NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

File Name: 14a0682n.06

No. 13-5951

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

KNC INVESTMENTS, LLC, a California 

Limited Liability Company,

Plaintiff-Appellant,

v.

LANE’S END STALLIONS, INC., a Texas 

Corporation,

Defendant-Appellee.

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ON APPEAL FROM THE UNITED 

STATES DISTRICT COURT FOR 

THE EASTERN DISTRICT OF 

KENTUCKY

OPINION

BEFORE: WHITE, DONALD, and O’MALLEY, Circuit Judges.*

BERNICE BOUIE DONALD, Circuit Judge. The instant appeal involving KNC 

Investments, LLC (“KNC”) and Lane’s End Stallions, Inc. (“Lane’s End”) arose following this 

Court’s remand to the district court—via sealed per curiam order—to determine whether 

subsequent events mooted the issues KNC raised in its prior appeal, No. 12-5650. On remand, 

the district court found that no live case or controversy remained and accordingly granted Lane’s 

End’s motion to dismiss the case for lack of subject-matter jurisdiction pursuant to Federal Rule 

of Civil Procedure 12(b)(1). For the following reasons, we AFFIRM the judgment of the district 

court.

 

*

The Honorable Kathleen M. O’Malley, United States Court of Appeals for the Federal Circuit, 

sitting by designation.
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I.

Lane’s End serves as Syndicate Manager for the owners of interests in the Lemon Drop 

Kid Syndicate (“the Syndicate”). Lemon Drop Kid is a Thoroughbred horse. The agreement 

establishing the Syndicate transferred ownership of Lemon Drop Kid from the original, single 

owner into syndicate form to provide for the horse’s management and supervision. The 

Syndicate consists of forty equal fractional ownership interests (“Fractional Interests”). A holder 

of a Fractional Interest is an Owner. Each Owner has various rights under the agreement, 

including breeding Nominations.

On February 28, 2011, KNC purchased Fractional Interest No. A05 in the Syndicate from

its previous Owner. At the time of this purchase, the Original Syndicate Agreement (“Original 

Agreement”), effective November 30, 2000, governed the rights and responsibilities of the 

Owners and the Syndicate Manager. The Original Agreement contained a procedure whereby

thirty-four of the forty Owners of Fractional Interests could amend it.

After buying Fractional Interest No. A05, KNC became concerned about some of Lane’s 

End’s business practices. Those practices included Lane’s End’s making contracts related to the 

Syndicate in its own name, failing to segregate the Syndicate’s assets from those of other 

syndicates managed by Lane’s End, and handling of breeding Nominations. 

On January 17, 2012, KNC filed suit against Lane’s End, as Syndicate Manager, in the 

United States District Court for the Eastern District of Kentucky, asserting four claims and 

seeking declaratory relief, injunctive relief, and damages. In May of 2012, the district court 

granted Lane’s End’s motion to dismiss and denied KNC’s motion for discovery. KNC appealed

to this Court.
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Before this Court adjudicated KNC’s prior appeal, the other thirty-nine Owners of 

Fractional Interests in the Syndicate voted to amend the Original Agreement and expressly to 

ratify Lane’s End’s past actions as Syndicate Manager. Lane’s End then sought to dismiss the 

appeal as moot based on the Amended Syndicate Agreement (“Amended Agreement”). This 

Court remanded to the district court to determine in the first instance whether the Amended 

Agreement mooted KNC’s claims. On remand, the district court found that no live case or 

controversy remained and accordingly granted Lane’s End’s Rule 12(b)(1) motion to dismiss for 

lack of subject-matter jurisdiction. KNC again appealed to this Court.

II.

A.

In granting Lane’s End’s motion to dismiss for lack of subject-matter jurisdiction, the 

district court decided only the question of whether KNC’s claims are now moot in light of the 

Amended Agreement. Because the district court considered only the issue of mootness on 

remand, we confine our review to that issue. Wright v. Holbrook, 794 F.2d 1152, 1157 (6th Cir. 

1986) (“[T]he general rule is that this court will not consider issues not raised in the district 

court.”); see also Norfolk & W. Ry. Co. v. City of Oregon, 210 F.3d 372, at *4 (6th Cir. 2000) 

(Table) (“The district court limited its remand to that issue and, likewise, our review is similarly 

limited.” (footnote omitted)).

We generally review de novo a district court’s decision to dismiss for lack of subjectmatter jurisdiction under Rule 12(b)(1). Howard v. Whitbeck, 382 F.3d 633, 636 (6th Cir. 2004). 

If the lower court, however, “does not merely analyze the complaint on its face, but instead 

inquires into the factual predicates for jurisdiction, the decision on the Rule 12(b)(1) motion 
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resolves a ‘factual’ challenge rather than a ‘facial’ challenge, and we review the district court’s 

factual findings for clear error.” Id. (citing RMI Titanium Co. v. Westinghouse Elec. Corp., 

78 F.3d 1125, 1133-35 (6th Cir. 1996); United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 

1994); Ohio Nat’l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990)). Lane’s 

End’s challenge to the existence of subject-matter jurisdiction in this case is a factual one 

because the district court analyzed the complaint in light of the Amended Agreement, which 

Lane’s End contends deprives the court of a “factual predicate[]” for jurisdiction. Id. We 

therefore review the district court’s factual findings for clear error and its legal conclusions de 

novo. See Howard, 382 F.3d at 636.

B.

This Court has stated that “‘[t]he test for mootness is whether the relief sought would, if 

granted, make a difference to the legal interest of the parties.’” Wedgewood Ltd. P’ship I v. Twp. 

of Liberty, 610 F.3d 340, 348 (6th Cir. 2010) (quoting Ford v. Wilder, 469 F.3d 500, 504 (6th 

Cir. 2006)). The “heavy burden of demonstrating mootness” lies with the party claiming that the 

case is moot. Cleveland Branch, NAACP v. City of Parma, 263 F.3d 513, 530-31 (6th Cir. 2001) 

(citing Cnty. of L.A. v. Davis, 440 U.S. 625, 631 (1979)). We agree with the district court that 

Lane’s End met its burden to prove the mootness of this controversy in light of the Amended 

Agreement, which now expressly ratifies Lane’s End’s past conduct.

KNC’s Complaint asserts four claims against Lane’s End. Count I seeks a declaratory 

judgment, based on the Original Agreement, requiring Lane’s End to segregate the Syndicate’s 

funds and business dealings. Count II seeks a permanent injunction, based on the Original 

Agreement, to prevent Lane’s End from commingling the Syndicate’s funds or making Syndicate 
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contracts in the name of Lane’s End. Count III seeks a declaratory judgment, based on the 

Original Agreement, requiring Lane’s End to allocate excess Nominations to Syndicate Members 

and requiring Lane’s End to give the Owners first priority to purchase any Nominations sold by 

the Syndicate. Count IV seeks compensatory and punitive damages for Lane’s End’s alleged 

violations of its fiduciary duties to the Owners under the Original Agreement. All the claims 

KNC brought in the district court therefore were based on the Original Agreement.

Events that transpired after KNC filed its Complaint, however, prevent it from asserting 

any claims under the Original Agreement. The other thirty-nine Owners of Fractional Interests 

in the Syndicate—all save for KNC—voted in May and June of 2012 to amend the Original 

Agreement. The Amended Agreement addresses the actions taken by Lane’s End that KNC 

complains of in this litigation. Specifically, the language of the Amended Agreement expressly 

ratifies all of Lane’s End’s past actions regarding the handling of Syndicate funds, making 

contracts in the name of Lane’s End, and allocating breeding Nominations. Kentucky law 

permits such ratification, even with the consent of a simple majority of the owners. See 

Weisbord/Etkin/Goldberg v. Gainesway Mgmt. Corp., No. 2007-CA-000280-MR, 2008 WL 

820950, at *5-6 (Ky. Ct. App. Mar. 28, 2008) (“The appellants provide no convincing authority 

in law or in the express language of the Agreement to support the view that such a post facto 

approval of the transfer of one share must be approved by all the members of the syndicate.”).1

 

1We recognize that the Weisbord court reached this conclusion in a case where the syndicate 

agreement was not amended, which is different from the situation here. We cite this case only to 

demonstrate that the other Owners of Fractional Interests in the Syndicate were permitted under 

Kentucky law to ratify Lane’s End’s past conduct without KNC’s consent.
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Accordingly, the district court’s factual conclusion—based on the affidavit submitted by 

Thomas Hyams, Secretary and Treasurer of Lane’s End—that the other thirty-nine Owners in the 

Syndicate followed the proper procedures for ratifying Lane’s End’s prior actions is not clearly 

erroneous. KNC failed to present probative evidence to the district court rebutting Hyams’ 

affidavit, and the Amended Agreement specifically ratifies all of Lane’s End’s past actions. This 

Court thus cannot grant any relief that “would . . . make a difference to the legal interest of the 

parties.” Wedgewood, 610 F.3d at 348 (quoting Ford, 469 F.3d at 504) (internal quotation marks 

omitted).

C.

KNC nonetheless contends that the district court committed two legal errors in granting 

Lane’s End’s Rule 12(b)(1) motion to dismiss. First, KNC argues that the district court failed to 

follow the mandate in our prior remand order, which KNC construes to contain a requirement 

that the district court decide disputed issues of material fact via the discovery process. Second, 

KNC argues that the other Owners’ decision to amend the Original Agreement cannot moot its

claim seeking compensatory and punitive damages for Lane’s End’s alleged violations of 

fiduciary duties to the Syndicate.

In remanding to the district court to determine in the first instance whether this case is 

moot, we neither held that there were disputed issues of fact nor required the district court to 

conduct discovery. In Chrysler Corp. v. Fedders Corp., 643 F.2d 1229 (6th Cir. 1981), this 

Court held that whether or not to allow discovery prior to deciding a motion to dismiss for lack 

of jurisdiction is within the discretion of the district court. Id. at 1240 (“A ruling by the trial 

court limiting or denying discovery will not be cause for reversal unless an abuse of discretion is 
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shown.”). The instant case is analogous to Chrysler Corp. because KNC did not present any 

probative evidence to the district court to support its allegations that Lane’s End acted 

improperly during the amendment process in May and June of 2012. See id. (“Inasmuch as 

Chrysler failed to offer any factual basis for its allegations of conspiracy, it was well within the 

trial court's discretion to deny Chrysler's request for discovery.”). The district court therefore did 

not abuse its discretion in denying as moot KNC’s discovery request.

KNC’s second argument, that the amendment of the Original Agreement cannot moot its 

claim for damages regarding Lane’s End’s alleged breach of fiduciary duties, has some 

superficial appeal. Indeed, this Court has stated: “[W]here a claim for injunctive relief is moot, 

relief in the form of damages for a past constitutional violation is not affected.” Gottfried v. 

Med. Planning Servs., Inc., 280 F.3d 684, 691 (6th Cir. 2002) (emphasis added) (citing Univ. of 

Tex. v. Camenish, 451 U.S. 390, 393-94 (1981); Powell v. McCormack, 395 U.S. 486, 495-500 

(1969)). Even where a past constitutional violation is at issue, however, “[t]he key question is 

whether [the plaintiff] has a viable claim for damages.” Id. Setting aside the fact that KNC has 

not alleged a constitutional violation in this case, KNC’s claim for damages is no longer viable in 

light of the Amended Agreement.

Although KNC correctly points out that the district court improperly relied on its own 

non-final order of dismissal to conclude that KNC’s claim for alleged breaches of fiduciary 

duties was moot, that improper reliance does not constitute a reversible error. See City Mgmt. 

Corp. v. U.S. Chem. Co., 43 F.3d 244, 251 (6th Cir. 1994) (citing Hilliard v. U.S. Postal Serv., 

814 F.2d 325, 326 (6th Cir. 1987)) (“[W]e may affirm on any grounds supported by the record, 

even though they may be different from the grounds relied on by the district court.”). KNC’s 
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claim is moot because the other Owners of Fractional Interests in the Syndicate expressly ratified

Lane’s End’s conduct in relation to KNC in the Amended Agreement. Therefore, KNC no 

longer has a viable claim for damages.

III.

Accordingly, we AFFIRM the judgment of the district court.
No. 13-5951

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HELENE N. WHITE, Circuit Judge, dissenting. The majority opinion concludes that 

KNC’s claims against Lane’s End are moot because the Amended Agreement “now expressly 

ratifies Lane’s End’s past conduct.” Maj. Op. at 4. I respectfully dissent. 

I.

KNC brought four claims: (I) for a declaratory judgment that Lane’s End should be 

required to make all contracts related to the Syndicate “in the name of the LDK Syndicate” and 

that all monies received by Lane’s End for the Syndicate should be deposited into a segregated, 

interest-bearing account; (II) for an injunction prohibiting Lane’s End from commingling 

Syndicate funds with other funds and from making contracts related to the Syndicate in Lane’s 

End’s name; (III) for a declaration that Lane’s End must allocate excess Nominations to 

Syndicate members and give Syndicate members priority consideration in the purchase of 

Nominations; and (IV) for damages based on Lane’s End alleged breach of fiduciary duties in 

engaging in the conduct described in Counts I – III. The district court dismissed the claims and 

KNC appealed. During the pendency of the direct appeal, thirty-nine of the forty members of the 

Syndicate voted to amend the Syndicate Agreement and to ratify Lane’s End’s challenged 

conduct. The Amended Agreement makes its changes effective retroactive to the date of the 

adoption of the Original Agreement and purports to supersede that Agreement entirely. Lane’s 

End filed a Notice of Suggestion of Mootness based on the Amended Agreement. Without 

reaching the merits of KNC’s appeal, we remanded the case to the district court for a 

determination whether the Amended Agreement rendered KNC’s claims moot.

On remand, the district court found that KNC’s complaints regarding the sale of bonus 

nominations were moot because “thirty-nine of the forty Syndicate Owners ratified Lane’s End’s 

decisions.” Op. at 2 (citing Section 6.16(f) of the Amended Agreement). The district court did 
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not specifically address Counts I and II. The district court rejected KNC’s argument that its 

claims for monetary relief in Count IV are still alive, relying on its own prior dismissal of the 

claim. Id. at 3 (“[T]he breach of fiduciary duty claims were expressly dismissed and therefore, 

there can be no ‘surviving’ claim for damages stemming from those dismissed claims.”). The 

district court also denied KNC’s request for discovery.

In this appeal, KNC argues, first, that the district court failed to follow the mandate in the 

remand order, “which KNC construes to contain a requirement that the district court decide 

disputed issues of material fact via the discovery process.” Maj. Op. 10. I agree with the 

majority that the remand order did not require the district court to permit discovery into the 

validity of the amendment and ratification process. I note, however, that to the extent the district 

court relied on its own prior dismissal of KNC’s claim for damages to find the damages claim 

moot, it failed to comply with the mandate. Second, KNC argues that the amendment of the 

Original Agreement cannot moot its claim for damages regarding Lane’s End’s alleged breach of 

fiduciary duties. 

II.

As KNC acknowledges, its claims for declaratory and injunctive relief under the Original 

Agreement are moot because the Original Agreement no longer exists to enforce. But the 

Owners’ adoption of the Amended Agreement does not necessarily moot KNC’s claims for 

damages because this court can still redress a past violation of the Original Agreement by 

awarding damages. See Wedgewood Ltd. P’ship I v. Twp. of Liberty, 610 F.3d 340, 348 (6th Cir. 

2010) (“‘The test for mootness is whether the relief sought would, if granted, make a difference 

to the legal interest of the parties.’”) (citation omitted); see also 13C Fed. Prac. & Proc. Juris.

§ 3533.3 (3d ed.) (“Untold numbers of cases illustrate the rule that a claim for money damages is 
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not moot, no matter how clear it is that the claim arises from events that have completely 

concluded without any prospect of recurrence.”). 

Lane’s End asserts, essentially, two reasons that the Amended Agreement nonetheless 

renders KNC’s damages claims moot: (1) in the Amended Agreement, the Owners ratified, i.e.,

retroactively sanctioned, all the conduct of Lane’s End that KNC claims was in violation of the 

Agreement and Lane’s End’s fiduciary duties; and (2) the Amended Agreement purports to 

supersede the Original Agreement entirely, as though it never existed. 

A. Ratification

The Original Agreement provides that “the relationship of the Owners to the Syndicate 

Manager [is] that of principal and agent.” Under Kentucky law, a principal may ratify or affirm 

its agent’s otherwise unauthorized conduct. See Stewart v. Mitchell’s Adm’x, 190 S.W.2d 660, 

662 (Ky. 1945) (“As applied to the law of agency, ratification is the affirmance of an act by one 

for or in behalf of another at a time when he had no authority to do the act for the one in whose 

name it was done.”). “An otherwise-effective ratification eliminates claims that the principal has 

against the agent, including claims for breach of fiduciary duty.” Restatement (Third) of Agency 

§ 4.02(b). Accordingly, if KNC ratified Lane’s End’s conduct, all KNC’s claims against Lane’s 

End would be extinguished, and therefore moot, even claims for damages. 

The Original Agreement provides that a vote of 34 out of 40 Owners may alter, amend, or 

modify the Agreement, and a simple majority of Owners may resolve “all questions properly 

submitted.” The Owners’ express statement in the Amended Agreement that they ratified Lane’s 

End’s conduct is undoubtedly effective to ratify the conduct on behalf of the Owners who 

participated in the vote to amend, but the question is whether it is effective with respect to KNC.
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The majority opinion concludes that Kentucky law permits a simple majority of syndicate 

owners to ratify an agent’s conduct on behalf of the remaining owners. Maj. Op. at 6

(“Kentucky law permits such ratification, even with the consent of a simple majority of the 

owners.”) (citing Weisbord/Etkin/Goldberg v. Gainesway Mgmt. Corp., No. 2007-CA-000280-

MR, 2008 WL 820950, at *5–6 (Ky. Ct. App. Mar. 28, 2008), for its observation that “[t]he 

appellants provide no convincing authority in law or in the express language of the Agreement to 

support the view that such a post facto approval of the transfer of one share must be approved by 

all the members of the syndicate.”). But the quoted sentence in Weisbord was not a holding; it 

was dicta. In Weisbord, the plaintiffs challenged the sale of one member’s Fractional Interest, 

arguing that in coordinating the sale, the Syndicate Manager had deviated from the terms of the 

Syndicate Agreement governing such sales. Id. at *2. The court affirmed the dismissal of the 

plaintiffs’ claims for declaratory and injunctive relief. It found, first, that the plaintiffs were 

estopped from challenging the sale because they themselves had sought a waiver from the terms 

of the Agreement. Id. at *4. Second, it addressed the plaintiffs’ argument “that the ratification 

was invalid because it was not approved by all the members of the syndicate, but was approved 

only by a majority.” Id. at *6. The court made the observation quoted above that the plaintiffs 

had provided “no convincing authority in law or in the express language of the Agreement to 

support the view that such a post facto approval of the transfer of one share must be approved by 

all the members of the syndicate.” Id. And then in a footnote immediately following that 

observation, the court stated: “Regardless of whether the appellants have a valid argument in 

this regard, they are without remedy due to estoppel as we have explained above.” Id. at *6 n.3 

(emphasis added). Thus, the observation the majority relies on would not bind subsequent 

Kentucky courts because it is dicta, see Bd. of Claims of Kentucky v. Banks, 31 S.W.3d 436, 439 
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n.3 (Ky. Ct. App. 2000), and because it appears in an unpublished decision, see Ky. St. RCP 

76.28(4)(c). For a federal court sitting in diversity, like this one, the observation is a relevant 

data point, but is not controlling on its own. See Garden City Osteopathic Hosp. v. HBE Corp., 

55 F.3d 1126, 1130 (6th Cir. 1995) (“When deciding a diversity case under state law,” where the 

state’s highest court has not decided the question, “a federal court must . . . ascertain the state 

law from ‘all relevant data’” including “the state’s appellate court decisions, . . . the state’s 

supreme court dicta, restatements of law, law review commentaries, and the majority rule among 

other states”) (citations omitted).

The Kentucky Supreme Court has applied the Restatement (Third) of Agency (2006) to 

questions of agency law, see Pannell v. Shannon, 425 S.W.3d 58, 84 (Ky. 2014) (citing §§ 4.01, 

4.02 in a discussion of ratification), as well as American Jurisprudence, Second Edition, on 

Agency, see Kindred Nursing Ctrs. Ltd. P’ship v. Leffew, 398 S.W.3d 463, 467 (Ky. Ct. App. 

2013) (stating that “Kentucky has adopted th[e] understanding of ratification” expressed in 

2 Am. Jur. 2d Agency § 209 (2013)) (citing Capurso v. Johnson, 248 S.W.2d 908, 910 (Ky.

1952)). Under the Restatement, the Owners are “coprincipals,” and lack the power to ratify their 

agent’s conduct on each other’s behalf. See Restatement (Third) of Agency § 3.14 (“[A]n agent 

for coprincipals acts for more than one principal in the same transaction or other matter. 

Coprincipals are not hierarchically stratified.”); see also id. § 4.01 (“When there are two or more 

coprincipals, each must ratify to be bound.”) (emphasis added). American Jurisprudence is in 

accord. See 3 Am. Jur. 2d Agency § 176 (2013) (“If a ratification would bind multiple principals, 

each must affirm with knowledge of the acts to be ratified.”) (citing Restatement (Third) Agency 

§ 4.06 cmt. b.); see also Kindred Nursing Ctrs. Ltd. P’ship, 398 S.W.3d at 467 (citing § 176 of 

Am. Jur. as authoritative on a question of agency law). 
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KNC did not vote to ratify Lane’s End’s conduct. To resolve the question whether the 

Owners’ ratification is effective as to KNC, I would look to the authorities the Kentucky 

Supreme Court and Court of Appeals have relied on in published decisions rather than an 

unsupported, non-binding observation in an unpublished decision. According to those 

authorities, the Owners lacked authority to ratify Lane’s End’s conduct on KNC’s behalf, and 

therefore, the Owners’ ratification could not and did not extinguish KNC’s claims for damages. 

B. Contract

I would also reject Lane’s End’s contention that the Owners’ purported retroactive 

amendment of the contract moots KNC’s claims for damages. Lane’s End cites Kentucky 

decisions holding generally that a contract provision allowing for amendment of the contract is 

enforceable and binding, see, e.g., Kentucky Home Mut. Life Ins. Co. v. Leitner, 196 S.W.2d 421, 

423 (Ky. 1946); Supreme Lodge K.P. v. Hunziker, 87 S.W. 1134, 1135 (Ky. 1905), but neither 

party cites cases addressing whether a contract provision granting one-sided authority to amend 

can be reasonably construed to include authority to amend the contract retroactively. 

Kentucky follows the general rule of enforcing contracts as written. See Wehr 

Constructors, Inc. v. Assurance Co. of Am., 384 S.W.3d 680, 685 (Ky. 2012) (“‘[A] written 

instrument will be enforced strictly according to its terms,’ and a court will interpret the 

contract’s terms by assigning language its ordinary meaning and without resort to extrinsic 

evidence.”) (quoting Frear v. P.T.A. Indus., Inc., 103 S.W.3d 99, 106 (Ky. 2003). No term in the 

Original Agreement confers on the Owners the power to retroactively change its terms. The 

Original Agreement provides that it may be “altered, amended, or modified” by thirty-four out of 

forty Owners, but says nothing about retroactivity, and the contract does not purport to govern 

the parties’ past conduct. Under those circumstances, I see no basis to conclude that the Owners’ 
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authority to amend the Original Agreement includes the additional extraordinary power to 

retroactively amend it to eliminate an Owner’s accrued claim for damages. Cf., e.g., Sec. Watch, 

Inc. v. Sentinel Sys., Inc., 176 F.3d 369, 373 (6th Cir. 1999) (declining to give a merger clause 

retroactive effect “as no other provision of the later agreement even ‘remotely intimate[d] that 

the parties ever contemplated so radical a retroactive renegotiation of their earlier agreements’”) 

(quoting Choice Security Sys., Inc. v. AT&T Corp., No. 97–1774, 1998 WL 153254, at *1 (1st 

Cir. 1998) (unpublished)). To the extent that Lane’s End argues that the Amended Agreement is 

probative of the Owners’ understanding of the terms of the Original Agreement, that is not a 

contention that renders KNC’s claims moot; it is an argument on one side of a live controversy.

I would VACATE the district court’s mootness determination and reach the merits of 

KNC’s appeal regarding Count III. In that regard, I would reverse the grant of the motion to 

dismiss as to the claim regarding nominations. The Syndicate Agreement is ambiguous on this 

issue, and further proceedings are appropriate.