In re Aramark Sports & Entm't Servs., LLC

• Decision Date: 29 August 2012
• Docket Number: Case No. 2:09-CV-637-TC
• Parties: In re ARAMARK SPORTS AND ENTERTAINMENT SERVICES, LLC, a Delaware limited liability company, as owner of a certain 20' 2007 Baja Islander 202 for exoneration from or limitation of liability, Plaintiff.
• Court: U.S. District Court — District of Utah

In re ARAMARK SPORTS AND

ENTERTAINMENT SERVICES, LLC, a

Delaware limited liability company, as owner

of a certain 20' 2007 Baja Islander 202 for

exoneration from or limitation of liability, Plaintiff.

Case No. 2:09-CV-637-TC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH CENTRAL DIVISION

Date: August 29, 2012

ORDERANDMEMORANDUM DECISION

In April 2009, six tourists from St. Petersburg, Florida—Robert and Katherine Prescott, James and Heather Brady, and Terry and Maryanne Taranto (the Prescott Party)—were visiting Lake Powell. The Prescott Party rented a powerboat from Plaintiff Aramark Sports and Entertainment Services, LLC, for a day-trip to Rainbow Bridge. On April 24, 2009, Robert Prescott signed the Rental Agreement, which included a provision titled "Indemnification." The provision is both a "hold harmless" clause and an indemnity clause, so, because of its dual nature, the court refers to it as the "Liability Clause."

On the morning of April 25, 2009, the Prescott Party took the boat out by themselves. In the afternoon, during their return from Rainbow Bridge, the boat began to take on water, and in less than two minutes, the boat sank. Robert Prescott, Katherine Prescott, Terry Taranto, and Maryanne Taranto died, likely from drowning or hypothermia. The boat has not been recovered.

In July 2009, Aramark filed a pre-emptive complaint (a special admiralty claim) asking the court to limit Aramark's liability to the post-accident value of the boat under the Shipowner'sLiability Act of 1851, 46 U.S.C. §§ 30501-30512.¹ The estates and heirs of the Prescotts and the Tarantos (the "Claimants") filed counterclaims alleging negligence and unseaworthiness.

Now the court must resolve cross-motions for partial summary judgment addressing the enforceability of the Liability Clause in the Rental Agreement signed by Mr. Prescott. Aramark contends that the Liability Clause requires Mr. Prescott to hold harmless and indemnify Aramark for claims of negligence by Mr. Prescott and third parties, including the Claimants. The Claimants contend that the Liability Clause is unenforceable.²

For the reasons set forth below, Aramark's motion for partial summary judgment is granted as to Mr. Prescott and denied as to the remaining Claimants. The Claimants' motion for partial summary judgment is denied.

FACTUAL BACKGROUND

The day before the boat accident, Robert Prescott went into Aramark's rental office and paid for the boat rental. He signed the two-page Rental Agreement on the front page under conspicuous language stating in relevant part that:

[t]he Customer named above hereby enters into this Rental Agreement and agrees to be bound by all of the terms and conditions stated herein including the terms and conditions printed on the reverse side of this Rental Agreement.

(Rental Agreement (Ex. B to Aramark's Mem. Supp. Mot. Partial Summ. J.) at ARA00047 (emphasis added).) He also initialed the Terms and Conditions page (the "reverse side" of the agreement) on the bottom right-hand corner in a space after the words "Read and Agreed:

[Customer's Initials]." (See Ex. 36 to Claimants' Mem. Supp. Cross-Mot. for Partial Summ. J.)³ The remaining members of the Prescott Party did not sign the Rental Agreement. There is no evidence that they read the Rental Agreement or were present when Mr. Prescott signed the agreement.

The Terms and Conditions page included a paragraph titled "Indemnification." That contract provision, upon which Aramark relies to bar the negligence and unseaworthiness claims against it, is both a "hold harmless" (or exculpatory) clause and an indemnity clause. It states:

Indemnification. Customer will indemnify and hold harmless [Aramark] from and against any claims, suits, penalties, obligations, costs and expenses (including reasonable attorney's fees), including claims by Customer or by third parties (which may include members of Customer's party), incurred or suffered by such indemnified parties with respect to injury to persons or damage to property resulting or arising from Customer's use of the Rented Equipment or Customer's failure to comply with its obligations set forth in this Rental Agreement.

(Rental Agreement Terms & Conditions ¶ 10 (emphasis added).)

Although Aramark focuses on the Liability Clause in its motion, the Claimants expand the factual issues to include the events of April 24-25, 2009. They devote most of their cross motion for partial summary judgment to discussing those events and arguing why the evidence in their 185-paragraph-long statement of facts shows Aramark's gross negligence. But they do not ask for a ruling on whether Aramark was negligent, much less grossly negligent. Because thelegal analysis in the parties' pleadings focuses on the enforceability of the Liability Clause, this order limits the analysis to that discrete issue as well.

ANALYSIS

The court may grant summary judgment when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The court "view[s] the evidence and make[s] all reasonable inferences in the light most favorable to the nonmoving party." Northern Nat. Gas Co. v. Nash Oil & Gas, Inc., 526 F.3d 626, 629 (10th Cir. 2008). The court may only rely on evidence that would be admissible at trial. Fed. R. Civ. P. 56(c)(1). A party is entitled to summary judgment if no genuine dispute as to any material fact exists and no reasonable jury could find for the nonmoving party. Pinkerton v. Colorado Dep't of Transp., 563 F.3d 1052, 1058 (10th Cir. 2009).

A. Admiralty Jurisdiction

The purpose of the Rental Agreement was to address the rights and obligations of the contracting parties concerning rental and use of the powerboat on Lake Powell. The activities giving rise to the alleged tort occurred on a navigable water of the United States (Lake Powell) or in connection with navigating a boat on Lake Powell. Given those facts, and courts' view that recreational boating bears a substantial relationship to traditional maritime activity, this court has admiralty jurisdiction under 28 U.S.C. § 1333(1).⁴ Sisson v. Ruby, 497 U.S. 358, 365-66 (1990); Foremost Ins. Co. v. Richardson, 457 U.S. 668, 675 (1982); see also, e.g., Charnis v. WatersportPro, LLC, 2009 AMC 1299, 2009 U.S. Dist. LEXIS 76022 (D. Nev. May 1, 2009) (holding that activity of providing waterskiing and wakeboarding services to tourists on Lake Mead was substantially related to traditional maritime activity); Waggoner v. Nags Head Water Sports, Inc., 1998 AMC 2185, 1998 U.S. App. LEXIS 6792 at *2 (4th Cir. Apr. 6, 1998) (holding that events relating to rental and use of a jet ski for pleasure were governed by principles of maritime law) (citing Jerome B. Grubhart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 543 (1995)).

Accordingly, the court must apply admiralty law. East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 864 (1986) ("With admiralty jurisdiction comes the application of substantive admiralty law."). Where admiralty law does not provide a clear rule, the court looks to state law to fill in the gaps. Charnis, 2009 AMC at 1302-03 (citing Kossick v. United Fruit Co., 365 U.S. 731, 738 (1961); KDME, Inc. v. Bucci, Case No. 05CV199, 2007 U.S. Dist. LEXIS 59810, *7-*9 (S.D. Cal. Aug. 14, 2007).

B. Threshold Procedural Issues

1. Aramark's failure to plead the "hold harmless" agreement as an affirmative defense does not bar the claim now.

The Claimants assert that Aramark is barred from relying on the "hold harmless" portion of the Liability Clause to avoid liability because Aramark failed to plead the exculpatory aspect of the clause as an affirmative defense in its answer to the counterclaims.⁵ To support their argument, the Claimants cite to the rule governing pleading of affirmative defenses, which statesthat, "In responding to a pleading, a party must affirmatively state any avoidance or affirmative defense, including: ... assumption of risk; ... release; ... and waiver." Fed. R. Civ. P. 8(c)(1). But, as Aramark points out, when there is no prejudice to the other party, "federal courts generally allow defendants to raise an affirmative defense for the first time in a motion for summary judgment." (Aramark's Reply & Opp'n (Docket No. 142) at 6, citing Moore, Own, Thomas & Co. v. Coffey, 992 F.2d 1439, 1445 (6th Cir. 1993); Charpentier v. Godsil, 937 F.2d 859, 863 (3d Cir. 1991); Van Pier v. Long Island Sav. Bank, 20 F. Supp. 2d 535, 540 (S.D.N.Y. 1998); Steinberg v. Columbia Pictures Indus., Inc., 663 F. Supp. 706, 715 (S.D.N.Y. 1987); 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure: Civil § 1278 (3d ed. 2004) ("the substance of many unpleaded affirmative defenses may be asserted by pretrial motions, particularly in the absence of any showing of prejudice to the opposing party and assuming it has had an opportunity to respond").)

The court's main consideration is notice to the opposing party. Resolving Aramark's claim will not prejudice the Claimants, because they had sufficient notice that Aramark was going to rely on the Liability Clause to limit Aramark's liability. For instance, Aramark cites the Liability Clause in its Complaint and attaches the signed Rental Agreement to the Complaint. Aramark disclaims its own liability, affirmatively alleging that the boat sank and the four passengers died because the Prescott Party was negligent (Aramark alleges that the Prescott Party took the boat outside the marked navigable channel, struck an underwater hazard causing the boat to sink, and were not wearing life jackets at the time of the accident).

The Claimants argue, however, that they did not have notice that Aramark was going to rely on the Liability Clause to support its current theory—that the indemnification clause barsclaims against Aramark for its own negligence. While true that Aramark does not expressly allege in its Complaint that even if it were negligent it would not be...