Threatening to Retain Property Beyond a Possessory Lien Constitutes TTLA “Coercion”; Expectation Damages Must Net Avoided Costs — Rose v. Equis Equine (5th Cir. 2025)

Introduction

In Rose v. Equis Equine, the Fifth Circuit addressed three core disputes arising from a high-end quarter horse dispersal sale and a later fallout between industry figures: (1) whether damages awarded to Lori and Phillip Aaron (the “Aarons”) for Carol Rose’s breach of a lease-centered transaction were measured under a legally cognizable Texas damages framework; (2) whether Rose’s assertion of a stable keeper’s lien and demand for unrelated sums constituted “theft” under the Texas Theft Liability Act (TTLA) by means of coercion; and (3) whether horse trainer Jay McLaughlin’s testimony sufficed to establish market-value diminution damages for two unregistered fillies.

The decision delivers two clarifying rules with practical reach beyond the horse industry:

Under the TTLA, threatening to retain another’s property after the statutory basis for a possessory lien would be extinguished qualifies as a “threat to commit an offense,” i.e., TTLA “coercion.”
Under Texas contract law, expectation damages must reflect a recognized measure and net gains avoided by the breach (e.g., saved rent) against losses; awarding outlays like “improvement costs” in isolation fails as a matter of law without a proper damages methodology supported by evidence.

The case also reaffirms Texas’s “Property Owner Rule” and the need for objective, market-based support when owners testify to value diminution.

Case Background

Carol Rose, a renowned quarter horse breeder, entered into an integrated three-document arrangement with the Aarons in August 2013: a lease-with-option for Rose’s Gainesville Ranch; a consulting agreement with Rose; and a confidential term sheet listing horses the Aarons were to buy at Rose’s upcoming dispersal sale (the “Blue List,” mandatory) and others she recommended (the “Red List,” optional). The Aarons bought nearly all Blue List horses and many Red List horses. The parties quickly soured: the Aarons allegedly failed to assume insurance/utilities and fund operations; Rose allegedly interfered with shows, mistreated a customer, and boarded extra horses secretly.

By early October 2013, Rose locked gates at Gainesville Ranch, sued in Texas court, and on October 17, 2013, asserted a stable keeper’s lien of $101,948.50 against the Aarons’ horses—though only $40,691.18 reflected actual care charges; the remainder comprised unrelated lease/consulting items. The Aarons paid the full demand and removed their horses, subsequently improving their Commerce Ranch for performance horses at a cost of at least $1.1 million. Related disputes among Rose, the Aarons, and Elizabeth Weston/Equis Equine (the “Weston Parties”), as well as a separate suit with trainer Jay McLaughlin, were later consolidated and removed to the bankruptcy court after Rose and her company filed Chapter cases in 2017.

Procedural Posture

Bankruptcy court (after a nine-day trial):
- For the Aarons: found breach of the lease by Rose and awarded $1.109 million based on Commerce Ranch improvements; found TTLA violation for extracting $61,257.32 beyond valid horse-care charges; awarded fees/costs.
- For McLaughlin: allowed a $51,200 unsecured claim for loss in value of two fillies due to missing breeder’s certificates.
District court (on appeal): reversed the Aarons’ breach and TTLA wins and McLaughlin’s award; vacated attorneys’ fees.
Fifth Circuit: following settlement with the Weston Parties and dismissal of associated appeals, addressed only (a) the Aarons’ breach-of-contract damages, (b) the TTLA claim, and (c) McLaughlin’s fillies claim.

Summary of the Opinion

Breach-of-Contract Damages (Aarons): Affirmed the district court’s reversal. The bankruptcy court’s $1.109 million award for Commerce Ranch improvements could not be squared with any recognized Texas damages measure. Expectation damages require netting harms against gains (e.g., avoided lease payments), which the record did not establish.
TTLA Claim (Aarons): Reversed the district court and remanded. Rose’s threat to retain the Aarons’ horses until they paid sums beyond what the stable keeper’s lien legally secured qualifies as a “threat to commit an offense” (theft) and thus TTLA coercion. The case is remanded for the bankruptcy court to make findings on intent and causation based on the existing record.
McLaughlin’s Fillies Claim: The court agreed the owner-value testimony was legally insufficient under Texas law. It remanded for further proceedings consistent with its analysis, vacating the district court’s judgment to allow the bankruptcy court to address the claim under the correct standard.
Attorneys’ Fees: Left for the bankruptcy court to reassess after disposition of the TTLA issue on remand.

Analysis

Precedents Cited and Their Influence

The court’s contract-damages analysis rests on a well-worn Texas trilogy—restitution, reliance, and expectation—as clarified in Texas cases like Atrium Medical Center v. Houston Red C, LLC, 595 S.W.3d 188 (Tex. 2020), and Sharifi v. Steen Automotive, 370 S.W.3d 126 (Tex. App.—Dallas 2012). A plaintiff’s recovery must match a recognized measure, guided by the legal standard, with evidence that quantifies the loss and—under expectation—nets any benefits from nonperformance (Parkway Dental, Clear Lake City, Lafarge). The Fifth Circuit relied on its own Eni US Operating Co. v. Transocean Offshore Deepwater Drilling, 919 F.3d 931 (5th Cir. 2019), to reject “conservative” damages awards based on incorrect methodologies.

On TTLA coercion, the opinion synthesizes statutory elements: TTLA incorporates Texas Penal Code § 31.03 (theft by unlawful appropriation) and § 31.01 (ineffective consent induced by coercion), with coercion defined in § 1.07(a)(9)(A) as a threat to commit an offense. The court situates stable-keeper liens (Tex. Prop. Code § 70.003) within the law of possessory liens, emphasizing that such liens—and the right to continued possession—terminate automatically upon payment of the secured debt (Seureau v. Mudd, Acme Energy Services, Caress v. Lira, Jarvis). A threat to continue holding property beyond that point is a threat to commit theft.

For the owner-value testimony issue, the court applies the Texas Supreme Court’s Natural Gas Pipeline Co. v. Justiss, 397 S.W.3d 150 (Tex. 2012), and related authorities (Porras, Coastal Transport, Sharboneau) to hold that owner testimony must be grounded in market value with an objective factual basis. Conclusory assertions—even if unchallenged—are legally insufficient to support a damages award.

Legal Reasoning

1) Contract Damages: No Recognized Measure, No Award

The bankruptcy court awarded the Aarons $1.109 million based on the cost of improvements to their own Commerce Ranch after Rose’s breach of the Gainesville Ranch lease. The Fifth Circuit held:

Restitution: Inapplicable; the improvements conferred no benefit on Rose.
Reliance: Inapplicable; the improvements were not expenditures toward performing the Gainesville lease; and reliance after repudiation is generally unreasonable.
Expectation: Not established. Expectation damages must restore the non-breaching party to the position as if the contract had been performed, which requires calculating both the losses caused by the breach and the gains (or avoided costs) from nonperformance. Here, the record reflected the Aarons avoided roughly $2.375 million in remaining rent, while the court tallied only their $1.109 million in improvements. Without quantifying and netting all additions and subtractions (including any lost profits tied to the Commerce Ranch’s constrained use, the loss of Rose’s brand/consulting, location advantages, etc.), the award risked overcompensation.

Significantly, the Fifth Circuit emphasized parties bear the burden to present evidence supporting a legally cognizable damages model at trial. The failure to introduce objective proof of net loss—including “objective facts, figures, or data” for alleged lost profits—precludes remand for a “second bite,” absent circumstances like unclear subsidiary findings. As in Letterman Bros. and Great Pines Water, the Aarons had a full opportunity in a nine-day trial; having failed to offer the necessary proof, their contract-damages recovery cannot be salvaged on remand.

2) TTLA: Possessory Lien Overreach as “Coercion”

The TTLA imposes civil liability on persons who commit “theft,” incorporating Penal Code § 31.03. A person commits theft by unlawfully appropriating property with intent to deprive the owner, and consent is not effective if induced by “coercion”—including a threat “to commit an offense.”

Rose’s stable keeper’s lien secured only “charges for the care” of the Aarons’ horses. When she demanded an extra $61,257.32 for unrelated obligations and threatened to retain the horses until paid, she threatened to hold them even after the valid possessory lien would be extinguished by the Aarons’ payment of the actual horse-care charges ($40,691.18). Because a possessory lien—and any lawful right to retain possession—“automatically” expires upon payment of the secured debt, the court held that threatening post-payment retention is a threat to commit criminal theft. The district court’s contrary view—that Rose had a present right to possess the horses—missed the forward-looking nature of the threat: the threat was to continue retaining the horses beyond the lien’s lawful life.

That establishes the coercion component. But TTLA liability also requires intent to deprive and causation (that the threat induced payment). The bankruptcy court had not made explicit findings on those elements. The Fifth Circuit therefore remanded for factfinding on the existing record, noting that intent is a paradigmatic fact issue turning on credibility and circumstantial evidence (e.g., what Rose and her counsel knew and intended when including the extra charges; whether payment was truly “voluntary” or made “under full protest”).

3) Owner-Value Testimony: Market Evidence Required

McLaughlin’s claim alleged that two fillies lost value because Rose refused to provide breeder certificates, rendering them unregistrable. He testified that comparable siblings with papers sold for $25,000 each, and that without papers the fillies were “worth $500 as recipient mares.” The court held this was legally insufficient under Justiss:

Texas’s default damages measure for partial destruction of personal property is the difference in market value immediately before and after the injury. An owner may testify, but must tie opinions to market data or factors.
McLaughlin offered no objective basis for the $500 figure—no comparable sales of recipient mares, purchase costs, appraisals, tax assessments, or local market data. Stating a number is not enough, even if unchallenged.

While the court agreed the award could not stand on the current proof, it remanded to the bankruptcy court for further proceedings consistent with the correct standard—leaving room for the claim to be re-evaluated on an appropriate evidentiary footing.

Impact

Practical Consequences for Lienholders and Commercial Actors

TTLA exposure for overreaching possessory liens: Stable keepers, mechanics, storage facilities, towing companies, and others relying on possessory liens should avoid bundling unrelated debts into a single “hold” demand. A threat to retain property after the lien would be extinguished by payment of the secured charges can support TTLA liability via coercion.
Drafting and collection practices: Demand letters should delineate (1) the precise amount secured by the possessory lien, and (2) separately state any other amounts allegedly due under other contracts—without conditioning release of the property on payment of the non-lien amounts.

Damages Proof in Texas Contract Cases

Expectation damages must net avoided costs: Plaintiffs must present evidence that quantifies both losses and gains avoided by breach (e.g., foregone profits, lost use, and reputational advantages, minus saved rent/insurance/utilities). Simply totaling “improvements” or out-of-pocket expenditures is not a valid expectation model.
No “conservative award” workaround: Courts will not uphold a damages figure because it “seems conservative” absent a correct methodology and evidentiary support (Eni).
No second chance if the record is barren: Where plaintiffs had a full opportunity to prove damages but failed, courts may enter take-nothing judgments rather than remand for a redo (Letterman Bros., Great Pines Water).

Owner-Value Testimony in Practice

Owners can testify—but must bring data: To quantify pre- and post-injury market value, owners should marshal actual sales, comparables, appraisals, tax valuations, or other objective benchmarks. Conclusory numbers—even from experienced owners—will be set aside (Justiss).
Bankruptcy claim proofs: In bankruptcy, proofs of claim premised on diminished value must satisfy the same evidentiary rigor. Expect closer scrutiny where claims turn on specialized markets (e.g., registered performance horses).

Complex Concepts Simplified

Possessory lien: A creditor’s right to keep possession of specific property until a particular debt is paid. The right vanishes automatically when that specific debt is satisfied.
TTLA “coercion”: Consent is invalid if obtained by a threat to commit an offense. Threatening to hold property after a possessory lien is satisfied is a threat to commit theft (unlawful appropriation without effective consent).
Contract damages measures:
- Restitution: Restore benefits conferred on the breaching party.
- Reliance: Reimburse expenditures made in reliance on the contract to return the party to the pre-contract position.
- Expectation: The “benefit of the bargain”—put the non-breaching party in the position as if the contract had been performed, which requires calculating gains avoided and losses sustained.
Property Owner Rule: Owners may testify to their property’s value, but the testimony must be grounded in market value and supported by facts, not speculation.

Notes on the Separate Opinion

Judge Oldham concurred in part and dissented in part. He agreed that Rose’s conduct satisfied TTLA coercion. He would have remanded the remaining claims for clarification or additional factfinding rather than allow a take-nothing result on the contract damages. His opinion highlights an internal debate over when appellate courts should deny parties a chance to correct damages proof versus remanding for more precise analysis. Litigants should not bank on a mulligan; they should build a complete damages record the first time.

Conclusion

Rose v. Equis Equine supplies two important clarifications with broad commercial resonance. First, it squarely holds that threats to retain property beyond the lawful scope or duration of a possessory lien can constitute “coercion” under the TTLA by threatening an offense—here, theft through unlawful appropriation. That rule will guide lien practices across industries. Second, it reinforces Texas’s insistence on disciplined damages methodology: plaintiffs must choose a recognized measure and come armed with numbers that net gains against losses. Courts will not salvage awards that depart from these requirements, nor accept conclusory owner-value opinions unmoored from market data.

On remand, the bankruptcy court will address TTLA intent and causation on the existing record and reassess fees in light of the ultimate TTLA disposition. McLaughlin’s claim returns for further proceedings consistent with the requirement for objective, market-based valuation evidence. The contract-damages holding stands as a cautionary tale: without a legally cognizable model and supporting proof, even sympathetic narratives of out-of-pocket expense cannot support recovery under Texas law.

Key Takeaways

TTLA coercion includes threats to continue holding property after a possessory lien would be extinguished by payment of the underlying lien charges.
Expectation damages under Texas law require netting avoided costs (e.g., unpaid rent) against claimed losses; awarding improvement costs alone is legally defective.
Owner testimony on value must provide an objective, market-based foundation; conclusory figures are insufficient even if unchallenged.
Parties must present a complete damages case at trial; absent ambiguity in findings, appellate courts may not grant a do-over.