Court Race Between Fifth Third Bank and Gulf Coast Horses
Fifth Third Bank, which sued Thoroughbred industry player Gulf Coast in January for defaulting on $15 million loans, is now facing a counterclaim from the American breeder for allegedly trying to withdraw from its equine lending agreements.
Fifth Third Bank, a U.S. regional banking corporation based in Cincinnati, Ohio, is a subsidiary of holding company Fifth Third Bancorp (NASDAQ: FITB) with assets totaling $111 billion over diversified financial services. Its stock closed at $14.75 today, up 3 percent on volume of 10,290,892 shares traded with NASDAQ.
The bank’s lawsuit against Gulf Coast was the fifth in a series of highly publicized court litigation in the Thoroughbred industry, the most prominent being the $34 million case filed against Zayat Stables for refusing to renew the credit it held from Fifth Third Bank. The case was settled when Zayat Stables filed for insolvency.
In a counterclaim filed in the Fayette County, Kentucky Circuit Court, Gulf Coast accused Fifth Third Bank of trying to breach its equine lending agreements with the Thoroughbred industry, which went hidden from Gulf Coast and other breeding entities having lending deals with the bank.
Under the agreement, Fifth Third Bank is bound to support Gulf Coast through a line of credit which would be compensated through the sale of horses as laid out in a timetable concurred by the two entities.
But Gulf Coast’s counterclaim said Fifth Third Bank was actually planning to withdraw its credits for the Thoroughbred player at the earliest time.
Unaware of the bank’s plans, Gulf Coast had already sold its horses at Keeneland auctions in September and November 2010 and January 2011, though in a lower value due to the ailing market.
The sale has caused financial damages to the breeding company, the counterclaim stated. Gulf Coast blames Fifth Third Bank for promising to sustain its line of credits and for insisting to disperse the horses.
Gulf Coast seeks at least $12 million in punitive damages and $4 million in compensatory damages from Fifth Third Bank, which is yet to respond to the allegations according to its legal counsel Tom Miller.