04/12/2010 11:00PM

Judge awards $25,000 in Rachel suit

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LEXINGTON, Ky. - A Johnson County (Kentucky) Circuit Court judge has ruled that James M. Lauffer, who purchased a half-interest in Rachel Alexandra in November 2008, owes adviser Jerry Brown of Thoro-Graph Inc. only a 5 percent commission on the $500,000 price Lauffer paid for his share in the filly. That totals $25,000, plus interest and court costs, which Lauffer also must pay.

Brown originally sought payment of 5 percent of the sale price, 5 percent of future earnings, and 5 percent of appreciation in the filly's value, which Brown totaled at $271,423. As part of the damages he claimed, Brown also had sought disgorgement of Lauffer's later profit when he and co-owner Dolphus Morrison sold Rachel Alexandra to Jess Jackson for $10 million. Lauffer's share of that, according to Brown's court documents, was $4,928,451.

Lauffer initially sued Brown last year, contending that the two had not had a contract and that Lauffer never agreed to Brown's fee structure. Lauffer testified that he relied on his own research and the opinions of others, rather than Brown's advice, in judging Rachel Alexandra. Consequently, he "did not believe the defendant was entitled to any fee, but thought that if any fee was due, the industry standard fee of 5 percent should be paid" to Brown, according to the ruling.Judge John David Preston ruled "the plaintiff in this case received valuable services in the form of specific advice as to the merit of Rachel Alexandra, and a recommendation that the horse be purchased. This advice was rendered under circumstances such that the defendant expected to be paid for giving that advice.

"Considering all circumstances surrounding this particular transaction, including the relatively limited nature of the telephone conversation between plaintiff and defendant, the information plaintiff received from other sources, the lack of understanding between the parties as to a fee arrangement, and the significant testimony to the effect that a 5 percent commission is a generally accepted standard, the court finds that a reasonable amount for the services rendered by the defendant to the plaintiff in this case is the sum of 5 percent of the selling price or $25,000."

Lauffer contended his services are different from a bloodstock agent's and therefore were subject to a different fee structure.

"Most importantly, the court decided Mr. Lauffer couldn't avoid his responsibilities," Brown's attorney, Andre Regard, said. "The court says clearly that he owes Jerry Brown a fee and that Jerry Brown was influential and provided analysis."

Adding that the "court got the amount wrong," Regard said he and Brown will review the ruling "and see what our options are."