Summary
holding that exculpatory clause in release is enforceable even though it contained "or otherwise" language
Summary of this case from Scoreboard Sportswear v. WelshcoOpinion
No. C0-03-227.
Filed September 2, 2003.
Appeal from the District Court, Anoka County, File No. C9019371.
Sharon L. Van Dyck, Robert J. Schmitz, Schwebel, Goetz Sieben, (for appellants)
Joseph M. Stocco, (for respondent Waldoch Sports, Inc.)
Peter Lind, Peter Waldeck, Waldeck Lind, (for respondents Sno Barons Snowmobile Club, Inc., et al.)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
This case presents an issue of the interpretation of an exculpatory clause in a release signed by a participant in a snowmobile grass drag race. Because the exculpatory clause manifests an unvarying intent to release the sponsors from negligence claims which form the basis for this action; does not violate public policy; and does not state an intent to release the sponsors for intentional, willful, or wanton acts, we conclude that the release is enforceable and affirm.
FACTS
Norman Ball was injured when the snowmobile he was driving in a high-speed grass drag race went out of control and crashed into hay bales that were stacked at the end of the course. Grass drag racing is a sport in which the driver operates a modified snowmobile on a grass-covered track during the non-winter months. The September 1999 race in which Ball was injured was part of a drag-racing event in Lino Lakes called Haydays.
Haydays was organized and regulated by the National Snowmobile Racing Association, formerly the Southern Wisconsin Drag Racing Association, a membership organization to which Ball belonged. The events were coordinated by the Sno Barons Snowmobile Club, Inc. and were held at a facility owned and operated by Waldoch Sports, Inc. We refer to these entities collectively as the "sponsors." Ball is an experienced racer who has participated in snowmobile-grass-drag-racing events for over fifteen years.
Most of the 1999 Haydays races were held on a 500-foot course. But the final high-speed event in which Ball was injured extended the finish line to create a 650-foot course. Unlike earlier years, the high-speed race was held in the same lane as the races that preceded it. The preceding races left a swale in the track created by the racers applying their brakes after they crossed the finish line. The sponsors placed hay bales beyond the longer finish line as an added cushion for the drivers.
Ball covered the 650-foot distance at 123.7 miles per hour. As he crossed the finish line he hit the swale and started to lose control of his snowmobile. The swale caused him to rise up off his seat and lose contact with the handlebar brakes. As he regained his position and began a hard brake, he crashed into the hay bales at the end of the course, sustaining serious injuries.
As a condition of participating in the Haydays races, Ball was required to sign a "Release and Waiver of Liability and Indemnity Agreement." The release provided, in part:
THE UNDERSIGNED . . . HEREBY RELEASES, WAIVES, DISCHARGES AND COVENANTS NOT TO SUE . . . releasees from all liability to the undersigned . . . for any and all loss or damage, and any claim or demands therefor on account of injury to the person . . . whether caused by the negligence of the releasees or otherwise while the undersigned is in or upon the restricted area and/or . . . participating in the event.
. . . .
[The undersigned] HEREBY ASSUMES FULL RESPONSIBILITY FOR AND RISK OF BODILY INJURY, DEATH OR PROPERTY DAMAGE due to the negligence of releasees or otherwise while in or upon the restricted area and/or while competing, officiating, observing, or working for or for any purpose participating in the event.
Additionally, the release contained a severability clause, providing that
THE UNDERSIGNED further expressly agrees that the foregoing release, waiver, and indemnity agreement is intended to be as broad and inclusive as permitted by the law of the Province or State in which the event is conducted and that if any portion thereof is held invalid, it is agreed that the balance shall, notwithstanding, continue in full legal force and effect.
Ball acknowledges that he signed the release. He stated that he did not read it before he signed it, but because he had signed numerous releases in the course of his racing career he knew that he could not race unless he signed the release.
After sustaining the injuries at Haydays, Ball sued the sponsors in negligence for his personal injuries. The district court granted summary judgment for the sponsors concluding that the release barred Ball's claim. This appeal followed.
DECISION
The use and acceptance of exculpatory agreements has been firmly established in the context of recreational sports and racing. Wolfgang v. Mid-American Motorsports, Inc., 898 F. Supp. 783, 786 (D.Kan. 1995); Mario R. Arango William R. Trueba, Jr., The Sports Chamber: Exculpatory Agreements Under Pressure, 14 U. Miami Ent. Sports L.Rev. 1, 3 (1997). These agreements are generally viewed as being in the nature of a contractual or express assumption of the risk. Bunia v. Knight Ridder, 544 N.W.2d 60, 62-63 (Minn.App. 1996) (citing Restatement (Second) of Torts § 496B cmt. a (1965) (noting that "[t]he risk of harm from the defendant's conduct may be assumed by express agreement between the parties")). The agreement must expressly manifest the intent of both parties. W. Page Keeton et al., Prosser and Keeton on Torts § 92, at 656 (5th ed. 1984). But because the obligations are based on policy considerations apart from manifest intent, the extent to which the obligations can be altered by contract depends on the relationship between the parties, the nature of the bargaining transaction, and the type of loss for which liability is disclaimed. Id.
In Minnesota, the framework for evaluating these factors was developed in Schlobohm v. Spa Petite, Inc., 326 N.W.2d 920 (Minn. 1982). To evaluate public policy considerations affecting the validity of a release, Schlobohm requires consideration of (1) whether a disparity of bargaining power existed between the parties, and (2) whether the service offered was a public or essential service. Id. at 923.
Ball does not argue that a disparity of bargaining power created an invalid contract of adhesion. And Minnesota caselaw has not invalidated liability releases for recreational activities because of a disparity in bargaining power. Beehner v. Cragum Corp., 636 N.W.2d 821, 827-28 (Minn.App. 2001) (observing that no Minnesota case has held a recreational-activity release unenforceable because of a disparity of bargaining power); see also Malecha v. St. Croix Valley Skydiving Club, Inc., 392 N.W.2d 727, 730 (Minn.App. 1986) (stating that appellant's lack of opportunity to negotiate terms of exculpatory agreement not enough to show disparity of bargaining power that would invalidate release), review denied (Minn. Oct. 29, 1986).
Neither does Ball argue that snowmobile drag racing is a public or essential service that warrants public regulation. See Schlobohm, 326 N.W.2d at 925-26 (enumerating public or essential services suitable for public regulation and including common carriers, hospitals and doctors, and public utilities). Ball does state that he did not read the release before he signed it. But absent fraud or misrepresentation, "a person who signs a contract may not avoid it on the ground that he did not read it or thought its terms to be different." Gartner v. Eikill, 319 N.W.2d 397, 398 (Minn. 1982). Thus, the facts do not present a basis to invalidate the exculpatory clause on public policy grounds.
The second part of the Schlobohm test addresses the nature of the exculpatory clause and the type of loss for which liability is disclaimed. Schlobohm, 326 N.W.2d at 923. Exculpatory clauses are strictly construed against the benefited entity and will not be created by implication. Id. An exculpatory clause is invalid if it seeks to exonerate for willful or wanton recklessness or intentional torts. Id. According to Schlobohm, a clause that is ambiguous in its scope will also not be enforced. Id.
The exculpatory clause in the release that Ball signed referred only to negligence. It did not include in its terms any purported release for willful or wanton recklessness or intentional torts. Ball argues that the exculpatory clause is nonetheless invalid because it purports to release the sponsors for injury caused by "negligence of the releasees or otherwise." Ball contends that this language creates an ambiguity in scope that invalidates the exculpatory clause under Schlobohm.
In determining whether the language releasing the sponsors from claims "whether caused by the negligence of the releasees or otherwise" creates an ambiguity in scope, we look to the meaning of the contract as a whole. "[P]hrases found in a contract should not be interpreted out of context, but rather . . . given a meaning in accordance with the obvious purposes of the . . . contract as a whole." Beehner, 636 N.W.2d at 827 (quotations omitted). "Otherwise" has been defined to mean "[i]n another way; differently." The American Heritage Dictionary of the English Language 1282 (3d ed. 1992). Thus the release would exonerate the sponsors from claims whether caused by the negligence of releasees or "in another way." Negligence caused "in another way" suggests negligence by someone other than the releasees. The meaning that Ball seeks to draw from the phrase would be more likely if "or otherwise" followed the word negligence rather than the word releasees, resulting in a release from claims "whether caused by the negligence or otherwise of the releasees."
Ball's contention draws support, however, from a decision of this court, Nimis v. St. Paul Turners, 521 N.W.2d 54 (Minn.App. 1994), that commented in dicta that the language "or otherwise," which was contained in a release, created an ambiguity in the scope because it arguably exculpated intentional injuries as well as negligence. Id. at 57-58. Nimis invalidated the release, not because of the perceived ambiguity in the scope, but because the waiver had expired before the injury occurred. Id. at 58.
Although Ball's arguments are not without persuasive force, we conclude, for three reasons, that the phrase "or otherwise" does not create an ambiguity of scope that invalidates the release that Ball signed.
First, the release considered as a whole evinces an unvarying intent to release the sponsors from claims arising in negligence. See Schlobohm, 326 N.W.2d at 922-23 (holding that exculpatory clause releasing health club from all "claims, demands, injuries, damages, actions or causes of action, and from all acts of active or passive negligence" was unambiguous).
Second, the release that Ball signed is a commonly used release for recreational activities that has been applied in a number of other cases. See, e.g., Anderson v. Eby, 998 F.2d 858, 862 (10th Cir. 1993) (analyzing exculpatory agreement that released organizers of snowmobile trip for liability "whether caused by the negligence of [r]eleasees or otherwise"); Potter v. Nat'l Handicapped Sports, 849 F. Supp. 1407, 1411 (D.Colo. 1994) (construing waiver releasing sponsor of handicapped ski race from injury caused by "negligence of the releasee or otherwise"); Finkler v. Toledo Ski Club, 577 N.E.2d 1114, 1117 (Ohio Ct. App. 1989) (upholding indemnity provision signed by member of ski club against negligence claim asserted against club for drowning death on club-sponsored canoeing trip, noting that agreement not to hold club liable for injury "arising as the result of negligence or otherwise" was clear and unequivocal); Chauvlier v. Booth Creek Ski Holdings, Inc., 35 P.3d 383, 386 (Wash.Ct.App. 2001) (concluding that plain language of clause releasing ski resort from liability for "[n]egligence or otherwise," . . . le[ft] no doubt" of intent to release ski resort from liability for all personal injuries arising from negligent operation of ski area).
Of the forty-five reported cases that analyze exculpatory contracts using the term "negligence or otherwise," none of the cases has concluded that the term creates an ambiguity in scope. See, e.g., Haines v. St. Charles Speedway, Inc., 874 F.2d 572, 575 (8th Cir. 1989) (finding that release is not overbroad and providing a list of cases upholding exculpatory clause in auto racing); Wolfgang, 898 F. Supp. at 786-88 (holding that "or otherwise" does not make contract unenforceable and listing cases in which release has been upheld); Kohr v. Skip Barber Racing School, Inc., 1997 WL461563 (E.D. Pa) (upholding exculpatory clause for loss caused by the negligence of the releasees or otherwise and stating that every other court considering releasees has followed suit).
Third, Ball is suing for negligence only, which is plainly covered under the terms of the exculpatory clause. He does not contend that respondents acted willfully, intentionally, or wantonly to cause his injuries. See, e.g., Schlobohm, 326 N.W.2d at 923 (noting that claims of plaintiffs were based in negligence, and they made no claims that health club or its employees acted willfully, intentionally, or wantonly).
Even if the "negligence or otherwise" created an ambiguity in scope, it should not mean that the entire release is void, only that the disputed provision would not be enforceable. Wolfgang, 898 F. Supp. at 788. "A better interpretation of the law is that any `term' in a contract which attempts to exempt a party from liability for gross negligence or wanton conduct is unenforceable, not the entire [contract]." Id.; Restatement (Second) of Contracts § 195(1) (1981); see also Murphy v. N. Am. River Runners, Inc., 412 S.E.2d 504, 510 (W.Va. 1991) (declining to construe general clause to include intentional or reckless misconduct or gross negligence unless the intention is clear from circumstances). Because Ball is suing only in negligence and not for gross negligence or intentional conduct, there would be little reason to strike the entire agreement when it is uncontradicted that the precise nature of his claim is within the scope of the release as contemplated by both parties. This is particularly true when the scope of the release is limited by the severability clause which provides expressly "that if any portion thereof is held invalid, it is agreed that the balance shall, notwithstanding, continue in full legal force and effect."
For these reasons we conclude that the exculpatory clause is enforceable and operates, as a matter of law, to bar Ball's claims for negligence against the sponsors of the race.