Case Title: ADLOO V. H.T. Brown

Citation: 344 Md. 254

Docket Number: 143/95

State: maryland

Court: Maryland Supreme Court

Date: 1996-12-16T00:00:00Z

Document:
Abdolrahman M. Adloo, et. al., v. H.T. Brown Real Estate, Inc.
No. 143, September Term, 1995
Headnote:
CONTRACT-REAL ESTATE-EXCULPATORY CLAUSE - The intention of the
parties to a contract to exculpate one of the parties from
liability for future negligence must be expressed in clear,
explicit, and unequivocal language. 
IN THE COURT OF APPEALS OF MARYLAND
NO. 143
SEPTEMBER TERM, 1995
___________________________________
   
    ABDOLRAHMAN M. ADLOO et al.    
                            
V.
H.T. BROWN REAL ESTATE, INC.
___________________________________
    *Murphy, C. J.
Eldridge
     Rodowsky
Chasanow
Karwacki
Bell
Raker,
     
JJ.
___________________________________
 OPINION BY BELL, J.
___________________________________
       
        FILED:  December 16, 1996
* 
Murphy, 
C.J., 
now 
retired,
participated in the hearing and
conference of this case while an
active member of this Court; after
being recalled pursuant to the
Constitution, Article IV, Section
3A, he also participated in the
decision and the adoption of this
opinion.
     Although both parties addressed a second issue, the
1
sufficiency of the evidence to support the jury's verdict, we
were asked to grant certiorari, and in fact we granted
certiorari, on only one issue, the validity and effect of the
exculpatory clauses.  Accordingly, the sufficiency of the
evidence is not before us and we shall refrain from addressing
it. 
In this case, we are asked to resolve whether, as a matter of
law, clauses in a real estate listing contract between the
petitioners, Abdolrahman Adloo, and Monireh, his wife, and the
respondent H.T. Brown Real Estate, Inc., and in a related lock-box
authorization are exculpatory clauses, which absolve the real
estate company from liability for its future negligence.  The
Circuit Court for Montgomery County having denied the respondent's
motion for judgment premised on the clauses being exculpatory, the
jury returned a verdict in favor of the petitioners.  The
respondent successfully appealed to the Court of Special Appeals,
which, in an unreported opinion, held that "a provision in an
agreement between homeowners and their real estate broker
exculpating the broker from any liability for the loss of the
homeowners' personal property ... is enforceable."  We granted the
petitioner's petition and issued the writ of certiorari to consider
the issue.   We shall reverse the judgment of the intermediate
1
appellate court.
I
The petitioners entered into an exclusive listing agreement
with the respondent for the sale of the petitioner's home.  That
listing agreement contained the following clause:
2
     The listing agreement and the lock box authorization were
2
standardized realtor contracts used in Montgomery and Prince
George's counties, respectively.  Given our view of the issue, it
is not necessary that we address the petitioners' argument
concerning the propriety of the use of these forms in Montgomery
County.
Neither REALTOR nor his agents or sub-agents are
responsible for vandalism, theft or damage of any nature
whatsoever to the property, nor is REALTOR responsible
for the custody of the property, its management,
maintenance, upkeep or repair.
It also provided that the petitioners' home would be available for
showing "at all reasonable hours."  
Consistent with the latter provision and in order to
facilitate the showing of the petitioners' home, the petitioners
subsequently executed a lock-box authorization.   Pursuant to that
2
authorization, the petitioners agreed to the installation and use
of a lock-box device, which allowed their home to be shown without
either the petitioners or the respondent's agent being present.
While the respondent instructed the petitioners to disengage the
security system monitoring their home to allow access to the home,
the authorization cautioned the petitioners to "safeguard" their
valuables.
It also contained the following provision:
SELLER further acknowledges that neither Listing or
Selling BROKER nor their agents are an insurer against
the loss of personal property; SELLER agrees to waive and
releases BROKER and his agents and/or cooperating agents
and brokers from any responsibility therefore [sic].
The respondent received a telephone call from a man who
identified himself as Alvin Harris and represented that he was an
agent of Shannon and Luchs, another real estate broker.  Informing
3
     The lock-box, which contained the key to the house, placed
3
on the petitioners' house was a combination lock-box; thus, it
could be opened only by using the correct combination.   
the respondent's employee of his intention to show the petitioners'
home that afternoon, "Mr. Harris" requested, and eventually
secured, the lock-box combination.   In providing that information,
3
the employee followed the respondent's established policy of
verifying the bona fides of the caller, his identity and
affiliation with the named agency, by calling, without first
conducting any independent investigation, the number the caller
gave her.  Subsequently, it was discovered that the caller was an
impostor; Shannon and Luchs did not have an agent named Alvin
Harris.  According to the records of the Maryland Real Estate
Commission, no real estate license has been issued in that name,
and the number given to the respondent's employee was not a Shannon
and Luchs number.  It was also discovered that cash, jewelry, and
other property totalling nearly $40,000 had been taken from the
petitioners' home.  
Having filed, and settled, a claim with their insurance
carrier, the petitioners sued the respondents for damages.
Following a trial in the Circuit Court for Montgomery County, the
jury awarded them $20,000.  The respondent noted an appeal to the
Court of Special Appeals.  The intermediate court reversed the
judgment of the circuit court.  In an unreported opinion,
characterizing it as an exculpatory clause, that court held that
4
     At issue in that case was an exculpatory clause in a lease
4
for a residential property.  Subsequent to our holding such a
clause valid and enforceable, the General Assembly enacted
legislation declaring exculpatory clauses in real property leases
to be void as against public policy. Ch. 124, Acts of 1964, now
codified at Maryland Code (1974, 1988 Repl.Vol.) § 8-105 of the
Real Property Article. See Prince Philip Partnership v. Cutlip,
321 Md. 296, 298, 582 A.2d 992, 992-93 (1990).
the lock-box authorization provision, quoted above, was valid and
enforceable and, thus, precluded the petitioners' claim.  We
granted certiorari, at the petitioners' request, to consider this
important issue.
II
A.
It is well settled in this State, consistent with "the public
policy of freedom of contract,"  see Wolf v. Ford, 335 Md. 525,
531, 644 A.2d 522, 525 (1994), that exculpatory contractual clauses
generally are valid.  Id.; Eastern Ave. Corp. v. Hughes, 228 Md.
477, 480, 180 A.2d 486, 488 (1962) ; Atty Griev. Comm'n v.
4
Owrutsky, 322 Md. 334, 350, 587 A.2d 511, 518 (1991); Sullivan v.
Mosner, 266 Md. 479, 494-96, 295 A.2d 482, 490-91 (1972); Baker v.
Roy Haas Associates, Inc., 97 Md. App. 371, 377, 629 A.2d 1317,
1320 (1993); Schrier v. Beltway Alarm Co., 73 Md. App. 281, 286,
533 A.2d 1316, 1318 (1987); Boucher v. Riner, 68 Md. App. 539, 548,
514 A.2d 485, 490 (1986); Winterstein v. Wilcom, 16 Md.App. 130,
135, 293 A.2d 821, 824, cert. denied, 266 Md. 744 (1972).  Aside
5
     In addition to the legislation discussed in note 4 supra,
5
see Maryland Code (1974, 1989 Repl. Vol., 1993 Cum. Supp.), § 5-
305 of the Courts and Judicial Proceedings Article.  That section
provides:
A covenant, promise, agreement or understanding in, or
in connection with or collateral to, a contract or
agreement relating to the construction, alteration,
repair, or maintenance of a building, structure,
appurtenance or appliance, including moving, demolition
and excavating connected with it, purporting to
indemnify the promisee against liability for damages
arising out of bodily injury to any person or damage to
property caused by or resulting from the sole
negligence of the promisee or indemnitee, his agents or
employees, is against public policy and is void and
unenforceable.  This section does not affect the
validity of any insurance contract, workers'
compensation, or any other agreement issued by an
insurer.
  
See also Heat & Power v. Air Products, 320 Md. 584, 592-93, 578
A.2d 1202, 1206 (1990); Bethlehem Steel v. G.C. Zarnas & Co., 304
Md. 183, 195, 498 A.2d 605, 611 (1985).
from legislation proscribing such clauses,  this Court, in Wolf v.
5
Ford, 335 Md. at 531-32, 644 A.2d at 525-26 (citing Wilcom, 16 Md.
App. at 135-36, 293 A.2d at 824, Restatement (Second) Contracts §
195(1) (1981), and W. Page Keeton, et al., Prosser and Keeton on
the Law of Torts, § 68, at 482 (5th ed. 1984)), identified three
circumstances in which exculpatory clauses in contracts are invalid
and will not be enforced: when a party to the contract attempts to
avoid liability for intentional conduct or harm caused by reckless,
wanton, or gross behavior; when the contract results from grossly
unequal bargaining power; and when the transaction is one adversely
affecting the public interest.  We also noted that this last
exception
6
includes the performance of a public service
obligation, e.g., public utilities, common
carriers, innkeepers, and public warehousemen.
It also includes those transactions, not
readily susceptible to definition or broad
categorization, that are so important to the
public good that an exculpatory clause would
be "patently offensive," such that "` the
common sense of the entire community would
pronounce it' invalid," 
id. at 532, 644 A.2d at 526 (quoting Md. Nat'l Cap. P. & P. v.
Wash. Nat'l Arena, 282 Md. 588, 606, 386 A.2d 1216, 1228 (1978), in
turn quoting Estate of Woods, Weeks & Co., 52 Md. 520, 536 (1879),
and the standard by which it is measured is a strict one.  See Anne
Arundel Co. v. Hartford Accident, 329 Md. 677, 686-88, 621 A.2d
427, 431-32 (1993); Finci v. American Casualty, 323 Md. 358, 376-
79, 593 A.2d 1069, 1077-78 (1991).
While we have clearly defined when exculpatory clauses in
contracts are valid, there is a threshold issue that must be
considered prior to addressing that inquiry: whether the clause at
issue is, in fact, an exculpatory clause.  Stated differently, the
question is the adequacy of the clause to shield one of the parties
from liability.  That issue turns on the intention of the parties.
As in the case of statutory construction, determining the intention
of the parties to a contract involves construing the language of
the contract, more particularly, the words of the subject clause.
Highley v. Phillips, 176 Md. 463, 5 A.2d 824 (1939); Fidelity &
Deposit Co. v. Mattingly Lumber Co., 176 Md. 217, 4 A.2d 447
(1939); Rollins v. Bravos, 80 Md. App. 617. 565 A.2d 382 (1989),
7
cert. denied, 318 Md. 525, 569 A.2d 644 (1990).  In the cases
involving exculpatory clauses, decided by this Court and also by
the Court of Special Appeals, cited above, no question concerning
the meaning of the clause was raised, only its applicability to the
situation presented.  Consequently, in those cases, only the latter
issue was addressed.
This Court has addressed the former issue, however.  In
Crockett v. Crothers, 264 Md. 222, 285 A.2d 612 (1971), the Court
was required to construe the following paragraph:
The obligations of the CONTRACTOR under this
Article 32 shall not extend to the liability
of the ENGINEER, his agents or employees
arising out of (a) the preparation or approval
of maps, drawings, opinions, reports, surveys,
Change Orders, designs or specifications or
(b) the giving of or the failure to give
directions or instructions by the ENGINEER,
his agents or employees provided such giving
or failure to give is the primary cause of
injury or damage.
Id. at 228, 285 A.2d at 615.  Noting the general rule - "contracts
will not be construed to indemnify a person against his own
negligence unless an intention to do so is expressed in those very
words or in other unequivocal terms," id. at 227, 285 A.2d at 615
(citing Blockston v. United States, 278 F. Supp. 576, 591 (D. Md.
1968); Farrell Lines, Inc. v. Devlin, 211 Md. 404, 421-22, 127 A.2d
640, 648-49 (1956); 24 Md. L. Rev. 66 (1964)) -  construing the
paragraph, we agreed with the trial court that the appellee "did
not agree in so many words or otherwise unequivocally - indeed did
not agree at all - to indemnify Crockett against his own
8
     This general rule of construction, see Standard Garments
6
Co. v. Hoffman, 199 Md. 42, 47, 85 A.2d 456, 458 (1952), is 
inconsistent neither with what the petitioner argues nor the rule
negligence." Id. at 228, 285 A.2d at 615.  See also Heat & Power
Corp. v. Air Products & Chemicals, Inc., 320 Md. 584, 592, 578 A.2d
1202, 1206 (1990).
Similarly, in Home Indem. Co. v. Basiliko, 245 Md. 412, 226
A.2d 258 (1967), the Court was called upon to construe the
following clause:
Landlord shall not be responsible for loss of
or damage to property of Tenant in said
building caused by fire or other casualty, or
by any acts of negligence of co-tenants or
other occupants of said building or any other
person, or by rain or snow or water or steam
that may leak into or flow from said building
through any defects in the roof or plumbing or
from any other source.
Id. at 414, 226 A.2d at 259.  The issue  was "whether ... the
exculpatory clause in the lease absolved the lessors from damages
caused by the leaking air conditioning unit."  The appellant in
that case contended that, because its words were susceptible of
more than one meaning and the instrumentality which caused the
damage was not definitively identified, the clause should have been
construed against the lessors.  Noting that "the wording of the
exculpatory clause is not ambiguous"  and "its meaning is not
uncertain," id. at 417, 226 A.2d at 260, this Court affirmed the
judgment in favor of the appellees.  We explained:    
    
The rule that a lease must be construed most
strongly against a lessor and in favor of a lessee  is
6
9
of construction reiterated in Crockett v. Crothers, 264 Md. 222,
285 A.2d 612 (1972).
only to be resorted to when the words of the lease are
doubtful in their meaning or susceptible of more than one
construction. ...   As to the damage caused by water
leaking into the premises of the tenants by way of the
defective air conditioning unit, i[t] is clear, since the
meaning of the words in the third category of causes are
neither doubtful nor susceptible of more than one
construction, that the lessors were not responsible for
the damage suffered by the  lessees.  And this would be
so regardless of whether or not the lessors were
negligent in keeping the air conditioning unit in good
repair. Furthermore, even if it is assumed that the unit
was not a part of the plumbing system, it would not be
unreasonable to include an air conditioning unit as
another source from which leakage of water might be
expected.
Id. at 417, 226 A.2d at 261 (citation omitted).  See Christhilf v.
Mayor and City Council of Baltimore, 152 Md. 204, 208, 136 A. 527,
528 (1927).
Courts in other jurisdictions apply the same analysis.  Alack
v. Vic Tanny International, 923 S.W.2d 330, 334 (Mo. 1996)(quoting
Hornbeck v. All American Indoor Sports, Inc., 898 S.W.2d 717, 721
(Mo. App. 1995)  ("contracts exonerating a party from acts of
future negligence are to be `strictly construed against the party
claiming the benefit of the contract, and clear and explicit
language in the contract is required to absolve a person from such
liability."`); Audley v. Melton, 640 A.2d 777, 779 (N.H. 1994)
(language of release clearly and specifically must indicate intent
to release the defendant from liability for personal injury caused
by the defendant's negligence; general release language does not
10
     The Missouri Supreme Court has said that it  is a "well-
7
established rule of construction that a contract provision
suffice); Michel v. Merrill Stevens Dry Dock Company, 554 So.2d
593, 595 (Fla. App. 1989)(exculpatory contracts relieving a party
of his or her own negligence are valid and enforceable where such
intention is made clear and unequivocal in the contract); Baker v.
Stewarts', Inc., 433 N.W.2d 706, 709 (Iowa 1988) ( "[contract
provisions that are subject to construction which a party claims
relieve him from liability for his own negligence] are not held to
cover such negligence unless the intention to do so is clearly
expressed."); Colgan v. Agway, Inc., 553 A.2d 143, 145 (Vt. 1988)
(" a greater degree of clarity is necessary to make the exculpatory
clause effective than would be required for other types of contract
provisions.") (emphasis added); Larsen v. Vic Tanny International,
474 N.E.2d 729, 731 (Ill. App. 1984) ("exculpatory contracts or
clauses are subject to the general rule that they are to be
construed most strongly against their maker"); Wenzel v. Boyles
Galvanizing Co., 920 F.2d 778, 781 (11th Cir. 1991).  See
University Plaza Shopping Center, Inc. v. Stewart, 272 So.2d 507,
509 (Fla. 1973), in which the Florida Supreme Court applied the
principle in the same context as this Court has done - to the
construction of an indemnity clause in a contract.
The standard thus developed and required is a stringent and
exacting one, under which the clause must not simply be unambiguous
but also understandable. Alack, 923 S.W.2d at 334.   Just how
7
11
exempting one from liability for his or her negligence will never
be implied but must be clearly and explicitly stated." Poslosky
v. Firestone Tire and Rubber Co., 349 S.W.2d 847, 850 (Mo. 1961). 
Maryland has applied that rule of construction but only in the
context of an indemnity clause.  We see no reason, when the
effect of the two clauses is the same to approach their
interpretation from a different analytical premise; if a rule of
construction is applicable to the interpretation of one clause,
it should also be applicable to the interpretation of the other. 
     The photographer also relied on a sentence in the release
8
directed toward proprietary rights: "I further release the
photographer, his/her agents or assigns from any and all
liability whatsoever."
stringent and exacting may be demonstrated by reviewing a few of
the cases.  
Audley, supra, 640 A.2d 777, was a negligence action by a
model, who had been bitten on the head by a lion during a
photography shoot. Id. at 778.  The photographer moved to dismiss,
relying on the following release:
I ... realize that working with the [sic] wild
and potentially dangerous animals (i.e. lion,
white tiger, hawk) can create a hazerdous
[sic] situation, resulting in loss of life or
limb. I take all responsibility upon myself
for any event as described above that may take
place. I hold Bill Melton and T.I.G.E.R.S. or
any of their agents free of any or all
liability. I am signing this of my on [sic]
free will.8
Denying the motion, the court explained:
The ... release recognizes certain risks
inherent in working with wild animals, and
then promises to hold the defendant "free of
any and all liability."  Although this release
insulates the defendant from liability for
injuries inflicted by wild animals when no
negligence on the part of the defendant is
involved, it does not effectively release the
12
defendant from liability based on his own
negligence.  Quite simply, the general release
language does not satisfy the ... requirement
that "the contract must clearly state that the
defendant 
is 
not 
responsible 
for 
the
consequences of his negligence." ... The
release fails in this respect not because it
fails to use the word "negligence" or any
other special terms; instead it fails because
no particular attention is called to the
notion 
of 
releasing 
the 
defendant 
from
liability for his own negligence.  The general
language in the context of the release simply
did not put the plaintiff on clear notice of
such intent.
640 A.2d at 779 (quoting Barnes v. New Hampshire Karting Assn., 509
A.2d 151, 154 (1986)). 
The exculpatory clause in Baker, supra, 433 N.W.2d 706, was:
I ... do hereby acknowledge that this is a
student training facility and thus there is a
price consideration less than would be charged
in a salon.  Therefore, I will not hold the
Stewart School, its management, owners, agents
or students liable for any damage or injury,
should any result from this service.
Id.  Addressing the adequacy of the clause, the court said:
In reviewing the language of the exculpatory
clause at issue in the present case, we do not
believe that it would be apparent to the
casual reader asked to sign this form as a
condition for receiving cosmetology services
that 
its 
effect 
was 
to 
absolve 
the
establishment from liability based upon the
acts or omissions of its professional staff.
To construe the agreement in this light would
be contrary to the requirement ... that such
intention must be clearly and unequivocally
expressed.
Id. at 709.
To be sure, as the weight of authority makes clear, Hardage
13
Enterprises, Inc. v. Fidesys Corporation, 570 So.2d 436, 437 (Fla.
App. 1990), the exculpatory clause need not contain or use the word
"negligence" or any other "magic words." Id.; Audley, 640 A.2d at
778; Alack, 923 S.W.2d at 335-36.  Such a clause is sufficient to
insulate the party from his or her own negligence "as long as [its]
language ... clearly and specifically indicates the intent to
release the defendant from liability for personal injury  caused by
the defendant's negligence...." Barnes, 509 A.2d at 154.   
This is consistent with the objective law of contract
interpretation and construction, which Maryland follows.  As
explained in General Motors Acceptance Corp. v. Daniels, 303 Md.
254, 261, 492 A.2d 1306, 1310 (1985), that means:
      
A court construing an agreement under
this test must first determine from the
language of the agreement itself what a
reasonable person in the position of the
parties would have meant at the time it was
effectuated.   In addition, when the language
of the contract is plain and unambiguous there
is no room for construction, and a court must
presume that the parties meant what they
expressed.   In these circumstances, the true
test of what is meant is not what the parties
to the contract intended it to mean, but what
a reasonable person in the position of the
parties 
would 
have 
thought 
it 
meant.
Consequently, 
the 
clear 
and 
unambiguous
language of an agreement will not give away
[sic] to what the parties thought that the
agreement meant or intended it to mean.   As a
result, when the contractual language is clear
and unambiguous, and in the absence of fraud,
duress, or mistake, parol evidence is not
admissible to show the intention of the
parties or to vary, alter, or contradict the
terms of that contract.  
14
Id. at 261-62, 492 A.2d 1310 (citations omitted).  By parity of
reasoning, when the clause is unclear and ambiguous, either the
intention of the parties must be established through the
introduction of relevant parol evidence or the issue resolved by
strictly construing the clause against its author. Dialist Co. v.
Pulford, 42 Md.App. 173, 399 A.2d 1374 (1979). See Colgan, supra,
553 A.2d at 145, in which the Vermont Supreme Court, noting the
applicability 
of 
the 
objective 
law 
of 
contracts 
to 
the
interpretation of exculpatory clauses, pointed out that, "[i]t is
the degree of clarity that the language must convey in order to
achieve a particular legal result which is the crucial question."
Id.  That means, in Vermont, the court said, that because "such
disclaimers are exculpatory, they must be construed strictly
against the party relying on them." Id.    
The critical issue on this appeal is whether the exculpatory
clause in the lock-box agreement is sufficient to exculpate the
respondent from liability resulting from its own negligence.  The
answer lies in the intention of the parties, which, under the
objective law of contracts, is determined by the language of the
subject clause. We agree with the petitioners that the clause is
ambiguous and its scope is, at best, unclear.  Because it does not
clearly, unequivocally, specifically, and unmistakably express the
parties' intention to exculpate the respondent from liability
resulting from its own negligence, the clause is insufficient for
that purpose.
15
     This clause may present yet another ambiguity, whether it
9
refers to real or personal property, or both.  
The first sentence of the exculpatory clause recites that the
respondent is not an insurer against the loss of the petitioners'
personal property.  The second sentence then relieves the
respondent of the responsibility for any such loss. In short, it
places the homeowner, as seller, on notice that the listing or
selling broker is not "an insurer against the loss of personal
property" and thus releases the broker from the responsibility of
such losses. Very clearly that clause may logically be interpreted
as applying only to those situations in which, without negligence
on the part of the respondent, a person to whom the house is being
shown steals the petitioners' property.  There is nothing in the
clause or, indeed, in the context, that would suggest a different
or broader intent.  In fact, putting the matter in context leads to
the conclusion that the parties did not contemplate that this
clause would insulate the respondent from liability for it own
negligence.  We conclude that the exculpatory clause plainly does
not address thefts occurring as a result of the respondent's
negligence.  
Nor does the exculpatory clause in the listing contract pass
muster.  That clause protects the respondent from responsibility
for "vandalism, theft or damage of any nature to the property."9
Here again, there simply is no clear, unequivocal expression of the
parties' intention that included in that exclusion was damage or
16
injury caused by the respondent's own negligence.  Indeed, the
clause is devoid of any language manifesting any  such intention.
  
JUDGMENT OF THE COURT OF SPECIAL
APPEALS 
REVERSED. 
 
CASE 
REMANDED
TO THAT COURT WITH INSTRUCTIONS
TO REINSTATE THE JUDGMENT OF THE
CIRCUIT COURT FOR MONTGOMERY
COUNTY. COSTS IN THIS COURT AND
IN THE COURT OF SPECIAL APPEALS
TO BE PAID BY THE RESPONDENT.