Title: Courbat v. Dahana Ranch, Inc. Dissenting Opinion by J. Duffy, with whom J. Acoba, joins [pdf]. S.Ct. Order Granting Motion for Reconsideration, filed 08/03/2006 [pdf]. Statement of No Position, by J. Acoba and J. Duffy.

State: hawaii

Issuer: Hawaii Supreme Court

Document:

‘FOR PUBLICATION IN WEST’ S HAWAT'T REPORTS AND PACIFIC REPORTER*

eee

IN THE SUPREME COURT OF THE STATE OF HAWAI'T

 

00

eee

LISA COURBAT and STEVEN COURBAT, Plaintiffs-Appellants,

 

vs.
DAHANA RANCH, INC., Defendant-Appellee,
and

JOHN DOES 1-10, JANE DOES 1-10, DOE ASSOCIATIONS 1-10, DOE
PARTNERSHIPS 1-10, DOE CORPORATIONS 1-10, DOE ENTITIES 1-10, and

OE GOVERNMENTAL UNITS 1-5, Defendants.
No. 25151 | ;

APPEAL FROM THE THIRD CIRCUIT COURT
(CIV. NO. 01-1-0049)

 

&h-O1KY OF Tne:

JOLY 10, 2006

MOON, C.dJ., LEVINSON AND NAKAYAMA, JJ., AND DUFFY, J.,/
DISSENTING, WITH WHOM ACOBA, J. JOINS

OPINION OF THE COURT BY LEVINSON, J.
The plaintiffs-appellants Lisa Courbat and Steven
Courbat [hereinafter, collectively, “the Courbats”) appeal from
the May 13, 2002 judgment of the circuit court of the third
circuit, the Honorable Riki May Amano presiding, entered pursuant
to the circuit court’s April 26, 2002 grant of summary judgment

in favor of the defendant-appellee Dahana Ranch, Inc. (the

Ranch) «

on appeal, the Courbats contend that the circuit court
(1) in concluding that Hawai'i Revised Statutes (HRS)

 

ast
*POR PUBLICATION IN WEST'S HAWAT' REPORTS AND PACIFIC REPORTER*

$ 480-2 et sea. (Supp. 1998)! do not apply to the Ranch’s
business practices of booking prepaid tours and subsequently
requiring liability waivers upon check-ins (2) by applying the
rebuttable presunption set forth in HRS § 6638-2(a) (Supp. 1994)?

 

1 wR ch, 480 provided in relevant part:

$ 480-2... . (a) Unfair methods of competition and unfair of
deceptive acts of practices in the conduct of any trade or commerce are
Snlawesl

(bj In construing this section, the courts and the office of
consumer protection shail give due coisiderstion to the rule:
Fegulations, and decisions of the Federal Trade Commission snd the
federal courts interpreting section 5(a) (1) of the Federal Trade
Conaisaion Act (15 Ur5.c. 4S(al (1)}y aa from tine to tine amended.

 

 

 

§ 490-3 . . . . This chapter shall be construed in accordance with
judicial interpretations of similar federal antitrust statutes =.

§ iwd-i2 . . . . any contract or agreement in violation of this
chapter ie void and 2 not enforceable at law or in equity.

‘§ 480-13... (b) Any consumer who 1 injured by any unfair or
deceptive act of practice forbidden of declared unlawiul By section
Wonks

(2) May ue for damages sustained by the consumer, and, if the

Judgment is for the plaintiff, the plainciff shall be
awarded a sun not less than 31,000 or threefold damages by
the plaintif® sustained, whichever sum is the greater, and
Feusonable attorneys” fees together with the costs of auity
Oana
(2) May being proceedings to enjoin the unlawful practices, and
ifthe decree is for the plaintiff, the plaintif! shall be

‘avarded reasonable attorneys’ fees together with the cost of

suit

 

 

 

 

Effective June 26, 2002, HRS § 480-2 was amended in respects inmaterial to the
present matter. See 2002 Haw. Sess. L. Act 229, §§ 2 and 6 at 916-18.
Effective ay 2, 2001, June 28, 2002, and June >, 2008, HRS $ 480-13 was
amended in respects immaterial to the present matter. See 2005 Haw. Sess. L.
Ret 108, $6.3 snd 5 at 265-66, 267; 2002 Haw. Sess. ib. Act 229, $6 3 and 6 at
917-18;'2001 Haw. Sess. L. Act 78, §§ 1 and § at 127-28

 

   

2 HRS ch. 6638, entitled “Equine activities” and enacted in 1994,
sag 1994 Haw, Sess. L. Act 225, §§ 1 and 2 at 591-82, provides in relevant,
part:

§ 6630-1... . As used in this [chapter], unless the context

otherwise requizes:
(cont ined...)
+FOR PUBLICATION IN WEST'S HAWAI'I REPORTS AND PACIFIC REPORTER*

 

(continued)

Engages in an equine activity” means riding . | . or being a
passenger upon an equine...

Spguine activity" means:

is) ‘Aides, trips, hunts, or other equine activities of any type

however informal or impronptu that are sponsored by an
equine activity sponsor and
ipguine activity sponsor” means an individual, group, clubs
partnership, of corporation. . - which sponsors, organizes, oF provides
the facilities for, an equine activity. -. «
‘Equine professions!” means a person engaged for compensation in
instructing 2 participant or renting toa participant an equine for the
purpose of riding, driving, of being a passenger upon the equine, or in
Ponting equipment’ or tack toa participant.
Srinerent risks of equine activities” means those dangers, oF
conditions which are an integral part of equine activities, including,
but not Limized to:
ia} ™ dhe propensity of an equine to behave in ways that may
Tori in injury, hem, or death to persons on or around

(2) The unpredictability of an equine’s reaction to such things
Zn sounds, sudden movenent, and unfaniliar objects, persons,
of other animals;

(3) Certain harerds such as surface and subsurface conditions:

[a)  Gellisions with other equines or objects; and

(S) She potential of a participant to act in a negligent manner

That may contribute to snjury to the participant or others,
Such a9 failing to maintain contra! over the animal oF not.
Acting within the porticipant’s ability.

“participant” means any person, whether amateur or professional,
who engages invan equine activity, whether or not a fee is paid to
Participate in the equine activity.

 

 

 

 

 

$ 6638-2...» (a) In any elvil action for injury, toss,
danage, of death Of'a participant, there shall be a presumption that the
$Ryaky, lows, damages or death was not caused by the negligence of an
Sqeing activity sponsor, equine professional, or their employees or
Sdents, if the invury, loss, damage, or death was caused solely by the
[gkerene risk and unpredictable nature of the equine. An injured person
Sr'theis legel representative may reout the presumption of no negligence
By a preponderance of the evidence.

ve] Nothing in this section shall prevent or limit the Liability
of an equine activity sponsor, an equine professional, or their
eenbyees Se Sgents ie Ene equine activity sponsor, equine professional,

oF person:

 

 

 

Provided the equine and . . . failed to reasonably supervise

ii
(continued...)

 
*FOR PUBLICATION IN WEST’ S HAWAI'I REPORTS AND PACIFIC REPORTER*

in finding that Lisa’s injuries were not due to the negligence of
the tour operator; (3) in finding that the Courbats sufficiently
read over the waiver before signing its and (4) in concluding
that the waiver was valid as to their negligence claims.

For the reasons discussed infra in section TII.A, we
vacate the circuit court's May 13, 2002 judgment and remand for
further proceedings consistent with this opinion.

1. BACKGROUND
The present matter arises out of personal injuries
sustained by Lisa on February 1, 1999, while she and Steven were
on a horseback riding tour on the Dahana Ranch on the Big Island
of Hawai'i. The Courbats had booked the tour and prepaid the fee
several months earlier through Island Incentives, Inc., an
internet-based tour organizer. When they checked in at the
Ranch, the Courbats were presented with a document to review and
to sign which laid out the rules for the horseback tour and
included a waiver “releas{ing] and hold{ing) harmless . . . [the
Ranch . . . from. . . injury to myself . . . resulting from my
«+ being a spectator or participant or while engaged in any
such activity in the event(-]related facilities” and stating that
the undersigned “acknowledge[s] that there are significant
elements of risk in any adventure, sport, or activity associated

84. continued)
‘the equine activities and such failure is a proxinate cause

of the injury. =

 

(Sone brackets in original end some omitted.)

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+FOR PUBLICATION IN WEST’S HAWAI'I REPORTS AND PACIFIC REPORTER*

with horses." According to admissions by the Courbats in
subsequent depositions, Lisa read over the waiver and, having no
questions regarding the rules and regulations it contained, *
signed it before passing it to her husband to sign. Steven
evidently did not read it, but recognized that it was “some kind
of release of some sort” and signed it. In fact, no guest of the
Ranch had ever refused to sign a waiver. Steven was familiar
with the concept of such waivers, having participated with his

wife in a snorkeling activity earlier during the vacation, at

 

>The roles and waiver stated in pertinent par

tn order for us to keep our Fide from being 2 "Nose To Tail Trail
Ride(,"] there are certain rales which mist be followed for your safety
Ghd’ che norses! mental well Being. FAILURE 70 FOLLOW THESE RULES WILL
Resvzt IN FORFEITURE OF YOUR RIDE WITH NO REFUND.

 

Ri pk Ss
+ FOLLOW RIDING INSTRUCTIONS 4 DIRECTIONS THROUGHOUT THE RIDE
+ PLEASE’ po NoT RIDE AHEAD OF YOUR GUIDE UNLESS TOLD TO DO $0
+ Bo'NGr FOLLOW ONE ANOTHER

warver
I/We, the undersigned, hereby release and hold harmless the Land
owners; managers, operators’ (Willian ®. Kalawai‘anui, Daniel 8, Nakoa,
Gunso’ Rench snd Nekos Ranch), [tine State of Hawes [']4 and the
peneEinest of Hawaiian Howe Zande and sli cther persons directly related
PePihone Listed sbove for the event listed herein(,] their successor:
Slesigns and affiliates from loss or damage to property or injury to
setts oz any person +. . resulting from my... + being a spectator or
wetLapine ae unite engaged in any such activity in the event (-)
Pelsted' facilities. i/Me acknowledge that there are significant
eects of risk in any adventure, sport or activity associated with

 

 

 

 
 

I/KE HAVE READ AND UNDERSTOOD THE FOREGOING RULES, REGULATIONS AND
waiver.

(empha:

 

6 in original.)
*POR PUBLICATION IN WEST’ S HAWAI'I REPORTS AND PACIFIC REPORTER*

which time they both signed similar forms.
The Ranch’s guide, Daniel Nakoa, briefed the Courbats
on how to handle a horse and general rules of the trail,
including the importance of not riding single-file or allowing
the horses to bunch up end to end. Out on the ride, Lisa was
injured when she rode up behind Nakoa’s horse while Nakoa was
speaking with another guest who had approached Nakoa with a |
question. According to later statements by both Nakoa and Lisa,
Lisa approached Nakoa’s horse from the rear while the three

neared Nakoa’s hor:

 

horses were in motion, and, when her hor:

 

Nakoa’s horse struck out at her horse, hitting Lisa in the left
shin. Lisa described the incident in a deposition taken on

November 3, 2001:

At what point did you believe that you
needed to pull the reins back an_you were
Bppreaching the guide - .

Ween tele that che horoei} was’ getting

too close to the horses above me-

Sov appeared to you that the nose, end of

sEting £00 clos:

horse in front’

(ties): To the horse in general. We ve:
in. 'T wae just teying to keep

space between

Tr]hose. two her

the guest's horse, they were to the Lert

Of your horae, 18 that correct, to the

front Left ef you?

(isal: Yes.

ao Yoo "recall which hind leg of the horse kicked you?

Was it the right or the lest?

(isa): Te would be the right one

° And that was a horse which was ridden by the guide or
the quest?

[iisa): The guide.

° Dust before the horse in front of you kicked you, were
a1] of the horses still in motion?” When Z say "all
the horses," yours, the guide's, and the quest that
as riding parallel to the guide?

(iiea): Just before?

   

(eee):

 

 
 
   
   
 

   

 

 

 
‘FOR PUBLICATION IN WEST'S HAMAT'T REPORTS AND PACIFIC REPORTER*

 

Yes.

iitsal: Yes.

@ iss’ there any conversation between you and the guide
Srehe guest just before this Kicking incident

eccurred?

No.

Re the time this kicking incident occurred, wlere) the

Guide and the guest still talking te each other?

Iuieal: Yee.

(uisal

 

   

Nakoa described the same incident in a January 9, 2002
deposition:

[ekoal: . . . Everybody was facing the gate, the
decond gate. ss + And T'was in the back.
Ans bechuse I'1ote of times don’t want to
be a part of the ride, I started riding to
the right. And then @ aan came to talk to
fe and ask me about the horse

a On'which side of your horse was he at the
tine?

fe 'was on the left side of ne.

And were you still moving or were you

stopped?

We were walking.

 

1 lpilad you passed Lisa elong the way?

Belausé of the angle, she was off to my
left.

Btili sn front of you?

No. About the sane.

 

@ And then 4 the next time you noticel]
Elsa's horse before the injury takes
place?

[Wakos}: She as still on the left side of ne.

° she "8Talbout how far sway do you estimate she was
Exon’ your horse?

(Wekoal: You kos, 30 feet maybe...

3 Knd from that point ony... were you able to

Continually observe Lise riding her horse until the
tine the injury occurred?
Naxos): Yee. The nan wae on my left and I was talking to him.

e LLL iwynite (ene quest 4s) asking you this question
and jou can see [Liga], what is her horse doing as
{traYapproaching your horse?

[Nakos]: toy Tsian't 2ee Her epprosching my horse. That's
Woot I'm trying to tell you. she was on the left side

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*FOR PUBLICATION IN WEST’S HAWAI'I REPORTS AND PACIFIC REPORTER*

of this man and me and we're 11 going in that
Saiking’with this men,” ARI stu hers dnd’ Chen this
Ean acted ne Something. “And the next thing 1 knew
she was right in back of ny horse telling se that ay
ores kickga her
Nakoa later acknowledged in the deposition that, if he or his .
horse had been aware that Lisa’s horse was approaching from
behind, his horse would not have been surprised and would not
have struck out at her horse. As a result of the inpact, Lisa
suffered severe pain and swelling, but no broken bones, and since
the incident has complained of ongoing pain and injury to her
deg.

The Courbats filed suit on January 31, 2001, asserting
claims of negligence and gross negligence that resulted in
physical injury to Lisa and loss of consortium injuries to
Steven, On Novenber 21, 2001, they filed a first amended
complaint, adding a claim of unfair and deceptive trade practices
regarding the waiver they had signed the day of the ride.

On January 16, 2002, the Ranch filed a motion for
summary judgment on the grounds: (1) that the Courbats had
assuned the risk of the activity: (2) that the Courbats had
waived their rights to sue the Ranch for negligence; and (3) that
the Ranch had not committed any acts that brought it under the
purview of HRS $$ 480-2 and 480-13, see supra note 1.

‘The Courbats filed a memorandum in opposition to the
Ranch’ s motion and a motion for partial summary judgment, urging
the circuit court to rule, inter alia: (1) that the Ranch owed
Lisa a duty to protect her from injury by Nakoa’s horse; and (2)
*FOR PUBLICATION IN WEST’S HAWAI'I REPORTS AND PACIFIC REPORTER*

that the rebuttable presumption of no negligence on a defendant's
part set forth in HRS § 6638-2, gee supra note 2, was
inapplicable.

The circuit court conducted a hearing on both motions
on February 13, 2002 and, on April 26, 2002, entered an order
granting the Ranch’s motion and denying the Courbats’ motion. On
May 13, 2002, the cizcuit court entered a final judgment in favor
of the Ranch and against the Courbats. On August 8, 2002, the

Courbats filed a timely notice of appeal.‘

TI, STANDARDS OF REVIEW
Summary Judament

We review the cixcuit court’s grant or denial of
sunnary judgnent de ou. ss

 

(s}ummary judgment is appropriate if
tthe pleadings, depositions, answers to
[nterrogatories, and eduissions on file,
together with the affidavits, if any, show
that there ie no genuine issue as to any
futerial fact and that the oving party 1s
entitled to judgment as a natter of lew.
Refact 1s material if proof of that fact
ould have the effect of establishing oF
Tefuting one of the essential elenents of
s’cause of action or defense asserted by
fhe parties. Zhe evidence must be viewsd
[nthe Light most favorable to the
honemeving pasty, in sther words, we must
View all of the evidence and the
Inferences drawn theretron in th

   
  

 

 

«on way 20, 2002, the Ranch filed a notice of taxation of costs
hich, pursuant to Hawai'i Roles of appellate Procedure (HRAP) Rule 412) (3),
Uolied Ene time for filing an eppeal: An order as to taxation of costs was
hover entered, and so, pursuant co #8AP Rule (a) (3), the request was deened
Genied 90 days later, on August 8, 2002. The Courbats' appeal, filed
Prematurely on dine 7, 2002, was therefore timely filed as of August 8, 2002,
Porevant to WRAP Rule’ 4(a)(2) and (3).

 

 
FOR PUBLICATION IN WEST’S HAWAI'I REPORTS AND PACIFIC REPORTER*

most favorable to the party opposing the

(Wawas's Cety, Fed. Credit Union v Keke, 94 Hawai'i 213, 221, 1

Pod 2,9 (2000)] Testations and internal quotation marks
onitted).

Quervbin v. Thronas, 107 Hawai'i 48, 56, 109 P.3d 689, 697 (2005)
(quoting Durette v, Aloha Plastic Recycling, Inc., 105 Hawai'i
490, $01, 100 P.3d 60, 72 (2004)) (internal citation omitted)
(some brackets in original)

8. Interpretation of Statutes

‘The interpretation of a statute is a question of law
reviewable de nove. State v. Arceo, 84 Hawai'i 1, 10, 928 P.2d
843, 852 (1996).

Furthermore, cur statutory construction 1s guided by
established rules

hen construing a statute, cur foremost
Sbiigation is to ascertain and give effect
fo the intention of the legislature, which
is to be obtained primarily from the
Language contained in the statute itself.
And we must read statutory language in the
Context of the entire statute and construe
Se°sn'S sanner consistent with ies

purposi

 

 

‘iben there is doubt, doubleness of
meaning, or indistinctiveness or
Oneertainey of an expression used in
statute, an ambiguity exists.

Th construing an ambiguous statute,
[tine meaning of the ambiguous words may
bo. sought by exanining the context, with
which the eabiguous words, phrases, and
Tentences may be conpared, in order to
aScertasn their true nesning.” RS
$ 1-15(2) [11993]. Moreover, the courts
Ray resort to extrinsic aids in
Setermining legislative intent. One
Gvenue is the use of legislative history
a5 an interpretive tool.

 

 

 

 

 

 

je, Ba ne Court], 84 Hawai'i (136,]
Sst F.2d {580-1 890 [11997)] (footnote omitted) .

 

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State v. Koch, 107 Hawai'i 215, 220, 112 P.3d 69, 74 (2008)
(quoting State v. Kaua, 102 Hawai'i 1, 7-8, 72 P.34 473, 479-480
(2003)). Absent an absurd or unjust result, see State v. Haugen,
104 Hawai'i 71, 77, 05 P.3d 178, 184 (2004), this court is bound
to give effect to the plain meaning of unambiguous statutory
languages we may only resort to the use of legislative history
when interpreting an ambiguous statute. State v, Valdivia, 95
Hawai'i 465, 472, 24 P.3d 661, 668 (2001).

III. DISCUSSION
Inasmuch As The Presence Or Absence Of An Unfair Or
ade?) Tri

Determine, the Cireu{t Court Erroneusly Granted
Jug 7 ne Bi fm

Courbate,

‘The Courbats do not dispute that they both signed the
Ranch’s waiver form, see supra note 3, prior to their ride. Nor
do they dispute that waivers are an accepted method by which
businesses may limit their liability. Rather, they assert that
the Ranch's practice of booking ride reservations through an
activity company, receiving payment prior to the arrival of the
guest, and then, upon the guest’s arrival at the Ranch, requiring
the guest to sign 2 liability waiver as a precondition to
horseback riding is an unfair and deceptive business practice to
which the remedies of HRS ch. 480 apply. The Courbats maintain
that the practice of withholding the waiver had “the capacity or
tendency to mislead” customers, thereby satisfying this court’s
test for a deceptive trade practice as articulated in State ex

an
*POR PUBLICATION IN WEST’S HAWAI'I REPORTS AND PACIFIC REPORTER*

rel. Bronster v. United States Steel Corp, 82 Hawai'i 32, 50,
919 P.2d 294, 312 (1996).

The Intermediate Court of Appeals held in Berman va
Toro, 1 Haw. App. 111, 118, 615 P.26 749, 754-55 (1980), that the
remedies afforded by HRS ch. 480 are not available for personal
injury clains. See also Blowers v, E1i Lilly 6 Co., 100 F. Supp.
2d.1265, 1269-70 (D. Haw. 2000). The Courbats, however, assert
that they aze not invoking HRS ch. 480 for the purpose of
establishing personal injury damages, but rather because the lack
of notice as to the waiver requirement injured them economically,
by way of the $116 cost of the tour, giving rise to a valid claim
under HRS § 480-13, see supra note 1. As a deceptive trade
practice, the Courbats maintain, the waiver is void under HRS

§ 480-12, see supra note 1.
Log ve trade practice cla

for recision of a contract
To render the waiver void, the Courbats must establish
that it ia an unseverable part of a “contract or agreement in
violation of [HRS ch. 480].” See HRS § 480-12, supra note 1.
Furthermore, any “unfair or deceptive act(] or practice[] in the
conduct of any trade or commerce” violates HRS § 480-2.
“Deceptive” acts or practices violate HRS § 480-2, but
HRS ch. 480 contains no statutozy definition of “deceptive.”
‘This court has described a deceptive practice as having “the
capacity or tendency to mislead or deceive,” United States steel
Corps, 62 Hawai't at 50, 919 P.2d at 312, 313, but, beyond noting

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+FOR PUBLICATION IN WEST'S HAWAI'I REPORTS AND PACIFIC REPORTER*

that federal cases have also defined deception “as an act
causing, as a natural and probable result, a person to do that
Which he (or she] would not do otherwise,” Keka, 94 Hawai'i at
228, 11 P.3d at 16 (brackets in original) (quoting United States
Steel Corp., 82 Hawai'i at 51, 919 P.2d at 313 (citing
Rockenstette v, Federal Trade Comm'n, 134 F.2d 369 (10th Cir.
1943))), we have not articulated a more refined test.

HRS § 480-3, see supra note 1, provides that HRS ch.
480 “shall be construed in accordance’ with judicial
interpretations of similar federal antitrust statutes,” and HRS.
§ 480-2(b) provides that “[iJn construing this section, the
courts . . . shall give due consideration to the . . . decisions
of . . . the federal courts interpreting . . . 15 U.S.C. [5]
45(a) (1) { (2000)],"* in recognition of the fact that HRS § 480-2
is “a virtual counterpart.” Keka, 94 Hawai'i at 228, 11 P.3d at
16. The Federal Trade Commission (FTC), in In re Cliffdale
Assocs., Inc., 103 F.T.C. 110 (1984), developed a three-part

 

+ 15 v.8.c, § 45(a) (2) provides that *[ulnfair methods of
competition in of affecting comerce, and unfair or deceptive ects or
practices in or affecting connerce, are hereby declared unlawful.”

 

< awai's courts nave Long recognized, therefore, that federal
Anterpretations of 15 U.8.C. § (5 (a) (2) guide us in construing HRS $ 460-2 “in
Light" of conditions in Hawai'i. Alv, Frank Huff Agency, 61 Hew. 607, 613
ell, 607 P.24 1308, 1309 n.11 (1980); gee also Island Tobacco Co, v. RJ.

, €2 Han, 208, 293, 627'P.2d 260, 768 (1961) guerzuled on

 

   

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*FOR PUBLICATION IN WEST'S HAWAI'I REPORTS AND PACIFIC REPORTER*

analytical test for “deception,” which the federal courts have
thereafter extensively adopted, see ETC v, Verity Int'l, Ltd.,
443 F.34 48, 63 (2d. Cir. 2006) EIC vs Tashman, 318 F.3d 1273,
1277 (11th Cir. 2003); ETC v. Pantron I Corp,, 33 F.3d 1088,’ 1095
(9th Cir. 1994); FIC v, World Travel Vacation Brokers. ‘Inc., 861
F.2d 1020, 1029 (7th Cir. 1988). Under the Cliffdale Assocs,

test, a deceptive act or practice is “(1) a representation,

 

omission, or practice[] that (2) is likely to mislead consumers
acting reasonably under the circumstances [where] (3) {] the
representation, omission, or practice is material.” Verity
Int/1, 443 F.3d at 63. A representation, omission, or practice
is considered “material” if it involves “'information that is
important to consumers and, hence, likely to affect their choice
of, or conduct regarding, a product.” Novartis Corp. v. FTC,
223 F.3d 783, 786 (D.C. Cir. 2000) (quoting Cliffdale Assocs.,
103 F.T.C. at 165); see also Kraft, Inc, v. FIC, 970 F.2d 311,
322 (7th Cir. 1992); ETC v. Crescent Publ’a Group, Inc., 129 F.
Supp. 24 311, 321 (8.0.N.¥. 2001); ETC v, Five-Star Auto Club,
Ince, 97 F. Supp. 2d $02, 529 (S.D.N.¥. 2000); ETC vs Sabal, 32
F. Supp. 2d 1004, 1007 (N.D, T11. 1998). Moreover, the Cliffdale
Assocs, test is an objective one, turning on whether the act or
omission “is likely to mislead consumers,” Verity Int'l, 443 F.3d
at 63, as to information “important to consumers,” Novartis

> See Cligtasle accocs., 103 F.7.C. at 164-65 (characterizing the
new standard as a refsnenent of the "tendency or capacity to deceive” test,
sed by the FIC to that point and pronouncing the eld test “circular and
therefore inadequate to provide guidance”)

     

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‘FOR PUBLICATION IN WEST’S HAWAI'I REPORTS AND PACIFIC REPORTER*

Corp, 223 F.3d at 786, in making a decision regarding the
product or service."

Given our obligation under HRS §§ 480-3 and 480-2(b) ‘to
apply federal authority as a guide in interpreting HRS ch. 480,
we hereby adopt the three-prong Cliffdale Assocs. test in
determining when a trade practice is deceptive.”

2. he Clift cs. Obie e
eat,
Th Fact, ni
s amet

‘The Courbats do not allege that the waiver itself is
deceptive; rather, they urge that the deceptive practice at issue
was the booking agent's failure to inform them of the waiver

requirement during the negotiation and execution of the

 

+ nse federal courts have not expressly categorized the test as
objective, the Fic, in CLiftdale Assocs, commented that “(t]he requirenent
that gn act or practice be considered fron che perspective of = consuner
acting ressonably in the circumstances is not new... ~ (The FIC] has long
Tecognized that the Lew should not be epplied in such’a way as to find that
honest representations are deceptive simply because they are misunderstood by
afew, es {alm advertisenent would not Be considered deceptive merely
Because it could be unreasonably misunderstood by an insignificant and
Unrepresentative segment of the class of persons. (to) whom the representation
[Saccressed,” 102 F-7.C, at 165 (footnotes and internal quotation signals
omitted)

 

 

 

 

 

+ other, states have already adopted the CLiftdale Assocs, test.
See, sau, Lustints, Ine, "#. Consuner Prot Div, 726 Regd 702, 713 (NG.
$955); Gater2. Gualiussi, 7i¢ A.2d 17, 23 (Vt. 1998). Our adoption of the
Gliftisie Rescsg, test does not change the existing rule that, in order to
Gstablish violation of HRS § 480-2, the plaintiff need not establish an
Gneent to deceive on the part of the defendant, World Travel Vacation Brokers,
bel F.2d at 1029; Fiverster Auto Club, 87 F. Sopp. at S26, nor any actual
deceit, United States Steel Corp,, 82 Mawai'i at Si, 919 P.2d at 213.

a5

 

 

 
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underlying contract." Nevertheless, if any deceptive omission
occurred with respect to the negotiation and execution of the
original contract, the operation of HRS § 480-12, see supra note
1, would render both the original contract and the waiver, signed
afterward, void." Thus, the waiver’s survival depends on the
trier of fact’s determination as to whether the omission of the
waiver requirenent during Island Incentives, Inc.'s booking
process was deceptive and therefore in violation of HRS § 480-2.

The application of an objective “reasonable person”
standard, of which the Cliffdale Assoce, test is an example, is
ordinarily for the trier of fact, rendering summary judgment
“often inappropriate.” anfac, Inc. v, Waikiki Beachcomber nw
Sou, 74 Haw. 85, 107, 839 P.2d 10, 24 (1992), cited in Casumpana
Ya IMU Local 142, 108 Hawai'i 411, 425, 121 P.3d 391, 405

(2005); Arquero v. Hilton Hawaiian Village LLC, 104 Hawai'i 423,
“Ie ie undisputed thet Island Incentives, Inc. was acting as the

Ranch's agent in this matter, and ‘we note that an owner is responsible for
the representations of his agent made within the scope of hig agent's selling
authority.” uv. Ay, 63 Haw. 210, 215, €26 P.2d 173, 176 (1981) (citing
Neqvessy o, strong, 300 /A.2d 383, 385 (Ve, 1978) ).

Xf the waiver were severable from the underlying contract, it
could survive despite 2 determination that the original contract was void.

 

 

    

See 61 Haw. “607, 619, 607 Pr2d 1304, 1312, (1980)
(The wording on HRS § 460-12 might... | Spear to suggest that any contract
containing an illegal provision . . ‘ should be held unenforceable in its
entirety... . (U]nder ordinary contract law, however, . «2 partially

 

legal contfact may be upheld if the illegal portion is severable from the part
hich Is legal.)- However, “the general rule ia that severance of an illegal
Provision is warrentea ang the lawful portion... . enforceable when the
Ellegal provision is not central to the parties" agreenent.”

Bauall, Ene, 3. ica, 96 Hawai'i 283, 11, 30 F-36695, 917 (2001): The
Underiying coneract at iseve ig the sum of the parties’ agreement) the waiver
Would Ge considered an addendus to it. Therefore, the waiver is not severssie
and must stand or fall with the underiying contract.

   

 

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433, 91 P.3d 505, $15 (2004). “Inasmuch as the term
treasonableness’ is subject to differing

interpretations... , it is inherently ambiguous. where = +
ambiguity exists, summary judgment is usually inappropriate
because “the determination of soneone’s state of mind usually
entails the craving of factual inferences as to which reasonable
[minds) might differ.'” fmfac, Inc., 74 Hew. at 107, 639 P.2d at
24 (quoting Bishop Trust Co. v. Cent. Union Church, 3 Haw. APP.
624, 628-29, 656 P.2d 1353, 1356 (1983). Reasonebleness can
only constitute a question of law suitable for summary judgment
wYwhen the facts are undisputed and not fairly susceptible of
divergent inferences’ because *[wJhere, upon all the evidence,
but one inference may reasonably be drawn, there is no issue for
the jury.’” Id. at 108, €39 P.2d at 24 (quoting Broad & Branford
lace Comp, v. Jud Hockenios Co., 39 A.2d 80, 82 (N.J. 1944)
(brackets in original). **{A] question of interpretation is not

left to the trier of fact where evidence is so clear that no

 

reasonable person would determine the issue in any way but on
‘Id. (quoting Restatement (Second) of Contracts § 212 cmt. @
(1981) (brackets in original). See also Restatenent (Second) of
Contracts § 212(2) (1981 and Supp. 2005) ("A question of
interpretation of an integrated agreement is to be determined by
the trier of fact if it depends on the credibility of extrinsic
evidence or ona choice anong reasonable inferences @
extrinsic evidence.”) (Emphasis added). There is no genuine

issue of material fact regarding the failure to disclose the

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waiver requirement during negotiation of the original tour
contract, but we cannot say that, applying the Cliffdale Assocs,
test, reasonable minds could draw only one inference as to the
materiality of that omission to reasonable consumers
contemplating the transaction. Therefore, the question whether a
waiver requirement would be materially important in booking a
horseback tour renains one for the trier of fact.

Because a genuine issue of material fact, resolvable

only by the trier of fact, remains in dispute, the grant of

 

summary judgment on the HRS ch. 480 claim was erroneous. We
therefore vacate the circuit court's May 13, 2002 judgment and
remand for further proceedings consistent with this opinion.
B. The Consequences, On Remand, Of The Determination By

The Trier Of Fact As To Whether Nondisclosure Of The

Waiver Requirenent Was A Deceptive Trade Practice

If, on remand, the trier of fact determines that the
nondisclosure of the waiver was a deceptive trade practice,
rendering the waiver void, then the Courbats’ negligence clains
proceed free of the waiver defense. Nevertheless, for the
reasons set forth below and for purposes of any subsequent trial
fon the Courbats’ negligence claims, we hold that HRS ch. 6638,
entitled “Equine activities,” see supra note 2, setting forth a
rebuttable presumption of non-negligence on the part of the tour
operator, does not apply to the present matter.

Conversely, if, on remand, the trier of fact determines
that the nondisclosure of the waiver was not deceptive, then the
Courbats validly waived their negligence claims.

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1. The Statutory Pr ion Of Non-Neali. Fol
2 2
Does Not Apply To The Courbats’ Claims.

If the trier of fact determines that the failure to
inform the Courbats of the waiver requirement was a deceptive
trade practice, then the negligence waiver, along with the
underlying contract, will be rendered void, and the Courbats’
negligence claims will be revived. In order to provide guidance
on remand, therefore, we hold that it was error for the circuit
court in the present matter to apply HRS § 6638-2(a), see supra
note 2, which establishes a rebuttable presumption in favor of
horseback tour operators that any injury “caused solely by the
inherent risk and unpredictable nature of the equine” is not due
to the negligence of the tour operator.

HRS § 663B-2(b) provides in relevant part that
s{nJothing in this section shall prevent or limit the liability

of an equine activity sponsor . - . if the equine activity
sponsor, equine professional, or person: . . - (2) (plrovided
the equine and . . . failed to reasonably supervise the equine

activities and such failure is a proximate cause of the injury.”
‘the substance of Lisa’s claim revolves around her assertion that
Nakoa failed to monitor her approach toward his horse while he
was engaged in conversation with ancther guest; in other words,
Lisa claims that Nakoa “failed to reasonably supervise the equine
activities” that were the “proximate cause of (her) injury.”
therefore, we hold that, if Lisa is correct, the presunption of

non-negligence set forth in HRS § 6638-2(a) would not apply to

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the Courbats’ claims.
2 if

ifthe Trier Of fact Determines That The
sclosure OF The Waiv :
‘Trade Practice, Then The Courbate Validly Waived

Their Negligence Claims.
a. i i ut
Citing Krohnert v. Yacht Svs. of Hawaii, 4 Haw. App.

190, 201, 664 P.2d 738, 745 (1983), the Courbats assert that,
because they manifested no clear and unequivocal acceptance of
the terns of the waiver, the waiver cannot be enforced against
them. However, pursuant to the following analysis, we hold that,
if the trier of fact finds that the failure to inform the
Courbats of the waiver requirement was not a deceptive trade
practice, then the waiver, in all other respects, was valid.
“The general rule of contract law is that one who
assents to a contract is bound by it and cannot complain that he
has not read it or did not know what it contained.” Leong vi

Kaiser Found, Hosps., 71 Haw. 240, 245, 788 P.2d 164, 168 (1990);
ace also Joaquin v. Joaquin, 5 Haw. App. 435, 443, 698 P.2d 298,

 

304 (1985); In ve Chung, 43 B.R. 368, 369 (Bankr. D. Haw. 1984);
Ince Kealoha, 2 B.R. 201, 209 (Bankr, D. Haw. 1980).
Furthermore, “*(pjarties are permitted to make exculpatory
contracts so long as they are knowingly and willingly made and
free from fraud. No public policy exists to prevent such
contracts.'" Fujimoto v. Au, 95 Hawai'i 116, 156, 19 P.3d 699,
739 (2001) (some brackets omitted) (quoting Gen. Bargain Ctr, ve
Am. Alarm Co., Inc., 430 N.E.2d 407, 411-12 (Ind. Ct. App.

 

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1982)). “[SJuch bargains are not favored, however, and, if
possible, bargains are construed not to confer this immunity.”
Eulimote, 95 Hawai'i at 155, 19 P.3d at 738. Therefore, as a
general rule, “*{e]xculpatory clauses will be held void if the
agreement is (1) violative of a statute, (2) contrary to a
substantial public interest, or (3) gained through inequality of
bargaining power.'” 95 Hawai'i at 156, 19 P.3d at 739 (quoting
Andrews v. Fitzgerald, 823 F. Supp. 356, 378 (M.D.N.C. 1993).

‘The Courbats have not alleged that any of the terms of
the waiver, or the use of a waiver by the Ranch, violates a
statutes on the contrary, the Courbats concede that waivers are
an acceptable method by which tour operators may seek to limit
their liability in response to rising insurance and litigation
costs.

In Krohnert, the ICA defined the public interest

a5 involving sone of all of the following
Characteristics

[1] it concerns a business of a type

jeneraily thought suitable for public
gelation.
(2) the party seeking excvlpation is
Engaged in performing 9 service of great
[npertance to the public, which is often a
Batter of practical necessity for some
Renbere of the public.
{3} the party holds Bimeelf out as willing
£2) pergerm this service far any nenber of
the public who seeks it, or at least for
any member coming within certain
Getablished stancarcs.
[a] Ase result of the essential nature of
the fervice, in the economic setting of
the transaction, the party invoking
Gnculpation possesses a decisive advantage
SF fergaining strength against any menber
SE the public who seeks his service
[5] In exercising 2 superior bargai

 

 

 

 

 

 

 

 

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ower the party confronts the public with
B standardized adhesion contract of

Sxcuipation snd makes no provision whereby

a purchaser nay pay additional reasonable :
Fees and obtain protection against

negligence.

16) Finally, a

result of the

son of property of the
purchaser is placed under the control of
Ene selier of the service, subject to the
Fisk of carelessness by the seller or his
agents.

   
   

  

 

4 Haw. App at 199, 664 P.2d at 744 (finding under this test that
the exculpatory clause contained in a contract for marine
surveying was permissible) (brackets omitted) (quoting Lynch v.
Santa Fe Nat'] Bank, 627 P.2d 1247, 1251-52 (N.M. Ct. App. 1961)
(holding that services of escrow agents in New Mexico were not in
the nature of a public service so as to render an exculpatory
clause unenforceable) (quoting Tunkl v. Regents of Univ, of Cali,
383 P.2d 441, 445-46 (Cal. Ct. App. 1963) (declaring invalid as
against the public interest an exculpatory clause for future
negligence required for admission to a public research
hospital))); see also 15 Corbin on Contracts $ 85.18 (2003 &

Supp. 2005) (sunmarizing a similar test commonly used by courts

 

and noting that courts tend to enforce exculpatory clauses for

recreational activities under the test).! Entities that have

 

 

courts have upheld exculpatory cleuses relating to car racing, see
Gadek v. creat Lakes Dracsway, Inca, 43 F. Sopp. 420 (M.D. 111. 1994)

Eigharsav. int'l Wotor Sports Ass'n, $30 9.6.04 059 (Ga. ct. App. 2000), snow
skiing, Eee Chauvlier v. Scot creck Ski Holdings, Inc,, 35 P.3d 383 (Wash.
Ce. App. 200i], skydiving, ace Scrivener v. Sky's The Cinie, ine, 68 F. Supp.
2a 279" (s..N.¥, 1999), and horseback riding, see Sereet v-Darein Sanch,

inc, 15 F. Supp. 24 1296, 1299 ID. Wyo. 1999)” (Finding That “recreational
trafi rides are neither of great inportance to the public, nor a practical
necessity to any menber of the public”)

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been found to fall under the public interest doctrine, rendering
exculpatory clauses void, include common carriers, see Adams
Express Co, v. Croninaer, 226 U.S. 491, $09 (1913); Shippers
Nat'l Freight Claim Council, Inc. v. Interstate Commerce Com'n,
712 F.2d 740, 746 (2d Cir. 1983); Clairol, inc. v. Moore=
McCormack Lines, Inc., 79 A.D.2d 297, 309-10 (N.Y. App. Div.
1981), and hospitals, see Iunkl, 383 P.2d at 447; Smith v. Hosp.

Auth, of Walker, Dade & Catoosa Counties, 287 S.£.2d 99, 101 (Ga.
Ct. App. 1981); Belshaw v. Feinstein, 65 Cal. Rptr. 788, 798

(cal. ct. App. 1968).
Applying these factors to the present matter, we

 

determine that the public interest here is not at sta
recreational activity tours are not generally suitable to public
regulation, in the manner of common carriers, nor of great
importance to the public, nor of an essential nature, in the
manner of medical care, such that the provider's bargaining power
is greatly enhanced over any member of the public seeking their
services

Finally, as the United States District Court for the
District of Hawai'i noted, in considering negligence waivers in
the context of recreational activity, while such waivers may be
contracts of adhesion, in that they are presented on a “take-it-
or-leave-it” basis, they are not unconscionable, but “are of a
sort commonly used in recreational settings” and “are generally
held to be valid.” Wheelock v. Snort Kites, Inc., 839 F. Supp.
730, 736 (D. Haw. 1993). “[Clontracts [of adhesion] are

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‘unenforceable if two conditions are present: (1) the contract
is the result of coercive bargaining between parties of unequal
bargaining strengths and (2) the contract unfairly limits the
obligations and liabilities of, or otherwise unfairly advantages,
the stronger party.’” Fudimoto, 95 Hawaii at 156, 19 P.3d at
739 (quoting Brown v. KFC Nat’) Momt. Co., 82 Hawai'i 226, 247, .
921 P.2d 146, 167 (1996)); see also Wheelock, 839 F. Supp. at 735
("(Aldhesion contracts are fully enforceable provided that they

fare not unconscionable and do not fall outside the reasonable

 

expectations of the weaker or adhering party.”). Unequal
bargaining strength “involves the absence of alternatives;
to use or not to

 

specifically whether the plaintiffs were ‘frei
use’ [the] defendant's . . . services.” Krohnert, 4 Haw. App at
199, 664 P.2d at 744 (quoting Lunch, 627 P.2d at 1250). These
conditions are generally not germane in the recreational waiver
context. In the context of a recreational sport or adventure
activity, freely undertaken for pleasure, “coercive bargaining”
and “an absence of alternatives” are terms that hold Little
meaning.

In the present matter, Lisa read through and responded
to queries contained in the waiver form and had no further
questions or concerns regarding the contents before she signed
it. Steven conceded that he routinely relied on his wife to
review documents before signing them and that he knew he was
waiving rights when he signed the form. The record demenstrates
given adequate time and opportunity to

 

that the Courbats ve

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fully review the waiver presented to them before they signed it
and that both knew that by signing it they were waiving legal
rights in return for being allowed to participate in the ride.

In short, there is no evidence of coercion. By signing the
waiver form, they demonstrated that they agreed to its terms, and
by reading it, or, in Steven's case, in relying on the advice of
his wite, demonstrated knowledge of its contents. Moreover, they
had signed similar waivers that week for another activity and
were familiar with what they epresented. Accordingly, we hold
that, if the trier of fact determines that the nondisclosure of
the waiver was not a deceptive trade practice, the Courbats’
waiver was valid.

b. .
‘extend ea] ier -

The language of the waiver, see supra note 3, releases
the Ranch and its agents and holds it harmless “from loss or
damage to property or injury to [the undersigned) . . . resulting
from [the undersigned) . . . being a spectator or participant or
while engaged in any such activity in the event(-]related
facilities.” However, because “‘{e]xculpatory provisions are not
favored by the law and are strictly construed against parties
relying on them,’” the effect of the broad exculpatory language
contained in the Ranch’s waiver should be construed to limit the
waiver’s scope to simple negligence claims; it does not protect
the Ranch against its own gross negligence or willful misconduct.
Fulimeto, 95 Hawai'i at 156, 19 P.3d at 739 (quoting Andrews, 023

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F. Supp. at 378); see also Wheelock, 639 F. Supp. at 736
(interpreting the reasoning in Krohnert to conclude that to allow
an exculpatory clause to extend to gross negligence would violate

the public interest, rendering the clause void) .

IV. CONCLUSION
In light of the foregoing analysis, we vacate the
circuit court’s May 13, 2002 judgment in favor of the Ranch and
against the Courbats and remand for further proceedings

consistent with this opinion.

On the briefs:

for the plaintiffs-appellants

Lisa Courbat and Steven Courbat

Zale T. Okazaki,

of Ayabe, Chong, Nishimoto,

Sie and Nakamura, Neue Cinaveny are
for the defendant-appeliee

Dahana Ranch, Inc.

26