The United States District Court of the Western District of Texas (Austin Division) recently held that Churchill Downs subsidiary website, Twinspires.com, is prohibited from accepting wagers from persons living in Texas.
Churchill Downs brought action against the Texas Racing Commission seeking a declaration that the Texas Racing Act’s in-person requirement, under which only a person inside the enclosure where a race meeting was authorized may wager on a race, violated the dormant Commerce Clause. The dormant Commerce Clause precludes states from enacting laws or regulations that excessively burden interstate commerce.
The Texas Racing Commission is a state agency charged with enforcing the statutory and regulatory provisions of the Texas Racing Act. Churchill Downs moved for permanent injunction to prevent the Texas Racing Commission from enforcing the Act to prohibit Texans from placing wagers on Twinspires.com. The in-person requirement has been on the books in Texas since 1986. Nevertheless, Twinspires.com continued to accept wagers from Texans through its website.
The court, Judge James R. Nowlin, presiding, found that the Act did not violate the dormant Commerce Clause and entered judgment for the Texas Racing Commission. With respect to the legitimate state interests furthered by the in-person requirement, Judge Nowlin remarked,
[E]very regulatory challenge that gambling has always posed to the state has been made that much more daunting by the advent of the internet. Gambling has always been addictive, but before the internet, at least the addicts had to go to the trouble of driving somewhere to place his bet. The internet allows the addict to get his fix 24/7/365, all without leaving the comfort of his own home . . . Along the same lines, underage patrons looking to get in on the action have always tried to evade detection with fake IDs and the like, but with the advent of the internet, all they need to place a bet is Dad’s credit card and date of birth . . . Finally, gambling—especially horse racing—has always attracted crooked individuals hoping to clean their money. With the advent of the internet, though, criminal elements are better able to hide behind the anonymity afforded by the computer screen.”
Churchill Downs has appealed this case to 5th Circuit Court of Appeals.
Case Information: Churchill Downs, Inc. v. Trout, No. 1:12-CV-00880-JRN, 2013 WL 5799694 (W.D. Texas Sept. 23, 2013).
On August 12, 2013, an evidentiary hearing was held on Plaintiffs’ request for attorneys’ fees and for injunctive relief that would require the AQHA to register clones and their offspring.
Following the hearing, U.S. District Judge Mary Lou Robinson informed counsel that she would grant an injunction requiring the AQHA to register horses produced by cloning and their offspring.
On August 14, 2013, the court entered an order (which can be accessed here) setting forth specific changes and additions to AQHA rules and regulations, which, according to the order, the judge is considering for inclusion in the injunction. The order requires that any objections to the proposed rule changes be submitted by noon on August 19, 2013.
The court has not yet ruled on Plaintiffs’ request for nearly $900,000 in attorneys’ fees. The court ordered the Plaintiffs to furnish their billing statements to AQHA, and also ordered AQHA to file any objection to the request for attorney’s fees, by August 14, 2013. A copy of AQHA’s objection to Plaintiffs’ attorneys’ fees, filed yesterday, can be found here.
AQHA’s primary objection to Plaintiffs’ fee request is the fact that the jury did not award any damages to Plaintiffs. Plaintiffs had sought $5.7 million in damages and sought to treble those damages under the antitrust laws for a total of $17.1 million. However, the jury awarded Plaintiffs zero damages.
At this point, the court has not yet entered final judgment in favor of Plaintiffs. According to this press release, AQHA will file a Motion for Judgment as a Matter of Law after entry of final judgment. In that motion, AQHA will request that the Court enter a take nothing judgment in favor of AQHA based on the fact that the jury’s verdict was not supported by the evidence. Should the court not grant AQHA’s motion, AQHA will file a notice of appeal thereby starting the appellate process.
Case Information: Abraham & Veneklasen Joint Venture, et al v. American Quarter Horse Association; Cause No. 2:12-CV-00103-J in the U.S. District Court for the Northern District of Texas (Amarillo Division)
Today, a 10-person jury in the U.S. District Court for the Northern District of Texas, Amarillo Division ruled that AQHA Rule REG106.1, which prohibits the registration of cloned horses and their offspring in AQHA’s breed registry, violates federal and state anti-trust laws. The jury awarded no damages.
When individuals with shared interests, goals and values come together to form a voluntary association to serve a common purpose, the members have a right to determine the rules for their association. The wisdom of our membership –which is largely not in favor of the registration of clones and their offspring—has not been upheld by this verdict.
Whether nor not clones will be able to be registered with the AQHA in the foreseeable future is still up in the air. According to AQHA President Johne Dobbs,
We will meet with our legal counsel and executive committee regarding our appeal options in continuing to fight for our members’ rights and announce our decision in that regard in the near future.
The plainitffs in the case have requested injunctive relief, in which they have asked the court to order the AQHA to register their cloned horses. They have also requested that the court order the AQHA to pay at least a portion of their legal fees. A hearing on the injunctive relief and fees request has not yet been held. The jury’s verdict has not been reduced to a final judgment, nor has the court issued an opinion in the case at this time.
Case Information: Abraham & Veneklasen Joint Venture, et al v. American Quarter Horse Association; Cause No. 2:12-CV-00103-J in the U.S. District Court for the Northern District of Texas (Amarillo Division)
On July 18, 2013, the Austin Court of Appeals issued a memorandum opinion affirming in part a trial court judgment which held that a stable employees’ smoking while working in the barn was a material breach of the boarding agreement, allowing several boarders to move out without notice.
After a boarder saw and photographed a stable employee smoking while working in the barn at Tamara Ramaker’s stables, several boarders removed their horses from the stables. They did not give 30 days notice before leaving, and did not pay for the month after removing their horses as prescribed by their boarding contract with Ramaker.
The court of appeals upheld the trial court’s decision that the employee’s smoking in the barn was a material breach of the agreement that excused the boarders from further compliance with the boarding contract. In its materiality analysis, the court pointed out that Ramaker agreed when testifying that her “sole job in taking in other’s animals for boarding is to give those animals a safe place to live,” and agreed that “fire is a danger to the care and safety of horses.” Further, Ramaker’s barn rules, which were incorporated into the boarding contract by reference, included the statement, “No smoking in the barns”. The smoking ban was included in a rule entitled “Safety”. The court found that this general prohibition banned everyone in the barn from smoking, not just the horse owners.
The court reversed and remanded the remainder of the suit, which had to do with Ramaker’s riding instructor agreement with Amber Ross. Ross had given riding lessons at Ramaker’s stables for the boarders involved in the suit who had left the barn with their horses. Ross’s lessons were covered by a written riding instructor agreement that required Ross to pay a fee when she taught a lesson at Ramaker’s stables. Ross did not pay Ramaker any fees for lessons conducted during March 2009, though there was evidence that Ross gave lessons during that month. The court of appeals reversed the trial court’s decision that Ross did not breach the riding instructor agreement, and remanded that portion of the case to the trial court to determine the amount of fees Ross owed to Ramaker.
Take Aways: Owners of boarding stables should take care to ensure that all stable employees, as well as friends and guests of the stable ower, comply with all written rules and regulations prescribed by the stable. If a stable employee or a guest or friend of the stable owner violates barn rules, boarders may be legally entitled to terminate their boarding contracts immediately under certain circumstances. This may be true even if the stable's rules do not mention whether or not the stable owners are subject to the rules.
Case Information: Tamara Lynn Ramaker, Appellant v. Jeanette Abbe, Gary Hobbs, Denise Lackey, Shelly Mattson, Stacy McCoy, Anita Paniagua and Amber Ross, Appellees, ---S.W.3d--, 2013 WL 3791491 (Tex. App.—Austin, Jul. 18, 2013).
The story contains a quote from a representative of the Humane Society’s Texas Branch, as well as some quotes from two breeders who are not involved in the lawsuit. Neither of the breeders quoted in the article expressed the due process concerns raised by the plaintiffs in the suit.
With respect to the plaintiffs, the article states, “calls to plaintiffs in the case were not immediately returned.”
Jim Smith, a cat breeder and one of the plaintiffs in the case, posted this response in the comments section of the online article this morning. According to Smith,
I am one of the plaintiffs in the Puppy Mill and Kitten Mill case. I was called by Ms. White and asked for comments, but I told her that because there was legal actions pending, I needed to clear things with my attorney first. He told me that there was no reason why I couldn't address the issues, so I called Ms White back (several times), got no answer, and she never returned my call. I called her back within an hour or two of her call.
Mr. Smith went on to explain his due process concerns, saying,
There are several reasons why this is bad law. First and foremost, even a meth dealer or porn publisher is afforded more rights under Texas Law than a Kitten or Puppy Breeder. The law is written in such a way that agents from the Texas Department of Licensing and Regulations can enter my property, with or without me being present, enter my private residence, confiscate my computer, files or other property, or my animals simply on their own recognizance. They do not need a warrant, and there is no oversight by any actual law enforcement agency or court. Once they seize my animals or property, there is no appeals process developed for me to protest their actions. The TLDC can also employ "Third Party Inspectors", such as members of Animal Rights organizations to do these functions for it.
Smith also hinted that legislation of this nature could eventually effect the equine and ranching industries, stating,
HB 1451 is part of a nationwide push by animal rights organizations to deny us the ability to keep pets, have horses and ranching, rodeos and many other traditional Texas activities because it offends their vegetarian and vegan beliefs. It's their attempt to enforce their personal and religious beliefs on the rest of us.
Horse breeders, what do you think of the new Puppy Mill Bill? I welcome you to post your thoughts and insights in the comments section to this post.
Yesterday, the Fort Worth Court of Appeals reversed and rendered in part and affirmed in part the judgment of the 236th District Court of Tarrant County, Texas in Whitmire v. NCHA.
In the underlying suit, the jury returned a verdict for Lainie Whitmire for $70,000 in damages for breach of oral contract and $0 in damages on her false imprisonment claim. Lainie requested that the trial court enter judgment in accordance with the jury’s verdict and also requested attorneys’ fees for prevailing on her breach of contract claim.
On motion of the NCHA, the trial court entered a judgment notwitstanding the verdict (JNOV), holding that Lainie take nothing on her breach of oral agreement claim and awarding her no attorneys’ fees. The final judgment also ordered that the NCHA recover $302,000 in attorneys’ fees from Lainie and $45,000 in attorneys’ fees from her husband, Ray.
The Whitmires filed a timely notice of appeal.
A panel of the Fort Worth Court of Appeals, consisting of Dauphinot, Walker, and Gabriel, JJ., held on appeal that the trial court erred by disregarding the jury’s findings that the NCHA breached an oral agreement with Lainie and that Lainie sustained $70,000 in damages as a result. The court of appeals reversed that portion of the judgment and rendered judgment in favor of Lainie for $70,000.
The court of appeals also sustained the Whitmires’ issue on the NCHA’s attorneys’ fees, and modified the trial court’s judgment to delete the NCHA’s recovery of attorneys’ fees of $302,000 from Lainie and $45,000 from Ray. The court of appeals affirmed the remainder of the judgment.
Case Information: Whitmire v. National Cutting Horse Ass’n, No. 02-11-00170-CV, 2012 WL 4815413 (Tex. App.—Fort Worth, Oct. 11, 2012, no pet. h.).
Are your liability release contracts sufficient to sustain a successful motion for summary judgment? Texas courts generally hold releases of liability to fairly high standards. Release cases are very fact specific, and often come down to extremely technical points about the contents of the release document. As such, the proper drafting of these contracts is a must. A recent case gives us a glimpse into how Texas courts interpret liability releases.
A man by the name of Revel Thom decided to ride the mechanical bull while he was hanging out at Rebel’s Honky Tonk, a country bar on 5th Street in Austin. Before riding the bull, Mr. Thom signed a document entitled “PARTICIPANT AGREEMENT, RELEASE AND ASSUMPTION OF RISK.” The release had Thom acknowledge the risks of riding the mechanical bull, disclose any pre-existing health conditions, and release and indemnify Rebel’s and related parties.
Unless you're Ty Murray, don't expect to stay on one of these things...especially if you've been drinking!
However, Mr. Thom failed to inform the mechanical bull operator that he had suffered from chronic back pain for four to five years requiring him to receive annual epidurals to numb the pain. Mr. Thom fractured his T-12 and L-1 vertebrae in his back as a result of being bucked off the mechanical bull. Thom subsequently sued Rebel’s Honky Tonk for his injuries.
The honky tonk filed a motion for traditional summary judgment, arguing that they conclusively established the affirmative defenses of release and assumption of the risk. The honky tonk also sought a no-evidence summary judgment on Thom’s claims of negligence and negligent supervision. The trial court granted the honky tonk’s motion for summary judgment without stating the basis for its ruling.
Overruling all of Thom’s points of error, the Austin Court of Appeals affirmed the trial court’s dismissal of Thom’s case on summary judgment.
The court of appeals found Thom’s argument that he did not read the release to be unconvincing, stating,
It is well established that one is presumed to know the contents of the contract that they are signing and are bound by its legal effects.
The court of appeals also found that the release language was sufficiently conspicuous, because the release was contained in a stand-alone document, was not written in minuscule font, and contained bolded and underlined warnings.
The language listing Rebel’s Honky Tonk and its “owners” as released parties was upheld by the court of appeals to be specific enough to release additional defendants Rainbow Cattle Company, Inc. (the honky tonk’s owner) and Zack Truesdell (Rainbow’s president). The court found the the case cited by Thom inapplicable, as the release at issue in that matter purported to release an “unlimited, general class of potential defendants.”
Hat tip to Nick Farr over at Abnormal Use for the heads up on this case.
Thom v. Rebel’s Honky Tonk, No. 03-11-00700-CV, 2012 WL 3793181 (Tex. App.—Austin, Aug. 30, 2012, no pet. h.)
Last Friday, the Supreme Court of Texas denied Brenda Young’s petition for review. The 14th Court of Appeals’ holding that Chapter 87 can immunize defendants against suits brought by independent contractors will stand.
The Court’s notice regarding the denial of the petition for review can be downloaded here.
The Supreme Court did not give a reason for denying the petition. One reason could have been that the Court found no reversible error in the 14th Court’s opinion. As such, the denial may be yet another indication that the Supreme Court agrees with me and other practitioners who believe Chapter 87 applies to suits brought by workers (both independent contractors and employees), subject to its exceptions.
As far as I know, no court of last resort in any state has ever taken up the issue of whether an equine or farm animal immunity statute applies to suits brought by workers.
A Lubbock County district court held that approximately 130 head of horses it allocated to the husband in a divorce action were worth $520,000. The husband disagreed.
The husband, Robert “Greg” Collier, objected to the court’s valuation at trial and in two separate appeals of the divorce decree. According to Greg, the trial court’s allocation of $520,000 worth of divorce assets to him in the form of the horses was an abuse of discretion, because the horses were actually worth far less than that amount. Despite Greg’s objections, the Amarillo Court of Appeals did not find that the trial court abused its discretion with respect to its valuation of the horses.
When the honeymoon's over, can you prove the value of your horses with reasonable certainty?
According to the court of appeals, the trial court seems to have based its valuation on an "appraisement and inventory" proffered by the wife, Leanne Farrell Collier. Leanne alleged that Greg possessed "approximately" 130 head of quarter horses that could sell for between $200 at a livestock auction to $7,500, if sold privately with a little training put into the horse.
The trial court apparently multiplied the number of horses (130) by one of Leanne’s estimates of what the horses could be sold for ($4,000) to arrive at the $520,000 figure.
Though the court of appeals noted that Greg’s testimony was more specific and “would support a different valuation”, Greg’s testimony was similar to Leanne’s in that it was full of estimates and guesses. At the end of the day, the evidence Greg used to support his objections to Leanne’s valuation was not specific enough for the trial court.
Because neither party provided the trial court with specific information regarding the number of horses owned by Greg, the trial court was left in a position of assessing the credibility of the parties’ estimated values.
How could Greg have avoided this dilemma? The parties could have kept better books and records with respect to the number of horses owned by the couple and related business entities. Furthermore, Greg might have retained a professional equine appraiser to determine the true value of the herd. A well-researched independent third-party appraisal is typically given more weight than the estimates and guesses of interested parties.
Well-founded appraisals are invaluable not only in divorce matters, but in any lawsuit where a horse’s value is at issue.
In the Matter of the Marriage of Leanne Farrell Collier and Robert Greg Collier and in the Interest of R.C.C., a Child, No. 07-12-00084-CV, 2012 WL 3762475 (Tex. App.—Amarillo, Aug. 30, 2012, no pet. h.)
In the Matter of the Marriage of Leanne Farrell Collier and Robert Greg Collier and in the Interest of R.C.C., a Child, No. 07-09-00146-CV, 2011 WL 13504 (Tex. App.—Amarillo, Jan. 4, 2011, no pet.)
Did you know that horse slaughter for human consumption has technically been illegal in the State of Texas from 1949 to the present? The laws surrounding horse slaughter in the United States are complicated, and they vary from state to state. Below is an overview of the legal history of horse slaughter in Texas, from 1949 to present.
Photo: Silhouette of a horse before a North Texas sunset
1949: 51st Texas Legislature passes a law that makes it a criminal offense for a person to 1) sell horsemeat as food for human consumption; 2) possess horsemeat intending to sell it as food for human consumption; and 3) transfer horsemeat to a person who intends to sell it as food for human consumption or who knows or reasonably should know that the person receiving the horsemeat intends to sell it as food for human consumption. SeeArticle 719e of Vernon’s Texas Penal Code (now repealed). The 51st Legislature placed jurisdiction to investigate within the Board of Health’s powers as a matter related to the public health. However, Article 719e did not expressly authorize any particular entity to enforce the law.
1950: A news article quotes the “state health officer,” Dr. George W. Cox, as stating that the Department of Health was prosecuting “every violator we could find.” Health Officer Tells How to Stop Horse Meat Sales, Dallas Morning News, Mar. 17, 1950.
1952: Another news article quotes the same Dr. Cox, “state health officer”, as saying that sausage containing horsemeat “can’t be sold in Texas”. Neigh? Nay! Texans Can’t Horse Around with Sausage, Dallas Morning News, May 23, 1952.
1973: The substance of Article 719e was transferred to Texas Revised Civil Statutes and again placed with statutes related to public health. It was not substantively changed.
Mid 1970’s: Horse slaughter companies Beltex (Fort Worth, Texas) and Dallas Crown (Kaufman, Texas) began marketing and processing horse-meat intended for human consumption in foreign countries.
1991: The statute prohibiting horse slaughter was codified as Chapter 149 of the Texas Agriculture Code (where it resides today). It was not substantively changed. Nothing in the current statute expressly authorizes any entity or agency to enforce the law.
2002: Texas State Representative Tony Goolsby requested that the Texas Attorney General clarify the enforceability of Chapter 149, which on its face prohibits the processing, sale or transfer of horsemeat for human consumption. AG John Cornyn issued this opinion, stating that Chapter 149 is applicable to the slaughterhouses in Texas and was not preempted by federal law. According to the opinion, Texas Department of Agriculture has no authority to investigate or assist in prosecuting violations of Chapter 149, but local prosecutors may investigate and prosecute alleged violations of Chapter 149.
2007: When the slaughterhouses learned of the 2002 AG opinion, and that Beltex and Dallas Crown were facing imminent prosecution, they brought a case in the United States District Court for the Northern District of Texas, seeking a declaration of legal rights and responsibilities and to enjoin any potential prosecution of them under Chapter 149. The slaughterhouses generally asserted that Chapter 149 had been implicitly repealed and/or it was preempted by federal law. The trial court permanently enjoined the state from prosecuting the slaughterhouses under Chapter 149. On appeal, the 5th Circuit Court of Appeals vacated the trial court’s judgment and injunction in favor of the slaughterhouses, finding that Chapter 149 had not been repealed, was not preempted by federal law, and that it did apply to the slaughterhouses. See Empacadora de Carnes de Fresnillo, S.A. de C.V. v. Curry, 476 F.3d 326 (5th Cir. 2007). As a result of this decision, Beltex and Dallas Crown shut down their operations in Texas.
2008: Attorney General Greg Abbott issued this opinion, stating that it is illegal under Chapter 149 for a foreign corporation to transport horsemeat for human consumption in-bond through Texas for immediate export to foreign destinations. Abbott made clear that neither federal law nor the U.S. Constitution invalidated this application of Chapter 149.
July 2012: As discussed in this prior post, the Texas Senate Committee on Agricultural and Rural Affairs met to hear testimony on the economic impact of the closure of Texas's slaughterhouses. According to this news story, some believe that a repeal of Chapter 149 could be on the table next legislative session.
Unless Chapter 149 is repealed or revised, horse slaughter remains illegal in Texas—though it can ostensibly be carried out in other U.S. jurisdictions barring the passage of any federal law that directly or indirectly prohibits it. Whether U.S. horse slaughter, in my opinion, remains a viable option from a legal prospective will be the topic of an upcoming post.
Yesterday, counsel for Brenda Young filed a petition for review of the 14th Court of Appeals’ decision discussed in this prior post. This will be the first time the high court has ever been given the opportunity to decide whether or not Chapter 87 immunity applies to claims brought by workers.
A copy of Young’s petition can be downloaded here.
In her petition, Young contends that the 14th Court of Appeals committed error in holding that:
1. non-consumers of equine activities (i.e. people who are paid to work around horses) qualify as participants under Chapter 87; and
2. the posting of warning signs under Chapter 87 was a defense and not an element of proof (i.e. Young asserts that the McKims had the burden of proving that they had posted the Chapter 87 warning signs in order to be afforded immunity under Chapter 87, and that they did not meet that burden).
While I agree with the 14th Court of Appeals’ decision and do not wish to see it reversed, I am pleased that the Supreme Court now has an opportunity to review whether or not Chapter 87 applies to claims brought by employees or other workers. This issue is currently somewhat “murky” under Texas law. Clarification is needed because there seems to be a conflict of authority on this issue among the intermediate courts of appeals. In that respect, I am pleased that Young requested review of the first issue discussed above.
As we discussed in this prior post, the Supreme Court of Texas has not yet addressed the issue of whether Chapter 87 of the Texas Civil Practice & Remedies Code (the “Act”) shields defendants from liability in suits where employees or independent contractors are injured while engaging in an equine activities. Up until last week, we only had two opinions—both from intermediate appellate courts—addressing this issue.
In the first case—Johnson v. Smith(Corpus Christi 2002)—the court held that independent contractors were participants under the Act, and therefore the Act shielded defendants in suits brought by independent contractors from liability. In the second case—Dodge v. Durdin(Houston [1st] 2005)—the court held that employees are not participants under the Act, and therefore defendants in suits brought by employees are not immune from liability.
As of last Thursday, we now have a third appellate case that sheds light on this issue. The Fourteenth Court of Appeals in Houston recently held that the Act immunizes defendants from liability for claims brought by independent contractors.
The case, styled Young v. McKim, represents the first equine employee negligence suit addressed by a Texas court of appeals since Loftin v. Leewas handed down by the Texas Supreme Court in April of 2011.
Case Background: Brenda Young had posted a flyer at Ravensway Stables advertising her ability to assist owners in the care of their horses. Tisa McKim and her daughter, Jackie, hired Young to care for their horses—Jasper and Butch—at Ravensway.
About two months after Young started caring for Jasper (a rescue horse), Jasper kicked Young and injured her. The injury occurred while Young was talking to another boarder at Ravensway while Jasper grazed beside her.
Young sued the McKims for negligence, and the McKims moved for summary judgment under the version of the Act in existence in 2010 (i.e. before the Act was amended in 2011). The trial court granted the McKims’ motion for summary judgment.
The Appeal: The Fourteenth Court of Appeals affirmed the trial court’s summary judgment in favor of the McKims. On appeal, Young alleged that the Act did not shield the McKims from liability. Among the reasons Young gave were 1) only “tourists and other consumers of equine activities” qualify as participants under the Act; and 2) Young was an employee of the McKims, not an independent contractor. Young relied heavily on the First Court of Appeals’ opinion in Dodgeon appeal.
The Fourteenth Court of Appeals determined that Young was an independent contractor, not an employee. The court did not reach the issue of whether the Act would have applied had Young been an employee. The Fourteenth Court disagreed with the discussion in Dodgesuggesting that the Act only applied to “tourists and other consumers of equine activities.”
Citing Loftin, the Fourteenth Court held,
“The Equine Act is a comprehensive limitation of liability for equine activities of all kinds…The Equine Act applies to all ‘participants’”. [Emphasis supplied].
It remains to be seen whether Youngwill be appealed to the Supreme Court of Texas. Given the Supreme Court’s expansive view of the Act set forth in Loftin, the Supreme Court might disagree with Dodge’sholding that the Act does not apply to employees.
Case Information: Young v. McKim, No. 14-11-00376-CV, 2012 WL 1951099 (Tex. App.—Houston [14th] May 31, 2012, no pet h.).
On April 23, 2012, AQHA member Jason Abraham and two related business entities sued the American Quarter Horse Association (AQHA) in the U.S. District Court for the Northern District of Texas, Amarillo Division.
The complaint asks the court to order the AQHA to revoke AQHA Rule 227(a), on the basis that an outright restriction on the registration of cloned horses and their offspring allegedly violates federal antitrust laws.
Rule 227(a) was approved in 2004 by the AQHA board of directors, which prohibits all cloned horses and their offspring from being included in the AQHA’s breed registry.
Other breed registries, such as the Jockey Club and the Paso Fino Horse Association, have also ruled that cloned horses and their offspring are not eligible for registration.
As discussed in this prior post, Texas law (which may or may not be deemed applicable in this case) favors a policy of judicial non-intervention with respect to the internal affairs of voluntary associations, such as the AQHA. An exception to Texas’s policy of judicial non-intervention can apply in cases where a valuable right or property interest is at stake in a lawsuit, and cases where a voluntary association’s rules violate the law.
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?).
On March 30, 2012, the Supreme Court of Texas denied review of Paula Gaughan’s lawsuit against the National Cutting Horse Association (“NCHA”).
We first covered the Gaughan case in a post back in August of 2011, shortly after the Fort Worth Court of Appeals affirmed the trial court’s judgment in favor of the NCHA. The trial court’s now completely final judgment awards the NCHA $75,000 in attorneys’ fees and denies Gaughan’s request that certain NCHA financial records be judicially declared available for inspection by all NCHA members. For more information, see this article.
The Justices of the Supreme Court of Texas
The NCHA is a Texas nonprofit corporation. The Gaughan case dealt primarily with a company’s duties under the Texas Non-Profit Corporation Act to maintain and, in some cases, allow members to inspect the nonprofit's books and records. The trial and appellate courts held that the NCHA complied with the portions of the Act that were at issue in the lawsuit.
While we’re on the topic of a member’s suit against a horse association, it is a convenient time to point out that the NCHA would likely be deemed a “voluntary association” under Texas law. Here are some “fun facts” about voluntary associations:
It is the right of a voluntary association to manage, within legal limits, its own affairs without interference from the courts. This is what they call the “policy of judicial nonintervention.”
Review of a voluntary association’s actions is severely limited under Texas law. Courts will not interfere with the internal management of a voluntary association so long as the governing bodies of such association do not act totally unreasonably, contravene public policy, break the law, or violate the association’s own rules and procedures.
An individual, by becoming a member of a voluntary association, subjects himself or herself, within legal limits, to the association’s power to administer its rules as well as its power to make its rules.
An exception to the policy of judicial nonintervention can be made where a valuable right or property interest is at stake in a lawsuit.
Although the policy of judicial nonintervention did not directly come up in the Gaughan case, these issues often preclude or limit the ability of a court to interfere in disputes between members and horse industry associations.
Are you thinking about buying a ranch through an informal seller finance deal? If so, beware. Andalusian breeder Rancho Mi Hacienda and owner Gilda Arana learned the hard way the pitfalls of doing this type of deal “on the fly”.
Rancho thought it had an enforceable written agreement whereby Coy Lynn Owens and his wife Linda agreed to sell Rancho 126 acres of land in Hopkins County, Texas. After all, Rancho did have a letter signed by Coy Lynn memorializing the parties’ verbal agreement concerning the ranch sale.
In reliance, Rancho transported its seventy-three Andalusian horses from California to Texas and moved them onto the property. Further, Rancho paid Coy Lynn $25,000 and gave the Owenses’ daughter an Andalusian horse of her choosing. Rancho also expended substantial sums on a log cabin, shelter for the horses, and utilities for the premises. It was Rancho’s understanding that the $25k and the horse constituted the down payment, and that an additional $200,000 was to be paid to the Owenses at the end of a five year term.
Photo: a very majestic Andalusian mare
Around the time Rancho took possession of the property, Coy Lynn Owens went to federal prison for mail fraud. Linda filed for divorce soon after Coy Lynn was incarcerated. In an agreed divorce decree entered by the divorce court, Linda was awarded the realty in question and Coy Lynn was divested of any title to it.
Shortly after the divorce decree was entered, Rancho sued Coy Lynn, Linda, and L&L Investments (a holding company) seeking, among other things, specific performance of the ranch sale agreement, and damages related to the horses such as vet bills, the cost of five horses who died, and lost earnings for one year’s breeding season.
Rancho had Coy Lynn served with the lawsuit at the prison. When Coy Lynn did not file an answer, Rancho took a default judgment against Coy Lynn and nonsuited Linda and L&L Investments. After the jump, you'll see why this was a costly mistake.
Rancho (apparently still in possession of the property) later tried to levy execution on the 126-acre tract to satisfy its judgment against Coy Lynn. In response, Linda obtained a judgment from a JP Court ordering Rancho evicted from the property.
Linda also filed suit in district court against Rancho seeking a declaratory judgment that, among other things, Linda was the sole owner of the property and that it was not subject to execution. The trial court and the Texarkana Court of Appeals agreed with Linda on these points. The Court of Appeals held that because Rancho’s suit was filed after the divorce decree divested Coy Lynn of all interest in the property, it was no longer community property subject to execution on a judgment against Coy Lynn alone.
In hindsight, Rancho probably realized that nonsuiting Linda was a terrible idea. According to the Court:
Although Rancho’s suit originally included [Linda] as a defendant, it made the choice not to pursue an action against [Linda] and filed a nonsuit as it pertained to her, electing to pursue judgment only against [Coy Lynn], who was apparently perceived to be the low-hanging fruit.
Case information: Rancho Mi Hacienda v. Bryant, 2012 WL 952853, No. 06-11-00080-CV (Tex. App.—Texarkana, Mar. 22, 2012). The full text of the opinion can be found here.
In general, a defendant can only be immune from suit in a Texas horse-related injury case if the plaintiff was a “participant in a farm animal activity or livestock show” when the injuries occurred.
Chapter 87 of the Texas Civil Practice & Remedies Code (the “Act”) was amended in 2011 to, among other things, include farm animals other than equines. However, the “participant” requirement did not change in 2011. Neither the former nor the current version of the Act specifically states whether or not employees of equine activity sponsors are considered “participants in a farm animal activity or livestock show” under the Act.
The 1st Court of Appeals in Houston is the only Texas court to have taken up this issue (Dodge v. Durdin, 2005). In that case, Deborah Dodge sued her employers, Magestic Moments Stables, et al, after a horse kicked her in the abdomen as she was administering paste-wormer at the direction of her employer. Dodge claimed that she incurred $4,000 in medical bills as a result of her injuries, and that her employers’ negligence was the proximate cause of her damages.
Majestic Moments claimed that Dodge's suit was barred by the Act. The trial court agreed, and dismissed the case. On appeal, the 1st Court of Appeals disagreed that the Act applied to an employer / employee relationship.
This warning sign should not be a "news flash" to anyone.
Citing its review of legislative intent, together with the duties assigned to Texas employers under the Texas Labor Code, the 1st Court of Appeals held that, “the Equine Actapplies to consumers and not to employees and that Dodge is therefore not a ‘participant’ under the Equine Act.”
Workers’ compensation did not cover Dodge’s alleged injures. Unlike employers in many states, Texas employers are able to opt out of the workers’ compensation system. For more information, see this post.
In Dodge, the 1st Court of Appeals noted that the only other Texas court to have addressed the definition of “participant” was the Corpus Christi Court of Appeals in Johnson v. Smith (2002). In that case, the Corpus Christi court acknowledged that an independent contractor—not an employee—in charge of breeding and handling stallions wasa participant under the Act. The 1st Court of Appeals distinguished the Johnson case from the Dodge case on its facts.
Neither the Dodge nor the Johnson case were appealed to the Supreme Court.
The Texas Supreme Court has not yet addressed whether or not an employee or independent contractor who is injured while working with horses on their employer’s premises is a “participant” for purposes of the Act. Until the Supreme Court takes up this issue or the Legislature clarifies it, this issue continues to be somewhat unsettled in Texas. Texas equine businesses should therefore not rely upon the Act to provide immunity from suits brought by employees or independent contractors.
Businesses can take several steps to minimize liability risk in this area, including 1) procuring insurance to cover employee or independent contractor injuries; 2) having employees or independent contractors sign liability releases; and 3) forming limited liability entities through which employees and independent contractors are retained.
Thomas Corea represented John Anthony “Tony” Burris in another lawsuit involving an allegedly defamatory letter that defendants Pamela J. Bilek, the Bilek Family Trust, and Bilek Quarter Horses, LLC sent to the American Quarter Horse Association (“AQHA”). The letter at issue complained of Burris's activity as a judge for the AQHA.
Burris’s suit was originally filed in the 40th District Court of Ellis County, Texas. The Ellis County court dismissed Burris’s suit after determining that the State of Texas lacked personal jurisdiction over the Bilek defendants. Unlike in the Becky George suit, Corea did not appeal this dismissal.
The Ellis County Courthouse, in my hometown of Waxahachie, Texas
Seven days after Burris’s Ellis County case was dismissed, Corea filed (on behalf of Burris) three new lawsuits in Potter, Victoria, and Medina Counties of Texas. All of the new lawsuits alleged the same conduct against Bilek towards Burris that was the subject of the Ellis County lawsuit.
On the same day that the multiple lawsuits were filed, Corea sent an email to Bilek’s counsel advising that,
This is NEVER going away. Pam needs to get that through her drunk head that I will chase her to the end of the earth and she needs to get this settled now.
In response, Bilek’s counsel advised Corea that sanctions would be sought if Corea served any of the three new lawsuits. The Potter County lawsuit (which was identical to the Ellis County suit) was subsequently served on Bilek.
Bilek filed a special appearance (again alleging lack of personal jurisdiction) and motion for sanctions against Corea, the Corea Law Firm, PLLC, and Burris in the Potter County suit. Corea subsequently non-suited the Potter County case.
The 108th District Court of Potter County held a hearing on the motion for sanctions a couple of days after Corea non-suited the case. Corea appeared at the sanctions hearing by telephone, and did not object to any of the exhibits offered by Bilek’s counsel (who personally appeared).
The court found that all of the same jurisdictional facts alleged in Potter County had already been fully litigated and resolved in Ellis County, and determined that the Potter County suit was brought in bad faith and for purposes of harassment.
The Potter County court ordered Thomas Corea, the Corea Law Firm, PLLC, and Tony Burris to pay Bilek $50,000 for costs and attorney’s fees, $10,000 to compensate Bilek for the deliberate and intentional harassment and inconvenience, and additional attorney's fees in the event of unsuccessful appeal.
Corea appealed the sanctions award. The Amarillo Court of Appeals upheld the sanctions awarded by the trial court, in their entirety.
Case information: Corea v. Bilek, 2012 WL 602898, No. 07-11-00114-CV (Tex. App.—Amarillo, Feb. 24, 2012).
According to federal district judge Xavier Rodriguez of the Western District of Texas (San Antonio Division), the creation and sale of belt buckles featuring a mirror image of a copyright-protected team penning logo constituted copyright infringement.
William C. Spent d/b/a Spent Saddlery & Feeds created a logo of three riders penning three head of cattle. He registered this logo with the United States Copyright Office. Spent later contracted with Award Design Medals, Inc. (Award Design) to create a die and produce a motif featuring Spent’s team penning logo.
Spent gave Award Design limited rights to use this "team penning logo" to create belt buckles and other products exclusively for Spent. Award Design created the die and included a copyright notice.
"You copied my belt buckle, pardner!"
Unbeknownst to Spent, someone with Award Design created a “mirror image” of Spent’s logo, which also deleted the copyright notice.
Award Design went out of business. A predecessor company to Montana Silversmiths, Inc. purchased certain assets of Award Design, including the mirror image of Spent’s logo that did not include the copyright notice. Montana Silversmiths sold approximately 1,100 products featuring the mirror image of Spent's logo.
Spent sued Montana Silversmiths and Award Design for copyright infringement, and moved for summary judgment on his claims.
The court granted Spent’s motion for summary judgment against both defendants in part, holding that both engaged in copyright infringement. According to Judge Rodriguez,
Award Design does not contest that it engaged in copyright infringement. Although Montana Silversmiths, Inc. argues that it believed itself to be a valid owner of the Team Penning logo, this is not a defense to the copyright infringement claim, although this argument is relevant to the issue of willfulness.”
The court held that there was a genuine issue of material fact as to whether the copyright infringement was willful. Thus, the court held that to the extent Spent was alleging that the defendants “willfully” engaged in copyright infringement, Spent’s motion for summary judgment was denied.
1) You can be completely oblivious to the fact that you are engaging in copyright infringement, and still be held liable. Purchasers of equine gear for resale would be wise to consult an attorney who is knowledgeable in the area of patent and/or copyright law prior to the purchase; and
2) The creation of a “mirror image” of copyrighted work does not defeat copyright protection.
Case information: Spent v. Montana Silversmiths, 2012 WL 400964, Civil No. SA-11-CA-307-XR (W.D. Texas, Feb. 7, 2012)
The Fort Worth Court of Appeals has affirmed the 348th District Court of Tarrant County’s dismissal of horse trainer Rebecca “Becky” George’s lawsuit against Adam Deardorff and Lana Wirsig, holding that the trial court lacked personal jurisdiction over Wirsig and Deardorff.
Becky George of Tomball, Texas alleged that statements by Deardorff and Wirsig were submitted to the American Paint Horse Association (APHA), which caused the APHA to revoke George’s status as an official APHA judge and suspend her from APHA competitions for six months. George alleged that the suspension caused her to lose more than half of her clients.
All parties agreed that Deardorff was a resident of Pennsylvania, and Wirsig was a resident of Missouri. The trial court dismissed George's claims against Deardorff and Wirsig on jurisdictional grounds. According to the Court of Appeals, George did not meet her burden to allege facts sufficient to give the trial court personal jurisdiction over Deardorff and Wirsig, because:
1) George asserted in her pleadings that another defendant named Harlan Hall (and not Deardorff or Wirsig) submitted Deardorff and Wirsig’s statement to the APHA (which is based in Fort Worth).
2) George alleged that Deardorff had engaged in negotiations with Hall regarding the possibility of Hall hiring Deardorff to become the Hall family’s horse trainer in Texas. But George did not allege where these negotiations occurred or allege any other facts about these negotiations.
3) Even if Deardorff and/or Wirsig had submitted their statements to the APHA, this allegation is not sufficient to establish personal jurisdiction because it “was too is too random or isolated to constitute purposeful availment and does not show that Deardorff or Wirsig sought some benefit, advantage, or profit by availing themselves of Texas.”
4) George’s claim asserting a civil conspiracy among Deardorff, Wirsig, and Hall (a Texas resident) did not impute Hall’s acts to Deardorff and Wirsig. The court held that George had to establish jurisdiction over Deardorff and Wirsig individually and not based on the acts of another person as part of a conspiracy.
5) George argued that Deardorff and Wirsig attended APHA events and that Wirsig competed in APHA-sponsored events, and because the APHA is headquartered in Texas, these acts constitute doing business in Texas. The Court of Appeals overruled this argument because George did not allege that Deardorff and Wirsig attended any of these events in Texas, much less that their contacts with Texas in connection with these events constituted purposeful availment of the laws of Texas.
6) George claimed that Wirsig was a customer of George, and George’s business is located in Texas. But George never alleged that Wirsig ever did business with George in Texas or other facts showing that Wirsig purposefully invoked the benefits of Texas laws by using George’s services.
As you can see, a defendant's isolated or indirect contacts with Texas do not always give rise to jurisdition in Texas. The defendant must usually be shown to have committed a tort in Texas, to have done busniess in Texas, or to have otherwise purposefully availed himself of the protections of Texas law to in order to submit to the jurisdiction of Texas courts. Plaintiffs should always plead jurisdictional facts against out-of-state defendants in a detailed manner to demonstrate the defendant's specific acts undertaken in Texas.
Plaintiffs to litigation against defendants who reside in other states should carefully consider jurisdictional factors before deciding where to bring suit. Filing suit in the correct forum to begin with can expedite the litigation process and save attorneys’ fees and court costs. Typically, jurisdiction is proper in the state and county were the defendant resides. If a defendant has a possible “quick way out” of a lawsuit by challenging personal jurisdiction, a defendant will usually take advantage of this. If a defendant's suit is dismissed on jurisdictional grounds, the plaintiff must then sue them again in a proper forum. But the plaintiff must act expediently in doing so to ensure that the statute of limitations does not expire before the new suit is filed.
Case information: George v. Deardorff, No. 02-11-00173-CV, 2012 WL 335854, (Tex. App.—Fort Worth, Feb. 2, 2012).
As I’ve previously stated in this prior post, negligence and malpractice lawsuits against veterinarians are generally “tough sleddin’” for plaintiffs in Texas. Would-be plaintiffs who wish to sue their veterinarians often face major obstacles such as: 1) proving damages; 2) obtaining effective expert testimony; 3) paying litigation expenses where there is a low likelihood of recovery; and 4) finding a lawyer experienced in representing plaintiffs in veterinary malpractice suits.
If Larry Welk’s name sounds familiar to you, it may be because his father was the famous bandleader Lawrence Welk, host of the long-lived Lawrence Welk Show. Larry and Lynn Welk’s Champagne Ranch, based in Malibu, California, is in fact named after the “champagne music” made famous by Larry’s father.
The Welks’ lawsuit, filed in the 415th District Court of Parker County, Texas (Judge Graham Quisenberry, presiding), centered around the alleged stifle injuries sustained by their young stallion, Juan Bad Cat. The Welks alleged that Dr. Foland had injected the horse’s stifles and performed a surgery without first consulting with the Welks or the horse’s previous veterinarian. The horse's prior veterinarian was the late Dr. Van E. Snow of Santa Ynez, California. According to the Welks’ suit, they lost the opportunity to compete and syndicate Juan Bad Cat due to Dr. Foland’s alleged negligence and malpractice. The Welks sought damages of approximately $3 million against Dr. Foland and his clinic.
Dr. Foland and his clinic filed counterclaims against the Welks, seeking damages for an unpaid veterinary bill, attorneys’ fees, and court costs.
The Welks were represented by Robert Talaska and Theodore G. Skarbowski, both based in Houston, Texas. Talaska’s firm, according to its website, specializes in human birth injuries. Skarbowski’s firm assists clients with such matters as National Firearms Act gun trusts, commercial litigation, contracts, and estate planning-- per its website.
Dr. Foland and his veterinary clinic were represented by Dr. Donald A. Ferrill of Brown, Pruitt, Peterson & Wambsganss, P.C. in Fort Worth, Texas. Dr. Ferrill is both a licensed veterinarian and an attorney who regularly represents veterinarians.
After a jury trial in September 2011 that lasted about 9 days, the jury returned a verdict in favor of Dr. Foland and his clinic for approximately $192,000 for an unpaid vet bill and attorneys’ fees. The jury awarded zero damages to the Welks.
I recently got the opportunity to catch up with Don Ferrill, the lawyer who represented Dr. Foland and his clinic, to talk about the evidence revealed in the case. According to Ferrill, “Dr. Snow diagnosed and had been treating the horse for what he believed was a congenital condition in its right stifle since it was approximately one year of age. The colt was not any worse off after Dr. Foland treated him than he was before the treatment.”
The plaintiffs’ expert witnesses, when pressed for details on cross examination, gave testimony that helped the defense, according to Ferrill.
“The evidence showed that Dr. Foland did consult with Dr. Snow’s office prior to performing surgery on the horse, and that Dr. Snow advised Dr. Foland to do the surgery at issue,” said Ferrill. Darren Simpkins, the Welks’ horse trainer who was boarding and training Juan Bad Cat in Texas at the time, testified that he gave Dr. Foland permission to perform the stifle injections, according to Ferrill. “These injections [Vetalog and hyaluronic acid] did not numb pain in the horse’s limbs, did not contribute to lameness, and were the type that performance horses typically receive for routine maintenance,” said Ferrill. The Welks also had Dr. Foland perform a colic surgery on one of their other horses after the lawsuit was filed, according to Ferrill.
“Prior to the depositions of Darren Simpkins and his wife, Kelly Simpkins, Ted Skarbowski warned Kelly Simpkins that the Welks would sue them if they testified that they gave Dr. Foland permission to perform the injections”, according to Ferrill. “Darren Simpkins nonetheless testified in his deposition that he gave Dr. Foland permission to inject the horse, and the Welks sued the Simpkinses in federal court for breach of fiduciary duty”, Ferrill said. The federal case against the Simpkinses was later dismissed because the statute of limitations on the Welks’ claims against the Simpkinses had already run.
As an aside, I briefly discussed the Simpkins case and its significance in this prior post.
In Judge McBryde's Memorandum Opinion and Order of March 10, 2010 in the federal case, Judge McBryde stated on page 20, “To put the matter mildly, the testimony given by plaintiffs on February 10, 2010, is suspect.” He then goes on to explain how the Welks' deposition testimony in the case against Dr. Foland directly contradicts their depositions in the federal court case.
According to the Champagne Ranch website, Juan Bad Cat stood at stud in 2011 at ESMS in Weatherford, Texas for a fee of $1,500 plus chute fee.
In December 2011, Judge Quisenberry reduced the amount of attorney’s fees awarded to Dr. Foland by the jury as a result of a JNOV (judgment notwithstanding the verdict) motion filed by the Welks’ lawyers. Nonetheless, the final judgment still ordered the Welks to pay damages to Dr. Foland and his clinic, and the Welks took nothing on their claims. According to Ferrill, the Welks also had to pay their own attorneys’ fees pursuant to their fee agreements with their lawyers.
Case Information: Larry and Lynn Welk v. Dr. Jeffrey A. Foland and Weatherford Equine Medical Center P.C., Cause No. CV-07-1322 in the 415th District Court of Parker County, Texas; Lynn Welk, et al. v. Darren Simpkins, et al.; Case 4:09-CV-00456-A in the United States District Court for the Northern District of Texas (Fort Worth Division).
**Note: Thank you to the readers who requested that I cover this case on the Equine Law Blog last fall after the jury reached its verdict. Generally, my policy is to not comment on a case until after its full and final disposition, which in this case happened in late December, 2011. Thank you for reading and for submitting topic suggestions!**
Texas Racing Commission v. Marquez, a recent opinion from the Austin Court of Appeals, involved a horse race where two horses owned by Javier Marquez were inadvertently wearing each other’s saddle cloth numbers. One of the horses suffering from this “wardrobe malfunction” finished second, and the race stewards disqualified both horses and redistributed the race purse.
When the Texas Racing Commission refused to hear Marquez’s appeal of the stewards’ decision, Marquez sued the Texas Racing Commission and its executive director, Charla Ann King.
Marquez won big in the trial court. The trial court declared that Ms. King acted in excess of her statutory authority by refusing Marquez’s appeal, by disqualifying Marquez’s horses, and by redistributing the race purse. The trial court also awarded Marquez his attorneys’ fees under the Uniform Declaratory Judgment Act, and ordered the second place race purse distributed to Marquez. The Racing Commission appealed the decision.
On appeal, the Austin Court of Appeals found that Ms. King did exceed her authority in denying Marquez’s appeal of the stewards’ decision and upheld Marquez’s attorneys’ fees award under the Declaratory Judgment Act. However, the Court of Appeals vacated and dismissed the portion of the trial court’s judgment that awarded the second place race purse to be distributed to Marquez.
The trial court’s logic: TheTexas Racing Commission has exclusive jurisdiction over the issue of the second place race purse. Marquez needs to exhaust his administrative remedies by moving forward with his appeal before the Texas Racing Commission that he fought for in the trial court.
Ironically, the Texas Racing Commission (the same entity that Marquez sued and fought on appeal) will get to decide whether or not Marquez will get the purse that his horse won when it was wearing the wrong “outfit”.
The Honorable Kenneth M. Hoyt, district judge for the Southern District of Texas, rejected claims for lost profits brought by Jim Simpson, Ken Ridenour, and Mel Karr arising from injuries allegedly sustained by “Jess for th Memories” [sic], an AQHA race horse they co-owed.
Like many race horses, Jess received maintenance joint and suspensory injections. After receiving a couple of rounds of injections in his hind and fore limbs in 2009, Jess broke his maiden as a 3-year-old at Sam Houston Race Park. Here is the story on Jess's win. About a month after Jess broke his maiden, Dr. Tom Hays at Elgin Veterinary Clinic observed problems in Jess’s stifles and could not rehabilitate him. Jess was no longer able to race. Judging from the pleadings in the case, Jess was gelded at some point after he won his race at Sam Houston.
Jess’s owners sued Louisiana-based Baronne Veterinary Clinic, Inc. They alleged that Dr. Ed Baronne was negligent and failed to meet the standard of care when he performed joint injections on Jess, allegedly resulting in “debilitating joint infections.” Baronne filed a motion for summary judgment in the case.
In his Memorandum Opinion and Order on Baronne’s motion, Judge Hoyt allowed the plaintiffs’ negligence claim to move forward, but dismissed the plaintiffs’ gross negligence and lost potential profits claims, stating,
Texas law does not allow an injured animal’s owner to recover the animal’s lost potential profits…Rather, a plaintiff’s recovery is limited to the difference in the animal’s market value immediately before and after any injury alleged to have been caused by the defendant.
* * *
The plaintiffs seek to recover speculative lost profits for a gelded race horse, and that horse’s potential profits are far too uncertain to be recoverable. Horse racing is considered gambling for a reason."
[Emphasis added, citations omitted].
The case settled shortly after Judge Hoyt’s opinion was issued, resulting in its agreed dismissal on April 1, 2011.
Case info: Simpson et al v Baronne Veterinary Clinic, Inc., No. 10-CV-03032, filed Dec. 21, 2009 in the U.S. District Court for the Southern District of Texas.
Hat tip to Krysia Nelson at Equine Law & Business Letter for noticing this case first.
On July 28, 2011, the Fort Worth Court of Appeals affirmed the entire judgment in favor of the National Cutting Horse Association in the Paula Gaughan lawsuit. A copy of the Gaughan opinion can be found here. [Note: Westlaw has labeled this case, in error, as a Waco Court of Appeals case. The opinion was issued by the Fort Worth Court of Appeals].
Gaughan Recap: The Gaughan case stemmed from Paula Gaughan’s written requests to NCHA to inspect certain financial data found in the books and records of the NCHA. Gaughan sought the records to make sure the NCHA was “not guilty of waste or mismanagement in its financial affairs and in the administration of the NCHA’s business.” The NCHA produced 89,214 pages of documents to Gaughan under a protective order, but designated 36,556 of those pages as confidential. Gaughan wanted to share all of the documents with other NCHA members, which was one of the points of contention in the case.
A fellow by the name of Dean Sanders was also originally a plaintiff in the case, but he later dropped out. In November 2009, the 67th District Court in Fort Worth granted a motion for summary judgment in favor of the NCHA and ordered Gaughan and Sanders [even though he had dropped out of the case] to pay NCHA’s attorneys’ fees in the amount of $75,000 [NCHA had asked for $84,243].
Both Gaughan and the NCHA have issued public statements about the July 28, 2011 appellate opinion affirming the judgment, and they can be found here.
The Gaughan appellate decision comes on the heels of Lainie Whitmire’s May 13, 2011 appeal of the trial court’s surprising judgment in her case against the NCHA.
Whitmire Recap: In January 2011, the Whitmire case was tried to a jury in the 236th District Court of Tarrant County (Judge Tom Lowe, presiding). The jury found that NCHA officials “falsely imprisoned” Lainie Whitmire during the 2004 NCHA Futurity. According to Whitmire, they had taken her to a room at the Will Rogers Coliseum and allegedly not allowed her to leave while questioning her about her amateur status. The jury also determined that the NCHA breached an oral agreement with Whitmire leading her to believe her suspended NCHA membership and Amateur or Non-Pro status would be restored. The jury awarded no monetary damages on the false imprisonment claim, but it awarded Whitmire $70,000 in mental anguish damages against the NCHA on the claim related to the oral agreement.
In a turn of events that was shocking to many who were following the Whitmire case, the final judgment signed by Judge Lowe on April 15, 2011 overturned the jury verdict and ordered the Whitmires to pay the NCHA $347,000 in attorneys’ fees and court costs. The parties had spent four years and more than $1.6 million in attorneys’ fees and court costs in the Whitmire matter.
Whitmire appealed the case to the Fort Worth Court of Appeals on May 13, 2011. The parties have until August 15 to submit briefs to the court. For more information, see this article in the Quarter Horse News.
Stay tuned for more developments on the Whitmire appeal as they unfold.