Regensburger v. China Adoption Consultants, Ltd.

• Decision Date: 17 March 1998
• Docket Number: No. 97-2046,97-2046
• Parties: Kurt REGENSBURGER and Anna Regensburger, Plaintiffs-Appellants, v. CHINA ADOPTION CONSULTANTS, LTD., Kenneth Lubowich and Renee Lubowich, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1201

138 F.3d 1201

Kurt REGENSBURGER and Anna Regensburger, Plaintiffs-Appellants, v. CHINA ADOPTION CONSULTANTS, LTD., Kenneth Lubowich and Renee

Lubowich, Defendants-Appellees.

No. 97-2046.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 24, 1997.

Decided March 17, 1998.

Paul R. Shuldiner (argued), Chicago, IL, for Plaintiffs-Appellants.

Barbara J. Buhai, Stephen G. Katz (argued), Tammara M. Lovett, Katz & Buhai, Barrington, IL, for Defendants-Appellees.

Before RIPPLE, MANION, and KANNE, Circuit Judges.

KANNE, Circuit Judge.

The Regensburgers brought this action seeking damages for breach of contract, fraudulent misrepresentation, and negligent misrepresentation. The district court granted the defendants' motion for summary judgment. The Regensburgers now appeal that decision. Appellees moved for sanctions against the Regensburgers for frivolous appeal, and that motion was combined with the case on the merits. For the reasons set forth below, we affirm the judgment of the district court and deny the motion for sanctions.

I. HISTORY

We recite the facts in the light most favorable to the Regensburgers. China Adoption Consultants, Ltd. ("CAC") is an Illinois corporation in the business of providing travel and support services to prospective parents interested in adopting children from the People's Republic of China. CAC is owned by defendant Kenneth Lubowich. CAC has employed defendant Renee Lubowich since 1995.

In January 1995, the Regensburgers engaged the services of CAC. The Regensburgers explained that they wished to adopt a healthy two to two and a half year old from China. The Regensburgers had lost their second child to Sudden Infant Death Syndrome, and they were hoping to adopt a child who would be approximately the same age as their second child would have been. At that time Kenneth Lubowich advised the Regensburgers about the services CAC would provide and the steps necessary to complete an adoption of a child from China. Lubowich made certain oral representations to the Regensburgers. He assured the Regensburgers that he had special expertise with Chinese adoptions, that they would get the child they wanted, and that he had connections with the Director of the China Adoption Center ("the Center"). The Regensburgers relied on these representations.

Between January and August 1995, Lubowich advised the Regensburgers on the paperwork the Center required. Renee Lubowich also assisted with the preparation of the paperwork. Once the Regensburgers completed the necessary forms, Kenneth Lubowich reviewed the paperwork to ensure it met the requirements of the Center. Lubowich forwarded these documents to the Center in August 1995. In September 1995, the Center forwarded a referral of a three year old girl, Yang Chun Hua ("Yang") for potential adoption by the Regensburgers. The referral consisted of a medical report and a picture of the child. Lubowich forwarded these documents, along with a formal Consulting Agreement ("Agreement") to the Regensburgers.

Lubowich advised the Regensburgers that they had the right to refuse the referral, but that if they did so, he was unsure when the next child would become available. Lubowich also advised the Regensburgers that China had a policy that requires a family that already has a natural child to adopt a child with special needs. Lubowich explained that the Center informed him that the special needs requirement would be met if prospective parents adopted a child over two years old. The Regensburgers accepted the referral and signed the Agreement with CAC.

The services provided by CAC were outlined in the Agreement entered into by the Regensburgers and CAC on September 8, 1995. Under the Agreement, CAC agreed to: (1) consult and advise the Regensburgers concerning the necessary documentation and authentication of such documentation required for Chinese adoptions; (2) forward the documentation to China; (3) act as a liaison between the Regensburgers and translators to secure the required notarized translations of the documentation; (4) receive a summary of available medical records, if any, and personal histories provided by Chinese authorities; and (5) provide assistance to the Regensburgers in connection with the adoption while the Regensburgers are in China, and relay information and documentation that is available in the public record. It is undisputed that CAC provided many of these services prior to the time the parties signed the Agreement. The Regensburgers also performed part of their responsibilities under the Agreement prior to its signing, including paying the Agreement price of $500.

The Agreement provides that information received from the Chinese government might not be complete or accurate and in most cases would not be detailed or elaborate. The Agreement notes that there may be little or no information available concerning a child's history and that CAC made no representations with regard to the accuracy of any information on children the Chinese government identified for adoption. The Agreement also states that the adoption process is subject to great risks and that there can be no assurances concerning the outcome of an adoption, including the child's health, intelligence, or other attributes. Accordingly, the Agreement provides that the Regensburgers assume all risk attendant to proceeding with an adoption subject to limited information and assume all risk concerning the outcome of the adoption. Finally, the Agreement states that the Regensburgers voluntarily, irrevocably, and unconditionally release CAC and its employees from any and all liability related to the adoption process.

On September 11, 1995, the Regensburgers used CAC's travel services to arrange a trip to China. On September 14, 1995, the Regensburgers went to China to adopt Yang. While they were in China, Lubowich's agent assisted the Regensburgers. The Regensburgers met Yang, and on September 20, 1995, they made a videotape of the orphanage director verifying Yang's birth date. On September 25, 1995, the Regensburgers called the orphanage to again confirm Yang's birth date. At any time, the Regensburgers could have refused the referral, but instead they formally adopted Yang. On September 28, 1995, the Regensburgers returned to the United States with their newly adopted daughter.

Between September and November 1995, the Regensburgers wrote and called many friends and colleagues, including Lubowich, to express their happiness with their adopted daughter. However, in November 1995, after taking Yang to several doctors, the Regensburgers learned that she was not three years old but was in fact between six and eight years old and mentally and physically delayed. The Regensburgers placed Yang for readoption in February 1996.

II. ANALYSIS

A. Summary Judgment Standard

We review a district court's grant of summary judgment de novo, drawing our own conclusions of law and fact from the record before us. See Thiele v. Norfolk & W. Ry. Co., 68 F.3d 179, 181 (7th Cir.1995). Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). In determining whether a genuine issue of material fact exists, courts must construe all facts in the light most favorable to the non-moving party and draw all reasonable and justifiable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513-14, 91 L.Ed.2d 202 (1986). However, neither "the mere existence of some alleged factual dispute between the parties," Anderson, 477 U.S. at 247, 106 S.Ct. at 2510, nor the existence of "some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986), is sufficient to defeat a motion for summary judgment.

B. Breach of Contract Claim

CAC and the Lubowiches argue that they did not breach the terms of the Agreement because the Regensburgers, according to the terms of the Agreement, assumed the risk and waived liability for damages arising out of the adoption. The relevant contractual provisions read as follows:

[The Regensburgers] acknowledge and understand that there will be limited information or no information available concerning a child's history and Consultant makes no representations with regard to the accuracy of any information contained in the files of children identified by Chinese authorities; accordingly, the [Regensburgers] will decide the selection of their child based on limited information and [the Regensburgers] assume[ ] all risks attendant to proceeding on this basis.

. . . . .

[The Regensburgers] agree and acknowledge that the adoption process is subject to great risk considering the human and emotional and subjective factors which are present, and there can be no assurances of any kind, nature, or description concerning the outcome of an adoption, including, but not limited to, the child's health, intelligence, or other attributes which would be critical to [the Regensburgers].

. . . . .

In view of the aforesaid considerations, [the Regensburgers] hereby voluntarily, irrevocably and unconditionally release and forever discharge Consultant, its officers, directors, agents and associates from any and all claims, demands, causes of action, damages, judgments, decrees, costs, attorneys' fees, expenses or other liability arising directly or indirectly out of any alleged or actual breach of the representations, covenants and obligations of Consultant, its officers, directors, agents and associates as set forth in this Agreement or arising out of the relationship between...