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Full Opinion
United States Court of Appeals
For the First Circuit
No. 05-2822
MARK BROADLEY,
Plaintiff, Appellant,
v.
MASHPEE NECK MARINA, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Patti B. Saris, U.S. District Judge]
Before
Boudin, Chief Judge,
Torruella and Dyk,* Circuit Judges.
Thomas M. Bond with whom Matthew H. Snell and The Kaplan/Bond
Group were on brief for appellant.
John H. Bruno, II with whom Masi & Bruno was on brief for
appellee.
December 22, 2006
*
Of the Federal Circuit, sitting by designation.
BOUDIN, Chief Judge. On August 25, 2002, Mark Broadley
was injured at the Mashpee Neck Marina ("Marina") at Cape Cod when
his foot became caught in a gap between the main dock and a
floating dock where his vessel was moored. The gap between the
docks is about two to three inches wide when the water is calm, but
the wake of a passing boat can cause the docks to move and the gap
to widen. Broadley fractured his ankle and was left with a
permanent loss of function.
Broadley alleged that Marina's negligence caused the
accident: the space between docks was a potential hazard that could
have been mitigated either by using a flexible material to cover
the gap or by tying the docks together more tightly. Marina denied
liability, citing the boilerplate exculpatory clause of the
contract for seasonal mooring between the parties. That clause
read:
The OWNER [Broadley] warrants and [covenants] that
. . . the OWNER . . . will [not] make any claims,
demands, causes of action of any kind and nature,
or obtain or enforce any judgments, executions or
levies thereon . . . against MARINA, its officers,
directors, agents, servants, or its employees,
arising out of any damage, loss, personal injury
or death suffered by [him]. . . . The OWNER . . .
agree[s] and covenant[s] that [he] will defend,
indemnify and save MARINA harmless from any and
all of such claims, demands, causes of action,
judgments and executions, and the MARINA shall be
entitled to responsible attorneys fees in the
event of breach of the OWNER's covenant hereunder.
Marina claimed that this exculpatory clause precluded
Broadley from bringing suit for personal injury due to Marina's
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negligence. Broadley responded that under admiralty law, a party
may limit but may not completely absolve itself from liability for
ordinary negligence; and that the clause was over-broad and
therefore unenforceable insofar as it absolved Marina of liability
for gross negligence and intentional wrongdoing. Because of its
connection to maritime activities, the clause is governed by
federal admiralty law. S.C. State Ports Auth. v. Silver Anchor,
S.A., 23 F.3d 842, 846 n.3 (4th Cir. 1994).
The district court issued summary judgment in Marina's
favor, holding that the clause should be reformed to limit it to
ordinary negligence. Broadley had conceded that Marina's
negligence did not rise to the level of gross negligence, so as
reformed the clause barred his claim. This appeal followed. We
review grants of summary judgment de novo. Iverson v. City of
Boston, 452 F.3d 94, 98 (1st Cir. 2006).
Broadley's main argument on appeal is that, under
admiralty law, a party may not completely absolve itself of
liability for ordinary negligence; for support, Broadley cites the
Supreme Court's decision in Bisso v. Inland Waterways Corp., 349
U.S. 85 (1955), and our own decision in La Esperanza de P.R., Inc.
v. Perez Y Cia de P.R., Inc., 124 F.3d 10 (1st Cir. 1997).
Bisso could be read as laying down a flat rule,
applicable to all cases, forbidding clauses that entirely exculpate
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a party for its own simple negligence.1 However, Bisso focused on
towing contracts and the special threat of "monopolistic
compulsions." 349 U.S. at 91. The Court also cited case law
forbidding exculpatory clauses in common law relationships where
unequal bargaining power is presumed (e.g., utilities and their
customers). 349 U.S. at 90-91. Thus Bisso can easily be read as
limited to relationships where unequal power is inherent or
established.
Agreements to waive claims for mere negligence are
generally enforceable at common law. See Keeton et al., Prosser &
Keeton on Torts § 68, at 482-83 (5th ed. 1984). Qualifications
exist-–the relevant doctrines are unconscionability and contracts
of adhesion-–turning on factors like adequate disclosure, relative
bargaining power and the like. 1-2 Farnsworth, Farnsworth on
Contracts §§ 4.26, 4.28, 5.2 (3d ed. 2004). But an admiralty rule,
flatly preventing parties from contracting away claims for simple
negligence in all circumstances, would be surprising.
Since Bisso, decisions in other circuits have addressed
this issue in admiralty cases but no consensus exists as to how
Bisso should be read. Two circuits would allow a release from all
1
The Court applied the "judicial rule, based on public policy,
invalidating contracts releasing towers from all liability for
their negligence," and noted that "[t]his rule is merely a
particular application to the towage business of a general rule
long used by courts and legislatures to prevent enforcement of
release-from-negligence contracts." Bisso, 349 U.S. at 90.
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liability for negligence (at least in the dockage context) and one
circuit arguably would not.2 Another circuit has upheld
exculpatory clauses that limited but did not entirely preclude
liability for negligence; but in our case the clause completely
exculpates from such liability, so this last circuit's cases are
distinguishable.3
As for this circuit, the main thrust of the language in
La Esperanza was to uphold exculpatory clauses directed to mere
negligence so long as "expressed clearly in contracts entered into
freely by parties of equal bargaining power." The sentence ended
with the phrase: "provided that the clause not provide for a total
absolution of liability." 124 F.3d at 19. But this may simply
mean (unexceptionally) that parties cannot contract out of gross
negligence.
Nor did La Esperanza hold invalid a properly disclosed
clause, not unfairly imposed, waiving all claims for all
negligence. The decision upheld application of a clause barring
recovery for lost profits or lost use of vessel caused by a
2
Compare Sander v. Alexander Richardson Invs., 334 F.3d 712,
719 (8th Cir. 2003), and Morton v. Zidell Explorations, Inc., 695
F.2d 347, 350-51 (9th Cir. 1982), cert. denied, 460 U.S. 1039
(1983), with Edward Leasing Corp. v. Uhlig & Assocs., Inc., 785
F.2d 877, 888-89 (11th Cir. 1986).
3
Todd Shipyards Corp. v. Turbine Serv., Inc., 674 F.2d 401,
410 (5th Cir.), cert. denied sub nom, 459 U.S. 1036 (1982); Alcoa
S.S. Co. v. Charles Ferran & Co., 383 F.2d 46, 55 (5th Cir. 1967),
cert. denied, 393 U.S. 836 (1968); see also Diesel "Repower", Inc.
v. Islander Invs. Ltd., 271 F.3d 1318, 1325 (11th Cir. 2001).
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shipyard's negligence. So La Esperanza's dicta, however read,
cannot control the present case. See United States v. Barnes, 251
F.3d 251, 258 (1st Cir.), cert. denied, 534 U.S. 967 (2001). In
our view, the better rule is that an exculpatory clause limited to
barring liability for ordinary negligence would be valid, assuming
it were not inflicted by a monopolist or one with greatly superior
bargaining power.
Broadley does not claim that Marina had undue bargaining
power--presumably because there are alternative marinas in the
general area--but this is not the end of the inquiry. There is no
doubt that the clause as written is vastly overbroad and against
public policy insofar as it purports to absolve Marina of liability
for gross negligence, recklessness and intentional wrongdoing.4
Thus, the question remains whether a court should be willing to
narrow the clause and apply it only to the extent that it excludes
liability for simple negligence.
The district court said that it would "reform" the
clause, narrowing it to apply only to negligence; but reformation
is normally appropriate where the language somehow fails to express
the actual intention of the parties and is conformed merely to
reflect their actual intent or, where the contents have been
4
Royal Ins. Co. v. Southwest Marine, 194 F.3d 1009, 1016 (9th
Cir. 1999) (exculpatory clause in admiralty contract may not limit
liability for gross negligence); La Esperanza, 124 F.3d at 19
(same); Prosser & Keeton on Torts § 68, at 484 (same in common law
context).
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fraudulently misrepresented by one party, to conform the contract
to the terms conveyed to the defrauded party. See Restatement
(Second) Contracts §§ 155, 166; 2 Farnsworth on Contracts § 7.5.
Neither situation is present here.
The doctrine pertinent where a contract provision is
unlawfully overbroad is that which permits a court to sever or
divide provisions that are unlawful as written, retaining those
provisions or applications of them that are permissible.
2 Farnsworth on Contracts § 5.8. State law is not uniform, but a
modern version of the doctrine, as reflected in the Restatement
(Second) of Contracts § 184 (emphasis added) provides:
A court may treat only part of a term as
unenforceable . . . if the party who seeks to
enforce the term obtained it in good faith and
in accordance with reasonable standards of
fair dealing.
One of the illustrations makes clear that where the
parties actually negotiated an overbroad exculpatory clause that
clearly encompasses negligence, a good case can be made for
narrowing it to apply only to negligence, id. § 184 illus. 4; but
another comment, arguably more pertinent here, says that "[t]he
fact that the [overbroad] term is contained in a standard form
supplied by the dominant party argues against aiding him in this
request." Id. § 184 cmt. b.
There is no finding in this case as to the good or bad
faith of the marina owner. Quite possibly this was a form contract
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of a kind often furnished by trade associations seeking to give
their members every advantage. In all events, we will assume that
there was no subjective bad faith by Marina. Instead, the question
for us is whether the clause represents fair dealing so that a
judicial narrowing is sound public policy.
The substantial overbreadth of the clause has two
negative consequences. Obviously such a clause can discourage
perfectly legitimate claims-–e.g., for gross negligence or
deliberate wrongdoing--from ever being brought by the injured
party. The injured slip-renter often has ample reason to hesitate
about suing--time, uncertainty, expenses--especially where, as
here, the contract provides for attorney's fees to Marina for
breach of the agreement not to sue.
A second concern is that the clause never says that it
exempts Marina from negligence. The language used, although
broader, is also blander: there is no reference to fault; and,
although the clause literally encompasses negligence, Sander, 334
F.3d at 716, it is less likely to convey an effective warning to
the reader than would a clear and specific disclaimer of liability
for negligence.
Finally, Marina does not suggest that there was actual
negotiation about such terms. If the negligence issue had been the
subject of actual bargaining and discussion, we might well have a
different reaction; but this is evidently a typical case of
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boilerplate. Boilerplate even in contracts of adhesion is not
automatically unlawful; but it is a relevant consideration in
deciding whether to rescue the contract from overbreadth. See,
e.g., Richards v. Richards, 513 N.W.2d 118, 123 (Wis. 1994);
Restatement (Second) Contracts § 184 cmt. b.
The case law is not very helpful in providing a
controlling answer. There are two admiralty cases in other
circuits sharing our reading of Bisso that have narrowed such
clauses;5 but neither addresses specifically the considerations of
concern to us. Cases applying state law are divided, with some
courts narrowing such clauses and others declining to do so very
much for the reasons we have already given.6 We find the latter
more persuasive.
The marina agreement in this case has, as part of the
boilerplate, a severability clause. But the same public policy
concerns we have described lead us to reject the application of
this clause to rescue the overbroad exculpatory clause. Otherwise,
the narrow and explicit language, which we think should be
5
Sander, 334 F.3d at 716; Royal Ins. Co., 194 F.3d at 1014.
6
Compare, e.g., In re Pacific Adventures, Inc., 27 F. Supp. 2d
1223, 1224-25 (D. Haw. 1998) (applying Hawaii law), and Richards,
513 N.W.2d at 122-23, with Harmon v. Mt. Hood Meadows, Ltd., 932
P.2d 92, 95-96 (Or. Ct. App. 1997), and Swartzentruber v. Wee-K
Corp., 690 N.E.2d 941, 944-46 (Ohio Ct. App.), appeal denied, 678
N.E.2d 1231 (1997).
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required, could be side-stepped by leaving the broad language in
place and including the severability clause as a companion.
In declining to narrow the exculpatory clause, we rely on
the extreme overbreadth of the clause and the plainness of its
illegality, the boilerplate character of the contract and lack of
specific negotiation, the absence of an explicit reference to
negligence which would provide better warning, and the attorney's
fees clause. Any competent lawyer could write a straightforward
exclusion of liability for negligence that we would sustain.
Only some elements of this analysis were made by
Broadley. In the district court a simple overbreadth argument was
adverted to; in this court Broadley stresses lack of clarity. A
litigant is not expected to guess just how a court will explain its
result; but it would be easy enough for us to avoid the issue and
to affirm on the ground that the overbreadth argument was not
adequately developed and is therefore forfeit. United States v.
Zannino, 895 F.2d 1, 17 (1st Cir.), cert. denied, 494 U.S. 1082
(1990).
But the forfeiture doctrine is not an absolute limitation
on judicial power but a prudential limitation subject to the
reviewing court's discretion. Indeed, a court may, although rarely
will, forgive a knowing waiver where extreme injustice would be
done. United States v. La Guardia, 902 F.2d 1010, 1013 (1st Cir.
1990). Here, it is important that the validity issue be resolved
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for the sake of future case law, and invalidity is the juster
result.
The only concern where the court develops issues not
adequately argued is that a party not apprised may have arguments
against the court's reasoning. But in this instance an overbreadth
claim as such was raised in the district court and we know what
Marina said in response. Similarly, we are especially open in
cases of this kind to petitions for rehearing and are ready to
revise reasoning and result if this is warranted.
With that qualification, we reverse the decision of the
district court and remand for further proceedings. No criticism of
the very able district judge is intended; we are dealing with
poorly developed and confusing admiralty law in aggravated
circumstances, and the district court did not receive much help.
Each side will bear its own costs on this appeal.
It is so ordered.
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