Simon v. Taylor
| Decision Date | 26 September 2013 |
| Docket Number | No. CIV 12-0096 JB/WDS,CIV 12-0096 JB/WDS |
| Parties | RICHARD SIMON, JANELLE SIMON, ERIC CURTIS and JOSE VEGA, Plaintiffs, v. HEATH TAYLOR, JERRY WINDHAM, PAT WINDHAM, MARTY L. COPE, ARNOLD J. REAL, B. RAY WILLIS, THOMAS FOWLER, LARRY DELGADO, and THE NEW MEXICO RACING COMMISSION, Defendants. |
| Court | U.S. District Court — District of New Mexico |
THIS MATTER comes before the Court on the Defendants Heath Taylor, Jerry Windham and Pat Windham's ("Defendants") Motion to Dismiss Under Rule 12(b) and Memorandum in Support Thereof, filed May 9, 2012 (Doc. 7)("Motion to Dismiss").1 The Court conducted a hearing on September 24, 2012. The primary issues are: (i) whether New Mexico law provides a cause of action for prospective economic losses between competitors in a sporting contest; (ii) whether the Plaintiffs have a private right of action under the New Mexico Horse Racing Act, N.M. Stat. Ann. §§ 60-1A-1 et seq., and under the New Mexico Racing Commission's rules and regulations promulgated pursuant to the Act; and (iii) whether collateral estoppel bars thePlaintiffs' claims. The Court will grant the Motion to Dismiss in part and deny it in part.2
The Court rejects the Defendants' argument that New Mexico law does not support a cause of action for prospective economic losses between competitors in a sporting contest, because public policy militates against litigating the winner of a sporting event, the speculative nature of the outcome of a sporting event bars litigation of the claims, causes of action premised on a rules violation that an administrative agency already has determined did not occur are not viable, and the Complaint does not state claims for intentional interference with prospective contractual relations or prima facie tort. The Court does not believe that the Supreme Court of New Mexico would hold that the public policy of preventing a flood of litigation bars the Plaintiffs' claims for prospective economic losses, because the Court holds only that public policy does not preclude litigation between sporting competitors premised on a rules violation where the administrative body charged with adjudicating the violation conducted an unfair and incomplete review, the agency insulated itself from all judicial review, and the agency denied the Plaintiffs the right to participate in the administrative process despite the Plaintiffs' demonstrated interest in the outcome.
Furthermore, the Court does not believe that the Supreme Court of New Mexico would hold that the speculative nature of the outcome of the sporting event precludes the Plaintiffs' claims, because, on the facts alleged, the outcome of the horse race was not uncertain. If the New Mexico Racing Commission ("Commission") had upheld the stewards' disqualification of StolisWinner, the Plaintiffs' horse was certain to be the first place finisher of the race. The Plaintiffs also allege that their horse was an extremely close second, finishing only a "neck" behind Stolis Winner, Complaint ¶ 12, at 4, and thus the allegations plausibly indicate that the Plaintiffs had at least a high probability of winning the race.
In addition, the Court does not believe that the Supreme Court of New Mexico would hold that the Commission's finding that the Defendants did not violate the rules of racing is fatal to the Plaintiffs' claims, because the Court's adjudication of the Plaintiffs' tort claims is separate and distinct from the Commission's adjudication of the regulatory and disciplinary issues, and the Court is entitled to determine anew whether the Plaintiffs have alleged facts sufficient to state a claim for relief premised on a violation of the rules of racing. The Court also does not believe that the Supreme Court of New Mexico would dismiss the Plaintiffs' intentional interference claim or the Plaintiffs' prima facie tort claim premised on the intentional act of improperly training Stolis Winner, because the Complaint alleges that the Defendants interfered with the Plaintiffs' prospective contractual relations and because the Complaint contains allegations that satisfy the elements of a prima facie tort. The Court concludes, however, that the Supreme Court of New Mexico would dismiss the Plaintiffs' prima facie tort claim premised on the act of providing Stolis Winner with a performance enhancing substance, because this act does not constitute an intentional lawful act as required by the first element of a prima facie tort claim. Accordingly, the Court will deny the Motion to Dismiss the common-law claims with the exception of the prima facie tort claim premised upon the intentional act of providing Stolis Winner with caffeine.
The Court further rejects the Defendants' argument that the Plaintiffs do not have a private right of action under the New Mexico Horse Racing Act, and under the Commission's rules andregulations promulgated pursuant to the Act. The Court concludes that it is the public policy of New Mexico to ensure that horse racing is conducted fairly and honestly, and to protect the participants of racing. The Court concludes that the Supreme Court of New Mexico would likely hold that, pursuant to National Trust for Historical Preservation v. City of Albuquerque, 117 N.M. 590, 874 P.2d 798, 801 (Ct. App. 1994), this public policy forms the predicate for an implied private right of action under the New Mexico Horse Racing Act. Furthermore, the Court believes that the Supreme Court of New Mexico would likely find that the legislative intent behind the Horse Racing Act supports an implied private right of action.
The Court also rejects the Defendants' argument that collateral estoppel precludes the litigation of the Plaintiffs' claims. Although the Defendants may assert the affirmative defense of collateral estoppel in a motion to dismiss pursuant to rule 12(b)(6) of the Federal Rules of Civil Procedure, they may prevail on their motion only if the facts necessary to support a finding of preclusion appear on the face of the Complaint. Because the Plaintiffs' allegations do not support a legal conclusion that the Plaintiffs were in privity with the State prosecuting the administrative complaint, the Defendants cannot prevail on their motion. Furthermore, the Court will deny the Motion to Dismiss, because the application of collateral estoppel to the facts of this case would be fundamentally unfair given that the Plaintiffs have alleged that the Commission was not neutral, that the administrative process was "fatally defective," and that the Commission wrongfully excluded them from the administrative process. See Complaint ¶ 28, at 6; ¶¶ 40-41, at 8; ¶¶ 43, 44, at 9; ¶¶ 46, 48, at 10; ¶ 78, at 15.
The Complaint contains the following factual allegations. This dispute arises out of ahorse race called the All American Futurity Run at Ruidoso Downs Race Track in New Mexico on September 1, 2008. See Complaint ¶ 1, at 2. The All American Futurity is widely recognized in the quarter horse racing world as the major quarter horse event. See Complaint ¶ 3, at 3. The winning horse in the event receives a purse of approximately one million dollars. See Complaint ¶ 3, at 3. The winner also receives publicity, and earns for its owners tremendous stud and breeding fees. See Complaint ¶¶ 3-4, at 3.
Stolis Winner, a horse that Defendants Jerry and Pat Windham owned and Defendant Heath Taylor trained, just barely crossed the finish line ahead of Jet Black Patriot, a horse that the Plaintiffs Richard and Janelle Simon owned, Plaintiff Eric Curtis trained, and Plaintiff Jose Vega rode. See Complaint ¶¶ 2, 9-11, at 2-3. Jet Black Patriot finished the race approximately "a neck" behind Stolis Winner. Complaint ¶ 12, at 4. Jet Black Patriot was recorded as winning second place. See Complaint ¶ 8, at 3.
A licensed veterinarian collected test samples for banned substances for each of the horses that competed in the race and divided the test samples for each horse into two containers. See Complaint ¶¶ 13-14, at 4. Both of the samples taken from Stolis Winner tested positive for caffeine. See Complaint ¶¶ 16, 21, at 4-5. The rules and regulations promulgated by the Commission list caffeine as a level 2 drug. See Complaint ¶ 17, at 5. The substance is banned pursuant to the Commission's no-tolerance policy for level 2 drugs. See Complaint ¶ 18, at 5-6. In violation of the Commission's rules, New Mexico officials released the race purse to the Defendants before all of the test results were received, but after the staff had received a suspicious test. See Complaint ¶ 23, at 5.
The Commission scheduled a hearing of the stewards3 to consider disciplinary action against the Defendants. See Complaint ¶¶ 22, 24, at 5. The Plaintiffs were not permitted to bring their own administrative complaint against the Defendants for violating the Commission's rules, because the facts underlying the violations were concealed until after the deadline to file a complaint. See Complaint ¶ 25, at 6.
After conducting a hearing on January 8, 2009, the stewards disqualified Stolis Winner and declared Jet Black Patriot the winner. See Complaint ¶ 24, at 5. The stewards entered two orders. See Complaint ¶ 24, at 5. The first order issued penalties against Taylor, Stolis Winner's trainer, and the second order altered the winners of the race, placing the Plaintiffs' horse first. See Complaint ¶ 24, at 5. Taylor appealed the decision and requested a de novo review. See Complaint ¶ 26, at 6. For the first time in New Mexico racing history, the Commission appointed a three-judge administrative panel. See Complaint ¶ 26, at 6.
The Plaintiffs attempted to participate in the appeal by filing a motion to appear at the administrative panel's hearing. See Complaint ¶ 27, at 6. The panel recommended that the Commission deny the motion to appear. See Complaint ¶ 28, at 6. Although the Plaintiffs demonstrated that they "ha[d] an effected [sic] interest sufficient to...
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