Federal District Court Enforce Exclusive Remedy Terms of Thoroughbred Horse Sale Agreement, Applies Economic Loss Doctrine to Preclude Fraud Claim

Federal District Court Enforce Exclusive Remedy Terms of Thoroughbred Horse Sale Agreement, Applies Economic Loss Doctrine to Preclude Fraud Claim

 

In a 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:

 

The case 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) principles.

 

 

            While 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.

 

            Notwithstanding 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.

 

            Biszantz 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 tort.