Cornell v. Council Unit Owners Haw. Vill. Condo.

• Court: U.S. District Court — District of Maryland
• Writing for the Court: Joseph H. Young
• Citation: Cornell v. Council Unit Owners Haw. Vill. Condo., 983 F.Supp. 640 (D. Md. 1997)
• Decision Date: 05 November 1997
• Docket Number: No. CIV. Y-96-4037.,CIV. Y-96-4037.
• Parties: Larry CORNELL v. COUNCIL OF UNIT OWNERS HAWAIIAN VILLAGE CONDOMINIUMS, INC., et al.

983 F.Supp. 640

Larry CORNELL v. COUNCIL OF UNIT OWNERS HAWAIIAN VILLAGE CONDOMINIUMS, INC., et al.

No. CIV. Y-96-4037.

United States District Court, D. Maryland.

November 5, 1997.

COPYRIGHT MATERIAL OMITTED

Laurence A. Marder, Baltimore, MD, for Plaintiff.

Norberto G. Lacson, pro se; Warren D. Stephens, Baltimore, MD; James Sutherland Aist, Baltimore, MD; Alan L. Briggs, Washington, DC, for Defendants.

MEMORANDUM OPINION

JOSEPH H. YOUNG, Senior District Judge.

I.

This case arises from injuries sustained by Plaintiff Larry Cornell, a resident of the District of Columbia, when he allegedly slipped and fell on a patch of ice in the parking lot of the Royal Hawaiian Condominium in Ocean City, Maryland on December 31, 1993. Plaintiff owned a unit at the Royal Hawaiian which he used as a vacation home, and has sued the condominium's governing body and various individuals and corporations involved in the design, construction, and maintenance of the condominium. Plaintiff alleges that the Defendants were negligent in the maintenance and design of the Royal Hawaiian, resulting in faulty drainage leading to the ice formation causing his injuries. Complete diversity exists among the parties.

Defendants Council of Unit Owners-Hawaiian Village Condominiums, Inc. ("the Council") and K & W Management, Inc. ("K & W") seek summary judgment on the affirmative defense of waiver. The Council alleges Plaintiff waived his right to sue it for failure to maintain the premises when he became a unit owner, automatically enrolling him in the Council and subjecting him to its bylaws, which limit the Council's liability for personal injuries. K & W contends it is entitled to the benefit of this affirmative defense as the Council's agent. Plaintiff responds that the Council's bylaws do not unequivocally express an intent to limit liability for its negligence; that the limitation of liability is void as against public policy; that K & W is not derivatively immune from suit as the Council's agent; and that the Defendants have waived their right to assert this defense by failing to plead it as an affirmative defense in accordance with FED.R.CIV.P. 8(c).

II.

The Court must first consider whether Defendants waived their affirmative defense of waiver by failing to plead it in accordance with FED.R.CIV.P. 8(c). A federal court exercising diversity jurisdiction must apply applicable state substantive law. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). The issue of when affirmative defenses must be pleaded, however, is a procedural issue governed exclusively by federal law. See Taylor v. United States, 821 F.2d 1428, 1432 (9th Cir.1987).

Generally, affirmative defenses are waived unless raised in a responsive pleading. Id. Failure to do so, however, "does not always result in waiver." Charpentier v. Godsil, 937 F.2d 859, 863 (3d Cir.1991). Failure to raise an affirmative defense until the summary judgment phase of a case does not waive the defendant's ability to assert the defense absent a showing of prejudice to the plaintiff. Camarillo v. McCarthy, 998 F.2d 638, 639 (9th Cir.1993); Kleinknecht v. Gettysburg College, 989 F.2d 1360, 1374 (3d Cir. 1993) (holding defense of immunity first raised in summary judgment motion not waived); Moore, Owen, Thomas & Co. v. Coffey, 992 F.2d 1439, 1445 (6th Cir.1993) (same).

Although the summary judgment phase may not be the most appropriate time for raising this affirmative defense, Plaintiff cannot reasonably claim that unfair prejudice resulted from Defendants' failure to plead waiver in their answer. A defendant does not waive an affirmative defense if it is raised at a "pragmatically sufficient time", and the plaintiff is not prejudiced. Charpentier, 937 F.2d at 864 (permitting immunity defense to be raised in pretrial brief). Plaintiff has filed a comprehensive response to the pending summary judgment motion, demonstrating his thorough understanding of the principles of law and fact involved. Plaintiff's response addresses and refutes each relevant aspect of the waiver defense, drawing upon all facts relevant to the defense. Under these circumstances, Plaintiff cannot complain of prejudice or lack of notice. Further, the waiver defense involves no factual issues. See id. Finally, the Court has the discretion to treat the defense as an amendment of the answer under FED.R.CIV.P. 15(a) absent a showing of prejudice. See Smallwood v. United Air Lines, Inc., 661 F.2d 303, 306 (4th Cir.1981); Charpentier, 937 F.2d at 864. Plaintiff's thorough response to the waiver defense demonstrates that he suffered no prejudice. The Court will therefore consider Defendants' waiver defense because Defendants raised the defense at a "pragmatically sufficient time."

III.

A.

Defendants' waiver defense arises from Plaintiff's ownership of a Royal Hawaiian unit which subjected him to the Council's bylaws. The relevant bylaw in this case is Article VIII, § 6, which states in part:

Limitation of Liability. The Council shall not be liable ... for injury or damage to persons or property caused by the elements, or by the Unit Owner of any unit, or any other person, or resulting from electricity, water, snow, or ice, which may leak or flow from any portion of the general or limited common elements, or from any pipe, drain, conduit, appliance, or equipment.

The condominium declaration filed by Royal Hawaiian, in accordance with MD.CODE ANN., REAL PROP. § 11-102 (1996 & Supp.1996), defines "common elements" to include parking areas (Def.'s Mot. Ex. 1, ¶ 4(b)).

The Council maintains that this exculpatory clause acts to insulate the Council from liability for Plaintiff's personal injuries arising out of its negligence. Maryland presumes exculpatory clauses to be valid based upon a public policy favoring freedom of contract. Adloo v. H.T. Brown Real Estate, Inc., 344 Md. 254, 259, 686 A.2d 298 (1996). Because such clauses often bring about harsh results, Maryland narrowly construes exculpatory clauses, and will not construe such clauses "to indemnify a person against his own negligence unless an intention to do so is expressed in those very words or in other unequivocal terms." Id. at 261-62, 686 A.2d 298 (quoting Crockett v. Crothers, 264 Md. 222, 227, 285 A.2d 612 (1972)). As the Adloo court stated, the clause need not use the word "negligence" or any other "magic words", but it must be unambiguous and understandable before it is given effect. Id. at 264, 266, 686 A.2d 298.

The Maryland Court of Appeals has addressed this issue in several cases. In Adloo, realtor and seller entered into a "lock-box" agreement allowing the sellers' home to be shown in their absence. The listing agreement between the realtor and sellers contained an exculpatory clause absolving the realtor and his agents from "vandalism, theft or damage of any nature whatsoever to the property," and excused the realtor from liability "for the custody of the property, its management, maintenance, upkeep, or repair." Id. at 257, 686 A.2d 298. The agreement further stated that the broker and his agents were not "an insurer against the loss of personal property; [seller] agrees to waive and releases [broker] and his agents ... from any responsibility therefore [sic]." Id. at 258, 686 A.2d 298. The court found this language to be ambiguous under Maryland's objective theory of contract interpretation, and held that the clause did not operate to exculpate the broker's negligence regarding the burglary of the seller's house through the lock-box device. Id. at 267-68, 686 A.2d 298. The court specifically noted that the clause did not clearly address loss of property resulting from the broker's negligence, and could therefore be interpreted to encompass only those losses occurring without the broker's negligence. Id.

Similarly, in Crockett v. Crothers, 264 Md. 222, 285 A.2d 612 (1972), a homeowner sued a contractor who broke a water main while constructing a sewer system according to a co-defendant engineer's specifications. The contract between the engineer and contractor provided that the contractor's obligations did "not extend to the liability of [engineer], his agents or employees arising out of (a) the preparation or approval of maps, drawings, opinions, reports, surveys, Change Orders, designs or specifications or (b) the giving of or the failure to give directions or instructions by the [engineer], his agents or employees, provided such giving or failure to give is the primary cause of injury or damage." Id. at 228, 285 A.2d 612. The court upheld the trial court's refusal to honor the exculpatory clause, finding that the clause did not insulate the contractor from his own negligence either expressly or by equivalent language. Id.

The Maryland Court of Appeals, in Home Indem. Co. v. Basiliko, 245 Md. 412, 226 A.2d 258 (1967), construed an exculpatory clause contained in a lease agreement. The clause absolved the landlord from liability "for loss of or damage to property of Tenant in said building caused by fire or other casualty, or by acts of negligence of co-tenants or other occupants of said building or any other person, or by rain or snow or water or steam that may leak into or flow from said building through any defects in the roof or plumbing or from any other source." Id. at 414, 226 A.2d 258 (emphasis supplied). The court held that the clause absolved the landlord of liability for a leaky air conditioning without considering the issue of negligent maintenance. Id. at 417, 226 A.2d 258. Finally, in Heat & Power Corp. v. Air Pdcts. & Chem., Inc., 320 Md. 584, 578 A.2d 1202 (1990), the court found an exculpatory clause in a construction contract ambiguous because it did not specifically indemnify the breaching party against their own negligence. Id. at 588, 593, 578 A.2d 1202.

The language of the disputed clause in Basiliko is quite similar to the clause in this case, and the Court finds Basiliko to be controlling....