Hunter-Reay files new suit in Gentilozzi-3GT case

3GT, which is co-owned by Gentilozzi and his sons John and Anthony, fields a factory-sponsored two-car effort on behalf of auto manufacturer Lexus in IMSA's WeatherTech SportsCar Championship. The elder Gentilozzi is listed as a 60 percent owner of 3GT and his sons each hold a 20 percent stake in the business.

At the heart of the complaint is Ryan Racing's ability to fully collect on the personal and business debts assigned to Gentilozzi in federal court. According to the complaint, the new legal pursuit of 3GT Racing is to seek the assets that were allegedly transferred from RSR Racing to 3GT that would be necessary to settle the $3.3 million award.

"In the course of attempting to collect on the Federal Court Judgment, it has become apparent that while the First Federal Action was pending, Gentilozzi – just as he did when the entry of the State Court Judgment against Rocketsports was imminent – transferred assets of RSR Racing to 3GT Racing," Ryan Racing's legal representatives wrote in the complaint.

In a statement made to RACER, the 3GT team questioned the veracity of the new lawsuit and asserted its belief that it will be dismissed: “During the litigation between Ryan Racing, LLC, RSR Racing and Paul Gentilozzi, Ryan Racing, LLC, has tried on multiple occasions to bring 3GT Racing into their lawsuit.  On each of these occasions the court denied the request. A new lawsuit filed against 3GT Racing is simply another attempt by Ryan Racing to bring a claim against 3GT Racing when none exists.  3GT Racing is confident that the court will again tell Ryan Racing, LLC that its claims against 3GT Racing are moot and dismiss the lawsuit.”

RACER has contacted Lexus Racing and is awaiting a response.

With the closure of Rocketsports approximately two weeks before an arbitrator awarded Ryan Racing $2.7 million in 2009, Hunter-Reay and his lawyers spent the next eight years pursuing legal options to collect on the award against Gentilozzi's defunct business.

Through the findings delivered by Judge Bell, Gentilozzi is said to have engaged in the practice of closing Rocketsports and reappearing as RSR Racing to avoid paying the $2.7 million debt assigned to Rocketsports. Judge Bell also stated each new team owned by Gentilozzi has been located at the same property, 3400 West Road, East Lansing, Michigan, using the same essential management, staff and assets to run various racing programs.

According to Judge Bell, the closure of Rocketsports and immediate transfer of Rocketsports’ assets to RSR Racing was done to remove all value from the company that was ordered to pay the $2.7 million.

As Ryan Racing’s lawyers found, with Rocketsports’ newfound inability to cover the $2.7 million it owed, pursuing its successor to pay the debt sparked a prolonged battle over legal responsibility.

Through court documents, Gentilozzi's lawyers argued each of the new businesses that came after Rocketsports at 3400 West Road was wholly unrelated to its predecessor and therefore incapable of being held responsible to pay any debts incurred by the previous team(s).

Following the chain of new companies, RSR Racing was created in the wake of Rocketsports’ sudden demise in 2009 and ran a factory Jaguar ALMS GT program (and later, an independent IMSA PC program). After winning the bid to run the new Lexus Racing program in 2015, the public use of the RSR Racing brand came to an end and a new, short-lived company, F Performance, was announced as the Gentilozzi-owned team that would run the Lexus RC F model in IMSA’s GT Daytona class starting in 2016. After numerous delays and another company name change, 3GT Racing emerged as Gentilozzi’s service provider for the Lexus Racing effort.

Judge Bell, through his Jan. 31 ruling under a statute called "Successor Liability," determined RSR Racing was indeed a continuation of Rocketsports and held RSR and Gentilozzi liable for the debt. The judge proceeded to award Ryan Racing the original $2.7 million from arbitration, plus interest during the ensuing eight years, which moved the final amount owed by Gentilozzi as an individual and his RSR Racing business to a total of $3.3 million.

The federal ruling meant the assets of Rocketsports that were transferred to RSR Racing could be taken to settle the $3.3 million debt. But in a familiar theme, Ryan Racing's lawyers allege Gentilozzi performed the same maneuver used with Rocketsports and RSR in 2009 by transferring assets from RSR to 3GT while the federal case was pending.

3GT Racing, which was formed years after the first federal complaint against RSR was filed, was not named as a responsible entity in Judge Bell's findings.

In the new federal suit filed by Ryan Racing's lawyers on March 1, the same "Successor Liability" complaint has been leveled against 3GT Racing, which is positioned as a "Successor to the Successor" in the paperwork.

The new federal complaint states: "Indeed, Ryan Racing alleges to the best of its knowledge, information and belief that: a. 3GT Racing continues to operate its business out of the 3400 West Road location previously used by Rocketsports and RSR for the same purpose; b. Gentilozzi continues to manage the business affairs of 3GT Racing, just as he had managed the business affairs of Rocketsports and RSR; c. Gentilozzi and the entities that he controls continue to lend money to 3GT Racing without formal terms or approval from others, just as they did with Rocketsports and RSR; d. 3GT Racing has hired RSR Racing's former employees; e. 3GT Racing continues to use the same office equipment, transporters, tractors and tractor trailers that Rocketsports and RSR did; and, f. 3GT Racing continues to use much of the same machinery and equipment to fabricate and build race cars that Rocketsports and RSR used. In all material respects, 3GT, RSR and Rocketsports are functionally indistinguishable."

In closing, Ryan Racing's lawyers "requests that this court issue a judgment in its favor against Defendant 3GT Racing, LLC in the amount of the State Court Judgment and the Federal Court Judgment (as same may be adjusted by this Court), plus interest, taxable costs and the attorney's fees involved in bringing this action."

If Ryan Racing's lawyers are successful in holding the Gentilozzis' 3GT Racing business liable for the $3.3 million debt, the company tasked with fielding the Lexus Racing IMSA program could face difficulties if U.S. marshals seize a significant number of the team’s assets.

In February, a warrant for immediate seizure of assets by U.S. marshals was filed for RSR Racing, and with Gentilozzi named personally in the federal suit, a second warrant was issued for "The property to be seized under this writ is all personal property owned by Paul Gentilozzi, including without limitation any interest in, and shares of stock in, Gentilozzi Real Estate and Management Company, Inc. d/b/a Gentilozzi Real Estate, Inc." Those seizures began on Feb. 20 at 3400 West Road.

According to 3GT, further asset seizures could be halted through a motion filed by the lawyers representing the team and Gentilozzi through a bond that would ensure payment of the $3.3 million to Ryan Racing if the motions for a new trial, or to overturn Judge Bell’s decision, are unsuccessful. The team also reiterated its ability to field the Lexus Racing program will not be interrupted during the ongoing court battle.

“At the same time as [Ryan Racing] filed the new lawsuit against 3GT, Paul Gentilozzi and RSR Racing posted a stay bond with the Court,” the team wrote. “This bond will prevent [Ryan Racing] from attempting to collect on its judgment during the time that Gentilozzi and RSR Racing ask the court for a new trial because of procedural irregularities. It also assures 3GT will not have any interference in its operation.

“Following a ruling on that motion Gentilozzi and RSR racing will also ask the Sixth Circuit Court of Appeals to reverse the judgment if the trial court does not grant the relief that they have asked of the trial court. This Bond would assure payment to the Plaintiff if they are not successful in reversing the judgment.”

Stemming from the eight-year effort to hold RSR Racing accountable for the debt assigned to Rocketsports, it's unclear whether the new lawsuit seeking to hold 3GT Racing accountable for RSR Racing's debts will be subject to another multi-year timeline, or if the federal court will expedite the jury trial sought by Ryan Racing's lawyers, the motions filed on behalf of Gentilozzi’s businesses, and one more that was put in play last week.

Ryan Racing’s lawyers filed a new motion on Feb. 28 seeking an additional $1.5 million to cover the legal expenses incurred since the initial pursuit of Gentilozzi and Rocketsports began in 2007. And with new legal expenses continuing to build in the pursuit of 3GT, the number being sought by Ryan Racing’s lawyers could increase. If the court chooses to attach Ryan Racing’s legal expenses to the $3.3 million, Gentilozzi and 3GT could be responsible for over $5 million.

The next race for Hunter-Reay takes place on March 12 in St. Petersburg, FL. The next outing for 3GT Racing and its Lexus Racing program follows on March 18 at Sebring, FL.