Opinion ID: 162638
Heading Depth: 2
Heading Rank: 3

Heading: The Validity of the Exculpatory Clause

Text: 19 The district court found that the exculpatory clause in the Bicycle Rental Agreement signed by Mincin was valid, and therefore dismissed Mincin's claim. Plaintiffs claim that the district court erred both in upholding the exculpatory clause and in its interpretation of the clause. We disagree. 20 In determining whether an exculpatory agreement is valid under Colorado law, we must consider four factors: (1) whether the service provided involves a duty to the public; (2) the nature of the service provided; (3) whether the agreement was fairly entered into; and (4) whether the agreement is clear and unambiguous. Jones v. Dressel, 623 P.2d 370, 376 (Colo.1981). Each of the following militates against the validity of an exculpatory clause: a duty to the public; that the service provided is a practical necessity; unfairness; and ambiguity. Id. Regarding the first factor, plaintiffs contend that mountain biking is an issue of public concern and involves a public duty. In support of this contention, plaintiffs rely upon language in Stanley v. Creighton, 911 P.2d 705 (Colo.Ct.App.1996). In Stanley, the Colorado Court of Appeals invalidated an exculpatory clause in the context of a residential lease. Id. at 709. In concluding that the landowner-residential tenant relationship involved a public interest sufficient to invalidate an exculpatory agreement, the Stanley court relied in part on the Colorado Premises Liability Act (CPLA), Colo.Rev.Stat. § 13-21-115. Id. at 707. The court noted that the CPLA confirms that landowner negligence is an issue of public concern. Id. Relying on this language, plaintiffs argue that exculpatory agreements are per se invalid in the context of negligence suits against landowners for damages sustained on their properties. We reject this broad construction of Stanley for two reasons. 21 First, although the Stanley court relied in part on the CPLA, the court placed greater emphasis on the essential nature of residential housing. Id. at 707-08. Landowner-residential tenant relations implicate a heightened degree of public concern as housing rental is a matter of practical necessity to the public. Id. at 708. The court further noted the Colorado General Assembly's continuous regulation of the landowner-residential tenant relationship over the past thirty years. Id. at 707. 22 Second, other language in Stanley is inconsistent with plaintiffs' position. Later in its opinion, the court alluded to a distinction between residential and commercial leases, implying that an exculpatory clause might well be valid in the context of a commercial lease. Id. at 708. Such disparate treatment of commercial and residential tenants is, of course, at odds with plaintiffs' proffered interpretation of Stanley. 23 The commercial-residential distinction drawn in Stanley is in accord with numerous cases under Colorado law upholding exculpatory agreements in other commercial and recreational contexts. In fact, a number of these cases specifically hold that a recreational activity does not involve a public duty: 24 It is the essential nature of the service that gives the party seeking exculpation an unfair bargaining advantage and results in the contract running afoul of public policy. The service here is recreational. Although skiing is a recreational activity enjoyed by many, by definition and common sense, it is neither a matter of great public importance nor a matter of practical necessity. Therefore, there is no public duty that prevents enforcement of this agreement. 25 Bauer v. Aspen Highlands Skiing Corp., 788 F.Supp. 472, 474 (D.Colo.1992) (upholding an exculpatory clause in the context of ski equipment rental); see also Lahey v. Covington, 964 F.Supp. 1440, 1445 (D.Colo.1996) (same regarding white water rafting); Brooks v. Timberline Tours, Inc., 941 F.Supp. 959, 962 (D.Colo. 1996) (same regarding snowmobiling); Jones, 623 P.2d at 377-78 (same regarding skydiving). 26 Plaintiffs attempt to distinguish these cases as involving skiing and horseback riding, both of which are activities covered by Colorado statutes specifically limiting landowner liability. See COLO.REV.STAT. §§ 33-44-101 to -114 (Ski Safety Act); id. § 13-21-119 (equine and llama activities); Bauer, 788 F.Supp. at 474-75 (skiing); B & B Livery, Inc. v. Riehl, 960 P.2d 134, 138 (Colo.1998) (upholding exculpatory agreement in the context of horseback riding, because the agreement was unambiguous). Plaintiffs argue that because statutes limit landowner liability in these particular commercial settings but not in the context of mountain biking, we should not limit landowner liability in the context of bicycle rental, under the maxim expressio unius est exclusio alterius. Harris v. Owens, 264 F.3d 1282, 1296 (10th Cir. 2001). This maxim represents the principle that the expression of one thing is the exclusion of another. Id. 27 This argument fails for two reasons. First, plaintiffs' argument misconstrues the issue in this case. The issue is not whether the Colorado General Assembly has limited landowner liability or whether this court should do so. Rather, it is whether Mincin and Vail could agree to limit Vail's liability — that is, whether an exculpatory clause is valid in the context of a commercial bicycle rental agreement. The fact that the Colorado legislature has limited landowner liability in the contexts of horseback riding and skiing is relevant to the question of whether landowner liability might be limited in other circumstances absent a contract. It is irrelevant, however, to the issue in this case — whether an exculpatory agreement is enforceable in the context of a bicycle rental agreement. 28 Second, plaintiffs ignore those cases involving Colorado law in which no specific statute governed the transaction and the court upheld an exculpatory agreement. E.g., Mullan v. Quickie Aircraft Corp., 797 F.2d 845, 852-53 (10th Cir.1986) (sale of aircraft kit); Lahey, 964 F.Supp. at 1445 (white water rafting); Brooks, 941 F.Supp. at 962 (snowmobiling); Jones, 623 P.2d at 377-78 (skydiving). The numerous cases upholding exculpatory agreements in a variety of commercial contexts severely undercut plaintiffs' theory that such agreements are per se unenforceable in the area of landowner negligence. 29 Consideration of the second and third Jones factors — the nature of the service provided and whether the agreement was entered into fairly — further undermines plaintiffs' claim. The Stanley court stressed the disparity of bargaining power created by the practical necessity of housing rental in reaching its decision to invalidate the exculpatory clause in the context of the landowner-residential tenant relationship. Id. at 708. In this case, however, there is no such practical necessity as mountain biking is not an essential activity. Thus, Mincin did not enter into the contract from an inferior bargaining position. Further, Mincin fails to point to any other unfair circumstances surrounding the parties' contract. 30 Thus, the first three Jones factors militate against plaintiffs' broad interpretation of Stanley. Stanley does not represent a per se prohibition against exculpatory agreements in the context of negligence suits against landowners. 2 This construction of Stanley best comports with the standard for identifying a public duty under Colorado law, as first articulated in Jones. The Jones court provided the following guidance regarding the types of services that involve public duties and instances in which exculpatory agreements might trigger fairness concerns: 31 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.... 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. 32 623 P.2d at 376 (quoting Tunkl v. Regents of Univ. of Cal., 60 Cal.2d 92, 32 Cal.Rptr. 33, 383 P.2d 441, 444 (1963)). Thus, Stanley is distinguishable from the present case in that the public need and disparity of bargaining power present in the landowner-residential tenant area are wholly absent in the context of mountain biking and bicycle rental. 33 The final factor of the Jones test requires us to consider whether the agreement is clear and unambiguous. We agree with the district court that the language of the exculpatory agreement is unambiguous. A contractual term is ambiguous when it is susceptible to more than one reasonable interpretation. Browder v. U.S. Fid. & Guar. Co., 893 P.2d 132, 133 (Colo.1995). Plaintiffs first argue that the exculpatory clause is ambiguous as to whether it bars claims by subrogees. In support of this position, plaintiffs point to Rowan v. Vail Holdings, Inc., 31 F.Supp.2d 889 (D.Colo.1998). In Rowan, a skier signed an exculpatory agreement that released Vail from any and all claims I might state. Id. at 893. The agreement also contained language binding the agreement on my estate, heirs, administrators and assigns. Id. The court found that this discrepancy rendered the agreement ambiguous as to whether the skier's parents could institute a wrongful death suit, which is based on a statutory cause of action belonging to a decedent's heirs. Id. at 899. The court reasoned that claims `I' might state are, by necessity, limited to those of the signatory.... A wrongful death action is not encompassed by such language, since Rowan could not assert such a claim on his own behalf. Instead, a wrongful death claim is an independent action belonging to Rowan's heirs. Id. 34 The instant case is distinguishable. It is true that the rental agreement signed by Mincin contained language almost identical to that found in Rowan. In contrast to a wrongful death claim, however, a subrogation claim is not an independent action. Subrogation is the right of the insurer to be put in the position of the insured in order to pursue recovery from third parties legally responsible to the insured for a loss the insurer has paid. Porter v. Castle Rock Ford Lincoln Mercury, Inc., 895 P.2d 1146, 1148 (Colo.Ct. App.1995) (emphasis added). Indeed, it is elementary that one cannot acquire by subrogation what another whose rights he claims did not have. Browder, 893 P.2d at 136 n. 4 (quoting U.S. v. Munsey Trust Co., 332 U.S. 234, 242, 67 S.Ct. 1599, 91 L.Ed. 2022 (1947)). Accordingly, because a subrogation claim by Kemper asserts Mincin's rights, it is plainly precluded by the I might state language of the exculpatory agreement. 35 Plaintiffs also contend that the expressio unius canon of construction operates to exclude subrogation claims from the purview of the exculpatory clause. Plaintiffs argue that, because the agreement explicitly binds Mincin and his estate, heirs, administrators, and assigns, but is silent as to subrogees, it does not bind Kemper. Again, however, the crucial point is that a subrogation claim is not an independent claim. Mincin waived his right to sue when he signed the agreement. Therefore, no basis for a subrogation claim exists. See Porter, 895 P.2d at 1148 (The insurer's right of subrogation is derived solely from the rights of its insured and is limited to those rights.). Thus, Mincin's release waived any subrogation right Kemper might have otherwise possessed. The exculpatory clause is unambiguous on this point. 36 Nor is there any ambiguity as to the type of claim that is barred by the agreement. The agreement covers any and all claims I might state ... including those claims based on negligence or breach of warranty. The agreement bars Mincin from bringing suit for any and all claims, then makes clear that breach of warranty and negligence claims are contained within that prohibition. There is nothing ambiguous about this portion of the agreement. 3 37 Plaintiffs also invoke the doctrine of ejusdem generis. Under this principle, where general words follow the enumeration of particular classes of persons or things, the general words will be construed as applicable only to persons or things of the same general nature or class as those enumerated. Noyes Supervision, Inc. v. Canadian Indem. Co., 487 F.Supp. 433, 437 (D.Colo.1980) (emphasis added). In this case, however, the general language (any and all claims I might state) precedes the specific language. Thus, the doctrine of ejusdem generis is inapposite. Lyman v. Town of Bow Mar, 188 Colo. 216, 533 P.2d 1129, 1133 (1975) (rejecting the application of ejusdem generis where the general words at issue preceded the enumeration of specific examples). Moreover, the term include is a term of extension or enlargement, rather than limitation. Id. Thus, in this case, as in Lyman, the general language controls and the specific language merely provides examples. See id. 38 In summary, the public interest in mountain biking is minimal, and the provision of trails and bicycles does not involve a duty to the public. The service provided is not a public necessity, and nothing indicates that the agreement was entered into unfairly. The agreement is clear and unambiguous. Considering these factors, we conclude that the exculpatory agreement is enforceable as a matter of law. The district court was therefore correct in granting summary judgment to defendants.