Keeneland Ass'n, Inc. v. Eamer

• Decision Date: 08 July 1993
• Docket Number: Civ. A. No. 92-51.
• Citation: 830 F. Supp. 974
• Parties: KEENELAND ASSOCIATION, INC., Plaintiff, v. Richard K. EAMER, d/b/a Mandysland Farm, Defendant/Third-Party Plaintiff, v. CALUMET FARM, INC., and Ray Stark, Third-Party Defendants.
• Court: U.S. District Court — Eastern District of Kentucky

830 F. Supp. 974

KEENELAND ASSOCIATION, INC., Plaintiff, v. Richard K. EAMER, d/b/a Mandysland Farm, Defendant/Third-Party Plaintiff, v. CALUMET FARM, INC., and Ray Stark, Third-Party Defendants.

Civ. A. No. 92-51.

United States District Court, E.D. Kentucky, at Lexington.

July 8, 1993.

Harvie B. Wilkinson, Stoll, Keenon & Park, Lexington, KY, for plaintiff.

Steven L. Beshear, Ashley W. Ward, Stites & Harbison, Lexington, KY, for third party defendant, Calumet Farm, Inc.

Richard E. Vimont, Vimont & Wills, Lexington, KY, Allan Browne, Laura Seraso, Brown & Woods, Beverly Hills, CA, for defendants.

Keith Moorman, Patrick Madden, Brown Todd & Heyburn, Lexington, KY, for third party defendant, Ray Stark.

MEMORANDUM OPINION

FORESTER, District Judge.

I. INTRODUCTION

Plaintiff, Keeneland Association, Inc. ("Keeneland), initiated this action in Fayette Circuit Court to enforce the terms of a purchase and security agreement concerning the auction sale of a 1991 thoroughbred weanling filly by ALYDAR out of CARELESS NOTION ("the Filly") on November 3, 1991, at the Keeneland November Breeding Stock Sale ("the Sale"), wherein the Defendant/Third-Party Plaintiff, Richard K. Eamer, d/b/a Mandysland Farm ("Eamer") purchased the Filly at auction with a bid of Three Hundred Fifty Thousand Dollars ($350,000.00). Subsequent to the Sale, on or about November 4, 1991, the buyer, Eamer, sought to revoke acceptance of the Filly and to rescind the Sale. Consequently, Eamer has not paid Keeneland for the Filly. Keeneland seeks judgment against Eamer in the amount of $350,000.00, plus interest from November 3, 1991, and its costs and attorney's fees.

The Defendant Eamer removed this action from Fayette Circuit Court and filed a counterclaim against Keeneland seeking rescission of the contract to purchase the Filly, alleging that (1) Keeneland had breached its fiduciary duty to him by failing to provide him with the best available information regarding the health and condition of the Filly, (2) Keeneland had fraudulently and/or negligently misrepresented the true condition of the Filly and had failed to provide him with accurate information concerning the Filly's true condition which Keeneland knew or with the exercise of reasonable care could have known, (3) he has a claim for breach of warranty against Keeneland because the Conditions of Sale on which Keeneland asserted its claim against him are unconscionable, thereby entitling him to punitive damages against Keeneland, and (4) Keeneland breached the Conditions of Sale and its implied warranty to him by failing to announce at the November 3, 1991 auction that the Filly was a cribber.

Subsequently, Defendant Eamer also filed a Third-Party Complaint against the owners of the Filly, Calumet Farm, Inc. ("Calumet") and Ray Stark ("Stark"), who equally co-owned the Filly and had consigned the Filly to Keeneland for sale, (1) for fraud, alleging that Calumet and Stark knew the Filly's true condition prior to the Sale and intentionally failed to advise him and other interested buyers of the Filly's true condition, (2) for conspiracy, alleging that Calumet and Stark conspired to misrepresent the Filly's true condition by not advising their agent, Keeneland, thereof, (3) for negligent misrepresentation, alleging that Calumet and Stark knew or with the exercise of reasonable care should have known of the Filly's true condition prior to the Sale and also knowing that the Filly's true condition would not be discovered in the usual and customary pre-sale examination, and (4) for breach of implied warranty, alleging that Calumet and Stark sold the Filly, knowing it was a cribber, without disclosing this fact to him. Eamer's Third-Party Complaint seeks rescission of the purchase contract, compensatory and punitive damages, indemnity for any amounts he may owe Keeneland, his costs, and attorney's fees.

The Third-Party Defendant, Ray Stark, as owner of 50% of the Filly, has filed a counterclaim against the Third-Party Plaintiff Eamer seeking $175,000.00, 50% of the purchase price of $350,000.00, plus interest from November 3, 1991, and his costs and attorney's fees associated with the costs of collection.

This matter is before the Court on the Plaintiff's motion for summary judgment against the Defendant/Third-Party Plaintiff, Eamer, on its complaint and on Eamer's counterclaim against it, and on the motion of the Third-Party Defendant, Stark, for summary judgment against the Defendant/Third-Party Plaintiff, Eamer, on Eamer's complaint against him and on his counterclaim against Eamer for the purchase price of the Filly. Third-Party Defendant, Calumet, has also moved for summary judgment on the Third-Party Complaint. These motions are fully briefed and are ripe for review.

II. FACTUAL BACKGROUND

In 1990, the Third-Party Defendant Stark, purchased two seasons in the stallion ALYDAR, owned by Third-Party Defendant Calumet. Stark paid Calumet for one of these ALYDAR seasons, the breeding of Stark's mare MARGARET BOOTH to ALYDAR, and Stark and Calumet agreed to a foal sharing arrangement in respect to the other ALYDAR season, the breeding of Stark's mare CARELESS NOTION to ALYDAR, whereby if the mating of these two thoroughbreds produced a live foal, they would be equal co-owners thereof. (Stark Depo., p. 17; Jex Depo., p. 16). The ALYDAR/CARELESS NOTION mating in 1990 resulted a filly being born on March 20, 1991, at Stark's farm in California, the home of the dam, CARELESS NOTION.

Subsequently, the Filly's owners decided to place the Filly in the Calumet dispersal sale, which was held in conjunction with Keeneland's November Breeding Stock Sale on November 3, 1991. The reason the owners decided to place the Filly in Calumet's dispersal sale was twofold: (1) Calumet owned half of the Filly and needed to sell her as part of its efforts to raise money to pay off its debt, and (2) Stark's tax adviser informed him that his thoroughbred business needed to show a profit in 1991, and the sale of this Filly would help him meet that goal. (Jex Depo., p. 21).

The Filly was weaned from her mother on August 12, 1991. (Jex Depo., p. 24). The weaning process was particularly difficult for the Filly because she was unaccustomed to being around other foals. During the first few weeks after weaning, the Filly "ran the fence," trying to return to her mother. (Jex Depo., p. 75). Explaining this situation, Ron Jex, Stark's farm manager, stated:

A. ...

She — the mare, Careless Notion, had a broken knee, so she was a mare who was on her own all the time while she had her foal. When we weaned her, the foal had not been used to being with other foals, she didn't buddy up with anything for the first two or three weeks and she just ran the fence and tried to get back to mom. And this filly, in the process, wore the fronts of the hoof, the toes on both front feet, so it made her sore. She was just gimpy.

(Jex Depo., p. 23). Within a week after weaning, Jex noticed that the Filly was sore. Consequently, he put the Filly in a stall and called Dr. Doug Herthel, the veterinarian who has serviced Stark's farm for the past thirteen years (Herthel Depo., p. 8) and requested that the Filly be examined. (Jex Depo., p. 25). Dr. Herthel was out of town when Jex called and did not examine the Filly until September 5. (Jex Depo., p. 31). In the interim, Jex kept the Filly in a stall to prevent her from continuing to "ran the fence." Her condition improved prior to being examined by Dr. Herthel. (Jex Depo., p. 27).

Dr. James Douglas Herthel is a licensed veterinarian in California. His specialty is surgery on horses and diagnosing lameness in horses. (Herthel Depo. p. 7). Dr. Herthel confirmed Jex's belief that the Filly was sore because she had spent a lot of time running the fence and had worn her two front feet down very short. (Herthel Depo., p. 18). He stated, "The closest medical term you could probably put on is she had bruised her feet. I don't think there is a medical term for wearing her hoof off." (Herthel Depo., p. 19). To protect the hoof from further bruising and wearing while it healed, Dr. Herthel placed fiberglass tape on the hooves of the Filly's front feet. Elaborating on this fiberglass tape, Dr. Herthel explained:

Q There has been some earlier discussion in prior testimony about the purpose of the acrylic or the fiberglass tape that's been placed on the hooves. In your opinion, would the placing of the tape over the hooves, would that be done to conceal any defect in a horse? Is it done for the purpose of concealment?

A No. It's only done to protect the hoof.

Q Done to protect it so it can grow back?

A If you saw it, I think we used purple or green tape. It was not something to conceal anything. Just strictly to protect that hoof.

Q To allow it to grow back?

A The alternative would be to put a shoe on the foot.

Q I believe you testified that this weanling's foot was really too small for a shoe, so the alternative was to put tape on it?

A It's difficult to put a shoe on a youngster. To put this tape on it takes about two minutes. I use it for grown horses that lose a shoe.

Q So it is a fairly typical or common procedure or tender-footed procedure?

A I use it all the time.

Q This procedure, placing the tape on the hoof, is it a corrective measure? Does it in any way correct the shape or form of a hoof or a foot or is it purely protective in nature?

A Purely protective.

(Herthel Depo., pp. 47-48).

After Dr. Herthel initially applied the fiberglass tape to the Filly's front hooves on September 5, he reexamined the Filly nearly three weeks later on September 23 and changed the fiberglass tape. He noted that the Filly's condition had improved. Also, as a precautionary measure, to be certain that his original opinion that the Filly's sore front feet had been caused by her running the fence on hard ground and that there was no other possible cause for the soreness, he had the Filly's front feet x-rayed...