The topic of this week’s post is not a true “horse case”, per se, but horse dealers and those who purchase horses from dealers can certainly glean some valuable lessons from it.
David and Lisa Moore were breeders and sellers of horses and dogs. Originally operating as “Kanes Lake Horse & Kennel” in Minnesota, they relocated to Magnolia, Texas, where they purchased about 25 acres of land and began “Brushy Creek Kennel”, where they also lived.
The Moores sold at least 163 dogs to Lisa Bushman, who herself was a breeder and seller of rare dogs, including Cavalier King Charles Spaniels, West Highland White Terriers, and Jack Russell Terriers.
Cavalier King Charles Spaniels
At some point after Bushman bought dogs from the Moores for a sum of $132,000, Bushman sued the Moores in the 155th District Court of Waller County, Texas alleging violation of the Texas Deceptive Trade Practices-Consumer Protection Act (“DTPA”), fraud, and breach of contract.
In her lawsuit, Moore alleged that some of the dogs she purchased were sick, and that she had difficulty obtaining registration papers on the dogs. Moore claimed that she had been sued by some of her customers, that she to refund money on some of the sales to customers, and that she had to pay more than $10,000 in veterinary expenses to nurse the sick dogs back to health.
The court opinion makes no reference to any written agreement between the parties as to the terms of the dog sale.
In his defense, David Moore alleged that the business arrangement with Bushman consisted of the Moores shipping dogs to Bushman via third-party breeders or brokers, without registration paperwork unless a higher price was paid.
Before the suit went to trial, Lisa Moore conveyed 18 of their 25 acres of land to Dalvis Enterprises, Ltd. (“Dalvis”), an entity owned almost entirely by the Moores.
A side note that will prove relevant as you read on: in Texas, a husband and wife can claim up to 200 acres of rural land as their homestead, thereby shielding the land from creditors’ claims.
After a trial, the court found in Bushman’s favor, awarding her damages of approximately $350,000 against the Moores.
After Bushman attempted to levy execution of her judgment upon the 18 acres of land that had been partitioned from the 25-acre homestead and conveyed to Dalvis, Dalvis purported to convey the 18 acres back to Lisa Moore. Shortly thereafter, the Moores filed a Chapter 7 bankruptcy proceeding.
The bankruptcy court, and later the United States District Court for the Southern District of Texas on appeal, held that:
1) Bushman’s state court judgment was non-dischargeable in bankruptcy because the debt was incurred by fraud; and
2) the 18 acres of land was subject to execution on Bushman’s judgment, because the homestead exemption was lost when Lisa Moore transferred the property to Dalvis.
Surprisingly, the Moores claimed that the conveyance of land to Dalvis was a “pretend sale”, because it was allegedly made without consideration, in an attempt to hide the eighteen-acre tract from Bushman. The Moores made this seemingly self-defeating allegation in favor of their position that they never lost their homestead exemption on the 18 acres. Both the the bankruptcy court and federal district court on appeal found this argument unconvincing.
Take aways: Many or most of these issues could have been avoided, had the parties put the express terms of their purchase and sale agreement in writing. Further, an inspection of both the dogs and their registration paperwork before the dogs were accepted and paid for might have alleviated the situation.
Case Information: Bushman v. Moore, 2011 WL 7655696, Civil Action No. H-10-3045 (S.D. Texas, Sept. 14, 2011). Hot off the presses from Westlaw this week (not sure why it took Westlaw so long to publish this opinion?).