Court Affirms Judgment Allowing Boarders to Move Horses Due to Stable Employee's Smoking in Barn

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, several boarders removed their horses from the stable. 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 the stable.

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 the stable owner 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, the stable'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 the stable owner's riding instructor agreement with Amber Ross. Ross had given riding lessons at the 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 the stables. Ross did not pay the stable owner 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 the stable owner.

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 InformationRamaker v. Abbe, 2013 WL 3791491 (Tex. App.—Austin, Jul. 18, 2013)(mem. op.)

Increase Your 2012 Bottom Line Through Forage Management Now

It’s finally raining in Texas!  And grass is beginning to grow in pastures following the crippling drought brought on by Texas’s “Nuclear Summer of 2011”.  Horse businesses in many parts of the country have only relatively recently begun to purchase round bales and make other preparations for winter.  But most operators in Texas have been forced to feed horses practically every bite they’ve had to eat since summer, and they will have to continue feeding through winter and early spring along with everyone else. 

 

To manage this unfortunate scenario, and to make sure your pastures are restored to pre-drought conditions in 2012, there are a couple of proactive steps you can take:

1)      Raise board / maintenance rates to cover your increased costs for hay.  If you need to increase fees to cover your hay costs, be sure to send each of your customers a notice of the rate increase well in advance of the month you actually increase rates for feeding.  Your written agreements with customers should contain language indicating that boarding / maintenance rates are subject to change.  If this is not already in your agreements, it would be a good idea to include this in your 2012 agreements.

2)       Share hay delivery costs.  For delivered hay, it is typically less expensive to buy it by the stacker load (about 5 tons) or an entire semi-load (about 17 to 20 tons). If you can’t use this much hay, you might save freight costs by finding another farm that is interested in splitting a load.

3)      Take immediate action to speed pasture recovery. According to an article by Dr. Daren Redfearn, Oklahoma State University Cooperative Extension forage and pasture management specialist, this can be done by a combination of restricted grazing, fertilizer, and weed control. Dr. Redfearn's full article can be found here.  Oklahoma’s pasture conditions in the wake of the 2011 drought and current moisture levels are comparable to those in most parts of Texas.

Speaking of Oklahoma State University and Oklahoma, a recap of last weekend’s fan riot at Boone Pickens Stadium in Stillwater that injured 13 people can be found here.  One emergency medical technician described the mayhem resulting from the riot as “much worse” than the magnitude 5.6 earthquake that hit Stillwater in November.

How to Successfully Manage Credit in a Tough Economy

In these economic times, horse industry businesses need to make sure they are effectively managing their credit, as well as their client relationships.

Many equine-related businesses owners have occasion to extend credit to their customers or clients. First of all, it is important to get everyone on the same page with respect to billing. “Everyone” includes you, others in your office who have client contact, and the client. For example, everyone who deals with your accounts should know when statements are mailed, when payment is due, and when or if the client may spread out payment over a number of installments. Similarly, your customer or client needs to clearly understand your expectations regarding payment. 

Your spoken words and your actions must match your paperwork and billing terms. This is one of the weakest areas for many horse businesses in debt management. I have seen, for example, many people who believe someone is boarding or training their horse for free in exchange for a commission when the horse is sold, only to receive a bill in the mail months later for thousands of dollars of boarding and training services. When this occurs, there is a much higher potential to really upset a client who believes your rules have changed between what was verbally offered and how they were actually billed. 

The following are some things you can do to avoid having to collect a debt in the first place:

1. Have clear, written terms from the outset.  You need to give your client a written confirmation of the product or service you will be providing before you provide the product or service.   The initial agreement should be signed by both you and the client.  

2. Publish your terms frequently.  Your terms should be published frequently after the original agreement. For example, the payment due date should be printed on each statement.

3. Send out detailed statements.  You should bill your clients at least once per month, and the bill needs to be as detailed as possible. People are more likely to pay a bill and pay it on time when they fully understand all the services that were performed. When a client sees a general entry such as “vet services” on a bill, for instance, when the client had no idea a veterinarian had treated their horse, the client may become suspicious that you are divvying up your vet expenses equally among all clients, whether that particular client received the vet service or not. 

4. Invoice clients on a consistent billing cycle.  Once a product or service has been delivered, invoice the client as soon as possible. Whichever date you choose to send out bills, send one out at least once per month on that same schedule as long as you are providing services or waiting for payment.

5. Encourage prompt payment.  To encourage the prompt settlement of bills, offer an incentive such as discounts for early payments (while always balancing the extent of the price cut with the benefits of an improved cash flow).

For more debt collection tips, continue reading.

Once an account becomes past-due, remember the following key principles for debt collection: 

Start early. A debt is born when your credit terms are breached. If you do not act immediately, your terms are seen as flexible. If you clearly spelled out the consequences of breaching the rules up front, then no one asks why payment has not been made, you cannot expect to get tough later and get away with it. 

 

Always be the “good guy. Do not let emotions ruin your relationship with your clients. It is possible to be diplomatic while collecting debts. Remember—persistence is everything. Be polite, persistent, and consistent. Leave aggression to the lawyer or collections agency you hand the debt over to after you have done your best.

 

Debt collection tips:

 

*Manage debt weekly, if not twice a week. You will lose the upper hand if you only follow up with debtors monthly or less often. 

 

*Statements should say only “current” and “overdue.” Do not use 30, 60, and 90 day panels, which suggest such periods are normal.

 

*Instead of asking how much a client can afford, ask how much they are short. Clients will tend to answer more realistically. Depending on how much they are short, you can ask for a payment plan accordingly. 

 

*A day or two after the payment becomes past-due, call or email the client. Keep following up on a weekly basis.

 

*When an account becomes 45 days past due, pass it to a third party. Be sure your third party attorney or collections firm complies with the Fair Debt Collections Practices Act (“FDCPA”), a federal law that governs third-party debt collection practices. One such company is GreenFlag Profit Recovery. They help large and small businesses collect accounts as low as $50, and they typically charge a flat fee of about $25 per account, no matter how large the account is. Just be sure to consistently send your accounts out after 45 days. The longer you wait to take action, the lower your chances to ever recover your profits become.

What Happens if Lien Foreclosure Sale Proceeds Not Enough?

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.

Overview of Texas Stable Keeper's Lien

Texas law provides liens for two specific types of services provided to horse owners: boarding services (the stable keeper's lien) and breeding services (the stock breeder’s lien).   This blog provides an overview of the stable keeper's lien.

How does a stable keeper's lien work? The Texas stable keeper's lien, also known as an “agister’s lien,” is a possessory lien that applies when one person takes care of horses or other livestock of another by providing board or pasture for the horse or other livestock. If you run a stable or keep other people’s horses on your land or land you are leasing, you may keep possession of the horse until your board bill is paid by the horse owner. If the nonpayment persists, you can have the horse sold to collect the amount owed.

How do I foreclose on a stable keeper's lien? Your foreclosure has to comply with Section 70.005 of the Texas Property Code. Under that section, you must: 1) have possession of the horse for 60 days after the date the charges accrue; 2) make a written request to the owner to pay the unpaid bill; and 3) if the charges are not paid on or before the 11th day after you made demand for payment, you may sell the horse at public auction after giving the horse owner 20 days’ written notice.

What if someone is interested in buying the horse? Can I sell it to them or does it have to be sold at an auction? Texas law provides that you must sell the horse at a public sale. This is to prevent boarding facilities from selling a horse worth a lot of money to a friend for much less than the horse is worth, just to satisfy the debt. To get around the public auction requirement, boarding facilities can draft clauses into their boarding agreements allowing them to sell to horse by private treaty. The boarding contract may also provide for interest and late fees for past-due board.

My boarder left a lot of tack at my barn and did not pay their board. Can I keep or sell the tack to satisfy the bill? No. The stable keeper's lien only covers the horse itself. Boarding facilities may not hold tack or other equipment as security for payment of past-due board. Again, a boarding facility may draft a clause into their boarding agreement allowing them to keep or sell tack or other equipment belonging to a boarder who does not pay their bill.

This entry only addresses the current law in Texas.  The University of Vermont's website, Equine Law and Horsemanship Safety, provides a list of agister's lien statutes in other states
(scroll to bottom to find your state).