

Florida's First District Court of Appeal upheld a lower court ruling by Leon County Circuit Court Judge James C. Hankinson that the FTBOA, though a private not-for-profit organization, is doing public work, so it is entitled to be specifically named in state law as the administrator of the state's breeders' awards program.

The Florida constitution prohibits a private corporation from being named in state statute and then granted benefits and privileges.

"If this lawsuit had been successful, it would have decimated the state breeders' award program on which so many Florida breeders rely," the FTBOA said in a Jan. 13 statement. "As a result, the FTBOA, in conjunction with the Florida Attorney General's office, aggressively defended against the challenges raised by SCF.

"On behalf of the hard-working Thoroughbred breeders of our state, we are pleased to announce that both the trial court and the appellate court presiding over this case have now agreed with the FTBOA and upheld the constitutionality of the Florida breeders' award program."

The lawsuit was originally filed by Marion County veterinarian Dr. Thomas Lane in 2014. Due to health concerns, Florida owner and breeder Belinda Kitos' SCF Inc. (operating at Southern Cross Farm) was substituted as the plaintiff. Kitos' association with this case cost her membership in the FTBOA, which expelled her August 22, 2014, for her efforts to "disseminate and publicize on a national level," said allegations contained in the March 2014 lawsuit. FTBOA bylaws state a member can be expelled for "conduct believed by the board to be not in the best interests of the association or its objectives."

Lane once owned land that is now the site of Oxford Downs, a shoestring Quarter Horse racing operation in south Marion County that also offers a card room. Both the FTBOA and the Florida affiliate of the American Quarter Horse Association opposed the development of Oxford Downs, because the track's meets had not been accredited by the AQHA, and because it lacked adequate oversight of how racing is conducted and the safety of the racing surface and facilities. The project was viewed as merely a cheap way for investors to open up a card room.

Lane's attorney was David Romanik, who now represents Kitos and is financially involved in Oxford Downs and also Gretna Racing, which attracted opposition from the Thoroughbred and Quarter Horse racing industries for creating pari-mutuel barrel racing in the Florida panhandle. Gretna also offers a poker room.

FTBOA executives have characterized the Lane/SCF lawsuit as "retaliatory and frivolous," one politically motivated because of the association's opposition to Oxford Downs and Gretna ventures.

Kitos, a certified fraud examiner, said the issues with Oxford Downs and Gretna are red herrings as far as this lawsuit is concerned.

"The lawmakers created a monster—a trustee of other people's money with no checks and balances," she said. "I expected the state to do the right thing and it did the political thing."

This lawsuit can go no further, according to Romanik, because the ruling was a per curiam opinion, meaning the decision was made in the name of the court as a whole rather than by the opinions of the individual judges. Since no opinion or argument accompanied the ruling, there is essentially nothing to challenge.

"There are hundreds of non-profits appointed to do things by the legislature. There are 40-50 companies that get benefits from these specialty license plates," Romanik said. "I think the court was more concerned about the can of worms it might be opening up regarding all these other non-profits that have found their way into the statutes."

Kitos still has another appeal coming up next month, regarding an administrative law judge ruling that she has no standing in challenging how the Florida Department of Pari-Mutuel Wagering reviews and approves an annual plan that establishes the compensation and payment rates for breeders' awards. The annual plans are submitted by the FTBOA because it administers the breeders' awards.

The concerns about the annual plan for 2016 raised by the lawsuit include a lack of supporting documentation for how breeders' awards rates are set each year. Disclosing the balance of undistributed awards to monitor that the fund has not been allowed "to grow excessively," which is prohibited by a provision in the law. And, no supporting documentation of how the FTBOA uses the 10% it retains from the gross funds from handle and gaming revenue that supports breeders' and stallion awards.

The FTBOA said its operations have not and will not be affected by this and other frivolous lawsuits, and that it will "continue to tirelessly promote and defend the interests of Florida's thoroughbred breeding industry."