Court Opinion

ID: 9526715
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:22:32.79256+00
Date Added: 2024-06-11T13:21:12.531434
License: Public Domain

MARING, Justice,
dissenting.
[¶ 26] I respectfully dissent. I agree with the majority that the release of liabili*73ty in this case is ambiguous. However, I am of the opinion that the waiver of liability is void and unenforceable because it violates clear public policy. I would, therefore, reverse and remand this case for trial.
I
[¶ 27] Contracts exonerating parties from liability for their conduct are generally disfavored in the law. Reed v. University of North Dakota, 1999 ND 25, ¶ 22, 589 N.W.2d 880; Kondrad v. Bismarck Park District, 2003 ND 4, ¶ 6, 655 N.W.2d 411. “[Contractual exculpatory clauses are strictly construed against the benefit-ted party, and will not be enforced if they are ambiguous, or release the benefitted party from liability for intentional, willful, or wanton acts.” Reed, at ¶ 22; N.D.C.C. § 9-08-02 (precluding contracts that exonerate parties from willful injury to the person of another as against public policy). Generally, releases of liability “are not construed to cover the more extreme forms of negligence, described as willful, wanton, reckless or gross, or to any conduct which constitutes an intentional tort.” W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 68, at 484 (5th ed.1984). Under N.D.C.C. § 9-08-01 (emphasis added),
Any provision of a contract is unlawful if it is:
1. Contrary to an express provision of law;
2. Contrary to the policy of express law, though not expressly prohibited; or
3. Otherwise contrary to good morals.
See also Martin v. Allianz Life Ins. Co. of North America, 1998 ND 8, ¶ 20, 573 N.W.2d 823. It is a “general rule that certain contracts though properly entered in all other respects, will not be enforced, or at least will not be enforced fully, if found to be contrary to public policy.” 15 Grace McLane Giesel, Corbin on Contracts § 79.1 (rev. ed., 2003).
[¶ 28] “The Restatement (Second) of Contracts section 178 provides that a court should refuse enforcement when a public policy against enforcement outweighs the interest in enforcement.” 15 Corbin, supra, § 89.1.
The Restatement suggests that in making that determination the courts should consider the expectations of the parties, the forfeiture that would result from nonenforcement, any public interest in enforcing the provision, the strength of the policy against enforcement, whether nonenforcement will further that policy, the seriousness and deliberateness of the misconduct, and the closeness of the connection between the misconduct and the provision.
15 Corbin, supra, § 79.3 (citing Restatement (2d) of Contracts § 178 (1981)). The unenforceability of contracts contrary to public policy “is a clear limitation on the freedom of contract because, regardless of the parties’ intention to be bound or manifestations of that intent, the courts have refused to give such contracts the full enforcement to which they would otherwise be entitled.” 15 Corbin, supra, § 79.1. This course is only followed by courts “when necessary to protect a public interest offended by the contract.” Id. In Johnson v. Peterbilt of Fargo, Inc., 438 N.W.2d 162, 163-64 (N.D.1989) (citations omitted) (emphasis added), this Court explained:
Public policy, with respect to contract provisions, is a principle of law whereby a contract provision will not be enforced if it has a tendency to be injurious to the public or against the public good. Whether a particular provision is against public policy is generally provided for by statute or by the State Constitution. *74However, when a contract provision is inconsistent with fair and honorable dealing, contrary to sound policy and offensive to good morals, courts have the authority to declare the provision void as against public policy.
Under the Restatement (2d) of Torts § 496B, “[a] plaintiff who by contract or otherwise expressly agrees to accept a risk of harm arising from the defendant’s negligent or reckless conduct cannot recover for such harm, unless the agreement is invalid as contrary to public policy.”
[¶ 29] Statements of public policy come from legislation, and courts must look at constitutions, statutes, regulations, and ordinances to ascertain the policy embedded in the law. 15 Corbin, supra, § 79.2 (citing Restatement (2d) of Contracts § 179 (1981)). “A public policy against the enforcement of promises or other terms may be derived by the court from ... legislation relevant to such a policy.” Restatement (2d) of Contracts § 179(a) (1981).
More often the statutes or other legislative statements of public policy prohibit certain conduct but do not deal with the issue of the enforceability of a contract involving such conduct. In these cases, the courts must look at the policy represented or expressed by the legislative enactment and must decide whether that policy would be offended by full or partial enforcement or by some other remedy-
15 Corbin, supra, § 79.2. “A public policy against the enforcement of promises or other terms may be derived by the court from ... the need to protect some aspect of the public welfare.” Restatement (2d) of Contracts § 179(b) (1981). The North Dakota legislature has made safe, supervised child care the public policy of the state of North Dakota.
[¶ 30] The North Dakota Legislative Assembly has made it clear that child care is a priority in this State. Linda Reinicke, Program Director for Child Care Resources & Referral, in testimony offered during the 63rd Legislative Assembly, stated: “The Legislature has, over the last six years, invested in strengthening ND’s child care. In 2007, the Legislature funded on-line training for child care providers. The 2009 Legislature funded a child care recruitment, training and retention initiative and, in 2011, refunded the initiative.” Hearing on H.B. 14-22 Before the House Human Services Comm., 63rd N.D. Legis. Sess. (Jan. 28, 2013) (testimony of Linda Reinicke, Program Director for Child Care Resources & Referral) (emphasis omitted) [“Hearing on H.B. 1422, House”]. Most recently, in 2013, the legislature funded a child care stabilization initiative. The legislature’s position was evidenced through the creation and enactment of amendments to N.D.C.C. ch. 50-11.1. The child care stabilization initiative, originally House Bill 1422 prior to codification, was offered as a solution to the child care “crisis” occurring in North Dakota. Hearing on H.B. 1422, House, supra (testimony of Rep. Kathy Hawkens). “Studies conducted in the past year by the U.S. Department of Agriculture’s Rural Development agency and the state of North Dakota have shown that child care ranks right behind housing in order of importance for the people who live and work in North Dakota.” Hearing on H.B. 1422 Before the Senate Human Semces Comm., N.D. 63rd Legis. Sess. (March 11, 2013) (testimony of T.J. Cor-coran, founder of the Corcoran School) [“Hearing on H.B. 1422, Senate”]. “It is the intent of the legislative assembly that the department of human services change the eligibility requirement for the child care assistance program from fifty percent of the state median income to eight-five percent of the state median income.” 2013 N.D. Sess. Laws ch. 376, § 8. The legisla*75ture recognized the need to widen the net regarding assisting North Dakota families with their child care needs. In 2012, Child Care Resource & Referral complied data that shows all but three counties in North Dakota “have less than 30 percent of licensed care to meet demand.” Hearing on H.B. 1422, Senate, supra (testimony of T.J. Corcoran, founder of the Corcoran School). According to information published by North Dakota Child Care Resource & Referral, as of September 2012, there were 88,936 children between the ages of 0 to 12 years that potentially needed care due to the mother being in the workforce, but the capacity of licensed child care programs, including family, group, center, and school-age, was limited to 33,190 children. Hearing on H.B. 14.22, House, supra (testimony of Linda Reinicke, Program Director for Child Care Resources & Referral).
[¶ 31] The application for the 21st Century Community Learning Center grant, offered as exhibit 1 (“exhibit 1”) in support of the Missouri Valley Family YMCA’s CYMCA”) brief in support of its motion for summary judgment and declaratory judgment noted that state and federal entities found additional programs were needed in Bismarck during the summer months when school was not in session. This information was also included in the YMCA’s brief. In exhibit 1, the need was identified as “critical” for many reasons, including the levels of poverty and lack of services. According to exhibit 1 and the YMCA’s brief, children at or near the poverty level were the Extend School Program’s (“ESP”) targeted clients. Two of the schools participating in the ESP “ha[d] 50.2% and 68.5% of their schools’ population living in poverty and unable to afford after hours program[s]” according to exhibit 1. The YMCA’s brief also relies on that data. T.D. and her sister were accepted into the program and both received a full scholarship for the program for the entire summer. The program T.D. was enrolled in was a child care program for children of poor families.
[¶ 32] A majority of jurisdictions hold waivers of liability similar to the one signed by T.D.’s mother are void against public policy. “A majority of courts that have considered the issue have held that public policy precludes ... waiver of a child’s cause of action for injuries caused by negligence.” 2 J.D. Lee et al., Modem Tort Law § 20:45 (2d ed.2002) (citing Galloway v. State, 790 N.W.2d 252, 256 (Iowa 2010)). “[T]he majority of state courts who have examined the issue ... have concluded public policy precludes enforcement of a parent’s preinjury waiver of her child’s cause of action for injuries caused by negligence.” Galloway, 790 N.W.2d at 256 (citing Apicella v. Valley Forge Military Academy & Junior Coll., 630 F.Supp. 20, 24 (E.D.Penn.1985); Fedor v. Mauwehu Council, Boy Scouts of Am., 21 Conn.Supp. 38, 143 A.2d 466, 468 (1958); Kirton v. Fields, 997 So.2d 349, 358 (Fla.2008); Meyer v. Naperville Manner, Inc., 262 Ill.App.3d 141, 199 Ill.Dec. 572, 634 N.E.2d 411, 414 (1994); Hojnowski v. Vans Skate Park, 187 N.J. 323, 901 A.2d 381, 386 (2006); Fitzgerald v. Newark Morning Ledger Co., 111 N.J.Super. 104, 267 A.2d 557, 558 (Law Div.1970); Rogers v. Donelson-Hermitage Chamber of Commerce, 807 S.W.2d 242, 245 (Tenn.Ct.App.1990); Munoz v. II Jaz Inc., 863 S.W.2d 207, 209-10 (Tex.App.1993); Scott ex rel. Scott v. Pac. W. Mountain Resort, 119 Wash.2d 484, 834 P.2d 6, 10-11 (1992)); see also Johnson v. New River Scenic Whitewater Tours, Inc., 313 F.Supp.2d 621, 634 (D.W.Va.2004); Smith v. YMCA of Benton Harbor/St. Joseph, 216 Mich.App. 552, 550 N.W.2d 262, 263 (1996); Childress v. Madison County, 777 S.W.2d 1, 6-7 (Tenn.Ct.App.1989); Hiett v. Lake Bancroft Cmty. *76Ass’n, 244 Va. 191, 418 S.E.2d 894, 897 (1992). However, other jurisdictions have upheld preinjury releases executed by parents. See, e.g., Hohe v. San Diego Unified Sch. Dist., 224 Cal.App.3d 1559, 274 Cal.Rptr. 647, 649 (1990); Sharon v. City of Newton, 437 Mass. 99, 769 N.E.2d 738, 747 (2002); Zivich v. Mentor Soccer Club, Inc., 82 Ohio St.3d 367, 696 N.E.2d 201, 205 (1998). I find the reasoning of the majority of jurisdictions on the issue more persuasive because “the strong public policy in favor of protecting children must trump any competing interest of parents and tortfeasors in their freedom to contractually nullify a minor child’s personal injury claim before the injury occurs.” 2 J.D. Lee et al., Modem Tort Law § 20:45 (2d ed.2002) (quoting Galloway, 790 N.W.2d at 258).
[¶ 33] In addition, “[i]n considering whether a release is against public policy, other courts generally have considered: (1) the disparity of bargaining power between the parties in terms of compulsion to sign the agreement and lack of ability to negotiate elimination of the clause, and (2) the types of services provided by the party seeking exoneration, including whether they are public or essential services.” Reed, at ¶ 26 (citing Schlobohm v. Spa Petite, Inc., 326 N.W.2d 920, 923 (Minn.1982); Heil Valley Ranch, Inc. v. Simkin, 784 P.2d 781, 784 (Colo.1989); Restatement (2d) Contracts § 195 (1981)). To determine whether there was a disparity in bargaining power, courts must find more than just a contract offered on a “take it or leave it” basis. Schlobohm, 326 N.W.2d at 924. Courts must determine if there was an opportunity for negotiation and if services could be obtained elsewhere. Id. at 924-25. To determine whether the services were public or essential or not, courts must “consider whether it is the type generally thought suitable for public regulation.” Id. at 925. “Further, in the determination of whether the enforcement of an exculpatory clause would be against public policy, the courts consider whether the party seeking exoneration offered services of great importance to the public, which were a practical necessity for some members of the public.” Id. at 926.
[¶ 34] Contracts of adhesion tend to evidence great disparity of bargaining power between parties. An adhesion contract is defined as “[a] standard-form contract prepared by one party, to be signed by the party in a weaker position, usu. a consumer, who adheres to the contract with little choice about the terms.” Black’s Law Dictionary 342 (8th ed.2004). “Under North Dakota law, a consumer transaction which is essentially a contract of adhesion will be examined by the courts with special scrutiny to assure that it is not applied in an unfair or unconscionable manner against the party who did not participate in its drafting.” Strand v. U.S. Bank Nat. Ass’n ND, 2005 ND 68, ¶ 13, 693 N.W.2d 918 (citations omitted).
When one party is in such a superior bargaining position that it totally dictates all terms of the contract and the only option presented to the other party is to take it or leave it, some quantum of procedural unconscionability is established. The party who drafts such a contract of adhesion bears the responsibility of assuring that the provisions of the contract are not so one-sided as to be unconscionable.
Id. at ¶ 15. One leading commentator summarized:
The concept of unconscionability was meant to counteract two generic forms of abuses: the first of which relates to procedural deficiencies in the contract formation process, ... today often analyzed in terms of whether the imposed-upon party had meaningful choice about *77whether and how to enter into the transaction; and the second of which relates to the substantive contract terms themselves and whether those terms ... contravene the public interest or public policy; terms (usually of an adhesion or boilerplate nature) that attempt to alter in an impermissible manner fundamental duties otherwise imposed by the law.
Id. at ¶ 10 (quoting 8 Richard A. Lord, Williston on Contracts § 18.10 (4th ed.1998) (footnotes omitted)).
[¶ 35] According to the YMCA’s brief in support of its motion for summary judgment and declaratory judgment, “[biased on prior fact gathering by numerous [s]tate and [federal entities, a need was identified for additional programs in Bismarck” during the summer months when school was not in session, which was based on the information provided in the YMCA’s exhibit 1. The need was identified as “critical” for many reasons including the levels of poverty and lack of services, in exhibit 1. The ESP was funded by a federal grant obtained by the Bismarck Public School District and the YMCA. As the majority at ¶ 2 recognized and the YMCA offered in its brief, the program was designed, in part, to provide summer educational opportunities “in a stimulating, safe, drug-free, supervised environment to a large number of at-risk students.” According to the YMCA’s answer to T.D.’s amended complaint, the ESP was developed to address the unmet and unsatisfied needs of low income and underperforming students within the Bismarck Public School system. The YMCA identified the targeted clients for the ESP as young children at or near the poverty level in its brief. According to exhibit 1, two of the schools participating in the ESP “ha[d] 50.2% and 68.5% of their schools’ population living in poverty and unable to afford after hours programas],” which was also acknowledged in the YMCA’s brief.
[¶ 36] T.D.’s mother signed the release of liability provisions in the YMCA registration form. T.D. would not have been able to participate in the ESP without her parent’s signature on the YMCA registration form. In my view, there was a disparity in bargaining power between the organizations involved in providing the child care services for the ESP and the Dicker-sons, parents of T.D. There was no negotiating and they had to sign the release or be without summer child care. T.D. and her sister were accepted into the program and both received a full scholarship for the program for the entire summer. All of this information taken together leads to one conclusion: the Dickersons’ daughters were within the targeted children of the ESP and the Dickersons had no other options due to lack of services and income level. I am of the opinion that the services offered by the YMCA under the ESP grant were subject to public regulation and essential services for parents like the Dick-ersons. Enforcement of this release is to the disadvantage of poor children and families and deprives them of the safe childcare so desperately needed as evidenced by our legislature’s policy. To present a waiver of a child’s rights to parents, like the Dickersons, is offensive against the public policy of North Dakota and “contrary to good morals.” See N.D.C.C. § 9-08-01(3).
II
[¶ 37] I would reverse the district court’s summary judgment, declare the waiver of liability void and unenforceable as against public policy, and remand for trial.
[¶ 38] MARY MUEHLEN MARING