10/22/2012 2:40PM

Kentucky appeals court upholds $25,000 award to Jerry Brown for Rachel Alexandra purchase


The Kentucky Court of Appeals has upheld a circuit court decision that James M. Lauffer, onetime co-owner of 2009 Horse of the year Rachel Alexandra, should pay Thoro-Graph owner Jerry Brown $25,000 for providing information that contributed to Lauffer’s decision to buy a half-interest in Rachel Alexandra in 2008.

Brown had sought payment of 5 percent of the sale price, 5 percent of Rachel Alexandra’s future earnings, and 5 percent of her value appreciation, as well as disgorgement of Lauffer’s profit when he and Rachel Alexandra’s breeder and co-owner, Dolphus Morrison, sold her to Jess Jackson for $10 million. All told, these would have totaled more than $5 million. Lauffer had argued that he never had a contract with Brown and hadn’t agreed to Brown’s fees as an advisor, but in April 2010 a Kentucky circuit court ruled that Brown was due the industry standard 5 percent commission for his role in advising Lauffer.

On Oct. 19, the court of appeals agreed with the circuit court that awarded Brown a  5 percent commission but denied his claims of punitive damages and disgorgement of profits. “We see nothing in the record to significantly distinguish the services rendered by Thoro-Graph from services that typically garner a five-percent commission within the horse racing industry,” the appeals court ruling stated. The court also agreed with the circuit court’s analysis on several points of law.
Lauffer’s attorney, Thomas W. Miller, said Lauffer was “not unhappy” with the verdict and does not intend to proceed with further action.

In a written statement, Brown said: “Though I completely disagree with the court’s ruling as to how much I should be paid for my work, I am glad there is finally a clear record of what transpired.” Brown said that Lauffer paid him nothing despite “netting a profit of $4.5 million” on Rachel Alexandra’s sale to Jackson.

“We believe there are clear errors in the ruling and plan to contest it, but I will leave the legal analysis to the lawyers,” Brown said.