This article is the first in a four-part series on boarding stable lien foreclosure. Stay tuned for articles on the specifics of agister's lien foreclosure in Oregon, Washington and New York - every state is different.
Boarding stables, even very high-end ones, occasionally find themselves with customers who run up large past due balances and refuse to remove their horses. As a result, the facility finds itself essentially feeding and caring for someone else’s horses for free. Meanwhile, the deadbeat customer’s horses occupy facilities that could be filled with paying customers’ horses. How can a California horse facility lawfully sell a customer’s horses to satisfy a debt?
California Civil Code Section 3080 provides California persons and businesses with an automatic lien on their customers’ horses to satisfy debts incurred in caring for or providing services to those horses, such as boarding and health care. This type of lien is sometimes called an agister’s lien, and it means the facility can refuse to allow a customer’s horses to leave until the bill for those horses is paid in full.
While the lien is automatic, the ability to sell the horses to satisfy the debt is not. Here are the steps a lienholder must take to be able to sell the horses:
- Sue the debtor for the past due amount.
- When filing suit or at any time during the suit, the lien holder can ask the court for an order allowing the lien holder to sell the livestock. This application for an order must contain specific information, as set forth in California Civil Code 3080.03. The lien holder must request a hearing on the application for an order.
- The lien holder must serve the defendant with a copy of the application for an order to sell the horses and the notice of hearing. The notice of hearing must contain very specific information, as set forth in California Civil Code Section 3080.04.
- The court will then hold a hearing on the sale issue. The court will issue an order permitting the sale only if all the following conditions are met:
- The statutory lien applies to the debt at issue;
- The lien holder has shown the debt is valid;
- The lien holder has shown the lien is valid;
- The sale is necessary to prevent the horses from declining in value OR that equitable concerns demand the sale (such as the cost of continuing to feed the horses during the remainder of the lawsuit);
- The method of sale proposed by the lien holder would be commercially reasonable; AND
- The lien holder isn’t seeking the sale for reasons other than the debt.
Frequently Asked Questions about Horse Lien Foreclosure in California
Q: The horses aren’t worth anything. Can I give them away, sell them for a dollar, take them to a rescue or donate them to a therapeutic riding facility?
A: Not lawfully. If you give away or donate the horses without the debtor’s permission, the debtor could later sue you for what is called conversion. Conversion is essentially the civil form of theft. Even if the debtor doesn’t ultimately win their case against you, you will still have to pay a lawyer to defend you, which is expensive.
Q: I don’t know where the debtor lives. How can I sue them if I don’t know where they live?
A: In order to sue someone, you will need to have them personally served with a summons and complaint. That means you’ll need to know where to find them. To find the debtor, you may want to use one of the many free online people finder services, such as WhitePages.com (which also has a reverse phone directory search). In extreme cases, you may need to hire a private detective to track down the debtor for you.
Q: The debtor has several horses, and one is worth more than the others. Can I keep the valuable one and let the debtor take the rest?
A: Yes, but you can only assert a lien on the valuable horse for the amount that is actually owed with respect to that horse.
Q: Is there any other way to sell the horses without going through the lien foreclosure steps in the California statutes?
A: Only two: Getting the debtor to sign the horses over to you, or getting the debtor to waive their rights under the lien statutes. Equine Legal Solutions’ horse boarding contract forms contain a lien statute waiver provision.
Q: The debtor already took the horses from my property. Can I still file a lien?
A: Because the horses aren’t on your property anymore, you no longer have the automatic lien provided by the agister’s lien statute. However, you can still sue the debtor to collect the amount owed, which is often a more practical alternative to foreclosing on an agister’s lien – here’s why.
Q: Do I have to keep feeding and caring for the horses that are on my property, even though I’m not getting paid?
A: Yes, or you run the risk of violating animal cruelty laws. However, California Civil Code 3080.02(a) specifically provides that you can add the cost of caring for the horses during the pending lawsuit to your original claim.
Q: I’m a vet, farrier or business other than a boarding barn. Do I still have lien rights?
A: Yes, as long as you have the horses in your possession. California Civil Code 3080(c) is broad as to what it covers: “any and all grazing, feeding, boarding, general care, which includes animal health services, obtained or provided by the livestock servicer, or his employee, transportation or other services rendered by a person to livestock for the owner of livestock, or for any other person acting by or under the owner’s authority.”
Q: Can I go to small claims court and get an order to sell the horses?
A: No, you will have to file in regular civil court.
Q: Can I foreclose on my lien without having to hire an attorney?
A: Technically, yes, but you may find the statutory requirements difficult to navigate on your own, and errors will cause additional delay.
Q: If I hire an attorney to represent me, can I recoup that cost from the debtor?
A: Yes – California Civil Code 3080.16(c)(1) provides that the livestock sale proceeds shall be applied first to the debtor’s expenses, including reasonable attorneys’ fees.