KY Supreme Court Declines 'Rachel' Fee Case

KY Supreme Court Declines 'Rachel' Fee Case
Photo: Bill Denver/Equi-Photo
Rachel Alexandra earned more than $3.5 million.

The Supreme Court of Kentucky has declined to review lower court rulings over the $25,000 awarded to Jerry Brown, who operates Thoro-Graph, for his advisory role in the sale of Horse of the Year Rachel Alexandra.

Brown and an agent with whom he worked had initially brought the availability of Rachel Alexandra to be purchased from her owner-breeder Dolphus Morrison to the attention of horse owner Mike Lauffer, insurance agent and horse owner Ron Kirk, and Lexington businessman Greg McDonald. That deal did not transpire, with Lauffer declining because he did not agree with the commission being charged by Brown.

Brown said 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.

A few days later, Lauffer privately purchased a half interest in the daughter of Medaglia d'Oro   from Morrison for $500,000.

Following her victory in the 2009 Kentucky Oaks (gr. I), Rachel Alexandra was sold to Stonestreet Stables and Harold McCormick for $10 million and then defeated males in the Preakness Stakes (gr. I).

The state Court of Appeals had previously upheld a Circuit Court decision that said Brown was entitled to a fee of 5%$25,000considered the industry standard for commissions to agents who assist buyers. The Circuit Court ruled that Brown should be paid $25,000 under the "theory of quantum meruit"

In his appeal, Brown agreed with the Circuit Court's decision that said he was entitled to a fee under "theory of quantum meruit," but disagreed with the monetary award, contending it should be $271,423 based on his standard rates which the partnership was notified of in advance. In his initial suit, Brown was seeking nearly $5 million. (See related story)

Rachel Alexandra, who earned more than $3.5 million and won five grade I stakes, produced foals in 2012 and 2013 but was not bred in 2013.

Following the Supremet Court's ruling, Brown reiterated that in his legal arguments that the amount he was seeking was based on his standard fee as a consultant and that the court had agreed that that his role was not that of agent.

Brown said it is contradictory that the Supreme Court ordered the lower court decision in his case not to be published, meaning it cannot be used as precedent in other cases, but yet not hear the case itself.

"There is an inherent contradiction in (the Supreme Court) saying the appeals court ruling has enough problems it should not be used as precedent but also not willing to right the wrong," Brown said. "They ordered the appeals court decision not to be published. The reason they don't want it to be used as precedent is because they know it has problems.

"This has made me lose faith in the judicial system. I am not convinced your rights are going to be protected. I don't think state of Kentucky really understands what they do when they do something like this. I would certainly advise anybody outside the state of Kentucky considering doing business in that state to think twice about."
 

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