Butler Mfg. Co., Inc. v. Americold Corp.

• Decision Date: 10 December 1993
• Docket Number: No. 92-2118-JWL.,92-2118-JWL.
• Citation: 841 F. Supp. 1107
• Parties: BUTLER MANUFACTURING COMPANY, INC., et al., Plaintiffs, v. AMERICOLD CORPORATION, et al., Defendants.
• Court: U.S. District Court — District of Kansas

841 F. Supp. 1107

BUTLER MANUFACTURING COMPANY, INC., et al., Plaintiffs, v. AMERICOLD CORPORATION, et al., Defendants.

No. 92-2118-JWL.

United States District Court, D. Kansas.

December 10, 1993.

Thomas R. Buchanan, Mark D. Hinderks, Roger D. Stanton, Stinson, Mag & Fizzell, Overland Park, KS, David S. Evinger, Andrew W. Horstman, Martin R. Lueck, Robins, Kaplan, Miller & Ciresi, Minneapolis, MN, Michael G. Norris, Payne & Jones, Chtd., Overland Park, KS, for plaintiffs.

Paul H. Niewald, Niewald, Waldeck & Brown, Kansas City, MO, Douglas R. Richmond, Robert G. Rooney, Armstrong, Teasdale, Schlafly & Davis, James S. Kreamer, Baker, Sterchi & Cowden, Kansas City, MO, Mary M. Kenney, William H. Sanders, Floyd R. Finch, Jr, Blackwell, Sanders, Matheny, Weary & Lombardi, Kansas City, MO, James M. Yeretsky, Patrick J. Doran, Niewald, Waldeck & Brown, Overland Park, KS, for defendants.

MEMORANDUM AND ORDER

LUNGSTRUM, District Judge.

I. Introduction

This consolidated action arises out of a fire that occurred at an underground warehouse facility owned and operated by defendants Americold Corporation and Americold Services Corporation ("defendants"). The plaintiffs in the various consolidated cases consist of corporations who had stored foodstuffs, records and other goods which were damaged in the fire and various insurers of those goods. The various goods stored in the warehouse facility fall into several general categories, including those covered by what are denominated as record storage contracts, those covered by warehouse receipts, and those covered by what are termed leasehold contracts.

This matter is currently before the court on defendants' motions for summary judgment, or in the alternative, for partial summary judgment, against cross-claim plaintiff Safeway (Doc. # 25 in case no. 92-2458-JWL; Doc. # 24 in case no. 93-2024-JWL; and Doc. # 12 in case no. 93-2067-JWL). The motions filed by defendants in the three cases are identical. The motions deal with issues relating to the applicability of an exculpatory clause and limitation on damages language that is contained in the leasehold contracts executed by defendants and Safeway. The motions also seek summary judgment on a variety of liability related arguments.

Following a thorough examination of the arguments and authorities submitted by the parties and a review of the relevant case law, the court finds that defendants' motions for summary judgment or, in the alternative, for partial summary judgment should be granted in part and denied in part. As more fully set forth below, the court finds that the motions are granted as to the enforceability of the exculpatory provisions contained in the leasehold contracts. The liability arguments are denied as premature, without prejudice to their re-assertion in a subsequent motion.

II. Factual Background

In the various consolidated cases, plaintiffs have sued defendants for alleged destruction and damage to property stored in defendants' underground warehouse located at 6500 Inland Drive, Kansas City, Kansas. The warehouse in question is located in a limestone cave which was originally formed during mining operations. Plaintiffs' claims arise from a fire which broke out at the warehouse on December 28, 1991. Plaintiffs have filed various claims in the consolidated cases which seek relief for property damage, extra expenses and costs, lost profits and attorneys' fees.

The vast majority of goods stored in the warehouse by plaintiffs fall into two general categories, those covered by what are denominated as record storage contracts and those covered by warehouse receipts. The respective record storage contracts and warehouse receipts each contained identical damage limitation provisions. The court has previously issued orders ruling on the applicability of the damage limitation provisions in those documents.¹

In the present motions by defendants for summary judgment against cross-claim plaintiff Safeway, the court is faced with a different issue. The relationship between Safeway and defendants is not governed by the record storage contracts or warehouse receipts common to the other plaintiffs in the case. Rather, Safeway and defendants entered into lease agreements (hereinafter referred to as the "leasehold contracts") whereby Safeway leased space in the defendants' warehouse. The present order deals with the applicability of exculpatory provisions contained in the leasehold contracts.

III. Summary Judgment Standards

A motion for summary judgment gives a judge an initial opportunity to assess the need for a trial without weighing the evidence or determining credibility. Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The requirement of a "genuine" issue of fact means that the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52, 106 S.Ct. at 2511-12.

The party who files a motion for summary judgment has the initial burden of demonstrating the absence of a genuine issue of material facts concerning its claims. This burden may be met by showing that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). Once the moving party has properly supported its motion for summary judgment, the burden shifts to the nonmoving party to show that there is a genuine issue of material fact left for trial. Anderson, 477 U.S. at 256, 106 S.Ct. at 2514. The nonmoving party may not simply rest on its pleadings in the case but has the affirmative duty to come forward with facts to establish that a genuine issue exists necessitating a trial in the case. Id. Thus, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Id. The court must consider the record in the light most favorable to the party opposing the motion. Bee v. Greaves, 744 F.2d 1387, 1396 (10th Cir.1984), cert. denied, 469 U.S. 1214, 105 S.Ct. 1187, 84 L.Ed.2d 334 (1985). More than a "disfavored procedural shortcut," summary judgment is an important procedure "designed `to secure the just, speedy and inexpensive determination of every action.' Fed.R.Civ.P. 1." Celotex, 477 U.S. at 327, 106 S.Ct. at 2555.

IV. Discussion

The central question facing the court in defendants' motions for summary judgment is what legal effect should be given to the exculpatory language contained in the leasehold contracts. Paragraph 16 of the leasehold contracts, which contemplates the mutual release of liability between the lessor and lessee to the extent that either party is insured for the loss, provides as follows:

16. SUBROGATION: As part of the consideration for this lease, each of the parties hereto does hereby release the other party hereto from all liability for damage due to any act or neglect of the other party (except as hereinafter provided) occasioned to property owned by said parties which is or might be incident to or the result of a fire or any other casualty against loss for which either of the parties is now carrying or hereafter may carry insurance; provided, however, that the releases herein contained shall not apply to any loss or damage occasioned by the willful, wanton, or premeditated negligence of either of the parties hereto, and the parties hereto further covenant that any insurance that they obtain on their respective properties shall contain an appropriate provision whereby the insurance company, or companies, consent to the mutual release of liability contained in this paragraph.

Paragraph 10 of the leasehold contracts provides as follows:

10. PERSONAL PROPERTY. LESSOR shall not be liable for any loss or damage to any merchandise or personal property in or about the premises, regardless of the cause of such loss or damage.

In their initial motions, defendants argue that full effect should be given to the exculpatory provisions because the leasehold contracts were fairly bargained for by the parties, there was no unconscionable disparity in bargaining power between them, and the exculpatory provisions are acceptable allocations of risk agreed to by business parties standing on equal footing in a commercial setting. Defendants rely on several Kansas cases that recognize that mentally competent parties may make contracts on their own terms and fashion their own remedies provided that the agreement is not illegal, contrary to public policy, or obtained by fraud, mistake, overreaching or duress. See Corral v. Rollins Protective Services Co., 240 Kan. 678, 732 P.2d 1260 (1987); Kansas City Structural Steel Co. v. L.G. Barcus & Sons, Inc., 217 Kan. 88, 535 P.2d 419 (1975); Kansas Power & Light Co. v. Mobil Oil Co., 198 Kan. 556, 426 P.2d 60 (1967).

Safeway argues that the exculpatory provisions in the leasehold contracts are contrary to public policy. A contractual provision is contrary to public policy "`if it is injurious to the interests of the public, contravenes some established interest of society, violates some public statute, or tends to interfere with the public welfare or safety.'" Deines v. Vermeer Mfg. Co., 752 F.Supp. 989, 997 (D.Kan.1990) (quoting Coleman v. Safeway Stores, Inc., 242 Kan. 804, 808, 752 P.2d 645, 647-48 (1988)). The court has reviewed applicable Kansas cases on the issue and concludes that the lease provisions at issue are not injurious to the...