Gulf Coast Farms' Gerald F. Bailey, Lance K. Robinson and business partners filed a counterclaim Thursday against Fifth Third Bank, alleging the bank engaged in fraudulent and deceitful banking practices.
Fifth Third sued the prominent Thoroughbred breeders in January, alleging they defaulted on $15 million in loans. Gulf Coast was the fourth-leading breeder in North America in 2010; it bred Preakness winner Lookin At Lucky, the 2009 juvenile champion and 2010 3-year-old champion.
Gulf Coast said in its response, filed Thursday in Fayette Circuit Court in Lexington, that Fifth Third's suit should be dismissed because any default "was created by or resulted from the conduct of the bank."
"Gulf Coast believes the manner in which they were treated by Fifth Third Bank is not consistent with the way a bank should operate," said Richard A. Getty, an attorney for Gulf Coast. "They don't believe they were told the truth on a number of matters."
Gulf Coast is seeking to recover at least $4 million in compensatory damages and at least $12 million in punitive damages.
According to the filing, Fifth Third managers "have consciously chosen to renege on promises, including those made in loan agreements, as part of an effort to extricate Fifth Third from the equine lending area."
Thomas W. Miller, an attorney for Fifth Third, said Thursday he had not seen the counterclaim.
"The bank denies any wrongdoing," Miller said.
Gulf Coast proposed a three-year plan to sell off horses, pay off the bank and continue operating, according to the counterclaim. But instead, Gulf Coast said, the bank forced the breeder to sell its horses at auction without reserve prices, resulting in "significant damages."
The claim states that Taylor Made Farm, at the request of the bank, appraised Gulf Coast horses and said many would bring higher prices if sold at another time. But Fifth Third informed Gulf Coast on the morning that Keeneland's November 2010 sale began that the horses must be sold without minimum prices, according to the filing.