RENDERED: NOVEMBER 12, 2021; 10:00 A.M.

TO BE PUBLISHED

Commonwealth of Kentucky

Court of Appeals

NO. 2020-CA-0478-MR

MGG INVESTMENT GROUP LP APPELLANT 

v. 

APPEAL FROM FAYETTE CIRCUIT COURT

HONORABLE KIMBERLY N. BUNNELL, JUDGE

ACTION NO. 20-CI-00248 

MULL ENTERPRISES LIMITED 

D/B/A YEOMANSTOWN STUD APPELLEE

AND NO. 2020-CA-0434-MR

MULL ENTERPRISES LIMITED 

D/B/A YEOMANSTOWN STUD 

CROSS-APPELLANT 

v. 

CROSS-APPEAL FROM FAYETTE CIRCUIT COURT

HONORABLE KIMBERLY N. BUNNELL, JUDGE

ACTION NO. 20-CI-00248 

MGG INVESTMENT GROUP LP CROSS-APPELLEE 
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AND NO. 2020-CA-0821-MR

MGG INVESTMENT GROUP LP APPELLANT 

v. 

APPEAL FROM FAYETTE CIRCUIT COURT

HONORABLE KIMBERLY N. BUNNELL, JUDGE

ACTION NO. 20-CI-00248 

HILL ‘N’ DALE EQUINE HOLDINGS, INC.; 

LNJ FOXWOODS, LLC; MCMAHON OF 

SARATOGA THOROUGHBREDS, LLC; AND 

ORPENDALE UNLIMITED COMPANY APPELLEES 

AND NO. 2020-CA-0900-MR

MGG INVESTMENT GROUP LP APPELLANT 

v. 

APPEAL FROM FAYETTE CIRCUIT COURT

HONORABLE KIMBERLY N. BUNNELL, JUDGE

ACTION NO. 20-CI-00248

BEMAK N.V., LTD. APPELLEE 

AND NO. 2020-CA-0960-MR

MGG INVESTMENT GROUP LP APPELLANT 
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v. 

APPEAL FROM FAYETTE CIRCUIT COURT

HONORABLE KIMBERLY N. BUNNELL, JUDGE

ACTION NO. 20-CI-00248

FLINTSHIRE FARM, LLC AND THOMAS 

B. SEARS A/K/A BRAD SEARS APPELLEES 

OPINION

AFFIRMING IN PART, REVERSING IN PART, 

AND REMANDING

**   **  **

BEFORE: ACREE, GOODWINE, AND JONES, JUDGES.

GOODWINE, JUDGE: MGG Investment Group LP (“MGG”) appeals the 

judgment of the Fayette Circuit Court dismissing its claims against Mull 

Enterprises Limited d/b/a Yeomanstown Stud (“Yeomanstown”) based on KRS1

413.242. Yeomanstown cross-appeals the circuit court’s determination that MGG 

may be entitled to equitable tolling in dismissing its claims without prejudice. 

MGG also appeals judgments of the Fayette Circuit Court dismissing 

its claims against Hill ‘N’ Dale Equine Holdings, Inc. (“Hill ‘N’ Dale”); LNJ 

Foxwoods, LLC (“Foxwoods”); McMahon of Saratoga Thoroughbreds, LLC 

(“McMahon”); Orpendale Unlimited Company (“Orpendale”); Flintshire Farm, 

 

1 Kentucky Revised Statutes. 
-4-

LLC (“Flintshire”); and Thomas B. Sears a/k/a Brad Sears (“Sears”) under CR2

12.02(f) and granting summary judgment on behalf of Bemak N.V., Ltd. 

(“Bemak”). After careful review of the record and applicable law, and 

consideration of oral arguments by the parties, we affirm in part, reverse in part, 

and remand for entry of a judgment dismissing MGG’s claims against 

Yeomanstown with prejudice.

BACKGROUND

Zayat Stables, LLC (“Zayat Stables”) is in the business of “[o]wning, 

raising, maintaining, buying, selling, racing, breeding and promoting horses.” 

Record (“R.”) at 867. The most well-known of Zayat Stables’ thoroughbreds is 

AMERICAN PHAROAH, winner of the 2015 Triple Crown. 

In 2016, MGG loaned Zayat Stables $30 million secured by 

all of the property and assets and all interests therein and 

proceeds thereof now owned or hereafter acquired by any 

Person upon which a Lien is granted or purported to be 

granted by such Person as security for all or any part of 

the Obligations, including, without limitation, all Equine 

Collateral.

R. at 748. The financing agreement defines “Equine Collateral” as

all horses, stallions, mares, weanlings, foals, 

thoroughbred bloodstock and/or stallion shares, breeding 

rights, lifetime breeding rights and/or fractional interests 

therein, their offspring and young, both born and unborn, 

and/or fractional interests therein, stallion seasons and 

 

2 Kentucky Rules of Civil Procedure.
-5-

shares, and any other interests in any of the foregoing, 

owned by [Zayat Stables] or any of its Subsidiaries, 

howsoever classified, whether now owned or hereafter 

acquired, and including all substitutions and 

replacements thereof.

Id. at 752. Under the financing agreement, Zayat Stables was obligated to report to 

MGG any sale of equine collateral. Id. at 809. Zayat Stables agreed not to sell any 

equine collateral except as permitted by the agreement. Id. at 819. The agreement 

allowed, in part, for sales which were for fair market value and in the ordinary 

course of business. Id. at 765. Upon any sale, Zayat Stables was required to 

prepay principal with a percentage of the proceeds. Id. at 784. 

These appeals involve sales of ownership interests in EL KABEIR, 

AMERICAN CLEOPATRA, and SOLOMINI, three horses owned by Zayat

Stables at the time the financing agreement was executed, as well as the sale of the 

breeding rights to AMERICAN PHAROAH and LEMOONA. On September 20, 

2017, Zayat Stables privately sold EL KABEIR to Yeomanstown for $500,000. 

On November 15, 2017, Zayat Stables privately sold AMERICAN CLEOPATRA 

to Hill ‘N’ Dale for $1.3 million. Between December 2018 and June 2019, Zayat

Stables sold nine shares of the breeding rights to AMERICAN PHAROAH to 

Foxwoods and Orpendale for a total of $3.3 million. On March 6, 2019, Zayat

Stables privately sold the breeding rights to LEMOONA to Flintshire and Sears for 

$150,000. On December 3, 2019, Zayat Stables privately sold its fifty percent 
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ownership interest in SOLOMINI to McMahon.3 MGG claims none of these sales 

were for fair market value and that Zayat Stables did not prepay principal upon 

receiving the proceeds from the sales in violation of the financing agreement.

In September 2019, Zayat Stables defaulted on the loan. 

Subsequently, MGG sent Zayat Stables a notice of default and reservation of 

rights. On January 21, 2020, after failing to reach an agreement for liquidation, 

MGG filed suit against Zayat Stables alleging breach of contract and fraud. R. at 

1043-46. MGG’s claims against Zayat Stables remain pending before the circuit 

court. 

On February 11, 2020, MGG amended its complaint to include claims 

against purchasers of equine collateral, including the appellees. In relevant part, 

MGG claimed intentional interference with contract against Orpendale, replevin 

and constructive trust against Yeomanstown, Hill ‘N’ Dale, Foxwoods, Orpendale, 

and McMahon, as well as unjust enrichment against Flintshire and Sears.4 MGG 

claimed Bemak tortiously interfered with its security interest when Bemak 

facilitated Orpendale’s purchase of AMERICAN PHAROAH breeding rights. 

 

3 Zayat Stables previously sold a fifty percent interest in SOLOMINI to Orpendale for $800,000. 

Prior to the sale to Orpendale, Zayat Stables obtained a partial release from MGG and, after the 

sale, transferred proceeds to MGG in accordance with the financing agreement. R. at 1031-37. 

McMahon contemporaneously purchased Orpendale’s ownership interest.

4 MGG also amended its complaint to include claims against individual members of the Zayat 

family. These individuals are not parties to these appeals.
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Yeomanstown moved to dismiss MGG’s claims based on the statutes 

of limitations under KRS 413.242 and KRS 413.125. The circuit court granted the 

motion, holding KRS 413.242 and KRS 413.125 are applicable and the discovery 

rule is inapplicable herein. However, in dismissing MGG’s claims against 

Yeomanstown without prejudice, the court also determined MGG may be entitled 

to equitable tolling. 

The remaining appellees moved for summary judgment and dismissal 

of MGG’s claims. In granting the motions, the circuit court determined the Food 

Security Act of 1985 (“FSA”) applied to these sales because horses and breeding 

rights are “farm products” under 7 U.S.C.5 § 1631(c)(5). R. at 2560.6 The court 

further determined, based upon MGG’s own description of Zayat’s business, 

appellees were buyers “in the ordinary course of business” who took the horses or 

breeding rights free of MGG’s security interest. R. at 2560-61.

These appeals and cross-appeal followed. 

 

5 United States Code.

6 This citation is to the order dismissing MGG’s claims against McMahon. The court’s 

reasoning in dismissing the claims against Foxwoods, Orpendale, Hill ‘N’ Dale, Flintshire, and 

Sears, as well as granting summary judgment in favor of Bemak, is essentially identical to its 

reasoning in the McMahon order.
-8-

STANDARD OF REVIEW

A motion to dismiss under CR 12.02(f) for failure to state a claim 

upon which relief may be granted is reviewed de novo. Carruthers v. Edwards, 

395 S.W.3d 488, 491 (Ky. App. 2012) (citation omitted). 

The court should not grant the motion unless it appears 

the pleading party would not be entitled to relief under 

any set of facts which could be proved in support of his 

claim. In making this decision, the circuit court is not 

required to make any factual determination; rather, the 

question is purely a matter of law. Stated another way, 

the court must ask if the facts alleged in the complaint 

can be proved, would the plaintiff be entitled to relief?

James v. Wilson, 95 S.W.3d 875, 883-84 (Ky. App. 2002) (internal quotation 

marks and footnotes omitted).

Summary judgment is also reviewed de novo. Isaacs v. Sentinal

Insurance Company Limited, 607 S.W.3d 678, 681 (Ky. 2020) (citation omitted). 

In determining whether summary judgment was proper, we must determine 

“whether the circuit [court] correctly found that there were no issues as to any 

material fact and that the moving party was entitled to a judgment as a matter of 

law. Summary judgment is appropriate where the movant shows that the adverse 

party could not prevail under any circumstances.” Id. (citation omitted).

ANALYSIS

On appeal, MGG argues: (1) the circuit court erred in granting 

summary judgment and dismissing its claims based on the FSA; (2) KRS 413.242 
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does not bar its claims against Yeomanstown; and (3) MGG is entitled to 

application of the discovery rule and/or equitable tolling, making its claims against 

Yeomanstown timely under KRS 413.125. On cross-appeal, Yeomanstown argues, 

because MGG is not entitled to equitable tolling, its claims should have been 

dismissed with prejudice.7

First, MGG alleges the circuit court erred in determining the FSA 

allowed the appellees to take horses and breeding rights free of MGG’s security 

interest. Within this argument, MGG claims: (1) thoroughbred race horses and 

breeding rights thereto are not “farm products” under the FSA; (2) the appellees 

are not “buyers in the ordinary course” under the statute; and (3) the AMERICAN 

PHAROAH breeding rights were not sold by the same party which created the 

security interest therein.

Prior to passage of the FSA in 1985, many states enacted “farm 

products exceptions” under the Uniform Commercial Code (“UCC”) to protect 

security interests in farm products. Kentucky’s farm products exception mirrors 

those of other states and mandates

[e]xcept as otherwise provided in subsection (5) of this 

section, a buyer in ordinary course of business, other 

than a person buying farm products from a person 

engaged in farming operations, takes free of a security 

 

7 At oral arguments, Hill ‘N’ Dale joined Yeomanstown in this argument. Although Hill ‘N’ 

Dale argued MGG’s claims were time barred by KRS 413.125, the circuit court did not reach this 

argument because it found application of the FSA dispositive of the claims against Hill ‘N’ Dale.
-10-

interest created by the buyer’s seller, even if the security 

interest is perfected and the buyer knows of its existence.

KRS 355.9-320(1) (emphasis added). 

Congress adopted the FSA to eliminate these exceptions and protect 

purchasers of farm products from “double payment.” 7 U.S.C. § 1631(a)(2). The 

FSA requires

[e]xcept as provided in subsection (e) and 

notwithstanding any other provision of Federal, State, or 

local law, a buyer who in the ordinary course of business 

buys a farm product from a seller engaged in farming 

operations shall take free of a security interest created by 

the seller, even though the security interest is perfected; 

and the buyer knows of the existence of such interest.

7 U.S.C. § 1631(d).8 

MGG argues Kentucky’s farm products exception is not entirely 

preempted by the FSA because the General Assembly, by amending the UCC 

definition of farm products, specifically included “[e]quine interests, including, but 

not limited to, interests in horses, mares, yearlings, foals, weanlings, stallions, 

syndicated stallions, and stallion shares (including seasons and other rights in 

 

8 Subsection (e) delineates the manner by which a buyer takes the farm product subject to a 

security interest created by the seller. For farm products to sell subject to a security interest, the 

buyer must either receive direct notice or, where applicable, appropriate filings must be made 

through a central filing system. Kentucky has not implemented a central filing system, making 

direct notice to the buyer necessary to protect a security interest created by a seller.
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connection therewith), whether or not the debtor is engaged in farming operations 

and without regard to the use thereof.” KRS 355.9-102(1)(ah)5. 

“Pre-emption may be either expressed or implied, and is compelled 

whether Congress’ command is explicitly stated in the statute’s language or 

implicitly contained in its structure and purpose.” Gade v. National Solid Waste 

Management Ass’n, 505 U.S. 88, 98, 112 S. Ct. 2374, 2383, 120 L. Ed. 2d 73 

(1992) (internal quotation marks and citations omitted). The FSA expressly 

preempts state farm products exceptions through inclusion of “notwithstanding any 

other provision of Federal, State, or local law” within the language of the statute. 

Farm Credit Bank of St. Paul v. F & A Dairy, 477 N.W.2d 357, 360 (Wis. Ct. App. 

1991). This is reinforced by Congress’ statements of intention in enacting the 

FSA, as recorded in a House Committee Report.

The bill is intended to preempt state law (specifically the

so-called “farm products exception” of the Uniform 

Commercial Code section 9-307) to the extent necessary 

to achieve the goals of this legislation. Thus, this Act 

would preempt state laws that set as conditions for buyer 

protection of the type provided by the bill requirements 

that the buyer check public records, obtain no-lien 

certificates from the farm products sellers, or otherwise 

seek out the lender and account to that lender for the sale 

proceeds.

 
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Food Services of America v. Royal Heights, Inc., 871 P.2d 590, 595 (Wash. 1994) 

(en banc) (citing H. R. REP.

9 No. 271, pt. 1, 99th Cong., 1st Sess. 110 (1985), 

reprinted in U.S.C.C.A.N.10 1103, 1214). Based upon this reasoning, Kentucky’s

farm products exception is preempted by the FSA. 

MGG further argues neither thoroughbred race horses nor breeding 

rights qualify as “farm products” under the FSA. The FSA defines a “farm 

product” as

an agricultural commodity such as wheat, corn, soybeans, 

or a species of livestock such as cattle, hogs, sheep, 

horses, or poultry used or produced in farming 

operations, or a product of such crop or livestock in its 

unmanufactured state (such as ginned cotton, wool-clip, 

maple syrup, milk, and eggs), that is in the possession of 

a person engaged in farming operations.

7 U.S.C. § 1631(c)(5). 

When interpreting a statute, we must first consider the plain language 

of the law and, where there is no ambiguity, we will look no further. Seeger v. 

Lanham, 542 S.W.3d 286, 291 (Ky. 2018) (citation omitted). Where no ambiguity 

exists, “there is no need to resort to the rules of statutory construction in 

interpreting it. The words of the statute are simply accorded their commonly 

understood meaning.” Id. at 293 (citation omitted).

 

9 House of Representative Reports.

10 United States Code Congressional and Administrative News.
-13-

Herein, farm products are plainly defined to include horses. MGG 

attempts to distinguish thoroughbreds from workhorses, claiming only the latter 

can be considered farm products. However, Congress did not provide such a 

distinction. Although addressing another clause of the FSA, a United States 

District Court accurately described the place of statutory construction when it 

stated,

[i]t is apparent that Congress intended by the FSA to shift 

the potential burden of loss in cases of the sale of farm 

products to the lenders who finance farm operations, 

rather than have that burden imposed upon buyers, thus 

inhibiting interstate commerce. If Congress has cast its 

net too broadly in the FSA, at least in some 

circumstances, the proper remedy is in legislative 

amendment, not strained construction by the judiciary.

Lisco State Bank v. McCombs Ranches, Inc., 752 F.Supp. 329, 334 (D. Neb. 1990). 

In defining farm products, Congress only qualified that the horse must 

be “used or produced in farming operations[.]” 7 U.S.C. § 1631(c)(5). “Farming 

operations” are not defined by the FSA. However, Kentucky’s UCC defines 

“farming operation[s]” to include “raising, cultivating, propagating, fattening, 

grazing, or any other farming, livestock, or agricultural operation[.]” KRS 355.9-

102(1)(ai). Additionally, BLACK’S LAW DICTIONARY (11th ed. 2019), borrows 

from the federal bankruptcy statute in defining “farming operation[s]” as “[a] 

business engaged in farming, tillage of soil, dairy farming, ranching, raising of 

crops, poultry, or livestock, or production of poultry or livestock products in an 
-14-

unmanufactured state.” See also 11 U.S.C. § 101(21). MGG cites to no alternative 

definition for farming operations which does not include raising livestock, 

including horses. 

Certainly, there are owners of thoroughbred race horses who are not 

engaged in farming operations. However, Zayat Stables is not such an owner. In 

fact, in its amended complaint and the financing agreement, MGG defines the 

nature of Zayat Stables’ business as “[o]wning, raising, maintaining, buying,

selling, racing, breeding and promoting horses.” R. at 867. Because Zayat Stables 

raises horses, it is engaged in farming operations. Furthermore, because the horses 

in question were sold by a business engaged in such operations, they are farm 

products. 

Following similar reasoning, the AMERICAN PHAROAH breeding 

rights are also farm products. Again, MGG attempts to narrow the definition of 

farm products in a manner which Congress did not in enacting the FSA. This 

Court, in a decision which predates enactment of the FSA, determined a stallion 

syndicate granting one free nomination per breeding season of a mare to be bred to 

the stallion for its lifetime is properly classified as a farm product. North Ridge 

Farms, Inc. v. Trimble, 1983 WL 160534, 37 UCC Rep. Serv. 1280, 1288 (Ky. 
-15-

App. Dec. 2, 1983).11 Similarly, we are persuaded that lifetime breeding rights in 

AMERICAN PHAROAH are farm products under the FSA. 

MGG next argues the FSA does not apply to the subject sales because 

the appellees are not buyers in the ordinary course of business. 7 U.S.C. §

1631(d). A buyer in the ordinary course of business is defined as “a person who, 

in the ordinary course of business, buys farm products from a person engaged in 

farming operations who is in the business of selling farm products.” 7 U.S.C. § 

1631(c)(1). MGG’s argument must fail because, as discussed previously, within 

the amended complaint and security agreement, MGG defines Zayat Stables’ 

business to include the selling of horses. R. at 867. We cannot overlook this 

admission. 

With regard to the AMERICAN PHAROAH breeding rights, MGG 

further argues the security interest in the rights was not created by the seller of the 

rights, making the FSA inapplicable. MGG claims Justin Zayat, individually and 

separately from Zayat Stables, sold the breeding rights. Much like its prior 

argument, MGG ignores its own amended complaint in making this assertion. 

Specifically, within the amended complaint, MGG asserts “Zayat Stables and the 

 

11 We cite this unpublished opinion as persuasive, not binding, authority. See CR 76.28(4)(c). 

Because North Ridge Farms was decided before Congress enacted the FSA, this Court reached 

its decision using the then-enacted UCC definition of farm products which included “crops or 

livestock used or produced in farming operations or if they are products of crops or livestock in 

their unmanufactured states . . . and if they are in the possession of a debtor engaged in raising, 

fattening, grazing or other farming operations.” North Ridge Farms, 37 UCC Rep. Serv. at 1288.
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Zayat Family purported to sell [AMERICAN PHAROAH] breeding rights Nos. 3-

9 to Defendant Orpendale[.]” R. at 692.

12

 Furthermore, the amended complaint 

describes Justin Zayat as the President of Zayat Stables who is “in charge of the 

day-to-day operations of Zayat Stables.” Id. at 643. In light of these declarations, 

we are unconvinced by MGG’s argument. 

As determined by the circuit court, MGG could have provided the 

purchasers direct notice under 7 U.S.C. § 1631(e)(1) to protect its security 

interests. MGG acknowledges the notice provisions of the FSA within the 

financing agreement. Therein, Zayat Stables was required to:

Provide to [MGG] a list of the buyers, commission 

merchants, selling agents and auctioneers to or through 

whom the Borrower may sell any of the Equine 

Collateral pursuant to the provisions of Section 1324 of 

the Food Security Act of 1985, 7 U.S.C. 1631, in order 

that [MGG] may give notices required by, and enjoy 

protection afforded by, such Section. Schedule 7.01(q) 

attached hereto and made a part hereof sets forth the 

name and address of all such buyers, commission 

merchants, selling agents and auctioneers. Borrower 

agrees to provide [MGG] with any additions or deletions 

from such Schedule immediately upon becoming aware 

of the same, and, in any event, to update such Schedule at 

least quarterly, and further agrees to notify the Collateral 

Agent, in writing, of the identity and address of any other 

buyer, commission merchant, or selling agent not 

included on such Schedule 7.01(q) at least seven (7) days 

prior to any sale of the Equine Collateral. BORROWER 

ACKNOWLEDGES THAT PURSUANT TO 7 U.S.C. 

 

12 With regard to the sale of AMERICAN PHAROAH breeding rights Nos. 1 and 2, MGG 

asserts “Zayat Stables and Justin Zayat” purported to sell the shares to Foxwoods. R. at 689.
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1631(h)(3), BORROWER’S FAILURE TO COMPLY 

WITH THE PROVISIONS OF THIS SECTION 7.01(q) 

MAY SUBJECT BORROWER TO A FINE IN THE 

AMOUNT OF $5,000,000 OR 15% OF THE VALUE 

OF THE BENEFIT RECEIVED FROM SUCH 

COLLATERAL, WHICHEVER IS GREATER.

R. at 818 (emphasis added).13 

 This provision of the financing agreement shows MGG was aware of 

the requirement of direct notice to a purchaser of equine collateral to protect a

security interest. Furthermore, we are unconvinced by MGG’s claim that this 

reference to the FSA “does not indicate that the parties intended the FSA to govern 

the sales[.]” Reply Brief at 14. In fact, citation to the FSA in the financing 

agreement is evidence of acknowledgment by the parties of the applicability of the 

statute to any potential sale of equine collateral. To find otherwise would be 

illogical. MGG would not have required Zayat Stables to provide names and 

addresses of purchasers in order to provide notice under 7 U.S.C. § 1631(e) to 

protect its security interests if the parties did not believe 7 U.S.C. § 1631(d) 

applied to the relevant sales herein. 

MGG next argues the circuit court erred in finding KRS 413.242 bars 

its claims against Yeomanstown. 

Before a party possessing a security interest or lien 

against an equine interest that has been sold without the 

 

13 Schedule 7.01(q) includes Keeneland Association, Inc., Fasig-Tipton Company, Inc., and 

Ocala Breeders’ Sales Company. R. at 879. No appellee is named therein.
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debt to the party being discharged may bring an action 

against the purchaser or selling agent of the equine 

interest, the secured party shall pursue a remedy against 

the debtor to the point where a judgment is rendered on 

the merits or the suit is dismissed with prejudice.

KRS 413.242. Within its argument, MGG first claims it complied with the 

requirements of the statute by attempting to distinguish the “claims” it brought 

against Yeomanstown within its action against Zayat Stables from a separate 

“action” it could have brought against Yeomanstown. Essentially, MGG argues its 

claims are not barred by KRS 413.242 because they were brought within the action 

against the debtor, Zayat Stables, rather than as a separate action against the 

purchaser, Yeomanstown. 

“[I]t is axiomatic that, when interpreting a provision of a statute, a 

court should not, if possible, adopt a construction that renders a provision 

meaningless or ineffectual or interpret a provision in a manner that brings about an 

absurd or unreasonable result.” Schoenbachler v. Minyard, 110 S.W.3d 776, 783 

(Ky. 2003) (footnotes omitted). The statute plainly states the legislature intended 

for creditors to pursue actions against sellers “to the point where a judgment is 

rendered on the merits or the suit is dismissed with prejudice” prior to pursuing 

any action against a purchaser. KRS 413.242. The intention of the legislature for 

suits against debtors to first reach finality is unambiguous. Were we to adopt 

MGG’s theory differentiating between a “claim” and an “action,” security interest 
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holders would be empowered to entirely circumvent KRS 413.242 by filing an 

action which includes claims against both the debtor and purchaser at once. This 

would effectively render KRS 413.242 meaningless, an outcome strongly 

disfavored by our jurisprudence. Brooks v. Commonwealth, 217 S.W.3d 219, 223 

(Ky. 2007); Commonwealth v. Phon, 17 S.W.3d 106 (Ky. 2000); DeStock No. 14, 

Inc. v. Logsdon, 993 S.W.2d 952 (Ky. 1999). Therefore, MGG’s amendment of 

the complaint against Zayat Stables to include claims against Yoemanstown is not 

sufficient for compliance with KRS 413.242. 

MGG further argues, regardless of its noncompliance with KRS 

413.242, the statute is unconstitutional under Section 2 of the Kentucky 

Constitution.14 Section 2 of the Kentucky Constitution states, “[a]bsolute and 

arbitrary power over the lives, liberty and property of freemen exists nowhere in a 

republic, not even in the largest majority.” The Supreme Court of Kentucky has 

held “whatever is essentially unjust and unequal or exceeds the reasonable and 

legitimate interests of the people is arbitrary.” Commonwealth Natural Resources 

and Environmental Protection Cabinet v. Kentec Coal Co., Inc., 177 S.W.3d 718, 

726 (Ky. 2005) (citation omitted). Where economic rights are involved, the 

 

14 MGG provided notice to the Attorney General of its constitutional challenge to KRS 413.242

as required by KRS 418.075. The Attorney General declined to intervene in this action. 
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purpose of the statute must be rationally related to a legitimate state objective. 

Beshear v. Acree, 615 S.W.3d 780, 816 (Ky. 2020) (citation omitted). 

MGG contends there is no rational basis for such a distinction and 

attempts to place the burden of identifying such a rationale on both Yeomanstown 

and the circuit court.15 However, MGG solely bears the burden of dispelling any 

conceivable basis which might justify the statute. Buford v. Commonwealth, 942 

S.W.2d 909, 911 (Ky. App. 1997). “A strong presumption exists in favor of the 

constitutionality of a statute. Furthermore, one who seeks to have a statute 

declared unconstitutional bears the burden of dispelling any conceivable basis 

which might justify the legislation.” Id. (citation omitted).

A rational basis may be any reasonable basis or 

substantial and justifiable reason. A person challenging a 

law upon equal protection grounds under the rational 

basis test has a very difficult task because a law must be 

upheld if there is any reasonably conceivable state of 

facts that could provide a rational basis for the 

classification. Furthermore, the General Assembly need 

not articulate its reasons for enacting the statute, and . . . 

has great latitude to enact legislation that may appear to 

affect similarly situated people differently. 

Teco/Perry County Coal v. Feltner, 582 S.W.3d 42, 47 (Ky. 2019) (citations 

omitted). Furthermore, we need not agree with the wisdom or expediency of the 

 

15 Although the circuit court did not directly address the constitutionality of KRS 413.242 in its 

judgment, in granting Yeomanstown’s motion to dismiss the court implicitly found the statute 

constitutional. The parties did not file post-judgment motions under CR 52.02 or CR 59.05.
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General Assembly’s purpose for a statute for it to be constitutional. Buford, 942 

S.W.2d at 911.

MGG argues KRS 413.242 unconstitutionally creates an arbitrary 

classification favoring purchasers of equine interests over all other purchasers. 

“We will accept at face value contemporaneous declarations of governmental 

purposes, or in the absence thereof, rationales construed after the fact, unless our 

examination of circumstances forces us to conclude that they could not have been a 

goal of the classification.” Commonwealth ex rel. Stumbo v. Crutchfield, 157 

S.W.3d 621, 624 (Ky. 2005) (citation omitted). 

The General Assembly unquestionably has the power to enact such 

statutes. Munday v. Mayfair Diagnostic Laboratory, 831 S.W.2d 912, 914 (Ky. 

1992) (citation omitted). Kentucky’s appellate courts have repeatedly upheld the 

constitutionality of statutes of limitation even where they arguably conflict with 

sections of the Kentucky Constitution. Id. “[P]rovisions of statutes of limitations 

should not be lightly evaded.” Id. (citation omitted). Acceptance of MGG’s 

argument regarding the constitutionality of KRS 413.242 would violate these 

settled principles and would call into question the constitutionality of many 

provisions of KRS Chapter 413. 

Furthermore, as identified by Yeomanstown, numerous Kentucky 

statutes treat the equine industry in a manner different from the way in which other 
-22-

industries within the Commonwealth are treated. See KRS 139.531 (exempting 

certain equine sales from application of taxes); see also KRS 330.210 (regulating 

the sale of horses by auction); KRS 525.130 (exempting killing of animals at 

organized horse races or shows from cruelty to animals and imposing additional 

penalties for offenses arising from a person’s treatment of an equine). In fact, the 

entirety of KRS Chapter 230 separately regulates the horse racing and showing 

industries.

16 Furthermore, in enacting KRS Chapter 230, “the intent of the 

Commonwealth [was] to foster and to encourage the horse breeding industry 

within the Commonwealth and to encourage the improvement of the breeds of 

horses[,]” as well as “to foster and to encourage the business of legitimate horse 

racing with pari-mutuel wagering thereon in the Commonwealth on the highest 

possible plane.” KRS 230.215(1). Although not part of Chapter 230, KRS 

413.242 can undoubtedly be rationally related to the same government interests. 

Therefore, as MGG is unable to dispel all conceivable rationales for the General 

Assembly’s enactment of KRS 413.242, the statute is not unconstitutional. 

Next, MGG argues its claims against Yeomanstown were timely. “An 

action for the taking, detaining or injuring of personal property, including an action 

 

16 See KRS 230.225 (establishing the Kentucky Horse Racing Commission); KRS 230.280 to 

KRS 230.310 (regulating licensure for horse racing); KRS 230.357 (regulating sales, purchases, 

and transfers of horses); KRS 230.781 (exempting international racing hubs from fees and taxes);

KRS 230.804 (establishing the Kentucky horse breeders’ incentive fund and regulating the 

disbursement of monies from the fund); and KRS 230.990 (establishing penalties for violations 

of statutes). 
-23-

for specific recovery shall be commenced within two (2) years from the time the 

cause of action accrued.” KRS 413.125. Yoemanstown purchased EL KABEIR 

from Zayat Stables on September 20, 2017. MGG amended its complaint to bring 

claims against Yeomanstown on February 11, 2020, more than four months after 

the expiration of the statute of limitations. MGG concedes to these facts but argues 

its claims are timely with application of the discovery rule.

Under the discovery rule, a cause of action does not accrue “until the 

plaintiff discovers or[,] in the exercise of reasonable diligence[,] should have 

discovered not only that he has been injured but also that his injury may have been 

caused by the defendant’s conduct.” R.T. Vanderbilt Co., Inc. v. Franklin, 290 

S.W.3d 654, 659 (Ky. App. 2009) (citation omitted). “Reasonable diligence means 

that a plaintiff must be as diligent as the great majority of persons would [be] in the 

same or similar circumstances[.]” Id. (citations omitted). This rule is available 

only in the limited circumstances in which an injury is not readily discoverable or 

ascertainable. Wiseman v. Alliant Hospitals, Inc., 37 S.W.3d 709, 712 (Ky. 2000) 

(citations omitted). The discovery rule is most often applied to cases involving 

latent injuries or illnesses. Mark D. Dean, P.S.C. v. Commonwealth Bank & Trust 

Co., 434 S.W.3d 489, 502 (Ky. 2014) (citation omitted). Kentucky courts have 

generally been reluctant to extend the discovery rule where they are without the 
-24-

statutory authority to do so. Roman Catholic Diocese of Covington v. Secter, 966 

S.W.2d 286, 288 (Ky. App. 1998) (citations omitted). 

No statutory authority exists for applying the discovery rule to the 

circumstances herein. Furthermore, this case is easily distinguishable from those 

where the rule has been applied, namely those involving latent injuries or illnesses. 

Here, MGG suffered no latent injury attributable to Yeomanstown’s actions.17 

Had MGG exercised reasonable diligence, it would have discovered 

Zayat Stables’ sale of EL KABEIR to Yeomanstown. While Zayat Stables may 

have failed to comply with its obligation to notify MGG of the sale, MGG had 

other means of discovering it. Primarily, it is uncontroverted that MGG had, under 

the financing agreement, inspection rights which allowed agents of MGG to, with 

written notice to Zayat Stables, “visit, inspect and conduct such examinations as 

they may elect in their sole and absolute discretion[.]” R. at 814. As part of its 

inspection rights, MGG was empowered

(A) to examine and make copies of and abstracts from 

[Zayat Stables’] records and books of account, (B) to 

visit, inspect and examine [Zayat Stables’] Equine 

Collateral and other properties, (C) to permit Equine 

Appraisers to visit, inspect and examine [Zayat Stables’] 

Equine Collateral in connection with Equine Appraisals 

permitted hereunder, (D) to verify materials, leases, 

notes, accounts receivable, deposit accounts and [Zayat

Stables’] other assets, (E) to conduct audits, physical 

 

17 In fact, MGG does not allege any wrongdoing attributable to Yeomanstown. Instead, MGG 

alleges only wrongdoing by Zayat Stables in concealing the sale of EL KABEIR.
-25-

counts, valuations, appraisals, or examinations and (F) to 

discuss [Zayat Stables’] affairs, finances and accounts 

with any of its directors, officers, managerial employees, 

independent accountants or any of its other 

representatives[.]

Id. MGG was also entitled to equine appraisals at Zayat Stables’ expense. Id.

MGG’s failure to exercise these inspection rights is fatal to any claim that the 

injury it suffered was “inherently unknowable” within the statutory period. Wilson 

v. Paine, 288 S.W.3d 284, 287 (Ky. 2009) (citation omitted). 

In the alternative, MGG argues it is entitled to equitable tolling as to 

its claims against Yeomanstown. “Equitable tolling pauses the running of, or tolls, 

a statute of limitations when a litigant has pursued his rights diligently, but some 

extraordinary circumstance prevents him from bringing a timely action.” Williams 

v. Hawkins, 594 S.W.3d 189, 193 (Ky. 2020) (citing Lozano v. Montoya Alvarez, 

472 U.S. 1, 10, 134 S. Ct. 1224, 1231-32, 188 L. Ed. 2d 200 (2014)). “[T]o be 

entitled to equitable tolling, a litigant must establish: (1) that he has been pursuing 

his rights diligently, and (2) that some extraordinary circumstance stood in his way 

and prevented timely filing, with those circumstances being beyond the litigant’s 

control.” Id. at 194 (internal quotation marks and citation omitted). It is 

incumbent on plaintiffs to locate and name the proper party defendant. Id. at 195 

(citation omitted). 
-26-

The circuit court, in dismissing MGG’s claims against Yeomanstown 

without prejudice, held “[e]quitable [t]olling could or may apply to the case at bar, 

but the [c]ourt does not currently have sufficient evidence before it to make this 

determination.” R. at 1357. Again, MGG argues only that Zayat’s actions in 

failing to comply with the security agreement in reporting the sale entitles it to 

equitable tolling of its claims against Yeomanstown. This claim must fail on the 

same grounds as MGG’s argument for application of the discovery rule. Had 

MGG exercised its inspection rights and practiced reasonable diligence, it would 

have discovered the sale. MGG fails to identify any extraordinary circumstance 

beyond its control which entitles it to equitable tolling. 

CONCLUSION

Accordingly, the judgments of the Fayette Circuit Court on MGG’s 

claims against Hill ‘N’ Dale, Foxwoods, McMahon, Orpendale, Flintshire, Sears, 

and Bemak are affirmed. The judgment on MGG’s claims against Yeomanstown 

is affirmed in part, reversed in part, and remanded with direction for the circuit 

court to enter a judgment dismissing the claims with prejudice.

ALL CONCUR.
-27-

BRIEFS FOR APPELLANT/CROSSAPPELLEE:

W. Craig Robertson III

Daniel E. Hitchcock

Thomas E. Travis

Lexington, Kentucky

Kannon K. Shanmugam

Stacie M. Fahsel

Tanya S. Manno

Brian M. Lipshutz

Washington, D.C.

ORAL ARGUMENT FOR 

APPELLANT/CROSS-APPELLEE:

Kannon K. Shanmugam

Washington, D.C.

BRIEF FOR APPELLEE/CROSSAPPELLANT, MULL 

ENTERPRISES LIMITED D/B/A 

YEOMANSTOWN STUD:

Thomas D. Bullock

Rachele T. Yohe

Lexington, Kentucky

BRIEF FOR APPELLEE, HILL ‘N’ 

DALE EQUINE HOLDINGS, INC.:

David T. Royse

John C. Roach

Lexington, Kentucky

BRIEF FOR APPELLEE, 

MCMAHON OF SARATOGA

THOROUGHBREDS, LLC:

Gregory P. Parsons

Marshall R. Hixson

Megan K. George

Lexington, Kentucky

BRIEF FOR APPELLEE, LNJ 

FOXWOODS, LLC:

W. Chapman Hopkins

Andrew J. Donovan

Lexington, Kentucky

BRIEF FOR APPELLEES, BEMAK 

N.V., LTD. & ORPENDALE 

UNLIMITED COMPANY:

Barry D. Hunter

Medrith Lee Norman

Lexington, Kentucky
-28-

BRIEF FOR APPELLEES, 

FLINTSHIRE FARM, LLC & 

THOMAS B. SEARS:

J. Mel Camenisch, Jr.

Megan R. Holt

Lexington, Kentucky 

ORAL ARGUMENTS FOR 

APPELLEES/CROSS-APPELLANT

David T. Royse

Lexington, Kentucky

Thomas D. Bullock

Lexington, Kentucky