This blog, written by Thomas E. Rutledge, focuses primarily on business entity law in Kentucky. Postings on contract law, contractual and statutory construction, and the entity law of other jurisdictions appear as well. There may as well be some random discussions of classical, medieval and renaissance history.
Tuesday, March 17, 2015
Federal District Court Enforce Exclusive Remedy Terms of Thoroughbred Horse Sale Agreement, Applies Economic Loss Doctrine to Preclude Fraud Claim
District Court Enforce Exclusive Remedy Terms of Thoroughbred Horse Sale Agreement,
Applies Economic Loss Doctrine to Preclude Fraud Claim
recent decision from the Federal District Court, it held that the specific terms
of the conditions of sale utilized by Keeneland would be enforced to the effect
that a horse purchaser could not seek redress on a sale as he waited too long
to bring a complaint.Further, the Court
found that allegations of fraud are barred by the economic loss doctrine.Biszantz
v. Stevens Thoroughbreds, LLC, No. 5:13-CV-348-REW, 2015 WL 574594 (E.D.
Ky. Feb. 11, 2015).
Gary Biszantz, when first reading
this decision, must have known it was not going to go well for him when the
first paragraph recited:
presents no genuine dispute of any material fact, and each of Plaintiff’s
claims fails as a matter of law. Mr. Biszantz, an experienced horseman who
voluntarily entered an arms’ length transaction covered by the highly
predictable and demanding Keeneland Conditions of Sale, seeks to evade the
effect of those conditions over just satisfaction with the results of the
bargain; this he cannot do, on this record, under Kentucky contract (or tort)
the factual record recited in the decision is long, suffice it to say that
Stephens, in connection with efforts to sell the thoroughbred Salina, deposited
certain records with Keeneland.There
was a question as to whether everything that should have been deposited
actually was, and it is clear that certain records were missing.Still, Biszantz purchased Salina and began
training the horse; that training proceeded well for at least several
months.When medical issues arose
Biszantz sought to set aside the transaction.
failures in disclosure as to Salina, the Court reviewed and applied the
Keeneland Conditions of Sale (the “COS”).They afforded Biszantz certain rights available within certain time
limitations; the COS went on to provide that the remedies afforded under the
COS are exclusive.Finding that Biszantz
had not acted within the time limitations of the COS, the Court determined he
had no right to have the sale set aside.
also brought a claim for fraud.This
claim was rejected based on the Economic Loss Doctrine.Essentially, where the parties have by
contract, in this case the COS, comprehensively allocated the risks and rewards
of the transaction, including remedies for breach, they are restricted to an
action in contract and cannot morph the complaint into one arising in