Seigneur v. National Fitness Institute, Inc.

Opinion by Salmon, J.

In this case, we are asked to examine the enforceability of an exculpatory clause found in a fitness club's contract.

[Plaintiff was injured while being evaluated on exercise equipment under the supervision of defendant’s employee, who was negligent in assigning weight and task. Furthermore, defendant’s employee did not take proper precautions when informed of the plaintiff’s injury, and instead urged the plaintiff to complete the evaluation. Plaintiff filed an agreement freeing the defendant from liability before undergoing the evaluation]

[. . .]

On October 28, 1998, NFI filed a motion to dismiss arguing that the exculpatory clause contained in the Participation Agreement was valid and enforceable and that NFI was entitled to judgment as a matter of law. The Seigneurs responded by arguing that the Participation Agreement was a contract of adhesion and that the exculpatory clause was void as against public policy. They also argued that the agreement was unclear and ambiguous, thus precluding summary judgment.

II. Analysis

A. Validity of the Exculpatory Clause

To decide this case, we must first determine whether the exculpatory clause quoted at the beginning of this opinion unambiguously excused NFI's negligence. In construing the Participation Agreement, we are required to give legal effect to all of its unambiguous provisions. [. . .]


In Maryland, for an exculpatory clause to be valid, it "need not contain or use the word 'negligence' or any other 'magic words.'" [. . .] An exculpatory clause "is sufficient to insulate the party from his or her own negligence 'as long as [its] language . . . clearly and specifically indicates the intent to release the defendant from liability for personal injury caused by the defendant's negligence . . . .'" [. . .]

In the instant case, there is no suggestion that the agreement between NFI and Ms. Seigneur was the product of fraud, mistake, undue influence, overreaching, or the like. The exculpatory clause unambiguously provides that Ms. Seigneur "expressly hereby forever releases and discharges NFI, Inc. from all claims, demands, injuries, damages, actions, or courses of action, and from all acts of active or passive negligence on the part of NFI, Inc., its servants, agents or employees." (emphasis added). Under these circumstances, we hold that this contract provision expresses a clear intention by the parties to release NFI from liability for all acts of negligence.

[. . .]

B. Public Policy Exception

More than one-hundred years ago, it was noted that "the right of parties to contract as they please is restricted only by a few well defined and well settled rules, and it must be a very plain case to justify a court in holding a contract to be against public policy." Estate of Woods, Weeks & Co., 52 Md. 520, 536 (1879) [. . .]. This legal principle continues to hold true today.

In Maryland, unambiguous exculpatory clauses are generally held to be valid in the absence of legislation to the contrary. [. . .]

The Court of Appeals, in Wolf v. Ford, 335 Md. 525, 644 A.2d 522 (1994), said:

It is quite possible for the parties expressly to agree in advance that the defendant is under no obligation of care for the benefit of the plaintiff, and shall not be liable for the consequences of conduct which would otherwise be negligent. There is in the ordinary case no public policy which prevents the parties from contracting as they see fit.

[. . .]

Three exceptions have been identified where the public interest will render an exculpatory clause unenforceable. They are: (1) when the party protected by the clause intentionally causes harm or engages in acts of reckless, wanton, or gross negligence; (2) when the bargaining power of one party to the contract is so grossly unequal so as to put that party at the mercy of the other's negligence; and (3) when the transaction involves the public interest. [. . .]

Ms. Seigneur has not alleged that NFI's agents intentionally caused her harm, or engaged in reckless, wanton, or gross acts of negligence. She does assert, however, that the second and third exceptions are applicable.

Appellants argue that NFI "possesses a decisive advantage in bargaining strength against members of the public who seek to use its services." She also claims that she was presented with a contract of adhesion and that this is additional evidence of NFI's grossly disproportionate "bargaining power."

It is true that the contract presented to Ms. Seigneur was a contract of adhesion. [Footnote 4] But that fact alone does not demonstrate that NFI had grossly disparate bargaining power. [. . .] As discussed infra, there were numerous other competitors providing the same non-essential services as NFI. The exculpatory clause was prominently displayed in the Participation Agreement and Ms. Seigneur makes no claim that she was unaware of this provision prior to her injury.

====Footnote 4====
A contract of adhesion has been defined as one 'that is drafted unilaterally by the dominant party and then presented on a "take-it-or-leave-it" basis to the weaker party who has no real opportunity to bargain about its terms.'" Meyer v. State Farm Fire and Cas. Co., 85 Md. App. 83, 89, 582 A.2d 275 (1990)(quoting Restatement (Second) of Conflict of Laws § 187, Comment b)).
====End Footnote====




To possess a decisive bargaining advantage over a customer, the service offered must usually be deemed essential in nature. [. . .] In Schlobohm, supra, the Court said:

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. As indicated above, courts have found generally that the furnishing of gymnasium or health spa services is not an activity of great public importance nor of a practical necessity. For example, in a negligence action brought against a health club and gym, the Court of Appeals of New York in Ciofalo v. Vic Tanney Gyms, Inc., 10 N.Y.2d 294, 297-98, 220 N.Y.S.2d 962, 964, 177 N.E.2d 925, 927 (1961), noted:

Here there is no special legal relationship and no overriding public interest which demand that this contract provision, voluntarily entered into by competent parties, should be rendered ineffectual. Defendant, a private corporation, was under no obligation or legal duty to accept plaintiff as a "member" or patron. Having consented to do so, it has the right to insist upon such terms as it deemed appropriate. Plaintiff, on the other hand, was not required to assent to unacceptable terms, or to give up a valuable legal right, as a condition precedent to obtaining employment or being able to make use of the services rendered by a public carrier or utility. She voluntarily applied for membership in a private organization, and agreed to the terms upon which the membership was bestowed. She may not repudiate them now.

[. . .]

Similarly, in Shields v. Sta-Fit, Inc., 79 Wn. App. 584, 903 P.2d 525, 528 (Wash.App. 1995), the Court pointed out that:

Health clubs are a good idea and no doubt contribute to the health of the individual participants and the community at large. But ultimately, they are not essential to the state or its citizens. And any analogy to schools, hospitals, housing (public or private) and public utilities therefore fails. Health clubs do not provide essential services.

We agree with the views expressed in Schlobohm and Shields, supra. The services offered by the appellee simply cannot be accurately characterized as "essential."

In Wolf, an eighteen-year-old woman received a substantial cash settlement for a tort claim [. . .]. The plaintiff invested her money with a stockbroker, intending to use the investment income to pursue a college education. Id. She signed a contract with her stockbroker and his employer, Legg Mason, that included an exculpatory clause. The woman later sued the stockbroker and Legg Mason alleging negligence. [. . .] In rejecting the suggestion that the exculpatory clause was invalid due to an unequal bargaining advantage, the Court of Appeals said:

Wolf claims that the very fact that she was eighteen years old and an unsophisticated investor renders the relationship so lopsided as to impose an extraordinary duty upon Ford. We do not accept that notion. Although young, she had attained her legal majority at the time. She was not solicited by Legg Mason; rather, she initiated contact with Ford [the stockbroker]. Wolf was under no compulsion, economic or otherwise, to invest her money in the stock market with Legg Mason or any other securities investment firm. She had numerous options available to her, including placing her money in an interest-bearing bank account or long-term certificates of deposit.

[. . .]

The Washington metropolitan area, of which Montgomery County is a part, is home to many exercise and fitness clubs. Ms. Seigneur, like Ms. Wolf, was free to choose among scores of facilities providing essentially the same services. [. . .] She also had the option of purchasing her own fitness equipment and exercising at home or of exercising without any equipment by doing aerobic or isometric exercises. Ms. Seigneur's bargaining position was not grossly disproportionate to that of NFI.

[. . . W]hen defining what transactions affect public interests, this Court relied in part on a test enunciated in Tunkl v. Regents of the Univ. of California, 60 Cal. 2d 92, 383 P.2d 441, 32 Cal. Rptr. 33 (Ca. 1963). Quoting Tunkl, the Court stated that public interests are affected when the transaction 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.

With respect to the just-quoted six-factor test, the Court in Wolf held:

Even though these cases [ones decided by the Court of Special Appeals] have not found an activity that is sufficiently connected to the "public interest" so as to invalidate the exculpatory clause, we are concerned that the six-factor test of Tunkl, originally intended to be a rough outline in guiding a court's determination as to whether a given transaction affects the public interest, may become too rigid a measuring stick. Because of the fluid nature of the "public interest," strict reliance on the presence or absence of six fixed factors may be arbitrary. The Tunkl Court itself recognized that the public interest does not -- and cannot -- lend itself easily to definition, because "the social forces that have led to such characterization [of the public interest] are volatile and dynamic. No definition of the concept of public interest can be contained within the four corners of a formula." Tunkl, 60 Cal. 2d at 98, 383 P.2d at 444, 32 Cal. Rptr. at 36.

We expressly decline, therefore, to adopt the six-factor test set forth in Tunkl and relied upon, to varying degrees, by the Court of Special Appeals in the exculpatory clause cases mentioned above. This is not to say that the factors listed cannot be considered by a court in determining whether a given transaction involves the public interest, but the six factors are not conclusive. The ultimate determination of what constitutes the public interest must be made considering the totality of the circumstances of any given case against the backdrop of current societal expectations.

[. . .] The Wolf Court, in refusing to adopt the Tunkl test, identified transactions that affect the public interest as those involving the performance of a public service obligation, e.g., public utilities, common carriers, innkeepers, and public warehousemen. It also includes those transactions, not readily susceptible to definition or broad categorization, that are so important to the public good that an exculpatory clause would be "patently offensive," such that "the common sense of the entire community would . . . pronounce it" invalid.

[. . .]

NFI does not provide an essential public service such that an exculpatory clause would be "patently offensive" to the citizens of Maryland. The services offered by a health club are not of great importance or of practical necessity to the public as a whole. [. . .] Nor is a health club anywhere near as socially important as institutions or businesses such as innkeepers, public utilities, common carriers, or schools.

Ms. Seigneur supports her argument that health clubs affect the public interest by reference to Dalury v. S-K-I, Ltd., 164 Vt. 329, 670 A.2d 795 (Vt. 1995). In that case, the Supreme Court of Vermont held that a ski resort was providing an essential public service, and therefore ruled that an exculpatory clause, signed by a patron who was injured while skiing on its premises, was unenforceable. [. . .] The Dalury Court held that the burden to foresee and control hazards should be placed on the ski resort and not the skiers. Id. The Court explained that ski resorts, not the skiers, "have the expertise and opportunity to foresee and control hazards, and to guard against the negligence of their agents and employees." Id. Moreover, according to the Court, ski resorts can train their employees in risk management. Id. In summarizing its reasons for finding that the release in question implicated legitimate public policy concerns, the Vermont Supreme Court stated: "While interference with an essential public service surely affects the public interest, those services do not represent the universe of activities that implicate public concerns." Id. Furthermore, the ski resort's reliance on the private nature of the property "would be inconsistent with societal expectations about privately owned facilities that are open to the general public." Id.

Ms. Seigneur's reliance upon Vermont law is understandable, but the holding in Dalury is against the great weight of authority. [. . .]

JUDGMENT AFFIRMED;

COSTS TO BE PAID BY APPELLANT.