United States District Court, E.D. Kentucky, Central Division, Lexington
GARY E. BISZANTZ, d/b/a GARY E. BISZANTZ RACING, Plaintiff,
STEPHENS THOROUGHBREDS, LLC, Defendant.
MEMORANDUM OPINION AND ORDER
ROBERT E. WIER, Magistrate Judge.
Defendant, Stephens Thoroughbreds, LLC ("Stephens"), moved for summary judgment on all claims made by Plaintiff, Gary E. Biszantz d/b/a Gary E. Biszantz Racing ("Biszantz"). DE #21. Plaintiff responded, DE #38, and Defendant replied, DE #39. The motion is ripe for consideration. For the following reasons, the Court GRANTS Defendant's motion for summary judgment (DE #21). 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 governed by the highly predictable and demanding Keeneland Conditions of Sale, seeks to evade the effect of those conditions over dissatisfaction with the results of the bargain; this he cannot do, on this record, under Kentucky contract (or tort) principles.
Stephens purchased a yearling filly, later to be named SALINA, on September 12, 2012. See DE #36-6 (Notice of Sale). Prior to this transaction, Stephens employed Dr. Greg BonenClark, an owner of Florida Equine Veterinary Associates ("FEVA"), to review the filly's records and radiographs in the Keeneland Repository. DE #36-3 (BonenClark Depo.), at 1, 3 (Depo. pp. 3, 10, 12). He performed this inspection on September 11, 2012. Id. at 3 (Depo. pp. 10, 12). Also prior to Stephens's purchase, Dr. Robert J. Hunt wrote a letter regarding SALINA dated August 22, 2012, that states, in its entirety, "On April 3, 2012, I performed arthroscopic surgery on the right hind fetlock." DE #36-12 (Hunt Letter). This letter was in the Repository, but John Stephens ("Mr. Stephens, " to differentiate him from Defendant) claims he did not learn of it until this litigation. DE #36-5 (Stephens Depo.), at 8 (Depo. p. 30). Dr. BonenClark saw the letter in the Repository, DE #36-3, at 4 (Depo. p. 15), and gave principal Mr. Stephens a general verbal summary of his report from the Repository review, id. (Depo. p. 16); see also DE ##36-5, at 9 (Depo. pp. 34-35); 36-3, at 4 (Depo. p. 16) ("I would have told him about it.").
After Stephens's purchase, Dr. BonenClark engaged in a series of direct examinations of the filly and monitored her condition over several months. He examined SALINA on September 21, 2012, concerning an abnormality with her left hind fetlock. Id. at 4 (Depo. pp. 13-14). In his patient history report of that day, Dr. BonenClark noted a "LEFT HIND MED SUSP[ENSORY] BRANCH GRAD[E] 2 LESION AT ATTACHMENT." Id. at 5 (Depo. pp. 17-18); DE #21-10, at 3. On December 8, 2012, Dr. BonenClark observed "sesamoiditis of the medial left hind medial sesamoid, " and he reported the sesamoiditis to either Mr. Stephens or Emily Dawson ("Dawson"). DE #36-3, at 8 (Depo. pp. 29-30). Dr. BonenClark took another ultrasound on December 12, 2012, and again noted "LEFT HIND SUSP BRANCH". DE #21-10, at 2. The size of the branch had decreased since September 21, an improvement. DE #36-3, at 8 (Depo. pp. 31-32). Dr. BonenClark again scanned the horse on January 28, 2013. Id. at 9 (Depo. p. 35). While the branch appeared marginally bigger on the ultrasound of that date, Dr. BonenClark advised that the "angle of the way you hold the probe can change the size you measured" and that the size thus can be variable. Id. at 10 (Depo. pp. 38-39); see also DE #36-15 (Bramlage Depo.), at 11 (Depo. p. 43) (agreeing). The treatment record indicates "NO CHANGE" on January 28. DE #21-10, at 2. While Dr. BonenClark had continued concern about the January 28 ultrasound, he only stressed patience-"take your time"-to Mr. Stephens and Dawson. DE #36-3, at 12 (Depo. p. 47). The patient history was never provided to Defendant, and the evidence is that Dr. BonenClark never told Mr. Stephens or Dawson of the "lesion, " at least as to that term. Id. at 12-13 (Depo. pp. 48-49).
Dawson is Mr. Stephens's assistant trainer. She was with Dr. BonenClark when he performed SALINA's September 2012 ultrasound. DE #36-8, at 8 (Depo pp. 30-31). Dr. BonenClark told her "the [suspensory] branch was enlarged[, ]" but he did not tell her there was a lesion. Id. at 8-9 (Depo. pp. 31-33). He also told her that SALINA had sesamoiditis, but not that the enlarged suspensory branch was at the point of attachment to the bone. DE #36-22 (Dawson Re-Depo.), at 4 (Depo. p. 16). Between the September 21 and December 8 ultrasounds, SALINA was in a paddock and was on some type of conservative exercise program, probably including being under saddle and jogging on the track. DE #36-8, at 10 (Depo. p. 38). Like all horses, SALINA underwent a customized training regimen. See DE #36-5, at 3 (Depo. p. 9) (indicating training is determined for each horse individually; "There is no set program."). BonenClark told Dawson the December 8 ultrasound showed improvement and that the "branch was smaller in size." DE #36-8, at 10 (Depo. p. 39). He still did not mention a lesion. Id. Prior to January 28, 2013, Dawson did not remember having any issues with SALINA; "she was easy to take care of and easy to train." Id. (Depo. p. 42). Dawson remembered the January 28 scan to be the same as the previous scan. Id. (Depo. p. 43). SALINA "was a very sound, athletic, really very nice filly." Id. at 12 (Depo. p. 48).
The January 28 review communicated to Stephens that SALINA was status quo from early December, not better and not worse. Stephens then had the horse in continuous training leading up to the Keeneland sale in April 2013. Dr. BonenClark did not see the filly again in advance of that sale.
Biszantz bought SALINA from Stephens on April 9, 2013, at the annual Keeneland Two-Year-Olds In Training Sale, pursuant to a written agreement. DE #21-2 (Notice of Sale, Purchase and Security Agreement, and Conditions of Sale). SALINA did not originally sell when she went through the auction ring because she was RNA. DE #36-5 (Stephens Depo.), at 6 (Depo. pp. 21-22). After the auction, Mr. Stephens, on behalf of Defendant, contacted Steve Young ("Young"), Biszantz's agent, by phone to offer to sell SALINA. Id. at 20 (Depo. pp. 77-79). Young had observed SALINA in person, and Mr. Stephens allegedly had told Young, prior to the April sales, that he "liked her a lot." DE #36-13 (Young Depo.), at 3 (Depo. pp. 10-11). After consulting with Biszantz, Young made a $175, 000 offer; Mr. Stephens accepted. See DE #21-2. In the contract, the parties agreed to be bound by Keeneland's Conditions of Sale ("COS"), to say the least a comprehensive document. Id. at 1 ("Both Consignor and Purchaser agree and acknowledge that this sale shall be subject to and governed by the Conditions of Sale and they agree to be bound thereby[.]"). Both sides concede COS application. DE ##1-1 (Complaint), at 3 ("[t]he applicable Conditions of Sale"), 3 (Answer), at 1, 3.
Prior to the sale, on April 4, 2013, Stephens hired Michael J. Chovanes, D.V.M., to take radiographs of SALINA at the Keeneland sales grounds to place in the Repository. DE #36-9 (Chovanes Depo.), at 2 (Depo. p. 7). Dr. Chovanes described "a moderate sesamoiditis in a left hind ankle" and "may have told" Mr. Stephens that "one to two out of five veterinarians would be a little bit worried about th[e left] hind ankle." Id. at 4 (Depo. p. 14). Dr. Chovanes said he did not tell Mr. Stephens the possibilities and risks of training, nor he did discuss with Mr. Stephens the option of doing an ultrasound to gain further information. Id. at 5 (Depo. p. 17). He testified that which procedures and investigation to undertake are strictly up to the owner or client because each entails a cost. Id. at 16 (Depo. p. 61); see also DE #36-15 (Bramlage Depo.), at 4 (Depo. p. 14) (acknowledging that whether to take additional ultrasounds, due to the costs involved, "depends on the client"). Dr. Chovanes acknowledged many things can affect the physical condition of a horse in a material way, including training, putting it under tack, galloping, shipping, and simply passage of time. Id. (Depo. pp. 61-63); see also DE #36-11 (Hay Depo.), at 9 (Depo. pp. 33-34) (same).
On April 7, 2013, Biszantz retained Scott Hay, D.V.M., an equine veterinarian, to examine SALINA's radiographs in the Keeneland Repository. DE #36-11, at 2 (Depo. p. 7). Dr. Hay "didn't have any significant concerns about the horse's radiographs." Id. (Depo. p. 8). He did not see sesamoiditis. Id. at 3 (Depo. p. 10). He did not request to see Dr. Chovanes's radiological report, contained in the Repository (and he normally would not do so). Id. at 4 (Depo. p. 13-14). Dr. Hay expressly confirmed that he could have requested and viewed the Chovanes report. Id. at 10 (Depo. p. 37).
Biszantz did not hire a veterinarian to radiograph SALINA before she left Keeneland (nor did he have an ultrasound done before buying her or before she left Keeneland), but Young believed that if Biszantz had, the radiographs would have been the same as Chovanes's. DE #36-13, at 5 (Depo. pp. 18-20). Young advised that no one disclosed, prior to the purchase, SALINA's prior surgery or Dr. BonenClark's report of a lesion. Id. at 4 (Depo. p. 15).
After purchasing SALINA, Biszantz shipped her to Stonestreet in Ocala, Florida, to train. DE #36-3, at 15 (Depo. p. 60). Ian Brennan was her trainer. Id. Brennan advised Dr. BonenClark that "she was doing fine" in late May or early June 2013. Id. SALINA "had no problems the entire time she was at Stonestreet." Id. at 16 (Depo. p. 62). After approximately three months, Biszantz sent her to Todd Pletcher in New York for further training, where she manifested pain to the extent she was unable to enter a full training regimen. See DE #36-13, at 6 (Depo. pp. 22-23). Biszantz then sent SALINA to Rood & Riddle in Lexington, where she was treated by Lawrence Bramlage, D.V.M., who concluded (in August 2013) that her left hind medial suspensory branch had a major injury that appeared to start at the sesamoid bone. See DE #36-15 (Bramlage Depo.), at 9 (Depo. pp. 33-35). Dr. Bramlage opined that the Repository radiographs displayed no sign of injury,  but he took his own radiographs and ultrasounds on August 27, 2013, on which he observed a left hind ligament injury, and advised that the injury was old, perhaps from 2012. Id. at 8 (Depo. p. 31). He noticed avulsion fractures, which were not present in the radiographs at the time of sale. Id. at 10-11 (Depo. pp. 40-41). There was no indication from the April radiographs that SALINA "was a likely candidate to have a re-occurrence problem." Id. at 12 (Depo. p. 45).
Around August 15, 2013, Biszantz received a billing statement from FEVA that showed a previous balance due for December 2012-January 2013 tendon work on SALINA. This tipped Biszantz off to possible pre-sale health problems and was the catalyst for the current suit. DE #36-18, at ¶ 11. Plaintiff filed a Complaint in Fayette Circuit Court, making fraud and breach of contract/warranty claims. DE #1-1 (Complaint). Defendant removed the case to this Court. DE #1 (Notice of Removal). Plaintiff generally alleged that (1) Defendant concealed a preexisting, known injury to SALINA's left hind suspensory ligament; (2) the Repository radiographs gave a false or misleading impression of SALINA's condition; and (3) Defendant administered undisclosed medications to the filly. DE #1-1, at 6-8. Plaintiff alleged essentially the same conduct as establishing violations of the COS, identifying four specific provisions allegedly breached, while also challenging the enforceability of the COS's time and remedial limits. Id. at 8-9. Plaintiff finally alleged Defendant's creation and breach of a warranty by placing radiographs in the Repository. Id. Defendant rejected each argument and asserted a variety of affirmative defenses. DE #3 (Answer).
On the parties' request, Judge Hood ordered a period of limited discovery, see DE #6 (Order), and later stayed commencement of full discovery, see DE #10 (Order). The parties then consented to the jurisdiction of a Magistrate Judge. DE #12. A period of limited discovery followed, and Defendant moved for summary judgment. See DE #21. The parties have fully briefed the issues raised. See DE ##21-1, 38, 39.
II. STANDARD OF REVIEW
A court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A reviewing court must construe the evidence and draw all reasonable inferences from the underlying facts in favor of the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 106 S.Ct. 1348, 1356 (1986); Lindsay v. Yates, 578 F.3d 407, 414 (6th Cir. 2009). Additionally, the court may not "weigh the evidence and determine the truth of the matter" at the summary judgment stage. Anderson v. Liberty Lobby, Inc., 106 S.Ct. 2505, 2511 (1986).
The burden of establishing the absence of a genuine dispute of material fact initially rests with the moving party. Celotex Corp. v. Catrett, 106 S.Ct. 2548, 2553 (1986) (requiring the moving party to set forth "the basis for its motion, and identify those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, ' which it believes demonstrate an absence of a genuine issue of material fact"); Lindsay, 578 at 414 ("The party moving for summary judgment bears the initial burden of showing that there is no material issue in dispute."). If the moving party meets its burden, the burden then shifts to the nonmoving party to produce "specific facts" showing a "genuine issue" for trial. Celotex Corp., 106. S.Ct. at 2253; Bass v. Robinson, 167 F.3d 1041, 1044 (6th Cir. 1999). However, "Rule 56(c) mandates the entry of summary judgment... against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp., 106 S.Ct. at 2552; see also id. at 2557 (Brennan, J., dissenting) ("If the burden of persuasion at trial would be on the non-moving party, the party moving for summary judgment may satisfy Rule 56's burden of production in either of two ways. First, the moving party may submit affirmative evidence that negates an essential element of the nonmoving party's claim. Second, the moving party may demonstrate to the Court that the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim." (emphasis in original)).
A fact is "material" if the underlying substantive law identifies the fact as critical. Anderson, 106 S.Ct. at 2510. Thus, "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Id. A "genuine" issue exists if "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 2511; Matsushita Elec. Indus. Co., 106 S.Ct. at 1356 ("Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.'") (citation omitted). Such evidence must be suitable for admission into evidence at trial. Salt Lick Bancorp. v. FDIC, 187 F.Appx. 428, 444-45 (6th Cir. 2006).
First, the Court must make a choice of law determination. The Court, in this diversity case, applies Kentucky's substantive law. See Erie R.R. Co. v. Tompkins, 58 S.Ct. 817, 822 (1938) ("Except in matters governed by the Federal Constitution or by acts of Congress, the law to be applied in any case is the law of the state."); see also Legg v. Chopra, 286 F.3d 286, 289 (6th Cir. 2002) ("In federal diversity actions, state law governs substantive issues[.]"). Likewise, the COS and PSA contain choice-of-law provisions directing application of Kentucky law, see DE #21-2, at 3, 29-30, and the parties do not dispute that Kentucky law applies (and indeed they rely on it).
A. Breach of Contract/Warranty