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Mike Hillman Suing Circle Sport-Leavine Family Racing

The charter system has brought about smaller fields, bidding wars and mergers.

You can add lawsuits to the list.

Mike Hillman, who fielded the No. 40 car at the Sprint Cup level the previous two seasons, filed suit last Friday against former business partner Joe Falk, Circle Sport Racing, Leavine Family Racing and Circle Sport-Leavine Family Racing. The suit is for a judgment in excess of $25,000, punitive damages, rights to the No. 33 team (including its charter) and a share in the finances of CSLFR’s No. 95 team, which took over the No. 33 charter beginning this season.

The No. 40 car – Hillman’s – did not receive a charter as it did not compete full-time in the previous three seasons. Hillman contends that Falk did not have the authorization to enter into an agreement with LFR without Hillman’s consent.

Falk told NBC Sports that Hillman’s claims are “without merit” but would not comment further.

The Hillman-Falk partnership began early in the 2012 season when Falk purchased the owners points associated with the No. 33 car of Richard Childress Racing. Hillman, who fielded a Daytona 500 entry for Michael Waltrip, was unable to enter another car as Waltrip’s entry was considered a fourth Michael Waltrip Racing team – and NASCAR rules stipulate that owners cannot field more than four cars. The two partnered to form Circle Sport and ran the No. 33 car for the season.

The partnership required that Falk use race winnings of the No. 33 car to pay off all expenses for Falk’s team as well as the owner points purchase price of $100,000, with any excess winnings going to Hillman to pay expenses for his side of the team.

The two brought RCR back in for a handful of races from 2013-2015, with Austin and Ty Dillon and Brian Scott making select starts in an RCR-prepared car.

During the same timeframe, Hillman started a second car for the team – the No. 40 – and the two partners purchased assets for the other’s teams, which the lawsuit claims as proof that “Hillman Racing and Circle Sport operated pursuant to a partnership as part of the same organization.’’

The suit claims that Hillman contributed an increasing amount of capital from late 2014 through 2015, and in 2015 the two decided to split up following the season. The suit alleges that Falk and Circle Sport would “transfer all of their right, title and interest in and to the 33 points, and to all other property acquired by the Partnership to the remaining partners or an entity to be designated by them.’’

Falk allegedly changed his mind during the season, however, and requested a change to the agreement which would allow him to have sole ownership of the points for the team. Hillman and other partners in the team refused.

When the charter system was put into place, it was Falk – the listed owner of the No. 33 – who would receive a charter, leaving Hillman and his partners without a guaranteed starting spot in the race. When Falk explored the merger with Leavine Family Racing, Hillman was left out of the negotiations.

Hillman’s complaint says of the merger and charter system: “As a results of the circumstances described … the 40 points are of negligible value, the Partnership is unable to race full-time during the 2016 race season, Hillman and Hillman Racing have no ability to pay for the significant debt incurred in the 2013, 2014 and 2015 race seasons, and the remaining partners have been forced to liquidate many of the Partnership’s remaining assets.’’

CSLFR’s No. 95 car is being shared by Ty Dillon and Michael McDowell for the 2016 season. The team’s best finish came at Daytona where Dillon finished 26th. The team also fielded a second entry for McDowell in that race. He finished 15th.

Hillman Racing attempted Daytona with Reed Sorenson behind the wheel of the No. 40, but they failed to qualify. They haven’t been back to the track since.

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