IN THE OF COMMON PLEAS OF NORTHAMPTON COUNTY, PENNSYLVANIA CIVIL ACTION

NIKOLAI W. TARAS, ) ) No. C-48-CV-2013-4852 ) v. ) ) PENNSYLVANIA HORSE BREEDERS ) ASSOCIATION, ) )

OPINION OF THE COURT

This matter is before the Court on the “Preliminary Objections of

Defendant, Pennsylvania Horse Breeders Association, to Plaintiff’s

Complaint.” Briefs have been submitted, and the matter is ready for disposition. For the reasons that follow, the Preliminary Objections will be sustained, in part, and overruled, in part.

Plaintiff commenced this action by filing a on May 23, 2013.

The Complaint alleges the following facts. Plaintiff is the owner of a thoroughbred mare named Annie’s Tuff. (Compl. ¶ 3, Ex. A.) Plaintiff purchased Annie’s Tuff from Philip Walters on July 20, 2005. (Compl. ¶ 3.)

Philip Walters was the owner of Afton Farm in Kentucky. (Id.) After Plaintiff

1 purchased her, Annie’s Tuff remained at Afton Farm to be bred to a stallion.

(Id. ¶ 4.) Philip Walters died in 2006, and thereafter, his wife, Betty Sue

Walters (“Walters”), took over the farm. (Id.) On March 7, 2007, Annie’s

Tuff gave birth to a colt, Ryan’s Gift. (Id. ¶ 5, Ex. B.) Ryan’s Gift was sold to a third party in New York and began racing at various Pennsylvania racetracks in 2010. (Compl. ¶ 6.) On July 11, 2008, Walters filed an

“Official PA[-]Bred Registration Application” for Ryan’s Gift with Defendant, forging Plaintiff’s signature on the application and falsely identifying herself as the colt’s breeder. (Id. ¶ 8, Ex. B.) The breeder of a Pennsylvania-bred registered horse is entitled to a percentage of the horse’s earnings from races conducted in Pennsylvania. (Compl. ¶ 7.)

When Plaintiff learned of the forged and false registration, he notified

Mark McDermott, the Executive Secretary for Defendant, of the same. (Id. ¶

9.) According to Plaintiff’s Complaint, Defendant receives Pennsylvania-bred registration applications and forwards the breeder and foal information to the Commonwealth of Pennsylvania, which pays the breeder’s awards to the breeder. (Id. ¶ 7.) After learning of the forgery, McDermott negotiated an agreement between Walters and Plaintiff, whereby the two agreed to be listed as co-breeders of Ryan’s Gift and to equally divide the breeder’s share of the purses the colt earned thereafter. (Id. ¶ 10.) According to Plaintiff,

Defendant never informed the Commonwealth of the agreement between

Plaintiff and Walters. (Id. ¶ 11.) Consequently, subsequent to the parties

2 entering into the agreement to be co-breeders, the entire breeder’s share of

Ryan’s Gift’s earnings continued to be distributed solely to Walters, in an amount totaling $38,746.00. (Id. ¶¶ 12-13.) Plaintiff’s Complaint alleges that Defendant “should not have negotiated a between Plaintiff and . . . Walters.” (Id. ¶ 16.) The Complaint further contends that once the settlement was negotiated, Defendant “should have insured that proper notification of the settlement was made to the” Commonwealth so that proper distribution of the breeder’s awards could be made. (Id.)

On July 1, 2013, Defendant filed Preliminary Objections to Plaintiff’s

Complaint, in which it asserts that Plaintiff’s Complaint is insufficiently specific and fails to state a valid (). Defendant also asserts that Northampton County is an improper venue.

Any party may file preliminary objections based on “insufficient specificity in a .” Pa.R.C.P. No. 1028(a)(3). The relevant question in ruling on such an objection is whether the complaint is adequately clear to allow the defendant to set up its defense, or whether the complaint informs the defendant, with precision, of the basis on which recovery is sought so that it may know, without question, the grounds upon which to assert a defense. Rambo v. Greene, 906 A.2d 1232, 1236 (Pa. Super. 2006). In determining whether a particular paragraph is stated with the necessary specificity, that paragraph must be read in the context of all of the

3 allegations made in the complaint. Unified Sportsmen of Pa. v. Pa. Game

Comm’n (PGC), 950 A.2d 1120, 1134 (Pa. Commw. 2008).

Defendant argues that “Plaintiff’s Complaint lacks any headings or averments specifically identifying the nature of the cause of action and lacks averments setting forth the elements of any particular cause of action.”

(Prelim. Objections ¶ 10.) Paragraph sixteen of the Complaint attempts to outline the nature of the cause of action by alleging that Defendant “should not have negotiated a settlement between Plaintiff and . . . Walters” and

“should have insured that proper notification of the settlement was made to the” Commonwealth. (Compl. ¶ 16.) On the cover sheet of his Complaint,

Plaintiff checked the box labeled “Other” in the section labeled

“Miscellaneous” and handwrote “Fraud” as the cause of action. However, in his Brief, Plaintiff concedes that, “[i]n actuality[,] it is clear that Plaintiff is not alleging fraud against . . . Defendant.” (Pl.’s Br. at 5.) While Plaintiff’s

Brief does not directly specify that he is alleging negligence, it appears that he is, as he argues that Defendant had a duty to inform the Commonwealth of the settlement agreement in a timely fashion to ensure the proper payment of the breeder’s awards and that Defendant breached that duty.

(Id.) However, given the lack of headings in Plaintiff’s Complaint and

Plaintiff’s reluctance to use the term “negligence” in his Brief, the Court cannot say, with certainty, that the only cause of action that Plaintiff is pursuing is, in fact, negligence. For this reason, Defendant’s first

4 preliminary objection will be sustained, and Plaintiff will be required to file a more specific complaint, which specifies the precise nature of each cause of action asserted, along with facts to support the elements of those causes of action.

Defendant’s second preliminary objection asserts that Plaintiff’s

Complaint is legally insufficient to support a fraud, breach of contract, or tort claim. Any party may file preliminary objections alleging “legal insufficiency of a pleading (demurrer).” Pa.R.C.P. No. 1028(a)(4). To sustain a demurrer, a court must be certain that the law will not permit recovery. Pa.

Builders Ass’n v. Dep’t of Labor and Indus., 4 A.3d 215, 220 (Pa. Commw.

2010). “[A] court must overrule the objection if the complaint pleads sufficient facts which, if believed, would entitle the petitioner to relief under any theory of law.” Wilkinsburg Police Officers Ass’n By and Through Harder v. Commonwealth, 636 A.2d 134, 137 (Pa. 1993). Any doubt as to whether the demurrer should be sustained must be resolved in favor of overruling it.

Soto v. Nabisco, Inc., 32 A.3d 787, 790 (Pa. Super. 2011). A court must accept all material factual averments in the complaint as true, as well as all inferences reasonably deducible therefrom, in ruling on a demurrer.

O’Donnell v. Hovnanian Enters., Inc., 29 A.3d 1183, 1186 (Pa. Super. 2011).

“Preliminary objections in the nature of a demurrer require the court to resolve the issues solely on the basis of the ; no testimony or other evidence outside of the complaint may be considered to dispose of the legal

5 issues presented by the demurrer.” Hess v. Fox Rothschild, LLP, 925 A.2d

798, 805 (Pa. Super. 2007) (quoting Cardenas v. Schober, 783 A.2d 317,

321-22 (Pa. Super. 2001)).

As noted above, Plaintiff’s Complaint appears to set forth a cause of action for negligence. “A cause of action in negligence requires allegations that establish the breach of a legally recognized duty or obligation that is causally connected to suffered by the complainant.” Sharpe v. St.

Luke's Hosp., 821 A.2d 1215, 1218 (Pa. 2003). In his Brief in response to Plaintiff’s Brief, Defendant argues that it owed no duty of care to

Plaintiff. The Court disagrees. Section 325.223 of the Race Horse Industry

Reform Act outlines the manner in which breeders’ awards are calculated and distributed. 4 Pa.C.S.A. § 325.223. Pursuant to that section, Defendant is the “sole responsible body for the registration and records of

Pennsylvania-breds.” Id. § 325.223(g). Further, Defendant is responsible for determining “the qualifications for Pennsylvania-bred thoroughbred horses.” Id. Only Pennsylvania-bred horses are entitled to breeders’ awards, which are paid to breeders by the State Horse Racing Commission.

Id. § 325.223(b). Accordingly, Defendant has a duty to register

Pennsylvania-breds and to forward that information to the State Horse

Racing Commission for the proper distribution of breeders’ awards.

Accepting the facts in Plaintiff’s Complaint as true, because Defendant was aware of the settlement agreement between Plaintiff and Walters, which

6 changed the breeder of Ryan’s Gift, a Pennsylvania-bred, from Walters alone to Plaintiff and Walters together, Defendant had a duty to report that updated breeder information to the State Horse Racing Commission.

Because Plaintiff alleges that he suffered damages as a result of Defendant’s failure to do so, Plaintiff’s Complaint states a cause of action for negligence, and Defendant’s demurrer will be overruled.1

Defendant’s final preliminary objection asserts that Northampton

County is an improper venue. Rule 2156 states:

[A]n action against an association may be brought in and only in a county where the association regularly conducts business or any association activity, or in the county where the cause of action arose or in a county where a transaction or occurrence took place out of which the cause of actions arose . . . .

Pa.R.C.P. No. 2156. In its preliminary objections, Defendant avers that its principal place of business is located in Chester County and further alleges that Plaintiff’s Complaint fails to set forth facts indicating that Defendant conducts activity in Northampton County, that the cause of action arose in

Northampton County, or that a transaction or occurrence took place in

Northampton County out of which Plaintiff’s claim arose. (Def.’s Prelim.

Objections ¶¶ 29-32.) The Note following Rule 1028(c)(2) states that a preliminary objection on the ground of improper venue “cannot be

1 The Court notes that although Plaintiff was a party to the agreement that made him a co-breeder of Ryan’s Gift, “fact-based defenses, even those which might ultimately inure to the defendant’s benefit, e.g., the plaintiff’s contributory or comparative negligence, are not relevant” in ruling on a demurrer. Orner v. Mallick, 527 A.2d 521, 523 (Pa. 1987). 7 determined from facts of record.” Pa.R.C.P. No. 1028(c)(2) Note. “In such a case, the preliminary objections must be endorsed with a notice to plead

. . . .” Id. In this case, Defendant’s Preliminary Objections were endorsed with a notice to plead, and Plaintiff filed an to the Preliminary

Objections on August 30, 2013. In his Answer, Plaintiff admits that

Defendant’s principal place of business is located in Chester County but avers that, at all times, he “conducted his transactions with Defendant in

Northampton County.” (Pl.’s Answer to Def.’s Prelim. Objections ¶ 30.)

Northampton County Rule of Civil Procedure N1028(2) states:

When the preliminary objections are endorsed with a notice to plead because the objections involve issues that cannot be determined from facts of record, the preliminary objections shall be filed and appropriate time shall be allowed for the responding party to file a response before the objecting party shall praecipe the objections for an evidentiary hearing in compliance with Rule N209; once the evidentiary record has been made, the objecting party shall file a praecipe and accompanying brief in support of the objections in conformity with Rule N211.

Local Rule N1028(c)(2) (emphasis added). In this case, Plaintiff’s Answer does not contain an admission from which the Court can determine that

Northampton County is an improper venue. Further, Defendant did not praecipe its Preliminary Objections for an evidentiary hearing. The Court notes that “a defendant has the burden in asserting a challenge to the plaintiff’s choice of venue.” Masel v. Glassman, 689 A.2d 314, 316 (Pa.

Super. 1997) (quoting Shears v. Rigley, 623 A.2d 821, 824 (Pa. Super.

8

1993)). Thus, Defendant has failed to meet its burden of establishing that

Northampton County is an improper venue, and its third preliminary objection must be overruled.

WHEREFORE, the Court enters the following:

9

IN THE COURT OF COMMON PLEAS OF NORTHAMPTON COUNTY, PENNSYLVANIA CIVIL ACTION

NIKOLAI W. TARAS, ) Plaintiff ) No. C-48-CV-2013-4852 ) v. ) ) PENNSYLVANIA HORSE BREEDERS ) ASSOCIATION, ) Defendant )

ORDER OF COURT

AND NOW, this 6th day of December, 2013, the “Preliminary Objections of Defendant, Pennsylvania Horse Breeders Association, to Plaintiff’s

Complaint” are hereby SUSTAINED, in part, and OVERRULED, in part.

Plaintiff’s Complaint is hereby STRICKEN. Plaintiff is hereby granted leave to file an amended complaint within twenty (20) days.

BY THE COURT:

______ANTHONY S. BELTRAMI, J.

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