RACING INVESTMENT FUND 2000, LLC. V. CLAY WARD AGENCY, INC.
320 S.W.3d 654 (Ky. 2010)
NATURE OF THE CASE: This was an appeal by Racing Investments over the meaning, scope and nature of a provision in its operating agreement with respect to additional capital calls.
FACTS: Racing Investment was formed as a limited liability company in August 2000 to engage in thoroughbred horse racing. The Operating Agreement provided subject to some limitations, to call for additional capital from the members in order to pay operating, administrative or other business expenses. The Manager of Racing Investment was Gaines-Gentry Thoroughbreds, LLC, which also managed other investments as well. Gaines-Gentry (P) brought suit against Clay Ward (D) for breach of contract, fraud and negligence claims arising out of the alleged mishandling of the insurance of a foal and a stallion, neither of which was owned by Racing Investment. During the course of P's dispute with D, Racing Investment did not pay certain insurance premiums it owed for coverage of its horses. In the course of the litigation, D eventually moved for summary judgment on its counterclaims against Racing Investment for the unpaid insurance premiums, a motion which Racing Investment did not oppose. After the matter of the prejudgment interest was resolved between the parties, D and Racing Investment entered into an agreed judgment on May 27, 2004 for $69,858.96, of which $12,719.28 was paid shortly thereafter. Racing Investment failed to pay the remainder of the amount owed. D succeeded in its efforts to have Racing Investment held in contempt for failure to pay the outstanding balance. The trial court and the Court of Appeals concluded that a provision in an Operating Agreement which allows the Manager to make additional capital calls provided a means for obtaining funds to satisfy the D judgment. They also concluded that Racing Investment was in contempt of court for failing to have called for additional capital from its members. The Court of Appeals affirmed. This appeal resulted.
ISSUE:
RULE OF LAW:
HOLDING AND
DECISION:
LEGAL ANALYSIS:
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