Ransburg v. Richards

• Decision Date: 20 June 2002
• Docket Number: No. 29A05-0101-CV-25.,29A05-0101-CV-25.
• Citation: 770 N.E.2d 393
• Parties: Lenna RANSBURG d/b/a Twin Lakes Apartments, Appellant-Plaintiff, v. Barbara L. RICHARDS, Appellee-Defendant.
• Court: Indiana Appellate Court

770 N.E.2d 393

Lenna RANSBURG d/b/a Twin Lakes Apartments, Appellant-Plaintiff, v. Barbara L. RICHARDS, Appellee-Defendant.

No. 29A05-0101-CV-25.

Court of Appeals of Indiana.

June 20, 2002.

Michael R. Bain, Smith, Fisher, Maas & Bishop, Indianapolis, IN, Attorney for Appellant.

Jeffrey S. Zipes, Coots, Henke & Wheeler, Carmel, IN, Attorney for Appellee.

OPINION

BARNES, Judge.

Case Summary

Lenna Ransburg, d/b/a Twin Lakes Apartments ("Ransburg"), brings this interlocutory appeal to challenge the trial court's denial of her summary judgment motion in a negligence action filed by her tenant, Barbara Richards. We affirm.

Issue

The dispositive issue is whether the exculpatory clause contained in the residential lease between the parties is void as against public policy and whether, as a result, the denial of summary judgment in favor of Ransburg was proper.

Facts

In May 1995, Richards leased an apartment at Twin Lakes. The written lease agreement provided that Twin Lakes would "gratuitously" maintain the common areas. Appendix p. 78. The lease agreement further provided that Richards' use of the Twin Lakes facilities, including the parking lot, would be at "[her] own risk." Appendix p. 78. In addition, the lease agreement provided that Twin Lakes was not liable for damages to persons or property even if such damages were caused by Twin Lakes' negligence. Specifically, the lease contained the following clause:

Lessor shall not be liable for damages to person or property sustained by the Lessee, his family, servants, agents or visitors, due to the building or any of the appurtenances being out of repair or arising from leakage or stoppage of gas, plumbing, steam, water, sewer pipes or from defective wiring or from defective construction of any of the aforesaid. It is agreed that the common areas and grounds, on which the demise premises are located, recreational facilities, laundry rooms and equipment, hallways, walkways, stairways, parking lots, lawns and all other areas and equipment to be used in common by all occupants of the apartment building and grounds, are provided and maintained gratuitously by Lessor, and that their use is not appurtenant to the premises hereby leased; and the Lessee hereby expressly agrees that the same shall be made use of Lessee, his family, servants, agents or visitors, such use shall be at his, or their own risk, and that the lessor shall, in no event, be, or become liable thereby for any loss, or damage, to persons or property, whether such property be contained in the storerooms, in the common areas, in the leased premises or in any other portion of said building and grounds, even though such loss or damage shall be caused by the negligence of Lessor, or its agents, servants, or employees.

Appendix p. 78 (emphasis added).

In the early morning hours of January 28, 1999, it snowed approximately two inches. When Richards left her apartment that morning, she noticed that the sidewalk had been cleared. It also appeared that the parking lot had been plowed and cleared. As Richards walked across the parking lot to her car, she slipped and fell on snow-covered ice.

Richards subsequently filed a negligence action against Ransburg. Ransburg responded with a summary judgment motion wherein she alleged that because of the non-liability clause in the lease, Richards had "waived any right that she ha[d] to complain of injuries or damages...." Appendix p. 24. In her brief in opposition to Ransburg's motion, Richards contended that there were genuine issues of material fact with regard to whether Richards had assumed a duty to remove the snow and ice. The trial court denied Ransburg's motion.

Analysis

Ransburg argues that the trial court erred in denying her summary judgment motion because Richards waived any claim to damages. She claims that summary judgment should have been granted in her favor because "the law requires that the clear and unambiguous terms of the May 2, 1995, Residential Lease Agreement and corresponding non-liability clause entered into by [Richards] and [Ransburg] be enforced as a matter of law." Appellant's Brief p. 6. In support of her argument, she relies on basic contract principles and Indiana's recognition of the validity of exculpatory clauses, where parties are allowed to agree in advance that one is under no obligation of care for the benefit of the other and shall not be liable for the consequences of negligent conduct. See, e.g., LaFrenz v. Lake County Fair Board, 172 Ind.App. 389, 360 N.E.2d 605 (1977). She maintains that in the absence of legislation to the contrary, it is not against public policy to enter into an agreement that exculpates one from the consequences of her own negligence. See Marshall v. Blue Springs Corp., 641 N.E.2d 92 (Ind.Ct. App.1994).

Our standard of review for the denial of a summary judgment motion is the same as it was for the trial court. Miller v. Grand Trunk Western R.R., Inc., 727 N.E.2d 488, 491 (Ind.Ct.App.2000). We must determine whether there is a genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law. Id. We must consider the pleadings and evidence designated pursuant to Indiana Trial Rule 56(c) without deciding their weight or credibility. Id. Summary judgment should be granted only if such evidence shows that there is no genuine issue of material fact and that judgment is warranted as a matter of law. Id. Summary judgment is generally inappropriate in negligence actions. Miles v. Christensen, 724 N.E.2d 643, 645 (Ind.Ct. App.2000), trans. denied.

Resolving the question of whether this lease provision is void as against public policy turns on fairly balancing the parties' freedom to contract against the policy of promoting responsibility for damages caused by one's own negligent acts. Indiana courts have long recognized and respected the freedom to contract. Trotter v. Nelson, 684 N.E.2d 1150, 1152-53 (Ind.1997). We recognize a "very strong presumption of enforceability of contracts that represent the freely bargained agreement of the parties." Id. (quoting Continental Basketball Assoc. v. Ellenstein Enter., Inc., 669 N.E.2d 134, 139 (Ind.1996)). As a general rule, the law allows persons of full age and competent understanding the utmost liberty of contracting, and their contracts, when entered into freely and voluntarily, are enforced by the courts. Candlelight Prop., LLC v. MHC Operating Ltd. P'ship, 750 N.E.2d 1, 10 (Ind.Ct.App. 2001). It is in the best interest of the public that persons should not be unnecessarily restricted in their freedom of contract. Peoples Bank & Trust Co. v. Price, 714 N.E.2d 712, 716 (Ind.Ct.App.1999), trans. denied. However, in certain circumstances a court may declare an otherwise valid contract unenforceable if it contravenes the public policy of Indiana. Trotter, 684 N.E.2d at 1152-53.

As aptly stated by our supreme court, "[p]ublic policy is a term not easily defined." Id. In Trotter, the supreme court stated that in the past, Indiana courts have noted that we first look to the Constitution, the legislature, and the judiciary for explicit declarations of public policy. Id. In the absence of such a declaration, we next look to whether it can be clearly shown that the agreement has a tendency to injure the public, or is against the public good, or is inconsistent with sound policy and good morals as to the consideration or as to the thing to be done or not to be done. Id. The supreme court further noted that whether a contract is against public policy in a particular situation would be a question of law dependent on the circumstances of the particular case. Id.

The Trotter court then acknowledged that this approach had been reiterated in recent cases:

Recently, this Court re-emphasized this analysis. We categorized three situations where courts have refused to enforce private agreements on public policy grounds: "(i) agreements that contravene statute; (ii) agreements that clearly tend to injure the public in some way; and (iii) agreements that are otherwise contrary to the declared public policy of Indiana." We further noted that, depending on the category, we must approach the analysis in different manners. If an agreement is in direct contravention of a statute, "then the court's responsibility is to declare the contract void." If, however, the agreement falls into the more amorphous category of "otherwise contrary to the declared public policy of Indiana," then the court must balance five relevant factors: (i) the nature of the subject matter of the contract; (ii) the strength of the public policy underlying the statute; (iii) the likelihood that refusal to enforce the bargain or term will further that policy; (iv) how serious or deserved would be the forfeiture suffered by the party attempting to enforce the bargain; and (v) the parties relative bargaining power and freedom to contract.

Id. (citations and footnote omitted). The case before us falls in the "amorphous" category of "otherwise contrary to the declared public policy of Indiana," and, therefore, we must consider the five factors in evaluating this provision of the lease.

Indiana recognizes the general validity of exculpatory clauses. Marsh v. Dixon, 707 N.E.2d 998, 1000 (Ind.Ct.App. 1999), trans. denied. We have stated:

Parties are permitted to make such contracts so long as they are knowingly and willingly made and free from fraud. No public policy exists to prevent such contracts. However, exceptions exist where the parties have unequal bargaining power, the contract is unconscionable, or the transaction affects the public interest such as utilities, carriers, and other types of businesses generally thought to be suitable for regulation or which are thought of as a practical necessity for some members of the public.

General Bargain Ctr. v. American Alarm Co., 430 N.E.2d 407, 411-12 (Ind.Ct.App. 1982). Exculpatory clauses are generally enforced and are...