Texas Horse Lawyer & Attorney : Alison Rowe Law Firm : Equine Legal Matters, Racing, Thoroughbreds : Dallas, Bryan, Texas

Several people have asked me if I thought there would be  litigation over the death of Eight Belles after her second place finish at the 2008 Kentucky Derby on May 3.  Although animal rights activists staged a protest at the office of the Kentucky Horse Racing Authority after the filly's death, I don't think there will be any litigation.  

The filly's death did not seem to be caused by the negligence or wrongdoing of any person or entity.

What did cause Eight Belles to break both front ankles?  According to the Wall Street Journal, Eight Belles' breakdown may have arisen from a variety of factors such as genetics, track surface, training methods, or medications.  Interestingly, Eight Belles and 2006 Kentucky Derby winner Barbaro were both descendants of Northern Dancer, a 1950s Thoroughbred whose racing career was cut short by leg injuries.

What is being done in the horse racing industry to prevent future breakdowns?  The Welfare and Safety of the Racehorse Summit, which first convened in 2006 after Barbaro's breakdown in the Preakness, met again in Lexington March 17-18, 2008.  The Summit promulgated its recommendations to improve racehorse welfare, and those recommendations addressed the following issues:

1. Track Surfaces--including research and development of synthetic (Polytrack) surfaces
2. Catastrophic injuries
3. Racing Medication & Drug Testing Laboratories
4. Education--focusing on training methods
5. Regulation--to establish uniform regulation of medication and integrity issues
6. Solutions for unwanted Thoroughbreds
7. Promote genetic diversity of the Thoroughbred

If the Summit's recommendations are implemented, huge positive changes in the Thoroughbred racing industry could be realized.  However, according to Dan Metzger, the President of the Thoroughbred Owners and Breeders Association, "miracles will not happen overnight."

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Someone recently asked me if he had a case against an equine surgery clinic that told his local vet during a telephone conversation to not send them the mare because they did not have room for her at the clinic.  The mare died 4 hours later of colic complications, and the owner stated that she would have lived if the vet clinic had admitted her and performed colic surgery.  The mare in that case was not a current patient of the clinic.  The owner would not have a valid claim against the clinic in that case.

The decision of whether to accept an animal as a patient is at the sole discretion of a veterinarian.  This rule is set forth in Article II.E. of the the Principles of Veterinary Medical Ethics of the American Veterinary Medical Association, which applies to all veterinarians in the United States.  The Texas Rules of Professional Conduct for veterinarians codifies that rule for vets practicing in Texas.  Therefore, even in emergency situations, vets do not have to take your horse if, for example, you cannot pay for the treatment or they simply do not have time to treat your horse.

For a vet to be potentially liable to a horse owner for injury or death of their horse, a veterinarian-client-patient relationship (VCPR) must first exist.  The VCPR is established when all of the following conditions are met:

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An attorney called me last week to ask what her client, a trainer, should do about a prospective buyer who had picked up a horse from the trainer to "try out" but failed to bring the horse back after the trial period.  The trainer had been hired by the horse's owner to find a buyer for the horse.  After months of trying to make contact with the prospective buyer, the trainer finally made contact to learn that the horse had allegedly died of colic while in the prospective buyer's care.  There were no written agreements between the owner and trainer or owner/trainer and prospective buyer.

The first thing I asked was whether they called the police or sheriff when the horse was not returned.  In potential theft situations, it is always advisable to call law enforcement and get a copy of their report.  I also suggested a bit of investigative work to determine if the horse was, in fact, dead.  They had called the vet the prospective buyer usually uses, but the vet had no record of seeing the horse.  I suggested that they send a letter to the prospective buyer asking for proof that the animal was euthanized and asking him to pay the asking price for the horse.  The next step was to file suit if he did not pay (I suggested that she make the trainer and owner joint plaintiffs).

Under Texas law, the trainer and owner in this situation have a colorable claim for conversion and theft under the Texas Theft Liability Act (the "TTLA") against the potential buyer.  People with ownership or possessory rights have standing on both claims. And assuming the trainer spent money to take care of the horse while in her care and was going to get a commission on the sale, the damages element is also satisfied as to the trainer.  Attorneys’ fees and costs are recoverable by the prevailing party under the TTLA.

Is the trainer liable to the owner in this situation?  The trainer would only be liable to the owner under the “principal-agent” theory if the trainer acted without actual authority when she gave the horse to the prospective buyer to try out.

What's the lesson here?  The trainer and owner would have been in a better position if they had obtained a written agreement with the prospective buyer containing a "risk of loss" provision, whereby the prospective buyer would agree to pay the owner if the horse died or was injured in the prospective buyer's care.  The trainer could have also required the prospective buyers to make payment in escrow for the horse, and agreed to return the money if and when the horse was returned.

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My brother-in-law, Adam Rowe, recently asked me what I thought about the ASPCA's and other activist groups' recent attempts to pass legislation that would ban horse-drawn carriage rides in New York City.  The activists claim that the industry as whole should be banned because the horses are allegedly overworked and deprived of proper food, water, and shelter.  If you go to the Carriage Horses-NYC blog, a site maintained by one such activist group, you see a woman standing next to a horse in harness and holding a heart-shaped sign bearing the slogan, "Give These Horses Their Freedom."

My first reaction to the activists' cause was, assuming at least some carriage operators treat their horses well, why would they want to ban the trade as a whole? The draft horses have a job and are being put to use, which in my mind is preferable to the dubious fate of the "unwanted horse", which many of these horses might become if they cannot be used for surrey rides.  Due to the recent ban on horse slaughter in the U.S., many in the horse industry predict that unwanted horses will be now be euthanized and disposed of, or shipped to Mexico or Canada for slaughter.  See USA Today article on subject.  The activists (and many other horse lovers, myself included) would probably prefer that the carriage horses be released into vast green pastures to run free for the rest of their lives (which can be 30 years or longer).  However, the activists trying to pass this legislation seem short on ideas on who will take care of the horses once they are "given their freedom."

Another thought is that the mistreatment of carriage horses is already illegal in New York.  According to New York law (McKinney's Agriculture & Markets Law Sect. 353), a carriage driver is guilty of a Class A misdemeanor if he "overdrives, overloads, tortures or cruelly beats" a horse or allows another to do so. He is also liable if he deprives a horse of "necessary sustenance, food or drink," or neglects or refuses to furnish a horse such "sustenance, food, or drink".  I assume that if a particular carriage driver is charged under this criminal statute, his business will not flourish for long. 

Perhaps the most humane thing the activists can do is involve local law enforcement in the investigation of the carriage drivers whom they suspect are guilty of animal cruelty, and let the carriage operators who properly treat their horses continue to do business in peace.

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Every horse business should have a written business plan.  There are a couple of reasons for this.  First, if your business is a start-up, the business plan will help you reduce financial risk by realistically assessing anticipated income and expenses before the business is launched.  Second, a written and regularly-updated business plan will help you in the case of an audit by the IRS, especially if the IRS suspects that your horse business may actually be a "hobby" or that you did not actively participate in the management of the business.  Finally, a written business plan, especially if attractively packaged, can help foster good business relationships with banks, creditors, and others in the horse industry who can either send you business or help you in some other way.

Since there is really no downside to have a written business plan, I suggest that every horse business (including businesses that have been operating for a while without a written business plan) keep an electronic and hard copy of a business plan that addresses the following items:

1)  A summary of the business goals and objectives of the business;

2)  An outline of how you will attain your business goals; 

3)  A list of the types of advisers you will consult (such as horse industry mentors, accountants, and attorneys);

4)  How the business will be owned (i.e. through and entity such as an LLC, who all owns an interest in the business, the percentage interest each owner holds, etc.);

5)  How the business will be financed (i.e. where you will obtain the initial capital needed to start up the business, and the amount needed);

6)  Projected income and expenses for the next 6 months and year (be conservative...most business plans underestimate expenses and necessary capital;  also, you should avoid projecting income and expenses further out than one year as these often become meaningless due to changing conditions and strategies);

7)  The method(s) you will use to find and secure good clients (advertising, networking, shows, etc.).

There really is no "magic formula" for a good business plan, nor should it be set in stone.  Your business is your dream, and your plan needs to set out your unique and individual vision and talents.  Your business plan will act as a "road map" for your business to help you stay on course with your goals and avoid foreseeable hazards.  It should be updated and revised at least once per year, if not more often.

To help you get started, see the attached Sample Equine Business Plan, to which you can add information to fit the needs of your particular horse business.  As you can see, my sample is fairly basic.  There are a lot of sample business plans you can pull up online, and most of those are pretty complex.  One site that provides sample business plans is BPlans.com.  Do not let the complexity of others' business plans intimidate you into not doing one at all.  While more detail is better in some instances, do not put off doing a business plan just because you don't know your exact numbers or you see others putting pie graphs in their business plans.  The key here is to have something in writing that you can add to and enhance as your business grows.

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"Absolute insurer rules" and "trainer liability rules," common in horse racing and other equine sports, presume that trainers are responsible when their horses test positive for illegal substances.  In effect, the rules make trainers guilty unless proven innocent.

The effect of this presumption is to shift the burden of proof from the governing body to the trainer, who must prove innocence by showing  that he or she did not negligently administer a prohibited substance to the horse or did not negligently allow someone else to interfere with the horse.  These rules can result in the imposition of a penalty against the trainer and/or the horse's owner without actual proof of guilt.

Courts have uniformly upheld the absolute insurer rules, despite the fact that they appear to violate the due process of law.

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Landowners who run horse businesses on their land often run into situations in which an unwelcome person attempts to come onto their property.  Sometimes the unwelcome party is someone who once boarded their horse with the property owner, but no longer has a business relationship with the property owner.  In other instances, the trespasser may include a current boarder who has stopped paying the property owner the agreed amount, but still comes out to enjoy the facility as well as their horse without also bringing payment.

Except in special circumstances (mineral exploration, freshwater lakes and streams, easements, beaches, cemeteries) land owners do not have a legal obligation to let uninvited parties onto their land if it is privately-owned.  In other words, the fact that a land owner is running an equine-related business on their land does not give uninvited or unauthorized persons the right to access the private land.  Under Section 30.05 of the Texas Penal Code, a person commits criminal trespass if "he enters or remains on or in property of another without effective consent and he 1) had notice that the entry was forbidden; or 2) received notice to depart but failed to do so."

Below are some steps landowners can take to protect their property from trespassers before a trespass occurs:

1) Post a Sign on Your Property - In addition to the posted sign bearing the Chapter 87 equine liability statute, landowners should also post a "Private Property--No Trespassing" sign at a conspicuous place near the entrance of their property. 

2) Immediately Notify A Former Guest That They Are No Longer Welcome - If someone who used to have permission to access your land is no longer welcome, give them notice, either orally or in writing, that they are no longer welcome on your property and if they attempt to access your property (other than to pay you and take their horse, if money is owed), you will call the sheriff.

3)  Include a Trespass Provision in Your Contracts - If you require people who access your land to sign contracts, include a provision in the contract that your land is private property and you reserve the right to deny them and their guests access if they breach the contract, even if their horse, tack, or other belongings remain on your property;

4)  Secure the Property - If you know a trespass is imminent, lock the gate or take other measures to prevent entry upon the land.  Call the sheriff or local police if you're in the city limits and let them know a trespasser is trying to get onto your property.

If, despite these efforts, someone trespasses on your property, the best thing to do is to call the sheriff and let them handle the trespasser.  If for some reason you cannot have law enforcement intervene, Texas law (Section 9.41 of the Texas Penal Code) allows you to use "reasonable force" to protect your property.  Reasonable force includes any force that is not potentially lethal.  This would probably include physically blocking the trespasser's entry onto the land and perhaps even showing the trespasser that you have a gun and are prepared to use it if warranted.  However, as discussed below, an actual discharge of a firearm, unless clearly not aimed anywhere towards the trespasser, may expose the land owner to unwanted scrutiny by law enforcement.

When is a landowner allowed to shoot at a trespasser?  According to Section 9.42 of the Texas Penal Code, a landowner can shoot at or use other deadly force against a trespasser if the landowner reasonably believes the land or property cannot be protected or recovered by any other means, or that the landowner himself would be exposed to substantial risk of death or serious bodily injury if the landowner does not use deadly force. A landowner can also shoot at or use other deadly force against a trespasser if the force is immediately necessary to prevent the trespasser's imminent commission of arson, burglary, robbery, aggravated robbery, theft during the nighttime or criminal mischief during the nighttime; or to prevent the trespasser who is fleeing immediately after committing one of those acts from escaping with the property.  "Criminal mischief" includes "knowingly or intentionally damaging or destroying, tampering with or marking, inscribing slogans, drawing or painting on tangible property " of the property owner. 

Using potentially dangerous measures to protect your property is not recommended in all cases, as it can expose a property owner to possible physical harm and also criminal prosecution if too much force is used.  However, property owners should be aware of, and exercise, their right to protect their property under the proper circumstances.

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It pays to get your horse sale agreements in writing.  Both buyers and sellers should pay careful attention to the "warranties" section of any agreement. 

The Equine Law & Business Letter reports that a federal court in Arkansas ordered a seller to pay almost $100,000 in damages for breaching warranties in connection with the sale of 30 horses.

The court's opinion states that the owner of a riding camp in Colorado contracted with a rancher in Arkansas for the purchase of 30 trail riding horses that would be suitable for inexperienced riders and children.  The camp operator reached an oral agreement with the rancher that was later reduced to writing.  The written contract provided for the rancher to deliver 30 horses, all geldings, to the camp at a total cost of $30,000, and that the horses would be in excellent condition and trained as trail horses.

According to the opinion, all but four of the horses that were delivered were either unsuitably trained, too young (25 of the horses were 2 years old and one of the horses was 17 months old), or stallions.  Allegedly, only 2 of the 30 horses were suitable for trail riding.  The camp operator ended up selling 22 of the unsuitable horses, and one of the horses died.  She sued the rancher for breach of warranties, breach of contract, deceptive trade practices, fraud and deceit.

After a two-day bench trial, the court found in favor of the camp operator.  Specifically, the court concluded that at the time the contract was formed, the rancher "knew of the particular purpose for which the horses were required.  He knew that [the camp operator] was relying on his skill and judgment to select and furnish suitable horses."  Because the implied warranties of merchantability and suitability for a given purpose were not excluded from the written contract, the court found that the rancher breached both warranties.  

The court awarded the camp operator $9,914.61 for her net loss on the sales transaction, plus $3,276.60 for incidental damages (including transportation, wormer and veterinary expenses).  The camp was also awarded $71,700 in lost profits attributable to not having enough horses to operate the business at full capacity for one season.    Lost profits attributable to later years were disallowed because the court reasoned that one year provided the camp operator "ample time to buy horses."

The case is Manula, et al v. Wheat, No. 4:06CV01107JLH, in the U.S. District Court for the Eastern District of Arkansas, Western Division, October 5, 2007.

For more information, see the November-December 2007 issue of Equine Law & Business Letter.

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In many cases, the proceeds from a stock breeder's or stable keeper's lien foreclosure sale will not be enough to satisfy your debt.  In those cases, you may sue the owner for the deficiency, if any.

The law suit may not be worth it, however, as you could end up spending more on legal fees than you are owed. For these reasons, I recommend that everyone who takes a horse to be boarded or bred obtain a written contract providing an agreement for the customer to pay for your services as well as the services of third parties for their horse's care while in your possession. 

Ideally, the agreement would include either 1) credit card information from the customer and an agreement that it will be charged for your services; or 2) the customer’s agreement that you may sell their horse at a public or private sale without notice to them if their account is in arrears more than 30 days.

This is especially important for farriers and veterinarians, as Texas law does not provide them any statutory lien to secure payment for their services.

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