January 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.

Last year’s defense verdict in the lawsuit brought by Larry and Lynn Welk against Dr. Jeffrey A. Foland and Weatherford Equine Medical Center, P.C. illustrates some of these difficulties.

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!**

If you are thinking about buying or selling a horse on a “trial basis”, or if you are entering into a horse sale agreement with a trial period, here are five of the most important things you should consider:

1)      The Timing of the Pre-Purchase Exam.  The most important consideration in horse sales is usually, “is the horse sound”?  If the horse is not sound enough to perform the intended tasks of the prospective buyer, the prospective buyer shouldn’t be taking it “on trial” anyway.  It doesn’t happen often, but a horse can sustain an injury or get sick during even a short trial period.  Therefore, the pre-purchase exam should be conducted before the horse is ever taken by a prospective buyer to “try out.”  If a question is ever raised as to whose possession the horse was in when the horse was injured or got sick, both parties will be informed of the horse’s condition when it left the seller’s property if the pre-purchase exam is conducted before the horse leaves.  See the following posts for more information on the types of tests that should be conducted in a pre-purchase exam.

Guest Post:  Top 10 Pre-Purchase Exam Considerations

Tips for Equine Pre-Purchase Exams

2)      Insurance.  If the horse is nice / expensive, the seller should insure it for mortality and major medical before the prospective buyer leaves with the horse.  Note:  Sellers should speak with their insurance agent to make sure the seller’s insurance will cover incidents that occur during the trial period.  If the seller’s insurance will not cover the trial period, good equine insurance agents can often sell the prospective buyer a short-term insurance “binder” that will cover incidents that occur during the trial period.  These short-term "binders" may be extended by a formal policy if the prospective purchaser decides to keep the horse.  If the prospective buyer purchases an insurance “binder”, the seller should be named as additional insured.

3)      Written Purchase & Sale Agreement.  All terms of a purchase agreement “on trial” should be reduced to writing.  Among other things, the specific term of the trial period should be set out, as well as who will bear the risk if the horse is injured or dies during the trial period.  A “security deposit” can also be provided for in the agreement, along with specifics on when the seller can keep the deposit and in which instances the deposit will be refunded to the prospective buyer.  The bill of sale (which transfers title to the horse) and the registration papers should not be signed over until after the trial period has expired. 

4)      Liability Release.  The seller should consider having the prospective buyer sign a release of liability should the prospective buyer or its property be damaged during the trial period.  This will not cover injury to third parties in most instances.  A seller can procure a liability insurance policy to cover accidents involving the horse and third parties.

5)      Location of Horse During Trial Period.  A seller should have a prospective buyer agree in writing as to a single location where the horse will be kept during the trial period.  The seller can deliver the horse to said location or make other arrangements to either approve or disapprove the living conditions of the horse before the horse is released to the prospective buyer.  If the prospective buyer intends to board the horse with a third-party, it is wise for sellers to make sure that the prospective buyer pre-pays board for the trial period in advance.  This is to guard against stableman’s or agister’s liens being placed on the horse if the prospective buyer does not pay board during the trial period.

Due to all of these concerns (and others), I do not typically recommend that prospective buyers or sellers enter into "trial period" sale agreements.  In the best case scenario, a seller would allow a prospective buyer to inspect the horse as much as needed prior to the sale, either 1) on the seller’s premises;  or 2) at some other venue to which the seller would transport the horse for purposes of inspection.

This post was in response to a special request I received from a reader for a blog post on horse sales with trial periods.  I’m kind of like one of those music groups that takes requests as long as the song is in their repertoire, and I don’t even ask for tips in return!  So please contact me if you have any special requests for a blog topic.  I’m always looking for good content that will be helpful to my readers.

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Happy New Year, Equine Law Blog readers!  Here’s to the hope that you and yours find all opportunities for joy and happiness, as well as prosperity in abundance in 2012.

2011 brought a number of significant legal events / changes that will affect many people involved in the Texas horse industry.  The "Top Seven of 2011" (it rhymes!), are as follows:

1.  The Texas Supreme Court decided a case involving the Texas Equine Limitation of Liability Act.

  • Loftin vs. Lee was the case.  The opinion was handed down on on April 29, 2011.
  • The Supreme Court upheld the defendant’s immunity pursuant to the Act.
  • This was the first time the Texas Supreme Court has taken up a case concerning the scope of the Act.
  • Related blog post

2.  The Texas Legislature expanded the immunities provided under the Texas Equine Limitation of Liability Act to cover all farm animals and expanded immunity to cover veterinarians.

  • Governor Perry singned the bill into law on June 17, 2011, and it became effective immediately upon signing.
  • Warning signs should be updated to reflect the new law.
  • The new law is called the Texas Farm Animal Limitation of Liability Act.
  • Related blog posts can be found here and here.
     

3.  The Texas Legislature passed a new sales tax exemption certificate requirement for the purchase of tax-exempt agricultural goods.

  • The bill was passed during 2011 legislative session, but first became effective on January 1, 2012.
  • All persons purchasing tax-exempt ag supplies must now apply for a registration number with the Texas Comptroller.
  • Horse and feed sales are still exempt without a number, but some training and boarding businesses may not qualify for a registration number that is now required to purchase other goods.
  • Related blog post.

4.  The Texas Legislature passed a bill affecting equine dentistry.

  • There is (as of September 1, 2011) a licensing requirement for lay dentists in Texas.
  • Related blog posts can be found here and here.
     

5.  Congress and President Obama passed a budget bill that removed ban on federal funding of horse slaughter inspectors.

  • Bill was signed by the President on November 18, 2011.
  • Horse slaughter is, by virtue of this bill, again a possibility in some U.S. states.
  • Related blog post.
     

6.  100% Bonus Depreciation ended on December 31, 2011

  • Some believe this tax benefit caused a surge in sales for yearling markets last year.
  • For new goods or qualified horses purchased on January 1, 2012 and after, 50% bonus depreciation will be available instead of the 100% rate that was available in 2011.
  • Related blog post.

7.  New medication rules were adopted by a number of horse organizations

  • Performance and race horse medications were a hot topic in 2011.  Among other organizations, the Breeders’ Cup decided to phase out the use of Lasix, and NRHA initiated random testing protocols and adopted a new medications rule in 2011.
  • Related blog posts can be found here and here.

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