Equine Law Blog

Parker County Jury Finds for Vet in Welk v. Foland

Alison Rowe — Fri, 27 Jan 2012 14:52:00 -0600

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 skilled and 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 415^th 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!**

Top 5 Considerations for a Horse Sale Agreement with a Trial Period

Alison Rowe — Thu, 19 Jan 2012 07:47:00 -0600

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.

Follow me on Twitter @alisonmrowe

2011 Equine Law Year in Review

Alison Rowe — Fri, 06 Jan 2012 20:46:38 -0600

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.

Follow me on Twitter @alisonmrowe

American Horse Council Opposes Changes to Federal Child Labor Regulations

Alison Rowe — Thu, 22 Dec 2011 08:00:00 -0600

On December 15, 2011, the American Horse Council (AHC) issued a news release publicizing its opposition to the Department of Labor's (DOL) proposed child labor regulations concerning children working on farms because of its potential negative impacts on the horse community.

The AHC was organized in 1969 to represent the horse industry in Washington before Congress and the federal regulatory agencies. It is a non-profit corporation that represents all segments of the equine industry.

According to the AHC, the proposed rule would effectively bar minors under the age of 16 from working in most capacities in agriculture, especially around horses and other livestock.

On November 30, 2011, the AHC filed comments with the DOL expressing its concerns with the proposed rule. A link to the AHC’s full comments can be found here.

According to the AHC:

The proposed rule would expand the number and scope of Hazardous Occupation Orders (HOs) to such an extent that young people not working on a farm or ranch owned by their parents would be precluded from working in agriculture. The proposed rule would prohibit herding livestock on horseback or foot in confined spaces such as pens and corrals. Furthermore, the DOL would prohibited youth from engaging or assisting in almost all common animal husbandry practices, such as branding, breeding, dehorning, vaccinating, castrating livestock, or treating sick or injured animals including horses. All these activities combined represent a great deal of the work performed in association with livestock.”

The proposed DOL rule does include an exemption for children working on farms and ranches owned by their parents, but the AHC believes this exemption is too narrow in scope:

The AHC does not believe the proposed rule recognizes the reality that many family farms and ranches are held as LLCs or partnerships with other family members. We believe there is no reason to believe it has ever been the intent of Congress to excluded farms owned by two siblings or multiple generations of a family from the parental exemption. Doing so would impact thousands of family farms and ranches and unnecessarily deprive young people of the opportunity to work on a family farm or ranch and all the benefits associated with such work…”

Texas Farm Bureau has also recently published these blog posts featuring the concerns of family farmers who believe the proposed rule would rob many children of the valuable lessons that they could learn working in agriculture and around livestock:

DOL Could Change the Value of Hard Work

New Rules Robbing Our Kids?

In an age where most kids in the United States spend most of their free time in front of a TV set, an I-Pad or a computer, it is hard for me to imagine that so many kids are getting hurt working on farms that a new federal law is required to protect them from “exploitation”. Do any of you readers know what the real motivation behind this proposed rule really is? Please feel free to leave your ideas in the comments section.

In next week’s post, I’ll cover the most significant legal developments of 2011 that affect Texas horse owners. I wish all of you a very Merry Christmas and safe travels this weekend!

Multiple Agendas Revealed in Legal Battle over New York Carriage Horse Industry

Alison Rowe — Thu, 15 Dec 2011 19:48:08 -0600

Most of you have already read about the heated legal battle over the horse-drawn carriage industry in New York City, where some groups have been pushing for decades to outlaw carriage rides. On its face, the battle seems to be about whether or not the industry is inherently cruel or dangerous for the horses. But more recently, some facts have surfaced pointing to other interests and agendas that may be fueling the push to banish the carriage industry from New York.

Emily B. Hager authored a story published last week in the New York Times that delves into underlying interests of some who are attempting to ban carriage rides in New York City. A link to the article can be found here.

One issue raised in the Times article are allegations of foul play related to the ASPCA’s involvement in the efforts to outlaw the horse-drawn carriage industry. According to Ms. Hager’s article, Dr. Pamela Corey (chief equine veterinarian for the ASPCA), said her supervisors pressured her to distort her findings about the death of a carriage horse in order to turn public opinion against the carriage industry. After Dr. Corey spoke out, the ASPCA suspended her. Dr. Corey has since filed a complaint with the state attorney general’s office, in which she states that she had been pressured on several occasions to slant her professional opinion to help achieve a ban.

Ms. Hager also points out that while the ASPCA is one of the groups leading the effort to ban horse-drawn carriages, it is also one of three entities that regulate the carriage industry in New York.

The ASPCA’s president, Ed Sayres, is also reported in the Times to have teamed up with Stephen Nislick, chief executive of the development company Edison Properties, to develop a plan to replace carriage rides with electric-powered replicas of antique cars. Sayres and Nislick are reported to have started a nonprofit organization, known as NY-Class, that has collected more than 55,000 signatures backing city ordinances that would end the carriage horse industry in New York. NY-Class was allegedly started up through a $400,000 donation from the ASPCA and a contribution from Mr. Nislick.

With respect to these potential conflicts of interest, Ed Sayres is quoted in the Times as saying, “I don’t see it as a conflict. If we don’t bring forward the risk factor that we are observing, then it would be negligent.”

Real estate developers (including Mr. Nislick) are alleged to be involved in the movement to outlaw the carriage industry because they covet the land on the Far West Side where the horses have long been stabled.

According to Ms. Hager’s article, some carriage owners acknowledge carrying out a campaign to infiltrate the activist groups and secretly record their strategy sessions. In one recording, Mr. Nislick is said to describe efforts to gain the support of city politicians by giving them campaign contributions.

The carriage industry is reported to have filed its own complaints with the city and state agencies against the ASPCA and NY-Class.

The Times article includes some stats on drivers’ earnings, which reportedly range from $40,000 to $100,000 annually, depending primarily on whether they own their horses, whether they work the day or night shift, and how bad the weather and economy are. If you know how much it costs to live in Manhattan, you know that even $100,000 per year before taxes can be hard to live on there. One would think that the last thing the carriage drivers would want to do is abuse or mistreat their horses if their livelihood depended upon them.

These latest allegations are definitely thought-provoking. One must wonder whether those who donate money to the ASPCA hoping to fund food, medicine, and shelter for unwanted animals know that the Society has spent at least $400,000 on this political campaign.

Also, should the ASPCA still be one of the regulatory bodies governing the NY carriage industry, given the conflicts and allegations that have now arisen?

Finally, what would happen to the horses if those pushing for a ban were successful? According to Dr. Nena Winand, an equine veterinarian from upstate New York who is a member of the American Association of Equine Practitioners, “If we banned the carriage horse industry tomorrow, they would go straight to slaughter. There is no big field out there, there is no one to pay the bills.”

As discussed in this prior post, mistreatment of or cruelty to horses is already illegal in State of New York. Given these latest allegations, this fact does cause one to ponder whether animal welfare is the real impetus behind the movement to outlaw the carriage industry in New York City.

Can Jaci Rae Jackson Be Hanged for Horse Theft?

Alison Rowe — Thu, 08 Dec 2011 07:33:00 -0600

We’ve all heard accounts that horse thieves have, in the past, been sentenced to death by courts in Texas or legally hanged by vigilantes. The demise of Jake and his compatriots in the movie Lonesome Dove is a depiction of one such vigilante hanging in Texas. All kidding aside, verifiable accounts of capital punishment for horse theft (both after a trial and by vigilantes) come not only from Texas, but also from other U.S. states and even other from other countries.

Photo: Per Wikipedia, this photo is of a horse thief's hanging in Oregon, circa 1900 [Source]

According to a BBC news story from May 2011, some folks in Scotland even reenacted the events surrounding the 1811 hanging of a fellow named George Watson for horse theft. Watson was described in the BBC article as a “tinker-traveller” who made off with a “distinctive grey Clydesdale mare” belonging to a man who offered shelter to Watson and his family. Watson is alleged to be the last man hanged in Scotland for horse theft.

Urban legend has it that horse thieves can still be hanged or sentenced to death in Texas. But unfortunately for those who still wish to see horse thieves put to death, horse thievery is no longer a capital felony in Texas. Under Texas Penal Code Section 31.03(e), horse theft is a third-degree felony (2 to 10 years in prison) if the value of the horses stolen in a single transaction is less than $100,000. Horse theft in Texas is punishable as a second degree felony (2 to 20 years in prison) if the horses stolen in a single transaction are worth $100,000 to $199,999, and a first degree felony (5 to 99 years in prison) if the horses stolen in a single transaction are worth $200,000 or more. See also Chapter 12 of the Texas Penal Code.

Pursuant to the U.S. Supreme Court’s 2008 opinion in Kennedy v. Louisiana, the power of any U.S. state to impose the death penalty against an individual for committing a crime that did not result in the death of a human victim is now limited to crimes against the state (i.e., espionage, treason).

But vigilante justice for horse thieves is not completely dead in Texas. As discussed previously, there are still circumstances under which a person in Texas could legally shoot or otherwise kill a horse thief if the person, for example, is a witness to horse theft in progress and the circumstances warrant the use of lethal force. See these prior posts:

When is it Legal to Shoot a Trespasser?

How to Deal With Trespassers on Your Property

Facts revealed in the recent Jaci Rae Jackson case may cause some to wish capital punishment were still available for horse theft. As you have probably read by now, Jackson is a now 19 year-old Southern Arkansas University student who was charged this week with a number of felonies in Arkansas and Oklahoma for the theft of 5 college rodeo horses and a horse trailer. Jackson cannot (if convicted) be sentenced to death for her actions. Ms. Jackson has also been charged with related post-theft crimes which, according to reports, include allegedly participating in the killing and dismemberment of one stolen horse, and tying the 4 others to trees without sufficient food or water. Ms. Jackson’s arraignment is expected to occur on December 15, 2011.

Photo: Jaci Rae Jackson [Source]

Apropos, how can we all take steps to prevent the theft of our horses and trailers and make sure thieves are brought to justice? Dr. Pete Gibbs, Texas A & M University professor and Extension Horse Specialist, published an informative article entitled “15 Steps to Minimizing Theft of Horses and Equipment”, which can be downloaded here.

Increase Your 2012 Bottom Line Through Forage Management Now

Alison Rowe — Tue, 06 Dec 2011 08:19:00 -0600

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.

Equine Law Blog Included Among ABA Journal Top 100 Blawgs

Alison Rowe — Fri, 02 Dec 2011 12:13:27 -0600

I am so excited, y’all! Yesterday, the ABA Journal released its 2011 list of the 100 best law blogs (“blawgs”), and the Equine Law Blog was included on the list. I am so happy and honored that this blog was selected from over 1,300 worthy nominees. Thanks to the readers who make this blog possible and worthwhile. Thanks especially to Holden Hoggatt, equine attorney from Jennings, Louisiana, and others who nominated this blog for inclusion on the Top 100 list.

The Equine Law Blog is now up for another vote in the “Niche” category of law blogs. There are a whopping 14 blogs included in the “Niche” category, including heavy hitters like China Law Blog and TaxGirl. You should check out the amazing blogs on the Top 100 list, if you have not already.

Here are some of my favorite blogs on the Top 100 List:

In case you’re wondering how to spend all your “free time” between now and December 30, 2011, you can vote for the Equine Law Blog in the “Niche” category by clicking on the ABA Journal Blawg 100 badge in the left hand column of this blog. You don’t have to be a subscriber of the ABA Journal or a lawyer to vote. Pardon the "bleg," but I would appreciate your vote!

Thanks again, everyone, for your support and for your readership of the Equine Law Blog. Have a great weekend!

Obama Lifts Horse Slaughter Ban--PETA Says It's A Good Idea

Alison Rowe — Thu, 01 Dec 2011 17:12:03 -0600

Pigs are flying, or they must be somewhere in the world. President Barack Obama (while campaigning for his second term in office, I might add) has signed a bill essentially re-legalizing horse slaughter, and PETA is happy about it! Had you told me this a couple of weeks ago, I would have thought these events as likely an Occupy Wall Street protester taking an investment banking job at Goldman Sachs.

The recent bill reinstituting federal funding for horse slaughter plant inspections has been covered ad nauseam in a number of news stories, so I won’t belabor the details. It is important to note at the outset that there was never a federal law "banning" horse slaughter in the U.S. In a nutshell, there was law prohibiting federal funding of USDA horse meat inspections put in place in 2006, and that law esentially ended horse slaughter for human consumption in the U.S. The 2006 "USDA defunding" provision was lifted on November 18, 2011 as part of a Congressional bill signed by President Obama. As a result, horse slaughter plants are already being considered several states and may be operational in 30 to 90 days. But plants specifically designed for horse slaughter cannot be developed in Texas, California, Illinois and Oklahoma, where state laws specifically prohibit horse slaughter plant operations. For more information, see this article.

But the real news story, to me, is the astounding fact that PETA believes resuming horse slaughter in the U.S. will reduce overall horse suffering, and supports the move. Yes, we’re talking about PETA--the same, often controversial animal rights group known for campaigns like “fur is murder” and the lawsuit filed against Sea World for "enslaving" killer whales.

In a Christian Science Monitor interview, PETA founder Ingrid Newkirk said PETA believes the United States never should have banned domestic horse slaughter because “the amount of suffering that it created exceeded the amount of suffering it was designed to stop.”

According to the Christian Science Monitor article, “PETA says the optimal solution is to ban both consumption slaughter and the export of horses, but it supports reintroducing horse slaughterhouses in the U.S., especially if accompanied by a ban on exporting any horses at all to other countries.” Really? A ban on exporting any horses at all to other countries? Does anyone know if PETA really proposes that we make it illegal to export any horse to any country outside the U.S., for any purpose? If so, how would this possibly work and what would it do to our horse industry?

These questions aside, at least proponents of horse slaughter can be glad that for once, an association like PETA agrees with them.

Compare PETA’s position to that of Forbes contributor Vickery Eckhoff, who blasts the Thoroughbred industry in an article this week for allegedly being “silent” with respect to the fate of ex-race horses that end up being slaughtered (and tortured in the process, according to Ms. Eckhoff).

As an aside, it should be noted that many Thoroughbred racing industry associations are members and sponsors of the Unwanted Horse Coalition (UHC), whose goal it is to reduce the numbers of unwanted horses in the U.S. so that fewer end up being slaughtered…or worse (yes, I consider many fates worse than slaughter, such as dying of starvation, dehydration, or illness in the back pasture). For a list of the current member associations of the UHC, click here.

Ms. Eckhoff, like many in the “anti-slaughter” camp, believes horse slaughter should be banned because is inherently cruel and abusive and it cannot be made humane, even if it is done in accordance with USDA regulations. Anti-slaughter groups and individuals often place the blame on breeders, and urge the government or others to penalize people for over-breeding instead of allowing horses to be slaughtered. How would this be done, I wonder, and at what cost? And is there really no way a horse slaughter facility can be designed to make the slaughter process as humane for horses as it is for other livestock? I welcome your thoughts.

Thankful for Horses and Many Other Blessings

Alison Rowe — Thu, 24 Nov 2011 08:00:00 -0600

Happy Thanksgiving 2011 to you and yours, Equine Law Blog readers!

As those fortunate enough to own horses, we all have a lot to be thankful for.

On this Thanksgiving Day, please enjoy this article from America's Horse Daily, where others share how they are thankful for their horses and the special people in their lives.

Safe travels and blessings to you!

New Requirement for Texas Sales Tax Exemption Number May Affect Horse Businesses

Alison Rowe — Tue, 22 Nov 2011 12:54:37 -0600

Currently, anyone in Texas can say they are “ag exempt”, sign a form, and buy agricultural products tax free. But this is about to change. As of January 1, 2012, the Texas Comptroller will require all farmers and ranchers to obtain an Agricultural Sales Tax Exemption Registration Number in order to buy tax-free farm and ranch supplies. This new measure was signed into law during the 2011 Legislative Session via House Bill 268, and will be included in Chapter 151, Subchapter E of the Texas Tax Code.

When I was home in Ellis County last weekend, I heard several farmers grumbling about this new requirement and the added “red tape” being imposed on farmers. But is it such a bad thing? Texas Farm Bureau doesn’t think so.

Texas Farm Bureau discussed the new law and posted information for farmers on its blog, Texas Ag Talks. According to the Texas Farm Bureau blog post, the new “registration number” will be good for the overall agricultural industry, because abuses under the current system were so rampant that the agricultural sales tax exemption itself was at risk.

I'm not sure what the State’s intent was in enacting this new law, but I don’t think its affects will be good for many horse businesses. I predict that many Texas horse business owners that have been buying ag supplies tax free in the past will not be able to successfully apply for a registration number in 2012 (at least if they are honest on the application). A link to the application for the new registration number can be found here.

On the very first page of the application, the State boldly warns horse racing, boarding, and training businesses that they do NOT qualify for an ag exemption registration number. Under the list of “principal types of exempt activities” on page 2, the only activity on the list that involves horses states, “I raise and sell horses, mules, donkeys, burros and/or ponies.” The application and other applicable authority suggests that “raising and selling horses” must be your principal activity or your “normal course of business” in order to qualify for the sales tax exemption. The States’s intent with respect to mixed operations such as boarding operations who also breed and sell horses is not altogether clear. The Comptroller has answered some FAQs about horse businesses that give a little insight on how various circumstances will be treated. The Horses FAQ page published by the Texas Comptroller can be found here.

Boarding facilities and horse trainers who check the “raise and sell horses” box when they do not engage in said activities do so at their own risk. Page 3 of the application includes a signed statement by the applicant that acknowledges all of the penalties (criminal and otherwise) that may arise from the misuse of the tax exemption ID. I don’t have any data that suggests how strictly these forms are enforced.

But one thing is clear, the State of Texas will have the name, federal tax ID, Texas taxpayer ID, legal entity filing number (if any), mailing address, physical location, and Texas drivers license number for all horse businesses who buy tax exempt products from January 1, 2012 onward. I would think these things would make it much easier for the State to investigate and discipline someone if the State deemed purchases to be to frequent, too large in amount, or otherwise suspicious.

As under prior law, the sale or lease of horses will still be exempt from sales tax in Texas and a registration number is not required for horse sales or lease transactions. Further, the purchase of horse feed, grain and hay will remain tax free for everyone in Texas (with or without a registration number or exemption certificate).

To access a quick reference chart published by the Texas Comptroller that outlines items that do and do not qualify for sales tax exemption for agricultural production, click here.

Follow me on Twitter @alisonmrowe

Recap of Last Night's All Things Equine Event at Cowgirl Museum

Alison Rowe — Thu, 17 Nov 2011 18:29:46 -0600

Last night’s “All Things Equine” event, held at the National Cowgirl Museum and Hall of Fame in Fort Worth, was a great success. Approximately 60 attendees from across the North Texas and beyond were in attendance. Guests were greeted by the women of the TCU Womens Equestrian Team, who handed out awesome LL Bean-style totes loaded with goodies and materials.

Pat Riley, Executive Director of the Cowgirl Museum, was in attendance at the event and graciously opened the entire museum and gift shop to attendees after normal business hours.

The evening commenced with an elegant cocktail hour, catered by Reata, put on by hosts US Trust and Marsh. Afterwards, the panel of experts held their equine business and risk management forum in the Cowgirl Museum’s theater, which was equipped with an excellent PA system manned by Cowgirl Museum staff.

Here are some highlights from the presentation, in order of speaker appearance:

I (Alison Rowe) covered the main sources of business-related disputes involving horses and how to avoid them. The sources of equine litigation I spoke on included 1) transfer of title disputes; 2) fraud and negligence claims involving lameness issues discovered soon after a sales transaction; and 3) partnership / possessory disputes. Some take-aways from my portion include 1) especially for expensive horses, always insist on a thorough pre-purchase exam that includes radiographs of all limbs and a blood sample; 2) never provide a bill of sale or turn over possession of a horse until all pre-sale conditions have been met; 3) put all long-term agreements such as partnerships and training agreements in writing and include all important terms.

Gina Teresi of Chartis Insurance flew in all the way from Rochester, New York to discuss the risk transfer features of equine, farm and ranch insurance. Gina’s presentation centered on how important it is for equine and ranch owners to 1) discuss with their agent the specifics of how their horse operations work; and 2) choose an insurance agent who specializes in equine, farm and ranch insurance and has industry experience. Gina discussed ways in which these safeguards help owners ensure that all areas of risk are identified, considered, and covered “in black and white” in the insurance policy.

John L. Taylor of US Trust discussed the wide array of corporate fiduciary (trust) assistance that he and his colleagues use to protect the assets of affluent individuals who own horses and ranches. John, a native of rural West Texas, and his team do everything from finding, buying, selling and financing the ranch land, to finding tenants, managing crops or livestock, risk management, enhancing ROI on investments, and working with wealth strategists to make sure that horse and ranch owners’ estate plans are in line with their goals.

Logan Fiorentino, hunt seat head coach of the TCU Womens Equestrian Team, explained the process of how horses are donated to her program and answered audience questions concerning things such as eligibility and the scouting process.

After the panel concluded, there was an engaging Q&A session during which attendees posed questions to the speakers.

The open bar stayed open after the event, and many attendees hung out for a while to chat, exchange business cards, and tour the museum.

If you missed the event and have questions or would like contact information for the panelists, please let me know. US Trust and Marsh are planning a similar event for next year, and I will be sure to post information about it when it becomes available.

Could the U.S. Supreme Court Unwittingly Decide the Fate of Horse Slaughter?

Alison Rowe — Tue, 01 Nov 2011 19:12:28 -0600

Next Wednesday (November 9, 2011) the U.S. Supreme Court will hear oral arguments on a case where the main issue is States’ rights to impose their own regulations on federally-inspected slaughterhouses. The case is National Meat Association v. Harris (Docket No. 10-244). Though the case involves swine instead of horses, the Court’s decision might ultimately affect the horse slaughter debate currently being waged in Congress.

The issue before the Court is whether a state law in California requiring all slaughterhouses to “immediately euthanize” any nonambulatory animal on its premises is preempted by the Federal Meat Inspection Act (FMIA). The National Meat case deals with a California law governing slaughterhouses in that state that was passed in 2008, after the Humane Society of the United States released a video of so-called “downer cows” being pushed with a forklift, kicked, electrocuted, and dragged with chains at a slaughterhouse.

If the Court ultimately finds that California (and, presumably, all other states) can impose its own regulations on slaughterhouses to which the FMIA applies within their respective states, this might ultimately affect the current battle over horse slaughter being waged in the United States. An interesting question raised by this case, in my mind, is this:

What if one or more states were to enact laws that made illegal the so-called 'evils' of slaughter that opponents of horse processing find so unsavory? Would the opponents of horse slaughter be opposed to the humane processing of horses in those states?"

It’s an interesting question, and I’m torn. While I generally don’t like to see new red tape and new regulations unduly imposed on any industry, I tend to think that most issues such as this are best dealt with on the state level. If the Supreme Court finds that states can, in fact, impose their own laws on federally-inspected slaughterhouses, I am somewhat encouraged that this might ultimately provide vehicle whereby a “win-win” resolution of the horse slaughter battle may be reached. If humane horse slaughter can be reintroduced in the United States, many horse industry groups believe that that this would have a positive economic impact on the overall horse industry.

Follow me on Twitter @alisonmrowe

Equine Legal & Business Event to be Held in Fort Worth

Alison Rowe — Thu, 27 Oct 2011 18:13:00 -0600

On November 16, 2011, U.S. Trust and Marsh Insurance will be hosting a forum on equine real estate, legal and liability issues in Fort Worth, Texas.

Photo: National Cowgirl Museum & Hall of Fame, Fort Worth, Texas

Event details are as follows:

Wednesday, November 16, 2011
6:00 PM to 8:00 PM
National Cowgirl Museum & Hall of Fame
1720 Gendy Street
Fort Worth, Texas 76107

Panelists will include:

John L. Taylor, Jr., Senior Vice President and National Executive for the Farm & Ranch Group at US Trust

Gina M. Teresi, Vice President, Strategic Alliances, Chartis Insurance

Alison M. Rowe, Equine Attorney, Kelly Hart & Hallman LLP

If you'll be in the Fort Worth area on November 16, 2011, please let me know if you would like to attend the event. This event ought to be a great business networking opportunity, and we hope attendees will find the panel discussion and audience Q&A to be interesting and informative.

To get more information or to request an invitation, please send an e-mail to rebecca dot upward at kellyhart dot com.

Texas Farm Animal Limitation of Liability Act Warning Signs

Alison Rowe — Tue, 25 Oct 2011 18:37:56 -0600

As discussed in this prior post, Chapter 87 of the Texas Civil Practice & Remedies Code now includes as “Farm Animal Professionals” the following categories of service providers, provided that their services are provided for compensation:

1) A person who rents to a participant a farm animal for the purpose of riding, driving, or being a passenger on the farm animal;

2) A person who rents equipment or tack to a participant;

3) A person who examines or administers medical treatment to a farm animal as a veterinarian; and

4) A person who provides veterinarian or farrier services.

The Act now requires Farm Animal Professionals to post and maintain a sign containing the following warning language in a clearly visible location if the professional manages or controls a stable, corral, or arena where the professional conducts a farm animal activity:

WARNING

UNDER TEXAS LAW (CHAPTER 87, CIVIL PRACTICE AND REMEDIES CODE), A FARM ANIMAL PROFESSIONAL IS NOT LIABLE FOR AN INJURY TO OR THE DEATH OF A PARTICIPANT IN FARM ANIMAL ACTIVITIES RESULTING FROM THE INHERENT RISKS OF FARM ANIMAL ACTIVITIES.

The Act also requires all Farm Animal Professionals to include the above warning language in every written contract that the professional enters into with a participant for professional services, instruction, the rental of equipment or tack, or the rental of a farm animal. The warning must be included without regard to whether the contract involves farm animal activities on or off the location or site of the business of the farm animal professional, and the warning must be clearly readable.

I am currently unaware of any sign manufacturer that is mass-producing these new signs for purchase by the general public. This is probably because the Act just recently took effect on June 17, 2011. Farm Animal Professionals to whom the Act applies and who wish to avail themselves of the new immunities can have signs containing the specific language custom made. It is highly advisable for all Farm Animal Professionals to have participants/customers sign a written agreement for services that contains the warning language. There is nothing in the Act that prohibits Farm Animal Professionals from including additional warning, release, or indemnity language in their written agreements.

Edited to add: As a member service, the TVMA has ordered a limited number of warning signs on weatherproof corrugated plastic and has them for sale. The signs are 8.5" by 11" and are available to members for $12 and non-members for $15. If you would like to purchase a sign, you can call the TVMA or send an e-mail to info at tvma dot org.

Follow me on Twitter @alisonmrowe

100% Bonus Depreciation for Horse Businesses through December 31, 2011

Alison Rowe — Thu, 20 Oct 2011 13:18:28 -0600

Forbes.com featured a story this week, entitled “Tax Deductions for Yearling Thoroughbreds”, that may be of interest to many horse businesses. To read the article, click here. Many Thoroughbred racing industry experts are quoted in the article, including Kentucky equine lawyer Joel B. Turner, whose guest post was featured on the Equine Law Blog this Tuesday.

The focus of the Forbes article is the applicability and effect of the 100% bonus depreciation feature of the Tax Relief Act of 2010, and its potential tax benefits to qualified horse businesses. As the Forbes article suggests, some race horse operations who buy yearlings in 2011 may be able to deduct 100% of the yearling’s purchase price in 2011.

Before the bonus depreciation feature of the Act became effective on September 9, 2010, the percentage of depreciable basis allowed as bonus depreciation on qualified property was only 50%. This 50% depreciation percentage will apply again in 2012.

The potential tax savings offered by the Act for the 2011 tax year are significant for qualified horse businesses. Walt Robertson, Keeneland’s vice president of sales, indicated in the Forbes article that the Act may have positively affected sales activity at the Keeneland 2011 September Yearling Sale.

It is important to note that the Act does not refer to specifically Thoroughbreds, yearlings, race horses, horses or livestock. The Act provides 100% bonus depreciation for all “qualified property”. In general, “qualified property” is tangible personal property and equipment purchased for use in a business operation, as long as certain conditions are met. For horse businesses, qualified property could arguably include horses, trailers, trucks, tractors, ATVs, and other horse/farm equipment. Among the conditions that must be met are the following:

1) the horse / equipment’s original use must begin with the taxpayer (i.e. horses that have not begun training; new equipment); and

2) the horse / equipment must be placed in service after September 8, 2010 and before January 1, 2012.

As many of the experts quoted in the Forbes article indicate, the Act does not provide an “easy write-off”. For starters, taxpayers wishing to avail themselves of the 100% bonus depreciation must be able to prove that they are in the “horse business” and that the property was purchased for said business. This element may pose difficulties to taxpayers who have not shown a profit in their horse business for many years. Further, purchasers of fractional interests in racing syndicates are generally considered “passive investors”, and therefore may not see any tax savings through application of the Act.

There are other considerations that come into play to determine whether the 100% depreciation is available, such as whether the taxpayer borrowed money to purchase the horse/equipment through an LLC or other entity.

Horse businesses who purchased or will purchase new horses or equipment in 2011 should consult a CPA or attorney who has expertise in the equine industry to determine the possible applicability of the Act to their newly-acquired property.

Follow me on Twitter @alisonmrowe

Guest Post: Top Ten Pre-Purchase Exam Considerations

Alison Rowe — Tue, 18 Oct 2011 10:47:00 -0600

As a follow-up to last Thursday's post, Tips for Equine Pre-Purchase Exams, the following is a guest post by veteran Kentucky equine lawyer, Joel B. Turner, with valuable information concerning pre-purchase exams and other steps buyers can take to protect their interests in a horse sale transaction.

"As a 'horse lawyer', people usually do not call me to tell me how happy they are with their newly- purchased horses.

One of the most common calls from potential new clients (i.e. the variety that is extremely unhappy and ready to litigate) involves the post purchase discovery of a serious soundness issue. Recently during one such call I rudely interrupted the caller to interject, "Excuse me, but let me guess which joint is causing your horse an issue?" My guess was correct and the caller was dumbfounded. While it was the first for her, the same sorts of issues crop up time after time in my world.

How do you protect yourself in a situation like this?

a) Have a veterinarian, your veterinarian, perform a thorough pre-purchase examination; and

b) have an experienced lawyer prepare a contract to close the loopholes by obtaining proper warranties/ representations from the seller.

The combination of these two steps should provide adequate protection from the possible deceptions that so often turn an excited purchaser of a new horse into a disgruntled, if not disillusioned, victim and caretaker of an unsound horse.

Top ten pre-purchase exam considerations:

1. Is the vet performing the exam absolutely free from any conflict of interest or possible undue influence? Make sure the vet (and any vet who is a member or employee of his/her group or practice) has never performed any services for the seller. Do not, under any circumstances, ask the seller to refer you to a vet to perform the pre-purchase exam or consult about radiographs, ultrasound images, etc.

2. Is the veterinarian performing the pre-purchase exam willing to promptly (within 24 hours) provide a written report of his findings and make all radiographs and scans available digitally for the potential purchaser to use to obtain a second opinion, if necessary?

3. Is the veterinarian willing to review all the vet records obtained from the seller and watch the horse being ridden (preferably by the potential purchaser) as part of the pre-purchase evaluation for soundness/coordination-neurological issues?

4. Does the vet know how much money you intend to pay for and the purpose for which you are purchasing the horse? Share the purchase price with the vet and ask the vet to assume you are buying the horse for resale; if you want the highest level of scrutiny and are willing to pay for it, this request will put the vet on notice of your intentions and encourage a much closer look.

5. Is the seller willing to provide all veterinary records (including all medications dispensed, radiographs, ultrasounds or nuclear scintigraphy, i.e. "bone scans" performed) for the last 18 months to two years as well as any other "therapy" records such as acupuncture, massage, shock wave, hyperbaric chamber, etc. for review by you and your vet prior to the purchase decision?

6. Is the seller prepared to represent that, at the time of the pre-purchase exam, the horse is not under the influence of any medication, is not being treated with any substance to address any past or present physical condition experienced by the horse and is willing to allow the veterinarian to take a blood sample for drug testing to verify the accuracy of this representation?

7. Has the horse been examined by a vet in connection with a potential purchase within the last year?

8. Is the seller willing to represent that the horse has not had any surgery or any intra articular injections of any substance (including without limitation, corticosteroids, blocking agents or hyaluronic acid) during the seller's ownership, other than those disclosed by the seller, or if such surgeries or "joint' injections have been performed upon the horse and are disclosed, is the seller willing to identify all of the dates when such procedures were performed and what substances were injected into which joints?

9. Is the veterinarian willing (and capable) to effectively communicate to the potential buyer the significance of the findings and provide an opinion as to the functional effect of these findings in writing promptly after the examination is completed?

10. Is the veterinarian sufficiently experienced with the particular type of riding that the potential purchaser intends to do and the kind of work that the horse has been doing, to provide the potential purchaser with a high level of confidence that the vet understands the amount and level of work the horse will have to perform to fulfill the buyer's intended use?

This list is not exhaustive and does not address such issues as pre-purchase considerations for future breeding soundness of the horse. It is focused upon the veterinarian's performance of the pre-purchase exam for a performance horse, and the seller's willingness to make reasonable disclosures of the horse's condition. This list has a particularly narrow focus on determining if there are any pre-existing issues that could lead to unsoundness making the horse incapable in the future of performing the tasks for which it is being purchased.

In this era when aggressive veterinary intervention with lameness issues, (particularly with the prevalent use of intra articular injections of corticosteroids), is far more common, latent defects in horses may be hidden even from the experienced examining vet, if proper due diligence is not performed in conjunction with the pre-purchase exam. The combination of a) the seller's reasonable disclosures in response to the purchaser's requests coupled with, b) representations and warranties in a written purchase agreement, and c) a thorough pre-purchase veterinary exam performed by an unbiased, qualified vet working exclusively for the potential purchaser, may afford the best opportunity to avoid the heartbreak and financial loss caused by a post purchase discovery of a latent, undisclosed and undetected condition suffered by a horse after the sale is final."

About the Author: Joel B. Turner is a Kentucky attorney practicing equine-related law for the last 27 years. For Joel's full biography, click here.

Tips for Equine Pre-Purchase Exams

Alison Rowe — Thu, 13 Oct 2011 10:23:00 -0600

Having a thorough pre-purchase veterinary examination done prior to a horse sale is one of the best ways parties to a horse sale can prevent disputes and lawsuits.

Dr. Camille Knopf, an equine veterinarian in Northern California, offered some excellent advice this week on the blog Ribbons and Red Tape:

Always, always, always have a pre-purchase exam performed. Regardless of length of familiarity with the horse or seller, there should always be a thorough pre-purchase exam performed to provide you with a complete understanding of the health of the animal you are purchasing.

Always have a veterinarian pull and store blood at the time of pre-purchase exam. This blood can be stored for several weeks. If you purchase the animal and later suspect the horse may have been under the influence of a medication at time of exam, the serum can be analyzed for medication and may provide you with legal recourse if necessary.

Be cautious in purchasing any horse where the current owner wants to choose the veterinarian for pre-purchase exam, discourages you from having a pre-purchase exam, or discourages you from using a veterinarian of your choice. Reason: Sadly, the horse business is not immune to fraud and neither is the veterinary world. By choosing a veterinarian that does not have a direct relationship with the seller, you can protect yourself from a potentially biased opinion."

Here are some additional tips for pre-purchase exams that can go a long way to help prevent litigation:

1. Buyers will often ask sellers for a referral if they do not know any veterinarians in the seller’s area. It’s not always a sign that something is amiss if a seller recommends a veterinarian with whom the seller has a business relationship, as long as the seller discloses the relationship to the buyer. If a buyer asks a seller for a referral, the seller can provide buyers a list of veterinarians in the seller’s area and allow the buyer to choose from the list. If the seller has a relationship with any of the clinics or veterinarians on the list, the seller should disclose that fact to the buyer.

2. Generally, sellers should not allow a buyer to take a horse off the seller’s property for a pre-purchase examination. The seller or their agent, employee, or representative should be the one to haul the horse to the vet for the exam, if necessary. If the buyer chooses a veterinarian that is so far away that this becomes unduly burdensome for the seller, the parties should work out an agreement on who will pay the transportation costs.

3. As the term "pre-purchase exam" implies, it should be done prior to the purchase! That is, a pre-purchase exam should be performed before any of the following occurs: a) the buyer takes possession of the horse; b) the buyer pays the purchase price for the horse; and c) the buyer receives a bill of sale from the seller. A seller can take a down payment on the horse to either refund or apply towards the purchase price, depending on whether the pre-purchase exam results are satisfactory to the buyer. However, it is not advisable for a seller to hold a check for the full purchase price and agree not to cash it while the buyer is inspecting the horse.

4. Sellers should always encourage every buyer to get a thorough pre-purchase exam and to inspect horses either in person or through an agent prior to the purchase or delivery of the horse. This thorough inspection protects the seller just as much as it does the buyer.

5. If the seller purchased the horse from a third-party, the buyer should ask the seller if the seller had a pre-purchase exam performed prior to the seller's purchase. If the answer is yes, the buyer should ask the seller for a copy of the results of that exam.

Follow me on Twitter @alisonmrowe

The Dangers of Advertised Exchange Policies for Horse Sales

Alison Rowe — Tue, 11 Oct 2011 11:53:00 -0600

Some horse breeders, trainers, and consignors who are in the business of selling horses advertise “exchange policies” on their websites. The typical exchange policy contains language promising that a buyer can exchange a horse purchased from the seller for another horse owned by the seller of the same or lesser value within ___ days of the sale. Posting an exchange policy of this nature on the Internet is not a good idea, in my opinion.

Don’t get me wrong--good customer service is paramount to a seller’s reputation. Sellers can surely offer a buyer an exchange horse if a particular situation warrants it and a suitable exchange horse is available. But so much can go wrong if a seller offers each and every buyer the “right” to exchange a purchased horse. For instance:

1) Some buyers do not get a pre-purchase exam. Even for buyers who do get a pre-purchase exam, they do not check for every malady, disease, or infirmity due to the expense involved. This is problematic when an exchange has been offered. It can be very difficult to tell whether the horse is returned in the same or better condition as when he left the seller’s property.

2) Exchange policies may work great for retailers where there is price tag on each item in the store and the same items can be found on-line or in other stores. But establishing the value of the exchange horse can be difficult. The seller’s asking price is not always the horse’s fair market value. Reasonable minds can differ as to the value of a horse. Even professional equine appraisers may disagree.

3) A seller may not have an exchange horse that possesses all the same qualities as the original horse within the stated time frame. This leads to a lot of confusion. Does the buyer have to keep the horse until the seller obtains a suitable replacement? Does the seller have to keep and feed the buyer’s horse until a suitable replacement has been obtained by the seller? How long will it take the seller to find a suitable replacement?

4) If a buyer thinks he can simply return the horse for an exchange after 30 days if it doesn’t work out, he may be encouraged to purchase a horse without first inspecting it or spending the money to have a thorough veterinary examination done. This is problematic for several reasons. First, as discussed above, a seller who has offered an exchange policy cannot establish that the horse is being returned in the same condition if no thorough pre-purchase exam was done. Further, a buyer may come back to seller after the exchange policy has expired and demand a refund or exchange because the horse has a soundness or health issue. The presence or absence of a pre-existing condition is then hard to prove because no pre-purchase examination was done.

Due to all of these issues, an exchange policy on horses cannot function as simply as a similar policy offered on household goods sold by Home Depot, Target, and other retailers. Instead of offering a blanket exchange policy on the Internet, sellers should take an “all sales are final” approach and encourage all buyers to get a thorough pre-purchase exam and to inspect the horse prior to purchase in person or via an agent. Taking this approach does not prevent sellers from providing an exchange horse after the fact where the circumstances warrant it.

Follow me on Twitter @alisonmrowe

Guest Post: Overview of German Law Governing Horse Sales

Alison Rowe — Thu, 06 Oct 2011 13:16:00 -0600

Oktoberfest came to an end in Germany this Monday, October 3. But in Texas, you can still find some places to celebrate Oktoberfest this weekend and later this fall! To kick off your celebration, here is an overview of the current state of German law as it relates to horse sales by German lawyer Nikolaus Fackler. In the spirit of Oktoberfest, this post is even being provided to you in both English and German, for your reading pleasure. Prost!

Photo: Flag of Lower Saxony, Germany [Niedersachsen]

“Before January 1, 2002, die Gewährsmängel (the “minimum warranties”) applied to the purchase and sale of livestock under German law. Pursuant to die Gewährsmängel, a buyer could rescind a sale if a buyer discovered the following vices or diseases in a horse within a certain time frame:

Dummkoller (spinal ataxia)
Periodische Augenentzündung (moon blindness)
Rotz (glanders)
Kehlkopfpfeifen (roaring / laryngeal hemiplegia)
Koppen (cribbing)
Dämpfigkeit (heaves / COPD)

The statute containing the Gewährsmängel was found in Sections 481-492 of the old version of the German Civil Code (Bürgerliches Gesetzbuch or “BGB”) and the “Imperial Ordinance Concerning the Main Defects and Warranty Periods in the Sale of Livestock” (27 March 1899).

Die Gewährsmängel were abolished on January 1, 2002, when the German “law of obligation” changed as part of the required harmonization of German law with European Union legislation.

As of January 1, 2002, German law relating to the sale of livestock is the same law that applies to the sale of goods, in general. The following rules now apply in Germany to the sale of all goods, including horses:

A good is free from warranty defects if it possesses the represented qualities.
If no qualities were represented, a good is free from warranty defects if it is acceptable for general use.

These current rules are found in Section 434 of the BGB (i.e. Sachmangel), which can be downloaded here.

If a horse, for example, is sold as a show horse, it must be suitable for use as a show horse. If no qualities are represented, however, a horse must only be acceptable for general use.

This change in the law doesn’t mean we should completely forget about the old Gewährsmängel, though. Most regional superior courts in Germany would still likely find that cribbing, for example, is an abnormal behavior and an expression of a mental defect. Therefore, most German courts would find that a cribber is not acceptable for general use. This uncertainty under current German law illustrates the point that it is more important than ever to get all horse sales contracts in writing and to set forth all applicable warranties [or lack thereof] in said contract."

Gewährsmängel beim Pferdekauf:

“Das Kaufvertragsrecht hat sich in Deutschland im Jahr 2002 grundlegend geändert. Seit der Schuldrechtsreform im Jahr 2002 gibt es keine speziellen Regeln mehr für den Pferdekauf. Insbesondere wurden die speziellen Gewährsmängel im Pferdekaufrecht abgeschafft.

Foto: Rechtsanwalt Nikolaus Fackler

Seit 2002 ist die Sachmängelhaftung für alle Gebrauchsgüter gleich. Es gibt keine unterschiedlichen Regeln für den Handel mit Pferden und lebenden Tieren oder, beispielsweise, für den Handel mit Autos oder anderen Waren.

Für alle Handelsgüter, also auch für den Handel mit Pferden, gelten folgende Regeln:

1. Die Handelsware ist frei von Mängeln, wenn sie die vereinbarte Beschaffenheit hat.

2. Wenn keine Beschaffenheit vereinbart wurde, ist die Handelsware frei von Mängeln, wenn sie für die nach dem Vertrag vorausgesetzte Verwendung geeignet ist oder wenn sie für die gewöhnliche Verwendung geeignet ist.

Wenn beispielsweise ein Pferd als Turnierpferd verkauft wird, muss es auch als Turnierpferd geeignet sein. Wenn im Vertrag keine Beschaffenheit vereinbart wurde, muss es lediglich zum generellen Gebrauch geeignet sein.

Nach den Entscheidungen der meisten deutschen Oberlandesgerichte ist Cribbing (also Koppen) eine echte Verhaltensstörung mit Krankheitswert und Ausdruck eines psychischen Defekts des Pferdes. Deshalb sind solche Pferde für den generellen Gebrauch nicht geeignet. Das Schuldrecht in Deutschland ist also seit 2002 komplizierter und – im Bezug auf das Pferderecht – unübersichtlicher geworden.”

About Nikolaus Fackler: Nikolaus “Nick” Fackler is an attorney in Augsburg, Germany with over 30 years’ experience. His areas of expertise include equine law, criminal law, and commercial law. For more information, see Nick’s full biography.

For more information, see this related post: Miminum Warranties Applicable to Horse Sales in the European Union

[Intro and "About" authored by Alison Rowe. English substantive text authored by Nikolaus Fackler and edited by Alison Rowe; German text authored exclusively by Nikolaus Fackler]