620 F. App'x 535
6th Cir.2015Background
- Buyer Gary Biszantz purchased a two-year-old racehorse, Salina, from Stephens Thoroughbreds at Keeneland after a private offer following an auction; parties agreed Keeneland’s Conditions of Sale (COS) governed the transaction.
- Pre-sale: Salina had prior arthroscopic surgery on the right hind fetlock; Stephens had radiographs showing moderate sesamoiditis in the left hind and a radiology report was prepared. Dispute as to whether the radiology report and full medication disclosures were accessible to buyers.
- Buyer’s veterinarian reviewed radiographs but did not request the radiology report or perform additional imaging before removal from Keeneland; buyer later discovered post-sale left hind injuries and avulsion fractures.
- Procedural posture: District court granted summary judgment to Stephens on breach of contract, express warranty, and fraud claims; Sixth Circuit panel affirmed.
- Central contractual rules: COS contains an "as is" clause, disclaims most warranties, and sets strict notice windows (14 days for prior surgery/meds; 24 hours for bone-condition claims) and an exclusive remedy scheme.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of COS time limits (unconscionability / failure of essential purpose) | COS limits are unenforceable because purchaser cannot discover prior surgery/meds/bone conditions within the short time windows | COS limits are enforceable; time is of the essence for "as is" horse sales and buyers (sophisticated) could investigate within the windows | Time limits are enforceable; not unconscionable and did not fail of essential purpose given the facts |
| Breach of COS warranties (NINTH & THIRTEENTH Conditions) | Stephens failed to disclose invasive surgery, meds, and bone condition | Repository radiographs/reports and COS procedures satisfied disclosure; buyer failed to timely pursue contractual remedies | Buyer failed to avail himself of COS remedies within required time; claim dismissed |
| Express warranty based on seller’s statement (“I liked her a lot”) | Statement created an express warranty that Salina had no significant problems affecting training/racing | Statement was sales talk/opinion, not an affirmative factual warranty | No express warranty: statement was opinion/sales talk and did not induce the sale |
| Fraud (affirmative misrepresentation / omission) | Stephens intentionally (or recklessly) misrepresented/omitted material facts (prior surgery, meds, bone condition) to induce purchase | Fraud fails: statements were opinion; repository disclosed bone condition; no causal link or damages from undisclosed right-leg surgery/meds | Fraud claims fail—no actionable misrepresentation, no adequate proof of nondisclosure-caused damages; summary judgment affirmed |
Key Cases Cited
- V & M Star Steel v. Centimark Corp., 678 F.3d 459 (6th Cir. 2012) (standard of review for summary judgment)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (summary judgment requires no genuine dispute of material fact)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (definition of genuine issue of material fact)
- Erie R.R. Co. v. Tompkins, 304 U.S. 64 (U.S. 1938) (applying state substantive law in diversity cases)
- Forsythe v. Banc–Boston Mortg. Corp., 135 F.3d 1069 (6th Cir. 1997) (doctrine of unconscionability under Kentucky law)
- Flegles, Inc. v. TruServ Corp., 289 S.W.3d 544 (Ky. 2009) (fraud elements; opinions not ordinarily actionable)
- Giddings & Lewis, Inc. v. Indus. Risk Insurers, 348 S.W.3d 729 (Ky. 2011) (duty to disclose and elements of fraud by omission)
- Travis v. Washington Horse Breeders Ass’n, 759 P.2d 418 (Wash. 1988) (seller statements can create express warranties when affirming present physical condition)
- Keeneland Ass’n, Inc. v. Hollendorfer, 986 F. Supp. 1070 (E.D. Ky. 1997) (enforcing Keeneland COS "as is" and disclaimer provisions)