CUMBERLAND VALLEY CONTRACTORS, INC., AND DEL RIO, INC.V. BELL COUNTY COAL CORPORATION AND DARRELL HUFF
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NO. 2000-SC-000951 -DG`
AND
NO. 2004-SC-001121-DG,CUMBERLAND VALLEY
CONTRACTORS, INC .
AND DEL RIO, INC .
V.
APPELLANTS/CROSS-APPELLEES
ON REVIEW FROM COURT OF APPEALS
NOS. 1998-CA-001564-MR AND 1998-CA-001601-MR
BELL CIRCUIT COURT NO. 94-CI-00122
BELL COUNTY COAL CORPORATION
AND DARRELL HUFF
APPELLEES/CROSS-APPELLANTS
OPINION OF THE COURT BY JUSTICE MINTON
REVERSING
I. INTRODUCTION.
As a general rule, a party cannot contract away liability for
damages caused by that party's failure to comply with a duty imposed by a safety
statute .
This case presents the question of whether this general rule applies to
void a liability-shifting clause in a contract between parties to a coal mining
agreement where one side claims economic damages resulting from the other's
failure to comply with statutory mine-mapping duties presumably imposed to
further mine safety .
We find that the clause was clearly written as part of an
arm's-length transaction between two sophisticated parties who actually shared
the statutory mapping duties . Since there was no apparent gross imbalance of
bargaining power, we see no reason to invalidate the exculpatory clause, which
clearly bars the claims of Cumberland Valley Contractors, Inc., and its assignee,
Del Rio, Inc.
This case also presents a procedural issue in which we hold that
the Court of Appeals properly declined to dismiss Bell County Coal Corporation's
initial appeal.
II . FACTUAL BACKGROUND .
In 1989, Bell County Coal Corporation held the mineral rights to the
No . 5 underground mine in Bell County, Kentucky, under a mining lease with the
landowner, J.M. Huber Corporation . Bell County Coal contracted, in writing, with
Cumberland Valley Contractors, Inc., to operate the mine. According to the
contract, Bell County Coal and its Chief Engineer were responsible for mine
engineering and mine planning . These duties included preparing all mining
maps, including mine projection maps, which established the course and
direction of mining in No. 5 Mine. Paragraph 30 of the contract contained an
exculpatory clause related to the performance of these duties . Darrell Huff
became Bell County Coal's Chief Engineer in January 1991 .
A series of flooding incidents inside the mine resulted in equipment
loss to Cumberland Valley and its assignee, Del Rio, Inc. They also claimed that
the flooding prevented them from reaching coal they had planned to mine . The
flooding incidents occurred when Cumberland Valley and Del Rio encountered
unmapped core holes, sediment ponds, and portions of old mine works .
Cumberland Valley and Del Rio assert that these areas were unmapped or
inaccurately mapped on the maps provided to them by Bell County Coal despite
Bell County Coal's having accurate maps on hand showing the location of core
holes, sediment ponds, and old mine works.
Cumberland Valley and Del Rio sued Bell County Coal, Huff, and
Huber in the circuit court alleging misrepresentation, negligence, gross
negligence, and breach of contract . Bell County Coal moved for summary
judgment claiming that among other matters, the suit was barred by
Paragraph 30 of the Contract Mining Agreement. The trial court denied the
motion, and the case proceeded to a jury trial. The jury found for Cumberland
Valley and Del Rio awarding them $795,000.00 for lost equipment and
$5,057,106 .00 for lost profits . The trial court entered judgment against Bell
County Coal in accordance with the jury's verdict.
A panel of the Court of Appeals affirmed the trial court's refusal to
enforce the exculpatory clause holding that the exculpatory clause was void as
against public policy. The panel then upheld the $795,000.00 award for lost
equipment but vacated the award of lost profits stating that these were not
proven with sufficient certainty. We granted discretionary review and now
reverse the Court of Appeals because we have reached the opposite conclusion
concerning the validity of the exculpatory clause. Further facts are set forth as
needed in our discussion of specific issues .
1111. ANALYSIS .
A. The Standard of Review .
This is a contract case. And the interpretation and legal effect of a
contract is a matter of law.' So we review the trial court's and the Court of
Appeals's determination of whether a contractual provision is void against public
policy or otherwise invalid under a de novo standard, especially since findings of
fact are not at issue . The trial court's and Court of Appeals's construction of
statutes is also entitled to no deference on appeal because statutory construction
is a matter of law subject to a de novo standard of review.
B. Bell County Coal Made a Timely
Appeal to the Court of Appeals.
Cumberland Valley and Del Rio contend that Bell County Coal did
not file their appeal to the Court of Appeals in a timely manner ; and, therefore,
the appeal should have been dismissed. They insist that the trial court's
judgment should be fully reinstated .
The trial court entered its judgment following the jury verdict on
February 24, 1998, stating "[t]his is a final and appealable judgment, and there is
no just reason for delay." On March 5, 1998, Bell County Coal and Huff timely
filed a Kentucky Rules of Civil Procedure (CR) 59.05 motion to alter, amend, or
Morganfield Nat'l Bank v. Damien Elder & Sons, 836 S.W.2d 893, 895 (Ky. 1992) .
See, generaffy,. Anderson v. Ky. Growers Ins. Co., Inc., 105 S.W.3d 462 (Ky.App.
2003) (rejecting argument that contractual provision was void against public policy to
affirm, in part, the trial court's grant of summary judgment on that issue, applying de
novo standard of review.).
Bob Hook Chevrolet Isuzu . Inc. v. Commonwealth of K
983 S.W.2d 488, 490 (Ky. 1998).
vacate the judgment. After hearing oral argument, the trial court entered an
Amended Judgment on April 13, 1998, which denied the CR 59.05 motion and
also stated, "[t]he original Judgment is adopted but made interlocutory in all
respects except as herein amended ."
On April 21, 1998, Bell County Coal and Huff filed a CR 59.05
motion to alter, amend, or vacate the amended judgment of April 13, 1998,
stating that the amended judgment failed to "adjudicate a sum certain in
damages for each of the plaintiffs" and failed to adjudicate Bell County Coal's
counterclaim against Del Rio, as well as arguing the appropriate amount of the
supersedeas bond . On June 18, 1998, the trial court entered an order ruling on
all pending motions, which "overruled all [m]otions ." On June 22, 1998, Bell
County Coal and Huff filed their notice of appeal . Cumberland Valley and Del
Rio filed a motion to dismiss the appeal as untimely, which the Court of Appeals
denied in its modified opinion of September 22, 2000 .
Cumberland Valley and Del Rio now argue that the trial court's
initial judgment, rendered February 24, 1998, recited that it was a final judgment
and that there was "no just cause for delay." They argue that Bell County Coal's
failure to file a notice of appeal within thirty (30) days of that "final judgment'
barred their appeal under CR 73.02(1) .
We disagree because the trial court expressly revoked the "finality"
of the February 24 judgment when it entered its amended judgment of April 13,
1998, following Bell County Coal's filing of a CR 59 .05 motion to alter, amend, or
vacate . "In Kentucky, a court speaks through the language of its orders and
judgments . ,,4 Furthermore, as our predecessor-court stated,
we know of no rule of law that denies to a court the
right to revoke an order and substitute in lieu thereof a
new and different one, provided that court has not lost
jurisdiction over the case involved .5
Since Bell County Coal's initial motion to alter, amend, or vacate
was filed within ten days of judgment, it was timely filed under CR 59.05. So the
trial court retained its jurisdiction and, therefore, was free to revoke its original
order, including its statement of finality .
Bell County Coal's separate CR 59 motion to alter, amend, or
vacate the amended judgment, entered April 13, 1998, was not an impermissible
successive CR 59 motion. While "Kentucky law does not recognize an appeal
from an order refusing to reconsider an order denying a new trial[,]" 6 the trial
court's order of April 13 did not deny the CR 59 motion entirely but amended the
substance of its earlier judgment by resolving issues concerning punitive
damages, the claim against Huber, the counterclaim against Del Rio, and
explicitly revoked the finality of the initial judgment.
As stated by the federal courts, when a trial court makes
substantive changes-as opposed to merely correcting clerical errors-in
entering an amended judgment, the time for filing an appeal starts from the
4
Glogower v. Crawford , 2 S .W.3d 784, 785 (Ky. 1999).
5
Union Light. Heat & Power Co. v. Public Service Comm'n , 271 S.W.2d 361, 365 (Ky.
1954).
6
Patrick v. Hiner , 867 S.W.2d 211, 212 (Ky.App. 1993), citing Cloverleaf Dairy v.
Michels, 636 S.W.2d 894 (Ky.App. 1982).
entering of the amended judgment rather than the original judgment.' Since the
trial court changed the substance of its judgment by entering the Amended
Judgment on April 13, Bell County Coal's timely CR 59 motion regarding the
amended judgment was, thus, a CR 59 motion regarding a new judgment, not an
impermissible successive CR 59 motion regarding the same judgment
challenged by the first CR 59 motion . So the running of the time for appeal
stopped until the second CR 59 motion was resolved by the trial court's order of
June 18. Bell County Coal's appeal, filed on June 22, 1998, was timely as the
Court of Appeals correctly determined.
C. The Exculpatory Clause Is Valid and Bars
Cumberland Valley's and Del Rio's Claims.
As Bell County Coal contends on its cross-appeal, we find as a
matter of law that all of Cumberland Valley's and Del Rio's claims are barred by
Paragraph 30 of the Contract Mining agreement, $ which provides
30 . Condition of Premises. Contractor accepts the
Premises hereinabove described in their existing
condition and acknowledges that Contractor has
made an investigation to determine existing
conditions, limitation of the areas involved, equipment
necessary to conduct and complete operations, laws
affecting performance hereunder, Owner's knowledge
of prior mining, location of old works and latent
dangers and dangerous conditions . OWNER MAKES
NO IMPLIED OR EXPRESS WARRANTY OR
REPRESENTATION CONCERNING THE
See, e.g., Walker v. Bain, 257 F.3d 660, 671 (6th Cir. 2001); Federal Trade
Commission v. Minneapolis-Honeywell Regulator Co. , 344 U .S. 206, 211 (1952) .
We note that Appellee Darrell Huff was not a party to the Contract Mining
Agreement . And we found nothing in the voluminous record where Cumberland
Valley and Del Rio attempted to recover from Huff in his individual capacity. Rather,
it appears that Cumberland Valley and Del Rio intended to hold Bell County Coal
liable for Huff's actions as its employee .
EXISTENCE, QUANTITY, QUALITY, MINEABILITY
OF MERCHANTIBILITY OF THE COAL SEAM
WITHIN THE PREMISES, TITLE THERETO OR
OTHERWISE AND CONTRACTOR C OVENANTS
AND AGR EES THAT NO REPRESENTATIONS BY
OR ON BEHALF OF OWNER REGARDING THE
PREMISES, THEIR CONDITION, THE USE OR
OCCUPATION THAT MAY BE MADE THEREOF OR
THE INCOME THEREFROM . Owner shall in no
event assume or be liable for any loss incurred by
Contractor under this Agreement. Owner does not
assume any responsibility or liability for the present or
future condition of the Premises[,) and Owner shall
not be liable to Contractor for any damage to or
destruction of the Premises or Contractor's property
or the property of other person due to fires, floods, or
any other accident or natural catastrophe which
occurs on or within the Premises.
We recently stated in Hargis v. Baize9 that:
An exculpatory contract for exemption from future
liability for negligence, whether ordinary or gross, is
not invalid per se. . . . However, such contracts are
disfavored and are strictly construed against the
parties relying upon them. . . . The wording of the
release must be so "clear and understandable that an
ordinarily prudent and knowledgeable party to it will
know what he or she is contracting away; it must be
unmistakable ."' °
Even strictly construing Paragraph 30 against Bell County Coal, we
find that the wording of the release was "unmistakable ." Paragraph 30 clearly
states that Cumberland Valley has investigated prior mine works and latent or
dangerous conditions, that Bell County Coal makes no representations regarding
the mineability of the coal, and that Bell County Coal will not be liable for
damages caused by any flooding . So we find that "the hazard experienced was
9
168 S .W.3d 36 (Ky. 2005) (quoting 57A Am .Jur.2d, Negligence § 52 (2004)) .
10
Id. at 47 (citations omitted).
clearly within the contemplation of the provision"' and that Paragraph 30 cannot
be invalidated on the basis of unclear wording or lack of specificity .
Having determined that the wording of the provision was sufficiently
clear that Cumberland Valley knew what it was contracting away, we must next
determine whether this provision must be invalidated as void against public
policy.
Recognizing the importance of freedom to contract, the courts of
this Commonwealth have traditionally enforced exculpatory provisions unless
such enforcement violates public policy.'2 And despite perceived inconsistencies
in recent Kentucky case law, the basic principles regarding the enforceability of
exculpatory clauses or contracts were set forth over a century ago in Greenwich
Insurance Co. v. Louisville & Nashville Railroad Co.' 3 In deciding to uphold the
exculpatory clause at issue there, our predecessors noted that the parties were
"dealing at arm's length and upon an equal footing[,]" and that the contract was
entered into voluntarily without either party being compelled to enter into the
contract on the basis of necessity . 14 Therefore, the railroad could validly contract
away liability for its own negligence "however gross, short of wantonness or
Id
12
See, e.g., Cobb v. Gulf Refining Co . , 284 Ky. 523,145 S.W .2d 96, 99 (1940), citing
Rest. Contracts § 575 (stating that freedom of contract generally prevails to uphold
exculpatory clauses subject to certain exceptions, such as willful breach of statutory
duty, personal injury releases in employment contracts, and "contracts where one of
the parties (such as a railroad) is charged with a duty of public service, and the
bargain relates to negligence in the performance of its duty to the public .").
13
112 Ky. 598, 66 S.W . 411 (1902).
14
Id. at 412-13.
willfulness" 15 toward the brewing company, which leased land located in the
railroad's right-of-way and built a cold storage house on the right-of-way. The
court noted that the railroad, as a common carrier, could not have enforced an
exculpatory clause or release of negligence against passengers or freight
shipping customers as a matter of public policy because these customers were
compelled to travel or ship on the railroad due to its monopoly and, therefore, did
not have equal bargaining power. 16 Finding no such disparity in bargaining
power between the railroad and the brewing company, the court found no reason
to disturb the contract, which the parties entered into on an entirely voluntary
basis because the brewing company received consideration for its agreement to
bear the risk of fire and because the public was not affected by the parties'
contract ."
We conclude that under the longstanding principles of contract law
explained in Greenwich , the exculpatory clause at hand must be enforced as part
of an arm's-length transaction between sophisticated parties with equal
bargaining power. We believe that more recent cases, even those invalidating
exculpatory clauses on the basis of public policy, can be harmonized with
Greenwich by focusing on the parties' bargaining power. These cases further
suggest that there is no reason to invalidate the exculpatory clause before us .'8
15
Id. at 412 .
16
17
Id. at 413 .
18
Fortunately, no third parties were injured or suffered an economic loss as a result of
Bell County Coal's improper mine mapping . Thus, this opinion should not be
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We find this exculpatory clause to be valid, even in light of recent
authority disallowing a party to contract away liability for violation of safety
statutes . As discussed below, we conclude that the parties shared the duty of
preparing accurate mine projection maps to comply with statutes aimed at
furthering mine safety . Furthermore, no significant disparity in bargaining power
existed between the contracting parties in the instant case, unlike most cases in
which exculpatory clauses were deemed invalid due to safety statute violations or
other public policy concerns. Thus, we find no reason to disturb the parties'
agreement to shift the risk of loss for any violation of a statutory duty, which they
both share.
We recently stated in Hargis , 19 "[a] party cannot contract away
liability for damages caused by that party's failure to comply with a duty imposed
by a safety statute ." Specifically, Cumberland Valley and Del Rio contend that
Bell County Coal should not be allowed to contract away its future liability for
violation of statutory duties in regard to mine mapping . Under the contract, Bell
County Coal had the duty to prepare mine projection maps due to its control of
several adjoining mining areas ; and the Contractor (Cumberland Valley and its
assignee, Del Rio) had the duty to follow these projections strictly when mining . 2°
construed to affect the ability of a third-party to bring an action against anyone who
enters into a contract which contains an exculpatory clause .
19
168 S.W.3d at 47.
20
The parties' duties regarding mine maps appear in Paragraphs 11 and 12 of their
agreement. Paragraph 11 states that Bell County Coal "will provide engineering
services at its sole expense ." Paragraph 12(a) provides that due to the close
proximity of existing or future mining operations by other contractors in other areas to
which Bell County Coal retained mineral rights, "in order to allow [Bell County Coal]
Cumberland Valley and Del Rio contend that since Bell County
Coal undertook the contractual duty to prepare projection maps, Bell County Coal
had a concomitant duty to comply with KRS 352.450 when preparing the
projection maps . KRS 352.450 states, in relevant part, that the "operator or
superintendent" shall make annual maps of "workings" of the mines; and the
maps shall show a number of items, including worked-out or abandoned areas
and "[a]ll known drill holes that penetrate the coal bed being mined." But
Cumberland Valley and Del Rio contend they are not bound by this statute since
Bell County Coal acted as an operator or superintendent of the mine. We
disagree .
An operator is a "licensee, owner, lessee, or other person who
operates or controls a coal mine." 21 A superintendent is "the person who, on
behalf of the licensee, has immediate supervision of one [] or more mines[ .] ,22
Based on the words of the statute, Cumberland Valley and Del Rio were clearly
operators or superintendents under these definitions because they operated the
mine and had immediate supervision over it. So Cumberland Valley and Del Rio
had a statutory duty to ensure that accurate projections were made. But since
Bell County Coal had overall control over the No. 5 Mine, as well as other mines
overall coordination of operations on its lands, [Bell County Coal) will prepare mining
plans and projections and review the same with Contractor prior to Contractor's
commencing operations ." Furthermore, Paragraph 12(a) provides that the
Contractor shall "diligently follow" these mining plans and projections, as well as any
modifications for which they received notice from Bell County Coal.
21
KRS 352.010(z) .
22
KRS 352 .010(ag).
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in the area, it was also an operator of the No. 5 Mine . So, under the statute, we
find that Bell County Coal and Cumberland Valley and Del Rio shared the duty
and responsibility of ensuring that accurate mining projection maps were
prepared on an annual basis. Although Cumberland Valley and Del Rio
delegated the actual preparation of maps to Bell County Coal by contract,
Cumberland Valley and Del Rio still shared the responsibility for ensuring that
accurate mining projection plans were prepared . This responsibility is reflected
by the recital in the agreement that Cumberland Valley had investigated Bell
County Coal's knowledge of prior works, latent defects, and other dangerous
conditions.
Assuming that KRS 352 .450 qualifies as a "safety statute" since
neither party has argued otherwise, 23 we find that both parties to the contract
23
The legislature did not make explicit findings in regard to Chapter 352 . Arguably, the
legislative findings provided in KRS 351 .101 would apply to Chapter 352, as well as
Chapter 351, because the two chapters cross-reference each other in their
definitional sections (KRS 351 .010 and KRS 352.010); although, KRS 352 .450
predates KRS 351 .101 .
The version of KRS 351 .101 in effect during the events leading up to this action and
the pendency of this action in the trial court states :
The General Assembly hereby finds and declares the following :
(1) The highest priority and concern of the Commonwealth must
be the health and safety of the coal industry's most valuable
resource, the miner.
(2) The continued prosperity of the coal industry is of primary
importance to the state.
(3) A high priority must be given to increasing the productivity
and competitiveness of the mines in this state.
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shared the duty of providing accurate mining projections under KRS 352.450,
presumably for the purpose of protecting miners and the public at large . We
cannot see how the public is harmed by these two sophisticated parties to the
contract (who share the duty of preparing accurate mine projections) allocating
the risk of their own losses for any inaccuracies between themselves .
A personal injury claim was at stake in Hargis, in contrast to the
economic claim regarding loss of equipment and lost profits, as in the instant
case . We did not expressly limit application of the rule prohibiting contracting
(4) An inordinate number of miners are killed or injured during
the first few months of their experience in a mine and upon
acquiring new work assignments in a mine .
(5) These injuries result in the loss of life and serious injury to
miners and are an impediment to the future growth of the
state's coal industry .
(6) Mining is a technical occupation with various specialties
requiring individualized training and education .
(7) Injuries can be reduced through proper miner training,
education and certification .
In 2001, subsection (8) was added to KRS 351 .101, which provides :
Mine safety can be improved by the imposition and enforcement
of sanctions against licensed premises and certified and
noncertified personnel whose willful and repeated violations of
mine safety laws place miners in imminent danger of serious
injury or death .
Reading the clear language of these findings, it is apparent that the legislature
mainly intended to protect the safety of miners; although, it also identified continuing
economic security of the coal mining industry as another goal in enacting
underground mining regulations .
The legislature made more explicit findings in regard to surface mining (also known
as "strip mining") stating that "unregulated surface coal mining operations . . . in
general, create hazards dangerous to life and property" in KRS 350.020. These
findings explicitly refer only to surface mining operations ; although, it would not be
unreasonable to assume that underground mining regulations (such as
KRS 352.450) are also aimed at reducing hazards to life and property .
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against liability for damages for safety statute violation to personal injury cases in
Har is . We do not elect to limit or distinguish Hargis based upon whether a
personal injury or solely an economic loss resulted from a safety statute violation
because we do not find this factor solely dispositive .
As appellees point out, there is no published Kentucky state case in
which an exculpatory clause was invalidated when only property loss (as
opposed to personal injury) occurred . But the presence or absence of personal
injury is not the sole factor for determining whether an exculpatory clause is valid
under Kentucky law. True, exculpatory clauses have been invalidated more
frequently in the context of personal injury cases where an individual is often
forced to sign a release to, obtain a necessity such as medical care or
employment from a party in a superior bargaining position . However, exculpatory
clauses have been enforced by federal courts applying Kentucky law in regard to
personal injuries produced by recreational pursuits on the bases that "the races
affected only private interests, that participation was voluntary, that the parties
possessed equal bargaining power, and that the races could not continue without
such protection from liability ."24
When our courts have invalidated exculpatory clauses based upon
a breach of a statutory duty or breach of a duty to the public at large, those
agreements involved a major disparity in bargaining power between the parties .
For example, in Meiman v. Rehabilitation Center. Inc.
25
our predecessor court
24
Donegan v. Beech Bend Raceway Park, 894 F.2d 205, 207 (6th Cir. 1990) (citing
Dunn v. Paducah Int'i Raceway , 599 F.Supp. 612,613 (W.D .Ky. 1984)) .
25
444 S.W.2d 78 (Ky. 1969).
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invalidated a release, which an amputee was required to sign before the
rehabilitation center would treat her. In doing so, the court stated :
in no event can such an exculpatory agreement be
upheld where either "(1) the interest of the public
requires the performance of such duties, or
(2)[] because the parties do not stand upon a footing
of equality, the weaker party is compelled to submit to
the stipulation ." 6 A .L.R .3d 705. In our view, the
case at bar is one in which it is clearly against public
policy for the Center to seek refuge in the exculpatory
agreement .
Similarly, although our decision in Hargis does not explicitly discuss
the parties' relative bargaining positions, a significant disparity in bargaining
positions existed between the parties to that contract . The plaintiff's decedent
was an individual truck driver who worked as an independent contractor with the
defendant owner of several sawmills .27 Presumably, the plaintiff's decedent in
Hargis was required to sign the release at issue before he could deliver logs to
the defendant's sawmill and, therefore, was "compelled to submit to the
stipulation ." So Har is is distinguishable from the instant case. Here,
sophisticated corporate entities negotiated the allocation of a jointly shared risk
and expressly incorporated that risk allocation into a contract that neither of them
was compelled to enter into to obtain a necessity, such as medical care or
personal employment .
26
Id. at 80.
27
Har is at 39.
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An early case, holding that parties should not be allowed to contract
away liability for violation of a safety statute, noted the imbalance of power
between the parties (a coal miner and his employer) and reasoned as follows:
The very fact of such legislation indicates that the
lawmakers believed that the operation of the
common-law rules did not afford the employe
sufficient protection ; that, under the development of
the modern industrial system, tending to centralization
of capital and impersonal management, the employe
did not stand upon a footing of equality with the
employer in contracting for his safety; and that the
necessity of earning the daily wage frequently
constrained the employe to put up with defective
place and tools without complaint, by reason of his
fear of the consequences of complaining . From these
conditions grew the necessity, or at least the
propriety, of requiring certain specific measures to be
taken for the protection of employe's. . . . A definite
standard was fixed by the legislature. . . . If the
employer may avail himself of the defense that the
employe agreed in advance that the statutes should
be disregarded, the court would be measuring the
rights of the persons whom the lawmakers intended to
protect by the common-law standard of the
reasonably prudent person, and not by the definite
standard set up by the legislature .28
We find no suggestion that these parties were not on "a footing of
equality" or that Cumberland Valley or Del Rio belonged to a class of persons
that the legislature attempted to protect by setting a more definite standard .
Rather, since these parties were "dealing at arm's length and upon an equal
footing," the effect of Paragraph 30 is "not so much that [Bell County Coal]
contracts against its own negligence as that [Cumberland Valley and its
28
D .H . Davis Coal Co. v. Polland , 62 N.E. 492, 495-96 (Ind. 1902) (emphasis added.).
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assignee, Del Rio] agree[] to alone bear all risks from" flooding . Cumberland
Valley and Del Rio received consideration for agreeing to bear the risks of
flooding, and "[w]e cannot see that the public are in any wise affected by such a
contract[. y,30 Given that the clause at issue was negotiated as part of an arm'slength transaction between two business corporations with presumably equal
bargaining power, we find no compelling reason to disturb their written contract .
[C]ontracts voluntarily made between competent
persons are not to be set aside lightly. As the right of
private contract is no small part of the liberty of the
citizen, the usual and most important function of
courts is to enforce and maintain contracts rather than
to enable parties to escape their obligations on the
pretext of public policy or illegality . If the legality of
the contract can be sustained in whole or in part
under any reasonable interpretation of its provisions,
courts should not hesitate to decree enforcement .
Kentucky courts have long upheld exculpatory clauses in arm'slength transactions between sophisticated parties with equal bargaining power
and allowed such parties to bargain against liability for their own negligence and
even gross negligence "short of willfulness and wantonness ." 32 Cumberland
Valley and Del Rio have failed to show where they have alleged willful or wanton
29
Jones v. Hanna, 814 S .W .2d 287, 289 (Ky.App. 1991), quoting Greenwich Ins . Co. ,
66 S.W. at 413 .
30
Greenwich at 413 .
31
Jones , 814 S.W.2d at 289 (quoting Zeitz v. Folev , 264 S.W.2d 267, 268 (Ky. 1954)).
32
As explained in Donegan , 894 F.2d at 207 n .1, the Greenwich rule was misstated in
dicta to prohibit contracting against liability for gross negligence in Cobb. 145 S.W.2d
at 99 (wherein only ordinary negligence was at issue) .
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negligence in the record33 (other than baldly asserting without citing appropriate
authority that any failure to comply with statutory duties necessarily shows willful
or wanton negligence) . So, since willful or wanton negligence was not at issue,
this Court finds no reason to invalidate the exculpatory clause at issue and, thus,
reverses the holding of the Court of Appeals on this issue and the judgment of
the trial court .
IV. CONCLUSION .
Having concluded that Bell County Coal timely appealed to the
Court of Appeals and that the exculpatory clause bars Cumberland Valley's and
Del Rio's claims altogether, we reverse the decision of the Court of Appeals and
judgment of the Bell Circuit Court . All other issues raised by the parties are
rendered moot by our decision .
All concur. Scott, J., not sitting .
33
Cumberland Valley and Del Rio pleaded gross negligence in their amended
complaint. But they have failed to cite to any portion of the record in which they
claimed willful or wanton negligence . Willful or wanton negligence is distinguishable
from gross negligence under Kentucky law. Gross negligence signifies "the absence
of slight care." Donegan , 894 F.2d at 207, citing McTavish v. Chesapeake & O.R.R.,
485 F.2d 510, 512 (6th Cir. 1973). Willful or wanton negligence signifies "the entire
absence of care for the life, person or property of others[]" with "an element of
conscious disregard of the rights or safety of others, which deserves extra
punishment in tort." Donegan at 207, citing Louisville & N. R.R. v. George, 279 Ky.
24, 29, 129 S.W.2d 986, 988-89 (1939).
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COUNSEL FOR APPELLANTS/CROSS-APPELLEES
CUMBERLAND VALLEY CONTRACTORS, INC.
AND DEL RIO, INC . :
Jacob P . Cline, III
PO. Drawer 2220
Middlesboro, KY 40965
Elizabeth Ullmer Mendel
Woodward, Hobson & Fulton, L.L.P.
2500 National City Tower
101 South Fifth Street
Louisville, KY 40202
COUNSEL FOR APPELLEES/CROSS-APPELLANTS
BELL COUNTY COAL CORPORATION
AND DARRELL HUFF:
Perry M . Bentley
J. Peter Cassidy, Jr.
Todd S . Page
Palmer G . Vance, II
Stoll, Keenon & Ogden, PLLC
300 West Vine Street - Suite 2100
Lexington, KY 40507
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