Opinion
No. 28179
July 16, 2007.
Appeal from Circuit Court of Greene County, Hon. J. Miles Sweeney.
David W. Ansley and Steven J. Blair, Counsel for Appellant.
Randy Scheer and Jacob Sappington, Counsel for Respondent.
Opinion
We consider in this case whether an exculpatory clause is effective, and if so, who can claim its protection.
Plaintiff was injured when she fell two stories while saving herself and her children from a fire that destroyed their apartment building. She sued the apartment's owner (Chesterfield) and management company (McCormack), alleging negligence as to fire and city codes and ordinances, apartment rules and policies, smoke alarm inadequacies, and other matters.
A neighbor perished in the blaze. Her death is the subject of a companion case, Kaufold v. Chesterfield Village GP, LLC, et al ., #28178.
Defendants asserted an affirmative defense of release, and eventually moved for summary judgment, based on the exculpatory clause plaintiff read and initialed when she signed her apartment lease:
WAIVER OF LIABILITY
Lessee hereby agrees that Lessor shall not be liable to Lessee, his family, guests, invitees, servants, or others for injury to or death of any person or pet, nor for loss or damage to property (including the property of Lessee) occurring in or about the Leased Premises from any cause whatsoever, even if the cause or damages or injuries are alleged to be the fault or caused by the negligence or carelessness of the Lessor. _/s/DM_ (Lessee(s) initials) (Language taken from Warren vs. Paragon Technologies Group, Inc.)
Plaintiff cross-moved for a partial summary judgment declaring Paragraph 27 unenforceable. The trial court ultimately granted defendant's motion for summary judgment and denied plaintiff's cross-motion.
The court initially granted plaintiff's motion and denied defendants' motion. Defendant sought reconsideration and the court reversed its rulings.
Legal Principles
Our review is de novo. ITT Commercial Finance Corp. v. Mid-America Marine Supply Corp. , 854 S.W.2d 371, 376 (Mo. banc 1993). A liability limitation's validity is a question of law. Warren v. Paragon Technologies Group , 950 S.W.2d 844, 845 (Mo. banc 1997). This court is not bound by the trial court's contract interpretation. Wallace, Saunders, Austin, Brown Enochs, Chartered v. Rahm , 963 S.W.2d 419, 422 (Mo.App. 1998).
Public policy disfavors but does not prohibit releases of future negligence. Warren , 950 S.W.2d at 845; Alack v. Vic Tanny International of Missouri, Inc. , 923 S.W.2d 330, 334 (Mo. banc 1996). Alack , Missouri's lead case, demands that exculpatory language "effectively notify a party that he or she is releasing the other party from claims arising from the other party's own negligence." 923 S.W.2d at 337. Our traditional notions of justice are so fault-based that we require "clear, unambiguous, unmistakable, and conspicuous language in order to release a party from his or her own future negligence." Id. Consumer contracts must conspicuously employ "negligence," "fault" or equivalent words so that a clear and unmistakable waiver and shifting of risk occurs. Id.
Less precise language may be effective between businesses of equal power and sophistication. Alack , 923 S.W.2d at 338 n. 4. Sophisticated businesses that negotiate at arm's length may limit liability without specifically mentioning "negligence," "fault," or an equivalent. Purcell Tire Rubber Co. v. Exec. Beechcraft, Inc. , 59 S.W.3d 505, 509 (Mo. banc 2001).
Point I — Paragraph 27's Enforceability
Lease Paragraph 27, titled "WAIVER OF LIABILITY," releases injury claims at or about the apartment "from any cause whatsoever, even if the cause or damages or injuries are alleged to be the fault or caused by the negligence or carelessness of the Lessor." Plaintiff, a high school graduate, read the lease before she signed it. She read and initialed, in particular, Paragraph 27's "WAIVER OF LIABILITY." Absent other evidence — and plaintiff cites none — this demonstrates the parties agreed upon this release. Warren , 950 S.W.2d at 846.
Given these circumstances, Plaintiff's Point I makes a narrow claim. It asserts, as a matter of law, Paragraph 27 is unenforceable because "from any cause whatsoever" does not expressly exclude intentional torts, gross recklessness, or activities involving the public interest. Plaintiff is not claiming the Lessor did not effectively notify her she was releasing it from its own negligence. Alack , 923 S.W.2d at 337. Plaintiff also is not claiming Paragraph 27 does not clearly, unambiguously, unmistakably, and conspicuously release future negligence liability. Id. Plaintiff does not challenge Paragraph 27 about "negligence" — plaintiff's claim in this case — at all. Instead, plaintiff contends Paragraph 27 is ambiguous and invalid because its language arguably is broad enough to include non-releasable liabilities not involved in this case. To illustrate, consider two hypothetical conversations that start similarly but end differently:
First conversation:
P: I sue you for negligence.
D: You already released me from all future claims, including my own future negligence. Your release of my negligence was clear, conspicuous, and effectively notified you that you were releasing me from future negligence claims. You are suing me for what you clearly and conspicuously released me from. Your claims are barred.
Second conversation:
P: I sue you for negligence.
D: You already released me from all future claims, including my own future negligence. Your release of my negligence was clear, conspicuous, and effectively notified you that you were releasing me from future negligence claims. You are suing me for what you clearly and conspicuously released me from. Your claims are barred.
P: But my release doesn't mention assault.
D: I didn't assault you. You're not suing me for assault. Assault doesn't matter.
P: Yes it does. My suit is for the negligence from which I clearly and conspicuously released you. But my release of "all" claims is silent about assault, and assault can't be released, so my release is automatically "ambiguous" and unenforceable. You didn't assault me, nor am I suing you for assault, but that makes no difference. A release of "any" or "all" claims that is silent about assault is legally unenforceable, even against the negligence claims it clearly and conspicuously releases.
The first conversation represents the trial court's basis for summary judgment. The second illustrates plaintiff's Point I. Plaintiff cites as support passages from Alack and Lewis v. Snow Creek, Inc ., 6 S.W.3d 388 (Mo.App. 1999). Defendants reply that Paragraph 27 is modeled on a release they say Warren approved. 950 S.W.2d at 845-46. We begin by reviewing Alack .
Our supreme court did not quote Warren 's exculpatory clause in its opinion. Warren is the subject of Karen A. Read, Note, Public Policy Violations or Permitted Provisions?: The Validity of Exculpatory Provisions in Residential Leases, 62 Mo. L. Rev. 897 (Fall 1997), which purports to cite the clause.
Alack
Alack 's principal and dissenting opinions focused almost exclusively on enforceability of its future negligence release. See 923 S.W.2d at 334-38; 339-46. The majority's analysis, titled "Release From Future Negligence," was in four sections.
Section 1, citing Missouri cases, reiterated that exculpatory clauses are not prohibited by our public policy, but are disfavored, never implied, and must be clearly and explicitly stated. Clear and explicit language is required to absolve a person from future negligence, and is strictly construed against the party claiming its benefit. Id. at 334 (citations omitted).
Section 2 examined decisions of our sister states, most of which "have enforced exculpatory clauses when they include specific references to the negligence or fault of the drafter." Id. The court cited Minnesota, Maine, North Dakota, and Delaware cases, and considered at greater length Texas and New York opinions, to the effect that exculpatory clauses must expressly mention the drafter's negligence or fault. Id. at 334-35. Section 2 also cited minority-view cases, including those holding that "any" and "all" language alone can be sufficient without specifically mentioning "negligence." Id. at 335-36.
Section 3 returned to Missouri cases. "Historically, Missouri appellate courts have required that a release from one's own future negligence be explicitly stated." Id. at 336. The court cited six examples, but focused on Vergano v. Facility Management of Missouri, Inc. , 895 S.W.2d 126 (Mo.App. 1995), which upheld an exculpatory clause, and Hornbeck v. All American Indoor Sports , 898 S.W.2d 717 (Mo.App. 1995), which did not. Id. at 336-37. Significantly as to plaintiff's Point I, both cases involved "any" and "all" language that plaintiff claims invalidates any exculpatory clause. Thus, we will discuss these cases again, infra.
Section 4 began by summarizing the lessons of sections 1-3:
We are persuaded that the best policy is to follow our previous decisions and those of other states that require clear, unambiguous, unmistakable, and conspicuous language in order to release a party from his or her own future negligence. The exculpatory language must effectively notify a party that he or she is releasing the other party from claims arising from the other party's own negligence. Our traditional notions of justice are so fault-based that most people might not expect such a relationship to be altered, regardless of the length of an exculpatory clause, unless done so explicitly. General language will not suffice.
Id. at 337. This announced no new law. Nor did these pronouncements, or to our knowledge the cases cited in sections 1-3, suggest plaintiff's Point I argument, let alone elevate it to equal billing with Alack 's future negligence analysis.
Alack 's mention of ambiguity was in reply to defendant Tanny's claim that its clause was adequate ( Id. ), basically arguing the minority view that "any" or "all" covers negligence without using that word or its equivalents. "Any" and "all" seem unambiguous and all-encompassing, but not so under the law governing exculpatory clauses. The court perceived a "latent ambiguity" since Tanny's clause, while extensive, did not specifically release Tanny's negligence. Id. The court illustrated its point with other claims (intentional torts, gross negligence, and public interest) that Tanny's clause also seemed broad enough to cover, yet one can never exonerate oneself from such liabilities. Alack did not involve such claims, but they also demonstrated the clause's ambiguity. Id. Plaintiff Alack and the jurors did not interpret the clause as Tanny did, and "our law on such an important point cannot be so out of step with the understanding of our citizens." Id. The court thus proposed:
Our general tort law does not recognize degrees of negligence. Tendai v. Bd. of Reg. for Healing Arts , 161 S.W.3d 358, 367 n. 6 (Mo. banc 2005). "The plaintiff gains nothing by branding the negligence `gross'" because in cases since 1869, Missouri courts have refused to recognize differing degrees of negligence. Sherrill v. Wilson , 653 S.W.2d 661, 664 (Mo. banc 1983). Thus, a drafter trying to address this Alack illustration by releasing, for example, "negligence, but not gross negligence," may create a more troublesome ambiguity instead. The Alack court, as shown infra, apparently considered and certainly treated ambiguities other than negligence as illustrations but not real problems in a case involving only negligence. But a release expressly releasing one but not another degree of negligence, if our law does not so differentiate, may create an ambiguity in a negligence case. See also note 6, infra, as to whether some latent ambiguities are ambiguities at all.
a bright-line test . . . certain to alert all involved that the future `negligence' or `fault' of a party is being released. The words `negligence' or `fault' or their equivalents must be used conspicuously so that a clear and unmistakable waiver and shifting of risk occurs.Id. This would leave "no doubt that a reasonable person agreeing to an exculpatory clause actually understands what future claims he or she is waiving." Id. at 337-38. The court mentioned nothing in this bright-line test or its purpose that supports plaintiff's Point I. The court's remedy, even if Tanny's clause had several latent ambiguities, involved only "negligence," presumably because Alack involved only negligence claims. Passing mention of other ambiguity seems merely an illustration, not a second disqualifying rule as Point I claims. Otherwise, a drafter's compliance with Alack 's future negligence pronouncements would be for naught unless all possible "latent" ambiguities — although irrelevant to the case — were hypothesized and addressed. The Alack court devoted considerable care and many pages researching, expressing, and supporting its future negligence pronouncements. If the court meant to add a second disqualifying rule supporting plaintiff's Point I, we think it would done so more clearly, unambiguously, unmistakably, and conspicuously.
Alack 's approval of Vergano and Hornbeck strengthens this conclusion. Both cases involved "any" and "all" language that plaintiff claims Alack condemns, but Vergano 's clause mentioned "negligence" and Hornbeck 's did not. Vergano , 895 S.W.2d at 127; Hornbeck , 898 S.W.2d at 719-20. Vergano 's clause was approved despite its "any" and "all" language. While Hornbeck's clause failed, the court indicated it would have upheld a release of "any and all loss or damage . . . whether caused by the negligence of the Releasees or otherwise. . . ." 898 S.W.2d at 721, citing Haines v. St. Charles Speedway , 689 F. Supp. 964, 969 (E.D. Mo. 1988). If Point I is correct, Alack should invalidate both Vergano 's clause and the one Hornbeck said it would uphold. Instead, Alack cited Vergano and Hornbeck with approval and used them to illustrate how Missouri handles exculpatory clauses.
Lewis and Warren
Although Alack is the principal case, we will briefly address Lewis, Warren , and the parties' overbroad readings of each.
Lewis is somewhat unusual, in that the court declined to consider whether the exculpatory language operated as a release, since the defendant ski resort never pleaded that defense. 6 S.W.3d at 396. The court instead considered the clause in connection with an assumption of risk defense. The resort's ski rental form — in a part not quoted in the opinion — apparently mentioned snow but not ice. Id. at 393. The court ruled this precluded only snow-based liability. Ice-based liability would be barred only if the clause's general reference to "negligence" was sufficient to do so. Id. Since the "negligence" reference also expressly purported to release claims based on any other legal theory, the court cited Alack 's latent ambiguity discussion and said an ambiguity arose. Id. at 394. The court also measured the exculpatory language and its format by Alack 's bottom-line holding and concluded the resort "did not effectively notify [the plaintiffs] that they were releasing [the resort] from claims arising from its negligence." Compare 6 S.W.3d at 394 with Alack , 923 S.W.2d at 337. This was because the "Rental Form," so titled in large type, did not say or indicate it was a release. 6 S.W.3d at 394-95. The plaintiffs had to sign it, while standing in line, to get their ski equipment. They felt pressured to move along without an adequate chance to read the form and comprehend it. Id. at 391, 395. In contrast to the large-type "Rental Form" title, the exculpatory clause at the bottom was in approximately five-point type ( Id. ), which we illustrate by reducing the Lewis clause accordingly:
10. I hereby release from any legal liability the ski area and its owners, agents and employees, as well as the manufacturers and distributors of this equipment from any and all liability for damage and injury or death to myself or to any person or property resulting from the selection, installation, maintenance, adjustment or use of this equipment and for any claim based upon negligence, breach of warranty, contract or other legal theory, accepting myself the full responsibility for any and all such damage, injury or death which may result.
Under these circumstances, the Lewis court deemed the exculpatory clause language and format neither unambiguous nor conspicuous, and thus insufficient under Alack to establish an express assumption of risk of ice defense. Id. at 395. We agree with this result, which is fully consistent with Alack . The Lewis clause mentioned "negligence" and arguably met Alack 's bright-line rule. But five-point type is barely readable, let alone clear, conspicuous, unmistakable, or effective to notify ski renters they were releasing the resort from its own negligence. The ambiguity discussion was unnecessary to the holding, and Lewis does not say a clause can satisfy Alack 's future negligence requirements, yet automatically fail under plaintiff's Point I reasoning.
While plaintiff reads Lewis too broadly, defendants do likewise with Warren . Judge Robertson persuasively argued for that clause's ultimate validity ( 950 S.W.2d 847-48), but the principal opinion did not go that far. It upheld the clause preliminarily, but remanded to allow the plaintiff to plead and prove any avoidance under Alack , which was decided while Warren was on appeal. Id. at 846. Our supreme court arguably approved Warren 's release, but only prima facie, subject to and without resolving challenges of the sort plaintiff makes here.
Analysis
Our analysis yields two conclusions relevant to Plaintiff's Point I. First, Alack 's analysis culminates in its essential holding that "exculpatory language must effectively notify a party that he or she is releasing the other party from claims arising from the other party's own negligence." 923 S.W.2d at 337. Alack 's bright-line rule is but a means to this end, as is its call for "clear, unambiguous, unmistakable, and conspicuous language in order to release a party from his or her own future negligence." Id. This explains how a clause that met Alack 's bright-line rule could be struck down in Lewis . It explains why Warren remanded its clause, which met the bright-line rule but was never tested against Alack's essential holding. It explains why Vergano upheld a clause that arguably had a latent ambiguity about non-releasable claims, but met Alack 's rules for future negligence releases. It also explains why Alack cited Veragno with approval. Notwithstanding any other latent ambiguities, Veragno 's clause effectively notified the plaintiff she was releasing the defendant's negligence, and thus anticipated and complied with Alack 's bottom-line holding.
Indeed, Alack 's approval of Veragno , and the supreme court's prima facie approval of Warren 's clause one year after Alack , may lend credence to the Alack dissenters' contention that the majority's "latent ambiguity" discussion was:
not talking about an ambiguity at all. The general rule of law that courts will properly refuse to give effect to exculpatory clauses for intentional torts is not a rule governing interpretation and construction. It is part of the substantive law of contracts. "[A] rule of law which forbids effect being given to that [clear] meaning is part of the substantive law of contracts which comes into play after interpretation and construction have finished their work." 4 Williston on Contracts, Section 602 (3d ed.). Thus, courts refuse to enforce such exculpatory clauses not on the basis of ambiguity and not as a matter of contractual interpretation or construction, but as a matter of public policy.
Alack , 923 S.W.2d at 345 (Robertson, J., dissenting). The dissenters believed no latent ambiguity was created "by the refusal of the substantive law to recognize exculpatory clauses purporting to relieve a party of liability for intentional torts." Id. at 346. "That the contractual language under scrutiny might not exonerate Vic Tanny from willful torts does not create an ambiguity where the issue is whether the contractual language shields Vic Tanny from liability for its negligent acts." Id.
Second, even if there were two latent ambiguities, Alack 's "fix" (use "negligence," etc.) and rationale (to alert all that future negligence is released) was limited to the negligence ambiguity since the case involved only negligence claims. So remedied, the clause would meet Alack 's bottom-line test: Does the clause effectively notify one party that it is releasing the other party's negligence?
Plaintiff has not convinced us of a second bright-line rule akin to Point I and our second hypothetical conversation above. Paragraph 27 met Alack 's bright-line rule. Its release clearly, unambiguously, unmistakably, and conspicuously applied "even if the cause or damages or injuries are alleged to be the fault or caused by the negligence or carelessness of the Lessor" (emphasis ours). It effectively notified plaintiff she was releasing the Lessor from claims arising from its negligence, and thus met Alack 's bottom-line standard as well. Point I fails.
That said, even Alack 's dissenters expressed strong personal and policy concerns with exculpatory clauses in a health club contract. 923 S.W.2d at 339-40 (Limbaugh, J., dissenting), 342 (Robertson, J., dissenting and joined by Covington, J.). There are yet stronger reservations as to residential leases, especially adhesion leases of low-income housing. Mr. Alack, if unwilling to give up his legal rights against Vic Tanny, might have joined a different health club or the local Y, bought his own exercise equipment, or simply forgone his exercise plans. Thus, freedom of contract outweighed the public policy disfavoring a health club's exculpatory clause. Id. A low-income family cannot forgo housing, yet may be unable to buy a home, have few rental options, and lack any power to bargain away onerous lease terms. As more low-income lessors add exculpatory clauses to their lease forms, low-income lessees' "freedom of contract" may become increasingly illusory.
Point II — Paragraph 27's Scope
Plaintiff's Point II notes that Paragraph 27 releases only the "Lessor." She claims McCormack is neither the "Lessor" nor a third party beneficiary of the lease, and thus cannot claim the clause's protection. We consider McCormack's three counter-arguments out of order.
Can McCormack enforce the clause as a party?
McCormack claims it is the (or at least a) Lessor; thus a party to the lease; and in turn entitled to Paragraph 27's protection. However, the lease is ambiguous about who the "Lessor" is. Paragraph 1 of the lease describes the parties as:
McCormack Baron Ragan Management Services, Inc. as agent for Chesterfield Village Apartments hereinafter referred to (Property Name)
as "Lessor" whose address is 2310 W. Chesterfield Blvd. and Deanna Milligan, who is (are) jointly and severally responsible under this Lease, hereinafter referred to as "Lessee.
Paragraph 2 ties the leased premises to paragraph 1's address for "Chesterfield Village Apartments" and "Lessor." We think the best interpretation has Chesterfield as Lessor, and McCormack acting as agent for a disclosed principal and thus not itself a party to the lease. It is fundamental that an agent signing a contract on behalf of a disclosed principal binds only the principal but not the agent itself, absent clear and explicit evidence that the agent also intended to be bound. See, e.g., Professional Laundry Management Systems, Inc. v. Aquatic Technologies, Inc. , 109 S.W.3d 200, 204-05 (Mo.App. 2003); Warren Supply Co. v. Lyle's Plumbing, L.L.C ., 74 S.W.3d 816, 819 (Mo.App. 2002); Wallace, Saunders , 963 S.W.2d at 422; Budget Rent A Car of St. Louis v. Guaranty Nat. Ins. Co ., 939 S.W.2d 412, 415 (Mo.App. 1996); 21 West, Inc. v. Meadowgreen Trails, Inc ., 913 S.W.2d 858, 882 (Mo.App. 1995); Golf Digest/Tennis, Inc. v. Diode, Inc. , 849 S.W.2d 617, 618, 619 (Mo.App. 1993). See also Restatement of Agency (Third) Section 6.01 (2005). In turn, an agent not individually burdened by a contract generally cannot claim individual benefits thereunder, absent proof the contacting parties so intended. Id. at Comment d.
The lease evinces no intent to bind or benefit McCormack as a contracting party. To the contrary, Paragraph 1 expressly identifies McCormack as "agent" for the disclosed principal Chesterfield. Paragraph 1 also uses "jointly and severally" with the singular term "Lessee" to accommodate multiple persons, but eschews comparable language for its singular term "Lessor." Paragraph 25 does not mention "agents" as persons to be bound and benefited by the agreement. Paragraph 27's exculpatory language easily could have included "and agents," but it does not. The lease language does not indicate the agent McCormack is individually obligated. If not, McCormack cannot claim lease benefits unless it is a third-party beneficiary, a claim McCormack has not made. To be a third-party beneficiary, the contact must clearly express intent to benefit that party or an identifiable class to which the party belongs. Absent express declaration of such intent, it is strongly presumed that the third party is not a beneficiary and the parties contracted only to benefit themselves. Nitro Distributing, Inc. v. Dunn , 194 S.W.3d 339, 345 (Mo. banc 2006).
Is McCormack released by operation of law?
Next, McCormack argues release of a master also releases its servant, citing Max v. Spaeth , 349 S.W.2d 1, 3 (Mo. 1961). This is no master-servant or respondeat superior case, as Max was. Id. Max 's release also was given to the servant, not the master. Id. Thus, McCormack is citing dicta, and dicta questioned by our supreme court at that. Aherron v. St. John's Mercy Medical Center , 713 S.W.2d 498, 500-01 (Mo. 1986). Our courts have questioned Max 's correctness and vitality, especially in light of RSMo Section 537.060, a statute defendants pleaded in their answers. See Aherron , 713 S.W.2d at 500-01; Manar v. Park Lane Medical Center , 753 S.W.2d 310, 312-14 (Mo.App. 1988); Glidewell v. S.C. Management, Inc ., 923 S.W.2d 940, 944-46 (Mo.App. 1996). Indeed, this court has concluded Aherron 's broad language "abrogates the common law rules mentioned in Max ." Id. at 946.
" Max v. Spaeth . . . includes dicta that `release of the master releases the servant.' We need not determine whether that dicta correctly states the law in Missouri in cases involving vicarious liability." Id.
Did plaintiff admit herself out of a claim against McCormack?
McCormack claims plaintiff cannot deny Paragraph 27 protects McCormack because she admitted entering the lease with defendants. We consider this a non sequitur. Uncontroverted fact No. 1 in defendants' summary judgment motion asserted that plaintiff entered a lease agreement with defendants and a copy of the lease was attached. Rule 74.04(c)(2) required plaintiff to "admit or deny each of movant's factual statements," and plaintiff admitted the facts as to No. 1.
Yet plaintiff's factual response does not answer, and certainly does not bind this court in deciding, the legal question whether McCormack is a party to the lease, or the legal interpretation of Paragraph 27's scope. We illustrate by considering defendants' claim that the lease "is clearly and unambiguously an agreement between" plaintiff and McCormack, and "McCormack is therefore entitled to the benefit of the Waiver of Liability clause." The first half is correct. The lease is plaintiff's agreement with McCormack, who is acting as Chesterfield's agent, so it becomes plaintiff's agreement with Chesterfield. The rest of the statement is incorrect. Signing as an agent neither bound nor benefited McCormack individually.
An agreement to release one person's tort liability discharges no other tort-feasor unless the agreement so provides. RSMo Section 537.060. This "operates to preclude the unintended release of persons liable in tort." Manar , 753 S.W.2d at 313, citing Aherron , 713 S.W.2d at 501. Effective notice that one "is releasing the other party from claims arising from the other party's own negligence" imports "clear, unambiguous, unmistakable, and conspicuous" disclosure of not just what but who is released. Alack , 923 S.W.2d at 337 (emphasis added). Otherwise, Section 537.060's principle of avoiding unintended releases is violated. We already noted how easily "and McCormack," "and agents," etc. could have been added to Paragraph 27. Courts do not imply exemptions from negligence ( Alack , 923 S.W.2d at 334), especially in contracts, like this one, arguably of adhesion.
Point II is well taken. On this record, Paragraph 27 does not preclude plaintiff's claims against McCormack.
Conclusion
We affirm the judgment for Chesterfield. We reverse the judgment for McCormack and remand those claims for proceedings consistent with this opinion.
AFFIRMED IN PART; REVERSED IN PART AND REMANDED. Parrish, J., concurs. Rahmeyer, P.J., concurs in part and dissents in part.
I respectfully dissent to the majority's opinion that Paragraph 27 is unambiguous, but concur in the majority's opinion that Paragraph 27 does not preclude Plaintiff's claims against McCormack. In light of Lewis v. Snow Creek, Inc. , 6 S.W.3d 388 (Mo.App.W.D. 1999), I would find Paragraph 27 of the apartment lease to be ambiguous because its general language would include intentional torts and other causes of action which one may never use to exonerate oneself from future liability.
As discussed in the majority opinion, the court in Lewis analyzed whether an exculpatory clause found in a ski rental form established an express assumption of risk. The court found that the exculpatory clause in Lewis used "general language" which would include "intentional torts, gross negligence or any other cause of action not expressly listed." Id. at 394. "`[T]here is no question that one may never exonerate oneself from future liability for intentional torts or for gross negligence, or for activities involving the public interest.'" Id. (quoting Alack v. Vic Tanny International of Missouri, Inc. , 923 S.W.2d 330, 337 (Mo. banc 1996)). The court concluded that, based upon Alack , an exculpatory clause that "`purports to relieve a party from any and all claims but does not actually do so is duplicitous, indistinct and uncertain.'" Id. (quoting Alack , 923 S.W.2d at 337). When there is "duplicity, indistinctness, or uncertainty in the meaning of the words used in the contract" an ambiguity arises. Rodriguez v. General Acc. Ins. Co. of America , 808 S.W.2d 379, 382 (Mo. banc 1991).
It is true that this case is different because here the issue is whether the exculpatory clause operated as a release of liability and in Lewis the issue was whether the exculpatory clause established an express assumption of risk. However, the analysis as to the validity of the exculpatory clause remains the same in each circumstance.
Lewis , "[i]n addition," found that the exculpatory clause in the ski rental form was not "conspicuous," as required by Alack , and therefore was invalid. Lewis , 6 S.W.3d at 394-95. The court then stated that the language of the exculpatory clause was "not `unambiguous' or `conspicuous,' and thus [did] not meet the standard of Alack ." Id. at 395.
Based upon these two alternative holdings, the majority states that the "ambiguity discussion was unnecessary to the holding, and Lewis does not say a clause can satisfy Alack 's future negligence requirements, yet automatically fail under plaintiff's Point I reasoning." In fact, that is exactly what Lewis stated. Its first holding is that the general language in the exculpatory clause, specifically, that it purports to exonerate future liability for "any claim" including a claim which one may never exonerate future liability for, makes it ambiguous. Id. at 394. The fact that its alternative second holding is that the exculpatory clause is also invalid because it was not conspicuous does not render its other holding meaningless.
When there are alternative holdings each is authoritative. Woods v. Interstate Realty Co. , 337 U.S. 535, 537 (1949); Holt v. State , 494 S.W.2d 657, 659 (Mo.App. St.L.D. 1973); see also Jones v. Ladriere , 108 S.W.3d 736, 739 n. 2 (Mo.App.E.D. 2003); Buatte v. Schnuck Markets, Inc. , 98 S.W.3d 569, 574 n. 1 (Mo.App.E.D. 2002); City of St. Louis v. Riverside Waste Management, L.L.C. , 73 S.W.3d 794, 806 n. 5 (Mo.App.E.D. 2002). The court in Holt stated:
It is well settled that when a court bases its decision on two or more distinct grounds, each is as authoritative as the other and neither is obit[e]r dictum. This rule is the only reasonable inference to be drawn from alternative holdings. Unless all the alternatives are to be considered authoritative, how is one to pick which is the rule of law and which is dictum?
Holt , 494 S.W.2d at 659 (internal citations omitted).
This case clearly expresses the problems associated with Alack 's finding of ambiguity in the exculpatory clause it analyzed and is a problem that the dissenters in Alack probably anticipated. If we were operating with a clean slate and this was a case of first impression, I would be inclined to "refuse to enforce such exculpatory clauses not on the basis of ambiguity and not as a matter of contractual interpretation or construction, but as a matter of public policy." Alack , 923 S.W.2d at 345 (Robertson, J., dissenting). Such a result would be a bright line rule. Regardless, we are forced to look at this exculpatory clause to ascertain whether or not it is ambiguous. Based upon Lewis and Alack , I would find the exculpatory clause in Paragraph 27 of the lease to be ambiguous.
Initially, J. Robertson stated that if Alack was a case of first impression he may have found it against public policy. He later argued there was no ambiguity and suggested that the majority opinion was nothing more than a public policy decision camouflaged as an ambiguity decision.