02/03/2003 12:00AM

No sale: Azeri to stay put

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LOS ANGELES - Azeri, the 2002 Horse of the Year, will not be sold at the Barretts March sale and will continue to race in 2003 for the Allen Paulson Living Trust, Michael Paulson, a trustee and son of Allen Paulson, said Monday.

The beneficiaries of the Trust settled a long-standing dispute over the weekend and canceled a planned 20-horse dispersal, including Azeri, in conjunction with the sale of 2-year-olds in training in Pomona, Calif., on March 4.

Full terms of the settlement were not disclosed and are subject to court approval, which could take 30 days to complete, according to Michael Paulson.

"We've reached the settlement between the beneficiaries of my father's trust," he said. "It has to be approved by the court and once that goes through we'll be back in the horse business."

Allen Paulson, one of the nation's leading owners and breeders, died in July 2000. Michael Paulson said discussions had been held in the last year regarding a settlement and that talks became more frequent in the last week.

Part of the agreement, Michael Paulson said, states that Madeleine Paulson, the widow of Allen Paulson, will no longer be involved with the Trust's horses but will retain control of the Del Mar Country Club in suburban San Diego country.

"She will continue to race the horses that she has in her own name," said her attorney, Donald David.

In 2002, Azeri won 8 of 9 starts and $2,181,540, a campaign that included seven consecutive stakes wins ending with a five-length score in the Breeders' Cup Distaff. She became the sixth filly to be named Horse of the Year since voting began for the award in 1936 and the first female winner since Lady's Secret in 1986.

Trained by Laura de Seroux, Azeri has not been in serious training since the Breeders' Cup. Under terms of the dispersal, Azeri and the other active racehorses were restricted to light training. Azeri will not resume serious training until the settlement is approved in court, Michael Paulson said.

"She's such a fantastic athlete that it shouldn't take her long to get back in condition," Paulson said.

Michael Paulson said the Trust will be operated by himself and his brothers, Richard and Jim. He said the Trust will keep "40 to 60" horses, including broodmares and yearlings, some of which will be sold later this year at Keeneland.

"We'll definitely be smaller than when my father had it," he said.