Bennett v. Fun & Fitness of Silver Hill

• Decision Date: 17 August 1981
• Docket Number: No. 80-85.,80-85.
• Parties: Darlene M. BENNETT, Appellant, v. FUN & FITNESS OF SILVER HILL, INC., A Corporation, Appellee.
• Court: D.C. Court of Appeals

434 A.2d 476

Darlene M. BENNETT, Appellant, v. FUN & FITNESS OF SILVER HILL, INC., A Corporation, Appellee.

No. 80-85.

District of Columbia Court of Appeals.

Submitted September 25, 1980.

Decided August 17, 1981.

Bernard A. Gray, Washington, D. C., for appellant.

Joseph Sperling, Washington, D. C., for appellee.

Before KELLY and FERREN, Associate Judges, and YEAGLEY, Associate Judge, Retired.

FERREN, Associate Judge:

This is an appeal from a trial court order granting summary judgment for plaintiff-appellee, Fun & Fitness of Silver Hill, Inc., against defendant-appellant, Darlene M.

Bennett, for breach of a Maryland health club contract. Appellant contends that the trial court (1) abused its discretion in denying her motions to amend her answer and her admissions; (2) erred in ruling there were no genuine issues of material fact as to the validity of the contract; and (3) in any event, applied an incorrect rule of damages in awarding appellee the unpaid contract price. We hold that the trial court abused its discretion in declining to grant appellant's motions to amend her answer and her admissions. Applying the governing Maryland law, we further conclude that appellant raised a genuine issue of material fact as to the enforceability of the contract and that even if the contract is valid, appellee has the burden of proving actual damages. Accordingly, we reverse and remand the case for further proceedings.

I. FACTS AND PROCEEDINGS TO DATE

Appellant alleges¹ that on June 13, 1978, she attended a health club in Silver Hill Maryland, known as Fun & Fitness under a free supervised guest pass. At the end of the day, approximately fifteen minutes before closing, one of appellee's sales representatives took appellant into an office to discuss joining the club. After the discussion, appellant told the salesman that she wanted to think about whether to join. The salesman gave appellant a contract to read and left the room. When he returned, appellant told him that she had not finished reading the papers. The salesman replied that "he would explain everything to [appellant] because they were closing." Appellant then signed a two-page form contract for a 60-month "gold card" membership — a membership sold, according to the contract, "in limited quantities." Appellant also paid $25.00 in cash. The next day, appellant called Fun & Fitness to cancel her membership; she was told she could not do so. Appellant did not make the payments called for under the contract. On April 12, 1979, appellee filed suit.

The contract calls for 24 monthly payments of $41.25. It states that these are installment payments, that the contract is noncancellable, and that the failure of a member to use the facilities will not affect the obligation to pay in full. The contract provides a formula for calculating the sum due if, after joining, a member becomes medically disabled or moves to another area. The contract also provides that if the Fun & Fitness center closes permanently for any reason, the contract will terminate "without any further liability on the part of Purchaser or F & F, including any refunds by F & F for payments prior to the closing of the Exercise Center." The contract states that a prospective member should not sign without reading it in full.

In appellant's original answer to the complaint, she denied defaulting on the contract and further denied owing the amount claimed. After appellee had moved for summary judgment, appellant sought on October 26, 1979, to amend her answer by adding that "[i]n the event that the Court should find that the Defendant has breached the contract, the Defendant denies that the Plaintiff has suffered damages in the amount claimed or in any amount." Appellant also attempted to amend her admissions by denying the following three statements:

5. That the finance charge rebate as computed according to the Rule of 78, as of April 2, 1979 was $57.75.

. . . .

6. That the late charges for nine (9) months payments at $2.06 totals $18.54.

7. That the current balance which remains due and owing to Plaintiff from Defendant is $950.79.

Appellant originally had admitted these facts but, in each instance, had added "only if the contract were valid." Appellee opposed both proposed amendments, arguing that they did not provide any additional ground of defense. Appellee, however, at no point alleged prejudice from the amendments.

The court denied both of appellant's requests to amend. On the same day, the court granted appellee's motion for summary judgment and entered judgment against appellant for $950.79, with interest at 6% per annum from April 2, 1979, plus costs and a 15% attorney's fee.

II. MOTION TO AMEND ANSWER

Leave to amend a pleading "shall be freely given when justice so requires." Super.Ct.Civ.R. 15(a). Although the decision is a matter of trial court discretion, the policy favoring resolution of cases on the merits creates "a virtual presumption" that a court should grant leave to amend where no good reason appears to the contrary. Randolph v. Franklin Investment Co., D.C. App., 398 A.2d 340, 350 (1979) (en banc) (trial court abused discretion in not allowing defendant to amend answer to include compulsory counterclaim); accord, Bronson v. Borst, D.C.App., 404 A.2d 960, 963 (1979). In exercising its discretion, the trial court should consider "the number of such requests the length of the pendency of the trial, the number of previous continuances, the existence of bad faith or dilatory motive, the merit of the counterclaim [here, the defense], and the existence of prejudice to the other party." Id. (summarizing en banc holding in Randolph, supra at 350).²

In this case, appellant moved to amend her answer to add to her earlier denials (that she had defaulted on the contract and that she owed the amount claimed) a denial that appellee had suffered any damage. The trial court's order denying her motion is not accompanied by a statement of reasons. Applying the Bronson analysis ourselves, we conclude that the trial court had no reasonable basis for denying appellant's motion to amend. At the time of the motion, the case had been pending only about six months. See Bronson, supra at 963. There had been no continuances. See id. Appellee made no allegation of prejudice from amendment. See id. at 963-64. Appellee's only reason for opposition was its perception that the amendment added nothing to appellant's defense. Appellant's proposed amendment, however, raised a new and meritorious defense as to damages. See Part V. infra. We conclude, accordingly, that the trial court abused its discretion in denying appellant leave to amend her answer.

III. MOTION TO AMEND ADMISSIONS

The rule governing amendment of admissions is similar to the one for amendment of pleadings. It is designed to further a "just and complete resolution of the merits." Marshall v. District of Columbia, D.C.App., 391 A.2d 1374, 1379 (1978). More specifically, a party may withdraw or amend admissions "when the presentation of the merits of the action will be subserved thereby and the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice him in maintaining his action or defense on the merits." Super Ct.Civ.R. 36(b). "Accordingly, unless a party demonstrates prejudice by reliance upon previous admissions, the trial court can and should extend permission to withdraw or amend." Marshall, supra at 1379.

Appellant moved to amend her admissions in order to deny that she owed appellee the sums claimed. Appellee never claimed that the proposed amendments to admissions would be prejudicial. Instead, appellee opposed amendment solely on the ground that it was an effort to raise a nonexistent damages issue. Because we conclude that appellant's amended admissions (along with her amended answer) suggest a meritorious damages issue, see Part V. infra, we hold, absent prejudice to appellee, that the trial court abused its discretion in declining to permit the amendment.

IV. VALIDITY OF THE CONTRACT

We turn now to the merits. The parties agree that Maryland contract law governs this action. See 1 Restatement (Second) of Conflict of Laws §§ 188, 196, 207 (1971).³ Under that law, on the facts alleged, there is a serious question whether the contract is unconscionable. Thus, we must reverse summary judgment for appellee and remand for further proceedings.

Although Maryland law is not thoroughly developed in this area, it is clear that Maryland no longer follows the absolute rule (in appellee's words) that "[d]efendant is bound by the terms of the contract by signing it, whether she has chosen to read it or not." This rule is qualified: "an apparent manifestation of assent will not operate to make a contract if the other party knows, or a reasonable person should know, that the apparent acceptor does not intend what his words or acts ostensibly indicate." Binder v. Benson, 225 Md. 456, 461, 171 A.2d 248, 250 (1961); see Gagnon v. Wright, D.C. App., 200 A.2d 196, 198 (1964) (this court applying Maryland law). In addition to this intent issue, moreover, Maryland's intermediate court of appeals has recognized a substantive element of contractual unconscionability. See McCarty v. E. J. Korvette, Inc., 28 Md.App. 421, 428-34, 347 A.2d 253, 258-62 (1975) (contractual limitation of consequential damages for injury to person and property due to breach of warranty on consumer goods is unconscionable under Uniform Commercial Code and common law).

Accordingly, under Maryland law, if — as appellant alleges — appellee's salesman was aware, or reasonably should have been aware, that appellant had not finished reading the contract, it may be unenforceable. See Binder, supra 225 Md. at 461, 171 A.2d at 250; Gagnon, supra at 198. Furthermore, if a court were to find the contract terms themselves excessively one-sided — as alleged — this determination, too, could require its voidance as unconscionable. S...