Pinnacle Computer Services, Inc. v. Ameritech Pub., Inc., 82A01-9407-CV-213

Citation642 N.E.2d 1011
Decision Date28 November 1994
Docket NumberNo. 82A01-9407-CV-213,82A01-9407-CV-213
PartiesPINNACLE COMPUTER SERVICES, INC., Appellant-Plaintiff, v. AMERITECH PUBLISHING, INC., Appellee-Defendant.
CourtCourt of Appeals of Indiana
OPINION

BAKER, Judge.

Today we re-examine whether the exculpatory provision in an advertising contract limiting the publisher's liability to an amount equal to the contract price or the sum of money actually paid for the advertising, is unconscionable. A panel of this court recently addressed this issue in Pigman v. Ameritech Publishing, Inc. (1994), Ind.App., 641 N.E.2d 1026. The Pigman decision joined a minority of jurisdictions in holding that the exculpatory clause is unconscionable and void as against public policy as a matter of law. Pigman, 641 N.E.2d at 1035. Appellant-plaintiff Pinnacle Computer Services, Inc. (Pinnacle) appeals the summary judgment granted in favor of appellee-defendant Ameritech Publishing, Inc. (Ameritech), upholding the validity of the exculpatory clause.

FACTS

Pinnacle engages in the sale, repair and installation of computer related equipment. On August 30, 1992, Ameritech sales representative, Susan Exmeyer, met with Brian Ricci, Pinnacle's president, to discuss Pinnacle's advertising listing in the 1993 Ameritech Pages Plus directories (Yellow Pages). At that meeting, Exmeyer and Ricci reviewed and made various notations on a copy of Pinnacle's 1992 Directory Advertising Order. After reviewing those notations, Ricci signed the bottom of that order to place a 1993 listing.

Pinnacle's order provided that a four-quarter column page advertisement would be printed in the "Computer and Computer Equipment--Services and Repair" section of the Yellow Pages. However, when the 1993 Yellow Pages was published, Pinnacle's display ad was mistakenly omitted from that section and was instead printed under the heading "Computers--System Designers and Consultants."

Pinnacle filed its complaint for damages against Ameritech with the Vanderburgh Superior Court on March 25, 1993. Ameritech filed a motion for summary judgment alleging that its advertising liability was limited, pursuant to the limitation of liability clause contained in the order, to an amount equal to the contract price for the disputed advertisements, or the sum of money actually paid toward the disputed advertisements.

After a hearing on Ameritech's motion, the trial court issued a March 14, 1994, order that granted Ameritech's motion for summary judgment and in pertinent part provided:

7. The Directory Advertising Order contains the following provision which expressly and plainly limits Ameritech advertising's liability for errors and omissions in the providing of advertising services to the amount it received from the advertiser for such services.

PUBLISHER'S LIABILITY: ... IF PUBLISHER SHOULD BE FOUND LIABLE FOR LOSS OR DAMAGE DUE TO A FAILURE ON THE PART OF THE PUBLISHER OR IT DIRECTLY, IN ANY RESPECT, REGARDLESS OF WHETHER CUSTOMER'S CLAIM IS BASED ON CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, THE LIABILITY SHALL BE LIMITED TO AN AMOUNT EQUAL TO THE CONTRACT PRICE FOR THE DISPUTED ADVERTISEMENTS, OR THAT SUM OF MONEY ACTUALLY PAID BY THE CUSTOMER TOWARD THE DISPUTED ADVERTISEMENTS, WHICHEVER SUM SHALL BE LESS, AS LIQUIDATED DAMAGES AND NOT AS A PENALTY, AND THIS LIABILITY SHALL BE EXCLUSIVE. IN NO EVENT SHALL PUBLISHER BE LIABLE FOR ANY LOSS OF CUSTOMER'S BUSINESS,

REVENUES, PROFITS, THE COST TO THE CUSTOMER OF OTHER ADVERTISEMENTS OR ANY OTHER SPECIAL INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY NATURE, OR FOR ANY CLAIM AGAINST THE CUSTOMER BY A THIRD PARTY ...

8. Pinnacle, through Brian Ricci, further acknowledged the "Publisher Liability" clause--by signing the Directory Advertising Order on the customer signature line which is located directly below the following clause:

I have read and understand the terms and conditions on the face and reverse side, particularly the paragraph which limits my remedies and publisher's maximum liability in the event of error or omission.

9. Ameritech advertising has not sought to recover, and Pinnacle is not obligated to pay, nor has it paid for any advertising in the 1993 Directory.

10. Because Ameritech advertising's liability is limited to an amount equal to the contract price for the disputed advertisements, or the sum of money actually paid toward the disputed advertisements, whichever sum shall be less, Pinnacle is not entitled to recover for any damages because Pinnacle has not paid for any advertising in the 1993 Directory.

Record at 141-44.

DISCUSSION AND DECISION
I. Standard of Review

When reviewing an entry of summary judgment, we stand in the shoes of the trial court. Collins v. Covenant Mut. Ins. Co. (1992), Ind.App., 604 N.E.2d 1190, 1194. We consider the pleadings and evidence designated under Ind.Trial Rule 56(C) without determining their weight or credibility. Board of Trustees v. Landry (1993), Ind.App., 622 N.E.2d 1019, 1021. Summary judgment is appropriate if the designated evidentiary matter shows that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Id.; T.R. 56(C). We will not weigh the evidence and will consider the facts in the light most favorable to the nonmoving party. Collins, 604 N.E.2d at 1194.

II. Summary Judgment

Pinnacle first contends that the trial court erred in granting Ameritech's motion for summary judgment because a genuine issue of material fact exists as to whether the parties mutually assented to the exculpatory provision.

A mutual assent or a meeting of the minds on all essential elements or terms must exist in order to form a binding contract. Carr v. Hoosier Photo Supplies, Inc. (1982), Ind., 441 N.E.2d 450, 455. Assent to the terms of a contract may be expressed by acts which manifest acceptance. State v. Daily Exp., Inc. (1984), Ind.App., 465 N.E.2d 764, 767.

In the case at bar, Brian Ricci, Pinnacle's president and agent, signed Ameritech's order on the customer signature line located directly below the following clause:

I have read and understand the terms and conditions on the face and reverse side, particularly the paragraph which limits my remedies and publisher's maximum liability in the event of error or omission.

R. at 144. By its agent's act of signing the contract, Pinnacle assented to its terms and the trial court did not err in finding that there were no genuine issues as to any material fact and that Ameritech was entitled to judgment as a matter of law. See Sink & Edwards, Inc. v. Huber, Hunt & Nichols (1984), Ind.App., 458 N.E.2d 291, 296.

III. Exculpatory Provision

Next, Pinnacle argues that Ameritech's exculpatory damage clause is unconscionable and should be held invalid, unenforceable and against public policy.

A contract is thought to be the product of the free bargaining of the parties. Fresh Cut, Inc. v. Fazli (1994), Ind.App., 630 N.E.2d 575, 577. As a general rule, the law allows persons of full age and competent understanding the utmost liberty of contracting and their contracts, when entered into freely and voluntarily, are enforced by the courts. Id. This is so because it is in the best interest of the public that persons should not be unnecessarily restricted in their freedom of contract. Id. Accordingly, the parties to a contract are free to include in the agreement any provisions they desire so long as such provisions do not offend the public policy of this state. Id.

In the absence of legislation, a party may contract out of his duty to exercise reasonable care with respect to the other party and thereby exonerate himself of liability to the other for negligence without offending the public policy of the state. Id. at 578. This may be done by an exculpatory clause or an express agreement from the other party to release the promisee from his duty or to assume the risk. Id.

Although no public policy exists to prevent contracts containing exculpatory clauses, some exceptions do exist where the parties have unequal bargaining power, the contract is unconscionable, or the transaction affects the public interest such as utilities, carriers, and other types of businesses generally thought to be suitable for regulation or which are thought of as a practical necessity for some members of the public. General Bargain Center v. American Alarm Co. (1982), Ind.App., 430 N.E.2d 407, 411-12. Absent the exceptions mentioned above, however, such agreements are enforceable. Id. at 412.

The enforceability of an exculpatory clause in a Yellow Pages advertising contract was recently addressed by this court in Pigman v. Ameritech Publishing, Inc. (1994), Ind.App., 641 N.E.2d 1026. The Pigman decision joined a minority of jurisdictions in holding that the exculpatory clause contained in Ameritech's Yellow Pages advertising contract is unconscionable and void as against public policy as a matter of law. Pigman, 641 N.E.2d at 1035. However, authorities cited by Pinnacle and Ameritech and through our own research indicate that a majority of tribunals in other states that have addressed this issue have upheld the validity of such clauses. 1

IV. Other Jurisdictions

In University Hills Beauty Acad., Inc. v. Mountain States Tel. & Tel. Co. (1976), 38 Colo.App. 194, 554 P.2d 723, the Colorado Court of Appeals upheld an exculpatory clause in a Yellow Pages advertising contract against challenges that it was unconscionable and against public policy. The Beauty Academy sued Mountain Bell for loss of business profits and expenses resulting from the negligent omission of its listing under the heading "Beauty Schools" in the Yellow Pages published by Mountain Bell. Id. at 724. Although Mountain Bell admitted that due to a computer error, the listing appeared...

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