Monday, April 20, 2009
Recession Ripples Throughout Horse Industry
From time to time, I'm asked how the downturn in the economy has affected the horse industry. Here's my perspective as an equine attorney.
Boarding
Although Equine Legal Solutions always receives a lot of calls from boarding stables about boarders who aren't paying their bills, the situation seems to have reached nearly epidemic proportions, particularly in California. Our practice spans California, New York and Washington, and most of the calls about past-due boarders come from California, with an increasing number from Washington. Over half of our free phone consultations are now about non-paying boarders, whereas those calls typically represent more like 20% of our call volume.
In more and more of the non-paying boarder cases, the boarding stable has no way of reaching the boarder. Sometimes, the information the boarder gave the stable was completely fictional - the boarder intended to dump the horses on the boarding stable from the very beginning. (Note that screening potential boarders would help eliminate this problem.) In other cases, the boarder's contact information was initially good, but the boarder's phone has now been disconnected, and the boarder hasn't visited the stable in quite a while. Often, the boarding stable has sent the boarder a certified or registered letter, which has been returned unclaimed. The boarding stable is often desperate for solutions and wants to know when the boarder's horses are considered abandoned and what the stable can do with them.
Now more than ever, the boarding stable is usually better off not executing on its agister's lien. The horse market has declined significantly due to the slaughter ban and the recession. Horses that would have brought at least $500 at auction a few years ago now have no value at all. Meanwhile, hay prices have increased dramatically, making it more expensive to feed horses while waiting for foreclosure proceedings to conclude. And, the chances of being able to collect past due board through traditional methods are slimmer. The boarder may be out of work, with no wages to garnish, and/or may be preparing to file for bankruptcy. Usually, the best thing a boarding stable can do is to get the boarder to come and take the horses, even if the boarder owes the stable money. Getting the horses off the property stops the meter from running on the hay bill and it also cuts off the stable's potential liability for the horses' care.
More boarding stables are having to enforce the payment, lien and eviction portions of their boarding contracts. Unfortunately, many of them are finding their contracts don't adequately address the issues they face. These old, outdated contracts have unwieldy and difficult notice procedures for eviction involving certified and/or registered mail (which most deadbeat boarders will not claim). Often, they require the stable to give the boarder 30 days' notice of termination, even if the boarder owes the stable thousands in back board, effectively making the stable feed the boarder's horse for free for yet another month. And they contain virtually no practical remedies for collecting past due board and getting rid of abandoned horses and tack. As a result, more boarding stables are weighing the high cost of dealing with boarding problems, and deciding that having a boarding contract they can rely upon to protect their interests is well worth the relatively small price.
Breeding
Most breeders booked fewer breedings in 2009, and many of the bookings were made later than usual, simply because mare owners needed to wait to make sure they had the money to breed this year. Mare owners are being more selective, opting to breed fewer mares. Large breeders are downsizing their broodmare bands, keeping the best and offloading the rest. Many smaller breeders are exiting the breeding business altogether, finding that it's less expensive to buy young stock than it is to breed their own. As a result, there's a glut of broodmares on the market and prices are at historic lows.
Given the significant costs associated with shipping cooled semen and artificially inseminating mares, some breeders are finding that offering live cover and on-site artifical insemination services is drawing more local breedings. Breeders are also keeping costs down by doing more of the work themselves and involving veterinarians and stallion stations less frequently.
As usual, discounts are available to mare owners who book early, book multiple mares and/or have mares with proven production or show records. However, these discounts are more widespread, the discounts are deeper, and even the top stallion owners are offering them. Hoping to draw budget-conscious mare owners, some stallion owners are waiving collection and shipping fees on initial shipments, and others are significantly reducing stud fees and eliminating booking fees. Other stallion owners are offering enhanced live foal guarantees, some with no stud fees due until a live foal is born.
Horse Sales
It won't be news to anyone that horse sales are down, and so are horse prices. Craig's List abounds with free horses, and not just junk. More and more of those free horses are sound, registered and/or well-trained. Breeders are having more dispersal sales, and sending more young stock and broodmares to auction.
At the same time, there are fewer buyers at those auctions, and the buyers who do attend buy fewer horses. Sellers are less likely to "no sale" low-selling horses, opting not to haul them home.
Some horse buyers are being more careful. They're making fewer impulse purchases, not buying as many horses sight unseen over the Internet. They're using horse purchase contracts, insisting upon some accountability from the seller. Some horse buyers are taking horses on trial and/or making payments in installments. More sellers are agreeing to these relatively risky terms because they have no other buyers, but conscious of these risks, they are seeking out higher quality horse sale contracts in an effort to protect themselves.
Other horse buyers are cutting costs unwisely, opting not to get a pre-purchase vet exam or not have radiographs or blood draws done during the exam. And some horse sellers are also accepting risky deals that they wouldn't have even considered in a better economy, simply because they need to move some horses, and they need to do it now.
Riding Lessons
It should come as no surprise that many families consider riding lessons a luxury, so children's lessons are eliminated or reduced when a family experiences financial difficulty. Adult amateurs are also doing without lessons, opting to ride on their own instead.
Training
A lot of horse owners who would have sent young horses to a trainer are now either letting those horses sit, selling those horses as unbroke or greenbroke, or doing some of the training themselves. As a result, I think we can expect to see even more untrained young stock for sale in the coming months. Other horse owners who normally keep their horses in full-time training are bringing their horses home, or cutting back to part-time training, filling in the gaps themselves. Fewer training clients are going to shows, and many of those still showing are opting to attend fewer shows and show in fewer classes this year. More and more trainers are opting to use training contracts, fearful that they won't get paid, or will get stuck with a client's horse.
Boarding
Although Equine Legal Solutions always receives a lot of calls from boarding stables about boarders who aren't paying their bills, the situation seems to have reached nearly epidemic proportions, particularly in California. Our practice spans California, New York and Washington, and most of the calls about past-due boarders come from California, with an increasing number from Washington. Over half of our free phone consultations are now about non-paying boarders, whereas those calls typically represent more like 20% of our call volume.
In more and more of the non-paying boarder cases, the boarding stable has no way of reaching the boarder. Sometimes, the information the boarder gave the stable was completely fictional - the boarder intended to dump the horses on the boarding stable from the very beginning. (Note that screening potential boarders would help eliminate this problem.) In other cases, the boarder's contact information was initially good, but the boarder's phone has now been disconnected, and the boarder hasn't visited the stable in quite a while. Often, the boarding stable has sent the boarder a certified or registered letter, which has been returned unclaimed. The boarding stable is often desperate for solutions and wants to know when the boarder's horses are considered abandoned and what the stable can do with them.
Now more than ever, the boarding stable is usually better off not executing on its agister's lien. The horse market has declined significantly due to the slaughter ban and the recession. Horses that would have brought at least $500 at auction a few years ago now have no value at all. Meanwhile, hay prices have increased dramatically, making it more expensive to feed horses while waiting for foreclosure proceedings to conclude. And, the chances of being able to collect past due board through traditional methods are slimmer. The boarder may be out of work, with no wages to garnish, and/or may be preparing to file for bankruptcy. Usually, the best thing a boarding stable can do is to get the boarder to come and take the horses, even if the boarder owes the stable money. Getting the horses off the property stops the meter from running on the hay bill and it also cuts off the stable's potential liability for the horses' care.
More boarding stables are having to enforce the payment, lien and eviction portions of their boarding contracts. Unfortunately, many of them are finding their contracts don't adequately address the issues they face. These old, outdated contracts have unwieldy and difficult notice procedures for eviction involving certified and/or registered mail (which most deadbeat boarders will not claim). Often, they require the stable to give the boarder 30 days' notice of termination, even if the boarder owes the stable thousands in back board, effectively making the stable feed the boarder's horse for free for yet another month. And they contain virtually no practical remedies for collecting past due board and getting rid of abandoned horses and tack. As a result, more boarding stables are weighing the high cost of dealing with boarding problems, and deciding that having a boarding contract they can rely upon to protect their interests is well worth the relatively small price.
Breeding
Most breeders booked fewer breedings in 2009, and many of the bookings were made later than usual, simply because mare owners needed to wait to make sure they had the money to breed this year. Mare owners are being more selective, opting to breed fewer mares. Large breeders are downsizing their broodmare bands, keeping the best and offloading the rest. Many smaller breeders are exiting the breeding business altogether, finding that it's less expensive to buy young stock than it is to breed their own. As a result, there's a glut of broodmares on the market and prices are at historic lows.
Given the significant costs associated with shipping cooled semen and artificially inseminating mares, some breeders are finding that offering live cover and on-site artifical insemination services is drawing more local breedings. Breeders are also keeping costs down by doing more of the work themselves and involving veterinarians and stallion stations less frequently.
As usual, discounts are available to mare owners who book early, book multiple mares and/or have mares with proven production or show records. However, these discounts are more widespread, the discounts are deeper, and even the top stallion owners are offering them. Hoping to draw budget-conscious mare owners, some stallion owners are waiving collection and shipping fees on initial shipments, and others are significantly reducing stud fees and eliminating booking fees. Other stallion owners are offering enhanced live foal guarantees, some with no stud fees due until a live foal is born.
Horse Sales
It won't be news to anyone that horse sales are down, and so are horse prices. Craig's List abounds with free horses, and not just junk. More and more of those free horses are sound, registered and/or well-trained. Breeders are having more dispersal sales, and sending more young stock and broodmares to auction.
At the same time, there are fewer buyers at those auctions, and the buyers who do attend buy fewer horses. Sellers are less likely to "no sale" low-selling horses, opting not to haul them home.
Some horse buyers are being more careful. They're making fewer impulse purchases, not buying as many horses sight unseen over the Internet. They're using horse purchase contracts, insisting upon some accountability from the seller. Some horse buyers are taking horses on trial and/or making payments in installments. More sellers are agreeing to these relatively risky terms because they have no other buyers, but conscious of these risks, they are seeking out higher quality horse sale contracts in an effort to protect themselves.
Other horse buyers are cutting costs unwisely, opting not to get a pre-purchase vet exam or not have radiographs or blood draws done during the exam. And some horse sellers are also accepting risky deals that they wouldn't have even considered in a better economy, simply because they need to move some horses, and they need to do it now.
Riding Lessons
It should come as no surprise that many families consider riding lessons a luxury, so children's lessons are eliminated or reduced when a family experiences financial difficulty. Adult amateurs are also doing without lessons, opting to ride on their own instead.
Training
A lot of horse owners who would have sent young horses to a trainer are now either letting those horses sit, selling those horses as unbroke or greenbroke, or doing some of the training themselves. As a result, I think we can expect to see even more untrained young stock for sale in the coming months. Other horse owners who normally keep their horses in full-time training are bringing their horses home, or cutting back to part-time training, filling in the gaps themselves. Fewer training clients are going to shows, and many of those still showing are opting to attend fewer shows and show in fewer classes this year. More and more trainers are opting to use training contracts, fearful that they won't get paid, or will get stuck with a client's horse.
Labels: agister's lien, horse boarding, horse breeding, horse sales, horse training
Monday, February 2, 2009
Entering Into Contracts with Minors
Happily, there are a lot of minors (persons under 18 years of age) involved in the horse industry. At Equine Legal Solutions, we're often asked whether a minor can sign a boarding contract, horse lease agreement or horse purchase agreement. The short answer is yes. But, there are reasons why you may not want to enter into a contract with a minor.
Minors Can Back Out of Contracts
In the horse context and in most U.S. jurisdictions, almost all contracts will be voidable by the minor. At any time, the minor can choose to back out of the contract, with no penalty. For example, if a minor signs a boarding contract with a boarding stable, the boarding stable can't hold the minor to the contract. Even if the stable honors its obligations and provides wonderful care for the minor's horse, it won't be able to require the minor to pay board or honor a 30-day termination notice provision. This seems like a very unfair result, especially when the minor has received the benefits of the contract. However, the prevailing legal theory is that minors are particularly susceptible to being taken advantage of, and therefore the law must protect minors who enter into contracts with adults. By making it rather disadvantageous to enter into a contract with a minor, the law effectively protects minors by preventing adults from contracting with them.
Minors Can Enforce Contracts
In contrast, a minor can enforce the provisions of a contract against an adult. So, if an adult enters into a contract with a minor to sell the minor a horse, the adult can't change their mind if they get a better offer. If they do, the minor could sue the adult for damages or for "specific performance" - i.e., legally force the adult to sell the horse to the minor. Again, the legal theory is to discourage adults from entering into contracts with minors, thereby protecting minors from contractual exploitation by adults.
If the Minor Owns the Horse
Often, a minor is the registered owner of their horse. How, then, should trainers, boarding stable owners and other equine service providers handle that situation? The answer is fairly simple: Have the minor's parent or guardian sign the boarding or training contract. Like service provider situations involving leased horses, if the parent or guardian isn't listed on the horse's papers as a registered owner, this fact won't affect the trainer's or boarding stable's ability to enforce the contract.
Minors and Liability Releases
A liability release is essentially a contract. Therefore, if a minor signs a liability release, that signature is pretty much worthless because the minor can void the contract at any time. How, then, can boarding stables, riding instructors and other parties protect themselves against legal claims brought by minors. The short answer is to have the minor's parent or guardian enter into a liability release on behalf of the minor. For added protection, the liability release should include an indemnification clause stating that if any claims are later brought by the minor or on the minor's behalf, the person signing the liability release agrees to pay to defend the person being sued, and to pay the cost of any legal judgment. Equine Legal Solutions offers a wide range of liability releases meeting these requirements, including liability releases specifically designed for situations involving minors.
Minors Can Back Out of Contracts
In the horse context and in most U.S. jurisdictions, almost all contracts will be voidable by the minor. At any time, the minor can choose to back out of the contract, with no penalty. For example, if a minor signs a boarding contract with a boarding stable, the boarding stable can't hold the minor to the contract. Even if the stable honors its obligations and provides wonderful care for the minor's horse, it won't be able to require the minor to pay board or honor a 30-day termination notice provision. This seems like a very unfair result, especially when the minor has received the benefits of the contract. However, the prevailing legal theory is that minors are particularly susceptible to being taken advantage of, and therefore the law must protect minors who enter into contracts with adults. By making it rather disadvantageous to enter into a contract with a minor, the law effectively protects minors by preventing adults from contracting with them.
Minors Can Enforce Contracts
In contrast, a minor can enforce the provisions of a contract against an adult. So, if an adult enters into a contract with a minor to sell the minor a horse, the adult can't change their mind if they get a better offer. If they do, the minor could sue the adult for damages or for "specific performance" - i.e., legally force the adult to sell the horse to the minor. Again, the legal theory is to discourage adults from entering into contracts with minors, thereby protecting minors from contractual exploitation by adults.
If the Minor Owns the Horse
Often, a minor is the registered owner of their horse. How, then, should trainers, boarding stable owners and other equine service providers handle that situation? The answer is fairly simple: Have the minor's parent or guardian sign the boarding or training contract. Like service provider situations involving leased horses, if the parent or guardian isn't listed on the horse's papers as a registered owner, this fact won't affect the trainer's or boarding stable's ability to enforce the contract.
Minors and Liability Releases
A liability release is essentially a contract. Therefore, if a minor signs a liability release, that signature is pretty much worthless because the minor can void the contract at any time. How, then, can boarding stables, riding instructors and other parties protect themselves against legal claims brought by minors. The short answer is to have the minor's parent or guardian enter into a liability release on behalf of the minor. For added protection, the liability release should include an indemnification clause stating that if any claims are later brought by the minor or on the minor's behalf, the person signing the liability release agrees to pay to defend the person being sued, and to pay the cost of any legal judgment. Equine Legal Solutions offers a wide range of liability releases meeting these requirements, including liability releases specifically designed for situations involving minors.
Labels: equine liability, horse boarding, horse leasing, horse sales, horse training
Saturday, January 17, 2009
Horse Industry Defamation: Liability Revisited
As previously discussed in You Cant Say That! What Horse People Need to Know about Libel, Slander and Defamation, claims of horse industry defamation are frequent, but successful lawsuits are rare. However, a recent situation has highlighted an area of great potential liability for both individuals and equine websites. Equine Legal Solutions certainly doesn't condone abusive training practices. However, we feel a responsibility to outline the legal risks of publishing animal abuse allegations.
Popular websites such as GoHorseShow.com and HorsemansLibrary.com have published accusations of abuse allegedly committed by multiple world champion Western Pleasure trainer Cleve Wells. The accusations concern a horse allegedly discovered at Mr. Wells' property with infected spur wounds and fractured bone in the bars of its mouth. The accusations are detailed, and they include graphic color photos of the alleged wounds. In some published accounts, the allegations include written statements that appear to have been made by the horse owner, another witness and two veterinarians. All of that information tends to make the accusations look more credible.
As a result, concerned horse people are reading these allegations, believing them, and spreading them like wildfire. To date, Equine Legal Solutions has received three separate emails and two telephone calls about these allegations, all from folks with no firsthand knowledge who are simply passing on what they have read and commenting upon it. Equine chat boards are live with commentary on the situation. Obviously, these allegations have reached a very wide audience and, presumably, have negatively affected public opinion about Mr. Wells.
Each "publication" and "republication" of a defamatory statement can be counted for the purpose of determining liability. What is a "publication"? The written statements were "published" when they were given to another person, whether that exchange took place by email, hand delivery, or otherwise. So, the horse owner published her statement each time she sent it to a website or emailed it to a friend. Each time those statements were then passed on, whether posted to a website, emailed or otherwise, they were "republished". So, in situations like this one, there are usually many, many republications. Note that the republications are typically beyond the control of the original publisher, yet the original publisher can have liability for them. So here, the horse owner appears to be the original publisher, and therefore she may have liability for all of the republications.
While equine websites republishing defamatory statements might argue that they are simply reporting news (and therefore should be immune from liability), there are potential problems with that defense. If the websites don't make appropriate efforts to verify facts before publishing defamatory statements, i.e., if they are negligent, that can lead to liability. In addition, when websites make decisions about what materials to publish, such as in the case of chat forums where some negative threads are removed and others left intact, that exercise of discretion can lead to liability. The publishing website is in effect helping its readers decide which statements are credible.
Unless the subject of the defamatory statements is a "public figure," mere negligence is sufficient to defeat a fair report privilege defense. Here, while Mr. Wells may be well-known in certain segments of the horse industry, he is arguably not well-known outside the horse industry. Therefore, it's highly debatable whether he is a "public figure". If he is, he would almost certainly be a "limited public figure" - that is, a public figure only to a certain narrow audience.
If a court were to determine that Mr. Wells is a limited public figure, that may provide the equine websites with a viable defense, but that defense won't likely help the horse owner and other parties. Public figures are expected to endure a certain amount of public criticism and therefore, a public figure bringing a defamation case must show that the publisher of the defamatory statement acted wtih "actual malice" - that is, that they meant to the cause the public figure harm. Here, the witness statement allegedly made by Gary Russ looks like it was made with actual malice, because it calls for AQHA to take disciplinary action against Mr. Wells. On the other hand, in the absence of evidence to the contrary, the websites and individuals republishing Mr. Russ' statement likely meant no harm to Mr. Wells. (This is a situation where emails could provide evidence of actual malice, such as "I'm going to post this on my website and destroy this guy!" So, website managers, take heed of what you say when deciding to publish negative materials!)
On casual examination, there are some notable issues with the alleged evidence being published, perhaps enough to support a claim that those publishing and republishing the allegations were negligent in doing so. The typewritten statement allegedly made by the horse owner is not signed, nor is it dated. This statement alleges that the horse in question, Slow Lopin Scotch, is co-owned by Nicole Marrs (the alleged author of the statement) and Wayne Holley, her father. However, there are no published statements that appear to have been made by Mr. Holley. The statement allegedly made by veterinarian Larry McConnell is not dated. Neither Dr. McConnell's alleged statement nor Dr. Karen Adler's alleged statement is printed on clinic letterhead - rather, these letters simply have a typewritten clinic name and address at the top. In Equine Legal Solutions' experience, veterinarians' statements usually appear on clinic letterhead, particularly if they are made in anticipation of a lawsuit. There are no copies posted of the actual veterinary records with the original notes made by the examining veterinarians, or copies of the radiographs showing the bone fragments in the bars of the horse's mouth. The photos of the wounds are not time- and date-stamped. They also do not show any details that uniquely identify the horse in the pictures. Slow Lopin Scotch appears to be a bay with no white markings or brands, so the photos could theoretically be of any bay horse, taken at any time. If the evidence and allegations are in fact truthful, the defendants, not Mr. Wells, would bear the burden of proving truth.
While most opinions posted by persons commenting on the allegations are likely protected by the First Amendment, some are not. For example, if a chat board poster were to opine, "I used to work for Cleve and I'm not surprised," they are implying that they have special knowledge and therefore their opinion has a basis in fact. As a result, that poster could be liable for their defamatory statement.
Unlike most horse industry Internet defamation claims, Mr. Wells should have ample evidence to support damages claims. Given that Mr. Wells not only trains for private clients, but also sells training videos and tack to the general public, these horrific accusations are sure to have a measureable negative impact on his business. However, because the allegations impugn his professional reputation, Mr. Wells may not even have to prove damages. The court may consider the allegations to be per se defamation.
All things considered, this situation should be a cautionary tale for the horse industry - whether the allegations are true or not. Horse trainers should be aware that what happens in their barn may not stay in their barn. Training clients should check in on their horses. Equine website managers should be aware that evidence may not always be what it seems, and that if they publish juicy materials without proper due diligence, they could be liable. And finally, individual horse owners should be careful about what they say when they pass along negative information.
Popular websites such as GoHorseShow.com and HorsemansLibrary.com have published accusations of abuse allegedly committed by multiple world champion Western Pleasure trainer Cleve Wells. The accusations concern a horse allegedly discovered at Mr. Wells' property with infected spur wounds and fractured bone in the bars of its mouth. The accusations are detailed, and they include graphic color photos of the alleged wounds. In some published accounts, the allegations include written statements that appear to have been made by the horse owner, another witness and two veterinarians. All of that information tends to make the accusations look more credible.
As a result, concerned horse people are reading these allegations, believing them, and spreading them like wildfire. To date, Equine Legal Solutions has received three separate emails and two telephone calls about these allegations, all from folks with no firsthand knowledge who are simply passing on what they have read and commenting upon it. Equine chat boards are live with commentary on the situation. Obviously, these allegations have reached a very wide audience and, presumably, have negatively affected public opinion about Mr. Wells.
Each "publication" and "republication" of a defamatory statement can be counted for the purpose of determining liability. What is a "publication"? The written statements were "published" when they were given to another person, whether that exchange took place by email, hand delivery, or otherwise. So, the horse owner published her statement each time she sent it to a website or emailed it to a friend. Each time those statements were then passed on, whether posted to a website, emailed or otherwise, they were "republished". So, in situations like this one, there are usually many, many republications. Note that the republications are typically beyond the control of the original publisher, yet the original publisher can have liability for them. So here, the horse owner appears to be the original publisher, and therefore she may have liability for all of the republications.
While equine websites republishing defamatory statements might argue that they are simply reporting news (and therefore should be immune from liability), there are potential problems with that defense. If the websites don't make appropriate efforts to verify facts before publishing defamatory statements, i.e., if they are negligent, that can lead to liability. In addition, when websites make decisions about what materials to publish, such as in the case of chat forums where some negative threads are removed and others left intact, that exercise of discretion can lead to liability. The publishing website is in effect helping its readers decide which statements are credible.
Unless the subject of the defamatory statements is a "public figure," mere negligence is sufficient to defeat a fair report privilege defense. Here, while Mr. Wells may be well-known in certain segments of the horse industry, he is arguably not well-known outside the horse industry. Therefore, it's highly debatable whether he is a "public figure". If he is, he would almost certainly be a "limited public figure" - that is, a public figure only to a certain narrow audience.
If a court were to determine that Mr. Wells is a limited public figure, that may provide the equine websites with a viable defense, but that defense won't likely help the horse owner and other parties. Public figures are expected to endure a certain amount of public criticism and therefore, a public figure bringing a defamation case must show that the publisher of the defamatory statement acted wtih "actual malice" - that is, that they meant to the cause the public figure harm. Here, the witness statement allegedly made by Gary Russ looks like it was made with actual malice, because it calls for AQHA to take disciplinary action against Mr. Wells. On the other hand, in the absence of evidence to the contrary, the websites and individuals republishing Mr. Russ' statement likely meant no harm to Mr. Wells. (This is a situation where emails could provide evidence of actual malice, such as "I'm going to post this on my website and destroy this guy!" So, website managers, take heed of what you say when deciding to publish negative materials!)
On casual examination, there are some notable issues with the alleged evidence being published, perhaps enough to support a claim that those publishing and republishing the allegations were negligent in doing so. The typewritten statement allegedly made by the horse owner is not signed, nor is it dated. This statement alleges that the horse in question, Slow Lopin Scotch, is co-owned by Nicole Marrs (the alleged author of the statement) and Wayne Holley, her father. However, there are no published statements that appear to have been made by Mr. Holley. The statement allegedly made by veterinarian Larry McConnell is not dated. Neither Dr. McConnell's alleged statement nor Dr. Karen Adler's alleged statement is printed on clinic letterhead - rather, these letters simply have a typewritten clinic name and address at the top. In Equine Legal Solutions' experience, veterinarians' statements usually appear on clinic letterhead, particularly if they are made in anticipation of a lawsuit. There are no copies posted of the actual veterinary records with the original notes made by the examining veterinarians, or copies of the radiographs showing the bone fragments in the bars of the horse's mouth. The photos of the wounds are not time- and date-stamped. They also do not show any details that uniquely identify the horse in the pictures. Slow Lopin Scotch appears to be a bay with no white markings or brands, so the photos could theoretically be of any bay horse, taken at any time. If the evidence and allegations are in fact truthful, the defendants, not Mr. Wells, would bear the burden of proving truth.
While most opinions posted by persons commenting on the allegations are likely protected by the First Amendment, some are not. For example, if a chat board poster were to opine, "I used to work for Cleve and I'm not surprised," they are implying that they have special knowledge and therefore their opinion has a basis in fact. As a result, that poster could be liable for their defamatory statement.
Unlike most horse industry Internet defamation claims, Mr. Wells should have ample evidence to support damages claims. Given that Mr. Wells not only trains for private clients, but also sells training videos and tack to the general public, these horrific accusations are sure to have a measureable negative impact on his business. However, because the allegations impugn his professional reputation, Mr. Wells may not even have to prove damages. The court may consider the allegations to be per se defamation.
All things considered, this situation should be a cautionary tale for the horse industry - whether the allegations are true or not. Horse trainers should be aware that what happens in their barn may not stay in their barn. Training clients should check in on their horses. Equine website managers should be aware that evidence may not always be what it seems, and that if they publish juicy materials without proper due diligence, they could be liable. And finally, individual horse owners should be careful about what they say when they pass along negative information.
Labels: equine liability, horse training, other equine topics
Tuesday, December 16, 2008
New Florida Rules Governing Horse Sales - Part I
When the State of Florida enacted Section 535.16 of the Florida Statutes tasking the Florida Department of Agriculture and Consumer Services with adopting rules to "prevent unfair or deceptive trade practices" in horse sales, the equine community waited with great anticipation (and a fair bit of scoffing). There was widespread speculation that the horse sale rules would never be promulgated, or that when they were, they'd be toothless or poorly written, and it would be business as usual for the horse industry. However, the new Florida equine sale rules go a long way toward leveling the playing field for both horse buyers and horse sellers. In this article, we'll discuss the new disclosure requirements for horse sales agents (and horse purchase agents), in Part II, we'll discuss the new horse sales disclosure requirements, and in Part III, we'll discuss the new horse sale requirements as applied to auctions.
Florida Requirements for Dual Agents in Horse Sales
Horse Sale #1: Big Name Trainer has two clients, Clara Clueless and Nona Knownothing. Clara has a horse, Money Pit, that she wants to sell. BNT agrees to help Clara sell her horse in exchange for a 10% commission. Nona wants to buy a horse and BNT agrees to help her find a horse in exchange for his customary 10% finder's fee. BNT shows Money Pit to Nona, who loves him and immediately agrees to buy him. BNT arranges for the sale of Money Pit to Nona, and collects a 10% commission on the sale price of Money Pit from each of Clara and Nona. BNT does not talk to Clara about the commission that Nona paid him, and likewise, he doesn't discussion Clara's commission payment with Nona. BNT has heard about the Florida equine sale rules, but figures they don't apply to him because that's the way he's always done business, and after all, he is a big name trainer.
Under Florida Rule 5H-26.002, BNT served as a "dual agent" because he represented both the horse owner (Clara) and the horse purchaser (Nona) in the horse sale transaction. Florida Rule 5H-26.003(2) prohibits dual agency in horse sale transactions unless the horse buyer and the horse owner know in advance and agree to the dual representation in writing. Here, BNT violated Florida rule 5H-26.003 because there is no indication that Clara and Nona both knew in advance of the sale that BNT was representing both of them and they certainly did not agree in writing to the dual representation.
Florida Horse Sale Commission Disclosure Requirements
Horse Sale #2. After the purchase of Money Pit, Clara decides she needs to sell another of her horses, Always Lame. Clara approaches BNT and asks him to sell Always Lame, telling him that she wants to "get at least $25,000" for him. BNT doesn't have a client in his barn who would be interested in Always Lame, so he calls up a trainer buddy of his, Dewey Cheatem. Dewey tells BNT that he does have a client who's horse shopping, Nancy Naive, and Nancy is willing to spend up to $50,000 for a new horse. Dewey and BNT show Always Lame to Nancy, telling her that the asking price is $50,000. Nancy falls in love with Always Lame (and on Dewey's expert advice, decides to forgo a vet check). Nancy pays $50,000 to BNT, who provides her with Always Lame's registration papers (and of course, the parties do not use a bill of sale). BNT tells Clara that Nancy has agreed to pay $25,000 for Always Lame, and Clara is thrilled to get her asking price. BNT had agreed with Dewey that they would split any amount over $25,000 that they could get Nancy to pay for Always Lame, so BNT pays $12,500 to Dewey, $25,000 to Clara and pockets the remaining $12,500. BNT also receives a commission of $2,500 from Clara, and Dewey receives a commission of $5,000 from Nancy. BNT and Dewey shake their heads at the cluelessness of Florida legislators, noting it would ruin their business if they complied with the new Florida rules. Fortunately, they decide, the rules don't apply to industry scions like themselves.
If an agent for a horse purchaser or a horse owner receives more than $500 of compensation in connection with a horse sale, Florida Rule 5H-26.003(3) requires certain disclosures. The agent who receives the commission and the person who pays it must provide written disclosure to both the horse purchaser and the horse owner. And, the horse owner and purchaser must consent to the payments in writing. So, in Horse Sale #2, BNT and Dewey would have to disclose in writing to both Clara and Nancy that they would each receive $12,500 in connection with the sale, and Clara and Nancy would both have to consent in writing. As you might imagine, Florida Rule 5H-26.003(3) is designed to thwart exactly the type of "secret commission" sales described in Horse Sale #2.
Florida Horse Ownership Interest Disclosure Requirements
Horse Sale #3: BNT has worked out a deal with Clara whereby he will train Clara's horse Pig in a Poke in exchange for 50% of the sale proceeds when Pig in a Poke sells. No one knows about the particulars of this arrangement except Clara and BNT. One of BNT's other clients, Farah Fearless, tells BNT that she wants to buy a new horse. BNT agrees to help Farah buy a new horse and Farah agrees to pay him a 10% commission. BNT just happens to mention to Farah that Clara is planning to sell Pig in a Poke. Clara loves Pig in a Poke and jumps at the chance to buy him for $40,000. BNT never mentions to Clara that he owns 50% of Pig in a Poke, and only Clara's name is on Pig in a Poke's registration papers. Farah pays Clara $40,000, and Clara delivers $20,000 to BNT. Farah also pays BNT a commission of $4,000.
BNT has just violated Florida Rule 5H-26.003(5), which provides that an agent or trainer can't recommend that their client purchase a horse in which the agent/trainer has an ownership interest unless the client is aware of the ownership interest prior to the sale. Interestingly, Rule 5H-26.003(5) does not require the client's written consent unless it is "practicable."
Horse Sale #4
Anna Amateur is a very successful rider and spends a lot of time training her horses for competition. Anna co-owns a horse, Expensive Hobby, with Nona Knownothing. Expensive Hobby is registered in Nona's name only and stabled with Nona's trainer. Clara Clueless is a friend of Anna's, and she admires Anna's taste in horses. After having been burned a few times by BNT, Clara decides that she'd much rather have Anna help her select a horse. Anna steers Clara toward Expensive Hobby, but never mentions that she is a part owner. Clara buys Expensive Hobby and pays the purchase price to Nona. As a thank-you for Anna's help, Clara takes Anna out for a lavish dinner.
Notably, and unlike the other provisions of Rule 26.003, Section 5H-26.003(5) includes "trainers" as well as agents. Florida Rule 5H-26.002(3) defines "trainer" as "a person who trains horses for contests, shows or performances." Notably, this definition of trainer doesn't state that the person must be paid for the training or otherwise have a business training horses. Therefore, an amateur such as Anna could possibly fall within the purview of the rule.
Penalties for Violating Florida Equine Sales Agent Disclosure Rules
Florida Rule 5H-26.003(13) provides that violation of any part of the Florida equine sale rules is an "unfair and deceptive trade practice" under Part II of Chapter 501 of the Florida Statutes. Pursuant to Section 501.211 of the Florida Statutes, the injured party can recover their actual damages, attorneys' fees and court costs from the violator. This is very significant. In the typical horse sale transaction, actual damages are fairly low, and therefore attorneys' fees and court costs often greatly exceed the actual damages. Without a horse sale contract containing an attorneys' fees clause, plaintiffs have little hope of recouping their costs of bringing suit and therefore they're unlikely to sue. However, the new Florida rules change that by providing a mechanism for plaintiffs to recoup their costs if they win. Therefore, Florida can expect a lot more lawsuits related to horse sales!
In addition, pursuant to Section 501.2075, the State of Florida is entitled to collect a civil penalty of up to $10,000 if the violator knew or should have known that their conduct was a violation of the Florida rules. This provision may provide an incentive to sue in cases where the plaintiff's actual damages are low, but sense of outrage is high, such as in Horse Sale #1.
Florida Requirements for Dual Agents in Horse Sales
Horse Sale #1: Big Name Trainer has two clients, Clara Clueless and Nona Knownothing. Clara has a horse, Money Pit, that she wants to sell. BNT agrees to help Clara sell her horse in exchange for a 10% commission. Nona wants to buy a horse and BNT agrees to help her find a horse in exchange for his customary 10% finder's fee. BNT shows Money Pit to Nona, who loves him and immediately agrees to buy him. BNT arranges for the sale of Money Pit to Nona, and collects a 10% commission on the sale price of Money Pit from each of Clara and Nona. BNT does not talk to Clara about the commission that Nona paid him, and likewise, he doesn't discussion Clara's commission payment with Nona. BNT has heard about the Florida equine sale rules, but figures they don't apply to him because that's the way he's always done business, and after all, he is a big name trainer.
Under Florida Rule 5H-26.002, BNT served as a "dual agent" because he represented both the horse owner (Clara) and the horse purchaser (Nona) in the horse sale transaction. Florida Rule 5H-26.003(2) prohibits dual agency in horse sale transactions unless the horse buyer and the horse owner know in advance and agree to the dual representation in writing. Here, BNT violated Florida rule 5H-26.003 because there is no indication that Clara and Nona both knew in advance of the sale that BNT was representing both of them and they certainly did not agree in writing to the dual representation.
Florida Horse Sale Commission Disclosure Requirements
Horse Sale #2. After the purchase of Money Pit, Clara decides she needs to sell another of her horses, Always Lame. Clara approaches BNT and asks him to sell Always Lame, telling him that she wants to "get at least $25,000" for him. BNT doesn't have a client in his barn who would be interested in Always Lame, so he calls up a trainer buddy of his, Dewey Cheatem. Dewey tells BNT that he does have a client who's horse shopping, Nancy Naive, and Nancy is willing to spend up to $50,000 for a new horse. Dewey and BNT show Always Lame to Nancy, telling her that the asking price is $50,000. Nancy falls in love with Always Lame (and on Dewey's expert advice, decides to forgo a vet check). Nancy pays $50,000 to BNT, who provides her with Always Lame's registration papers (and of course, the parties do not use a bill of sale). BNT tells Clara that Nancy has agreed to pay $25,000 for Always Lame, and Clara is thrilled to get her asking price. BNT had agreed with Dewey that they would split any amount over $25,000 that they could get Nancy to pay for Always Lame, so BNT pays $12,500 to Dewey, $25,000 to Clara and pockets the remaining $12,500. BNT also receives a commission of $2,500 from Clara, and Dewey receives a commission of $5,000 from Nancy. BNT and Dewey shake their heads at the cluelessness of Florida legislators, noting it would ruin their business if they complied with the new Florida rules. Fortunately, they decide, the rules don't apply to industry scions like themselves.
If an agent for a horse purchaser or a horse owner receives more than $500 of compensation in connection with a horse sale, Florida Rule 5H-26.003(3) requires certain disclosures. The agent who receives the commission and the person who pays it must provide written disclosure to both the horse purchaser and the horse owner. And, the horse owner and purchaser must consent to the payments in writing. So, in Horse Sale #2, BNT and Dewey would have to disclose in writing to both Clara and Nancy that they would each receive $12,500 in connection with the sale, and Clara and Nancy would both have to consent in writing. As you might imagine, Florida Rule 5H-26.003(3) is designed to thwart exactly the type of "secret commission" sales described in Horse Sale #2.
Florida Horse Ownership Interest Disclosure Requirements
Horse Sale #3: BNT has worked out a deal with Clara whereby he will train Clara's horse Pig in a Poke in exchange for 50% of the sale proceeds when Pig in a Poke sells. No one knows about the particulars of this arrangement except Clara and BNT. One of BNT's other clients, Farah Fearless, tells BNT that she wants to buy a new horse. BNT agrees to help Farah buy a new horse and Farah agrees to pay him a 10% commission. BNT just happens to mention to Farah that Clara is planning to sell Pig in a Poke. Clara loves Pig in a Poke and jumps at the chance to buy him for $40,000. BNT never mentions to Clara that he owns 50% of Pig in a Poke, and only Clara's name is on Pig in a Poke's registration papers. Farah pays Clara $40,000, and Clara delivers $20,000 to BNT. Farah also pays BNT a commission of $4,000.
BNT has just violated Florida Rule 5H-26.003(5), which provides that an agent or trainer can't recommend that their client purchase a horse in which the agent/trainer has an ownership interest unless the client is aware of the ownership interest prior to the sale. Interestingly, Rule 5H-26.003(5) does not require the client's written consent unless it is "practicable."
Horse Sale #4
Anna Amateur is a very successful rider and spends a lot of time training her horses for competition. Anna co-owns a horse, Expensive Hobby, with Nona Knownothing. Expensive Hobby is registered in Nona's name only and stabled with Nona's trainer. Clara Clueless is a friend of Anna's, and she admires Anna's taste in horses. After having been burned a few times by BNT, Clara decides that she'd much rather have Anna help her select a horse. Anna steers Clara toward Expensive Hobby, but never mentions that she is a part owner. Clara buys Expensive Hobby and pays the purchase price to Nona. As a thank-you for Anna's help, Clara takes Anna out for a lavish dinner.
Notably, and unlike the other provisions of Rule 26.003, Section 5H-26.003(5) includes "trainers" as well as agents. Florida Rule 5H-26.002(3) defines "trainer" as "a person who trains horses for contests, shows or performances." Notably, this definition of trainer doesn't state that the person must be paid for the training or otherwise have a business training horses. Therefore, an amateur such as Anna could possibly fall within the purview of the rule.
Penalties for Violating Florida Equine Sales Agent Disclosure Rules
Florida Rule 5H-26.003(13) provides that violation of any part of the Florida equine sale rules is an "unfair and deceptive trade practice" under Part II of Chapter 501 of the Florida Statutes. Pursuant to Section 501.211 of the Florida Statutes, the injured party can recover their actual damages, attorneys' fees and court costs from the violator. This is very significant. In the typical horse sale transaction, actual damages are fairly low, and therefore attorneys' fees and court costs often greatly exceed the actual damages. Without a horse sale contract containing an attorneys' fees clause, plaintiffs have little hope of recouping their costs of bringing suit and therefore they're unlikely to sue. However, the new Florida rules change that by providing a mechanism for plaintiffs to recoup their costs if they win. Therefore, Florida can expect a lot more lawsuits related to horse sales!
In addition, pursuant to Section 501.2075, the State of Florida is entitled to collect a civil penalty of up to $10,000 if the violator knew or should have known that their conduct was a violation of the Florida rules. This provision may provide an incentive to sue in cases where the plaintiff's actual damages are low, but sense of outrage is high, such as in Horse Sale #1.
Labels: equine liability, horse sales, horse training
Thursday, December 4, 2008
When a Training Client Leaves: How to Make a Departure Pay Dividends
Horse training clients leave a barn for all sorts of reasons. The client’s horse may not be succeeding in the trainer’s program, or the client might feel another trainer’s program is a better fit. Due to job changes, marital problems, or other reasons, the client may be under financial strain. Sometimes, a client is just plain burned out and wants to take a break. Occasionally, a client has been with the same trainer for so long that they feel they have learned everything that trainer can teach them, and they’re ready to move on. A client’s reasons for leaving a trainer rarely have anything at all to do with how the client views the trainer as a person. Often, the client has stayed with the trainer far longer than they otherwise would have, simply because they like the trainer and don’t want to hurt their feelings by leaving. But, the trainer often takes the client’s departure personally.
At Equine Legal Solutions, we hear a lot of horror stories involving clients leaving training barns. Often, shortly after informing the trainer of their decision to leave, the client receives a huge bill containing unexpected charges, and the trainer insists on payment in full before the trainer will release the client’s horse. Occasionally, the client’s announcement results in an ugly confrontation at the barn or a horse show. Once in a while, the client even fears for the safety of their horses. As a result, the client does develop negative feelings about the trainer, feelings that probably wouldn’t have existed had the trainer handled the situation more professionally.
How, then, should you handle a client’s departure announcement?
1. Be polite. Even if the client’ s departure is a true blessing and you can’t wait to see the client and their good-for-nothing horses disappear down your driveway, it doesn’t cost you anything to find something nice to say. Even in the worst client relationships, you can find something polite and truthful to offer. For example, “I sure have appreciated your business, and I wish you the best.” Treating even the worst clients with respect may pay dividends later in the form of referrals, or at the very least, maintain your own dignity.
2. Get the facts. Rather than relying on secondhand information, you should ask the client, directly and sincerely (and as soon as possible) why they are leaving. Sometimes, the client may be uncomfortable voicing their concerns, but even in those situations, you can usually read between the lines. Whatever the client’s reasons for leaving are, you need to know – the future of your business may depend upon it.
3. Use the facts. The client’s reasons for leaving may be indicative of a problem in your program that needs to be addressed. Horse training business problems aren’t always obvious, and they aren’t always directly related to the horses. Maybe another client is driving your customers away with their difficult personality, or possibly another trainer is openly poaching your clients. Perhaps the vet or farrier you use charges more than your clients can handle. The client might even offer you a wakeup call, such as that one of your employees is behaving inappropriately with your customers. Once in a while, the client’s reasons for leaving may offer a crystal-ball peek at larger horse market trends, such as changes toward or away from particular disciplines and breeds. Even in situations where the client’s reasons for leaving don’t have anything to do with the horse industry in general or your training program in particular, you can at least rest assured that the client’s departure was not your fault. Whatever the client’s feedback is, you can use it.
4. Don’t hold the client hostage. If your client wants to leave before the notice period specified in your training agreement or boarding contract, let them. If the trainer-client relationship is ending on a good note, you won’t want to risk ruining that, and you won’t gain anything more than just a few dollars by trying to make them stay. When the relationship is acrimonious, an early departure reduces the chance the departing client will be around to poison your relationships with your other customers, and it also shortens the amount of time you’ll have to continue dealing with a difficult situation. Either way, you win.
5. Don’t hold the client’s horses hostage. While many states have laws that provide horse trainers with automatic liens on horses in training for unpaid bills, it’s rarely sensible to enforce your lien rights. While you may be right to think that once you release the horses, the client has no incentive to pay their bill, you have to consider the costs of enforcing your lien. Just like it doesn’t usually make sense to enforce a boarding stable lien, enforcing a horse trainer’s lien is usually cost-ineffective. Instead, the better business strategy for dealing with a client who isn’t paying is (a) minimizing your costs and risks by getting the horses and the client out of the barn as soon as possible, and (b) if necessary, taking the client to small claims court for the unpaid boarding and training bills.
6. Make the transition as smooth as possible. A client’s departure is your last chance to make a good impression on the client, and it’s a great opportunity to make new contacts, or renew old relationships. If the client is going to another trainer, call them up and offer them any information that might be helpful, such as medications and supplements the horses need. You just never know when that other trainer might refer someone to you, or even be judging you at a show. Find out when your client’s horses are leaving, and make sure there is someone there to meet the hauler and help load the horses. Promptly send out a final bill to the client, and answer any questions they may have about it. Round up all of the client’s belongings, such as halters, leads and blankets, and make sure they go home neatly packaged, reasonably clean, and in good shape. If a sheet has been destroyed, or you can’t find the client’s grain bucket, let them know before they have a chance to think you lost it (or worse, that you kept it). Make sure the client’s horses leave clean, in good weight, and with feet trimmed, manes pulled and muzzles clipped. This is your time to shine, to bolster your image as a professional trainer who is organized and takes excellent care of horses and clients.
7. Leave the door open. For those clients whom you’d be happy to see return, be sure to let them know that they are welcome to come back if they change their mind. Some clients may leave thinking the grass is greener at another trainer’s barn, and then find out it’s not. Being gracious about their departure paves the way for them to come back to you after recognizing how good they really had it at your barn!
More Business Information for Horse Trainers
At Equine Legal Solutions, we hear a lot of horror stories involving clients leaving training barns. Often, shortly after informing the trainer of their decision to leave, the client receives a huge bill containing unexpected charges, and the trainer insists on payment in full before the trainer will release the client’s horse. Occasionally, the client’s announcement results in an ugly confrontation at the barn or a horse show. Once in a while, the client even fears for the safety of their horses. As a result, the client does develop negative feelings about the trainer, feelings that probably wouldn’t have existed had the trainer handled the situation more professionally.
How, then, should you handle a client’s departure announcement?
1. Be polite. Even if the client’ s departure is a true blessing and you can’t wait to see the client and their good-for-nothing horses disappear down your driveway, it doesn’t cost you anything to find something nice to say. Even in the worst client relationships, you can find something polite and truthful to offer. For example, “I sure have appreciated your business, and I wish you the best.” Treating even the worst clients with respect may pay dividends later in the form of referrals, or at the very least, maintain your own dignity.
2. Get the facts. Rather than relying on secondhand information, you should ask the client, directly and sincerely (and as soon as possible) why they are leaving. Sometimes, the client may be uncomfortable voicing their concerns, but even in those situations, you can usually read between the lines. Whatever the client’s reasons for leaving are, you need to know – the future of your business may depend upon it.
3. Use the facts. The client’s reasons for leaving may be indicative of a problem in your program that needs to be addressed. Horse training business problems aren’t always obvious, and they aren’t always directly related to the horses. Maybe another client is driving your customers away with their difficult personality, or possibly another trainer is openly poaching your clients. Perhaps the vet or farrier you use charges more than your clients can handle. The client might even offer you a wakeup call, such as that one of your employees is behaving inappropriately with your customers. Once in a while, the client’s reasons for leaving may offer a crystal-ball peek at larger horse market trends, such as changes toward or away from particular disciplines and breeds. Even in situations where the client’s reasons for leaving don’t have anything to do with the horse industry in general or your training program in particular, you can at least rest assured that the client’s departure was not your fault. Whatever the client’s feedback is, you can use it.
4. Don’t hold the client hostage. If your client wants to leave before the notice period specified in your training agreement or boarding contract, let them. If the trainer-client relationship is ending on a good note, you won’t want to risk ruining that, and you won’t gain anything more than just a few dollars by trying to make them stay. When the relationship is acrimonious, an early departure reduces the chance the departing client will be around to poison your relationships with your other customers, and it also shortens the amount of time you’ll have to continue dealing with a difficult situation. Either way, you win.
5. Don’t hold the client’s horses hostage. While many states have laws that provide horse trainers with automatic liens on horses in training for unpaid bills, it’s rarely sensible to enforce your lien rights. While you may be right to think that once you release the horses, the client has no incentive to pay their bill, you have to consider the costs of enforcing your lien. Just like it doesn’t usually make sense to enforce a boarding stable lien, enforcing a horse trainer’s lien is usually cost-ineffective. Instead, the better business strategy for dealing with a client who isn’t paying is (a) minimizing your costs and risks by getting the horses and the client out of the barn as soon as possible, and (b) if necessary, taking the client to small claims court for the unpaid boarding and training bills.
6. Make the transition as smooth as possible. A client’s departure is your last chance to make a good impression on the client, and it’s a great opportunity to make new contacts, or renew old relationships. If the client is going to another trainer, call them up and offer them any information that might be helpful, such as medications and supplements the horses need. You just never know when that other trainer might refer someone to you, or even be judging you at a show. Find out when your client’s horses are leaving, and make sure there is someone there to meet the hauler and help load the horses. Promptly send out a final bill to the client, and answer any questions they may have about it. Round up all of the client’s belongings, such as halters, leads and blankets, and make sure they go home neatly packaged, reasonably clean, and in good shape. If a sheet has been destroyed, or you can’t find the client’s grain bucket, let them know before they have a chance to think you lost it (or worse, that you kept it). Make sure the client’s horses leave clean, in good weight, and with feet trimmed, manes pulled and muzzles clipped. This is your time to shine, to bolster your image as a professional trainer who is organized and takes excellent care of horses and clients.
7. Leave the door open. For those clients whom you’d be happy to see return, be sure to let them know that they are welcome to come back if they change their mind. Some clients may leave thinking the grass is greener at another trainer’s barn, and then find out it’s not. Being gracious about their departure paves the way for them to come back to you after recognizing how good they really had it at your barn!
More Business Information for Horse Trainers
Labels: horse training
Friday, February 22, 2008
What Kind of Insurance Does a Trainer Need?
If you are training horses and receiving compensation for training, you will need insurance. Although Equine Legal Solutions is a law firm and does not sell insurance, we often assist clients in determining their coverage needs and in negotiating coverage issues with their insurers. Here are the types of insurance we recommend, and reasons why they are advisable to have.
Care, Custody and Control Insurance
If you have horses in training and are primarily responsible for their care, you need care, custody and control insurance. CCC insurance is very limited in scope and only provides coverage for injuries to or death of clients' horses in your care. The limits of CCC insurance are typically relatively low and therefore are often well below the fair market value of valuable horses. For this reason, you may want to require your clients to purchase mortality insurance on their horses.
Note that even if you keep your clients' horses at a boarding stable that has CCC insurance, you will still want to have your own CCC insurance. If the facility owner's insurer has to pay out on a CCC claim regarding horses in your care, they may look to you to recoup their costs.
Commercial Liability Insurance
Commercial liability insurance is much broader in scope than CCC insurance. It covers most types of liability claims, including negligence. Even if you have a good training contract with a liability release, you can still be sued. In the United States, it seems that almost anyone can sue almost anyone else for anything. Therefore, one of the most valuable roles of commercial liability insurance is to pay for your legal defense in the event that you are sued (not to mention any actual judgment that might be issued against you). The average negligence lawsuit defense runs well into the tens of thousands of dollars in a case that goes to trial, so the cost of commercial liability insurance is money well spent.
If you train out of a facility owned by someone else, the facility owner will typically require all on-site trainers to provide proof of insurance, and to name the facility owner as an additional insured.
As with CCC insurance, even if you train out of a boarding facility that has its own commercial liability insurance, you will still want to have your own liability insurance. Your activities may not be covered by the facility's policy. Even if they are covered, if the facility's commercial liability insurer has to pay out on a claim related to your negligence (or alleged negligence), the insurer may pursue you for reimbursement if you are not listed as an insured party under the policy.
Property Insurance
If you own your own horse property, you will want to have casualty insurance that covers fire, etc. With rural properties, this type of insurance is often called a "farm and ranch policy."
Vehicle Insurance
If you have a truck and trailer, you will want to insure them as well. In many cases, your auto insurance will cover damage to the trailer you are towing (but NOT the contents of the trailer), so check with your insurance agent to clarify what your coverage terms are.
Equine Mortality, Major Medical and Loss of Use Insurance
If you have valuable horses of your own, you may want to consider insuring them, as your CCC insurance will not cover horses that belong to you. Mortality insurance generally makes sense only if you could not afford to replace your horse without undue financial hardship. Likewise, major medical insurance is recommended if you could not afford a several-thousand-dollar vet bill without breaking the bank. Loss of use insurance may be advisable if you have a horse whose value is heavily dependent upon his or her use (e.g., as a breeding stallion). Do be advised that some loss of use policies provide that the insurer may opt to take possession of the horse before they are obligated to pay the claim. If this would be unacceptable to you, loss of use insurance probably does not make sense for your situation.
Care, Custody and Control Insurance
If you have horses in training and are primarily responsible for their care, you need care, custody and control insurance. CCC insurance is very limited in scope and only provides coverage for injuries to or death of clients' horses in your care. The limits of CCC insurance are typically relatively low and therefore are often well below the fair market value of valuable horses. For this reason, you may want to require your clients to purchase mortality insurance on their horses.
Note that even if you keep your clients' horses at a boarding stable that has CCC insurance, you will still want to have your own CCC insurance. If the facility owner's insurer has to pay out on a CCC claim regarding horses in your care, they may look to you to recoup their costs.
Commercial Liability Insurance
Commercial liability insurance is much broader in scope than CCC insurance. It covers most types of liability claims, including negligence. Even if you have a good training contract with a liability release, you can still be sued. In the United States, it seems that almost anyone can sue almost anyone else for anything. Therefore, one of the most valuable roles of commercial liability insurance is to pay for your legal defense in the event that you are sued (not to mention any actual judgment that might be issued against you). The average negligence lawsuit defense runs well into the tens of thousands of dollars in a case that goes to trial, so the cost of commercial liability insurance is money well spent.
If you train out of a facility owned by someone else, the facility owner will typically require all on-site trainers to provide proof of insurance, and to name the facility owner as an additional insured.
As with CCC insurance, even if you train out of a boarding facility that has its own commercial liability insurance, you will still want to have your own liability insurance. Your activities may not be covered by the facility's policy. Even if they are covered, if the facility's commercial liability insurer has to pay out on a claim related to your negligence (or alleged negligence), the insurer may pursue you for reimbursement if you are not listed as an insured party under the policy.
Property Insurance
If you own your own horse property, you will want to have casualty insurance that covers fire, etc. With rural properties, this type of insurance is often called a "farm and ranch policy."
Vehicle Insurance
If you have a truck and trailer, you will want to insure them as well. In many cases, your auto insurance will cover damage to the trailer you are towing (but NOT the contents of the trailer), so check with your insurance agent to clarify what your coverage terms are.
Equine Mortality, Major Medical and Loss of Use Insurance
If you have valuable horses of your own, you may want to consider insuring them, as your CCC insurance will not cover horses that belong to you. Mortality insurance generally makes sense only if you could not afford to replace your horse without undue financial hardship. Likewise, major medical insurance is recommended if you could not afford a several-thousand-dollar vet bill without breaking the bank. Loss of use insurance may be advisable if you have a horse whose value is heavily dependent upon his or her use (e.g., as a breeding stallion). Do be advised that some loss of use policies provide that the insurer may opt to take possession of the horse before they are obligated to pay the claim. If this would be unacceptable to you, loss of use insurance probably does not make sense for your situation.
Labels: equine insurance, horse training
Wednesday, February 13, 2008
Top Five Foolish Reasons Not to Get Liability Insurance
If you are doing business, no matter how small or unprofitable your business is, you need commercial liability insurance. Period. Here are some of the common reasons we hear about why trainers, boarding stables, etc. do not have liability insurance, and why those reasons don't make sense.
(1) I Don't Need Insurance Because All of My Clients Sign Liability Releases
Liability releases are not a substitute for liability insurance, because insurance and contracts play very different roles. Contracts that include liability releases serve a number of valuable functions. They help set appropriate expectations for a business relationship so that the parties are less likely to have disputes. Contracts also provide the parties with legally enforceable rights. Liability releases discourage injured parties from suing and also help prevent them from prevailing in a lawsuit.
In contrast, insurance serves other valuable functions. If you are sued and the claim is covered by your insurance policy, your insurer will manage your defense and pay for your legal fees and court costs. Without insurance, if you are sued, you will have to pay for your legal defense out of pocket. The cost of defending an average civil suit easily runs into the tens of thousands of dollars, and an average retainer for a civil litigation attorney in a relatively small case is $10,000 - $20,000. Unless you have a contract providing for an award of attorneys' fees and costs to the winner of a lawsuit, you will have no way to recoup the cost of your legal defense, even if you ultimately prevail in the lawsuit. Representing yourself as a defendant in a lawsuit is simply not a viable option, as the other side's attorney will certainly use your lack of legal expertise to his or her client's advantage, and many judges are impatient with do-it-yourself litigants.
Your insurance will also cover the cost of any judgment that is issued against you in a lawsuit (up to your policy limits), provided that the claim that is the subject of the lawsuit is covered by your policy. Without such coverage, you will be forced to pay the judgment out of your own pocket, leading to potential financial ruin. If you cannot afford to pay the judgment and default in payment, the judgment holder can garnish your business' income and seize your business' assets to pay the judgment. If you do business as a partnership or sole proprietorship rather than a corporation, your personal assets will also be subject to seizure and your wages can be garnished to pay the judgment. Not all legal judgments are dischargeable in bankruptcy, either.
(2) I Don't Need Insurance Because My State Has an Equine Activity Statute
Equine activity statutes are often misinterpreted as "get out of lawsuit free" laws. In reality, equine activity statutes are limited in scope and other than serving to discourage some potential plaintiffs, they do not prevent lawsuits at all. Rather, much like a liability release, equine activity statutes provide a potential affirmative defense to claims in a lawsuit. As described in (1) above, defending a lawsuit and paying a judgment (functions typically performed by an insurer) can be financially ruinous.
(3) I Don't Need Insurance Because I Don't Have Very Many Clients
If you are accepting compensation for boarding, training, lessons or other horse-related services, you are in business. It only takes one client to sue you. Horses are very unpredictable and accidents can happen even in the safest possible environment. Even if you have only one client and you feel confident that they would never sue you, their insurance company or family may sue you if they are injured or killed in connection with your activities.
(4) I Can't Afford Liability Insurance
Many horse-related businesses are not particularly lucrative, and therefore it is often tempting to go without insurance because it seems cost-ineffective. However, given that the cost of defending just one lawsuit could be tens of thousands of dollars and all of your assets (however modest) are at risk, you really can't afford NOT to have insurance.
(5) I Don't Need Insurance Because I Don't Have Any Assets
Closely related to (4) above, this excuse also doesn't make financial sense. If you are not making any money and have very few assets, your financial situation makes it even less likely that you can afford the high cost of defending a lawsuit. Insurance serves to protect the assets that you do have.
(1) I Don't Need Insurance Because All of My Clients Sign Liability Releases
Liability releases are not a substitute for liability insurance, because insurance and contracts play very different roles. Contracts that include liability releases serve a number of valuable functions. They help set appropriate expectations for a business relationship so that the parties are less likely to have disputes. Contracts also provide the parties with legally enforceable rights. Liability releases discourage injured parties from suing and also help prevent them from prevailing in a lawsuit.
In contrast, insurance serves other valuable functions. If you are sued and the claim is covered by your insurance policy, your insurer will manage your defense and pay for your legal fees and court costs. Without insurance, if you are sued, you will have to pay for your legal defense out of pocket. The cost of defending an average civil suit easily runs into the tens of thousands of dollars, and an average retainer for a civil litigation attorney in a relatively small case is $10,000 - $20,000. Unless you have a contract providing for an award of attorneys' fees and costs to the winner of a lawsuit, you will have no way to recoup the cost of your legal defense, even if you ultimately prevail in the lawsuit. Representing yourself as a defendant in a lawsuit is simply not a viable option, as the other side's attorney will certainly use your lack of legal expertise to his or her client's advantage, and many judges are impatient with do-it-yourself litigants.
Your insurance will also cover the cost of any judgment that is issued against you in a lawsuit (up to your policy limits), provided that the claim that is the subject of the lawsuit is covered by your policy. Without such coverage, you will be forced to pay the judgment out of your own pocket, leading to potential financial ruin. If you cannot afford to pay the judgment and default in payment, the judgment holder can garnish your business' income and seize your business' assets to pay the judgment. If you do business as a partnership or sole proprietorship rather than a corporation, your personal assets will also be subject to seizure and your wages can be garnished to pay the judgment. Not all legal judgments are dischargeable in bankruptcy, either.
(2) I Don't Need Insurance Because My State Has an Equine Activity Statute
Equine activity statutes are often misinterpreted as "get out of lawsuit free" laws. In reality, equine activity statutes are limited in scope and other than serving to discourage some potential plaintiffs, they do not prevent lawsuits at all. Rather, much like a liability release, equine activity statutes provide a potential affirmative defense to claims in a lawsuit. As described in (1) above, defending a lawsuit and paying a judgment (functions typically performed by an insurer) can be financially ruinous.
(3) I Don't Need Insurance Because I Don't Have Very Many Clients
If you are accepting compensation for boarding, training, lessons or other horse-related services, you are in business. It only takes one client to sue you. Horses are very unpredictable and accidents can happen even in the safest possible environment. Even if you have only one client and you feel confident that they would never sue you, their insurance company or family may sue you if they are injured or killed in connection with your activities.
(4) I Can't Afford Liability Insurance
Many horse-related businesses are not particularly lucrative, and therefore it is often tempting to go without insurance because it seems cost-ineffective. However, given that the cost of defending just one lawsuit could be tens of thousands of dollars and all of your assets (however modest) are at risk, you really can't afford NOT to have insurance.
(5) I Don't Need Insurance Because I Don't Have Any Assets
Closely related to (4) above, this excuse also doesn't make financial sense. If you are not making any money and have very few assets, your financial situation makes it even less likely that you can afford the high cost of defending a lawsuit. Insurance serves to protect the assets that you do have.
Labels: equine insurance, equine liability, horse boarding, horse training
Friday, October 19, 2007
It's Your Property and You Can Decide Who Does Business There
Many boarding stable owners have asked ELS whether they have any say in who comes onto their property. They have expressed concern about the professionalism and methods of various trainers and instructors, and often are worried that they may have liability if the service providers hurt someone on their property. These concerns are very realistic. Even if the boarding stable doesn't have any actual liability for an incident that occurs on its property, the stable is still likely to be named in a lawsuit and therefore will have to pay to defend itself (or make a claim on its own insurance policy for the defense).
Contrary to popular opinion, boarding stables are not "public places" where anyone can conduct any horse-related business. As the property owner (or the leaseholder), you can certainly set reasonable policies about who is and is not permitted onto your property. In particular, no one should be earning income from activities taking place on your property without your knowledge and permission. Doing business on your property is a privilege and not a right.
ELS recommends that boarding stables require all independent contractors, including but not limited to trainers, instructors and persons who provide grooming and turnout services, to have commercial liability insurance. All such contractors should provide proof of insurance to the boarding stable, and name the boarding stable owners as additional named insureds on their policies. When adopting a contractor policy, the stable should put the requirements in writing and post them prominently at barn entrances and other locations where boarders and contractors will see them. ELS recommends sending a copy of the policy to each boarder with a cover letter introducing the new policy and noting that any contractors that the boarders invite onto the premises will have to comply with the policy. The barn manager should have copies of the policy on hand so that they can approach new contractors and inform them of the barn policy.
Contrary to popular opinion, boarding stables are not "public places" where anyone can conduct any horse-related business. As the property owner (or the leaseholder), you can certainly set reasonable policies about who is and is not permitted onto your property. In particular, no one should be earning income from activities taking place on your property without your knowledge and permission. Doing business on your property is a privilege and not a right.
ELS recommends that boarding stables require all independent contractors, including but not limited to trainers, instructors and persons who provide grooming and turnout services, to have commercial liability insurance. All such contractors should provide proof of insurance to the boarding stable, and name the boarding stable owners as additional named insureds on their policies. When adopting a contractor policy, the stable should put the requirements in writing and post them prominently at barn entrances and other locations where boarders and contractors will see them. ELS recommends sending a copy of the policy to each boarder with a cover letter introducing the new policy and noting that any contractors that the boarders invite onto the premises will have to comply with the policy. The barn manager should have copies of the policy on hand so that they can approach new contractors and inform them of the barn policy.
Labels: equine liability, horse boarding, horse training
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