Court Opinion

ID: 8684399
Source: CourtListenerOpinion
Date Created: 2022-11-25 15:08:08.591509+00
Date Added: 2024-06-11T16:57:33.941929
License: Public Domain

RENDERED: NOVEMBER 18, 2022; 10:00 A.M.
                         TO BE PUBLISHED

               Commonwealth of Kentucky
                         Court of Appeals

                            NO. 2022-CA-0195-MR

KENNETH MCPEEK RACING
STABLE, INC.                                                      APPELLANT

                APPEAL FROM FAYETTE CIRCUIT COURT
v.            HONORABLE LUCY ANNE VANMETER, JUDGE
                       ACTION NO. 19-CI-00165

NORMANDY FARM, LLC                                                  APPELLEE

                              OPINION
                      REVERSING AND REMANDING

                                 ** ** ** ** **

BEFORE: ACREE, MCNEILL, AND L. THOMPSON, JUDGES.

THOMPSON, L., JUDGE: Kenneth McPeek Racing Stable, Inc. appeals from an

order of the Fayette Circuit Court which granted a motion for summary judgment

in favor of Normandy Farm, LLC. We conclude that the trial court erred in

granting summary judgment; therefore, we reverse and remand.
                     FACTS AND PROCEDURAL HISTORY

            Kenneth McPeek is a licensed thoroughbred horse trainer doing

business as Kenneth McPeek Racing Stables, Inc. In 2015, Mr. McPeek provided

training services to Appellee pursuant to an oral agreement with its then owner,

Nancy Polk. The agreement included payment of daily board and training fees. In

addition, Mr. McPeek would receive a 12% commission on all purses won by

horses he trained. Mr. McPeek also alleges that he was to receive a 5%

commission when any horse he trained was sold.

            In 2016, Mr. McPeek began training DADDY’S LIL DARLING and

the horse began racing in June or July of that year. DADDY’S LIL DARLING

won $1,335,305 in purses and Mr. McPeek received over $160,000 in commissions

from those purses.

            Following the death of Ms. Polk in August of 2018, Appellee’s new

owners terminated the relationship with Mr. McPeek and he performed no further

services for Appellee. In November of 2018, Appellee’s new owners sold

DADDY’S LIL DARLING for $3,500,000. Soon thereafter, Mr. McPeek sent

Appellee an invoice for $175,000, representing the 5% sale commission on

DADDY’S LIL DARLING. Appellee refused to pay the money. In January of

2019, Appellant brought the underlying suit alleging claims for breach of contract,

quantum meruit, and breach of implied contract in fact.

                                        -2-
             On December 27, 2021, Appellee moved for summary judgment.

Appellee claimed that Kentucky Revised Statutes (KRS) 230.357(11) precluded

Appellant from recovering. KRS 230.357(11) states:

             No contract or agreement for payment of a commission,
             fee, gratuity, or any other form of compensation in
             connection with any sale, purchase, or transfer of an
             equine shall be enforceable by way of an action or
             defense unless:

                   (a) The contract or agreement is in writing
                   and is signed by the party against whom
                   enforcement is sought; and

                   (b) The recipient of the compensation
                   provides a written bill of sale for the
                   transaction in accordance with subsections
                   (2)(a) and (3) of this section.

Appellee argued that because there was no written contract, Appellant was not

entitled to any proceeds from the sale of the horse. Appellant responded to the

motion by arguing that the statute did not apply to the training agreement at issue

because the 5% commission was an additional fee for training the horse and not a

commission related to the sale of the horse.

             The trial court agreed with Appellee that KRS 230.357(11) applied

and Appellant could not recover because the training agreement was not in writing.

The court also found that KRS 230.357(11) precluded Appellant from receiving

equitable relief. This appeal followed.

                                          -3-
                            STANDARD OF REVIEW

                     The standard of review on appeal of a summary
             judgment is whether the trial court correctly found that
             there were no genuine issues as to any material fact and
             that the moving party was entitled to judgment as a
             matter of law. . . . “The record must be viewed in a light
             most favorable to the party opposing the motion for
             summary judgment and all doubts are to be resolved in
             his favor.” Summary “judgment is only proper where the
             movant shows that the adverse party could not prevail
             under any circumstances.” Consequently, summary
             judgment must be granted “[o]nly when it appears
             impossible for the nonmoving party to produce evidence
             at trial warranting a judgment in his favor[.]”

Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996) (citations omitted).

“Because summary judgment involves only legal questions and the existence of

any disputed material issues of fact, an appellate court need not defer to the trial

court’s decision and will review the issue de novo.” Lewis v. B & R Corporation,

56 S.W.3d 432, 436 (Ky. App. 2001). Furthermore, statutory interpretation is a

legal issue which we also review de novo. Commonwealth v. Long, 118 S.W.3d

178, 181 (Ky. App. 2003).

                                     ANALYSIS

             Appellant argues on appeal that KRS 230.357(11) does not apply to

the agreement in this case. We believe it would be beneficial if we were to set

forth the entire statute, not just the single subsection at issue. This allows us to get

a full picture of what the statute requires and what the statute seeks to regulate.

                                          -4-
(1) For purposes of this section, “equine” means a horse
of any breed used for racing or showing, including
prospective racehorses, breeding prospects, stallions,
stallion seasons, broodmares, yearlings, or weanlings, or
any interest therein.

(2) Any sale, purchase, or transfer of an equine shall be:

      (a) Accompanied by a written bill of sale or
      acknowledgment of purchase and security
      agreement setting forth the purchase price;
      and

      (b) Signed by both the purchaser and the
      seller or their duly authorized agent or, in a
      transaction solely relating to a season or
      fractional interest in the stallion, signed by
      the syndicate manager or stallion manager.

(3) In circumstances where a transaction described in
subsection (2) of this section is accomplished through a
public auction the bill of sale requirement described in
subsection (2) of this section may be satisfied by the
issuance of an auction receipt, generated by the auction
house, and signed by the purchaser or the purchaser’s
duly authorized agent. An agent who signs an auction
receipt on behalf of his or her principal shall do so only if
authorized in writing. When presented with such
authorization, all other parties to the transaction may
presume that an agent signing on behalf of his or her
principal is duly authorized to act for the principal.

(4) It shall be unlawful for any person to act as an agent
for both the purchaser and the seller, which is hereby
defined as a dual agent, in a transaction involving the
sale, purchase, or transfer of an interest in an equine
without:

      (a) The prior knowledge of both the
      purchaser and the seller; and

                             -5-
      (b) Written consent of both the purchaser
      and the seller.

(5) It shall be unlawful for a person acting as an agent for
either a purchaser or a seller or acting as a dual agent in a
transaction involving the sale, purchase, or transfer of an
equine to receive compensation, fees, a gratuity, or any
other item of value in excess of five hundred dollars
($500) and related directly or indirectly to such
transaction from an individual or entity, including any
consigner involved in the transaction, other than an
agent’s principal, unless:

      (a) The agent receiving and the person or
      entity making the payment disclose in
      writing the payment to both the purchaser
      and seller; and

      (b) Each principal for whom the agent is
      acting consents in writing to the payment.

(6) Any person acting as an agent for a purchaser or
seller or acting as a dual agent in a transaction involving
the sale, purchase, or transfer of an equine shall, upon
request by his or her principal or principals, furnish
copies of all financial records and financial documents in
the possession or control of the agent pertaining to the
transaction to the principal or principals. For purposes of
this subsection, financial records shall not include the
agent’s or owner’s work product used to internally
evaluate the equine.

(7) Any person injured by a violation of this section shall
recover treble damages from persons or entities violating
this section, and the prevailing party in any litigation
under this section shall be entitled to an award of costs of
the suit, reasonable litigation expenses, and attorney’s
fees. As used in this section, treble damages shall equal
three (3) times the sum of:

                             -6-
      (a) The difference, if any, between the price
      paid for the equine and the actual value of
      the equine at the time of sale; and

      (b) Any payment made in violation of
      subsection (5) of this section.

(8) Nothing in this section shall require disclosure of
compensation arrangements between a principal and an
agent where no dual agency exists, where the agent is
acting solely for the benefit of his or her principal, and
where the agent is being compensated solely by his or her
principal.

(9) Notwithstanding any provision of the Kentucky
Revised Statutes to the contrary, for transactions
contemplated by this section that are accomplished
through a public auction, this section shall not require
disclosure of the reserves, the identity of the principals,
or the auctioneer’s commissions. Auction companies
shall not be deemed to be dual agents for all purposes
under this section.

(10) The provisions of this section shall not apply to the
sale, purchase, or transfer of an equine used for showing
if the sale, purchase, or transfer does not exceed ten
thousand dollars ($10,000).

(11) No contract or agreement for payment of a
commission, fee, gratuity, or any other form of
compensation in connection with any sale, purchase, or
transfer of an equine shall be enforceable by way of an
action or defense unless:

      (a) The contract or agreement is in writing
      and is signed by the party against whom
      enforcement is sought; and

      (b) The recipient of the compensation
      provides a written bill of sale for the

                             -7-
                     transaction in accordance with subsections
                     (2)(a) and (3) of this section.

             (12) No person shall be held liable under this section
             unless that person has actual knowledge of the conduct
             constituting a violation of this section.

KRS 230.357. In the most simplistic of terms, this statute requires that a seller and

buyer of a horse, or their agents, must have a written agreement, signed by both,

for the sale, purchase, or transfer of a horse.

             When engaging in statutory interpretation,

             our main goal is “to give effect to the intent of the
             General Assembly.” The clearest indicator of that intent
             is the “language the General Assembly chose, either as
             defined by the General Assembly or as generally
             understood in the context of the matter under
             consideration.” And “[w]here the words used in a statute
             are clear and unambiguous and express the legislative
             intent, there is no room for construction and the statute
             must be accepted as written.”

Bell v. Bell, 423 S.W.3d 219, 223 (Ky. 2014) (footnotes and citations omitted).

“Generally, [t]he statute must be read as a whole and in context with other parts of

the law. All parts of the statute must be given equal effect so that no part of the

statute will become meaningless or ineffectual.” Kentucky Department of

Corrections v. Dixon, 572 S.W.3d 46, 49 (Ky. 2019) (internal quotation marks and

citation omitted).

             We agree with Appellant that KRS 230.357(11) does not apply in this

case. After examining the statute as a whole, we believe that it only covers

                                           -8-
agreements to sell, purchase, or transfer horses between a buyer and a seller, or

their agents. The statute requires receipts and bills of sale, neither of which would

be available for the agreement between Appellant and Appellee. The agreement at

issue in this case was an agreement to train horses. It was an agreement for

services, not an agreement to sell a horse.

              Appellant would receive various fees and commissions in exchange

for his services. One such fee would only arise should the horse be sold. Even

though the commission revolved around the sale of a horse, it was still a fee for

services, not a fee for the selling or purchasing of a horse. In other words, the

agreement between Appellant and Appellee was not an agreement in “connection

with any sale, purchase, or transfer of an equine[.]” KRS 230.357(11). Appellee

was not selling a horse to Appellant and Appellant was not seeking to purchase a

horse from Appellee.

              We believe our conclusion is supported by the only case which has

previously discussed KRS 230.357(11). In Thoro-Graph, Inc. v. Lauffer, Nos.

2010-CA-000891-MR and 2010-CA-000914-MR, 2012 WL 5038254 (Ky. App.

Oct. 19, 2012), discretionary review denied and ordered not to be published (Aug.

21, 2013),1 James Lauffer purchased a fifty percent interest in a racehorse named

1
 This case is cited pursuant to Kentucky Rules of Civil Procedure (CR) 76.28(4)(c). It is not
being cited as binding precedent, but only as persuasive authority.

                                              -9-
RACHEL ALEXANDRA. He purchased this interest based in part on the

recommendation of Jerry Brown, the owner of Thoro-Graph, Inc. Thoro-Graph

examines thoroughbred horses and consults with people looking to purchase or sell

said horses.

               Due to certain circumstances not relevant to our case, Mr. Brown gave

his recommendation to Mr. Lauffer before Mr. Lauffer was aware of Mr. Brown’s

commission rates. Mr. Lauffer believed these rates were too high. Mr. Lauffer

ultimately bought RACHEL ALEXANDRA, but only offered to pay Mr. Brown a

smaller fee. Mr. Brown accepted the lower fee because he did not want to litigate

for the higher amount.

               Mr. Lauffer later filed a declaratory action in which he argued that he

did not have to pay Mr. Brown or Thoro-Graph any further amounts. The trial

court held that there was no agreement between Mr. Lauffer and Mr. Brown

because Mr. Lauffer was not aware of Mr. Brown’s fee prior to Mr. Brown giving

his recommendation. The trial court also held that Mr. Brown did give Mr. Lauffer

valuable information; therefore, Mr. Brown was entitled to some compensation

based on quantum meruit.

               Mr. Lauffer appealed that decision and argued to another panel of this

Court that KRS 230.357(11) applied and barred any compensation for Mr. Brown.

Mr. Lauffer claimed that because he was purchasing a racehorse, any agreement

                                          -10-
between him and Mr. Brown should have been in writing. The Court disagreed

and held that the agreement between Mr. Brown and Mr. Lauffer was an agreement

for services, not an agreement for the sale or purchase of a racehorse. Lauffer,

2012 WL 5038254, at *5.

                                      CONCLUSION

               Just as in Lauffer, the agreement at issue here is an agreement for

services, not an agreement for the sale or purchase of a racehorse. Based on the

foregoing, we conclude that KRS 230.357(11) does not apply to this case;

therefore, the trial court erred in granting summary judgment in favor of Appellee.

We reverse and remand for further proceedings.2

               ALL CONCUR.

    BRIEFS FOR APPELLANT:                       BRIEF FOR APPELLEE:

    John D. Cox                                 J. Mel Camenisch
    Louisville, Kentucky                        H. Derek Hall
                                                Lexington, Kentucky

2
 We make no decision as to whether the agreement at issue is valid or if Appellant and Appellee
agreed to the 5% fee upon the sale of the horse.

                                             -11-