Keith Brackpool, who was hired by The Stronach Group in 2013 to head the company’s California operations, has resigned and sued the company for $40 million, alleging breach of contract in a dispute over the disposition of an equity stake in the private company. In the suit, which was filed in Los Angeles County Superior Court on Wednesday, Brackpool alleges that The Stronach Group, which was formed in 2011 from the bankrupt racing assets of a publicly traded company, MI Developments, failed to honor an agreement to buy out a 5 percent stake in the company last October, when, according to the suit, he agreed to leave the company. The suit estimates that the value of the stake was $40 million. Brackpool was named chairman of California operations early in 2013, overseeing Santa Anita Park in Southern California and Golden Gate Fields in Northern California. Although Friday’s track program at Santa Anita still listed Brackpool as chairman of the track, his attorney, Michael Eisner, said that Brackpool resigned on Wednesday just prior to the suit being filed. “We did try over the past several months to reach a negotiated resolution, but those efforts were unsuccessful,” Eisner said. The Stronach Group is named after Frank Stronach, the owner-breeder who set up a family trust to own and operate the racing assets of MI Developments through an agreement with the company’s shareholders that was approved late in 2011. Though the assets were valued at the time at between $600 million and $800 million, the agreement allowed Stronach to take control of the assets by forfeiting a bloc of supervoting stock in MI Developments that had a nominal value of $13 million and by paying MI Developments $20 million in cash, a bargain price reflecting the hundreds of millions of dollars in losses accrued by the assets over the previous five years. The lawsuit contains an attachment outlining the terms of Brackpool’s employment that states that he “shall” acquire 5 percent of an entity called “Racing Gaming Group” based on the book value of the company’s assets as of Dec 31, 2012. The acquisition was to be financed by a loan provided by The Stronach Group, the attachment states. The attachment says that 50 percent of the profits distributed to Brackpool from the equity stake would go toward repayment of the loan. The attachment then outlines two exit scenarios for the repurchase of the equity stake. The first would apply to an exit prior to the “fifth year” of the agreement, and the second would apply if Brackpool left after the “fifth year.” The buyout was based on a definition of the “value” of Brackpool’s stake as “the greater of” either the adjusted book value of the company or “10 X profits,” according to the attachment. The suit states that Brackpool, a former chairman of the California Horse Racing Board and real estate developer, would not have joined The Stronach Group “unless there was significant upside potential for him.” The suit also states that Brackpool “repeatedly received financial schedules” from the company that reflected the value of the stake, which was based on a book value of $993 million at the time he joined the company. Brackpool did not receive a salary at the company, according to the suit. Officials for The Stronach Group did not immediately respond to a request for comment. The suit acknowledges that officials for The Stronach Group told Brackpool that the employment agreement referenced in the suit would be replaced by a “long-form” agreement to be negotiated, but the suit also says that Brackpool believed that The Stronach Group “would honor their obligation to repurchase plaintiff’s 5 percent interest upon his exit even if no long-form agreement was signed.” In addition to the $40 million value of the stake, the suit is also seeking punitive and compensatory damages. “It is reprehensible that The Stronach Group has now decided to claim ignorance of the agreement at the eleventh hour when the parties met to finalize Plaintiff’s exit,” the suit says.