Purebred Arabians Registry AHA and PAT – US Arabian Horse Registry

Arabian Horse Association (AHA) and Purebred Arabian Trust (PAT)

AHA has a new address: 6030 Greenwood Plaza Blvd, Suite 100, Greenwood Village, CO 80111

In December, 2022 the Judge of the lawsuit ruled PAT had not proven their case; PAT had to pay AHA damages, and life continued on with both organizations.
In its September 1, 2022 “Member Update,” sent to at least 15,500 members, AHA claims that the Trust is “leveraging” royalties it receives from purebred Arabian horse registrations in a lawsuit that is in direct opposition to AHA’s members’ interests. 
July 7, 2021, Purebred Arabian Trust filed another lawsuit against Arabian Horse Association
September 6, 2022, Arabian Horse Association, Defendant, Files for Summary Judgment and includes many exhibits
October 28, 2022 Judge Issued Motion Denying AHA Motion for Summary Judgement
December 5 though 9, 2022, five day Trial, JUDGE PETER MICHAELSON
PAT requested $998,000 to build a new registration system database and $780,715 royalties unpaid plus interest pre and post Colorado allows plus attorney fees and costs
DECEMBER 7, 2022 JUDGE HAS DISMISSED THE LAWSUIT, RULING PAT HAD NOT PROVED ITS CASE THOUGH AHA CLAIMED THE JUDGE RULED IN THEIR FAVOR
Now Therefore Be It:
Resolved, that AHA’s Board of Directors has concluded that it is in the best interests of AHA to participate in settlement discussions with PAT’s representatives in order to resolve the litigation case and potentially to effectuate a complete separation of any relationship AHA has with PAT.
(March, 2022)
All fees and costs ordered by the Court to be paid by PAT to AHA have been completed as reported in March, 2023, Board of Directors meeting.


March 4, 2022 Board of Directors Virtual Meeting, AHA MEDIATION AUTHORITY RESOLUTION
MOTION: Jan Decker moved, Carrie Olson seconded that,
Whereas, The Board of Directors of AHA has authorized attendance of a group of AHA directors and agents (“AHA TEAM”) to attend the April 5, 2022 in an effort to resolve all claims that were or could have been asserted by PAT against AHA in the litigation case and to resolve any other potential claims between AHA and PAT, including potentially effectuating a complete separation of any relationship AHA has with PAT; and
Whereas, Pursuant to the powers provided in the Colorado Revised Nonprofit Corporation Act, AHA’s Articles of Incorporation, and AHA’s Policies, the AHA TEAM seeks express authorization from AHA’s Board of Directors to participate in settlement discussions with PAT’s representatives in order to resolve the litigation case and potentially to effectuate a complete separation of any relationship AHA has with PAT. Now Therefore Be It: Resolved, that AHA’s Board of Directors has concluded that it is in the best interests of AHA to participate in settlement discussions with PAT’s representatives in order to resolve the litigation case and potentially to effectuate a complete separation of any relationship AHA has with PAT. Further, Resolved, that the AHA Board of Directors authorizes and empowers Stan Morey, as part of the AHA TEAM, to execute and to deliver all necessary documents and to undertake all efforts necessary, in AHA TEAM’S judgment, to resolve the litigation case and to potentially effectuate a complete separation of any relationship AHA has with PAT.
Dated this 4th day of March, 2022
President
AHA Board of Directors
MOTION: Passed (Motion 10-03/04/2022-BOD) Bruce Johnson Abstained

2018 RULING FROM THE 2016 LAWSUIT

A 22-page ruling on the Purebred Arabian Trust vs Arabian Horse Association lawsuit, which was initiated by the PAT, was handed down by Judge Elizabeth Beebe Volz. The Findings of Fact, Conclusions of Law, and Judgement was to settle the dispute between the two associations. The suit related to which organization owned the $2.8 million Horse Registration System (HRS) software developed and paid for by AHA. On September 19, 2018, the judge ruled that HRS was not a part of the “licensed technology agreement” and, therefore, is owned solely by AHA.Another issue was whether the contract work AHA does for the Canadian Arabian Horse Registry (CAHR) is subject to royalty payments to the PAT. Again, the court ruled against the PAT, stating “IF the Association (AHA) is not using either the database or the Licensed Technology to perform services associated with registrations on behalf of the Canadian group then no royalties would be required to be paid.” The judge emphasized if the database or Licensed Technology was used then the royalties had to be paid and absolutely had to be paid if for US registered Arabian horses.

There were counterclaims by AHA against PAT trustees over Breach of Contract and Covenant Good Faith and Fair Dealing, Unjust Enrichment, Breach of Fiduciary Duty, and Civil Conspiracy. While AHA made the assertion these counterclaims were denied once it became clear AHA had not been damaged when it did not lose ownership of the HRS software, the judge stated there were not enough members of PAT to harm AHA in any action and therefore denied the counterclaim. The judge reduced the legal fees to $285,000 to be paid by AHA to the five individual PAT members who were sued. Evidently this amount was paid by or before the 2019 AHA November Convention.

Finally, the judge ruled in favor of the Trust finding that AHA is required to provide a functioning version of software capable of registering Purebred Arabian horses and AHA is required to maintain the database for such registrations. While AHA has continued to maintain the database for the registration of Purebred Arabian horses, there has been no compliance with this ruling of the judge. PAT is still waiting for a software license, purchase of a server for their future use, and of course, a database design with all the data included.

MERGER DOCUMENTS

IAHA/AHRA Merger Documents,
Governance Committee’s Recommendations on Governance
August 4, 2003

This study was conducted by Management Advisors, Inc., Management Consultants Contracted by the AHA Governance Committee

I. INTRODUCTION
A. PURPOSE OF REPORT

This report summarizes the findings, conclusions and recommendations of the Arabian Horse Association’s Governance Committee consisting of these eight members: Barbara Burck, Tom Connelly, Bob Fauls, Bill Hughes, Van Jacobsen, Henry Metz, Howard Pike, Alan Sankpill.

The Governance Committee was assisted by consultants from Management Advisors, Inc. who also conducted surveys and helped with the development of a strategic plan for the Association. In early April 2003, Management Advisors, Inc. (MAI) was engaged by AHA to work with the Governance Committee to undertake a three-phased project involving the development of a strategic plan and conducting a governance study.

Phase I involved obtaining background information and developing a comprehensive understanding of the Association and its plans for the future. This was primarily for the benefit of the MAI consultants, but it also helped the Governance Committee put AHA policies, traditions and operations in perspective. As part of this phase, multiple telephone interviews were conducted with Delegates, Regional Directors, other members of the Board of Directors, and members of the Executive Committee.

Phase II of the project involved undertaking the activities which resulted in development of a strategic plan for AHA. A major component of Phase II involved surveys of current members, past members and non- members, the results of which are summarized in a separate report to the Governance Committee dated July 29, 2003.

The three strategic initiatives recommended by the Governance Committee are as follows:
Increase market share of the Arabian horse within the horse industry.
Unify AHA as a broader-based organization with a new culture and identity.
Increase organizational efficiency and effectiveness including staff and member resources
.

On April 1, 2003, the Arabian Horse Registry of America (AHRA) and the International Arabian Horse Association (IAHA) merged to create the Arabian Horse Association. Essentially, the governance of the former IAHA was adopted by the new organization, at least as a temporary measure. The purpose of the governance study phase of the project was to obtain a thorough understanding of this current governance structure and the decision-making processes that go along with it. The end objective was to explore one or more modified governance models that could enable the Association to function more efficiently and effectively in concert with the strategic initiatives developed by the Governance Committee and anticipated to be embraced and implemented by AHA.

B. GOVERNANCE STUDY APPROACH
In dealing with the issues of governance, MAI first summarized all the key findings relevant to governance gleaned from the surveys, interviews and focus groups conducted during Phases I and II of the project. This summary, presented in Section IV of this report, largely represents the opinions of members, from the grassroots level up to top leadership, regarding AHA’s governance today. In developing suggestions for the Governance Committee to take under advisement, MAI endeavored to build upon the spirit of the strategic initiatives developed during Phase II of the project. That spirit calls for a broader-based organization with clearly defined roles and enhanced responsibilities for AHA staff led by a Chief Executive Officer (CEO) to take on some additional duties and responsibilities that are now in the hands of volunteers. This is a change in the organization and how it is run.

The following section of this report (Section II), discusses the traits that are usually found in highly effective organizations. This is followed by a description of AHA’s governance today and member opinions on AHA’s governance. Finally, the last section of the report, Section V, deals with opportunities to modify AHA’s governance and the Governance Committee’s recommendations for consideration by the leadership of AHA.

II. TRAITS OF HIGHLY EFFECTIVE ORGANIZATIONS
A. ASSOCIATIONS ARE BUSINESSES

Perhaps because most associations are non-profits, they sometimes do not see themselves as businesses. However, associations are required by laws and government regulations to function just like for-profits and other businesses. Some of the ways in which non-profits and for-profits are similar include:
ß Generate funds for growth, modernization and new initiatives
ß Compete for the same good people
ß Pay competitively
ß Provide ordinary, customary, and competitive benefits
ß Abide by Federal Wage and Hours regulations
ß Recruiting and hiring practices must comply with EEOC (Equal Employment

Opportunity Commission) regulations
ß Employment practices must be in compliance with state and federal regulations with regard to non-discrimination and work rules
ß Top-level and middle-level employees must be able to obtain training and
advance their careers
ß Executive and management staff must be able to participate in peer professional organizations at the employer’s cost
ß The organization must actively market and promote itself, its products and its services
ß A strong image and brand identity is necessary

B. NON-PROFIT IS A TAX STATUS

Non-profit is a tax status, not a business philosophy. The best non-profits recognize that it is okay to make money and essential to have revenues exceed expenses on a consistent basis. The highly effective organizations are market driven and devote significant resources on market research, competitor analysis, promotion and brand identity. They constantly focus on present organization needs and anticipate future needs while devising the best means for delivering the organization’s products and services. Market driven organizations also look at what their competition is doing, not necessarily to emulate them, but to at least know what the competition does well and not so well. The bottom line on highly effective market driven organizations is that they strive to expand and improve their services to their constituents and maintain a high degree of constituent satisfaction.

C. VOLUNTEER INVOLVEMENT

Highly effective non-profits utilize their top leadership volunteers for their expertise, knowledge and wisdom. They rely on these volunteers for a deep-rooted understanding of their industry or profession, and the ability to envision a future for themselves and their fellow constituents that others outside the industry or profession may not be able to visualize and comprehend. Highly effective organizations capitalize on these strengths of the volunteers and utilize the staff to execute strategies, policies and decisions developed and coordinated with top volunteer leadership involvement. Thus, volunteers become unburdened with the day to day management and administrative functions. At the same time, the paid staff becomes more responsible to carry out more than just mundane functions and to actually contribute ideas and entrepreneurial thinking to the organization. With both the volunteers and staff looking out for new opportunities for their organization, a better organization results.

Today’s associations tend to have a shortage of volunteers willing to donate time to their associations. Many who volunteer wish to spend less time doing so than in the past. They want quicker decisions and they do not want old decisions revisited or second-guessed, and old business re-hashed. Therefore, many associations are finding themselves more dependent on their paid staff to carry out duties and responsibilities the organization depended on volunteers to perform in the past and many have streamlined their governance to be as nimble as possible. They have accelerated the decision-making process so good decisions can be made more quickly and efficiently. In a fast-moving society where change can occur virtually overnight, this is necessary, and highly effective organizations aim to be as responsible as possible and have the ability to make decisions quickly and move quickly on those decisions. Such organizations are willing to take the risk that they may subsequently need to fine tune or even reverse decisions.

D. FOCUSED LEADERSHIP

Another characteristic of highly effective organizations is that they have volunteer leadership focused on strategy, policy and direction for the organization. They operate at a high level recognizing the strengths and opportunities for improvement of the organization while recognizing current and potential external opportunities and threats. They tend to leave the details of execution to their paid staff. Their executive committees oversee rather than execute and manage. Such organizations depend on the chief paid staff person to be a chief executive officer to carry out the aims and desires of the board of directors through the executive committee.

E. OTHER CHARACTERISTICS OF HIGHLY EFFECTIVE ORGANIZATIONS

Some of the more recent works that deal with association governance include John Carver’s Boards That Make A Difference, The National Center for Non-Profit Boards’ Non-Profit Governance, and The American Society of Association Executives (ASAE) Foundation’s How To Govern Well. All three of these publications approach the subject of governance from different angles, but they all emphasize the attributes and characteristics that their research has found to be present in the best run and most effective associations and non-profits. Below is a compendium of the more salient points made in these three works based on extensive research conducted in the past few years.

General
· Governance deals with the legitimate distribution of authority throughout an organization where leadership steers, controls and influences from a position of authority.
· Governance deals with the legitimate distribution of authority throughout an organization where leadership steers, controls and influences from a position of authority.
· Good governance helps an organization to thrive, not just survive.
• A good governance structure combined with effective organizational leaders results in leadership thinking about what to achieve instead of only what to do.
· A governance structure with more layers than needed, more committees than needed and more seats on committees than needed, increases complexity with no compensating gain.

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