Eder v. Lake Geneva Raceway, Inc.

523 N.W.2d 429, 187 Wis. 2d 596, 1994 Wisc. App. LEXIS 1353

• Court: Court of Appeals of Wisconsin
• Decided: September 21, 1994
• Docket: 94-0535
• Status: Published

Opinions

BROWN, J.

Kristine Kaskowski Eder and Catherine Nyman Fields's personal injury action was dismissed by summary judgment based upon a standard form exculpatory contract signed by each of them. The issue is whether the form is a valid exculpatory contract releasing their claims against Lake Geneva Raceway, Inc. and its insurer. We hold that under the facts of this case, the form is void as against public policy. Therefore, we reverse the trial court's granting of summary judgment for Raceway.

The following undisputed facts are taken from the pleadings, affidavits and interrogatories. Kaskowski and Nyman, along with their husbands, arranged to meet at Lake Geneva Raceway on August 24, 1990 to watch motorbike races. Neither Káskowski nor Nyman had been there before.

As Kaskowski entered the parking lot to the raceway, her car was stopped and she was asked to pay an admission fee and to sign a form entitled Release and Waiver of Liability and Indemnity Agreement. Kas-kowski was told that she must sign the form or she could not enter the raceway. Other spectators were waiting behind her. In her affidavit, Kaskowski stated that the form's "print was so small it could not be read rapidly" and consequently she did not read the form before signing it. Ih her answers to interrogatories, she also stated, "They did not tell you what you were signing, only that it was for the track records."

Likewise, as Nyman entered the raceway,¹ she stopped and paid an admission fee and was told that she must sign the release form or she could not enter. In her affidavit, Nyman stated that the print on the form was small and "other spectators were behind [her] trying to get in." In her answers to interrogatories, she stated that she asked the man taking the signatures, "What is this for? In case we get hurt?" Nyman never received an answer. She signed the form without reading it.

The form purports that the signees release, waive, discharge and covenant not to sue the track owner and others from all liability "on account of injury to the person or property or resulting in death of the undersigned, whether caused by the negligence of the releasees or otherwise while the undersigned is in or upon the restricted area, and/or, competing, officiating in, observing, working for, or for any purpose participating in the event." The form defines restricted area "as including but not limited to the racing surface, pit areas, infield, burn out area, approach area, shut down area, and all walkways, concessions and other areas appurtenant to any area where any activity related to the event shall take place." At the bottom of the form are lines allowing for eighteen signatures.²

After paying the admission fee and signing the release form, Kaskowski and Nyman entered the bleacher area. There were no signs identifying areas as restricted. Kaskowski and Nyman were injured during the race when one of the motorbikes left the racetrack and struck each of them. At the time they were injured, they were standing about twenty-five feet west of the racetrack in an area between the bleachers and the racetrack.

Kaskowski and Nyman brought an action against the Raceway sounding in negligence and safe-place statute violations. Raceway moved for summary judgment on the grounds that the exculpatory contract released it from any liability for Kaskowski's and Nyman's injuries. The trial court granted the motion holding that Raceway was entitled to judgment as a matter of law because the plaintiffs "should not be released from their signatures on the release because they failed to read it." The trial court also held that there was "[n]o evidence of acts or omissions to sustain the unsupported claim of negligence' on the part of the Defendants" and that there was "[n]o evidence of failure on the part of the Defendants to meet the requirements of the safe-place statute."

We review the trial court's grant of summary judgment de novo. See Weigel v. Grimmett, 173 Wis. 2d 263, 267, 496 N.W.2d 206, 208 (Ct. App. 1992). If the complaint states a claim and the answer joins the issue, we then must determine whether the depositions, answers to interrogatories, admissions on file and affidavits, if any, entitle a party to judgment as a matter of law. Id. Summary judgment must be entered if the evidentiary material shows "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Section 802.08(2), Stats.

Kaskowski and Nyman contend that Raceway was not entitled to judgment as a matter of law because the release form is void as against public policy. Citing the trial court holding, Raceway argues that Kaskowski and Nyman, by their failure to read the agreements, have waived any arguments that the terms of the agreement are unfair. We do not agree with Raceway or the trial court. The failure to read a contract does not by itself affect the contract's validity. State Farm Fire & Casualty Co. v. Home Ins. Co., 88 Wis. 2d 124, 129, 276 N.W.2d 349, 351 (Ct. App. 1979). Thus, Kaskowski's and Nyman's failure to read the agreement does not by itself entitle Raceway to judgment as a matter of law.

Wisconsin case law has set forth several principles relevant to the determination of the validity of an exculpatory contract, and we discuss those principles here. Although exculpatory contracts are not per se invalid, they are not favored by the law and are to be strictly construed against the party seeking to rely on them. Merten v. Nathan, 108 Wis. 2d 205, 210-11, 321 N.W.2d 173, 176 (1982).

In determining whether an exculpatory contract contravenes public policy, courts must balance the principles of tort law and of contract law. Id. at 211, 214, 321 N.W.2d at 177, 178. Contract law is based on the principle of freedom of contract which protects the justifiable expectations of parties to an agreement, free from governmental interference. Id. at 211, 321 N.W.2d at 177. Tort law compensates individuals injured from the unreasonable conduct of another. Additionally, tort law, through the payment of damages, provides an incentive to prevent future harm. Id.

We conclude that the exculpatory contract here was not consistent with the principles of freedom of contract. Our supreme court stated in Merten, "Freedom of contract is premised on a bargain freely and voluntarily made through a process of bargaining which has integrity." Id. at 214, 321 N.W.2d at 178. We must carefully consider the terms of the agreement and the circumstances under which the parties entered the agreement to determine whether the contract expresses the intent of the parties with particularity. See Arnold v. Shawano County Agric. Soc'y, 111 Wis. , 330 N.W.2d 773, 777 (1983), overruled on other grounds, Green Spring Farms v. Kersten, 136 Wis. 2d 304, 316-17, 401 N.W.2d 816, 821 (1987); see also State Farm Fire & Casualty, 88 Wis. 2d at 128, 276 N.W.2d at 350-51.

First, we consider the circumstances under which the parties entered the agreement. There are no facts showing that Raceway was willing to discuss the terms or intended to engage in a process whereby Kaskowski and Nyman could form the required intent to be bound to certain terms. The president of Raceway asserted in his affidavit that "[a]ll persons entering the restricted area are given adequate time to read the release." However, the undisputed facts do not support Raceway's conclusory allegation; the undisputed facts show that there was no meaningful opportunity for Kaskowski and Nyman to read the agreements before signing. Raceway secured the signatures of at least some of the entrants, including Kaskowski, while they were in their cars. We cannot believe Raceway intended that entrants would hold up the progression of cars into the racetrack in order to read the release. Furthermore, Raceway does not set forth any facts showing that patrons could step aside and read the agreements. Also, neither Kaskowski nor Nyman was given answers in response to their inquiries about the form; Raceway does not dispute this.

Raceway asks us to uphold the validity of its exculpatory agreement under the aegis of "freedom of contract." However, we cannot conclude, under the circumstances of this case, that there was a "bargain freely and voluntarily made through a process . . . which has integrity." See Merten, 108 Wis. 2d at 214, 321 N.W.2d at 178. As our supreme court stated in Richards v. Richards, 181 Wis. 2d 1007, 1019, 513 N.W.2d 118, 123 (1994), "[T]he plaintiffs lack of an opportunity for discussing and negotiating the contract is significant when considered with the breadth of the release." Although negotiating the terms of the standardized contract used here might have been logistically unrealistic, we hold that, at a minimum, the plaintiffs should have had an opportunity to read and ask questions about the terms releasing liability. Therefore, we hold that Raceway was not entitled to judgment as a matter of law based on the exculpatory agreements.

Although we hold that the agreement is void as against public policy on the foregoing basis alone, we address the parties' other arguments for they provide additional reasons for our decision. Raceway also contends that the exculpatory agreements here are not against public policy because Kaskowski and Nyman were aware of the dangerous nature of the sport and thus their claims against Raceway were within the contemplation of the parties when they signed the releases.³ In support of its position, Raceway cites two court of appeals cases upholding exculpatory contracts in a racing context, Kellar v. Lloyd, 180 Wis. 2d 162, 509 N.W.2d 87 (Ct. App. 1993), and Trainor v. Aztalan Cycle Club, Inc., 147 Wis. 2d 107, 432 N.W.2d 626 (Ct. App. 1988). Kaskowski and Nyman argue that these cases involve "race car drivers and their helpers" and therefore should be distinguished on the basis that the standards in those cases do not apply to spectators.

We agree that Trainor and Kellar are distinguishable. Exculpatory contracts are only enforceable as to "things within the contemplation of the parties at the time of execution of the release." Trainor, 147 Wis. 2d at 114, 432 N.W.2d at 629-30 (quoted source omitted). We apply this same rule of law, regardless of whether the party is a spectator or a participant.⁴ In both Trainor and Kellar, the plaintiffs had significant familiarity with the sport and the places where the accidents occurred and with the terms of the involved releases. We held that the risk of the types of injuries and accidents incurred by the plaintiffs was within their contemplation when signing the exculpatory contracts.⁵

Here, the facts do not support the conclusion, that Kaskowski and Nyman could have contemplated when signing the form the risk of a motorbike leaving the track and injuring them, even if they had read the form. Kaskowski and Nyman had never been to the raceway before the accident. Furthermore, they could not have inspected the racetrack grounds before signing because they were not allowed into the grounds unless they signed the form. Moreover, the form by its terms provides for inspection after signing it.⁶ We conclude that the bargain here will not be enforced simply because of the dangerous nature of the sport. Significant familiarity with the dangers involved . plus knowledge of the terms of the release are necessary conditions precedent. These conditions are lacking here.

Kaskowski and Nyman also make two additional arguments contending that the terms of the agreement are ambiguous and, thus, even if they had read the agreements before signing them, they could not have deciphered a clear meaning. First, they contend that the term "restricted area" is vague and ambiguous because it is uncertain whether "restricted area" includes all areas on the property.⁷ Kaskowski and Nyman contend that if the agreement is meant to cover all of the Raceway property, then Raceway should be required to clearly state that fact. We agree.

Courts construe broad releases strictly against the party seeking to rely on them and will not enforce a contract which has unclear and ambiguous terms. Dobratz v. Thomson, 161 Wis. 2d 502, 520, 468 N.W.2d 654, 661 (1991). Interpretation of a contract is a question of law which we review de novo. Keane v. Auto-Owners Ins. Co., 151 Wis. 2d 686, 688-89, 445 N.W.2d 715, 716 (Ct. App. 1989), aff'd, 159 Wis. 2d 539, 464 N.W.2d 830 (1991).

Here, the exculpatory agreement defined "restricted area," in part, as "areas appurtenant to any area where any activity related to the event shall take place." We hold that this phrase is subject to at least two interpretations and thus is ambiguous. One interpretation is that the entire grounds are a restricted area, including the spectator areas. Consulting a dictionary definition, we note another interpretation. A "restricted area" would generally be open to certain persons, such as event workers or participants, and off limits to all others, such as spectators. See WEBSTER'S Third New International Dictionary 1937 (unabr. 1976). Thus, another interpretation is that a "restricted area" is a place that would be closed to spectators and would be designated as such on the raceway grounds. There was no such designation here.

Kaskowski and Nyman also argue that the exculpatory contract is ambiguously drafted as to whether it applies to spectators or to participants. Conversely, Raceway argues that the form clearly applied to spectators because the terms covered the signees while "in or upon the restricted area, and/or, competing, officiating in, observing, working for, or for any purpose participating in the event." (Emphasis added.) Essentially, Raceway contends the form clearly applies to spectators because it specifies persons "observing" and persons in the "restricted area." We cannot agree that this clause so clearly applies as Raceway says it does. Raceway's position that the agreement covers people while in a restricted area begs the question as to what constitutes a restricted area. Furthermore, "observing" is listed along with "competing, officiating ... working for, or for any purpose participating in the event." These latter activities reasonably pertain only to event workers or participants. There is no contract language from which we can reasonably conclude that this single spectator activity of "observing" is set apart from activities applying only to workers or participants. Also, one version of the form asks a signee to indicate the "JOB DESCRIPTION" and "CAR NO." Spectators have neither. We construe the agreement against Raceway and hold that it does not apply to spectators.

In a footnote to its brief, Raceway noted the trial court's finding that the complaint was insufficient. Raceway stated its agreement and "adopted the trial court's arguments by reference fully herein." Raceway did not raise the issue in its answer or by motion and does not develop the argument here. Ordinarily, we-would not reach this issue because of inadequate briefing. See Reiman Assocs., Inc. v. R/A Advertising, Inc., 102 Wis. 2d 305, 306 n.1, 306 N.W.2d 292, 294 (Ct. App. 1981). However, because of the dissent's fascination with the pleadings, we will address it.

Whether a complaint states a claim is a question of law which we review de novo. Badger Cab Co. v. Soule, 171 Wis. 2d 754, 760, 492 N.W.2d 375, 378 (Ct. App. 1992). "Pleadings are to be liberally construed, with a view toward substantial justice to the parties. The complaint should be dismissed as legally insufficient only if it is quite clear that under no circumstances can plaintiffs recover." Dobratz, 161 Wis. 2d at 513, 468 N.W.2d at 658 (quoted source omitted) (citations omitted). The purpose of pleadings is to notify the opposing party of the pleader's position in the case and to frame the issue to be resolved. Hansher v. Kaishian, 79 Wis. 2d 374, 385, 255 N.W.2d 564, 570 (1977).

Kaskowski and Nyman alleged in their complaint that they were injured "when one of the motor bikes engaged in a race, left the racetrack and struck both plaintiffs" and that "this striking was due to the negligence of the defendant." They further claim that this alleged negligence was also a failure to "furnish a place of employment and a public building which was safe for . . . frequenters" contrary to the safe-place statute. Although the complaint may not have been as artfully drafted as it could have been, we hold that the allegations are minimally adequate to state the claims for negligence and safe-place statute violations, reasonably putting Raceway on notice as to Kaskowski and, Nyman's position in the case. See id. We also point out again that Raceway never raised or argued the matter in the trial court, which leads us to believe that Raceway knew full well what the plaintiffs' claims were about.

By the Court. — Judgment reversed ■ and cause remanded.

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1 Although the record shows that Kaskowski entered the grounds in her car, the record does not show how Nyman entered.

2 Nyman signed one version of the release form, which contained places for eighteen persons to print and sign their names. Kaskowski signed another version of the form, which contained places for persons to indicate their car numbers and their job descriptions. A copy of the form signed by Kaskowski is set forth at the end of this opinion.

3 Raceway contends that exculpatory agreements involving racing sports are subject to less scrutiny than other exculpatory contracts and cites Trainor v. Aztalan Cycle Club, Inc., 147 Wis. 2d 107, 116-17, 432 N.W.2d 626, 630-31 (Ct. App. 1988), as authority for this proposition. However, we think that Raceway misreads Trainor. In Trainor, we addressed the issue of whether the plaintiff motocross driver's accident and resultant injuries constituted the type of occurrences contemplated by the releases. Answering the question affirmatively, we stated that the inherent risks of racing are part of "the participants' success and the spectators' enjoyment." Id. at 116, 432 N.W.2d at 630. Thus, contrary to Raceway's reading of this language, the dangerousness of the sport is relevant to the intent of the parties, but not to the level of scrutiny employed by the court in deciding the validity of the exculpatory agreement.

4 We are aware that other states have rules favoring the use of exculpatory contracts involving spectators. See, e.g., Huber v. Hovey, 501 N.W.2d 53 (Iowa 1993). That is not the policy in Wisconsin where exculpatory contracts are generally disfavored. We caution that we do not make the general statement that exculpatory contracts involving spectators are void as against public policy; our holding is that such exculpatory contracts should be strictly construed as are all exculpatory contracts.

5 In Trainor, an experienced motocross driver acknowledged that he was prepared to accept the risks of serious injury because of his confidence in his racing skills. Trainor, 147 Wis. 2d at 110, 432 N.W.2d at 628. Additionally, he inspected the track before deciding to race and signing the release form. Id. In Kellar v. Lloyd, a volunteer "flagging and communications" worker had signed at least seven releases prior to her accident at a racetrack. Kellar v. Lloyd, 180 Wis. 2d 162, 169 & n.1, 509 N.W.2d 87, 89 (Ct. App. 1993). She had witnessed at least one accident per weekend that she worked. Id. at 173, 509 N.W.2d at 91. Furthermore, the worker received a manual describing the purpose of the release form. Id. at 174 & n.2, 509 N.W.2d at 91. The evidence was that she knew the legal effect of the exculpatory instrument. Id. at 177, 509 N.W.2d at 92.

6 The form states that signees, "[i]n consideration of being permitted to enter for any purpose any RESTRICTED AREA ... agrees and represents that he has, or will immediately upon entering any of such restricted areas ... inspect such restricted areas . . . and warrants that if, at any time, he is in or about restricted areas and he feels anything to be unsafe, he will immediately advise the officials of such and will leave the restricted areas."

7 Kaskowski and Nyman also contend that whether they were actually in a restricted area presents an issue of material fact. Because we hold that the agreement is ambiguous as a matter of law, this issue of fact is not material.