John Stewart, whose Resolute Racing has emerged as a prominent player in the Thoroughbred racing and business, was sued in New York by a private market investment company, Archean Capital Partners, claiming Stewart and MiddleGround Capital have failed to pay more than $20 million as promised. Stewart is founder and managing partner of MiddleGround, a private equity firm.

Stewart, in a post on X, wrote the suit emanates from an issue that arose last year when “we faced a disagreement with an organization we believed was attempting to leverage litigation to pressure us into an unfair agreement.” His post says he had to limit his comments on the advice of counsel.

In addition to Stewart and MiddleGround, Lauren Mulholland and Scot Duncan are personally named as defendants and described as the “MiddleGround Principals.”  Archean claims they owe more than $20 million.

Archean’s complaint says that in 2018, it committed to serve as a lead investor and injected $75 million in the initial fund formed and managed by MiddleGround. Archean claims Stewart and other defendants have “failed and refused to pay Archean their agreed-upon share of certain revenue streams generated and received by the Defendants in connection with managing the MiddleGround Funds and other business lines.”

“Until very recently, Defendants did not dispute that they owed Archean this amount,” the complaint alleges. “As of October 31, 2024, the parties agreed the total Revenue Share to which Archean is entitled is $36,042,342. However, Archean has only received $13,203,823. As of October 31, 2024, Defendants agreed that Archean was still owed $22,838,519.”

Claims in a lawsuit present one side of the case. Defendants have the right to file responsive pleadings setting out their position.

The litigation, first reported by Thoroughbred Daily News, was filed Dec. 19. An effort was made by the parties to seal portions of the court record, but Judge Jennifer Schecter ordered Jan. 9 that there was no valid basis for the request.

Archean claims Stewart diverted his efforts for MiddleGround to other endeavors in violation of a written agreement that says he and the other MiddleGround principals would “devote the substantial majority of his or her working time and efforts” to MiddleGround business.

“By way of example,” the complaint alleges, “Stewart began to heavily invest in ‘[horse] racing and bloodstock,’ including spending over $25 million at a public auction in 2023 and eventually acquiring Shadayid Stud from Shadwell Farm, ‘a place his burgeoning broodmare band could call home,’ now renamed Resolute Farm,” citing a news story published at TDN.

In addition to asserting breach of contract, Archean claims the defendants failed “to seek Archean’s written approval for other ventures” and demands the “cessation of any business ventures for which Defendants did not seek prior written approval.”