Contract Disputes And Disgruntled Shippers Plague The Ark Import Facility At JFK

Jan 30, 2018 - 11:22 AM

The newly constructed equine import and export facility that opened in August 2017 at New York City’s John F. Kennedy airport, The Ark At JFK, filed suit Jan. 2 against the Port Authority of New York and New Jersey. The contract dispute alleges that the Port Authority has cost The Ark millions of dollars in expenses and lost revenue.

The New York Times first reported on the suit Jan. 24. John Cuticelli Jr., the owner of The Ark, says he built the $65 million facility at the airport after signing a contract with the Port Authority giving The Ark “the exclusive right to provide specified animal handling services at JFK airport.” But the numbers of animals coming through The Ark have been much less than Cuticelli expected, with many horses still being transported from JFK airport to the USDA quarantine facility in Newburgh, New York.

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A newly imported horse in a stall in The Ark’s facility at JFK airport. Photo by Cornell University

“We went through a very elaborate and torturous process with so many different government regulatory agencies to qualify for what we thought was the opportunity to build this state-of-the-art facility and have the rights we list in the complaint, and to sit here virtually vacant makes no sense to me when I’m watching animals go by my door every day,” Cuticelli said.

The U.S. Department of Agriculture stipulates that horses flown into the United States must spend anywhere from three to seven days in a quarantine facility, with mares and stallions subject to further testing at secondary quarantine facilities. Horses are tested for various infectious diseases before being released to their owners, and owners foot the bill for their horse’s stay at the facility. Quarantine facilities can either be owned by private companies, like The Ark, or by the USDA.

Before The Ark was completed in August 2017, almost all horses flying into JFK airport went to a USDA quarantine facility in Newburgh, New York, a 40-year-old facility about 80 miles north of the airport. Cuticelli saw an opportunity to provide high performance sport horses with a closer quarantine option by building a modern facility right at the airport, eliminating the two-hour trailer ride after the import flight.

Cuticelli is not a horseman per se—since 2004 he’s served as the CEO of Racebrook Capital, an investment firm focused on real estate acquisition, development, financing and sales. Cuticelli got involved with The Ark at the urging of veterinarian Ken Rotondo. In 2010 the Port Authority put out a call for companies willing to build an animal quarantine facility at JFK for not only horses, but also dogs, cats and birds. Rotondo suggested the facility be built right at the airport, and when Rotondo retired after his group was awarded the project, Cuticelli took over getting the project off the ground.

“When you think of the team I assembled to do this, I had Cornell’s vet college as my consultant, Temple Grandin, Lachlan, Lucas Equine out of Kentucky; I had a world class team of people,” Cuticelli said. “And our team went out and spoke to every single broker and many, many horse people. So many people helped me walk through here, and every one of them told me it’s the most amazing thing they’ve ever seen.”

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The Ark’s quarantine facility is located on the grounds of the JFK airport. Photo by AnthonyCollins.nyc

Cuticelli negotiated a lease with the Port Authority of New York and New Jersey, which operates the JFK airport, to operate the facility. Cuticelli’s filed legal complaint claims his lease stipulated that the Port Authority “must use reasonable efforts to cause other providers to cease their provision of the exclusive services.”

Cuticelli’s company was under the impression that meant the USDA facility in Newburgh would close once The Ark opened, but the USDA has continued to operate its facility, and Cuticelli estimates only 10 percent of horses landing at JFK go through The Ark. His claim is alleging $425 million dollars in damages from the breach of contract and lost revenue.

The contract dispute regarding whether or not Cuticelli does truly have the exclusive right to handle horses landing at JFK will be hashed out in court, but it doesn’t answer the perhaps more pertinent question for the horse industry: When given the option between The Ark’s plane-side, brand new facility and the 40-year-old Newburgh facility two hours away, why are most horsemen choosing Newburgh?

Part of it may have to do with how the business side of importing horses operates. Virtually all horse owners book travel through third party transport companies tasked with arranging the details of flight, trailering and quarantine. Owners can communicate their interests in different quarantine facilities, but for the most part owners trust shipping companies to do what they think is best, and Cuticelli thinks those companies see him as a threat.

“I’m also told people think I want to become a horse shipper, that I’ll eliminate the need for [shippers], which is absolutely not true,” Cuticelli said.

Tim Dutta, the owner of the international horse transport company Dutta Corp, isn’t convinced.

“They go directly behind our back to our clients,” Dutta said. “They don’t want to use the agents. They want to be a direct shipper and quarantine facility, which irks quite a lot of my colleagues including myself.”

Dutta Corp arranges travel mostly for sport horses being bought in Europe and sold to the States or traveling to compete abroad. Dutta estimates his company brings 3,000 horses through JFK every year, and none of them have spent their quarantine time at The Ark. Besides Dutta’s objections to what he sees as Cuticelli doing an end run around his company, Dutta sees the facility’s vicinity to New York City as a problem, not a solution.

“It’s an inconvenient process,” Dutta said. “Newburgh is a very centrally located facility; it serves [Interstates] 84 and 87, and on Friday afternoon and Saturday morning when my horses are trailering out that’s a more convenient facility than asking someone to go at 3:00 in the afternoon with their truck and trailer to get horses at Kennedy airport; it’s a nightmare for traffic on any given day.”

Dutta’s company can trailer horses directly to their farms, but many owners chose to pick horses up from quarantine themselves to save money.

Guido Klatte operates Guido Klatte Horse-Transport, a company based in Germany similar to Dutta’s. Klatte doesn’t pay much mind to which facility has a newer building—he’s more interested in the staff.

“The Ark is closer, which of course is a little bit more convenient,” Klatte said. “And I hear that they have new technologies like constant camera surveillance, but in Newburgh you have people who have more equine experience, and this is really important.

“It is more important you have staff in the facility who know about the horse care,” Klatte continued. “People who know what is important to maintain sport horses and keep horses mentally happy, what hay you feed and how the bedding should be; this is much more important than the frame of the building. Of course the stalls have to meet a standard, that’s logical, but the people who are putting hands on the horse and working in the facility are so important, because our agents don’t have access to the quarantine area. The horses essentially disappear for two days.”

Newburgh’s facility may be older, but for transport company Horse Flight agent Nicole Judd, that level of establishment with the staff is a bonus.

“They do a great, great job; I love those vets, and we know them really well,” Judd said. “They communicate, and Newburgh holds these meetings every quarter, and everyone gets to say what they like and don’t like. Honestly I’ve never had any problem with the staff or anything at Newburgh, and I haven’t put a horse through quarantine at The Ark because if it’s not broken I’m not going to make a push to change it.”

Not all shippers see it Dutta, Klatte and Judd’s way. Dr. Scarlette Gotwals is a veterinarian and the director of flight operations for Horse America, the air travel arm of Brook Ledge Horse Transportation. Gotwals said they offer horse owners the choice between having their animal brought to Newburgh or The Ark, but to her it’s a no-brainer.

“We like to put horses first; we’re used to shipping premium horses, and this is more in line with the caliber of horses we transfer,” Gotwals said. “My horses that go to The Ark are drinking and eating hay while the horses going to Newburgh are still on the tarmac and still have two or three hours of travel.

“What I love about the facility is the horses get right off the plane,” Gotwals continued. “In 15 or 20 minutes, you have them in box stalls. Because when horses travel they get loaded in those containers two to four hours before they take off, and those flights can be six to 10 hours depending on where you’re coming from.”

Not all owners are without preference when it comes to quarantine. Alison McGowan owns and operates Ternary Performance Horses, a farm housing both race and sport horses in Long Island, New York. She canceled her horses’ flight to the States when she learned the shipper, who she declined to name, planned to use the Newburgh quarantine facility instead of The Ark. McGowan ended up importing with Brook Ledge’s Horse America and quarantining her horses at The Ark.

“The Ark is outstanding; it’s just an amazing facility. They have everything in the best interest of the horses,” McGowan said. “When you have these animals traveling such a long way, for them to go on a trailer for 2½ hours for a facility that doesn’t even come close to quality of care just doesn’t make any sense.”

Prominent hunter/jumper trainer Don Stewart frequently buys horses from Europe to train and sell Stateside. Stewart lets the transport company make all the quarantine arrangements.

“Horse Flight handles mine, and they find me the best deal; I let them handle it all,” Stewart said. “It doesn’t matter to me if mine go to The Ark or not; horses don’t know the difference. It’s just like people in these big shiny tractor trailers, the horses don’t know if their tractor trailer is shiny and pretty. They don’t care; as long as it’s safe it doesn’t matter.”

Time will tell if Cuticelli’s suit succeeds and ends the debate. Dutta was quite outspoken about his feelings toward the litigation.

“It is very presumptuous of someone to start a brand-new business and expect 100 percent of the traffic without earning it,” Dutta said. “In America the way we do business is competition. It’s fairness, it’s value and pricing. I’ve been in business for 30 years; we ship more horses than anyone else in the United States, and we earn the business one horse at a time.

“These folks decide they can strong-arm people,” Dutta continued. “Litigate people, sue people and change the process of how business has been done for years and reinvent the wheel when frankly they don’t know what they’re talking about.”

“There’s something wrong here, because the equine community is saying, ‘We never wanted The Ark,’ ” Cuticelli said. “Yet during the years of its construction and four public hearings and an open competitive bidding process no one said anything. But now that it’s completed you don’t want it? I don’t want to go through airport security either, but I have to. I can only look to the Port Authority and say, ‘Enforce my rights.’ ”

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