Opinion ID: 1240911
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Heading Rank: 5

Heading: The Exculpatory Provisions

Text: Jones asserts that the exculpatory agreement is void as a matter of public policy. We disagree. The defendants contend that Barker v. Colorado Region, 35 Colo.App. 73, 532 P.2d 372 (1974), is dispositive of the issue of the validity of the exculpatory agreement. In Barker, the court of appeals held that an exculpatory clause in a contract relating to recreational activities will be given effect where the intention of the parties is expressed in sufficiently clear and unequivocal language and does not fall within any of the categories where the public interest is directly involved. Jones, however, claims that summary judgment should not have been granted for three reasons. First, he argues that because exculpatory agreements must be strictly construed against the party seeking exemption, the agreement here does not insulate the defendants from liability for negligence in connection with a crash that occurred prior to the time that Jones made a parachute jump. Second, he claims that Free Flight was acting as a common carrier when it carried Jones, for compensation, to an altitude from which he could make a parachute jump, and that a common carrier by air cannot compel a passenger to release or limit the carrier's legal liability for its own negligence. Third, he contends that Free Flight, which is engaged in the private air charter business and operates under a Part 135 Certificate, is subject to FAA regulations which impose standards of safety upon the pilot of an airplane, and that Free Flight cannot contract away its liability for negligence in the performance of a duty imposed by law or where the public interest requires performance. [9] The determination of the sufficiency and validity of an exculpatory agreement is a question of law for the court to determine. Product Research Association v. Pacific Tel. & Tel. Company, 16 Cal. App.3d 651, 94 Cal.Rptr. 216 (1971); Ciofalo v. Vic Tanney Gyms, 10 N.Y.2d 294, 220 N.Y.S.2d 962, 177 N.E.2d 925 (1961). Generally, an issue relating to the validity of an exculpatory agreement does not preclude the entry of summary judgment. But see, Erickson v. Wagon Wheel Enterprises, Inc., 101 Ill.App.2d 296, 242 N.E.2d 622 (1968). (Issue as to whether an exculpatory clause is binding due to circumstances surrounding its execution is a factual issue.) An exculpatory agreement, which attempts to insulate a party from liability from his own negligence, must be closely scrutinized, and in no event will such an agreement provide a shield against a claim for willful and wanton negligence. Barker v. Colorado Region, supra ; Kansas City Power & Light Company v. United Telephone Company of Kansas, Inc., 458 F.2d 177 (1972); Ciofalo v. Vic Tanney Gyms, Inc., supra . In determining whether an exculpatory agreement is valid, there are four factors which a court must consider: (1) the existence of a duty to the public; (2) the nature of the service performed; (3) whether the contract was fairly entered into; and (4) whether the intention of the parties is expressed in clear and unambiguous language. See Rosen v. LTV Recreational Development, Inc., 569 F.2d 1117 (10th Cir. 1978); Barker v. Colorado Region, supra ; Threadgill v. Peabody Coal Co., 34 Colo.App. 203, 526 P.2d 676 (1974); Ciofalo v. Vic Tanney Gyms, Inc., supra . Measured against the four factors which determine the validity of an exculpatory agreement, we conclude that the trial court correctly held, as a matter of law, that the exculpatory agreement was valid. Therefore, the granting of defendants' motion for summary judgment was not error. The duty to the public factor is not present in this case. In Tunkl v. Regents of University of California, 60 Cal.2d 92, 32 Cal.Rptr. 33, 383 P.2d 441 (1963), the California Supreme Court stated: In placing particular contracts within or without the category of those affected with a public interest, the courts have revealed a rough outline of that type of transaction in which exculpatory provisions will be held invalid. Thus the attempted but invalid exemption involves a transaction which exhibits some or all of the following characteristics. It concerns a business of a type generally thought suitable for public regulation. 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 public. The party holds himself out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards. As a result of the essential nature of the service, in the economic setting of the transaction, the party invoking exculpation possesses a decisive advantage of bargaining strength against any member of the public who seeks his services. In exercising a superior bargaining power the party confronts the public with a standardized adhesion contract of exculpation, and makes no provision whereby a purchaser may pay additional reasonable fees and obtain protection against negligence. Finally, as a result of the transaction, the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or his agents. Id. 32 Cal.Rptr. at 36, 383 P.2d at 444. In light of the foregoing factors, we conclude that the contract between Jones and Free Flight does not fall within the category of agreements affecting the public interest. Jones relies on the Federal Aviation Regulations as a basis for disregarding the exculpatory provisions of the contract. He contends that the regulations governing private air charter business, as well as the F.A.A. regulation governing common carriers, prevents the enforcement of the exculpatory provision in the contract. Private Air Charter Business, 14 C.F.R. § 135.1. Admittedly, a commercial air operation is a business that is subject to extensive regulation. 14 C.F.R. § 135, et seq. We note, however, that 14 C.F.R. § 135.1(a)(3) provides that the rules governing operation of air carriers apply to: [t]he carrying in air commerce by any person, other than an air carrier, of persons or property for compensation or hire [commercial operations] in small aircraft.... Therefore, the standards of care and safety for private air charter services set forth in the Code of Federal Regulations apply only if Free Flight was engaged in commercial operations at the time of the airplane crash. Jones also claims that Free Flight was operating as a common carrier when it accepted funds and provided an aircraft to ferry him to an altitude from which he could make a parachute jump. He is correct in his statement that releases or limitations of liability in airline tickets issued by a common carrier have uniformly been held invalid. Conklin v. Canadian Colonial Airways, Inc., 266 N.Y. 244, 194 N.E. 692 (1935); Curtiss-Wright Flying Service, Inc. v. Glose, 66 F.2d 710 (3d Cir. 1933), cert. denied 290 U.S. 696, 54 S.Ct. 132, 78 L.Ed. 599 (1938). See L. Kreindler, I. Aviation Accident Law § 3.13 (rev.1977). He is in error, however, in his contention that Free Flight was operating as a common carrier or was engaged in commercial operations as defined by 14 C.F.R. § 135.1(a)(3). [10] 14 C.F.R. § 1.1 provides: `Commercial operator' means a person who, for compensation or hire, engages in the carriage by aircraft in air commerce of persons or property, other than as an air carrier or foreign air carrier or under the authority of Part 375 of this Title. Where it is doubtful that an operation is for `compensation or hire,' the test applied is whether the carriage by air is merely incidental to the person's other business or is, in itself, a major enterprise for profit. Here, the facts are clear that Free Flight was not engaged in commercial operations or acting as a common carrier in connection with this skydiving flight. Paragraph four of Jones' complaint alleges that the defendants were engaged in the business of operating a service for the general aviation public involving parachuting, soaring, and aerobatics.... Carriage by air was incidental to Free Flight's principal business. The standards of care and safety for private air charter services set forth in the Code of Federal Regulations do not apply. While it is not necessary for a contract to embody all of the characteristics set forth in Tunkl, supra, to meet the test, we conclude that an insufficient number of these characteristics are present in the instant case to establish that the contract between Jones and Free Flight affected the public interest. The service provided by Free Flight was not a matter of practical necessity for even some members of the public; because the service provided by Free Flight was not an essential service, it did not possess a decisive advantage of bargaining strength over Jones; and the contract was not an adhesion contract. Finally, in our consideration of the remaining factors that must be reviewed in considering the validity of an exculpatory agreement, we note that there was no disagreement between the parties that the contract was fairly entered into. Likewise, the agreement expressed the parties' intention in clear and unambiguous language; the contract used the word negligence and specifically included injuries sustained while upon the aircraft of the Corporation. See generally, Gross v. Sweet, 49 N.Y.2d 102, 424 N.Y.S.2d 365, 400 N.E.2d 306 (1979); Kaufman v. American Youth Hostels, 13 Misc.2d 8, 174 N.Y.S.2d 580 (1957). We conclude that the exculpatory agreement was not void as a matter of public policy, and that there was no genuine issue as to any material fact. Accordingly, the trial court properly granted a partial summary judgment on the simple negligence issue and we, therefore, affirm the decision of the court of appeals. LEE, J., does not participate.