Opinion
No. 69866
OPINION FILED: December 24, 1996
APPEAL FROM THE CIRCUIT COURT OF THE CITY OF ST. LOUIS HON. FLOYD McBRIDE.
Defendants, Paragon Technologies Group and Coast Federal Mortgage Corporation, appeal from the trial court's denial of their Joint Motion for Judgment Notwithstanding the Verdict in plaintiff, Marilyn Warren s, action for damages from bodily injury. Plaintiff claimed injury when she slipped and fell on a patch of ice outside an apartment complex owned by defendants. After a jury trial, plaintiff was awarded $38,000.00 in damages. We transfer to the Missouri Supreme Court.
Pursuant to a written lease, plaintiff lived in an apartment complex owned by defendant Coast Federal Mortgage and managed by defendant Paragon Technologies. Two times, once on January 5, 1991 and once on January 7, 1991, plaintiff slipped and fell on an ice-covered walkway near her apartment.
Before plaintiff moved into her apartment, she signed a written lease containing the following exculpatory clause:
NON-LIABILITY: Resident hereby agrees that Apartment Company shall not be liable to Resident, his family, guests, invitees, servants, animals, pets or others for injury to or death of any person, animal or pet, nor for loss or damage to property (including the property of Resident) occurring in or about the Leased Premises or within the Apartment Community from any cause whatsoever even if said damages or injuries are alleged to be the fault of or caused by the negligence or carelessness or fault of the Apartment Company. Resident agrees to indemnify and save Apartment Company harmless from all loss, damage, liability and expense, including any additional rent expense which Resident might incur; and the expense of defending the claims, relating to any actual or alleged loss or damage to property caused by or resulting from any occurrence in or about the Leased Premises or within the Apartment Community, including the alleged negligence, carelessness or fault of the Apartment Company.
The trial judge ruled that the exculpatory clause was against public policy and submitted the case to the jury. The jury returned a verdict in favor of plaintiff for $38,000.00, and defendants appeal.
Defendants raise two points on appeal, one of which we find dispositive. Defendants argue that they had a clear contractual defense to plaintiff's claim under the terms of the lease agreement signed by plaintiff. In light of the Missouri Supreme Court's recent decision in Alack v. Vic Tanny Int'l of Mo., Inc., 923 S.W.2d 330 (Mo. banc 1996), we are constrained to agree.
In Alack, our supreme court held that [a]lthough exculpatory clauses in contracts releasing an individual from his or her own future negligence are disfavored, they are not prohibited as against public policy. Id. at 334; see also, Rock Springs Realty, Inc. v. Waid, 392 S.W.2d 270, 272 (Mo. 1965).
In holding that an exculpatory clause in a health club contract was unenforceable because the language was ambiguous, the court held that:
The better rule is one that establishes a bright-line test, easy for courts to apply, and 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. There must be no doubt that a reasonable person agreeing to an exculpatory clause actually understands what future claims he or she is waiving.
Id. at 337-338.
The Alack court then found that because the health club's exculpatory clause did not contain the words negligence, or fault, or their equivalents, it was unenforceable. Id. at 338. Here, the exculpatory clause explicitly stated that defendants were insulating themselves from their own fault or negligence. Plaintiff was effectively notified that she was releasing defendants from claims arising out of defendants own negligence.
Plaintiff argues, however, that while exculpatory clauses have been upheld in commercial leases in Missouri (see, Kansas City Stock Yards Co. v. A. Reich Sons, Inc., 250 S.W.2d 692 (Mo. 1952)), they should not be upheld in residential lease situations. Plaintiff asserts that the tenant in a residential lease has little or no bargaining power, which should render exculpatory clauses in residential leases void as against public policy.
Some jurisdictions have held exculpatory clauses in residential leases void as against public policy. Stanley v. Creighton Co., 911 P.2d 705, 707 (Colo.App. 1996); Crawford v. Buckner, 839 S.W.2d 754, 758 (Tenn. 1992); Lloyd v. Service Corp. of Ala., Inc., 453 So.2d 735, 739 (Ala. 1984). Exculpatory clauses in residential leases have also been struck down in some jurisdictions by state statute. Wolf v. Ford, 335 A.2d 522, 527 (Md.App. 1994); Country Club Apartments, Inc. v. Scott, 271 S.E.2d 841, 841-42 (Ga. 1980).
Other jurisdictions, however, hold that exculpatory clauses in residential leases are valid and enforceable. Middleton v. Lomaskin, 266 So.2d 678, 680 (Fla.App. 1972) (exculpatory clause in residential lease valid if intention is made clear and unequivocal in contract); Porter v. Lumbermen's Investment Corp., 606 S.W.2d 715, 717 (Tex.App. 1980) (exculpatory clauses between landlord and tenant upheld unless there is such a gross disparity of bargaining power as to compel the lessee to agree).
In the present case, the exculpatory clause contained a clear and unambiguous release of defendants future negligence. There is no evidence in the record of a gross disparity in bargaining power between the parties or that the tenant was faced with a take it or leave it agreement in order to obtain adequate housing. Nor does plaintiff claim an intentional tort, gross negligence, or an activity involving the public interest. Under these circumstances, we believe the exculpatory clause in this case meets the tests outlined by our supreme court in Alack, and is therefore valid and enforceable.
Plaintiff offers three additional arguments as to why the contract clause should be invalidated. First, she argues that the contract language purports to be a release from liability. Plaintiff cites Aiple v. South Side Nat'l Bank In St. Louis, 442 S.W.2d 145 (Mo.App. 1969) for the proposition that [t]here can be no release unless there exists at the time of the claimed release a bona fide controversy concerning defendant's legal liability on some issue in dispute between the parties. Id. at 151. Aiple involved a banking transaction where the plaintiff signed a stop payment order which released the bank from liability if the payment was negligently made by the bank. Aiple is distinguishable in at least two respects. First, it involved a bank's statutory obligation to stop payment on a check when ordered to do so. Moreover, the release in Aiple sought to exonerate the bank from the specific statutory liability which bank was obligated to perform by the terms of the same agreement. In contrast, our courts have recognized the validity of an exculpatory clause without the requirement of an existing bona fide controversy. Alack, 923 S.W.2d at 337-38; Rock Springs Realty, 392 S.W.2d at 272.
Plaintiff next argues that the exculpatory clause was invalid for lack of consideration. Plaintiff characterizes the exculpatory clause as a covenant not to sue and cites Passer v. United States Fidelity Guar. Co., 577 S.W.2d 639 (Mo. banc 1979) for the proposition that a covenant not to sue requires consideration. Id. at 648. In Passer the plaintiff made an oral covenant not to sue on a present right of action, and the covenant was specifically directed to that right of action. In the present case, plaintiff did not sign a covenant not to sue on an existing claim. She instead signed a general exculpatory clause which exonerated defendants from acts of future negligence. Passer is therefore distinguishable from the present case.
Lastly, plaintiff argues that the language in the exculpatory clause is meaningless boilerplate. Plaintiff cites Maples v. Charles Burt Realtor, Inc., 690 S.W.2d 202 (Mo.App. 1985), in which the court held that the general exculpatory clause contained in a contract did not immunize the defendant from specific fraudulent conduct. Id. at 213. The Maples court specifically distinguished its facts from the facts in Luli Corp. v. El Chico Ranch, Inc., 481 S.W.2d 246 (Mo. 1972), a case where the defendant's allegedly fraudulent misconduct was protected by an explicit and specific disclaimer. In the present case, plaintiff does not contend that defendants engaged in any fraudulent conduct. Plaintiff merely alleges that defendants conduct was negligent. Furthermore, the exculpatory clause in this case stated specifically and explicitly that defendants were not liable for any negligent conduct. The exculpatory clause in this case can, therefore, be distinguished from the boilerplate in Maples.
Therefore, following the decision of our supreme court in Alack, we would hold that the exculpatory clause was not void as against public policy. However, because of the general interest and importance of the questions presented, we transfer this case to the Missouri Supreme Court. Rule 83.02.
William H. Crandall Jr., J., concurs.
Charles B. Blackmar, Sr. J., concurs.
OPINION SUMMARY
Defendants, Paragon Technologies Group and Coast Federal Mortgage Corporation, appeal from the trial court's denial of their Joint Motion for Judgment Notwithstanding the Verdict in plaintiff, Marilyn Warren s, action for damages for bodily injury. Plaintiff claimed injury when she slipped and fell on a patch of ice outside her apartment complex owned by defendants. After a jury trial, plaintiff was awarded $38,000.00 in damages.
TRANSFERRED TO THE SUPREME COURT.
DIVISION FIVE HOLDS: (1) The trial court erred in submitting the case to the jury because, in light of our supreme court's recent decision in Alack v. Vic Tanny Int'l of Mo., Inc., 923 S.W.2d 330 (Mo. banc 1996), defendants had a contractual defense to plaintiff's claim under the exculpatory clause in the lease agreement; and (2) the cause is transferred to the Missouri Supreme Court under Rule 83.02 because of the general interest and importance of the questions presented.