Court Favors Lauffer in Rachel Alexandra Case
The Kentucky Court of Appeals on Oct. 19 upheld a Circuit Court's decision that Jerry Brown, who operates speed-figure provider Thoro-Graph, should receive $25,000 for his advisory role in a private sale of eventual Horse of the Year Rachel Alexandra.
The case stems from dealings between Brown and Thoroughbred owner James Lauffer, who purchased a half-interest in Rachel Alexandra for $500,000 in Nov. 2008 from her breeder Dolphus Morrison. In 2009 Rachel Alexandra won the Kentucky Oaks (gr. I) and was then sold to Jess Jackson's Stonestreet Stables and Harold McCormick for $10 million and went on to defeat males in the Preakness Stakes (gr. I) in her next start.
The Circuit Court's May 2010 finding determined that Brown should be paid $25,000 under the theory of quantum meruit. In the appeal, Brown, who in the Circuit Court case was seeking nearly $5 million, argued the Circuit Court was correct in its finding but had incorrectly determined the amount. Brown thought the amount should be $271,423, arguing that "Quantum meruit is an equitable doctrine granting one 'who has rendered services in a quasi-contractual relationship the reasonable value of services rendered.'"
Brown had argued that his standard commission was 5% of the initial sales price, 5% of money earned by the horse, and 5% of any increase in value determined by resale price or appraised value.
The opinion of the appeals court, a unanimous decision by the three judges, noted the trial court heard from numerous witnesses, all of whom indicated a simple 5% commission was the industry standard for agents who assisted a buyer with a horse purchase. The appeals court found the $25,000 fee was appropriate under quantum meruit.
"We see nothing in the record to significantly distinguish the services rendered by Thoro-Graph from services that typically garner a 5% commission within the horse racing industry," the appeals court said. "If anything, Brown and Thoro-Graph provided fewer services than the typical bloodstock agent."
Lauffer had filed his own appeal, saying based on Kentucky law requiring written agreements between buyers and agents that he should not have to pay any commission. But the appeals court said the trial court acted appropriately in its reading of those laws and not applying them to this case.
Tom Miller, who represents Lauffer, said his client was satisfied with the decision of the appeals court.
Jon Fleischaker, an attorney for Brown, said they have not decided if they will pursue an additional appeal. In an e-mail, Brown said he disagrees with the court's ruling on the amount he should be paid for his work but is glad there is a record of what transpired in the court documents.
"We believe there are clear errors in the ruling and plan to contest it," Brown said. "But I will leave the legal analysis to the lawyers."
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