Richard L. and Marjorie A. Pitts - Page 5




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          lines and the racing history of those horses.  Petitioners did              
          not race Ding Dong Daddy.  Petitioners bred him with their own              
          horses and with outside horses for a stud fee.  Petitioner bred             
          Ding Dong Daddy with one of her mares and produced Blue’s Ding              
          Dong, which she sold.  Blue’s Ding Dong became a successful                 
          racing horse.                                                               
               Petitioners also acquired another stallion named Halyard               
          that allegedly sired $4 million worth of winners.  Halyard, an              
          older horse, was known to be a difficult breeder.  Indeed, he               
          produced no offspring for petitioners.  Halyard died in 1996.               
               Petitioners listed both Ding Dong Daddy and Halyard in the             
          Thoroughbred Times in 1993.  The Thoroughbred Times is a stallion           
          directory, and in petitioners’ listings, they listed the                    
          bloodlines and the stud fees.  The stud fee for Ding Dong Daddy             
          was $1,000 and for Halyard, $1,250.  But both fees were, as                 
          petitioner stated, “negotiable”.  Petitioners did not do any                
          other advertising.                                                          
               Midget Acres provided a “stallion service contract” to horse           
          owners who wanted to breed a mare with one of petitioners’                  
          stallions.  Petitioners would board a mare at their barn, and               
          petitioner would check the mare to see when she was in heat and             
          then determine when to do the breeding.  Petitioners charged a              
          booking fee which was 10 percent of the stud fee.  If the mare              
          gave birth to a live foal, petitioners would collect the stud               
          fee.  According to petitioner, it takes about a year from                   
          conception for the mare to give birth.  Therefore, petitioners              

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