Remi5

THINK BEFORE YOU JUMP

Cynthia Carlson, JD, DVM
Esquire Great Danes

Many of us in the dog fancy are involved with (or at least generally familiar with) so-called “co-ownerships,” where two or more people share ownership of a dog. The owner and co-owner(s) are listed on the dog’s AKC registration papers. AKC regulations require that all co-owners sign off on transfer of the animal and litter registration applications for litters out of co-owned bitches. 

While co-ownerships are common, experience suggests that many, if not most, are entered into without much thought as to the possible legal and practical ramifications of the arrangement. As an attorney, a veterinarian and a Great Dane owner, conformation competitor and occasional breeder, I offer some thoughts on co-ownership arrangements based on my personal potpourri of experiences.  The purpose of this article is to start a dialogue - and raise awareness generally – about potential issues of co-ownership, and particularly to encourage Dane fanciers to think about our dog-related human relationships in a more realistic, less casual fashion. 

Reasons Breeders Want To Co-Own: Many breeders seek co-ownerships for a number of reasons, including:

  • to keep tabs on bloodlines/pedigrees;
  • to require the owner in possession of the dog to crop ears, show, advertise or feed a certain way;
  • to maintain control of breeding rights, stud selection and fees and future puppy placements; and/or
  • to enhance their chances of owning or breeding AKC champions for overall kennel reputation or fulfilling judge application requirements. 

Often, dogs are co-owned by friends, although many breeders also co-own with puppy buyers or others who they really don’t know and may never even have met. Another common co-owning situation involves “specials” - top winning dogs frequently have several owners for some of the above reasons, and also to provide enhanced financing of their show careers. While these benefits can be desirable, co-ownership arrangements can be difficult and costly to enforce.

 
Risks Of Co-Ownership: Almost all co-ownership relationships start out friendly. One person takes the dog home and is responsible for its day-to-day care and well-being (I’ll call this person the “owner” or “owner in possession”). The other owners (let’s call them the “co-owners”) can have a range of involvement with the dog, from being virtually silent up to hands-on involvement in key decisions. Unfortunately, the level of involvement is rarely spelled out in co-ownership arrangements, either verbally or in writing. Therein lies a potential source of bitter conflict, destruction of friendships and substantial monetary exposure.

Let’s look at co-ownership primarily from the perspective of the “absentee” co-owners – those not living with the dog on a daily basis. It might surprise you to know that the degree of legal ownership of an animal is not determined by the AKC. In other words, the fact that person A is listed as “owner” and persons B, C and D are listed as “co-owners” on AKC registration papers does not mean that person A is primarily or solely responsible for that dog in the eyes of the law. Normally, all co-owners will be treated as “owners” and may be found equally liable to a third person for harm, damage or other adverse consequences pertaining to the animal. Moreover, in community property states, if one spouse is identified as an owner or co-owner on a dog’s registration papers, the other spouse probably is also a co-owner of that dog and probably shares liability for the dog’s actions.

Consider the following situations, from the point of view of a co-owner not in possession:

1.The dog bites or otherwise injures someone, whether on the owner’s property, at a dog show, after getting loose from the yard, or in any other situation.

2.The dog’s barking disturbs neighbors and is declared a nuisance to the community.

3.The dog gets loose and causes damage to third-party property -- breaks down a fence, chews up a garden, kills the neighbor’s cat, digs holes in a lawn, etc.

4.The dog escapes confinement or is left to roam and impregnates another dog without permission of that dog’s owner.

5.The dog is poorly cared for or even abused, in violation of animal welfare/cruelty laws.

6.The owner in possession is in violation of dog or kennel licensing laws, spay/neuter laws or maximum-dog-number-on-property laws.

7.The city/county where the dog resides adds Great Danes to a “dangerous dog” list, prohibiting the breed within the city/county boundaries.

8.For whatever reason, the dog is confiscated by local animal control authorities and substantial daily holding fees accrue until the situation is resolved.

Many co-owners might assume that the person in possession of an animal is solely responsible for its actions, and that makes some intuitive sense. However, these situations are governed by state and local laws, ordinances and regulations rather than by “common sense.” Each owner of a dog (including co-owners and potentially the spouses of co-owners) probably is exposed for any damages caused by that animal. In other words, even a co-owner living in another state could be dragged into court and face liability for damage caused to third parties by a co-owned dog, assuming that state jurisdictional requirements are met. The chance of this increases dramatically when the co-owner is financially more secure (or better insured) than is the person with whom the dog resides. 

Let me make this last point perfectly clear: if a co-owner is financially well-off and the owner in possession of the dog is not, and if that dog bites or causes damage to another, it is a good bet that the person bitten or otherwise damaged will name the co-owner as a defendant in any subsequent lawsuit and will try - and probably be entitled - to recover 100% of her monetary damages from the wealthier person. While the co-owner theoretically can then try to obtain “contribution” from the dog’s owner in possession (to get reimbursed for some or all of what he had to pay to the victim), squeezing blood from the proverbial turnip of another co-owner may be difficult, if not impossible. If the dog’s owner is not solvent or does not have sufficient insurance to cover the judgment, the co-owner is stuck with no realistic recourse. Even if the co-owner ultimately is cleared of liability, he still will have incurred attorney’s fees, wasted time and faced unnecessary aggravation.

Of course, there are many legal hurdles that must be overcome for anyone to pursue and prevail in civil litigation, and rarely are lawsuits “slam-dunk.” However, the risk of liability for co-owners for the actions of dogs that they do not physically control is real. Are you willing to assume this potentially open-ended liability as a co-owner, especially if you (and your spouse) have more assets or insurance than does the person living with the dog? These same issues may apply to lease arrangements, where the dog is not in the physical custody of the lessee. 

The American Kennel Club’s Perspective: The American Kennel Club is not in favor of co-ownerships:

“It has been our experience that all too frequently, severe and complicated problems result from disputes over conditional sale, conditional stud and co-ownership contracts or any contract or agreement relating to restrictions or limitations people try to place on the sale or breeding of a dog.” (AKC Frequently Asked Questions [How Do I Resolve a Conflict With My Breeder?]; AKC Procedures for Registration Matters, Section III, Contracts).

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“Co-ownership arrangements, in far too many cases, lead to problems. While AKC registration application forms provide for more than one owner, we recommend that co-ownerships be avoided. It has been our experience that purchasing a dog “outright” is preferable. We would like to point out that if a co-owner is suspended of all AKC privileges, then for the term of the suspension, recording of a transfer of the dog that is co-owned is barred and registrations of litters sired by or whelped by the dog in question are barred. Wins taken by the dog in AKC-licensed or member events are subject to disallowment. For the reasons cited above the AKC recommends that co-ownerships be avoided.” (AKC Procedures for Registration Matters, Section III.C, Co-Ownership Contracts).

It is important to emphasize that if a person is suspended from AKC privileges for any reason, no dog co-owned by that person can be entered or shown during the suspension period, nor may any litter or dog whelped or sired by that dog be registered with the AKC if the mating or whelping occurred during the suspension period. (AKC Board of Directors Policy Manual, Suspension of Registration Privileges; AKC Procedures for Registration Matters, Section VIII, Person Suspended of AKC Privileges).

Nearly a decade ago, AKC delegates expressed concern about canine co-ownership, noting that 80-85% of the cost of work done by the AKC Correspondence Department in Raleigh dealt with co-ownership disputes. At the Delegates Quarterly Meeting as reported in the July 1999 AKC Gazette, a Delegate from the Reno Kennel Club recognized: “Unfortunately, the way the current rules are being enforced, there is a huge opportunity and a concern with plain and simple blackmail. If two co-owners are fighting on a dog that is out being campaigned, one of them says to the other, ‘Pay me $25,000 and I will sign off on that dog; and if you don’t pay me, I’m going to write a letter to [the AKC], and your dog won’t be able to compete next weekend; because that dog will be put on referral immediately.’” 

Co-ownership issues were addressed in a very recent AKC Board of Directors meeting. Minutes of that August 2008 meeting state: “There was a discussion on the financial impact of co-ownerships on AKC, including a large number of time-consuming disputes. Staff suggested the possibility of a co-ownership fee to cover the expense associated with these disputes.” The AKC does not investigate or resolve disputes between co-owners when their relationship goes wrong. The AKC will abide by the decision of a state court if the case is litigated, and suggests that all contracts be thoroughly examined and understood by all parties before any co-ownership transaction is completed. (See, AKC Procedures for Registration Matters, Registration Contract).

Alternatives To Co-Ownership: So, how can those of us in the dog fancy achieve the presumed benefits of co-ownership while limiting its potentially adverse ramifications? Consider an alternative approach: specific, clear, well-drafted written contracts which specifically disclaim co-ownership and expressly place liability to third parties with the person in actual possession of the dog.  Most of the desired benefits of co-ownership can be addressed by contract, with the person owning and living with the animal assuming full liability vis-à-vis the other parties to the contract for any damages caused by the dog. Of course, without co-ownership, the benefit of owning or breeding champions is not transferable to those other than the actual owner(s).

Each party’s rights and responsibilities should be discussed and then spelled out clearly in writing, to govern the parties’ expectations and hopefully reduce the chance of misunderstandings. While verbal agreements can be upheld in many jurisdictions, they are difficult to prove and therefore virtually impossible to enforce. Put differently, they aren’t worth the paper that they aren’t written on. 

Some of the issues to consider addressing in a written contract involving a dog include:

•Who is responsible for providing, selecting and paying for food and housing? What will happen if the owner decides to feed a diet and/or supplements that the other involved parties disagree with?

•Who pays for veterinary care, and who makes decisions about whether to provide that care (routine care such as vaccinations and deworming, as well as unexpected costs for caesarian sections, mastectomies, bloat/GDV surgery [celiotomy, gastropexy, possible splenectomy], repair of torn crutiate ligaments or other orthopedic surgeries, hospitalization costs and decisions, and so on)? Who decides whether to have cosmetic procedures performed (cropping, dental correction, others) - procedures which may or may not violate AKC rules and which could affect the animal’s ability to be shown? Will medical insurance be obtained for the dog, and if so who will pay the premiums? Who makes the final decision about if and when to euthenize, should that decision become necessary?

•Who is responsible for advertising decisions and costs?

•Who pays for show entries and handler fees/expenses/travel/housing, and who decides which shows to enter and which handlers to use? Who decides whether to sell the dog, and if so to whom and for how much? And how are any resulting funds to be distributed? 

•If a bitch is the subject of the contract, who selects potential sires and who pays the stud fees? Who decides when to breed her, how to breed her (natural, vaginal AI, surgical implant, transcervical insemination) or how many times to breed her, and who is responsible for those expenses? Who whelps any resulting litters, decides where the puppies go and sets the sale prices and terms, and who keeps the proceeds of puppy placements?

•If a male is the subject of the contract, who decides which and how many bitches he is bred to? And when? And how? Who sets the stud fee, and who gets to keep it? Who decides whether to take a puppy back in lieu of a stud fee, and if so who decides which puppy to keep, and where it will live and who its owners and co-owners will be? Who decides whether to collect and freeze the male’s semen, and if so who pays for the collection and storage? Who owns the semen and who controls its eventual dissemination? These are particularly important considerations if you co-own a stud dog. Most semen storage facilities consider the owner of the semen to be the person who pays the annual storage fee, because only that person normally has a contractual relationship with the cryobank. If the frozen semen is stored under one account, the person responsible for that account theoretically could sell all or part of the semen to someone else (at least vis-à-vis the cryobank), leaving co-owners without control over valuable future breedings. If ownership of the semen is addressed between co-owners in a written contract, the co-owners in any such situation at least might have a claim for breach of contract against the rogue owner. Another way to address this might be to have frozen semen stored in separate accounts, each in the name of one co-owner, to do with what he or she pleases. No matter how owners decide to handle these situations, they should discuss them in advance and come to a meeting of the minds which is documented in writing.

Dispute Resolution: If a dispute arises despite everyone’s best intentions, do you want to resolve it formally in court or would you prefer to require binding or non-binding mediation or arbitration, with the mediator or arbitrator selection process perhaps agreed upon in advance? For example, each party could designate a person of his or her choice, and then those people could jointly select a neutral mediator or arbitrator to complete the panel. Alternatively, the parties might designate several people by name to serve as potential decision-makers if disputes arise. Consider adding an attorney’s fees provision to your contract, which lets the prevailing party in any dispute under the contract recover his or her attorney’s fees from the losing party. There are many ways to structure mediations and arbitrations; the point is that the parties must discuss and agree to the basics of the procedure in advance if they want to use it. Mediations and arbitrations can range from informal to formal and still tend to be quicker, less contentious and cheaper than litigation in civil court. 

“Consideration” must be exchanged between the parties for any contract to be enforceable. That is, each party must give something to the other in exchange for getting the benefits of the contract. While consideration is often presumed to exist if a contract is written, it still should be spelled out in the contract (for example, I sell you this puppy for a reduced price and transfer ownership of him to you in exchange for your agreement to all of the following terms:…..).

Even if you decide to co-own, think about these issues ahead of time and consider entering into a separate written co-ownership agreement to address them before any dispute with your co-owners occurs. Think about requiring the owner in possession of the dog to have sufficient homeowner’s insurance coverage (and proof of it) to cover liability that might be caused by the animal; consider having any co-owners added as additional insureds under that policy. Note that if shared ownership does exist, the fact that co-owners may allocate responsibility to third parties amongst themselves is irrelevant to whether a third party may sue and recover damages from any or all of the co-owners.

Conclusion: Don’t be cavalier about co-owning a dog. These relationships always start out friendly, and the details become important only when disagreements surface. Spend some time thinking about the possible issues and situations which might occur, and try to anticipate them before disputes arise. Talk with the other parties about the venue in which you would prefer to resolve any such disputes and who you might like to decide them – a judge, a jury, a mutually agreed-upon mediator or arbitrator or someone else. Finally, it would be prudent for anyone getting involved in either co-ownership or contractual arrangements to consult with an attorney to be sure the agreement and its documentation are concise, comprehensive, enforceable and appropriate under applicable state and local laws.
 

 Copyright 2008, Cynthia B. Carlson, ALL RIGHTS RESERVED.  Any use of this material, including reproduction, modification, distribution or republication, without the prior express written consent of its author, is strictly prohibited.

 Nothing in this article constitutes, or is meant to constitute, legal advice of any kind. If you require or seek advice in relation to any legal matter, you should consult with an appropriately qualified attorney in your area.