Track dispute takes positive turn

December 10, 1993|By Ross Peddicord | Ross Peddicord,Staff Writer

A settlement could be near that will lead to a possible resolution of the fight over ownership of Laurel and Pimlico race courses.

A hearing scheduled for today before Judge Ellen Hollander in Baltimore City Circuit Court was postponed indefinitely yesterday "because we are involved in settlement negotiations," said track operator Joe De Francis.

The attorney for Bob and Tom Manfuso, De Francis' estranged partners in the four-year-long ownership dispute, acknowledged that they are continuing talks.

A court source said that Joseph H. H. Kaplan, chief administrative judge for the Baltimore City Circuit Court, has entered the case as a mediator. Kaplan did not return phone calls yesterday.

Jim Gray, De Francis' attorney, and Herb Garten, who represents the Manfusos, would not comment other than to confirm the negotiations. Garten left last night for a three-day skiing trip, so it is likely that negotiations will not resume until Monday.

The dispute between the two sides started to heat up in August, when Hollander ruled valid a Russian roulette provision that allows one side to buy out the other. The roulette clause is part of an original stockholders agreement that the Manfusos signed with De Francis four years ago, when he assumed control of the tracks after his father's death.

De Francis questioned the validity of the roulette clause after he was sued by the Manfusos in April 1992. But after Hollander gave the Manfusos the green light on Aug. 6, they triggered the provision on Oct. 9 and offered to sell De Francis their shares for $8.2 million.

De Francis is contractually bound either to buy the shares by Jan. 12 -- 90 days after he received the offer -- or sell his stock in Laurel and Pimlico to the Manfusos for the same price.

But De Francis has said he will not honor the roulette provision unless he gets a complete settlement beforehand from the Manfusos. In early November, De Francis petitioned Hollander to grant final summary judgment to her Aug. 6 ruling that validated the Russian roulette clause. That was the hearing set for today. If Hollander gave clearance, it would have allowed De Francis to appeal the Aug. 6 decision and could have tied the matter up indefinitely in the courts.

But, in the meantime, on Nov. 18, De Francis sent the Manfusos a settlement proposal in which he offered to drop all legal proceedings if they agreed to 11 points. Among the items De Francis requested:

* Full releases from both sides guaranteeing the end of all legal disputes. In April 1992, the Manfusos sued De Francis, alleging that he used profits from the tracks to finance a racing venture in Texas. He then filed a counter suit that challenged the validity of the roulette clause. Hollander dismissed most of the Manfusos' charges in June 1992. De Francis' counter suit is scheduled for court in March.

* Payment to De Francis and his minority partner, Martin Jacobs, of $2.8 million in principal that the late Frank De Francis and Jacobs had invested in Pimlico at the time of its purchase in 1986. The Manfusos already have been repaid their original venture capital, according to Joe De Francis.

* Agreement not to intervene in the Maryland Jockey Club's effort to build a track in Virginia.

* A buyout of the remaining six years of a 10-year contract guaranteeing employment to Jacobs as the track's chief counsel, about $1.6 million.

Initially, the Manfusos rejected the settlement offer, but then on Nov. 27 agreed to a couple of the points.

Since then, there had been no reported movement in the matter until yesterday.

If De Francis and the Manfusos reach a settlement, it is still not known who will end up owning the tracks.

De Francis has acknowledged only that he is talking to a number of potential investors and is close to reaching a deal to buy out the Manfusos.

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