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NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. |
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STATE OF WISCONSIN : |
IN SUPREME COURT |
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MICHAEL YAUGER and BRENDA YAUGER, Plaintiffs-Appellants-Petitioners, v. SKIING
ENTERPRISES, INC., d/b/a HIDDEN VALLEY SKI AREA, a Wisconsin corporation and
INVESTORS INSURANCE COMPANY OF AMERICA, a foreign corporation, Defendants-Respondents. |
FILED DEC 19, 1996 Marilyn L. Graves Clerk of Supreme Court Madison, WI |
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REVIEW of a decision of the Court of Appeals. Reversed and
remanded.
WILLIAM A. BABLITCH, J. Michael and Brenda Yauger (the Yaugers), seek review of a court of appeals’ decision holding that a liability waiver signed by Michael Yauger effectively relieved Skiing Enterprises, Inc., d/b/a/ Hidden Valley (Hidden Valley) of liability for its alleged negligence in the death of the Yauger’s then eleven-year-old daughter, Tara. Hidden Valley argues that the exculpatory clause unambiguously relieves them from liability for the type of accident which gave rise to this litigation. The Yaugers argue that the ambiguity in the language of the exculpatory contract renders it unenforceable, and therefore it does not protect Hidden Valley from a negligence claim. We conclude that the exculpatory contract signed by Michael Yauger is void as against public policy for two reasons: (1) it failed to clearly, unambiguously, and unmistakably explain to him that he was accepting the risk of Hidden Valley’s negligence; (2) the form looked at in its entirety failed to alert the signer to the nature and significance of the document being signed. Accordingly, we reverse and remand.
The relevant facts are not in dispute. On October 8, 1992, Michael Yauger purchased a 1992-93 season family ski pass at Hidden Valley’s ski shop. The application form asked for the name, age, and relationship of his family members. He filled in the names of his daughters, eight-year-old Felicia, and ten-year-old Tara, and his wife, Brenda Yauger. Immediately following the space provided for this information was the clause in question (see Appendix for reproduced application form). It provided:
In support of this application for
membership, I agree that:
1. There are certain inherent risks in skiing and that we agree to
hold Hidden Valley Ski Area/Skiing Enterprises Inc. harmless on account of any
injury incurred by me or my Family member on the Hidden Valley Ski Area
premises.
There was nothing conspicuous
about the paragraph containing the waiver.
It was one paragraph in a form containing five separate paragraphs. Although the waiver paragraph was the first
paragraph of text, it did not stand out from the rest of the form in any
manner. It did not require a separate
signature.
On March 7, 1993, Tara was skiing
at Hidden Valley Ski Area when she allegedly collided with the concrete base of
a chair lift tower at the end of a ski run.
She died from injuries sustained in the collision.
The
Yaugers filed a wrongful death suit in circuit court alleging that Hidden Valley negligently failed to pad the
side of the lift tower. Hidden Valley
filed a motion for summary judgment based upon the exculpatory clause contained
in the application for the season family ski pass signed by Michael
Yauger. The circuit court for Manitowoc
County, Allan J. Deehr, Circuit Judge, granted the motion for summary judgment,
finding the exculpatory clause valid and binding on both Michael and Brenda
Yauger. The court of appeals held that
the exculpatory contract barred the Yaugers from suing Hidden Valley for
negligence, and upheld the summary judgment finding that the term “inherent
risks in skiing” plainly and simply described the risk of colliding with a
fixed object while skiing. Yauger v.
Skiing Enterprises, Inc., 196 Wis. 2d 485, 499, 538 N.W.2d 834 (1995). We disagree.
This
case presents one issue: whether, as a matter of public policy, the form
Michael Yauger signed bars the Yauger’s claim against Hidden Valley.
In
reviewing a decision affirming summary judgment, we apply the same standard
applied by the circuit court when it granted the motion for summary
judgment. Richards v. Richards,
181 Wis. 2d 1007, 1011, 513 N.W.2d 118 (1994); see Dobratz v. Thomson,
161 Wis. 2d 502, 512-13, 468 N.W.2d 654 (1991)(describing the step by step
analysis for reviewing the grant of a summary judgment pursuant to Wis. Stat. §
802.08(2)). If the court finds an
exculpatory contract void as against public policy, it will deny the
defendant’s motion for summary judgment.
Dobratz at 512-13.
Interpretation of a contract is a question of law which we review de
novo. Eder v. Lake Geneva Raceway,
187 Wis. 2d 596, 610, 523 N.W.2d 429 (1994).
If the exculpatory contract is void as a matter of law, then it would be
inappropriate to grant the defendants’ summary judgment motion insofar as there
remains a material issue of fact. We conclude
that, as a matter of law, the form Michael Yauger signed was void as against
public policy and, therefore, the clause does not bar the Yauger’s claim
against Hidden Valley.
Exculpatory contracts are not
favored by the law because they tend to allow conduct below the acceptable
standard of care. Richards, 181
Wis. 2d at 1015. However, exculpatory
contracts are not automatically void and unenforceable. Id.
Rather, a court closely examines whether such agreements violate public
policy and construes them strictly against the party seeking to rely on
them. Id.
Wisconsin law on exculpatory
contracts has recently been thoroughly reviewed. Richards; Dobratz, 161 Wis. 2d at 514-520; Arnold
v. Shawano County Agr. Society, 111 Wis. 2d 203, 330 N.W.2d 773 (1983), overruled
on other grounds, Green Springs Farms v. Kersten, 136 Wis. 2d 304,
317, 381 N.W.2d 582 (1985). There is no
need to reiterate the basic principles here.
An examination of these three most recent cases involving exculpatory contracts
as a defense to a negligence action leads us to the conclusion that the form
signed by Michael Yauger is void as against public policy.
These cases, in different ways,
involved an exculpatory clause that failed to disclose to the signers exactly
what rights they were waiving. In the
first case, Arnold, the court held an exculpatory contract unenforceable
because the accident that occurred was not “within the contemplation of the
parties” when they signed the exculpatory agreement. In contrast, in Dobratz, the court struck down on summary
judgment a broad release on the ground that it was ambiguous and unclear, and
that, as a matter of law, no contract was formed. Finally, in Richards, the court concluded that the
exculpatory contract was void as against public policy because its overbroad,
general terms created ambiguity and uncertainty as to what the signer was
releasing.
The first case involved an
accident during a stock car race at a county race track. Arnold. The plaintiff, a driver in the race, sustained severe brain
damage when, after crashing through the guardrail surrounding the racetrack,
racetrack rescue personnel sprayed chemicals into his burning car, creating
toxic chemical fumes. As a condition
precedent to participating in the race, the driver had signed an agreement
releasing defendants from liability from damages “whether caused by the
negligence [of defendants] or otherwise” while he was in the “restricted
area.” Arnold, 111 Wis. 2d at
212 (footnote omitted). Concluding that
the law does not favor exculpatory contracts, the court closely scrutinized
this agreement and strictly construed it against the party seeking to rely on
it. Id. at 209. The court examined the facts and
circumstances of the agreement to determine whether it expressed the intent of
the parties with particularity and thus assured certainty to the parties
involved. Although this contract
specifically referred to the defendants’ negligence, the court concluded that
while injuries from negligent track maintenance may have been waived, a
negligent rescue operation was not within the contemplation of the parties when
they executed the agreement and therefore, the contract was unenforceable.
Next, in Dobratz, while
participating in a water ski show as a member of the Webfooter’s Water Ski
Club, Mark Dobratz was killed when one of the motorboats in the show ran over
him. The circuit court rejected his
widow’s wrongful death claim because of the exculpatory form signed by Dobratz
prior to joining the club. The form
provided: [the signer] “knew the risk and danger to myself and property while
upon said premises or while participating or assisting in this event, so
voluntarily and in reliance, upon my own judgment and ability, and I there by
assume all risk for loss, damage or injury (including death) to myself and my
property from any cause whatsoever.” Dobratz,
161 Wis. 2d at 511 (emphasis added).
Holding that the contract was
unenforceable, the court explained that because particular provisions in the
contract were “very broad and general” it was unclear whether the activities
that took place immediately after Mark Dobratz fell into the water and up until
the time he was injured were to be included within “the event,” or whether,
alternatively, they constituted something akin to the rescue operations in Arnold
that were not clearly covered under the exculpatory contract. Specifically, the court concluded that the
contract failed to define several key terms:
neither the nature of the activity, nor the location where it was to
take place was explained; “this event” was not defined; the type of skiing
stunts the participant would be asked to perform were not indicated; and the
level of difficulty or dangerousness of the stunts was not explained. Dobratz, 161 Wis. 2d at 522. Because the terms in the contract were not
clearly defined, the court found that the contract failed to express the intent
of the parties with particularity. The
court held that the contract was unenforceable due to its ambiguity and
uncertainty.
Finally, in Richards, in
order to accompany her truck driver husband while he worked, Mrs. Richards
signed a “Passenger Authorization” form required by her husband’s employer, the
Monkem Company. The form purported to
waive defendants’ liability for “intentional, reckless, and negligent conduct,”
yet failed to circumscribe the specific time period or specific vehicle to be
covered by the waiver. Richards,
181 Wis. 2d at 1017. The court
concluded that the contract contravened public policy due to a combination of
factors: the contract served two purposes; the release was extremely broad and
all-inclusive; and the release was in a standardized agreement printed on the
company’s form. These factors indicated
to the court that Mrs. Richards did not have a clear understanding of the form
she was signing.
Among the principles that emerge from these
cases, two are relevant to our determination in this case. First, the waiver must clearly,
unambiguously, and unmistakably inform the signer of what is being waived. Second, the form, looked at in its entirety,
must alert the signer to the nature and significance of what is being
signed. The waiver in question fails in
both respects. Thus, the court finds
this waiver void as against public policy under either of these principles.
Addressing
the first principle, we conclude that the waiver fails to clearly,
unambiguously and unmistakably inform the signer that he is waiving all claims
against Hidden Valley due to their negligence.
Although Hidden Valley argues that the form unambiguously relieves them
from all liability for whatever cause including their own negligence, nowhere
in the form does the word “negligence” appear.
Indeed, the form fails to exhibit any language expressly indicating
Michael Yauger’s intent to release Hidden Valley from its own negligence.
Although
the contract uses the term “inherent risks in skiing,” nowhere in the contract
is that term defined. Hidden Valley
argues that the type of accident which led to Tara’s injuries, collision with a
fixed object, is inherent in the sport of skiing and therefore within the
contemplation of the parties. That
certainly is a plausible interpretation, but it is not the only plausible
interpretation. Equally plausible is
that the effect of the “inherent risks” language was sufficient only to negate
the possibility of a strict liability claim based on an inherently dangerous
activity, or, again equally plausible, that such term referred only to the
hidden dangers of skiing not attributable to the owner’s negligence.
The ambiguity of the phrase,
“inherent risks of skiing,” is seen in a review of other cases interpreting
this term. The highest court of New
Jersey defined “inherent risks of skiing” as those risks that “cannot be removed
through the exercise of due care if the sport is to be enjoyed.” Brett v. Great American Recreation, Inc.
677 A.2d 705, 715 (N.J. 1996)(interpreting the New Jersey Ski Statute). The essence of the Yauger’s tort claim is
that the danger from the lift tower could have been removed by placing padding
around the entire lift tower.
Similarly, the Supreme Court of Vermont expressly found that a ski
owner’s negligence is not an inherent risk of skiing. Dalury v. S-K-I, LTD., 670 A.2d 795, 800 (1995).
In contrast, the Michigan Court of
Appeals held that the “dangers that inhere in the [sport of skiing]” include
natural conditions and “types of equipment that are inherent parts of a ski
area, such as lift towers.” Schmitz
v. Cannonsburg Skiing Corp., 170 Mich.App. 692 (1988). If judges disagree on the meaning of the
term “inherent risks,” how can this court infer that a reasonable person would
understand what rights he or she was signing away?
Given the well established
principle that exculpatory contracts are construed strictly against the party
seeking to rely on them, and given the ambiguous nature of the term “inherent
risks of skiing,” we must conclude that this waiver was void as against public
policy because it failed to clearly, unambiguously, and unmistakably inform
Michael Yauger of the rights he was waiving.
Although we recognize that Dobratz and Arnold resolved the
issue on a contractual basis, Richards reached the same result, yet
departed from the contractual analysis and rested on public policy. We conclude that public policy is the
germane analysis. Just as the overly
broad releases in Richards, Dobratz, and Arnold raised
questions about the plaintiff signers’ understanding, so too the ambiguity in
this form raises troubling questions about Michael Yauger’s understanding of
the waiver. A valid exculpatory
contract must be clear, unambiguous, and unmistakable to the layperson. This form failed to unambiguously inform
Michael Yauger that he was prospectively absolving Hidden Valley from
responsibility for its negligence. The
form absolved Hidden Valley from the inherent risks of skiing, but failed to
state whether Hidden Valley’s negligence was one of the inherent risks of
skiing to which the clause referred.
The
second principle that emerges from our prior cases that is relevant here is
that the form, looked at in its entirety, must clearly and unequivocally
communicate to the signer the nature and significance of the document being
signed. This form violates that
principle in a number of respects.[1]
First, the form was a one page
form entitled “Application.” Thus, just as in Richards, this form was
meant to serve two purposes: 1) an application for a season pass; and, 2) a
release of liability. Just as in
Richards, this dual function is not made clear in the title of the contract,
which merely states, “Application.” The written terms indicate very clearly that
this contract is more than a mere application for a season pass. As we stated in Richards, “the
release should have been conspicuously labeled as such to put the person
signing the form on notice. . . Identifying and distinguishing clearly between
those two contractual arrangements could have provided important protection
against a signatory’s inadvertent agreement to the release.” Richards, 181 Wis. 2d at 1017.
Additionally, there was nothing
conspicuous about the paragraph containing the waiver. It was one paragraph in a form containing
five separate paragraphs. It did not
stand out from the rest of the form in any manner. It did not require a separate signature.[2]
The form, looked at in its
entirety, must be such that a reviewing court can say with certainty that the
signer was fully aware of the nature and the significance of the document being
signed. The combination of the above
factors leads us to conclude that we cannot say with any degree of certainty
that a reasonable person would be aware of the nature and significance of the
waiver at the time of its execution..
While the law grudgingly accepts
the proposition that people may contract away their right to recovery for
negligently caused injuries, the document must clearly, unambiguously, and
unmistakably express this intention.
Furthermore, the document when looked at in its entirety must clearly
and unequivocally communicate the nature and significance of the waiver. This form before us fails in both
respects. Accordingly, it is void as
against public policy.[3] We remand to the circuit court for a trial
on the issues of negligence and contributory negligence.
By the Court.¾The decision of the court of appeals is reversed
and the cause remanded to the circuit court for proceedings consistent with
this opinion.
SUPREME COURT
OF WISCONSIN
ROOM 715, 110 E. MAIN STREET
POST OFFICE BOX 1688
MADISON, WISCONSIN 53701-1688
TELEPHONE: (608)266-1880
FAX: (608)267-0640
Marilyn L. Graves, Clerk
AN
EXHIBIT HAS BEEN ATTACHED TO THIS OPINION.
THE EXHIBIT MAY BE OBTAINED UNDER SEPARATE COVER BY CONTACTING THE
SUPREME COURT CLERK’S OFFICE.
SUPREME COURT OF WISCONSIN
Case
No.: 94-2683
Complete
Title
of
Case: Michael Yauger and Brenda Yauger,
Plaintiffs-Appellants-Petitioners,
v.
Skiing Enterprises, Inc., d/b/a Hidden
Valley Ski Area, A Wisconsin corporation
and
Investors Insurance Company of
America, a foreign corporation,
Defendants-Respondents.
___________________________________________
REVIEW
OF A DECISION OF THE COURT OF APPEALS
Reported
at: 196 Wis. 2d 485, 538 N.W.2d
834
(Ct.
App. 1995)
PUBLISHED
Opinion
Filed: December 19, 1996
Submitted
on Briefs:
Oral
Argument: September 4, 1996
Source
of APPEAL
COURT: Circuit
COUNTY: Manitowoc
JUDGE: Allan J. Deehr
JUSTICES:
Concurred:
Dissented:
Not Participating:
ATTORNEYS: For the
plaintiffs-appellants-petitioners there were briefs by Gary L. Bendix, John
M. Bruce and Savage, Gregorski, Webster, Stangel, Bendix & Bruce,
S.C., Manitowoc and oral argument by John M. Bruce.
For the
defendants-respondents there was a brief by Thomas B. Hartley and Guttormsen,
Hartley & Guttormsen, Kenosha and oral argument by Thomas B.
Hartley.
Amicus curiae
brief was filed by Robert L. Jaskulski and Domnitz, Mawicke, Goisman
& Rosenberg, S.C., Milwaukee for the Wisconsin Academy of Trial
Lawyers.
Amicus curiae
brief was filed by Gregory J. Strasser and Terwilliger, Wakeen,
Piehler & Conway, S.C., Wausau for the Civil Trial Counsel of
Wisconsin.
[1] We need not address the third ground articulated in Richards, i.e., standardized agreement which offers little or no opportunity for negotiation or free and voluntary bargaining, inasmuch as either of the above principles was sufficient to void this contract.
[2]
The following suggestions for conspicuousness were adapted from
guidelines for practitioners governing warranty disclaimers under the Uniform
Commercial Code Stephanie J. Greer
& Hurlie H. Collier, The Conspicuousness Requirement: Litigating and
Drafting Contractual Indemnity Provisions in Texas After Dresser Industries,
Inc. v. Page Petroleum, Inc., 35 S. Tex. L. Rev. 243, 265-70, Apr. 1994.
A clear, unambiguous, and
unmistakable negligence waiver must be conspicuous. The far better practice is to place the waiver in a separately
titled section, highlighted from other parts of the contract. In order to further bring the signer’s
attention to the clause, it should be separately signed.
The print type and placement of
the negligence waiver add to its clarity and conspicuousness. The waiver print should stand out from the
surrounding print. Factors that
militate in favor of conspicuousness as to print include using a larger print
for the negligence waiver, using a different color print, preferably red, and
italicizing or boldfacing the waiver.
The placement of the exculpatory
clause also affects the signer’s awareness.
The negligence waiver should appear in an easy-to-find part of the
document - not buried in the fine print.
It should be on the front of a one-page contract, not on the
reverse. If it is on the reverse,
however, there should be language on the front calling the signer’s attention
to the negligence waiver on the reverse.
If there are many pages in the contract, the disclaimer should be on the
first page.
Finally, the language of the
negligence waiver should be readable.
The waiver should be preceded by a clear, not misleading, heading and
should not be written in legal jargon.
[3] Petitioner raises two other issues: (1) enforceability of the exculpatory clause against Michael Yauger’s non-signing wife, Brenda Yauger, and (2) enforceability of the exculpatory clause with respect to claims arising under Wisconsin’s Safe Place Statute. Because we find for the Petitioners on other grounds, we need not reach these issues.