# Schmidt v. United States

> Supreme Court of Oklahoma · February 27, 1996 · 912 P.2d 871

URL: https://www.frixlaw.com/law-library/cases/1119077

## Case

- **Full name:** Elizabeth M. SCHMIDT, Plaintiff, v. UNITED STATES of America, Defendant
- **Court:** Supreme Court of Oklahoma
- **Decided:** February 27, 1996
- **Citations:** 912 P.2d 871; 1996 OK 29; 1996 Okla. LEXIS 38; 1996 WL 80750
- **Precedential status:** Published
- **Opinion:** Opinion by Opala
- **Judges:** Opala, Kauger, Hodges, Lavender, Simms, Hargrave, Summers, Watt, Wilson
- **Cited by:** 37 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/1119077

## How later opinions describe it (automated extraction)

- explaining that courts also consider “the equality of the parties’ bargaining power, vis-à-vis each other . . .” in determining whether exculpatory contracts are enforceable
- explaining that courts also consider “the equality of the parties' bargaining power, vis-à-vis each other…” in determining whether exculpatory contracts are enforceable

## Opinion text

OPALA, Justice.
The United States District Court for the Western District of Oklahoma [certifying court] certified the following questions pursuant to the Uniform Certification of Questions of Law Act, 20 O.S.1991 §§ 1601 et seq.:
“1. Whether, under Oklahoma law, a contractual exculpatory clause for personal injury is valid and enforceable?
2. Whether, under Oklahoma law, the exculpatory provisions contained in the Rental Riding Agreement are valid and enforceable and operate to bar the plaintiffs negligence and negligent entrustment claims?”
We respond to the first question in the
affirmative.
We answer the second with a
qualifying
affirmative by noting that it applies if the certifying court finds that three preconditions to the clause’s enforcement are met: (1) the exculpatory clause’s language
clearly, definitely and unambiguously
displays an intent to insulate
the United States
from the
type of liability
the plaintiff seeks to impose; (2)
no disparity of bargaining power
existed between the two parties to the agreement containing the clause at the time it was executed; and (3) its effect
would not violate public policy.
We
note
that exculpatory clauses cannot relieve one from liability for fraud, willful injury, gross negligence or violation of the law.
1
I
ANATOMY OF THE FEDERAL LITIGATION
2
Elizabeth M. Schmidt [plaintiff or Schmidt] went to the Artillery Hunt Riding Stables [Stables] at Fort Sill, Oklahoma
3
to engage in recreational horseback riding. Before participating in this activity she executed a Rental Riding Agreement [contract]. The contract contained the following clause [exculpatory clause or clause]:
“In consideration for being allowed'to participate in Horse Rental, I hereby release the Artillery Hunt Center and its employees and/or ride leaders ... and the United States Government from
any liabilities or claims
arising from my participation. I agree that I will never prosecute or in any way aid in prosecuting any demand, claim or suit against the United States Government for
any loss, damage or injury to my person or property
that may occur from
any cause whatsoever
as a result of taking part in this activity.” [Emphasis supplied.]
Schmidt claims that, during the ride, a “ride leader” employed by the Stables negligently rode up behind her, frightened her horse and caused it to throw her to the ground, then fall on and injure her.
*873
Schmidt brought a negligent tort complaint against the United States
4
alleging that the latter (1) is liable
vicariously
for the ride leader’s negligence and (2) is culpable for
its own negligence
in selecting and keeping an unfit ride leader.
5
By its summary judgment motion the United States interposed the exculpatory clause, by which it sought to defeat Schmidt’s claim.
II
THE NATURE OF THIS COURT’S FUNCTION WHEN ANSWERING QUESTIONS FROM A FEDERAL COURT
While the actionability of state-law claims identified in the submitted questions may be tested when answering the queries posed, it is not this court’s province to intrude (by the responses to be given) upon the federal court’s decision-making process. Because this case is not before us /or
decision,
we refrain, as we must, from applying the declared state-law responses to the facts elicited or to be determined in the federal-court litigation (whether made by evidence adduced at trial or by acceptáble probative substitutes, called “evidentiary materials”, for use in the summary adjudication process).
6
The task of analyzing the impact of today’s answers must be and hence is deferred to the certifying court.
Ill
THE PARAMETERS OF THE CLAUSE’S ENFORCEABILITY
By entering into an exculpatory agreement of the type dealt with here
7
the promisor
assumes the risks
that are waived.
8
*874
While these exculpatory promise-based obligations are
generally enforceable,
9
they are
distasteful
to the law.
10
For a validity test the exculpatory clause must pass a gauntlet of judicially-crafted hurdles: (1) their language must evidence a
clear and unambiguous
intent to exonerate the would-be defendant
11
from liability for the sought-to-be-recovered damages;
12
(2) at the time the contract (containing the clause) was executed there must have been
no vast difference
in bargaining power between the parties;
13
and (3) enforcement of these clauses must never (a) be injurious to public health, public morals or confidence in administration of the law
or
(b) so undermine the security of individual rights vis-á-vis personal safety or private property as to
violate public
policy.
14
The clause will
never
avail to relieve a party from liability for intentional, willful or fraudulent acts or gross, wanton negligence.
15
A. Clear and Unambiguous Description of Parties and Damages
A contractual provision which one party claims excuses it from liability for
in futuro
tortious acts or omissions must clearly and cogently (1) demonstrate an intent to relieve
that person
from fault and (2) describe the nature and extent of damages from which that party seeks to be relieved. This is so not only when one assesses a party’s
direct
liability for negligence,
but also
when assaying whether the agreement’s terms embrace acts of an
agent or servant
of that party. In short, both the identity of the tortfeasor to be released and the nature of the wrongful act — for which liability is sought to be imposed — must have been foreseen by, and fall fairly
within the contemplar tion of,
the parties.
16
The clause must also identify the type and extent of damages covered — including those to occur
in futuro.
17
B. Bargaining Power’s Parity Level
Courts consider two factors when called upon to ascertain the equality of the parties’ bargaining power, vis-á-vis each other, in the setting of a promissory risk assumption: (1) the importance of the subject matter to the physical or economic well-being of the party agreeing to the release and (2) the amount of free choice that party could have exercised when seeking alternate services.
18
*875
C. The Element Whose Presence Makes the Exculpation Not Violative of Public
Policy
19
While courts
may declare void
those portions of private contracts which contradict public policy,
20
they must do so
only with great caution.
21
Two classes of exculpating agreements may be said to violate public policy: (1) those which — if enforced — patently would tend to injure public morals, public health or confidence in the administration of the law and (2) those which would destroy the security of individuals’ rights to personal safety or private property.
22
IV
SUMMARY
National jurisprudence teaches that parties
may
contractually allocate the risk of future harm. The exercise of this power is conditional; any agreement having as its purpose the
unequivocal
exoneration of one party from negligent tort liability of another must identify
both
the putative tortfeasor
and
the category of recovery from which that actor would be relieved. The parties must have bargained for their exchange on a level playing field — the level to be measured by the seriousness of the contract’s subject matter and the options available to the person giving up the right to sue. If the clause is to pass the test’s muster, the assumed obligation
cannot
be deemed to have brought about a result perceived as harmful to the principles of “public policy”.
23
The validity of the SchmidVStables exculpatory clause in suit depends on the outcome of the fact-finding investigation to be conducted in the certifying court.
24
If — under the test we announce today — that court should determine that
any single requirement
for the clause’s enforceability has not been met, its decision could not uphold the contract and exonerate the United States.
CERTIFIED QUESTIONS ANSWERED.
KAUGER, V.C.J., and HODGES, LAVENDER, SIMMS, HARGRAVE, SUMMERS and WATT, JJ., concur.
ALMA WILSON, C. J., concurs in part and dissents in part.
1
.
See infra
notes
8
and
15.
2
.
The material accompanying the certified questions consists of the parties' pleadings and motions filed in the certifying court. The factual recitals in the anatomy of the federal litigation were gleaned from this material and from the briefs submitted to this court.
3
. The Stables are admittedly an instrumentality of the U.S. Army.
4
. Schmidt's action invokes the Federal Tort Claims Act [FTCA], 28 U.S.C. §§ 2671 et seq. By the FTCA's terms the United States’ liability is measured according to the law of the state in which the wrongful act occurred. 28 U.S.C. § 2674 .
5
. Schmidt charges the United States with
actual notice
of the employee’s unfitness to lead the ride.
6
.
Brown v. Ford,
Okl., 905 P.2d 223 , 226 n. 3 (1995);
Bonner v. Oklahoma Rock Corp.,
Okl., 863 P.2d 1176 , 1178 n. 3 (1993);
Shebester v. Triple Crown Insurers,
Okl., 826 P.2d 603 , 606 n. 4 (1992).
7
. For a discussion of the difference between a contract clause
totally exempting
one from culpability and one which merely
limits the financial extent
of that liability, see
Elsken v. Network Multi-Family Sec. Corp.,
Okl., 838 P.2d 1007, 1008 (1992);
Fretwell v. Protection Alarm Co., Okl.,
764 P.2d 149, 151 (1988). In both of those cases a burglar alarm company sought to limit its liability for loss due to theft of customers' property via a
liquidated damages
provision. The propriety of similar
liability-limiting
contract clauses is subject to an analysis
grounded in contract law
that lies outside the realm of tort jurisprudence.
See
MacNeil,
Power of Contract and Agreed Remedies,
47 Cornell L. Q. 495 (1962).
8
.
Express assumption of risk
occurs in those cases where the plaintiff
expressly contracts
with another not to sue for any
future
injuries which may be caused by that person’s negligence.
Thomas v. Holliday
by and through
Holliday,
Okl., 764 P.2d 165 , 168 n. 8 (1988);
Murray v. Ramada Inns, Inc.,
521 So.2d 1123, 1129 (La.1988);
Anderson v. Ceccardi,
6 Ohio St.3d 110 , 451 N.E.2d 780, 783 (1983). The terms of Restatement (Second) of Torts § 496B (1965) provide:
"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.”
[Emphasis added.]
For a discussion of the jurisprudential requisites for determining whether an exculpatory contract
violates public policy,
see
infra
Part IIIC.
See also in this connection
V. Schwartz, Comparative Negligence § 9.1 at 154 (1974). Express consent, which might also be called “waiver” or "release”, will usually bar recovery by the plaintiff unless there is a statute or established public policy against it.
Murray, supra
at 1129 . The two statutory provisions cited by Schmidt
are inapposite here.
The terms of the
first,
15 O.S. 1991 § 212, provide:
"All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own
fraud,
or
willful injury to
the person or properly of another or
violation of the law,
whether willful or negligent, are against the public policy of the law.” [Emphasis added.]
This section forbids agreements relieving one from liability for
fraud, willful injury or violation of the law. Its
terms cannot be read to embrace contracts affecting liability for
simple negligence.
We assume — for want of contrary notice from the federal-court record — that in this case there is no fraudulent or willful conduct.
*874
The terms of the
second
section, 15 O.S.1991 § 212.1, provide:
"Any
notice
given by a business entity which provides services or facilities for profit to the general public and which seeks to exempt the business entity from liability for personal injury caused by or resulting from any acts of negligence on its part or on the part of its servants or employees, shall be deemed void as against public policy and wholly unenforceable.” [Emphasis added.]
This section’s terms apply to promises
imposed
without the promisor's adequate knowledge through explanation or
sans
consideration. That is not the case here because the exculpatory contract in suit
clearly
amounts to more than a posted notice.
9
.
Wolf v. Ford,
335 Md. 525 , 644 A.2d 522, 525 (1994);
Colgan
v.
Agway, Inc.,
150 Vt. 373 , 553 A.2d 143, 145 (1988);
Harris v. Walker,
119 Ill.2d 542 , 116 Ill.Dec. 702, 704 , 519 N.E.2d 917, 919 (1988);
Rawlings v. Layne & Bowler Pump Company,
93 Idaho 496 , 465 P.2d 107, 110 (1970);
Henry v. Mansfield Beauty Academy, Inc.,
353 Mass. 507 , 233 N.E.2d 22, 24 (1968);
Ciofalo v. Vic Tanney Gyms, Inc.,
10 N.Y.2d 294 , 220 N.Y.S.2d 962, 963 , 177 N.E.2d 925, 926 (1961).
10
.
Gulf, C. & S.F. Ry. Co. v. Anderson,
120 Okl. 60 , 250 P. 500, 502 (1926).
11
.
Colgan, supra
note 9 , 553 A.2d at 145 ;
Jones v. Dressel,
623 P.2d 370, 378 (Colo.1981);
Anderson, supra
note 10, 250 P. at 502 .
12
.
Anderson, supra
note 10 at 502.
13
.
Salt River Project Agr. v. Westinghouse Elec.,
143 Ariz. 368, 383 , 694 P.2d 198, 213 (1985);
Elsken, supra
note 7 at 1010-1111.
14
.
Shepard
v.
Farmers Insurance Co.,
Okl., 678 P.2d 250, 251 (1984).
See also Thomas, supra
note 8 at 168 n. 7;
Fisk v. Bullard,
205 Okl. 502 , 239 P.2d 424, 427 (1951);
Anderson, supra
note 10 at 502.
See also in this connection Harris, supra
note 9 at 909;
Salt River, supra
note 13 at 383, 694 P.2d at 213 ;
Belger Cartage Serv., Inc., v. Holland Const. Co.,
224 Kan. 320 , 582 P.2d 1111, 1119 (1978);
Ciofalo, supra
note 9 , 220 N.Y.S.2d at 963 , 177 N.E.2d at 926 .
15
.
Wolf, supra
note 9 , 644 A.2d at 528 ;
Jones, supra
note 11 at 376;
Manhattan Co. v. Goldberg,
38 A.2d 172 , 174 (D.C.1944).
16
.
Anderson, supra
note 10 at 502.
17
.
Anderson, supra
note 10 at 502.
18
.
Goldberg, supra
note 15 at 174 — 175.
See Trumbower v. Sports Car Club of America, Inc.,
428 F.Supp. 1113, 1117 (W.D.Okla.1976).
19
. In the context of an exculpatory clause’s validity,
"public policy"
means
that which inhibits anything injurious to the good of all.
The term is applied here in a sense
broader
than that used when scrutinizing for conformity to "public policy” wrongful-termination claims pressed by discharged at-will employees.
Cameron & Henderson v. Franks,
199 Okl. 143 , 184 P.2d 965, 972 (1947). For cases that deal with claims by discharged at-will employees see
Groce v. Foster,
Okl., 880 P.2d 902, 904 (1994);
Gilmore v. Enogex, Inc.,
Okl., 878 P.2d 360, 364 (1994);
Burk v. K-Mart Corp.,
Okl., 770 P.2d 24, 28-29 (1989).
20
.
Hargrave v. Canadian Valley Elec. Co-op.,
Okl., 792 P.2d 50, 59 (1990).
21
.
Shepard v. Farmers Insurance Co.,
Okl., 678 P.2d 250, 251 (1984);
Johnston v. J.R. Watkins Co.,
195 Okl. 341 , 157 P.2d 755, 757 (1945);
Camp v. Black Gold Petroleum Co.,
189 Okl. 692 , 119 P.2d 815, 817-818 (1941).
22
.
Shepard, supra
note 21 at 251;
Anderson v. Reed,
133 Okl. 23 , 270 P. 854, 856 (1928). An example of an- exculpatory clause injurious to
public
health is afforded by an agreement exonerating a
common carrier
from liability for negligence.
See Pine Belt Lumber Co. v. Riggs,
80 Okl. 28 , 193 P. 990, 996-997 (1920).
23
.
See supra
note 19.
24
. Promise-based obligations of the type dealt with here are treated as the promisor’s risk assumption.
See supra
Part III. The terms of Art. 23, § 6, Okl. Const., provide in pertinent part:
“The defense of ...
assumption of risk
shall, in
all cases whatsoever,
be a question of fact, and shall, at all times, be left to the jury.” [Emphasis added.]
The terms of Art. 23, § 8,
Okl.
Const., provide:
"Any provision of a
contract, express
or implied, made by any person, by which any of the
benefits of this constitution is sought to be waived,
shall be null and void.” [Emphasis added.]
Today we merely define the parameters of an exculpating clause’s enforceability. Whether, as applied to this case, the
provision presents a disputed law question or also a disputed fact question is to be decided by the certifying court.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/1119077. Public record. Not legal advice.