Schratter v. Development Enterprises, Inc.

Decision Date19 January 1979
Citation584 S.W.2d 459
PartiesMartin SCHRATTER, et ux., Plaintiffs-Appellants, v. DEVELOPMENT ENTERPRISES, INC., d/b/a Marquis Luxury Apartments, Defendant- Appellee. 584 S.W.2d 459
CourtTennessee Court of Appeals

R. Jerome Shepherd, Cleveland, for plaintiffs-appellants.

Luther, Anderson, Cleary, Luhowiak & Cooper, Chattanooga, for defendant-appellee.


FRANKS, Judge.

This appeal presents the issue of whether exculpatory clauses in residential leases will be enforced to bar recovery against a landlord for his negligent acts which cause loss or damage to his tenant.

Plaintiffs and defendant entered into a residential apartment lease agreement in July, 1976, in Bradley County. In January, 1977, an agent of defendant negligently caused a fire in the apartment building, which resulted in loss and damage to plaintiffs' personal property and other losses and expenditures. Defendant filed a motion for summary judgment, averring that a provision in the lease prohibits the plaintiffs from maintaining the suit which states, in part, at Sec. 21:

(T)he Lessor and its agents shall not be liable to Lessee, or any person claiming through Lessee, for any injury to the person or loss of or damage to property from any cause . . .

Plaintiffs argued before the trial court that the exculpatory provision in the lease was void as against public policy, but the trial judge, in sustaining defendant's motion, held under general contract law that parties to a contract may absolve themselves from liability and the rule is applicable to leases. The trial judge's memorandum quoted with approval Chazen v. Trailmobile, Inc., 215 Tenn. 87, 384 S.W.2d 1 (1964), as follows:

There is no disagreement within the various courts and jurisdictions over the fact that parties may contract to absolve themselves from liability, and this rule is applicable, and has been applied to the field of landlord and tenant. It has often been held that public policy is best served by freedom of contract and this freedom is prompted by allowing parties to limit their liability for fire damage under lease agreements. (Citations omitted.) Page 91, 384 S.W.2d page 3.

Appellants appealed, insisting the public policy of Tennessee is no longer as expressed in Chazen and the earlier case between those parties reported as Trailmobile, Inc. v. Chazen, 51 Tenn.App. 576, 370 S.W.2d 840 (1963).

Plaintiffs contend The Uniform Residential Landlord and Tenant Act of 1975, codified at T.C.A., § 64-2801, Et seq., has changed the public policy of the state in this area of the law.

T.C.A., § 64-2813(a)(2) prohibits provisions in rental agreements in which the tenant "agrees to the exculpation or limitation of any liability of the landlord to tenant arising under law . . ." If the act applied to the rental agreement under consideration, the disputed clause would be void; however, the lease was made and performed in Bradley County and T.C.A., § 64-2802 limits application of the act to "counties having a population of more than two hundred thousand (200,000)" or the four so-called metropolitan counties, and defendant argues the Uniform Act leaves the prior public policy of the state, as expressed in Chazen, in full force in the remaining 91 counties.

Plaintiffs' argument that the public policy of the state should be uniform throughout is not without appeal. It is disconcerting that the rights of tenants in certain counties of the state should differ so greatly from the rights of tenants in the four metropolitan counties. Nevertheless, the General Assembly clearly limited the application of the act and to accept plaintiffs' argument would extend the application of the Uniform Act to areas which the legislature has specifically excluded. 1 It is our obligation to give effect to, rather than ignore, the legislature's expressly stated intentions. See Tasco Developing & Bldg. Corp. v. Long, 212 Tenn. 96, 368 S.W.2d 65 (1963).

The freedom to contract away liability, as expressed in Moss v. Fortune, 207 Tenn. 426, 340 S.W.2d 902 (1961), and other cases, is not without limitations. The Supreme Court, in the case of Olson v. Molzen, 558 S.W.2d 429 (Tenn.1977), held if the exculpatory provision affects the public interest, then exceptions are to be made for the benefit of the public and adopted the following criteria 2 to be considered in making that determination:

(a.) It concerns a business of a type generally thought suitable for public regulation.

(b.) The party seeking exculpation is engaged in performing a service of great importance to the public, which is often a matter of practical necessity for some members of the...

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6 cases
  • Copeland v. Healthsouth/Methodist Rehab. Hosp., LP
    • United States
    • Tennessee Supreme Court
    • December 20, 2018
    ...analysis did not apply because the cases did not involve contracts for professional services. In Schratter v. Development Enterprises, Inc. , 584 S.W.2d 459, 461 (Tenn. Ct. App. 1979), the Court of Appeals upheld an exculpatory provision in a residential lease, based in part on its determin......
  • Crawford v. Buckner
    • United States
    • Tennessee Supreme Court
    • August 31, 1992
    ...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 ......
  • Schuck & Sons Const. v. Industrial Com'n of Ariz.
    • United States
    • Arizona Court of Appeals
    • January 29, 1998
    ... ... 41 ... SCHUCK & SONS CONSTRUCTION, Petitioner Employer, ... Alexsis, Inc., Petitioner Carrier, ... The INDUSTRIAL COMMISSION OF ARIZONA, ... ...
  • Petty v. Privette
    • United States
    • Tennessee Court of Appeals
    • February 6, 1989 the seller or his agents. 558 S.W.2d at 431. Olson applies only to professional service contracts. See Schmatter v. Development Enterprises, 584 S.W.2d 459 (Tenn.App.1979). Because the will at issue purports to protect a professional, i.e., an attorney, we must first consider the criteri......
  • Request a trial to view additional results

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