Wednesday, January 29, 2014

Equine Law Hypothetical

    Studds Croe Bateman is an established thoroughbred race horse trainer.  Colts, fillies and mature horses trained by Studds have won major stakes races at major tracks from Saratoga down through the East Coast tracks; Kentucky, Southern California and South Florida.  Studds has a team of assistant trainers, exercise and stable personnel that deal with every physical and emotional need of horses under his care and tutelage.

    Studds has been accused of doping, of using prohibited chemicals to enhance the performances of his charges, but has avoided suspension by various racing commissions through intervention and dazzling representation by Charles Haas, considered by many to be the top lawyer in legal aspects of the racing industry.

    Two years ago Studds signed a trainer deal with oil billionaire Sheikh Ben Abu Ben Ben to care for, train and campaign seven of the Sheikh’s most promising two and three year olds (not always the same seven horses at any given time).  The Sheikh is a national of Saudi Arabia but lives most of the time in Dubai. The agreement between Studds and Sheikh Ben Abu Ben Ben requires the Sheikh to pay Studds top dollar for feed, care, stable, grooms, transportation and all other aspects of Studd’s duties with the exception of training fees for which Studds is to receive 15% of all winnings.   It is a three year agreement with earlier termination provisions agreed upon.   Most of the understanding between owner and trainer originally was oral, but there are email exchanges which confirm many key aspects of the commitments of each to the other. 

    Three weeks  ago, in a surprise move, the Sheikh removed physical custody and control of his horses from Studds and turned them over to another trainer.  At the time of the surprise move there were roughly $279,000,00 in invoices submitted by Studds to the Sheikh which remain unpaid independent of any share of winnings to which Studds may be entitled.  There is a dispute between the Sheikh and Studds regarding accounting procedures to be followed in determining Studds’share of winnings.   During the first few months of their joint activities the Sheikh paid Studds $27,375.00 as his share of winnings, which Studds accepted while reserving the right to confirm actual amount to which he is or may be entitled after computation issues are resolved.  The Sheikh has made no further payment of winnings to Studds although the horses being trained by Studds have enjoyed varying degrees of success over time.

    The horses which were under Studds’ care and tutelage are stabled at Gulfstream Park located in Hallandale Beach, Broward County, Florida.  Sheikh Ben Abu Ben Ben will be visiting in Broward County, Florida for the next three weeks.

    Bateman has decided to proceed with a lawsuit against the Sheikh to recover $279,000,00 in invoices plus interest, and to seek from the Court an accounting as to how much Bateman is entitled to as his share of purses won and any other damages of any kind a skilled lawyer might recover for him.

    The fact pattern may be of interest to  a lawyer or lawyers and business people in the racing industry.  There are layers of questions for which there must be layers of answers.  Here are some of the considerations, the relevance of which are of greater or lesser significance:

    Bateman has a series of practical problems.  First, the person who owes the money to Bateman is a citizen and resident of another country.  Bateman does not know where the Sheikh keeps his major assets.  Even if Bateman wins a judgment against the Sheikh, Bateman has to find wealth that a court judgment can reach and be acted upon in a way that puts money in Bateman’s pocket.  Otherwise, Bateman will end up eating the Big Enchilada and the Big Enchilada will be purely symbolic with no nutritional benefit to Bateman.  So where are the assets?

    Well, there are seven horses owned by the Sheikh living in stables in Gulfstream Park.  The horses have value.  Seeking to execute a judgment upon them is a good place to start.  But in a few days the horses will be shipped to another location outside of Florida.  Then what?  The Empty Enchilada.  So the horses have to be kept in Florida.

    The Sheikh will be leaving.  It would be most convenient and reassuring to sue the Sheikh while he is in Florida and serve the lawsuit upon him while he is in Florida.  Then Bateman will have some leverage.

    What law, whose law, applies?  There are laws sometimes known as Agisters’ Liens which provide that those who care for livestock can impose liens on the livestock so that sale of the livestock can be a source of some recovery for the lienholder.  Bateman has cared for the seven horses through several states, and the lien laws of not only Florida, but New York, Maryland, Kentucky, California, and perhaps elsewhere may apply to different time periods corresponding to the care and maintenance of the horses as to each separate state.  So Bateman is faced with proving that he is entitled to enforce liens from distinct laws which may be similar but not identical among them..  And the court where the lawsuit is filed has to be able to follow those laws.

    Within Florida itself there are two lien laws with possible applicability to Bateman’s situation.  Florida Statue 713.65 provides for liens for care and maintenance of animals, in favor of all persons feeding or caring for the horse or other animal of another, including all keepers of livery, sale or feed or feed stables, for feeding or taking care of any horse or other animal put in their charge; upon such horse or other animal. 

    Florida Statute 713.66 provides for liens for feed, etc., for racehorses [and] polo ponies . . . . in favor of any person who shall furnish corn, oats, hay, grain or other feed or feedstuffs or straw or bedding material to or upon the order of the owner, or the agent, bailee, lessee, or custodian of the owner, of any racehorse [or] polo pony. . . for the unpaid portion of the price of such supplies upon every racehorse [or] polo pony . . . which consumes any part of such supplies. All racehorses . . . of such owner which are accustomed to consume supplies of the character delivered, which are at the time of the delivery of such supplies upon the premises to which delivery is made, shall be deemed prima facie to have consumed such supplies. Such lien shall remain valid and enforceable for a period of 1 year from the dates of the respective deliveries of  such corn, oats, hay, grain, feed or feedstuffs, or straw; and such liens are to be enforced in the manner provided for the enforcement of other liens on personal property in this state. Said liens shall be superior to any and all claims, liens and mortgages, whether recorded or unrecorded, including, but not limited to, any lessor’s or vendor’s lien, and any chattel mortgage, which theretofore may have been or thereafter may be created against such racehorse [or] polo pony or race dog, and to the claims of any and all purchases thereof.

    Statute 713.65 requires that the animal be put in the charge of the lienor, which in this instance would be Bateman.  But Bateman’s  care and charge of the horses was terminated by the Sheikh, and Bateman did not take timely action to enforce his lien as a possessory lien, placing in doubt his ability to enforce an essentially possessory lien. 

    With regard to any indebtedness by the Sheikh to Bateman arising from the presence of the race horses in Florida, Florida Statute 713.66 would appear to have usefulness to Bateman in seeking recovery of the amounts owed to him by the Sheikh.

    And then there are the lien provisions of several other states which must be confronted and understood by Bateman if he is to have some level of dominion over all of the legal issues which he confronts.

    Bateman has a major concern in securing in Florida economic resources owned by the Sheikh which will be available to Bateman should he be successful in winning the lawsuit.  The horses most likely will be moved to another location far from the reach of Florida courts, either State or Federal, and might even be exported outside the United States.

    Bateman might be advised to seek an Ex Parte Temporary Restraining Order With Asset Freeze which will keep the Sheik’s race horses in Florida until such time as the litigation is resolved through settlement or a final judgment.  Achieving that order on race horses is not quite the same as getting an asset freeze on a bank account.  Horses need to be stabled, fed; cared for. And there may be issues as to their participation in races to which binding commitments already have been made.  Who foots the feed and care bill while the horses are detained?

    Will the Court require Bateman to post a bond to protect the Sheikh against loss and damage as a consequence of the horses being treated as frozen assets?  Can the Sheikh post a bond with the Court which would allow the Court to terminate the restraining order while protecting Bateman?

    What Should Bateman’s lawyer, Charley Haas do?  What possible costs, benefits, and potential complications should Haas explain to Bateman?  Which laws should Haas rely upon to make his case and to provide guidelines for his legal initiatives.?

    Tune in next time.

Mount up, Ladies and Dudes

Gary D. Malfeld

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