Crawford v. Buckner

• Decision Date: 31 August 1992
• Citation: 839 S.W.2d 754
• Parties: Linda M. CRAWFORD, Plaintiff-Appellant, v. Debra Gail BUCKNER, Larry Eugene Buckner, Tobe McKenzie, and McKenzie Development Corp., Defendants-Appellees.
• Court: Tennessee Supreme Court

Page 754

839 S.W.2d 754

Linda M. CRAWFORD, Plaintiff-Appellant, v. Debra Gail BUCKNER, Larry Eugene Buckner, Tobe McKenzie, and McKenzie Development Corp., Defendants-Appellees.

Supreme Court of Tennessee,

at Knoxville.

Aug. 31, 1992.

H. Franklin Chancey, Banks & Associates, Cleveland, for plaintiff-appellant.

Fred M. Milligan, Milligan, Barry, Hensley & Evans, Chattanooga, for defendants-appellees.

Charles W. Burson, Atty. Gen. and Reporter, and Pamela Bingham Broussard, Asst. Atty. Gen., Nashville, for intervenor-appellee.

OPINION

ANDERSON, Justice.

The determinative issue raised in this appeal is whether an exculpatory clause in a residential lease bars recovery against the landlord for negligence which causes the tenant injury. The trial court granted the landlords' motion for summary judgment, holding that the tenant's tort action was barred by the exculpatory clause. The Court of Appeals affirmed. Because we conclude that the exculpatory clause is void as against public policy, we reverse the Court of Appeals and remand.

FACTUAL BACKGROUND

On December 16, 1988, the plaintiff, Linda Crawford, rented an apartment from the defendants, Tobe McKenzie and McKenzie Development Corporation. As a condition of rental, Crawford was required to sign the defendants' standard form lease, which contained an exculpatory clause providing that:

[t]enant agrees that the landlord, his agents and servants shall not be liable to tenant or any person claiming through tenant, for any injury to the person or loss of or damage to property for any cause. Tenant shall hold and save landlord harmless for any and all claims, suits, or judgments for any such damages or injuries however occurring.

On February 21, 1989, two months after Crawford rented her apartment, a fire started in the apartment of Debra and Larry Buckner, who lived in the apartment below the plaintiff. The fire quickly spread to the plaintiff's apartment, blocking her exit through the front, and only, door. To escape the fire, Crawford jumped from a window in her second story apartment. When she landed, the plaintiff suffered numerous injuries, partly due to the debris on the ground behind her apartment building.

Crawford later filed a tort action in Bradley County naming the Buckners, Tobe McKenzie, and McKenzie Development Corporation as defendants. The complaint alleged that the landlords were negligent in failing to maintain the fire alarm, the premises behind her apartment, and in continuing to allow the Buckners to reside at the apartment complex after numerous altercations and complaints. In addition, the plaintiff challenged the constitutionality of the Uniform Residential Landlord and Tenant Act, Tenn.Code Ann. §§ 66-28-101 to -28-517, which prohibits lease provisions limiting a landlord's liability to a tenant. The Act was not applicable to Bradley County at that time because the legislature had limited it to counties of more than 200,000 residents, which included only Davidson, Hamilton, Knox, and Shelby counties at the time of the Act's passage. See Tenn.Code Ann. § 66-28-102. ¹ The plaintiff alleged that the limited application of the Act denied her equal protection of the law under the Fourteenth Amendment to the U.S. Constitution, and Article XI, § 8, of the Tennessee Constitution.

The landlord defendants answered that the plaintiff's action was barred by the exculpatory clause of the lease and filed a motion for summary judgment.

At the hearing on the landlords' motion for summary judgment, the trial court concluded the exculpatory clause in the lease was enforceable. The court also found that there was a rational basis for the legislature's decision to limit the Act's application to the largest counties in the state, and therefore upheld the constitutionality of the Act. As a result, the landlords' motion for summary judgment was granted. The Court of Appeals affirmed.

EXCULPATORY LEASE PROVISIONS

An exculpatory clause in the context of a landlord-tenant relationship refers to a clause which deprives the tenant of the right to recover damages for harm caused by the landlord's negligence by releasing the landlord from liability for future acts of negligence.

The rationale underlying the argument for enforceability of such clauses has often been based upon the doctrine of freedom of contract. Courts employing that reasoning have said:

that the public policy in apparent conflict with the freedom of contract argument in real-estate lease exculpatory clause cases, namely, that a landlord should be liable for the negligent breach of a duty which is owed to his tenant, is subservient to the doctrine that a person has the right to freely contract about his affairs. Some cases, especially the older ones, have reasoned that the relationship of landlord and tenant is in no event a matter of public interest, but is purely a private affair, so that such clauses cannot be held void on purely public policy grounds.

John D. Perovich, Annotation, Validity of Exculpatory Clause in Lease Exempting Lessor From Liability, 49 A.L.R.3d 321, 325 (1973).

However, because of the burden-shifting effect of such clauses which grant immunity from the law, it is not surprising that their validity has been challenged and that courts have reached different conclusions as to their enforceability.

As early as 1938 Williston recognized that while such exculpatory clauses were recognized as "legal", many courts had shown a reluctance to enforce them. Even then, courts were disposed to interpret them strictly so they would not be effective to discharge liability for the consequences of negligence in making or failing to make repairs. 6 Williston, A Treatise on the Law of Contracts § 1751C p. 4968 (Rev. ed. 1938).

McCutcheon v. United Homes Corp., 79 Wash.2d 443, 486 P.2d 1093, 1095 (1971).

For example, courts have held that such clauses may be void as against public policy where the landlord had greater bargaining power so that the tenant must accept the lease as written, or where the tenant was unaware of or did not fully understand the clause's effect, or where the clause was overly broad or was unconscionable. See Annotation, Validity of Exculpatory Clause, 49 A.L.R.3d at 325-26.

The defendant contends that freedom to contract in the residential lease setting is the majority rule in the United States, and that holding exculpatory provisions in residential leases invalid on public policy grounds would require this court to adopt the minority rule. Our research of the cases in this area, however, demonstrates that there is no true majority rule. We find, as the Washington Supreme Court found, that there is no majority rule, "only numerous conflicting decisions, decisions concerned with contracts of indemnity, cases relating to property damage under business leases, and a disposition of the courts to emasculate such exculpatory clauses by means of strict construction." McCutcheon v. United Homes Corp., supra, 486 P.2d at 1096.

Tennessee courts have long recognized that, subject to certain exceptions, parties may contract that one shall not be liable for his negligence to another. See Empress Health & Beauty Spa, Inc. v. Turner, 503 S.W.2d 188 (Tenn.1973) (customer assumed the risk of injury from negligence of health spa); Chazen v. Trailmobile, Inc., 215 Tenn. 87, 384 S.W.2d 1 (1964) (commercial lease absolved both landlord and tenant from liability for loss resulting from fire); Moss v. Fortune, 207 Tenn. 426, 340 S.W.2d 902 (1960) (renter assumed the risk incident to injury from the hiring and riding of a horse); Dixon v. Manier, 545 S.W.2d 948 (Tenn.App.1976) (cosmetology customer assumed the risk of injury of a hair-straightening treatment). One exception, for example, is that a common carrier cannot by contract exempt itself from liability for a breach of duty imposed on it for the benefit of the public. Moss v. Fortune, supra.

Although the earlier cases recognized that there were exceptions to the rule made for the benefit of the public, no case considered the public interest issue until this Court's decision in Olson v. Molzen, 558 S.W.2d 429 (Tenn.1977). We held in Olson that if an exculpatory provision effects the public interest, it is void as against public policy, despite the general rule that parties may contract that one shall not be liable for his negligence to another. Id. at 431-32. We said that an exculpatory contract signed by a patient as a condition of receiving medical treatment is invalid as contrary to public policy and may not be pleaded as a bar to the patient's suit for negligence. Id. at 432.

In the most recent case to consider an exculpatory clause, the Court of Appeals, in Schratter v. Development Enterprises, Inc., 584 S.W.2d 459 (Tenn.App.1979), upheld the enforceability of an exculpatory clause in a residential lease under very similar facts to this case. There, a landlord was released by the clause from his agent's negligence which caused a fire in an apartment building, resulting in damage to a tenant. The intermediate court observed, however, that in Olson we had adopted a test to determine whether an exculpatory provision affects the public interest, and that several of the enumerated characteristics in the test were present in that case. The court also recognized that many states have, by legislative enactment or judicial decision, limited or prohibited broad exculpatory clauses in residential leases. Id., 584 S.W.2d at 461. Despite the finding that some of the public interest criteria were present, the intermediate court in Schratter felt constrained to hold that the exculpatory provision in the tenant's lease barred his recovery, because of their belief that this Court had limited the Olson standard to professional service contracts. Schratter, 584 S.W.2d at 461.

The plaintiff here contends that the exculpatory provision in her lease falls squarely within the criteria set forth in Olson. As a result, the plaintiff...