By Scott Zimmermann

The squeamish should read no further, because what follows outlines one of the worst nightmares for a horse owner. Consider the following:

After years of bad luck and much money spent, a horse owner, let’s call him “Turf Club Tony,” finally is blessed with an exceptional runner, appropriately named Lucky. The purse monies for Lucky are rolling in, and it does not hurt that Tony is getting some pleasant recognition in the Daily Racing Form. Not only has Tony finally gotten lucky, but he also tries to take steps to protect his investment. Believing that he will be protecting his valuable asset, Tony substantially increases the mortality insurance on Lucky, particularly because the horse is now beginning to travel quite a bit in its racing campaign.

Tony bids Lucky bon voyage as the horse is loaded onto the horse transportation company’s van to be taken to its next race. However, the next thing that happens is something no horse owner wants to hear. In the middle of the night, Tony receives a call from his trainer, “Back Stretch Bob,” that Lucky has been seriously injured in an accident involving the horse transportation company van. Indeed, the injuries to Lucky are so serious that it is highly unlikely that the horse will race again, but Lucky will survive.

After making sure that Lucky is properly taken care of medically, Tony next turns his attention to trying to find out what his rights are. To that end, Tony contacts the horse transportation company. Tony is told the following:

1. The horse transportation company denies that it is liable for anything.
2. If the horse transportation company is liable at all, its liability is limited to a total of $2,000 the limitation of liability stated on the horse company’s “bill of lading” that piece of paper that accompanies horses when they are being transported, usually signed by the horse’s trainer or groom upon departure and upon arrival.

Tony argues with the horse transportation company, but cannot convince them that the accident was their fault. However, the assertion by the horse transportation company of a limitation of liability of $2,000 takes Tony by complete surprise. (To add insult to injury, Tony makes a claim on the horse’s insurance policy, which is denied because the horse did not die, there being no loss of use coverage available in his policy or generally in the thoroughbred horse industry. Accordingly, if Tony cannot collect from the horse transportation company, he will have to bear the entire loss.)

Tony then asks his trainer Bob about the limitation of liability. Bob replies that he does not know about any limitation, but has heard around the backside that if a horse transporter is “negligent,” it is responsible for the whole loss. Tony asks other trainers and owners and gets the same sort of reply.

What Tony is told by Bob and others is incorrect. The fact is that a limitation of liability contained in a horse transportation company’s “bill of lading” is generally enforceable even if the horse transportation company is “negligent.” The vast majority of owners and trainers do not know about limitations of liability, and the horse transportation companies certainly make no concerted effort to advise owners and trainers about limitation. Limitations of liability are usually buried in the fine print of the bill of lading and the horse transportation company’s representatives do not usually, if ever, bring the limitations to the attention of owners and trainers. Indeed, many owners and trainers believe that a bill of lading is nothing more than a receipt that is to be signed upon the horse’s departure and arrival.

The horse transportation companies would say in their defense that the rates they offer to the thoroughbred industry for transporting horses are reasonable because the rates would be considerably higher if there were no limitations.

While generally enforceable, there are various circumstances under which a limitation of liability will not be enforced. Accordingly, if you find yourself in the regrettable position of Tony, the thing you need to do is to contact a lawyer as soon as possible – and I do mean as soon as possible – because other provisions of a typical horse transportation company bill of lading allow an owner only nine months within which to make a claim, and only two years to file a lawsuit or be barred from ever collecting from the horse transportation company.

The next question is, naturally, what should an owner or trainer do on a day-to-day basis in dealings with horse transportation companies. One possible thing to do is to inquire about obtaining a higher limitation of liability than a horse transportation company must offer to its customers. However, I believe that the owner or trainer will find these rates to be uneconomical. Another thing that an owner or trainer could possibly do is to refuse to sign the bill of lading. However, the horse transportation company may refuse to ship the horse. In addition, from a legal point of view, it is far from clear whether a refusal to sign a bill of lading nullifies the limitation of liability contained therein.

However, one thing is clear – the way things presently operate needs to be changed. It is not fair for an owner of a horse to receive only $2,000 for the loss of a valuable race horse, nor should horse transportation companies be exposed to tremendous losses given the rates they currently charge.

The purpose of this article is to suggest that owners, trainers and horse transportation companies “sit down” with each other, and work out an equitable solution. Perhaps, what horse farms do could provide a useful example. Many horse farms secure “care, custody and control” insurance for the horses they board and spread the cost of the insurance among all of their customers. If such insurance is available in the horse transportation context, then the cost could be spread over all shipments, allowing horse transportation companies to forego limitations of liability or substantially increase the amount of their limitations.

I sincerely encourage owners and trainer to unite and work with the horse transportation companies to achieve mush needed change.