Allan J. Dailey, as trustee for the heirs and next of kin of Kamyab Aghai Tabriz, Appellant, vs. Sports World South, Inc., d/b/a Scuba Center, et al., Respondents.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-127

 

Allan J. Dailey,

as trustee for the heirs and next of kin of

Kamyab Aghai Tabriz,

Appellant,

 

vs.

 

Sports World South, Inc.,

d/b/a Scuba Center, et al.,

Respondents.

 

Filed September 30, 2003

Affirmed

Kalitowski, Judge Dissenting, Schumacher, Judge

 

Hennepin County District Court

File No. WD 02-2788

 

John P. Sheehy, Michael C. Snyder, Pamela J. Spaulding, Meshbesher & Spence, Ltd., 1616 Park Avenue, Minneapolis, MN 55404 (for appellant)

 

Katherine A. McBride, Michael D. Hutchens, Erica Gutmann Strohl, Meagher & Geer, P.L.L.P., 33 South Sixth Street, Suite 4200, Minneapolis, MN 55402; and

 

Mark Hruska, pro hac vice, 750 South Dixie Highway, Boca Raton, FL 33432 (for respondents)

 

            Considered and decided by Kalitowski, Presiding Judge; Schumacher, Judge; and Anderson, Judge.

 

U N P U B L I S H E D   O P I N I O N

KALITOWSKI, Judge

            Appellant brought this wrongful death action alleging negligent supervision and instruction during a scuba-diving class.  The district court granted summary judgment to respondents based on an exculpatory clause in the release signed by the decedent.  Appellant argues the district court erred in granting summary judgment because:  (1) the exculpatory clause is unenforceable; and (2) the exculpatory clause does not apply to the instructors not specifically named in it.  We affirm.

FACTS

 

            Sports World South, Inc., d/b/a Scuba Center (Scuba Center) offers a scuba-diving class consisting of classroom and pool training, followed by an open-water-training dive.  Kamyab Aghai Tabriz (Tabriz) enrolled in Scuba Center's open-water course.  On June 15, 2001, Tabriz signed a document entitled "Liability Release and Express Assumption of Risk" (release). 

            Beginning on June 15, 2001, Tabriz attended the classroom and pool training.  Rick Duffy was the instructor.  According to Duffy, Tabriz "demonstrated mastery of all theoretical concepts and performance requirements and was therefore qualified to begin his open water training." 

            On June 23, 2001, Tabriz participated in the open-water training.  Ten students attended and were divided into two groups.  Six students, including Tabriz, were assigned to one instructor, Mary Nelson, and the four remaining students were assigned to the other instructor, Dan Schibel.  The students were grouped in pairs, in accordance with established safe diving practices that require using the buddy system throughout every dive.

            Tabriz's group began by doing a dive and swim around the perimeter of a course laid out by colored rope near the bottom of the lake.  The other group began by performing skills tests near the shore.  Tabriz apparently became uncomfortable during the dive and joined the other group near the shore.  When the second group began their dive and swim, Tabriz joined them with instructor Schibel as his buddy.  Upon surfacing, the instructors realized Tabriz was missing.  He was subsequently found in 15 to 16 feet of water with his regulator out of his mouth.  Tabriz later died at the hospital.  According to the police report, the autopsy indicated Tabriz died from drowning.

            Appellant, as trustee for the heirs and next-of-kin of Tabriz, initiated a wrongful-death claim against respondents.  Appellant's complaint alleged respondents negligently caused Tabriz's death by failing to provide proper instruction, supervision, and warnings during the open-water dive. 

            Respondents moved for summary judgment, arguing that the negligence claims were barred by the exculpatory release signed by Tabriz.  The district court agreed and granted respondents' motion for summary judgment and dismissed appellant's complaint with prejudice.

D E C I S I O N

 

I.

            On appeal from summary judgment, this court asks two questions:  (1) whether there are any genuine issues of material facts; and (2) whether the district court erred in its application of the law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).

            Appellant argues the release signed by Tabriz is unenforceable as a matter of law because it (1) purports to release respondents from willful or wanton recklessness, or intentional conduct; (2) is ambiguous in scope; and (3) violates public policy.

1.         Willful or wanton recklessness or intentional conduct

            "If [a] clause . . . purports to release the benefited party from liability for intentional, willful or wanton acts, it will not be enforced."  Schlobohm v. Spa Petite, Inc., 326 N.W.2d 920, 923 (Minn. 1982).  Moreover, a clause exonerating a party from liability is strictly construed against the benefited party.  Id.  But whether an agreement's language is ambiguous is a question of law in the first instance.  Blattner v. Forster, 322 N.W.2d 319, 321 (Minn. 1982).  Therefore, this court reviews de novo the district court's determination that the release exonerates respondents for acts of negligence only.  See Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).

            The release signed by Tabriz provided the following:

I understand and agree that neither my instructor(s), _______ the facility through which I received by instruction, _______ nor International PADI, Inc., nor any of their respective employees, officers, agents or assigns, (hereinafter referred to as "Released Parties") may be held liable or responsible in any way for any injury, death, or other damages to me or my family, heirs, or assigns that may occur as a result of my participation in this diving class or as a result of the negligence of any party, including the Released Parties, whether passive or active.

 

"Rick Duffy" was handwritten in the first blank and "Scuba Center" was inserted in the second blank.  The final paragraph in the release also addresses respondents' liability as follows:

IT IS THE INTENTION OF _________ BY THIS INSTRUMENT TO EXEMPT AND RELEASE MY INSTRUCTORS, ________ THE FACILITY THROUGH WHICH I RECEIVED MY INSTRUCTION ________ AND INTERNATIONAL PADI, INC, AND ALL RELATED ENTITIES AS DEFINED ABOVE, FROM ALL LIABILITY OR RESPONSIBILITY WHATSOEVER FOR PERSONAL INJURY, PROPERTY DAMAGE OR WRONGFUL DEATH HOWEVER CAUSED, INCLUDING, BUT NOT LIMITED TO, THE NEGLIGENCE OF THE RELEASED PARTIES, WHETHER PASSIVE OR ACTIVE.

 

Handwritten in the three spaces respectively are, "Kamyab A. Tabriz," "Rick Duffy," and "Scuba Center." 

            The language contained in this release is substantially similar to the language of the releases upheld in Schlobohm and Malecha v. St. Croix Valley Skydiving Club, Inc., 392 N.W.2d 727 (Minn. App. 1986), review denied (Minn. Oct. 29, 1986).  In Schlobohm, the plaintiff signed a release agreeing not to hold Spa Petite, a health club, liable

for any claims, demands, injuries, damages, actions or causes of action, whatsoever to member or property arising out of or connected with the use of any of the services and facilities of Spa Petite . . . member does hereby expressly forever release and discharge the said Spa Petite from all such claims, demands, injuries, damages, actions or causes of action, and from all acts of active or passive negligence on the part of such company, corporation, club, its servants, agents, or employees. 

 

Schlobohm, 326 N.W.2d at 921-22.  The court determined that this language "exonerate[s] Spa Petite from liability for acts of negligence and negligence only."  Id. at 923.  Similar to the case here, the court also noted that the claims of the plaintiff were based on negligence only and there was no claim that Spa Petite acted willfully, intentionally, or wantonly.  Id.

            In Malecha, the waiver provided:

That I, [Rick Malecha], the undersigned, while engaging in the sport of parachuting or skydiving, do hereby agree for myself, my heirs, executors, administrators and assigns, that neither said St. Croix Valley Skydiving Club Inc., nor any of its officers or members shall be held responsible or liable for any negligence implied or otherwise, or personal injury, or death, or property loss, or damage suffered or sustained by me in connection with or arising out of or resulting from any or all parachuting or skydiving activities engaged in by me; and further, I do hereby, for myself, my heirs, administrators, executors, and assigns, assume all risk whatsoever of personal injury or death or property damage or loss in connection with or arising out of or resulting from any or all parachuting or skydiving activities engaged in by me, and absolve and release said St. Croix Valley Skydiving Club, Inc., its officers and members, of and from all liability thereof, and further, I do hereby convent [sic] and agree for myself, my heirs, executors, administrators, and assigns, not to sue, arrest, attach, or prosecute said St. Croix Valley Skydiving Club, Inc., its officers and members for or on account of any such personal injury or death or property damage or loss, it being my express intent and purpose to bind myself, my heirs, executors, administrators, and assigns hereby.

 

Malecha, 392 N.W.2d at 728.  The court determined, "[e]ven though the agreement is unnecessarily wordy, it is susceptible to only one reasonable interpretation."  Id. at 729.  It then released respondent from liability for negligence only.  Id. at 732.  The court also acknowledged that "some of the language in the agreement could be construed to extend beyond acts of negligence," but reasoned that the agreement in Schlobohm also included broad language.  Id. at 729.  Thus, the Malecha court upheld the release as a valid exculpatory agreement.  The court also noted that, like the plaintiff in Schlobohm, the plaintiff in Malecha alleged only that the skydiving club had been negligent and did not allege any damage from intentional or willful acts.  Id. at 730.

            We apply the same interpretation here.  Appellant contends that some of the language contained in the release is an attempt by respondents to escape liability for intentional, willful, or wanton acts.  We conclude, however, that based on Schlobohm and Malecha, the only reasonable interpretation of the language in this release is that it exonerates respondents from liability for acts of negligence only.  Moreover, appellant has not alleged any claims resulting from intentional or willful acts.

            Appellant relies primarily on Nimis v. St. Paul Turners, 521 N.W.2d 54 (Minn. App. 1994) for support that the release should not be enforced.  In Nimis, the plaintiff agreed to release the defendant from liability for injuries "caused or alleged to be caused in whole or in part by the negligence of the . . . [defendant] or otherwise."  Id. at 57.  The court commented that the language "or otherwise" caused the agreement to be ambiguous as to whether it released the defendant for injuries caused intentionally.  Id. at 58.  But the court's comment regarding the ambiguity of the release was not the deciding issue in the case; therefore, the comment was dicta.  See K.R. v. Sanford, 588 N.W.2d 545, 548 (Minn. App. 1999) (stating that dicta are expressions in an opinion that go beyond the facts of the case), aff'd, 605 N.W.2d 387 (Minn. 2000).  The court ultimately concluded that the plaintiff was not subject to any waiver at the time of her injury because it had expired at the termination of the underlying contract.  Nimis, 521 N.W.2d at 58.  Thus, Nimis is not controlling here.

2.         Ambiguous scope

            Whether an agreement is ambiguous is a question of law that this court reviews de novo.  Blattner, 322 N.W.2d at 321.  Appellant argues that the scope of the release is ambiguous because Tabriz did not knowingly or intentionally waive his right to receive supervised instruction from a competent instructor or competent buddy.  The district court determined that these are claims for negligence arising out of participation in the diving class that are within the scope of the release.  We agree.

            The release signed by Tabriz provides that neither the instructors nor the facility may be held liable for any bodily injury or wrongful death caused by his participation in the class or negligence by the instructors.  Thus, by the plain language of the release, Tabriz released respondents from liability for any alleged negligent instruction.  See Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 67 (Minn. 1979) (stating that language in a contract is given its plain and ordinary meaning).

            The Malecha court addressed an argument similar to the one raised by appellant here.  The plaintiff in Malecha argued that the skydiving club's alleged failure to properly pack his parachute was not within the scope of the exculpatory agreement.  Malecha, 392 N.W.2d at 731.  The court concluded, however, that the broad definition of potential negligence in the exculpatory clause encompassed the type of accident that occurred.  Id.  The court also stated that the parachute was an integral part of skydiving and therefore, "[t]here would be no rational basis upon which to exclude from the scope of the exculpatory agreement negligence resulting in a malfunction of the parachute."  Id.

            We conclude that a similar analysis applies here.  Receiving instruction from teachers is an integral part of a scuba-diving class and therefore, it would not be rational to exclude negligent instruction from the scope of this release.

3.         Public Policy

            Schlobohm also requires courts to determine whether an exculpatory clause violates public policy.  326 N.W.2d at 923.  Before enforcing an exculpatory clause, both prongs of the test must be examined.  Id.  They are:  (1) whether there was a disparity in bargaining power between the parties; and (2) whether the type of services being provided are public or essential.  Id.  

            According to Schlobohm, a disparity of bargaining power exists when an adhesion contract is drafted unilaterally by a business and forced on an unwilling and unknowing public "for services that cannot readily be obtained elsewhere."  Id. at 924 (citations omitted).  Generally, it is a contract not bargained for but imposed on the public for a necessary service on a "take it or leave it" basis.  Id.  Moreover, "[t]here must be a showing that the parties were greatly disparate in bargaining power, that there was no opportunity for negotiation and that the services could not be obtained elsewhere."  Id. (citations omitted) (emphasis in original). 

            In Schlobohm, the supreme court determined that there was not a disparity in bargaining power because the plaintiff voluntarily applied for membership at the health club, and there was no showing that the services were necessary or that they could not have been obtained elsewhere.  Id. at 925.

            Here, Tabriz voluntarily signed up for the scuba-diving class, and there was no showing that the services were necessary or that they could not have been obtained elsewhere.  Tabriz had his choice of several other scuba-diving facilities in the area.  Moreover, Tabriz was not compelled to scuba dive and had the choice to forego the activity altogether.  See Malecha, 392 N.W.2d at 730.

            In addition, although appellant concedes that scuba diving is not an essential public service, he argues that scuba diving implicates the public interest and therefore, suggests that the standard set forth in Schlobohm be extended to encompass not only essential services, but services that affect the public interest.  But appellant offers no support for his position other than policy arguments and foreign caselaw.  And the majority of the Minnesota Supreme Court in Schlobohm rejected that argument and concluded that recreational activities are not essential public services.  Id. at 925-26.

II.

            Finally, appellant argues that even if we uphold the release as valid, it does not apply to this incident because the release applies only to the instruction Tabriz received from Rick Duffy during Part I of the scuba-diving course and did not apply to the direction he received from other instructors.  But according to the language in the exculpatory clause, Tabriz agreed to release his instructors, Scuba World, and all of their "respective employees."  Thus, although Schibel and Nelson's names are not specifically listed on the release signed by Tabriz, they are released from liability as employees of Scuba World.

            Affirmed.

 

 

 

ROBERT H. SCHUMACHER, Judge (dissenting)

            I respectfully dissent.  I believe the exculpatory clause at issue here is unenforceable because it is ambiguous, does not comport with fundamental contract principles, and is against public policy.

If an exculpatory clause "is either ambiguous in scope or purports to release the benefited party from liability for intentional, willful or wanton acts, it will not be enforced."  Schlobohm v. Spa Petite, Inc., 326 N.W.2d 920, 923 (Minn. 1982).  Here, the clause's final paragraph in capital letters claims to prevent students from recovering for any injury "however caused, including, but not limited to, the negligence of the released parties."  (Emphasis added.)    I find it difficult to imagine how a clause that specifically states it is "not limited to negligence" does not purport to release the respondents from liability for intentional willful or wanton acts.  The clause is unenforceable, regardless of whether or not there is a claim for willful or wanton conduct in this case.

A contract must conform to the basic fundamentals of contract law.  A contract is the result of a bargained-for exchange where both sides exercised good faith and fair dealing.  In re Hennepin County 1986 Recycling Bond Litig., 540 N.W.2d 494, 502 (Minn. 1995) (holding "every contract includes an implied covenant of good faith and fair dealing"); Cederstand v. Lutheran Bhd., 263 Minn 520, 530, 117 N.W.2d 213, 220 (1962) (stating "a contractual promise [must] be the product of a bargain"); Restatement (Second) of Contracts §§ 17 and 205 (1981).  Good faith, at a minimum, excludes actions that violate community standards of decency, fairness, or reasonableness.  Restatement (Second) of Contracts § 205 cmt. a (1981).  Subterfuge, evasion, and "abuse of power to specify terms" are some examples of bad faith.  Id.  cmt. d.  I believe if Scuba Center wishes to shield itself from its own liability, the release should be honestly and legitimately negotiated.  See Turnbough v. Ladner, 754 So. 2d 467, 469 (Miss. 1999) (holding exculpatory clauses that are not "fairly and honestly negotiated and understandingly entered into" are invalid (quotation omitted); Schmidt v. United States, 912 P.2d 871, 875 (Okla. 1996) (stating that exculpatory clause is only valid from bargained-for exchange "on a level playing field" where level varies according to seriousness of the contract's subject matter and options available to injured party).  Allowing Scuba Center to ignore the most basic rules of contract law does not support "freedom of contract."

The case at hand is indicative of why exculpatory clauses must be fairly and honestly negotiated and understood by both parties.  Tabriz was presented with a pre-printed "Liability Release and Express Assumption of Risk" form, which he was required to sign in order to participate in the certification process.  There is no evidence that any negotiation took place regarding other options such as paying more money to participate without the clause.  Furthermore, the release is evasive and fails to adequately state significant dangers.  The release contains a detailed discussion of hyperbaric injuries but says nothing about the danger of drowning from panic.  See Phyllis G. Coleman, Scuba Diving Injuries: Causes, Remedies and Defenses 29 J. Mar. L. & Com. 519, 541 (1998) (suggesting, in light of study finding 54% of experienced divers questioned had panicked at least once, scuba industry is masking dangers of panic to keep new customers flowing through door).  The release does not refer to the possibility that the instructor may deviate from accepted practices or that an instructor's decision to affirmatively undertake a greater duty of care does not expose the instructor or Scuba Center to any level of liability.  The release was not the result of a bargained-for exchange where both sides exercised good faith and fair dealing.

The need for freedom of contract cannot support a contract that "violates some principle which is of even greater importance to the general public."  Christensen v. Eggen, 577 N.W.2d 221, 225 (Minn. 1998) (quoting Rossman v. 740 River Drive, 308 Minn. 134, 136, 241 N.W.2d 91, 92 (1976)).  Scuba Center argues that the public policy issue in this case squarely falls within Schlobohm's analysisbecause it involves a recreational activity.  What is at issue here, however, is instruction and not recreation.  Baschuk v. Diver's Way Scuba, Inc., 618 N.Y.S.2d 428, 430 (N.Y. App. Div. 1994).  Unskilled consumers seek instruction because they cannot understand all dangers an activity, foreign to the average person, presents nor can they know how to escape danger when arises.  Instead, the consumers must entrust the instructor and the school with their very lives.  In a time when this country has realized the need for a heightened sense of corporate responsibility, I fail to see how upholding a release of liability for a company that is entrusted with the lives of this state's citizens, and then violates that trust, serves the public interest. 

As the Virginia Supreme Court eloquently stated in invalidating an exculpatory clause involving a sporting event, allowing one party "to put the other parties to the contract at the mercy of its own misconduct . . . can never be lawfully done where an enlightened system of jurisprudence prevails.  Public policy forbids it and contracts against public policy are void."  Hiett v. Lake Barcroft Cmty. Ass'n, 418 S.E.2d 894, 896 (Va. 1992) (alteration in original) (quotation omitted).   In Minnesota, a basic precept of justice and a principle embodied in Section 8, Article 1 of the Minnesota Constitution is a wrongdoer should bear the burden of his or her own conduct, not the innocent victim.    Anderson v. Stream, 295 N.W.2d 595, 600 (Minn. 1980). We have long recognized that this policy outweighs the need of "freedom in contract" when it comes to the sale of consumer goods.     See Minn. Stat. § 336.2-719 (2002) ("Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.").   Consumer instruction should not be any different.

            I would reverse the district court's grant of summary judgment and remand for trial.