Do you have contracts with all of your athletes? Manufacturers who provide more than swag to athletes may be sued without a written agreement.
Posted: September 7, 2015 Filed under: Contract, Cycling, Massachusetts, Mountain Biking | Tags: Athlete, BMX, Competitor, Cycling team, Cyclists, Defamation, Diamondback, Misrepresentation, Negligent Misrepresentation, Nicholi Rogatkin, Raleigh, Raleigh America, Raleigh America Inc., Sponsored Athlete, Sponsorship Leave a commentIn this case the manufacturer one because the damages were not able to be proven, however, this is just the tip of the iceberg on what could happen. What if the rider was injured, and you were their largest contributor to their income?
Rogatkin v. Raleigh America Inc., 69 F. Supp. 3d 294; 2014 U.S. Dist. LEXIS 164154
State: Massachusetts, UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAS-SACHUSETTS
Plaintiff: Nicholi Rogatkin, Minor by His Father and Next Friend, Vladmir Rogatkin
Defendant: Raleigh America Inc./Diamondback BMX, and John Does 1-8
Plaintiff Claims: : unauthorized use of name and portrait or picture in violation of Mass. Gen. Laws ch. 214 § 3A (Count I); unfair and/or deceptive business practices in violation of Mass. Gen. Laws ch. 93A, §§ 2 & 11 (Count II); defamation (Count III); negligent misrepresentation (Count IV); unjust enrichment (Count V); promissory estoppel (Count VI); and intentional misrepresentation (Count VII).
Defendant Defenses: No evidence and No damages
Holding: for the defendant
Year: 2014
The plaintiff was a very talented BMX rider starting at a very early age. The defendant started sponsoring him at age 11 in 2007. That sponsorship continued for five years until 2012 when the plaintiff moved on to another sponsorship. During that time, the sponsorship started as a bike and other equipment and grew to a monthly income and travel expenses. During that time the plaintiff wore the defendant’s logos and sent photographs and videos to the defendant to be used on their website.
The plaintiff one year flew out to the defendants, at the defendant’s expense to be photographed for the defendant’s catalog. The defendant started asking for in 2010 and was told that he had a great career ahead of him.
Prior to receiving income, the plaintiff and defendant did not have any contract between them. Once the defendant started receiving a monthly income the plaintiff signed a Team Rider Sponsorship Agreement. The agreement was signed by the plaintiff’s father on behalf of the plaintiff. The agreement provided the plaintiff with a monthly payment, and the defendant got unlimited promotional use of the plaintiff’s name and likeness.
At no time, was the plaintiff restricted from receiving sponsorship from other manufacturers. Eventually, the plaintiff was picked up by other manufacturers, including other bike manufacturers. Eventually, he went to one of the manufacturers as a high-paid rider and left the defendant. Soon thereafter the plaintiff, by and through his father, sued the defendant. The claims total seven counts.
unauthorized use of name and portrait or picture in violation of Mass. Gen. Laws ch. 214 § 3A (Count I);
unfair and/or deceptive business practices in violation of Mass. Gen. Laws ch. 93A, §§ 2 & 11 (Count II);
defamation (Count III);
negligent misrepresentation (Count IV);
unjust enrichment (Count V);
promissory estoppel (Count VI);
and intentional misrepresentation (Count VII).
Basically, the plaintiff sued to get more money believing that he was not compensated enough by the defendant for his work prior to leaving. He did not win any of these arguments. The judge granted the defendants motion for summary judgment.
Analysis: making sense of the law based on these facts.
The decisions starts with an analysis of the defamation claim. To prove defamation on Massachusetts law the plaintiff must prove:
…the defendant was at fault for the publication of a false statement regarding the plaintiff, capable of damaging the plaintiff’s reputation in the community, which either caused economic loss or is actionable without proof of economic loss.
The plaintiff based his claims on the theory that the defendant did not change the photos on its website fast enough to match the growth of the plaintiff and his riding larger bikes. For a year or so after he had advanced from a 16” (wheel size) bike to 18” then 20” bikes he was pictured on the website riding 16” bikes.
Although Rogatkin admits that the accused material was accurate and non-defamatory when published, he contends that as he grew in age and skill, his static portrayal by Raleigh took on a defamatory undertone.
Because the information was valid at the time it was posted, and the plaintiff’s date of birth was on the site, the court found no major issue with not changing photographs as quickly as the plaintiff wanted. The court even had fun with this argument.
Although Raleigh did not update Rogatkin’s biography with the march of time (the court knows of no duty the law imposes to do as much), it published Rogatkin’s accurate date of birth on the same page — a reasonable assurance that the public would never confuse Rogatkin with, say, Peter Pan or Benjamin Button.
More importantly the plaintiff could not offer any evidence showing that by failing to change the photographs, he had suffered an injury.
A false statement is defamatory if it “would tend to hold the plaintiff up to scorn, hatred, ridicule or contempt, in the minds of any considerable and respectable segment in the community
The court then had fun and brought in Shirley Temple in its analysis of the negative publicity claimed by the plaintiff.
The publication of Rogatkin’s age (12) and characterizing him as a “kid” in a biography is no more susceptible to a defamatory meaning than biographical references to Ambassador Shirley Temple as a child actor or as “America’s Little Darling.
A biography, like a photograph, is a faithful snapshot of a person taken at a particular time in his or her life.
The court also looked at the argument made by the plaintiff as one of not suffering injury from not showing him riding larger bikes, but of failing to post more images of him on larger bikes, which could not be actionable.
Rogatkin alleges that Raleigh’s continued publication of images of him as a 16-inch bike rider led to ridicule and scorn because he was not shown riding a larger bike. This is not an objection to the publications, but to the lack of publication of photos showing Rogatkin riding larger bikes. Rogatkin has not identified any support for the novel proposition that the absence of publication may form the basis of a defamation claim.
The court then looked at the first count, unauthorized use of the name and image of the plaintiff.
The statute at issue allows a private right of action when an image had been used for commercial advertising without the consent of the person. The defendant argued that the emails between them showed consent to use the images. The court agreed.
…Rogatkin does not disagree that he condoned Raleigh’s use of his name and images for purposes of advertising at the time of publication, or that he attended the various photo shoots (such as the one in Seattle in 2008) with any expectation other than that his name and image would be used by Raleigh to promote sales of its bikes.
The court also brought up the fact the emails from the plaintiff complained they were not posting enough photographs of him on the defendant’s website. Again, the plaintiff could not show any damages from the posting of his images. Just because Raleigh made money from using his injuries is not damages for injury upon the plaintiff. “Because Rogatkin has adduced no material evidence of damages attributable to the use of his name and image, Raleigh is entitled to summary judgment on Count I.”
Next the court took on claims IV, VI and VII, Intentional/Negligent Misrepresentation, and Promissory Estoppel.
Under Massachusetts’s law to win a claim of misrepresentation, the plaintiff had to show false statement that induced him to do something.
To sustain a claim of misrepresentation, a plaintiff must show a false statement of material fact made to induce the plaintiff to act, together with reliance on the false statement by the plaintiff to the plaintiff’s detriment. . . . The speaker need not know ‘that the statement is false if the truth is reasonably susceptible of actual knowledge, or otherwise expressed, if, through a modicum of diligence, accurate facts are available to the speaker.’
However, even if the defendant had made a false representation, the plaintiff had to prove he was worse off based on the false representation.
…a plaintiff must allege that (1) a promisor makes a promise which he should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee, (2) the promise does induce such action or forbearance, and (3) injustice can be avoided only by enforcement of the promise.
The plaintiff could have rejected the sponsorship from the defendant, and the plaintiff was free to contract with other manufacturers for sponsorship.
On top of that, the plaintiff could not prove a promissory estoppel claim because he could not prove any terms or elements to create a legal claim.
Under Massachusetts law, “as with a claim for breach of contract, [i]n order to establish the existence of an enforceable promise under promissory estoppel, the plaintiff must show that the defendants’ promise included enough essential terms so that a contract including them would be capable of being enforced.”
Count V, unjust enrichment was reviewed by the court next.
The plaintiff claimed that the defendant unfairly profited from his work and photographs by paying him minimally. To prove an unjust enrichment claim the plaintiff must show:
(1) a benefit conferred upon the defendant by the plaintiff;
(2) an appreciation or knowledge of the benefit by the defendant; and
(3) the acceptance or retention of the benefit by the defendant under circumstances which make such acceptance or retention inequitable.
Damages from an unjust enrichment claim are the disgorgement of the property unjustly appropriated.
Because unjust enrichment is a theory of equitable recovery, and not a separate cause of action, a court may not order restitution as a form of damages; it may only require a party to disgorge property that has been wrongfully appropriated from the rightful possession of the other party.
First because the relationship between the parties was voluntary there were no fraud or “unjust” actions by the defendant. On top of that, the plaintiff benefited from the relationship just as the defendants did.
He also benefited materially from the relationship in terms of equipment, gear, and travel expenses. If Rogatkin found the terms of his association with Raleigh unsatisfactory, he was free to renegotiate, or leave to pursue other opportunities (both of which he eventually did). Because Raleigh did not unfairly retain any benefit conferred by Rogatkin,….
Here again, the plaintiff could show no damages nor could he even show injury in this case.
The court looked at Count II then, Unfair and/or Deceptive Business Practices under Chapter 93A, a Massachusetts statute.
Here again, the plaintiff did not successfully argue this claim because he could not prove that the defendant was unethical, unscrupulous and a fraud.
Rogatkin has not shown that Raleigh’s actions fell within “the penumbra of some common-law, statutory, or other established concept of unfairness . . . or [was] immoral, unethical, oppressive or unscrupulous . . . [or] cause[d] substantial injury to consumers (or competitors or other businessmen).
These arguments were all based in fraud or contract. In all cases, the damages cannot be what the defendant got from third parties but what it cost the plaintiff in dealing with the defendant. Here the plaintiff could not show any damages that qualified, in fact, the court found the plaintiff had benefited from the relationship and at worse was a bad negotiator.
So Now What?
Once you put someone’s image on your website or your give something, specifically to someone based upon their relationship with your product you better have that relationship in writing.
Once you hand product to someone to sue in an effort to promote your product and create a long-term relationship with that person that is not defined by other facts, such as product testers, writers, reviewers, etc., you might look at immortalizing that relationship in writing.
Most states have laws concerning the unauthorized use of someone’s likeness without their permission. That is an easy reason to see why you should have an agreement.
The facts here are another reason. A written contract outlining the relationship from the beginning would have eliminated this lawsuit.
However, this can get worse.
The IRS wants to know what your relationship is. Without an agreement, the IRS is free to determine that relationship on its own with little help. (Although a contract is not persuasive, it helps when dealing with the IRS.) If the sponsored athlete is only sponsored by you and uses your equipment and does not pay taxes, the IRS can look to you for failing to pay withholding for the “employee.” The IRS wants it money and will work hard to get it from anyone who can write a check easily.
Another group that wants money is the athlete’s health insurance carrier or the unpaid hospital and doctors if the athlete does not have any insurance. The health insurance carrier through its subrogation clause can look to anyone it believes is legally responsible for the damages it paid out for the injured athlete’s medical bills. The insurer may see the action as the same way the IRS does; the injured athlete was an employee and should have been covered under your worker’s compensation insurance. A successful lawsuit on this issue will not only cost you money in paying the health insurance company, but double more for penalties to your worker’s comp carrier for not listing the athlete.
The health insurance carrier could also come after you if it believes the bike or another product was defective. Again, a contract with the athlete would eliminate both arguments.
Unpaid medical bills can also trigger claims based on either an employee theory or on the legal theory that you were legally responsible for encouraging the athlete.
It is easy to get these contracts written. You need to specify general issues like medical coverage, health insurance, taxes and the legal definition of the parties and that relationship. More importantly you need to define what you are going to do and all limits to that relationship so that no matter who or what, they cannot exceed the limits placed in the agreement.
You want to get your product out there, and you want to help up-and-coming athletes. However, taking the time to establish legally the relationship will make everyone’s life easier from the start.
Who knows, fifty years from now, that signature on an athlete’s first contract might have value in itself.
What do you think? Leave a comment.
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Forman v. Brown, d/b/a Brown’s Royal Gorge Rafting, 944 P.2d 559; 1996 Colo. App. LEXIS 343
Posted: February 7, 2015 Filed under: Colorado, Contract, Legal Case, Paddlesports, Release (pre-injury contract not to sue) | Tags: Arkansas River, big Horn Canyon, Novation, Release, Three Rocks, Waiver, Whitewater Rafting Leave a commentForman v. Brown, d/b/a Brown’s Royal Gorge Rafting, 944 P.2d 559; 1996 Colo. App. LEXIS 343
Sue Forman, Plaintiff-Appellant, v. Mark N. Brown, d/b/a Brown’s Royal Gorge Rafting, Brown’s Fort and Greg Scott, Defendants-Appellees.
No. 95CA1380
COURT OF APPEALS OF COLORADO, DIVISION B
944 P.2d 559; 1996 Colo. App. LEXIS 343
November 29, 1996, Decided
SUBSEQUENT HISTORY: [**1] Released for Publication October 23, 1997.
Rehearing Denied February 6, 1997.
PRIOR HISTORY: Appeal from the District Court of Fremont County. Honorable John Anderson, Judge. No. 93CV123.
DISPOSITION: JUDGMENT AFFIRMED
COUNSEL: Gregory J. Hock, Colorado Springs, Colorado, for Plaintiff-Appellant.
Hall & Evans, L.L.C., Alan Epstein, Denver, Colorado, for Defendants-Appellees.
JUDGES: Opinion by JUDGE NEY. Pierce *, J. concurs. Tursi *, J. concurs in part and dissents in part.
* Sitting by assignment of the Chief Justice under provisions of the Colo. Const. art. VI, Sec. 5(3), and § 24-51-1105, C.R.S. (1996 Cum. Supp.).
OPINION BY: NEY
OPINION
[*560] Opinion by JUDGE NEY
Plaintiff, Sue Forman, appeals from a summary judgment entered in favor of defendants, Mark N. Brown d/b/a Brown’s Royal Gorge Rafting and Brown’s Fort, and Greg Scott. We affirm.
Plaintiff participated in a rafting trip conducted by defendants. During the trip, defendant Scott, the river guide, pulled the raft off the river for a rest break and suggested [*561] that the participants take a swim in the river. Scott led some of the participants, including plaintiff, to a large boulder near the river and instructed them on the proper method [**2] to enter the water. Plaintiff injured her ankle when she jumped into the river.
Plaintiff brought this action alleging negligence, willful and wanton conduct, and breach of contract. Defendants moved for partial summary judgment on the grounds that the exculpatory agreement executed by plaintiff before the trip absolved them from liability for negligence as a matter of law. The trial court granted defendant’s motion for partial summary judgment, and later granted defendants’ motion for summary judgment on plaintiff’s remaining claims. This appeal followed.
I.
Plaintiff argues that summary judgment was improper because a genuine issue of fact existed as to whether she was mentally competent when she signed the exculpatory agreement. We disagree.
[HN1] Summary judgment is proper when the pleadings, affidavits, depositions, and admissions show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. C.R.C.P. 56; Civil Service Commission v. Pinder, 812 P.2d 645 (Colo. 1991).
The moving party has the burden to show that there is no issue of material fact. Once the moving party has met its initial burden, the burden then [**3] shifts to the nonmoving party to establish that there is a triable issue of material fact. Mancuso v. United Bank, 818 P.2d 732 (Colo. 1991).
In determining whether summary judgment is proper, the nonmoving party must receive the benefit of all favorable inferences that may reasonably be drawn from the undisputed facts. Mancuso v. United Bank, supra. Summary judgment is proper if reasonable persons could not reach differing conclusions. Morlan v. Durland Trust Co., 127 Colo. 5, 252 P.2d 98 (1952).
In their motion for summary judgment, defendants attached the exculpatory agreement, which was signed by plaintiff, entitled “Agreement to Participate (Acknowledgment of Risks),” and an agreement entitled “On River Prohibitions,” also signed by plaintiff, which listed rules that rafting participants were required to follow while on the rafts. Defendants also included plaintiff’s admissions that she signed the exculpatory agreements and that she was advised concerning the hazards involved in the raft trip. With this evidence, defendants established both the scope of the exculpatory agreement and the fact that plaintiff signed the agreement, and thus the burden shifted to plaintiff to establish [**4] triable issues of fact. Mancuso v. United Bank, supra.
Plaintiff admitted in her response to the summary judgment motion that she had signed the exculpatory agreement and she attached to her response an affidavit in which she stated:
I believe I am an intelligent woman and I
understand the (prohibition.) My failure to read the Agreement to Participate was related to my mental condition.
. . . .
Although I was not incompetent when I signed the on-river prohibitions and the Agreement to Participate, I do feel I lacked competency in the skills of independent decision-making and that I had mental impairment on relying on what Mr. Scott had advised.
Plaintiff also averred that she had been in therapy for several years before the incident, and included extensive documentation of the diagnosis and in-patient treatment of her emotional and mental condition that she underwent six months after the rafting incident. However, plaintiff’s complaint did not state any allegations of her impaired mental capacity.
Plaintiff filed a supplementary response to the summary judgment motion which included an affidavit from the therapist who had been treating her for several years prior to the rafting [**5] incident wherein the therapist stated that, at the time of the rafting trip, plaintiff was suffering from a mental impairment, “including a mental and/or emotional disability related to psychiatric problems, her [*562] inability to handle stress, emotional illness and severe psychiatric difficulties and serious emotional disturbances which prevented her from fully assessing the consequences of risks or prohibited conduct related to jumping into the river.” The therapist further opined that plaintiff had a tendency “to be quite vulnerable following the direction of someone she was trusting as well as to following the actions of those with whom she desired to be a part.”
Plaintiff also supplemented her response with an affidavit from a therapist who began treating her a year after the rafting incident in which the therapist averred that, at the time of the rafting incident, plaintiff’s need to be liked and accepted was likely to have caused her to suspend her own judgment in deference to others.
The trial court held that, even under the most favorable interpretation of the evidence, plaintiff did not show that she was incompetent to enter into a binding contract. Relying on plaintiff’s [**6] specific assertion that she was not incompetent when she signed the exculpatory agreements, the court found that plaintiff’s assertions of mental impairment, such as her need to belong to a group and her need to trust and follow the river guide, did not at all relate to her execution of a binding contract.
We agree with the trial court and find that the relevant evidence established, as a matter of law, that plaintiff was not, under principles of competency applicable to contracts in general, incompetent at the time she signed the exculpatory agreement.
[HN2] Every person is presumed by the law to be sane and competent for the purpose of entering into a contract. Hanks v. McNeil Coal Corp., 114 Colo. 578, 168 P.2d 256 (1946). A party can be insane for some purposes and still have the capacity to contract. Davis v. Colorado Kenworth Corp., 156 Colo. 98, 396 P.2d 958 (1964).
A person is incompetent to contract when the subject matter of the contract is so connected with an insane delusion as to render the afflicted party incapable of understanding the nature and effect of the agreement or of acting rationally in the transaction. Hanks v. McNeil Coal Corp., supra. Therefore, under this [**7] rule, it follows that emotional distress or severe mental depression generally is insufficient to negate the capacity to contract. See Drewry v. Drewry, 8 Va. App. 460, 383 S.E.2d 12 (Va. App. 1989)(severe mental depression did not render party to separation agreement legally incompetent where there was no evidence that party did not understand the nature and consequences of her acts).
Moreover, a contract may not be voided when, as here, the alleged incompetence arose after the execution of the contract. Competency to contract is determined by a party’s mental state at the time of execution of the agreement. See Hanks v. McNeil Coal Corp., supra.
[HN3] Where a party has failed to present sufficient evidence to make out a triable issue of material fact, the moving party is entitled to summary judgment. See Continental Air Lines Inc. v. Keenan, 731 P.2d 708 (Colo. 1987).
Plaintiff admitted that she was not incompetent at the time she signed the exculpatory agreement, that she was “an intelligent woman,” and that she understood the “prohibition.” Additionally, none of plaintiff’s evidence of her psychological diagnosis and treatment showed that, at the time she signed the exculpatory agreements, she was [**8] suffering under an insane delusion that prevented her from understanding the nature and effect of the agreements or of acting rationally in the transaction.
Nor do we agree with plaintiff’s claim that her impaired mental capacity caused her to fail to read the Agreement to Participate. As noted above, plaintiff admitted that she was not incompetent when she signed the exculpatory agreements; therefore, her failure to read the Agreement to Participate precludes her from arguing that she is not bound by it. See Rasmussen v. Freehling, 159 Colo. 414, 412 P.2d 217 (1966)(in the absence of fraud, one who signs a contract without reading it is barred from claiming she is not bound by what she has signed); Cordillera Corp. v. Heard, 41 Colo. App. 537, 592 P.2d 12 (1978), aff’d, 200 Colo. 72, 612 [*563] P.2d 92 (1980)(party signing an agreement is presumed to know its contents).
We conclude, therefore, that plaintiff failed to establish a triable issue of fact concerning her capacity to execute a contract at the time she signed the exculpatory agreement.
II.
Plaintiff also argues that the exculpatory agreement was invalid and ambiguous as to whether it applied to the activity in which she was [**9] injured. We disagree.
[HN4] The determination of the sufficiency and validity of an exculpatory agreement is a matter of law for the court to determine. Jones v. Dressel, 623 P.2d 370 (Colo. 1981).
The validity of an exculpatory agreement must be determined by the following four criteria: (1) the existence of a duty to the public; (2) the nature of the service performed; (3) whether the contract was fairly entered into; and (4) whether the intention of the parties is expressed in clear and unambiguous language. Jones v. Dressel, supra.
Only the fourth factor is at issue here, and as to this factor, the supreme court has held that in order for an exculpatory agreement to shield a party from liability, the intent of the parties to extinguish liability must be clearly and unambiguously expressed. Heil Valley Ranch, Inc. v. Simkin, 784 P.2d 781 (Colo. 1989).
The Agreement to Participate provided in relevant part:
I am aware that the activities I am participating in, under the arrangements of Brown’s Fort family recreation center; its agents, employees, and associates, involves certain inherent risks. I recognize that white water rafting, . . . and other activities, scheduled or unscheduled [**10] have an element of risk which combined with the forces of nature, acts of commission, or omission, by participants or others, can lead to injury or death.
I also state and acknowledge that the hazards include, but are not limited to the loss of control, collisions with rocks, trees and other man made or natural objects, whether they are obvious or not obvious, flips, immersions in water, hypothermia, and falls from vessels, vehicles, animals, or on land.
I understand that any route or activity, chosen as a part of our outdoor adventure may not be the safest, but has been chosen for its interest and challenge. . . . I . . . understand and agree that any bodily injury, death or loss of personal property, and expenses thereof, as a result of my . . . participation in any scheduled or unscheduled activities, are my responsibility. I hereby acknowledge that I and my family . . . have voluntarily applied to participate in these activities. I do hereby agree that I and my family . . . are in good health with no physical defects that might be injurious to me and that I and my family are able to handle the hazards of traffic, weather conditions, exposure to animals, walking, riding, and all [**11] and any similar conditions associated with the activities we have contracted for.
. . . .
I and my family . . . agree to follow the instructions and commands of the guides, wranglers, and others in charge at Brown’s Fort recreation center with conducting activities in which I and my family are engaged.
Further, and in consideration of, and as part payment for the right to participate in such trips or other activities . . . I have and do hereby assume all the above risks and will hold Brown’s Fort . . . its agents, employees, and associates harmless from any and all liability, action, causes of action, debts, claims, and demands of any kind or nature whatsoever which I now have or which may arise out of, or in connection with, my trip or participation in any other activities.
The terms of this contract shall serve as a release and assumption of risk for my heirs, executors and administers and for all members of my family, including any minors accompanying me. . . .
I have carefully read this contract and fully understand its contents. I am aware [*564] that I am releasing certain legal rights that
I otherwise may have and I enter into this contract in behalf of myself and my family [**12] of my own free will.
Plaintiff was engaged in an apparently unscheduled activity that had an element of risk which, combined with the forces of nature and acts of others, resulted in an injury. The language of the Agreement to Participate specifically addressed a risk, collision with boulders, that adequately described the circumstances of plaintiff’s injury, and by executing the Agreement to Participate, plaintiff was specifically made aware of and agreed to assume this risk. See Heil Valley Ranch, Inc. v. Simkin, 784 P.2d 781 (broad language in a release interpreted to cover all negligence claims); Barker v. Colorado Region–Sports Car Club of America, Inc., 35 Colo. App. 73, 532 P.2d 372 (1974) (in absence of duty to public, exculpatory agreements are valid when fairly made and may be enforced to preclude recovery for injury sustained by patrons of recreational facilities).
Therefore, we agree with the trial court that the Agreement to Participate unambiguously released defendants from liability for injuries occurring during associated scheduled or unscheduled activities such as the swimming activity here at issue.
III.
Plaintiff’s final contention is that the trial court erred in [**13] dismissing her claim of willful and wanton conduct against defendant Scott. We disagree.
[HN5] An exculpatory agreement does not bar an action based upon injuries sustained by a defendant’s willful and wanton conduct. Barker v. Colorado Region-Sports Car Club of America, Inc., supra. Willful and wanton conduct is purposeful conduct committed recklessly that exhibits an intent consciously to disregard the safety of others. Such conduct extends beyond mere unreasonableness. Terror Mining Co. v. Roter, 866 P.2d 929 (Colo. 1994) (applying definition of willful and wanton conduct to parental immunity doctrine); see also § 13-21-102(1)(b), C.R.S. (1987 Repl. Vol. 6A)(for purposes of exemplary damages, willful and wanton conduct means conduct purposefully committed which the actor must have realized as dangerous and which was done heedlessly and recklessly, without regard to the consequences, or of the rights and safety of others, particularly the plaintiff).
[HN6] Although the issue of whether a defendant’s conduct is purposeful or reckless is ordinarily a question of fact, Wolther v. Schaarschmidt, 738 P.2d 25 (Colo. App. 1986), if the record is devoid of sufficient evidence to raise a factual [**14] issue, then the question may be resolved by the court as a matter of law. See Continental Air Lines, Inc. v. Keenan, supra.
Plaintiff’s complaint alleged only that defendant Scott “beached the raft with Plaintiff and other guests, subsequently inviting, encouraging and directing Plaintiff and other guests to jump into the river and take a swim, directing them to a point of jumping that Scott represented as being safe for entry.” Plaintiff also gave a statement in which she said that, prior to the swim, defendant Scott reinforced the possibility of being hurt while jumping into the river but that he instructed the group on the proper manner of entry to avoid injury, and talked and stood close to the participants while they jumped.
Additionally, plaintiff stated in one of her affidavits:
Scott was with all of us monitoring the entry into the river. He gave brief instructions that we should try to jump with our feet up and keep our feet downstream and paddle to the shore. Although the possibility of being hurt existed, this clearly related to after we went downstream and tried to negotiate the river current and swim to the side of the river. I did not believe there were any safety [**15] problems in entering the water at the place he designated, nor could I see any submerged rocks.
. . . .
A couple jumped in before me and everything worked out fine. Their experience was consistent with what Scott had stated that if we followed his direction we would not get hurt.
. . . .
[*565] I feel that Scott was negligent in his suggesting the jumping and his preparing us and instructing us for that exercise.
Plaintiff’s evidence is insufficient to establish a factual question as to whether defendant Scott acted in a willful and wanton manner. Plaintiff’s statements that Scott instructed the participants on the proper manner to enter the water to avoid injury indicates that Scott did not consciously and willfully disregard the safety of the participants. Furthermore, plaintiff does not allege, nor does the record indicate, that Scott recklessly forced the participants to jump in the river or otherwise intentionally disregarded the participants’ safety. Rather, plaintiff states in her affidavit that Scott acted negligently. Negligence is not the same as willful or wanton conduct. Pettingell v. Moede, 129 Colo. 484, 271 P.2d 1038 (1954).
Therefore, the court properly entered summary [**16] judgment in defendant Scott’s favor. See Mancuso v. United Bank, supra.
The judgment is affirmed.
JUDGE PIERCE concurs.
JUDGE TURSI concurs in part and dissents in part.
CONCUR BY: TURSI (In Part)
DISSENT BY: TURSI (In Part)
DISSENT
JUDGE TURSI concurring in part and dissenting in part.
I concur in Parts I and III of the majority opinion and dissent as to Part II.
This matter is before us on summary judgment. The majority adequately sets forth the rules governing review of summary judgments. However, as to Part II, it misapplies them.
In Part II, the majority concludes that the documents which defendant had plaintiff execute were unambiguous. I disagree.
Plaintiff was presented with two documents by the defendants and was required to execute them simultaneously. These are the Agreement to Participate, quoted at length in the majority opinion, and the On River Prohibitions, which although mentioned, are not quoted.
It is axiomatic that if simultaneously executed agreements between the same parties and relating to the same subject matter are contained in more than one instrument, the documents must be construed together. Bledsoe v. Hill, 747 P.2d 10 (Colo. App. 1987).
The On River Prohibitions [**17] contained a prohibition that stated: “No diving or jumping into the river. (There are rocks under the surface of the river).”
By affidavit and by a statement appended to defendant’s motion for summary judgment, facts were presented that the guide had instructed plaintiff to “jump in” the river. In plaintiff’s affidavit (referred to by the majority), plaintiff further stated that the guide “indicated that we should jump into the water at that point.”
Plaintiff correctly argues that she was confronted with the requirement that she follow the instruction of the guide as required by the Agreement to Participate, but that this conflicted with a specific provision of the On River Prohibitions. The patently conflicting provision was, at a minimum, ambiguous and placed plaintiff in a situation that gave rise to a genuine issue of material fact. See Heil Valley Ranch, Inc. v. Simkin, 784 P.2d 781; Jones v. Dressel, 623 P.2d 370.
Clearly, the provision in the Agreement to Participate stating that participants “agree to follow the instruction . . . of the guides” creates a conflict when a participant is instructed by the guide to violate the specific prohibition against jumping into the river. Under [**18] these circumstances, an ambiguity arises which creates a genuine issue of material fact and thus, renders the entry of summary judgment reversible error.
Finally, after giving the entire agreement a fair reading, I am unable to comprehend how the majority can conclude that a prohibited activity is a foreseeable “unscheduled” [*566] activity. See Heil Valley Ranch, Inc. v. Simkin, 784 P.2d 781.
Therefore, in view of the ambiguity that arose under the documents based upon the material facts herein, I would reverse and remand to the trial court to proceed on the issues addressed in Part II of the majority opinion.
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Too many contracts can void each other out; two releases signed at different times can render both releases void.
Posted: January 14, 2015 Filed under: Contract, Release (pre-injury contract not to sue) | Tags: Breach of Contract, Consideration, Contract, Novation, Release, Void Leave a commentUpon signing the second release the first is void based on Novation and the second is void because there is not consideration for the second release.
Example I: You sign a release electronically to participate in an activity. Upon arrival, the outfitter of the activity has you sign a paper release.
Example II: You sign up with a rec center to go skiing. The rec center has you sign a release and when you get to the activity, the ski area has you sign a release. Both releases stop lawsuits for skiing accidents but one protects the rec center, and one protects the ski area. Each release has different language.
Novation is a legal term that states that once you sign a second identical or similar contract to the first contract the second contract voids the first contract based on Novation. Terms such as the amount due, interest owed, etc., can be different as long as the basic agreement is the same, and the parties are generally the same.
An agreement of parties to a contract to substitute a new contract for the old one. It extinguishes (cancels) the old agreement. A novation is often used when the parties find that payments or performance cannot be made under the terms of the original agreement, or the debtor will be forced to default or go into bankruptcy unless the debt is restructured.
The voluntary substitution of a new contract for an old one, usually to change the parties, duties, or payment terms.
Black’s Law Dictionary defines Novation as:
A contract that (1) immediately discharges either a previous contractual duty or a duty, (2) creates a new contractual duty, and (3) includes as a party one who neither owed the previous duty nor was entitled to its performance.
Many definitions of Novation include the word debt, meaning an obligation to repay, a promissory note, but not all definitions do. One argument to make is the Novation does not apply to a release because it is not a debt.
In the first example, Novation could be argued to void the first release. A new agreement has been signed, which then cancels the first agreement.
In the second example, if the parties are the same or similar and the intent of the release is the same, then it is possible that one can argue that a novation occurred canceling the first release.
In the second agreement if the group is a Youth Group that is taking kids skiing, the youth group release includes the ski area as a released party the signature on the ski area release may cancel the youth group release.
Consideration is the second issue. For a contract to be valid, something of value must flow both ways in the contract. Normally, this means one side gives the other side money, and the other side provides a service or a thing of value. You give a ski area money, and the ski area gives you access to their lifts and ski area.
2) a vital element in the law of contracts, consideration is a benefit which must be bargained for between the parties, and is the essential reason for a party entering into a contract. Consideration must be of value (at least to the parties), and is exchanged for the performance or promise of performance by the other party (such performance itself is consideration). In a contract, one consideration (thing given) is exchanged for another consideration. Not doing an act (forbearance) can be consideration, such as “I will pay you $1,000 not to build a road next to my fence.” Sometimes consideration is “nominal,” meaning it is stated for form only, such as “$10 as consideration for conveyance of title,” which is used to hide the true amount being paid. Contracts may become unenforceable or rescindable (undone by rescission) for “failure of consideration” when the intended consideration is found to be worth less than expected, is damaged or destroyed, or performance is not made properly (as when the mechanic does not make the car run properly).
A benefit or right for which the parties to a contract must bargain. In order to be valid, a contract must be founded on an exchange of one form of consideration for another. Consideration may be a promise to perform a certain act — for example, a promise to fix a leaky roof in return for a payment of $1,000 — or a promise not to do something, such as build a second story on a house that will block the neighbor’s view (in return for money or something else). Whatever its particulars, consideration must be something of value to the people who are making the contract, even if the value is very low.
Black’s Law Dictionary defines Consideration as:
Something (such as an act, a forbearance, or a return promise) bargained for and received by a promisor from a promisee; that which motivates a person to do something. Consideration or a substitute such as promissory estoppel, is necessary for an agreement to be enforceable.
If you paid your money for the activity in Example, I when you signed up and you do not pay more money when you signed the second release OR what you received when you signed the second release was no different than what you received when you signed the first, there was no consideration or no new consideration. Without new or additional consideration, the second agreement is void.
The second Example is quite interesting based on consideration. If you paid the ski area directly for your lift ticket, then there might not be any consideration for the release you signed with the rec center. If you paid the rec center for the lift ticket and the rec center did not receive any of the money, there might be an issue of consideration to the ski area. The rec center would argue as a non-profit they are not supposed to make money or the taxes paid by the person who signed up covered the consideration.
If the rec center bought 2 dozen tickets from the ski area and paid the ski area and then resold them to the participants, then the ski area release would not have any consideration, and the second release would be void. The contract with consideration was between the rec center and the ski area.
If the rec center took the money and had a guest sign their release, then took the money to the ski area which gave the rec center a lift ticket for the people who had signed up, then there would be a contract between the parties, the guest, the rec center and the ski area, however, whether or not the consideration went the right way and to the right people for the right agreement is best determined by an Ouija board or a judge.
Now, if both contracts are signed at the same time, then the consideration may not be an issue, and novation is not an issue. If you have no choice but to use two releases, then have them signed at the same place at the same time.
The decision in Forman v. Brown, d/b/a Brown’s Royal Gorge Rafting, 944 P.2d 559; 1996 Colo. App. LEXIS 343, the dissent argued that the two different contracts signed at the same time cancelled each other out. One was a release, the second contract was titled “On River Prohibitions.” The act which caused the injury to the plaintiff in Forman was prohibited in the On River Prohibitions. Because the two contracts were in conflict and the plaintiff was encouraged to jump in the river, the prohibited act, the dissenting judge felt the release was void.
Do Something
If you are an outfitter working with business, programs or non-profits brining groups to you, then offer to have everyone sign your release, (if it is a well-written release) and specifically include the group, program, business and/or non-profit in your release. You can sell this as a benefit that you have provided them with a well-written document that provides protection for everyone.
If you have your guests, sign releases electronically, then set up your system so you are comfortable with the system, and you know that someone has signed. That means if they have paid, they have signed the release. They can’t pay without signing the release.
You do have a problem then you need to write a new release so that it takes into account the novation and consideration issues in the new agreement. You have a client who swears they sent you a signed release. However, you do not have a copy. Get a paper copy of the release and write on it that the guest is signing the new release because the old one was lost and the consideration for the new release was the $XX paid to go rafting paid on XX day of XXX month 2015. Have the guest sign the release, and the additional language added the release. However, doing this is extremely risky.
What do you think? Leave a comment.
 James H. “Jim” Moss |
Jim Moss is an attorney specializing in the legal issues of the outdoor recreation community. He represents guides, guide services, and outfitters both as businesses and individuals and the products they use for their business. He has defended Mt. Everest guide services, summer camps, climbing rope manufacturers; avalanche beacon manufacturers, and many more manufacturers and outdoor industries. Contact Jim at Jim@Rec-Law.us |
Outdoor Recreation Insurance, Risk Management, and Law
Jim is the author or co-author of eight books about legal issues in the outdoor recreation world; the latest is Outdoor Recreation Insurance, Risk Management, and Law. To Purchase Go Here:
To see Jim’s complete bio go here and to see his CV you can find it here. To find out the purpose of this website go here.
If you are interested in having me write your release, download the form and return it to me.
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University climbing wall release along with Texas Recreational Use Act and Texas Tort Claims Act defeat injured climber’s lawsuit
Posted: December 4, 2014 Filed under: Climbing Wall, Contract, Release (pre-injury contract not to sue), Texas | Tags: Appeal, Attorney's fee, Climbing, Climbing Wall, Figure 8 Knot, Harness, Rec Center, Recreational Use Act, Tort Claims Act, University, University of Texas, University Rec Center Leave a commentCourt looks at whether a release will defeat a claim for gross negligence but does not decide the case on that issue. Case is confusing, because court discussed defenses that were not applicable. Plaintiff waived all but the gross negligence claims.
Benavidez v. The University of Texas — Pan American, 2014 Tex. App. LEXIS 11940
State: Texas, Court of Appeals
Plaintiff: Rolando Benavidez
Defendant: The University of Texas — Pan American
Plaintiff Claims: failure to properly use the climbing equipment and properly supervise [Benavidez] during the climb, Under the theory of respondeat superior, Benavidez claimed that his injuries were caused by the negligence and gross negligence of UTPA (University of Texas– Pan American), negligent use of tangible personal property in that UTPA breached its “legal duty to [Benavidez] to provide supervision of [Benavidez], use safe equipment with [Benavidez], and to properly secure [Benavidez’s] harness prior to climbing.” negligent use or condition of real property in that UTPA breached its duty to provide a safe climbing wall for Benavidez and failed to use ordinary care to protect Benavidez from an unreasonably dangerous condition. UTPA had subjective awareness of a high degree of risk and acted with “conscious indifference to the rights, safety, or welfare of [Benavidez] or others similarly situated.
Defendant Defenses: Release, Recreational Use Statute and the Texas Tort Claims Act
Holding: For the defendant
Year: 2014
The plaintiff was climbing at the university’s climbing wall. He signed a release to climb. On the back of the release was a set of rules about climbing that the plaintiff also had to sign. i.e. Two legal documents on one sheet of paper.
The plaintiff argued the rules on the backside of the agreement were part of the contract. Because the climbing wall had not followed the rules, the release was no longer valid and the defendant had acted negligently and gross negligently.
While climbing the plaintiff reached the top of the wall and was told to lean back while he was lowered. The plaintiff fell 33’ suffering injuries. Based on witness statements of other employees of the wall, it appeared the figure 8 (knot) used to tie the plaintiff’s harness to the rope had been tied incorrectly.
The trial court dismissed the case, awarded costs against the plaintiff based on the Texas Tort Claims Act, and the plaintiff appealed.
Analysis: making sense of the law based on these facts.
The court first looked at the Texas Tort Claim Act and its application to the case.
As a governmental unit, UTPA is immune from both suit and liability unless the Tort Claims Act has waived that immunity. Section 101.021 of the Tort Claims Act has been interpreted as waiving sovereign immunity in three general areas: “use of publicly owned automobiles, premises defects, and injuries arising out of conditions or use of property.”
The court then brought in the Texas Recreational Use Statute. Under the Texas Recreational Use Statute, a state landowner (governmental entity) can only be liable for gross negligence.
When injury or death results on state-owned, recreational land, the recreational use statute limits the state’s duty even further to that owed by a landowner to a trespasser, which means that the State only waives immunity for conduct that rises to the level of gross negligence.
The university is state land, and the climbing wall is on the land. It was used for recreation and probably as a student for free, although this was not discussed in the case. Consequently, the Texas Recreational Use Act protected the university from negligence claims.
With the ordinary negligence claims gone, the court turned to the gross negligence claims and looked at the release. Under Texas law to be valid, a release must:
(1) provide fair notice by being conspicuous, and (2) comply with the express negligence doctrine. To be conspicuous, a release must be written, displayed, or presented such that a reasonable person against whom it is to operate ought to have noticed it. A release satisfies the express negligence doctrine if it expresses the intent of the parties to exculpate a party for its own negligence.
The burden is on the defendant, the person relying on the defense of release, to prove the validity of the release and the requirements set forth by the court.
The court then looked at whether the release then barred the claim for gross negligence. The court reviewed several Texas cases; however, the court did not decide whether a release in this situation barred a claim for gross negligence. The court found the gross negligence claim was not raised on the appeal.
For a legal argument to be argued in the court, there are two basic components that must be met before any argument can be made. The argument must be made in the trial court and in many cases an objection to the court’s ruling made. Second the issue must be argued in the statements (pleadings) at the appellate court also. Here, although argued in the trial court the issue was not argued or probably raised at the appellate court.
The court then went back to the release to see if the release was still valid. The plaintiff claimed the defendant violated the release because it failed to follow the rules on the reverse side of the release. Because the rules were on the document called the release the plaintiff argued they were part of the release. Those rules set forth how the climbers and allegedly the gym was supposed to act. One of the rules required all knots to be checked by specific persons at the gym, which was not done in this case, and allegedly not done at all until after the plaintiff’s injury.
Arguing the rules and release were one document, the plaintiff stated the failure to follow the rules was a material breach of the contract. A material breach or avoidance of the contract voids it.
Under Texas law, a release is a contract and is subject to avoidance just like any other contract. When construing a contract, the court’s primary concern is to give effect to the written expression of the parties’ intent. This court is bound to read all parts of a contract together to ascertain the agreement of the parties. The contract must be considered as a whole. Moreover, each part of the contract should be given full effect.
A prior material breach one that occurs before the execution of the contract discharges the parties from the contractual obligations. “Under the theory of prior material breach, a party is discharged from its contractual obligations based on the other party’s material breach of the contract.”
Execution of the contract means the contract by its terms has not been completed. Meaning there is part so the contract that have not been complied with by one or more parties. Here the failure of the gym to check the plaintiff’s knot was prior to the climbing of the plaintiff. “Under the theory of prior material breach, a party is discharged from its contractual obligations based on the other party’s material breach of the contract.”
Under Texas law for a court to determine if a prior material breach to occur the court must determine the following:
(1) the extent to which the injured party will be deprived of the benefit which he reasonably expected;
(2) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
(3) the extent to which the party failing to perform or to offer performance will suffer forfeiture;
(4) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; and
(5) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.
This court also examined whether or not checking the knot was a condition precedent. A condition precedent requires one thing to occur before the rest of the contract must be done.
Alternatively, a condition precedent is an event that must occur or act that must be per-formed before rights can accrue to enforce an obligation. Ordinarily, terms such as “if,” “provided that,” “on condition that,” or similar conditional language indicate the intent to create a condition precedent. Conditions precedent, which can cause forfeiture of a contractual right, are not favored under the law, and we will not construe a contract provision as a condition precedent unless we are compelled to do so by language that may be construed in no other way.
However, the court found that the language of the safety rules did not relate to the language of the release. The safety rules, overall, were simply rules the plaintiff was to follow and was not part of the contract. “…the safety policy’s side of the document, by its clear language, does not indicate that UTPA promised to comply with the policies or that compliance with the policies by UTPA…”
However, reading the safety policies document as a whole, we find that the language of the agreement placed the sole responsibility on the climber to ensure that the procedures in the safety polices were followed.
Because we find that, by its clear language, the waiver and release form did not express the intent of either party to condition the release from liability on any performance by UTPA and did not include a promise by UTPA to follow the safety policies as consideration for the contract, we conclude that UTPA did not breach or fail to satisfy a condition of the release contract.
The remaining issues before the court were dismissed because without a negligence claim, they were also decided. The appellate court affirmed the trial court’s dismissal of the plaintiff’s claims and the award of costs under the Texas rules of civil procedure.
Costs are not attorney fees. Costs are the cost of going to trial, the filing fee, witness fees, possibly deposition costs, etc. Most states allow the winning side to recover costs of a trial.
So Now What?
This was close. It was obvious by the amount of time the court spend discussing the issue of a material breach that the language on the back of the release was an issue for the court. Always remember a release is a contract. You don’t buy a house with a laundry list on the back. You don’t rent an apartment with state driving laws on the back. Releases are contracts, and you need to make sure there is no issue that the document you are having your guests sign. A Release must be a contract and nothing else.
The university, because it was a state college was subject to broader and more protective statutes that provided defenses, than a private commercial gym or a private college. A state’s tort claims act provides a broad range for protection.
Whether or not a state’s recreational use statute provides protection for governmental agencies is different in each state. If you are in this position, you should check with counsel to see what protection any state statutes may provide.
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Jim Moss is an attorney specializing in the legal issues of the outdoor recreation community. He represents guides, guide services, outfitters both as businesses and individuals and the products they use for their business. He has defended Mt. Everest guide services, summer camps, climbing rope manufacturers; avalanche beacon manufactures and many more manufacturers and outdoor industries. Contact Jim at Jim@Rec-Law.us |
Jim is the author or co-author of six books about the legal issues in the outdoor recreation world; the latest is Outdoor Recreation Insurance, Risk Management and Law.
To see Jim’s complete bio go here and to see his CV you can find it here. To find out the purpose of this website go here.
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@2014-2023 Summit Magic Publishing, LLC
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Colorado Electronic Signature Act
Posted: November 14, 2014 Filed under: Colorado, Contract | Tags: CO, Colorado, Colorado Electronic Signature Act, Contract, Electronic Signature, Electronic Signatures 2 CommentsColorado Electronic Signature Act
24-71-101. Electronic signatures – construction with other laws
(1) As used in this article, “electronic signature” means an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.
(2) In any written communication in which a signature is required or used, any party to the communication may affix a signature by use of an electronic signature that complies with the requirements of article 71.3 of this title for electronic signatures.
(3) The use or acceptance of an electronic signature shall be at the option of the parties. Nothing in this section shall require any person to use or permit the use of an electronic signature.
(4) In the event of any conflict between article 71.3 of this title and this article, said article 71.3 shall control, but only to the extent of such conflict.
24-71.3-102. Definitions
As used in this article, unless the context otherwise requires:
(1) “Agreement” means the bargain of the parties in fact, as found in their language or inferred from other circumstances and from rules, regulations, and procedures given the effect of agreements under laws otherwise applicable to a particular transaction.
(2) “Automated transaction” means a transaction conducted or performed, in whole or in part, by electronic means or electronic records in which the acts or records of one or both parties are not reviewed by an individual in the ordinary course in forming a contract, performing under an existing contract, or fulfilling an obligation required by the transaction.
(3) “Computer program” means a set of statements or instructions to be used directly or indirectly in an information processing system in order to bring about a certain result.
(4) “Contract” means the total legal obligation resulting from the parties’ agreement as affected by this article and other applicable law.
(5) “Electronic” means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
(6) “Electronic agent” means a computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances, in whole or in part, without review or action by an individual.
(7) “Electronic record” means a record created, generated, sent, communicated, received, or stored by electronic means.
(8) “Electronic signature” means an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.
(9) “Governmental agency” means an executive agency, department, board, commission, authority, institution, or instrumentality of the federal government or of a state or of a county, municipality, or other political subdivision of a state.
(10) “Information” means data, text, images, sounds, codes, computer programs, software, databases, or the like.
(11) “Information processing system” means an electronic system for creating, generating, sending, receiving, storing, displaying, or processing information.
(12) “Person” means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, governmental agency, public corporation, or any other legal or commercial entity.
(13) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(14) “Security procedure” means a procedure employed for the purpose of verifying that an electronic signature, record, or performance is that of a specific person or for detecting changes or errors in the information in an electronic record. The term includes a procedure that requires the use of algorithms or other codes, identifying words or numbers, encryption, or callback or other acknowledgment procedures.
(15) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. The term includes an Indian tribe or band, or Alaskan native village, that is recognized by federal law or formally acknowledged by a state.
(16) “Transaction” means an action or set of actions occurring between two or more persons relating to the conduct of business, commercial, charitable, or governmental affairs. For the purpose of this article, “transaction” shall not mean any ballot cast in any election or any petition related to any department, board, commission, authority, institution, or instrumentality of the state or any county, municipality, or of their political subdivisions, or any of their instrumentalities.
(1) Except as otherwise provided in subsection (2) of this section, this article applies to electronic records and electronic signatures relating to a transaction.
(2) This article does not apply to a transaction to the extent it is governed by:
(a) A law governing the creation and execution of wills, codicils, or testamentary trusts;
(b) The “Uniform Commercial Code”, title 4, C.R.S., other than sections 4-1-107 and 4-1-206, C.R.S., and articles 2 and 2.5 of title 4, C.R.S.
(3) Additional exceptions. This article shall not apply to:
(a) Court orders or notices or official court documents, including briefs, pleadings, and other writings, required to be executed in connection with court proceedings;
(b) Any notice of:
(I) The cancellation or termination of utility services, including water, heat, and power;
(II) Default, acceleration, repossession, foreclosure, or eviction, or the right to cure, under a credit agreement secured by, or a rental agreement for, a primary residence of an individual;
(III) The cancellation or termination of health insurance or benefits or life insurance benefits, excluding annuities; or
(IV) Recall of a product, or material failure of a product, that risks endangering health or safety; or
(c) Any document required to accompany any transportation or handling of hazardous materials, pesticides, or other toxic or dangerous materials.
(4) This article applies to an electronic record or electronic signature otherwise excluded from the application of this article under subsection (2) of this section to the extent it is governed by a law other than those specified in said subsection (2).
(5) A transaction subject to this article is also subject to other applicable substantive law.
(6) (a) This article is not intended to limit, modify, or supercede the requirements of section 101 (d), 101 (e), 102 (c), 103 (a), or 103 (b) of the federal “Electronic Signatures in Global and National Commerce Act”, 15 U.S.C. sec. 7001 (d), 7001 (e), 7002 (c), 7003 (a), and 7003 (b).
(b) The consumer disclosures contained in section 101 (c) of the federal “Electronic Signatures in Global and National Commerce Act”, 15 U.S.C. sec. 7001 (c), are incorporated by reference and shall also apply to intrastate transactions.
24-71.3-104. Prospective application
This article applies to any electronic record or electronic signature created, generated, sent, communicated, received, or stored on or after May 30, 2002.
24-71.3-105. Use of electronic records and electronic signatures – variation by agreement
(1) This article does not require a record or signature to be created, generated, sent, communicated, received, stored, or otherwise processed or used by electronic means or in electronic form.
(2) This article applies only to transactions between parties each of which has agreed to conduct transactions by electronic means. Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties’ conduct.
(3) A party that agrees to conduct a transaction by electronic means may refuse to conduct other transactions by electronic means. The right granted by this subsection (3) may not be waived by agreement.
(4) Except as otherwise provided in this article, the effect of any of its provisions may be varied by agreement. The presence in certain provisions of this article of the words “unless otherwise agreed”, or words of similar import, does not imply that the effect of other provisions may not be varied by agreement.
(5) Whether an electronic record or electronic signature has legal consequences is determined by this article and other applicable law.
24-71.3-106. Construction and application
(1) This article must be construed and applied:
(a) To facilitate electronic transactions consistent with other applicable law;
(b) To be consistent with reasonable practices concerning electronic transactions and with the continued expansion of those practices; and
(c) To effectuate its general purpose to make uniform the law with respect to the subject of this article among states enacting it.
24-71.3-107. Legal recognition of electronic records, electronic signatures, and electronic contracts
(1) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.
(2) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.
(3) If a law requires a record to be in writing, an electronic record satisfies the law.
(4) If a law requires a signature, an electronic signature satisfies the law.
24-71.3-108. Provision of information in writing – presentation of records
(1) If parties have agreed to conduct a transaction by electronic means and a law requires a person to provide, send, or deliver information in writing to another person, the requirement is satisfied if the information is provided, sent, or delivered, as the case may be, in an electronic record capable of retention by the recipient at the time of receipt. An electronic record is not capable of retention by the recipient if the sender or its information processing system inhibits the ability of the recipient to print or store the electronic record.
(2) If a law other than this article requires a record to be posted or displayed in a certain manner, to be sent, communicated, or transmitted by a specified method, or to contain information that is formatted in a certain manner, the following rules apply:
(a) The record must be posted or displayed in the manner specified in the other law.
(b) Except as otherwise provided in paragraph (b) of subsection (4) of this section, the record must be sent, communicated, or transmitted by the method specified in the other law.
(c) The record must contain the information formatted in the manner specified in the other law.
(3) If a sender inhibits the ability of a recipient to store or print an electronic record, the electronic record is not enforceable against the recipient.
(4) The requirements of this section may not be varied by agreement, but:
(a) To the extent a law other than this article requires information to be provided, sent, or delivered in writing but permits that requirement to be varied by agreement, the requirement under subsection (1) of this section that the information be in the form of an electronic record capable of retention may also be varied by agreement; and
(b) A requirement under a law other than this article to send, communicate, or transmit a record by first-class mail, postage prepaid, or regular United States mail may be varied by agreement to the extent permitted by the other law.
24-71.3-109. Attribution and effect of electronic record and electronic signature
(1) An electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.
(2) The effect of an electronic record or electronic signature attributed to a person under subsection (1) of this section is determined from the context and surrounding circumstances at the time of its creation, execution, or adoption, including the parties’ agreement, if any, and otherwise as provided by law.
24-71.3-110. Effect of change or error
(1) If a change or error in an electronic record occurs in a transmission between parties to a transaction, the following rules apply:
(a) If the parties have agreed to use a security procedure to detect changes or errors and one party has conformed to the procedure, but the other party has not, and the nonconforming party would have detected the change or error had that party also conformed, the conforming party may avoid the effect of the changed or erroneous electronic record.
(b) In an automated transaction involving an individual, the individual may avoid the effect of an electronic record that resulted from an error made by the individual in dealing with the electronic agent of another person if the electronic agent did not provide an opportunity for the prevention or correction of the error and, at the time the individual learns of the error, the individual:
(I) Promptly notifies the other person of the error and that the individual did not intend to be bound by the electronic record received by the other person;
(II) Takes reasonable steps, including steps that conform to the other person’s reasonable instructions, to return to the other person or, if instructed by the other person, to destroy the consideration received, if any, as a result of the erroneous electronic record; and
(III) Has not used or received any benefit or value from the consideration, if any, received from the other person.
(c) If neither paragraph (a) nor paragraph (b) of this subsection (1) applies, the change or error has the effect provided by other law, including the law of mistake, and the parties’ contract, if any.
(d) Paragraphs (b) and (c) of this subsection (1) may not be varied by agreement.
24-71.3-111. Notarization and acknowledgment
If a law requires a signature or record to be notarized, acknowledged, verified, or made under oath, the requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required to be included by other applicable law, is attached to or logically associated with the signature or record.
24-71.3-112. Retention of electronic records – originals
(1) If a law requires that a record be retained, the requirement is satisfied by retaining an electronic record of the information in the record that:
(a) Accurately reflects the information set forth in the record after it was first generated in its final form as an electronic record or otherwise; and
(b) Remains accessible for later reference.
(2) A requirement to retain a record in accordance with subsection (1) of this section does not apply to any information the sole purpose of which is to enable the record to be sent, communicated, or received.
(3) A person may satisfy subsection (1) of this section by using the services of another person if the requirements of said subsection (1) are satisfied.
(4) If a law requires a record to be presented or retained in its original form, or provides consequences if the record is not presented or retained in its original form, that law is satisfied by an electronic record retained in accordance with subsection (1) of this section.
(5) If a law requires retention of a check, that requirement is satisfied by retention of an electronic record of the information on the front and back of the check in accordance with subsection (1) of this section.
(6) A record retained as an electronic record in accordance with subsection (1) of this section satisfies a law requiring a person to retain a record for evidentiary, audit, or like purposes unless a law enacted after May 30, 2002, specifically prohibits the use of an electronic record for the specified purpose.
(7) This section does not preclude a governmental agency of this state from specifying additional requirements for the retention of a record subject to the agency’s jurisdiction.
24-71.3-113. Admissibility in evidence
In a proceeding, evidence of a record or signature may not be excluded solely because it is in electronic form.
24-71.3-114. Automated transaction
(1) In an automated transaction, the following rules apply:
(a) A contract may be formed by the interaction of electronic agents of the parties, even if no individual was aware of or reviewed the electronic agents’ actions or the resulting terms and agreements.
(b) A contract may be formed by the interaction of an electronic agent and an individual, acting on the individual’s own behalf or for another person, including by an interaction in which the individual performs actions that the individual is free to refuse to perform and that the individual knows or has reason to know will cause the electronic agent to complete the transaction or performance.
(c) The terms of the contract are determined by the substantive law applicable to it.
24-71.3-115. Time and place of sending and receipt
(1) Unless otherwise agreed between the sender and the recipient, an electronic record is sent when it:
(a) Is addressed properly or otherwise directed properly to an information processing system that the recipient has designated or uses for the purpose of receiving electronic records or information of the type sent and from which the recipient is able to retrieve the electronic record;
(b) Is in a form capable of being processed by that system; and
(c) Enters an information processing system outside the control of the sender or of a person that sent the electronic record on behalf of the sender or enters a region of the information processing system designated or used by the recipient that is under the control of the recipient.
(2) Unless otherwise agreed between a sender and the recipient, an electronic record is received when:
(a) It enters an information processing system that the recipient has designated or uses for the purpose of receiving electronic records or information of the type sent and from which the recipient is able to retrieve the electronic record; and
(b) It is in a form capable of being processed by that system.
(3) Subsection (2) of this section applies even if the place the information processing system is located is different from the place the electronic record is deemed to be received under subsection (4) of this section.
(4) Unless otherwise expressly provided in the electronic record or agreed between the sender and the recipient, an electronic record is deemed to be sent from the sender’s place of business and to be received at the recipient’s place of business. For purposes of this subsection (4), the following rules apply:
(a) If the sender or recipient has more than one place of business, the place of business of that person is the place having the closest relationship to the underlying transaction.
(b) If the sender or the recipient does not have a place of business, the place of business is the sender’s or recipient’s residence, as the case may be.
(5) An electronic record is received under subsection (2) of this section even if no individual is aware of its receipt.
(6) Receipt of an electronic acknowledgment from an information processing system described in subsection (2) of this section establishes that a record was received but, by itself, does not establish that the content sent corresponds to the content received.
(7) If a person is aware that an electronic record purportedly sent under subsection (1) of this section or purportedly received under subsection (2) of this section was not actually sent or received, the legal effect of the sending or receipt is determined by other applicable law. Except to the extent permitted by the other law, the requirements of this subsection (7) may not be varied by agreement.
24-71.3-116. Transferable records
(1) In this section, “transferable record” means an electronic record that:
(a) Would be a note under article 3 of the “Uniform Commercial Code”, title 4, C.R.S., or a document under article 7 of the “Uniform Commercial Code”, if the electronic record were in writing; and
(b) The issuer of the electronic record expressly has agreed is a transferable record.
(2) A person has control of a transferable record if a system employed for evidencing the transfer of interests in the transferable record reliably establishes that person as the person to which the transferable record was issued or transferred.
(3) A system satisfies subsection (2) of this section, and a person is deemed to have control of a transferable record, if the transferable record is created, stored, and assigned in such a manner that:
(a) A single authoritative copy of the transferable record exists that is unique, identifiable, and, except as otherwise provided in paragraphs (d), (e), and (f) of this subsection (3), unalterable;
(b) The authoritative copy identifies the person asserting control as:
(I) The person to which the transferable record was issued; or
(II) If the authoritative copy indicates that the transferable record has been transferred, the person to which the transferable record was most recently transferred;
(c) The authoritative copy is communicated to and maintained by the person asserting control or its designated custodian;
(d) Copies or revisions that add or change an identified assignee of the authoritative copy can be made only with the consent of the person asserting control;
(e) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and
(f) Any revision of the authoritative copy is readily identifiable as authorized or unauthorized.
(4) Except as otherwise agreed, a person having control of a transferable record is the holder, as defined in section 4-1-201 (20), C.R.S., of the transferable record and has the same rights and defenses as a holder of an equivalent record or writing under the “Uniform Commercial Code”, title 4, C.R.S., including, if the applicable statutory requirements under section 4-3-302 (a), 4-7-501, or 4-9-308, C.R.S., are satisfied, the rights and defenses of a holder in due course, a holder to which a negotiable document of title has been duly negotiated, or a purchaser, respectively. Delivery, possession, and indorsement are not required to obtain or exercise any of the rights under this subsection (4).
(5) Except as otherwise agreed, an obligor under a transferable record has the same rights and defenses as an equivalent obligor under equivalent records or writings under the “Uniform Commercial Code”, title 4, C.R.S.
(6) If requested by a person against which enforcement is sought, the person seeking to enforce the transferable record shall provide reasonable proof that the person is in control of the transferable record. Proof may include access to the authoritative copy of the transferable record and related business records sufficient to review the terms of the transferable record and to establish the identity of the person having control of the transferable record.
24-71.3-117. Creation and retention of electronic records by political subdivisions
Each department, board, commission, authority, institution, or instrumentality of the state, in accordance with the policies, standards, and guidelines set forth by the office of innovation and technology of this state, may determine whether, and the extent to which, such department, board, commission, authority, institution, or instrumentality shall create and retain electronic records and convert written records to electronic records. A county, municipality, or other political subdivision, or any of their instrumentalities, shall have the general power, in relation to the administration of the affairs of a county, municipality, or other political subdivision, or any of their instrumentalities, to determine the extent to which it will create and retain electronic records and electronic signatures.
24-71.3-118. Acceptance and distribution of electronic records by governmental agencies – rules
(1) Except as otherwise provided in section 24-71.3-112 (6), each department, board, commission, authority, institution, or instrumentality of the state may determine the extent to which such department, board, commission, authority, institution, or instrumentality shall send and accept electronic records and electronic signatures to and from other persons and otherwise create, generate, communicate, store, process, use, and rely upon electronic records and electronic signatures. A county, municipality, or other political subdivision, or any of their instrumentalities, shall have the general power, in relation to the administration of the affairs of a county, municipality, or of their political subdivision, or any of their instrumentalities, to determine the extent to which it will send and accept electronic records and electronic signatures to and from other persons and otherwise create, generate, communicate, store, process, use, and rely upon electronic records and electronic signatures.
(2) Except in relation to electronic payments, which shall be governed by the state treasurer, to the extent that a department, board, commission, authority, institution, or instrumentality of this state uses electronic records and electronic signatures under subsection (1) of this section, the secretary of state, giving due consideration to security, shall by rule specify:
(a) The manner and format in which the electronic records must be created, generated, sent, communicated, received, and stored and the systems established for those purposes;
(b) If electronic records must be signed by electronic means, the type of electronic signature required, the manner and format in which the electronic signature must be affixed to the electronic record, and the identity of, or criteria that must be met by, any third party used by a person filing a document to facilitate the process;
(c) Control processes and procedures as appropriate to ensure adequate preservation, disposition, integrity, security, confidentiality, and auditability of electronic records; and
(d) Any other required attributes for electronic records that are specified for corresponding nonelectronic records or reasonably necessary under the circumstances.
(3) Except as otherwise provided in section 24-71.3-112 (6), this article does not require a governmental agency of this state to use or permit the use of electronic records or electronic signatures.
(4) Repealed.
The secretary of state may, in adopting rules promulgated pursuant to section 24-71.3-118, encourage and promote consistency and interoperability with similar requirements adopted by other governmental agencies of this and other states and the federal government and nongovernmental persons interacting with governmental agencies of this state. If appropriate, such rules may specify differing levels of standards from which governmental agencies of this state may choose in implementing the most appropriate standard for a particular application.
24-71.3-120. Severability clause
If any provision of this article or its application to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of this article that can be given effect without the invalid provision or application, and to this end the provisions of this article are hereby expressly declared to be severable.
24-71.3-121. Construction with other laws
In the event of any conflict between article 71 of this title and this article, this article shall control, but only to the extent of such conflict.
13-25-134. Electronic records and signatures – admissibility in evidence – originals
Pursuant to the provisions of article 71.3 of title 24, C.R.S., in any legal proceeding, nothing in the application of the rules of evidence shall apply so as to deny the admissibility of an electronic record or electronic signature into evidence on the sole ground that it is an electronic record or electronic signature or on the grounds that it is not in its original form or is not an original.
South Carolina Uniform Electronic Transactions Act
Posted: November 12, 2014 Filed under: Contract, South Carolina | Tags: #SC, Electronic Signature, Electronic Signature Act, South Carolina Leave a commentSouth Carolina Uniform Electronic Transactions Act
TITLE 26. NOTARIES PUBLIC AND ACKNOWLEDGMENTS
CHAPTER 6. UNIFORM ELECTRONIC TRANSACTIONS ACT
Contents
§ 26-6-10. Short title; purpose.
§ 26-6-40. Prospective application of chapter.
§ 26-6-50. Agreement of parties to conduct transactions by electronic means.
§ 26-6-60. Construction and application.
§ 26-6-70. Legality of electronic contracts, records, and signatures.
§ 26-6-110. Satisfying requirement that signature or record be notarized.
§ 26-6-120. Satisfying law requiring a record to be maintained; checks.
§ 26-6-130. Admissibility as evidence.
§ 26-6-140. Automated transactions; formation of contract.
§ 26-6-150. When electronic record sent and received.
§ 26-6-170. Creation and retention of electronic records by government agencies.
§ 26-6-180. Government agencies sending and accepting electronic records and signatures; format.
§ 26-6-190. Development of standards and procedures; service of process.
§ 26-6-195. Service of process to e-mail address by government agency.
§ 26-6-210. Applicability of Computer Crime Act.
§ 26-6-10. Short title; purpose.
(A) This chapter may be cited as the “Uniform Electronic Transactions Act”.
(B) Consistent with the provisions of the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7002(a), this chapter provides alternative procedures or requirements for the use of electronic records to establish the legal effect or validity of records in electronic transactions.
As used in this chapter:
(1) “Agreement” means the bargain of the parties in fact, as found in their language or inferred from other circumstances and from rules, regulations, and procedures giving the effect of agreements under law otherwise applicable to a particular transaction.
(2) “Automated transaction” means a transaction conducted or performed, in whole or in part, by electronic means or electronic records, in which the acts or records of any of the parties are not reviewed by an individual in the ordinary course in forming a contract, performing under an existing contract, or fulfilling an obligation required by the transaction.
(3) “Computer program” means a set of statements or instructions used directly or indirectly in an information processing system to bring about a certain result.
(4) “Contract” means the total legal obligation resulting from the agreement of the parties as affected by this chapter and other applicable law.
(5) “Electronic” means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
(6) “Electronic agent” means a computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part, without review or action by an individual.
(7) “Electronic record” means a record created, generated, sent, communicated, received, or stored by electronic means.
(8) “Electronic signature” means an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.
(9) “Governmental agency” means an executive, legislative, or judicial agency, department, board, commission, authority, institution, or instrumentality of the federal government or of a state or of a county, municipality, or other political subdivision of a state.
(10) “Individual” means a single natural person; one human being.
(11) “Information” means data, text, images, sounds, codes, computer programs, software, databases, or other forms for the communication or reception of knowledge.
(12) “Information processing system” means an electronic system for creating, generating, sending, receiving, storing, displaying, or processing information.
(13) “Person” means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, governmental agency, public corporation, or other legal or commercial entity.
(14) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(15) “Security procedure” means a procedure employed for the purpose of verifying that an electronic signature, record, or performance is that of a specific person or for detecting changes or errors in the information in an electronic record. The term includes a procedure that requires the use of algorithms or other codes, identifying words or numbers, encryption, or callback or other acknowledgment procedures.
(16) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. The term includes an Indian tribe or band, or Alaskan native village, which is recognized by federal law or formally acknowledged by a state.
(17) “Transaction” means an action or set of actions occurring between two or more persons relating to the conduct of business, commercial, or governmental affairs.
(18) “United States Postal Service Electronic Postmark” means an electronic service provided by the United States Postal Service that provides evidentiary proof that an electronic document existed in a certain form at a certain time and the electronic document was opened or the contents of the electronic document were displayed at a time and date documented by the United States Post Office.
§ 26-6-30. Applicability to electronic records and electronic signatures relating to transaction; exceptions.
(A) Except as otherwise provided in subsection (B), this chapter applies to electronic records and electronic signatures relating to a transaction.
(B) This chapter does not apply to a transaction:
(1) in connection with an order for prescription drugs; or
(2) to the extent the transaction is governed by:
(a) a law governing the creation and execution of wills, codicils, or testamentary trusts;
(b) the Uniform Commercial Code, other than Sections 36-1-107 and 36-1-206, Chapter 2 of Title 36, and Chapter 2A of Title 36; or
(c) the Electronic Signatures in Global and National Commerce Act, 114 Stat. 464, 15 U.S.C. at 7001 et seq., but it is not intended to limit, modify, or supersede Section 101(c) of the act, and to the extent that the notices exempted below are excluded from the scope of the Electronic Signatures in Global and National Commerce Act, 114 Stat. 464, 15 U.S.C. at 7003, this chapter of Title 26 does not apply to a notice required by law regarding:
(i) the cancellation or termination of utility services (including water, heat, and power);
(ii) default, acceleration, repossession, foreclosure, eviction, or the right to cure under a credit agreement secured by a primary residence of an individual or a rental agreement for a primary residence of an individual;
(iii) the cancellation or termination of health insurance or benefits or life insurance benefits, excluding annuities;
(iv) the recall of a product or material failure of a product, that risks endangering health or safety; or
(v) a law requiring a document to accompany any transportation or handling of hazardous materials, pesticides, or other toxic or dangerous materials.
(C) This chapter applies to an electronic record or electronic signature otherwise excluded from the application of the chapter pursuant to subsection (B) to the extent it is governed by a law other than those specified in subsection (B).
(D) A transaction subject to this chapter is also subject to other applicable substantive law.
§ 26-6-40. Prospective application of chapter.
This chapter applies to an electronic record or electronic signature created, generated, sent, communicated, received, or stored on or after the effective date of this chapter.
§ 26-6-50. Agreement of parties to conduct transactions by electronic means.
(A) This chapter does not require a record or signature to be created, generated, sent, communicated, received, stored, or otherwise processed or used by electronic means or in electronic form.
(B) This chapter applies only to transactions between parties who agree to conduct transactions by electronic means. Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the conduct of the parties.
(C) A party that agrees to conduct a transaction by electronic means may refuse to conduct other transactions by electronic means. This right of refusal shall not be waived by agreement.
(D) Except as otherwise provided in this chapter, the effect of its provisions may be varied by agreement. The presence in certain provisions of this chapter of the words “unless otherwise agreed”, or words of similar import, does not imply that the effect of other provisions may not be varied by agreement.
(E) Whether an electronic record or electronic signature has legal consequences is determined by this chapter and other applicable laws.
§ 26-6-60. Construction and application.
This chapter must be construed and applied to:
(1) facilitate electronic transactions consistent with other applicable law;
(2) be consistent with reasonable practice concerning electronic transactions and with continued expansion of those practices; and
(3) effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting it.
§ 26-6-70. Legality of electronic contracts, records, and signatures.
(A) A record or signature must not be denied legal effect or enforceability solely because it is in electronic form.
(B) A contract must not be denied legal effect or enforceability solely because an electronic record is used in its formation.
(C) An electronic record satisfies a law requiring a record to be in writing.
(D) An electronic signature satisfies a law requiring a signature.
§ 26-6-80. Satisfying requirement that information be in writing; complying with manner of transmission and format requirements; exceptions.
(A) If parties agree to conduct a transaction by electronic means and a law requires a person to provide, send, or deliver information in writing to another person, the requirement is satisfied if the information is provided, sent, or delivered in an electronic record capable of retention by the recipient at the time of receipt. An electronic record is not capable of retention by the recipient if the sender or its information processing system inhibits the ability of the recipient to print or store the electronic record.
(B) If another provision of law requires a record to be posed or displayed in a certain manner, be sent, communicated, or transmitted by a specified method, or contain information formatted in a certain manner, the record must:
(1) be posted or displayed in the manner specified in the other law;
(2) be sent, communicated, or transmitted by the method specified in the other law, except as otherwise provided in subsection (D)(2); and
(3) contain the information formatted in the manner specified in the other law.
(C) The electronic record is not enforceable against the recipient if a sender inhibits the ability of a recipient to store or print an electronic record.
(D) The requirements of this section shall not be varied by agreement, except that:
(1) to the extent a law other than this chapter requires information to be provided, sent, or delivered in writing but permits that requirement to be varied by agreement, the requirement pursuant to subsection (A) that the information be in the form of an electronic record capable of retention also may be varied by agreement; and
(2) a requirement pursuant to a law other than this chapter to send, communicate, or transmit a record by first-class mail, postage prepaid, or regular United States mail, may be varied by agreement to the extent permitted by the other law.
§ 26-6-90. Showing that electronic record or signature is attributable to a person; effect of electronic record or signature.
(A) An electronic record or electronic signature is attributable to a person if it is the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of a security procedure applied to determine the person to which the electronic record or electronic signature was attributable.
(B) The effect of an electronic record or electronic signature attributed to a person pursuant to subsection (A) is determined from the context and surrounding circumstances at the time of its creation, execution, or adoption, including the parties’ agreement, if any, and as otherwise provided by law.
§ 26-6-100. Change or error in transmission of electronic record; circumstances under which effect may be avoided; applicability of other law.
(A) If a change or error occurs in the transmission of an electronic record between parties to a transaction:
(1) the conforming party may avoid the effect of the changed or erroneous electronic record, if the parties have agreed to use a security procedure to detect changes or errors and one party has conformed to the procedure but the other party has not and the nonconforming party would have detected the change or error had he also conformed;
(2) an individual may avoid the effect of an electronic record that resulted from an error made by the individual in dealing with the electronic agent of another person if the electronic agent did not provide an opportunity for the prevention or correction of the error and, at the time the individual learns of the error, the individual:
(a) promptly notifies the other person of the error and that the individual did not intend to be bound by the electronic record received by the other person;
(b) takes reasonable steps, including steps that conform to the reasonable instructions of the other person, to return or destroy, as instructed, the consideration received as a result of the erroneous electronic record; and
(c) has not used or received any benefit or value from the consideration received from the other person.
(B) If subsection (A) does not apply, the change or error has the effect provided by other law, including the law of mistake, and the parties’ contract, if any.
(C) The provisions of subsections (A)(2) and (B) shall not be varied by agreement.
§ 26-6-110. Satisfying requirement that signature or record be notarized.
A law requiring a signature or record to be notarized, acknowledged, verified, or made under oath is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required to be included by other applicable law, is attached to or logically associated with the signature or record.
§ 26-6-120. Satisfying law requiring a record to be maintained; checks.
(A) A law requiring a record to be retained is satisfied by retaining an electronic record of the information that:
(1) accurately reflects the information in the record after it was first generated in its final form as an electronic record or otherwise; and
(2) remains accessible for later reference.
(B) A requirement to retain a record in accordance with subsection (A) does not apply to information whose only purpose is to enable the record to be sent, communicated, or received.
(C) A person may satisfy subsection (A) by using the services of another person if the requirements of that subsection are satisfied otherwise.
(D) A law requiring a record to be presented or retained in its original form, or providing consequences if the record is not presented or retained in its original form, is satisfied by an electronic record retained in accordance with subsection (A).
(E) A law requiring retention of a check is satisfied by retention of an electronic record of the information on the front and back of the check in accordance with subsection (A).
(F) A record retained as an electronic record in accordance with subsection (A) satisfies a law requiring a person to retain a record for evidentiary, audit, or like purposes, unless a law enacted after the effective date of this chapter specifically prohibits the use of an electronic record for the specified purpose.
(G) This section does not preclude a governmental agency of this State from specifying additional requirements for the retention of a record subject to the agency’s jurisdiction.
§ 26-6-130. Admissibility as evidence.
Evidence of a record or signature may not be excluded in a proceeding solely because the record or signature is in electronic form.
§ 26-6-140. Automated transactions; formation of contract.
In an automated transaction:
(1) a contract may be formed by the interaction of electronic agents of the parties, even if an individual was not aware of or reviewed the electronic agents’ actions or the resulting terms and agreements;
(2) a contract may be formed by the interaction of an electronic agent and an individual, acting on the individual’s own behalf or for another person, including by an interaction in which the individual performs actions that the individual is free to refuse to perform and which the individual knows or has reason to know will cause the electronic agent to complete the transaction or performance; and
(3) the terms of the contract are determined by the substantive law applicable to it.
§ 26-6-150. When electronic record sent and received.
(A) Unless otherwise agreed between the sender and the recipient, an electronic record is sent when it:
(1) is addressed properly or otherwise directed properly to an information processing system that the recipient has designated or uses for the purpose of receiving electronic records or information of the type sent and from which the recipient is able to retrieve the electronic record;
(2) is in a form capable of being processed by that system; and
(3) enters an information processing system outside the control of the sender or of a person that sent the electronic record on behalf of the sender or enters a region of the information processing system designated or used by the recipient and under the control of the recipient.
(B) Unless otherwise agreed between a sender and the recipient, an electronic record is received when it:
(1) enters an information processing system that the recipient has designated or uses for the purpose of receiving electronic records or information of the type sent and from which the recipient is able to retrieve the electronic record; and
(2) is in a form capable of being processed by that system.
(C) Subsection (B) applies even if the place the information processing system is located is different from the place the electronic record is considered to be received pursuant to subsection (D).
(D) Unless otherwise expressly provided in the electronic record or agreed between the sender and the recipient, an electronic record is considered to be sent from the sender’s place of business and to be received at the recipient’s place of business. For purposes of this subsection, the place of business is:
(1) the place having the closest relationship to the underlying transaction, if the sender or recipient has more than one place of business; and
(2) the sender’s or recipient’s residence, if the sender or the recipient does not have a place of business.
(E) An electronic record is received pursuant to subsection (B) even if an individual is not aware of its receipt.
(F) Receipt of an electronic acknowledgment from an information processing system described in subsection (B) establishes that a record was received but is not sufficient to establish that the content sent corresponds to the content received.
(G) If a person is aware that an electronic record purportedly sent pursuant to subsection (A), or purportedly received pursuant to subsection (B), was not actually sent or received, the legal effect of the sending or receipt is determined by other applicable law. Except to the extent permitted by the other law, the requirements of this subsection shall not be varied by agreement.
§ 26-6-160. Establishing person as having control of transferable record; rights and defenses; proof of control.
(A) In this section, “transferable record” means an electronic record that:
(1) would be a negotiable instrument under Chapter 3 of Title 36 or a document of title under Chapter 7 of Title 36 if the electronic record were in writing; and
(2) the issuer of the electronic record expressly has agreed is a transferable record.
(B) A person has control of a transferable record if a system employed for evidencing the transfer of interests in the transferable record reliably establishes that person as the person to which the transferable record was issued or transferred.
(C) A system satisfies subsection (B), and a person is considered to have control of a transferable record, if the transferable record is created, stored, and assigned in such a manner that:
(1) there exists a single authoritative copy of the transferable record that is unique, identifiable, and, except as otherwise provided in items (4), (5), and (6), unalterable;
(2) the authoritative copy identifies the person asserting control as the person to which the transferable record was:
(a) issued; or
(b) most recently transferred, if the authoritative copy indicates that the transferable record has been transferred;
(3) the authoritative copy is communicated to and maintained by the person asserting control or its designated custodian;
(4) copies or revisions that add or change an identified assignee of the authoritative copy are made only with the consent of the person asserting control;
(5) each copy of the authoritative copy and a copy of a copy are readily identifiable as copies that are not the authoritative copy; and
(6) a revision of the authoritative copy is readily identifiable as authorized or unauthorized.
(D) Except as otherwise agreed, a person having control of a transferable record is the holder, as defined in Section 36-1-201(20), of the transferable record and has the same rights and defenses as a holder of an equivalent record or writing pursuant to Title 36, including the rights and defenses of a holder in due course, a holder to which a negotiable document of title has been duly negotiated, or a purchaser, respectively if the applicable statutory requirements pursuant to Section 36-3-302, 36-7-501, or 36-9-308 are satisfied. Delivery, possession, and endorsement are not required to obtain or exercise the rights pursuant to this subsection.
(E) Except as otherwise agreed, an obligor under a transferable record has the same rights and defenses as an equivalent obligor under equivalent records or writings pursuant to Title 36.
(F) The person seeking to enforce the transferable record shall provide, upon request, reasonable proof that he is in control of the transferable record. Proof may include access to the authoritative copy of the transferable record and related business records sufficient to review the terms of the transferable record and to establish the identity of the person having control of the transferable record.
§ 26-6-170. Creation and retention of electronic records by government agencies.
Each governmental agency of this State shall determine if, and the extent to which, it will create and retain electronic records and convert written records to electronic records.
§ 26-6-180. Government agencies sending and accepting electronic records and signatures; format.
(A) Each governmental agency of this State shall determine if, and the extent to which, it will send and accept electronic records and electronic signatures to and from other persons and otherwise create, generate, communicate, store, process, use, and rely upon electronic records and electronic signatures.
(B) To the extent that a governmental agency uses electronic records and electronic signatures pursuant to subsection (A), the governmental agency, in consultation with the South Carolina State Budget and Control Board, giving due consideration to security, may specify:
(1) the manner and format in which the electronic records must be created, generated, sent, communicated, received, and stored and the systems established for those purposes;
(2) if electronic records must be signed by electronic means, the type of electronic signature required, the manner and format in which the electronic signature must be affixed to the electronic record, and the identity of, or criteria that must be met by, a third party used by a person filing a document to facilitate the process;
(3) control processes and procedures appropriate to ensure adequate preservation, disposition, integrity, security, confidentiality, and auditability of electronic records; and
(4) other attributes required for electronic records which are specified for corresponding nonelectronic records or reasonably necessary under the circumstances.
(C) Except as otherwise provided in Section 26-6-120, this chapter does not require a governmental agency of this State to use or permit the use of electronic records or electronic signatures.
§ 26-6-190. Development of standards and procedures; service of process.
(A) The South Carolina State Budget and Control Board shall adopt standards to coordinate, create, implement, and facilitate the use of common approaches and technical infrastructure, as appropriate, to enhance the utilization of electronic records, electronic signatures, and security procedures by and for public entities of the State. Local political subdivisions may consent to be governed by these standards.
(B) The Secretary of State may develop, implement, and facilitate the use of model procedures for the use of electronic records, electronic signatures, and security procedures for all other purposes, including private commercial transactions and contracts. The Secretary of State also may promulgate regulations as to methods, means, and standards for secure electronic transactions including administration by the Secretary of State or the licensing of third parties to serve in that capacity, or both.
(C) In accordance with Sections 26-6-20(18) and 26-6-195, and in reference to all South Carolina laws, rules, and regulations pertaining to service of process where service shall be made on entities described in Rule 4(d)(3) of the South Carolina Rules of Civil Procedure, those entities shall be served under Rule 4(d)(8) of the South Carolina Rules of Civil Procedure by:
(1) registered or certified mail-return receipt requested, addressed to the office of the registered agent;
(2) registered or certified mail-return receipt requested, addressed to the office of the secretary of the corporation at its principal office;
(3) e-mailing the service of process that has been postmarked by a United States Postal Service Electronic Postmark in a manner approved by the South Carolina Supreme Court to an e-mail address registered with the Secretary of State for the corporation; or
(4) e-mailing the service of process that has been postmarked by a United States Postal Service Electronic Postmark in a manner approved by the South Carolina Supreme Court to an e-mail address registered with the Secretary of State for the agent for service of process for the corporation.
§ 26-6-195. Service of process to e-mail address by government agency.
Notwithstanding any other provisions in this chapter, a governmental agency may use, in accordance with policies and procedures developed by the South Carolina Budget and Control Board and as circumstances allow, in order to perfect service of process of any communication, an e-mail address from any vendor, entity, or individual the governmental agency regulates or does business with, or an e-mail address from the agent for service of process of that vendor, entity, or individual. Such communication postmarked by a United States Postal Service Electronic Postmark shall have the same force of law as the United States Post Office certified mail-return receipt requested. The South Carolina Budget and Control Board shall devise policies and procedures for the use of the United States Postal Service Electronic Postmark in respect to state agencies and operations. These policies and procedures, where necessary, must consider the persons or entities which do not have an e-mail address.
§ 26-6-210. Applicability of Computer Crime Act.
The Computer Crime Act, as contained in Chapter 16 of Title 16, is expressly made applicable to and incorporated into this chapter.
Electronic Signature in Global and National Commerce Act
Posted: November 12, 2014 Filed under: Contract | Tags: Contracts, Electronic Signatures, Email, Federal Leave a comment15 U.S.C. §§ 7001. General rule of validity
(a) In general. Notwithstanding any statute, regulation, or other rule of law (other than this title and title II [15 USCS §§ 7001 et seq. and 15 USCS § 7021]), with respect to any transaction in or affecting interstate or foreign commerce—
(1) a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and
(2) a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation.
(b) Preservation of rights and obligations. This title [15 USCS §§ 7001 et seq.] does not—
(1) limit, alter, or otherwise affect any requirement imposed by a statute, regulation, or rule of law relating to the rights and obligations of persons under such statute, regulation, or rule of law other than a requirement that contracts or other records be written, signed, or in nonelectronic form; or
(2) require any person to agree to use or accept electronic records or electronic signatures, other than a governmental agency with respect to a record other than a contract to which it is a party.
(c) Consumer disclosures.
(1) Consent to electronic records. Notwithstanding subsection (a), if a statute, regulation, or other rule of law requires that information relating to a transaction or transactions in or affecting interstate or foreign commerce be provided or made available to a consumer in writing, the use of an electronic record to provide or make available (whichever is required) such information satisfies the requirement that such information be in writing if—
(A) the consumer has affirmatively consented to such use and has not withdrawn such consent;
(B) the consumer, prior to consenting, is provided with a clear and conspicuous statement—
(i) informing the consumer of (I) any right or option of the consumer to have the record provided or made available on paper or in nonelectronic form, and (II) the right of the consumer to withdraw the consent to have the record provided or made available in an electronic form and of any conditions, consequences (which may include termination of the parties’ relationship), or fees in the event of such withdrawal;
(ii) informing the consumer of whether the consent applies (I) only to the particular transaction which gave rise to the obligation to provide the record, or (II) to identified categories of records that may be provided or made available during the course of the parties’ relationship;
(iii) describing the procedures the consumer must use to withdraw consent as provided in clause (i) and to update information needed to contact the consumer electronically; and
(iv) informing the consumer (I) how, after the consent, the consumer may, upon request, obtain a paper copy of an electronic record, and (II) whether any fee will be charged for such copy;
(C) the consumer—
(i) prior to consenting, is provided with a statement of the hardware and software requirements for access to and retention of the electronic records; and
(ii) consents electronically, or confirms his or her consent electronically, in a manner that reasonably demonstrates that the consumer can access information in the electronic form that will be used to provide the information that is the subject of the consent; and
(D) after the consent of a consumer in accordance with subparagraph (A), if a change in the hardware or software requirements needed to access or retain electronic records creates a material risk that the consumer will not be able to access or retain a subsequent electronic record that was the subject of the consent, the person providing the electronic record—
(i) provides the consumer with a statement of (I) the revised hardware and software requirements for access to and retention of the electronic records, and (II) the right to withdraw consent without the imposition of any fees for such withdrawal and without the imposition of any condition or consequence that was not disclosed under subparagraph (B)(i); and
(ii) again complies with subparagraph (c).
(2) Other rights.
(A) Preservation of consumer protections. Nothing in this title [15 USCS §7001 et seq.] affects the content or timing of any disclosure or other record required to be provided or made available to any consumer under any statute, regulation, or other rule of law.
(B) Verification or acknowledgment. If a law that was enacted prior to this Act [enacted June 30, 2000] expressly requires a record to be provided or made available by a specified method that requires verification or acknowledgment of receipt, the record may be provided or made available electronically only if the method used provides verification or acknowledgment of receipt (whichever is required).
(3) Effect of failure to obtain electronic consent or confirmation of consent. The legal effectiveness, validity, or enforceability of any contract executed by a consumer shall not be denied solely because of the failure to obtain electronic consent or confirmation of consent by that consumer in accordance with paragraph (1)(c)(ii).
(4) Prospective effect. Withdrawal of consent by a consumer shall not affect the legal effectiveness, validity, or enforceability of electronic records provided or made available to that consumer in accordance with paragraph (1) prior to implementation of the consumer’s withdrawal of consent. A consumer’s withdrawal of consent shall be effective within a reasonable period of time after receipt of the withdrawal by the provider of the record. Failure to comply with paragraph (1)(D) may, at the election of the consumer, be treated as a withdrawal of consent for purposes of this paragraph.
(5) Prior consent. This subsection does not apply to any records that are provided or made available to a consumer who has consented prior to the effective date of this title to receive such records in electronic form as permitted by any statute, regulation, or other rule of law.
(6) Oral communications. An oral communication or a recording of an oral communication shall not qualify as an electronic record for purposes of this subsection except as otherwise provided under applicable law.
(d) Retention of contracts and records.
(1) Accuracy and accessibility. If a statute, regulation, or other rule of law requires that a contract or other record relating to a transaction in or affecting interstate or foreign commerce be retained, that requirement is met by retaining an electronic record of the information in the contract or other record that—
(A) accurately reflects the information set forth in the contract or other record; and
(B) remains accessible to all persons who are entitled to access by statute, regulation, or rule of law, for the period required by such statute, regulation, or rule of law, in a form that is capable of being accurately reproduced for later reference, whether by transmission, printing, or otherwise.
(2) Exception. A requirement to retain a contract or other record in accordance with paragraph (1) does not apply to any information whose sole purpose is to enable the contract or other record to be sent, communicated, or received.
(3) Originals. If a statute, regulation, or other rule of law requires a contract or other record relating to a transaction in or affecting interstate or foreign commerce to be provided, available, or retained in its original form, or provides consequences if the contract or other record is not provided, available, or retained in its original form, that statute, regulation, or rule of law is satisfied by an electronic record that complies with paragraph (1).
(4) Checks. If a statute, regulation, or other rule of law requires the retention of a check, that requirement is satisfied by retention of an electronic record of the information on the front and back of the check in accordance with paragraph (1).
(e) Accuracy and ability to retain contracts and other records. Notwithstanding subsection (a), if a statute, regulation, or other rule of law requires that a contract or other record relating to a transaction in or affecting interstate or foreign commerce be in writing, the legal effect, validity, or enforceability of an electronic record of such contract or other record may be denied if such electronic record is not in a form that is capable of being retained and accurately reproduced for later reference by all parties or persons who are entitled to retain the contract or other record.
(f) Proximity. Nothing in this title [15 USCS §§ 7001 et seq.] affects the proximity required by any statute, regulation, or other rule of law with respect to any warning, notice, disclosure, or other record required to be posted, displayed, or publicly affixed.
(g) Notarization and acknowledgment. If a statute, regulation, or other rule of law requires a signature or record relating to a transaction in or affecting interstate or foreign commerce to be notarized, acknowledged, verified, or made under oath, that requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required to be included by other applicable statute, regulation, or rule of law, is attached to or logically associated with the signature or record.
(h) Electronic agents. A contract or other record relating to a transaction in or affecting interstate or foreign commerce may not be denied legal effect, validity, or enforceability solely because its formation, creation, or delivery involved the action of one or more electronic agents so long as the action of any such electronic agent is legally attributable to the person to be bound.
(i) Insurance. It is the specific intent of the Congress that this title and title II [15 USCS §§ 7001 et seq. and 15 USCS § 7021] apply to the business of insurance.
(j) Insurance agents and brokers. An insurance agent or broker acting under the direction of a party that enters into a contract by means of an electronic record or electronic signature may not be held liable for any deficiency in the electronic procedures agreed to by the parties under that contract if—
(1) the agent or broker has not engaged in negligent, reckless, or intentional tortious conduct;
(2) the agent or broker was not involved in the development or establishment of such electronic procedures; and
(3) the agent or broker did not deviate from such procedures.
HISTORY: (June 30, 2000, P.L. 106-229, Title I, § 101, 114 Stat. 464.)
HISTORY; ANCILLARY LAWS AND DIRECTIVES Effective date of section:
This section took effect on October 1, 2000, subject to certain exceptions, pursuant to § 107 of Act June 30, 2000, P.L. 106-229, which appears as a note to this section.
Short titles:
Act June 30, 2000, P.L. 106-229, Title I, § 1, 114 Stat. 464, provides: “This Act [15 USCS §§ 7001 et seq. and 47 USCS § 231 note] may be cited as the ‘Electronic Signatures in Global and National Commerce Act’.”
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Arbitration clause in a release is upheld in Mississippi, but only because it was Fair
Posted: September 29, 2014 Filed under: Contract, Mississippi | Tags: Arbitration, Arbitration clause, Education Corporation of America, Enrollment, Enrollment Agreement, MISSISSIPPI, Release, Tuition, Tuition Agreement, Virginia College L.L.C., Willis-Stein and Partners 2 CommentsThe larger issue is should you use arbitration and if you should, when?
Daniels v. Virginia College at Jackson; 478 Fed. Appx. 892; 2012 U.S. App. LEXIS 13037
State: Mississippi; UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
Plaintiff: Mississippi, United States Court of Appeals for the Fifth Circuit
Defendant: Virginia College L.L.C.; Education Corporation of America; Willis-Stein and Partners
Plaintiff Claims: negligence, conversion, embezzlement, and unjust enrichment
Defendant Defenses: Mandatory arbitration as found in the release which was part of the enrolment agreement
Holding: for the defendant
Year: 2012
The facts of this case are unknown. What is known is the plaintiff enrolled in the defendant’s college. To enroll she had to sign an Enrollment and Tuition Agreement. The Enrollment and Tuition Agreement (Enrollment form) had a mandatory arbitration clause.
Arbitration is a cross between mediation and a trial. Arbitration is usually done by a member of the American Arbitration Association or by a neutral party picked by both sides. Arbitration is a lot cheaper and faster than going to trial. In many states, an arbitrator cannot award all the types of damages that a jury or judge could. Arbitrators rarely award as much money in damages as a jury does.
Arbitration is supported by state law, which limits damages, compels arbitration, and encourages and forces parties to an arbitration clause to arbitrate.
In this case, the plaintiff objected to the required arbitration required in the contract. That arbitration was required by the trial court, and the plaintiff appealed to the United States Court of Appeals for the Fifth Circuit. The Fifth Circuit Court upheld the mandatory arbitration.
Summary of the case
The discussion in this case is fairly simple. The plaintiff was unhappy about how the defendant’s school had retained portions of the federal financial aid she had received. She sued claiming the arbitration clause was void because it was unconscionable.
Under Mississippi law unconscionability:
…is proven by oppressive contract terms such that there is a one-sided agreement whereby one party is deprived of all the benefits of the agreement or left without a remedy for another party’s nonperformance or breach.
The plaintiff argued that the enrollment agreement was unconscionable because it limited damages, had a jurisdiction and venue clause and awarded the defendant attorney fees if it won its case. To overcome some of the issues, the defendant in its written argument to the appellate court considered the attorney fee clause stating the clause allowed any winning party to recover its attorney fees.
Consequently, the arbitration clause was not found to be unconscionable in this situation applying Mississippi law.
So Now What?
The real issue to look at in this case is, whether should you use arbitration if you run an outdoor recreation business or program and if so when.
Probably, if you are an outdoor recreation activity in a state that supports the use of a release, and you have a well-written release, then no, do not require arbitration. The reason is simple; arbitration does not allow motions for summary judgment, which is a quick and final ending to the litigation.
Arbitration will allow the parties to go to arbitration and allow the plaintiff to have their day in court. Usually, a motion for summary judgment is faster, simpler, and cheaper.
The only places I would consider arbitration in an outdoor recreation business setting would be those states that do not allow the use of a release if those states support mandatory arbitration. At the time of the writing of this article, those states are: Louisiana, Montana, and Virginia (although Virginia attorneys continuously tell me lower courts uphold releases?).
Possibly Alaska, Hawaii, New York, Arizona, New Mexico, and West Virginia for some activities were the state legislature or the courts have held that releases are not valid for those activities. However, in all of those states, you must investigate the statute and make sure arbitration works the way you need as well as limits the damages that can be awarded by an arbitrator.
See States that do not Support the Use of a Release
Arbitration is not a cover-up for having a bad release. If your release is bad, an arbitration clause is not going to provide any greater protection. Besides if you have a bad release, you probably have a bad arbitration clause also.
Of note, is the court looked at the over-all fairness of the agreement and the arbitration clause. Without a finding of fundamental fairness, the court might have voided the arbitration clause. In
For an article on failed arbitration see: Complicated serious of cases created to defend against a mountaineering death.
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What do you think? Leave a comment.
 Jim Moss |
Jim Moss is an attorney specializing in the legal issues of the outdoor recreation community. He represents guides, guide services, and outfitters both as businesses and individuals and the products they use for their business. He has defended Mt. Everest guide services, summer camps, climbing rope manufacturers; avalanche beacon manufacturers, and many more manufacturers and outdoor industries. Contact Jim at Jim@Rec-Law.us |
Jim is the author or co-author of eight books about legal issues in the outdoor recreation world; the latest is Outdoor Recreation Insurance, Risk Management,
Outdoor Recreation Insurance, Risk Management, and Law
To see Jim’s complete bio go here and to see his CV you can find it here. To find out the purpose of this website go here.
If you are interested in having me write your release, download the form and return it to me.
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Daniels v. Virginia College at Jackson; 478 Fed. Appx. 892; 2012 U.S. App. LEXIS 13037
Posted: September 28, 2014 Filed under: Contract, Legal Case, Mississippi | Tags: Arbitration, Arbitration clause, Education Corporation of America, Enrollment, Enrollment Agreement, MISSISSIPPI, Release, Tuition, Tuition Agreement, Virginia College L.L.C., Willis-Stein and Partners Leave a commentTo Read an Analysis of this decision see
Arbitration clause in a release is upheld in Mississippi, but only because it was “fair”
Daniels v. Virginia College at Jackson; 478 Fed. Appx. 892; 2012 U.S. App. LEXIS 13037
Natifracuria, Plaintiff-Appellant, Virginia College L.L.C.; Education Corporation of America; Willis-Stein and Partners, Defendants-Appellees,
No. 11-60861 Summary Calendar
UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
June 26, 2012, Filed
NOTICE: PLEASE REFER TO FEDERAL RULES OF APPELLATE PROCEDURE RULE 32.1 GOVERNING THE CITATION TO UNPUBLISHED OPINIONS.
PRIOR HISTORY: [**1]
Appeal from the United States District Court for the Southern District of Mississippi. USDC No. 3:11-CV-496.
DISPOSITION: The district court’s judgment is AFFIRMED.
COUNSEL: For NATIFRACURIA DANIELS, Plaintiff – Appellant: Precious Tyrone Martin, Sr., Esq., Precious Martin, Sr. & Associates, P.L.L.C., Jackson, MS.
For VIRGINIA COLLEGE, L.L.C., EDUCATION CORPORATION OF AMERICA, Defendants – Appellees: Ollie Ancil Cleveland, III, Esq., Peter Sean Fruin, Attorney, Maynard, Cooper & Gale, P.C. Birmingham, AL.
For WILLIS-STEIN AND PARTNERS, Defendant – Appellee: Robert Lewis Gibbs, Esq., Gibbs Whitwell, P.L.L.C., Jackson, MS.
JUDGES: Before REAVLEY, SMITH, and PRADO, Circuit Judges.
OPINION
[*893] PER CURIAM:*
* Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5th Cir. R. 47.5.4.
Plaintiff-Appellant Natifracuria Daniels appeals the district court’s order compelling arbitration of her state-law tort and restitution claims against Defendants-Appellees Virginia College at Jackson, Virginia College, L.L.C., Education Corporation of America, and Willis-Stein and Partners (collectively “Virginia College”). Virginia College moved [**2] to compel arbitration in order to enforce an arbitration clause in the “Enrollment and Tuition Agreement,” which Daniels signed before enrolling as a student at Defendant Virginia College at Jackson (individually, “the College”). On appeal, Daniels contends that the Agreement’s arbitration clause does not cover her tort claims, and she contends that the arbitration clause is unconscionable.
We AFFIRM.
The Enrollment Agreement’s arbitration clause requires arbitration of any claim “arising out of or relating to [the Agreement], together will all other claims . . . of any nature whatsoever arising out of or in relation to [Daniels’s] enrollment and participation in courses at the College . . . .” Daniels alleges that the College unlawfully retained the portion of her federal financial aid monies that should have been disbursed to Daniels to cover her cost of living. She brings state-law claims sounding in negligence, conversion, embezzlement, and unjust enrichment. Because these claims arose “in relation to [Daniels’s] enrollment and participation in courses at the College,” the district court was correct in finding them subject to the arbitration clause.
[HN1] Under Mississippi law,1 substantive [**3] unconscionability “is proven by oppressive contract terms such that there is a one-sided agreement whereby one party is deprived of all the benefits of the agreement or left without a remedy for another party’s nonperformance or breach.” Covenant Health and Rehab. of Picayune, LP v. Estate of Moulds, 14 So. 3d 695, 699-700 (Miss. 2009) (internal citation and quotation marks omitted). In Covenant Health, the Mississippi Supreme Court found that a contract containing an arbitration clause “coupled with a multitude of unconscionable provisions,” including asymmetrical limitations on liability, choice of forum, and other matters, was unenforceable in its entirety. Id. at 703. Daniels argues that the Enrollment Agreement is similarly laden with unconscionable provisions.
1 The Enrollment Agreement has an Alabama choice-of-law provision. But no party raises this provision, and they have relied on Mississippi law throughout their briefing on appeal and before the district court.
First, there is language in the arbitration clause that allows the College, but not Daniels, to seek injunctive relief in court. [HN2] An agreement that requires only one party to submit its claims to arbitration is unconscionable [**4] under Mississippi law,2 but the language at issue here merely allows the College to seek a preliminary injunction to halt a student’s ongoing breach of the Enrollment Agreement. The College must seek all other relief though arbitration. An asymmetric exception so limited in scope does not make an arbitration clause unconscionable. Sawyers v. Herrin-Gear Chev. Co., 26 So. 3d 1026, 1035 (Miss. 2010) (arbitration clause between car dealer and purchaser enforceable notwithstanding exception allowing car dealer to bring an action to repossess the car in court).
2 Covenant Health, 14 So. 3d at 700 (citing Pridgen v. Green Tree Fin. Servicing Corp., 88 F. Supp. 2d 655, 658 (S.D. Miss. 2000)).
[*894] Daniels also points to the arbitration clause’s language prohibiting the arbitrator from awarding any damages not “measured by the prevailing party’s actual compensatory damages.” [HN3] Ostensibly bilateral limitations on punitive damages are unconscionable under Mississippi law if they are one-sided in practical effect due to the weaker party’s being “much more likely to be justified in seeking punitive damages.” Vicksburg Partners, L.P. v. Stephens, 911 So.2d 507, 523-24 (Miss 2005) (ostensibly bilateral punitive-damages [**5] limitation in contract of adhesion between nursing home and occupant unenforceable against occupant), overruled on other grounds by Covenant Health, 14 So. 3d at 706 (Miss. 2009). However, as Virginia College concedes in its brief, the arbitration clause does not bar the arbitrator from awarding damages in excess of compensatory damages. It merely requires that the amount of such damages be based on the prevailing party’s compensatory damages. Sawyers, 26 So. 3d at 1036 (interpreting nearly identical language as requiring only that the parties be “limited as to the amount of punitive damages which might be awarded, since such an award would have to be ‘measured by the prevailing party’s actual damages'”). Such provisions are not unconscionable. Id.
Daniels next points to the Enrollment Agreement’s asymmetric liquidated damages provision, which she contends would leave her without any remedy for the wrongs she alleges because its language limits her recovery to “an amount equal to any non-refunded tuition payments . . . .” [HN4] Contractual provisions intended to exculpate a party of liability for its own tortious conduct are particularly suspect under Mississippi law. See Turnbough v. Ladner, 754 So.2d 467, 469 (Miss. 1999)). [**6] As Virginia College concedes, however, the liquidated damages provision in the Enrollment Agreement applies only to breach-of-contract damages, and would not affect recovery for Daniels’s claims.
Finally, a provision of the agreement permits the college to recover attorney’s fees against Daniels if it prevails in any action or arbitration that is “permitted” by the Enrollment Agreement or that “aris[es] out of [the Agreement] and the subject matter contained [there]in.” However, while the Enrollment Agreement is silent with respect to Daniels’s recovering fees if she prevails, Virginia College disavows any interpretation of it that would preclude Daniels from recovering attorneys’ fees to which she might otherwise be entitled under the arbitration rules. Given Virginia College’s concessions regarding the meaning of its provisions, enforcing the Enrollment Agreement’s arbitration clause is not unconscionable under Mississippi law.
The district court’s judgment is AFFIRMED.
G-YQ06K3L262
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Have you read your health and life policy to see if your activities are excluded. This travel insurance policy excluded mountaineering and skiing
Posted: February 17, 2014 Filed under: Contract, Insurance, Mountaineering, Skiing / Snow Boarding, Wisconsin | Tags: Ambiguous, Exclusion, Grand Teton, Grand Teton National Park, Grand Teton National Policy, Health insurance, Health Insurance Policy, Insurance, Insurance policy, Mountaineering, Policy Exclusion, Ski, Ski Area Boundary, Ski Mountaineering, Ski Resort, skiing, Travel insurance Leave a commentFirst this case defines mountaineering, legally! The court carefully picked its way through the language of the policy to keep the injured plaintiff in the lawsuit a little longer. That probably means the insurance company settled the case rather than spend more money fighting, but that is only speculation.
Redmond v. Sirius International Insurance Corporation, 2014 U.S. Dist. LEXIS 5089
Date of the Decision: January 15, 2014
Plaintiff: Ryan M. Redmond
Defendant: Sirius International Insurance Corporation
Plaintiff Claims: breach of contract and insurance bad faith
Defendant Defenses: the contract
Holding: Cross motions for summary judgment denied, case headed for trial
The plaintiff in this case when ski mountaineering in Grand Teton National Park. Half way up Ellingwood Couloir, the plaintiff and a friend stopped climbing and started to ski down. Two other friends proceeded up the couloir. The plaintiff fell, tumbling down the mountain. He was eventually airlifted from the park.
The plaintiff had purchased a travel policy. The insurance company that issued the travel policy, relying upon the exclusions in the policy, denied coverage for the plaintiff’s injuries. The plaintiff and the defendant insurance company filed motions for summary judgment covering multiple issues, including a dismissal of the case due to the policy exclusions.
Summary of the case
The policy exclusions stated:
All charges, costs, expenses and/or claims (collectively “Charges”) incurred by the Insured Person and directly or indirectly relating to or arising from or in connection with any of the following acts …:
* * *
(11) Charges incurred for any surgery, Treatment or supplies relating to, arising from or in connection with, for, or as a result of:
* * *
(d) any Injury or Illness sustained while taking part in mountaineering activities where specialized climbing equipment, ropes or guides are normally or reasonably should have been used, Amateur Athletics, Professional Athletics, aviation (except when traveling solely as a passenger in a commercial aircraft), hang gliding and parachuting, snow skiing except for recreational downhill and/or cross country snow skiing (no cover provided whilst skiing in violation of applicable laws, rules or regulations; away from prepared and marked in-bound territories; and/or against the advice of the local ski school or local authoritative body), racing of any kind including by horse, motor vehicle (of any type) or motorcycle, spelunking, and subaqua pursuits involving underwater breathing apparatus (except as otherwise expressly set forth in Section Q. Recreational Underwater Activities). Practice or training in preparation for any excluded activity which results in injury will be considered as activity while taking part in such activity; and/or
(e) any Illness or Injury sustained while participating in any sporting, recreational or ad-venture activity where such activity is undertaken against the advice or direction of any local authority or any qualified instructor or contrary to the rules, recommendations and procedures of a recognized governing body for the sport or activity….
Basically the policy attempted to exclude recreational activities except skiing at a ski area.
The court first looked at the requirements for either party to win a motion for summary judgment. Similar in most courts in most cases.
“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” A material fact is one that might affect the outcome of the case, and a nonmoving party’s dispute is “genuine” only if a reasonable finder of fact could find in the nonmoving party’s favor at trial. The court views the facts in the light most favorable to the non-moving party, and likewise it draws all inferences in the non-movant’s favor. The court may not weigh the evidence or make credibility determinations. Thus, the nonmoving party will defeat a motion for summary judgment if it is able to produce admissible evidence that, when viewed in the most favorable light, would be sufficient to enable the finder of fact to return a verdict in its favor.
The court then looked at the requirements on interpreting an insurance policy. Insurance policies are contracts and must meet all contract requirements. Insurance policies in many states also have to meet specific requirements and have different ways of interpreting some specific insurance issues. In Wisconsin policies are interpreted as a contract first.
“An insurance policy is a contract, and as such is subject to the same rules of construction as other contracts.” Because contract interpretation is primarily a question of law, it is a matter that is generally well-suited for summary judgment. “When interpreting an insurance contract courts must look at the contract as a whole.” In construing an insurance contract, the court should do “so as not to render any words, phrases, or terms ineffective or meaningless.” Terms should be given their plain and ordinary meaning. In determining the “plain and ordinary meaning” of a term, courts will frequently turn to dictionaries.
However, if a provision of an insurance contract is ambiguous, it is to be construed strictly against the insurer. An insurance contract is not ambiguous simply because parties each have their own interpretation of a provision. Rather, “[a]n insurance contract is ambiguous when it is susceptible to more than one interpretation and reasonably intelligent persons would honestly differ as to its meaning.”
Construction against the author of a contract is a common occurrence in the law. The party that drafts the contract is the party that loses if the court is faced with a situation where the exact intention of the language is not clear. Instead of tossing a coin, the writer of the contract loses.
The court looked at the exclusion language above to determine if the activity of climbing up a couloir and skiing down is mountain climbing.
First the court determined that mountaineering did not encompass the action of skiing down the mountain. When in doubt in defining words courts use dictionaries.
The Oxford English Dictionary defines “mountaineering” as, “The action or sport of climbing mountains.” Oxford English Dictionary, (January 15, 2014), http://www.oed.com/view/Entry/239554.
Merriam-Webster similarly defines it as “the sport or technique of scaling mountains.” Merriam-Webster, (January 15, 2014), http://www.merriam-webster.com/dictionary/mountaineering.
The definition within the American Heritage Dictionary states, “The climbing of mountains, especially using special equipment and techniques on rock, ice, or snow.
Also called mountain climbing.” American Heritage Dictionary, (January 15, 2014), http://www.ahdictionary.com/word/search.html?q=mountaineering.
The definitions all defined mountaineering as climbing and climbing means going up. However, the court also found that:
Thus, if “mountaineering” is defined by reference to “climbing” and climbing can denote either ascent or descent, then necessarily, “mountaineering” must include both ascent and descent. The court finds this understanding of mountaineering to be the only logical definition. After all, in the context of mountaineering, the proverb “What goes up, must come down,” is generally literally true.
The next issue then if skiing down was not mountaineering and excluded, was the issue, whether the activity which injured the plaintiff violated the ski terms of the policy. The court then had to consider if skiing in a couloir in a national park is skiing out of bounds. The defendant argued that ski mountaineering was encompassed by the term mountaineering. However, the court did not agree. “The court also rejects the defendant’s contention that the mountaineering exclusion encompasses “ski mountaineering,” which the defendant characterizes as a subset of mountaineering.”
The plaintiff argued that ski mountaineering required the use of ropes and other specialized equipment. The court found that the term mountaineering did not encompass ski mountaineering.
Thank heavens for us; the court did not accept either of these definitions.
The next issue was whether or not the acts of the plaintiff fell within the exclusions in the policy concerning skiing. The court reviewed the policy and the skiing exclusion and defined the exclusion this way.
This provision, moving back and forth between coverage and exclusions, is far from a model of clarity. It first excludes coverage for injuries sustained while snow skiing but then immediately excludes from the exclusion (and thus covers) injuries sustained while “recreational downhill and/or cross country snow skiing,” and then adds a parenthetical to now exclude from the exclusion to the exclusion (and thus deny coverage for) injuries sustained while “skiing in violation of applicable laws, rules or regulations; away from prepared and marked in-bound territories; and/or against the advice of the local ski school or local authoritative body.” The net effect of this provision is that injuries sustained as a result of recreational snow skiing are covered provided the skiing was not unlawful, against the advice of certain entities, or “away from prepared and marked in-bound territories.”
(You always wondered what someone learns in law school. You learn to read policy exclusions and then interpret them as explained above. The court found the language in the policy: “This provision, moving back and forth between coverage and exclusions, is far from a model of clarity.”)
The plaintiff argued that he was skiing in an area allowed by the insurance policy because anywhere within Grand Teton National Park was allowed to be skied, and he did not leave the park boundary. Inbounds meaning in the National Park. The court then looked at other aspects of the policy to determine what was meant.
“Recreational” is not ambiguous. It is readily understood as, “An activity or pastime which is pursued for the pleasure or interest it provides.” Oxford English Dictionary, (January 15, 2014), http://www.oed.com/view/Entry/159954.
There is no evidence that Redmond was skiing for any purpose other than the pure pleasure or interest the sport provides, and thus the court concludes that Redmond’s skiing on the day of his injury was recreational.
Thus, competitive or commercial skiing likely would not be covered under the policy.
The net effect of the review was the court could not determine if the actions of the plaintiff were excluded by the policy. The definitions the court used and defined in making this determination do have value.
…Redmond [plaintiff] was skiing away from prepared and marked in-bound territories, this plainly encompasses more than simply skiing in an area where skiing is not barred. Thus, having concluded that “away from” means roughly “outside of,” restating this exclusion as a positive question, the issue before the court becomes, “Was Redmond skiing in a prepared and marked in-bound territory when he was injured?” Only if he was would the policy possibly afford coverage for his injures.
The court then looking at the overview of skiing could not determine what the terms in the skiing exclusion meant.
The court presumes that if a ski area is bordered on the sides by signs and ropes demarcating the boundaries of the permissible skiing area, it is likely “marked” within the scope of the policy. But is this the only kind of identification that will render an area “marked?” What if the area is depicted on a map that includes boundary lines indicating the recommended areas for skiing? If markings on a map are sufficient, who must prepare such a map to render the area marked? Must the map be prepared by the entity in charge of the area, e.g. the National Park Service, or would a map prepared by a person with special knowledge of the area suffice? Or must the markings even relate to the in-bound territories? Would a sign in the vicinity of the mountain stating “Ski at your own risk,” suffice as a marking? Perhaps there are many other plausible understandings of this term.
The court finally determined that the terms “prepared” and “marked” were not defined adequately in the policy. Therefore, the policy was ambiguous. The court could not grant the defendant’s motion for summary judgment. That issue was left for a jury to decide.
The case went on for multiple pages discussing all the motions filed by each side. This issue was the only one of importance.
So Now What?
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) created this exclusion in health insurance policies. The exclusion is legal, but up to an insurance company to enact and place its policies. Several attempts have been made since HIPAA was enacted to correct this issue; however, all have died in committee.
Simply put the court worked hard to determine a way the plaintiff would have insurance. The simple term “ski area,” added to the definition of skiing would have made the purpose of the lawsuit irrelevant. Obviously, the ski area description was solely for skiing inbounds not in a park.
If you enjoy recreating in the outdoors, make sure that you have the insurance coverage you believe you are paying for. Read your policy or find someone who can read it for you. An insurance policy is more than something to read when you can’t get to sleep at night.
What do you think? Leave a comment.
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Redmond v. Sirius International Insurance Corporation, 2014 U.S. Dist. LEXIS 5089
Posted: February 17, 2014 Filed under: Contract, Insurance, Legal Case, Mountaineering, Skiing / Snow Boarding, Wisconsin | Tags: Grand Teton, Grand Teton National Park, Grand Teton National Policy, Health insurance, Health Insurance Policy, Mountaineering, Sirius International Insurance Corporation, Ski Mountaineering, skiing, Travel insurance Leave a commentRedmond v. Sirius International Insurance Corporation, 2014 U.S. Dist. LEXIS 5089
Ryan M. Redmond, Plaintiff, v. Sirius International Insurance Corporation, Defendant.
Case No. 12-CV-587
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF WISCONSIN
2014 U.S. Dist. LEXIS 5089
January 15, 2014, Decided
January 15, 2014, Filed
PRIOR HISTORY: Redmond v. Sirius Int’l Ins. Corp., 2012 U.S. Dist. LEXIS 110594 (E.D. Wis., Aug. 7, 2012)
CORE TERMS: skiing, bad faith claim, coverage, mountaineering, summary judgment, marked, choice of law, ski, territory, in-bound, mountain, insurer, dictionary, insurance contracts, insurance policies, recreational, insured, climbing, ambiguous, snow, forum selection clause, jury trial, deposition, moot, climb, descent, http, www, com, interest of justice
COUNSEL: [*1] For Ryan M Redmond, Plaintiff: Dean P Laing, Douglas P Dehler, LEAD ATTORNEYS, O’Neil Cannon Hollman DeJong & Laing SC, Milwaukee, WI.
For Sirius International Insurance Corporation, Defendant: Barry A Chasnoff, Mary M Pena, LEAD ATTORNEYS, Akin Gump Strauss Hauer & Feld LLP, San Antonio, TX; Jeffrey A Evans, von Briesen & Roper SC, Milwaukee, WI.
JUDGES: AARON E. GOODSTEIN, U.S. Magistrate Judge.
OPINION BY: AARON E. GOODSTEIN
OPINION
DECISION AND ORDER
I. PROCEDURAL HISTORY
Ryan M. Redmond (“Redmond”) was seriously injured while skiing at Grand Teton National Park on July 2, 2011. When his health insurer, Sirius International Insurance Corporation (“Sirius”), [*2] denied coverage for his injuries, Redmond filed the present action, initially in Waukesha County Circuit Court. Sirius removed the action to federal court on June 8, 2012 based upon the diversity of the parties. On June 14, 2012, Sirius filed its answer and a counterclaim along with a motion to transfer the case to the Southern District of Indiana. Redmond responded to the motion and also filed motions asking that the court strike the defendant’s answer and counterclaim and asking the court to require the defendant to post bond in accordance with Wisconsin law.
On August 7, 2012, the court denied the plaintiff’s motions. With respect to Sirius’ motion to transfer the action to the Southern District of Indiana, the court found that the record was insufficient to permit the court to resolve the motion and therefore held the motion in abeyance as the parties engaged in discovery. On March 20, 2013, the court denied without prejudice the motion to transfer.
On September 9, 2013, the parties filed a total of eight separate motions. (Docket Nos. 54, 56, 58, 60, 63, 66, 70, 75.) The plaintiff subsequently filed two additional motions. (Docket Nos. 84, 107.) Of these 10 motions, the court must [*3] first address the defendant’s renewed motion to transfer the case to Southern District of Indiana, (Docket No. 54), and thus decide whether this court or the Southern District of Indiana should resolve the 9 other motions.
II. MOTION TO TRANSFER
The relevant policy contains a forum selection clause providing that venue for any action related to the policy shall be in “the Circuit and/or Superior Courts of Marion County [Indiana] and in the United States District Court for the Southern District of Indiana, Indianapolis Division (assuming that federal jurisdiction is otherwise appropriate and lawful).” (Docket No. 7 at 3-4.) If the forum selection clause is valid, pursuant to 28 U.S.C. § 1404(a), the “court should transfer the case unless extraordinary circumstances unrelated to the convenience of the parties clearly disfavor a transfer.” Atl. Marine Constr. Co. v. United States Dist. Court, 517 U.S. , , 187 L. Ed. 2d 487, 494, 134 S. Ct. 568 (2013).
Wisconsin law bars such forum selection clauses in insurance policies. Wis. Stat. § 631.83(3)(b). But Wisconsin’s prohibition applies to only “insurance policies and group certificates delivered or issued for delivery in this state, on property ordinarily [*4] located in this state, on persons residing in this state when the policy or group certificate is issued, or on business operations in this state.” Wis. Stat. § 631.01(1). The defendant’s argument against the application of this provision is limited to its view that Redmond was not “residing in” Wisconsin at the time the policy was issued. Sirius does not present, and therefore the court shall not consider any other arguments that may be raised as to why this statutory proscription may be inapplicable to the present dispute.
As the court discussed at length in its prior order, Redmond v. Sirius Int’l Ins. Corp., 2012 U.S. Dist. LEXIS 110594 (E.D. Wis. Aug. 7, 2012), there is a dispute as to whether Redmond was “residing in” Wisconsin when the policy was issued. The court concluded that “residing in” “include[s] [*5] not only those who dwell within the state for a long-term or extended period of time, but also, to the extent that the categories are not redundant, those who have Wisconsin as their domicile, i.e. ‘an individual’s true, fixed, and permanent home where the individual intends to remain permanently and indefinitely and to which, whenever absent, the individual intends to return.'” 2012 U.S. Dist. LEXIS 110594 at *21 (quoting Wis. Stat. §§ 71.01(1n), 71.22(1t)).
Redmond traveled frequently. In fact, the insurance policy that is at issue here was designed specifically to serve the needs of such travelers. He lived in his mother’s home in Delafield, Wisconsin until November 5, 2006 when he left for about six months of missionary work in Peru. He returned to Wisconsin and lived in Wisconsin until August 29, 2010, aside from a total of 30 days of missionary work in Peru and a month working on a Canadian dude ranch.
On August 25, 2010, from his home in Wisconsin, Redmond electronically submitted an application for renewal of his health insurance for the period of October 20, 2010 to October 20, 2011. (Docket No. 88, ¶8.) In doing so, he requested that the policy documents be sent to him in Vermont where he would be attending [*6] school. The application was approved the following day and the declaration and certificate were issued. (Docket No. 88, ¶9.) On August 29, 2010, Redmond left Wisconsin to travel to Vermont where he leased an apartment and attended school from August 30, 2010 through May 20, 2011, returning to Wisconsin in the interim for holidays. (Docket No. 88, ¶¶11-12.) Following May 20, 2011, Redmond returned to Wisconsin. (Docket No. 88, ¶13.)
The court finds that notwithstanding his travels and attendance at school in Vermont, Wisconsin remained Redmond’s domicile, and thus he was “residing in” Wisconsin when the policy was issued. This conclusion is further supported by the facts that Redmond filed taxes, had bank accounts, voted, and registered a vehicle in only Wisconsin. (Docket No. 88, ¶¶16-19.) Consequently, the policy’s forum selection clause is unenforceable under Wis. Stat. § 631.83(3)(b).
Having concluded that the forum selection clause is invalid, the court must turn to Sirius’ alternative argument and consider whether, after balancing all relevant factors, transfer to the Southern District of Indiana remains appropriate pursuant to 28 U.S.C. § 1404(a). “For the convenience of parties [*7] and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” 28 U.S.C. § 1404(a).
Section 1404 (a) reflects an increased desire to have federal civil suits tried in the federal system at the place called for in the particular case by considerations of convenience and justice. Thus, as the Court recognized in Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 26, 27, 80 S. Ct. 1470, 4 L. Ed. 2d 1540, [(1960)], the purpose of the section is to prevent the waste “of time, energy and money” and “to protect litigants, witnesses and the public against unnecessary inconvenience and expense….”
Van Dusen v. Barrack, 376 U.S. 612, 616, 84 S. Ct. 805, 11 L. Ed. 2d 945 (1964) (footnotes omitted). There is no dispute that this action could have been filed in the Southern District of Indiana. Thus, the court’s analysis is limited to consideration of the convenience of the parties and witnesses and the interest of justice. The movant “has the burden of establishing, by reference to particular circumstances, that the transferee forum is clearly more convenient.” Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986).
“With respect to the convenience evaluation, [*8] courts generally consider the availability of and access to witnesses, and each party’s access to and distance from resources in each forum. Other related factors include the location of material events and the relative ease of access to sources of proof.” Research Automation, Inc. v. Schrader-Bridgeport Int’l, Inc., 626 F.3d 973, 978 (7th Cir. 2010) (citations omitted). “The ‘interest of justice’ is a separate element of the transfer analysis that relates to the efficient administration of the court system.” Id.
For this element, courts look to factors including docket congestion and likely speed to trial in the transferor and potential transferee forums; each court’s relative familiarity with the relevant law; the respective desirability of resolving controversies in each locale; and the relationship of each community to the controversy. The interest of justice may be determinative, warranting transfer or its denial even where the convenience of the parties and witnesses points toward the opposite result.
Id. (citations omitted).
Neither forum is especially more convenient for the parties or witnesses. Of the witnesses identified by the parties as likely to testify at trial, four live [*9] in Wyoming, one lives in Colorado, two (or three using the defendant’s count of potential witnesses) live in Indiana, one (the plaintiff) lives in Wisconsin (not Vermont as the defendant states), and one lives in Florida but maintains an apartment and office in Wisconsin. (Docket Nos. 87 at 15; 55 at 10.) The plaintiff’s attorneys have offices in Milwaukee, Wisconsin; the defendant’s attorneys are located in San Antonio, Texas, and are assisted by local counsel. Thus, a number of people are going to have to travel for trial. When traveling from Wyoming, Colorado, or Texas, it makes little difference whether the destination is Indianapolis or Milwaukee. The convenience of a trial in Indianapolis for the witnesses in Indiana would be countered by the inconvenience to the plaintiff, his attorneys, as well as his expert.
The defendant also notes that evidence, such as the plaintiff’s insurance documents, is more likely to be found at offices in Indiana. (Docket No. 55 at 10.) The court finds that in the usual case, the location of documentary evidence is generally an inconsequential consideration. Routine discovery in any case will involve digitizing documents and thus whether parties are [*10] separated by city blocks or time zones, the means and ease of exchange will be the same. The court has no reason to believe this would not be the case here. And after all, discovery is complete so this truly is a non-issue.
The court also recognizes that, although it is unenforceable under Wisconsin law, the fact that the parties agreed to a forum selection may be given some weight in the analysis under § 1404(a). See IFC Credit Corp. v. Aliano Bros. Gen. Contrs., Inc., 437 F.3d 606, 608 (7th Cir. 2006) (citing Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 31, 108 S. Ct. 2239, 101 L. Ed. 2d 22 (1988). However, the fact of the parties’ agreement is counterbalanced by Wisconsin’s strong public policy against forum selection clauses in insurance contracts; thus, the interests of justice lead to the conclusion that this fact merits negligible weight. Cf. id.
With further respect to the interests of justice factor, the defendant points to the fact that the policy states, “Indiana law shall govern all rights and claims raised under this Certificate of Insurance.” (Docket No. 55-1 at ¶6.) Whether Indiana law actually governs this case is the subject of a separate motion. (Docket No. 58.) As discussed below, the court finds [*11] that Indiana law does govern the interpretation of the present contract. Nonetheless, the court does not find that this factor is sufficient to overcome the presumption of preference for the plaintiff’s chosen forum. Although a federal court in Indiana will naturally be more familiar with Indiana law, applying laws from other states is a routine task for federal courts. The defendant has not identified any reason for the court to believe that the legal questions in this action will involve especially novel or complex interpretations of Indiana law such that there is a strong reason to have this matter overseen by a court with more intimate familiarity with Indiana law.
Therefore, having concluded that the forum selection clause is not enforceable and consideration of all the § 1404(a) factors fails to show that the Southern District of Indiana is clearly more convenient and/or favored as a result of a consideration of the interests of justice, the defendant’s motion to transfer this action, (Docket No. 54), shall be denied.
III. CHOICE OF LAW
The relevant insurance policy states, “Indiana law shall govern all rights and claims raised under this Certificate of Insurance.” (Docket No. 55-1 [*12] at ¶6.) Relying upon this provision, the defendant asks the court to conclude that Indiana law applies to the claims raised in this case. (Docket Nos. 58, 59.) The plaintiff responds that Wisconsin law should apply because: (1) the defendant waived its opportunity to make a choice of law argument; (2) the choice of law provision is unconscionable; (3) the choice of law provision is contrary to Wisconsin public policy; (4) the choice of law provision would not apply to the plaintiff’s bad faith claim; (5) a common law choice of law analysis indicates that Wisconsin law should govern. (Docket No. 86.) The defendant replies that a common law choice of law analysis would actually favor Indiana, but in any event, the choice of law provision remains enforceable, is applicable to all the plaintiff’s claims, and the defendant did not waive the choice of law argument.
The court finds that Indiana law governs the present action. The court does not find that the defendant waived the choice of law argument. Choice of substantive law was not relevant to the court’s prior decisions and concluding now that Indiana law applies does not require the court to reassess any prior conclusion.
Nor does the [*13] court find the relevant provision unconscionable. Even accepting the plaintiff’s arguments that a reasonable person would not read the entire policy to recognize that it contained this choice of law provision, much less recognize its implications if he did, the court does not find the provision satisfies the high standard of unconscionability. The plaintiff does not point out what is supposedly so unfavorable about Indiana law that it would make it extremely unfair or oppressive to apply it in this case. If a reasonable person in the plaintiff’s position had been fully aware of the presence and consequences of the choice of law clause, the court has no reason to believe he would not have still agreed to the insurance policy he was offered.
The court finds the plaintiff’s argument that the choice of law provision violates Wisconsin public policy, (Docket No. 86 at 7-8), to be novel but misguided. In the plaintiff’s view, only Wisconsin law could ever govern an insurance dispute involving a Wisconsin resident because Wisconsin’s laws embody the public policy of the state and an insurance contract cannot ever be interpreted in a manner that offends the public policy of the state of Wisconsin. [*14] This argument is founded upon an overly-expansive reading of a quote of Couch on Insurance contained in Appleton Papers, Inc. v. Home Indem. Co., 2000 WI App 104, ¶44, 235 Wis. 2d 39, 612 N.W.2d 760:
A provision that a contract of insurance shall be governed by the law of a given state is void where such an express provision violates a statute of the state of the contract or would, if given force, evade statutory provisions declaring a rule of public policy with reference to contracts made within the jurisdiction, or where the contract stipulation would violate the interests and public policy of the state, since these cannot be changed by the contract of the parties.
What the Wisconsin Court of Appeals was actually saying in this quoted passage is that Wisconsin will not enforce a provision of an insurance contract that offends Wisconsin law simply because the contract contained a choice of law provision stating that the law of another state shall govern. It is for this reason that, notwithstanding the presence of the forum selection clause, it is appropriate to apply Wisconsin law to conclude that the forum selection clause was invalid. The plaintiff does not point to any Wisconsin law or public policy similarly barring [*15] choice of law provisions in insurance contracts. The court rejects the plaintiff’s argument that the court of appeals in Appleton Papers effectively found any choice of law provision unlawful.
Thus, the court turns to the plaintiff’s remaining argument that Wisconsin law would still apply to his bad faith claim. (Docket No. 86 at 8-9.) In support of this argument, the plaintiff begins with the terms of the choice of law provision: “Indiana law shall govern all rights and claims raised under this Certificate of Insurance,” (Docket No. 55-1 at ¶6). Redmond reads this provision as being limited to claims for insurance coverage. (Docket No. 86 at 8.) In Redmond’s view, a claim of bad faith is not “raised under” the policy but rather is a wholly distinct claim.
The court disagrees. Although bad faith is a tort and is distinct from breach of contract, in this case, it is the existence of the contract that creates the relationship necessary for a bad faith claim. Anderson v. Cont’l Ins. Co., 85 Wis. 2d 675, 687, 271 N.W.2d 368, 374 (1978) (the court looks to Wisconsin law here because that is the basis for the plaintiff’s argument). If there was no contract, there could be no claim of bad faith. [*16] Any bad faith claim will depend upon the scope and provisions of the contract. Because a bad faith claim is inextricably linked to the contract, in the court’s view, it is appropriately regarded as a “claim raised under this Certificate of Insurance.”
Accordingly, the court concludes that the choice of law provision contained within the policy is enforceable and applies to all of the plaintiff’s claims. Therefore, the defendant’s motion, (Docket No. 58), shall be granted, and Indiana substantive law shall govern this matter. Consequently, the court shall not consider arguments presented by the plaintiff that are founded solely in Wisconsin law or otherwise unsupported by reference to Indiana law.
IV. MOTIONS FOR SUMMARY JUDGMENT
Having concluded that Indiana law applies and this court must decide the present motions, the court turns to the parties’ motions for summary judgment. Sirius seeks summary judgment in its favor on both Redmond’s breach of contract, (Docket No. 70), and bad faith, (Docket No. 75), claims, as well as its cross-claim for breach of contract, (Docket No. 70), and with respect to the issue of future medical expenses, (Docket No. 66). Redmond seeks summary judgment [*17] on the question of coverage. (Docket No. 63.) The issues raised in all of the motions are largely inter-related and therefore the court shall address them together. At the core of the present dispute is the question of whether the relevant insurance policy afforded coverage for the injuries Redmond suffered and thus the court begins there.
A. Facts
On July 2, 2011, 32-year-old Redmond joined three acquaintances on a trip to ski the Ellingwood Couloir, located in Grand Teton National Park in Wyoming. (Docket No. 83, ¶1.) All were experienced skiers and Redmond considered himself an “expert,” having skied since age two and having skied competitively in high school. (Docket No. 83, ¶¶7-8.) Setting out at 1:00 or 2:00 AM, the group hiked up the mountain using crampons and ice axes to assist their assent. (Docket No. 83, ¶17-18.) Photographs of the group’s ascent have been included in the record. (See Docket No. 68-5.) By about 10:00 AM, the group was about two-thirds of the way up the Ellingwood Couloir when they stopped to rest. (Docket No. 83, ¶19.) Two of the group, including Redmond, rested about 30 minutes, removed their climbing gear, and prepared for their descent; two others continued [*18] climbing, intending to reach the top of the couloir before skiing down. (Docket No. 83, ¶¶25-26.) Redmond was first to ski down the mountain but after skiing only a short distance, he lost his balance and fell. (Docket No. 83, ¶28.) When he ceased tumbling down the mountain, he remained motionless, unconscious, and unresponsive. (Docket No. 83, ¶29.) He was eventually airlifted from the park for medical treatment. (Docket No. 83, ¶29.)
The relevant insurance policy that provided coverage for Redmond for the period of October 20, 2010 to October 20, 2011, contains the following exclusions:
All charges, costs, expenses and/or claims (collectively “Charges”) incurred by the Insured Person and directly or indirectly relating to or arising from or in connection with any of the following acts …:
* * *
(11) Charges incurred for any surgery, Treatment or supplies relating to, arising from or in connection with, for, or as a result of:
* * *
(d) any Injury or Illness sustained while taking part in mountaineering activities where specialized climbing equipment, ropes or guides are normally or reasonably should have been used, Amateur Athletics, Professional Athletics, aviation (except when traveling [*19] solely as a passenger in a commercial aircraft), hang gliding and parachuting, snow skiing except for recreational downhill and/or cross country snow skiing (no cover provided whilst skiing in violation of applicable laws, rules or regulations; away from prepared and marked in-bound territories; and/or against the advice of the local ski school or local authoritative body), racing of any kind including by horse, motor vehicle (of any type) or motorcycle, spelunking, and subaqua pursuits involving underwater breathing apparatus (except as otherwise expressly set forth in Section Q. Recreational Underwater Activities). Practice or training in preparation for any excluded activity which results in injury will be considered as activity while taking part in such activity; and/or
(e) any Illness or Injury sustained while participating in any sporting, recreational or adventure activity where such activity is undertaken against the advice or direction of any local authority or any qualified instructor or contrary to the rules, recommendations and procedures of a recognized governing body for the sport or activity….
(Docket No. 83, ¶33 (emphasis added).) Relying upon section (d) quoted above, [*20] Sirius denied Redmond’s claim. (Docket No. 83, ¶¶36, 38.)
B. Summary Judgment Standard
“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). A material fact is one that might affect the outcome of the case, and a nonmoving party’s dispute is “genuine” only if a reasonable finder of fact could find in the nonmoving party’s favor at trial. Anderson, 477 U.S. at 248-49. The court views the facts in the light most favorable to the non-moving party, and likewise it draws all inferences in the non-movant’s favor. Ault v. Speicher, 634 F.3d 942, 945 (7th Cir. 2011). The court may not weigh the evidence or make credibility determinations. Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003). Thus, the nonmoving party will defeat a motion for summary judgment if it is able to produce admissible evidence that, when viewed in the most favorable light, would be sufficient to enable the finder of fact to return a verdict in its favor. Fleishman v. Cont’l Cas. Co., 698 F.3d 598, 603 (7th Cir. 2012).
C. [*21] Analysis
“An insurance policy is a contract, and as such is subject to the same rules of construction as other contracts.” Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249, 251 (Ind. 2005) (citing Allstate Ins. Co. v. Dana Corp., 759 N.E.2d 1049, 1054 (Ind. 2001)). Because contract interpretation is primarily a question of law, it is a matter that is generally well-suited for summary judgment. FLM, LLC v. Cincinnati Ins. Co., 973 N.E.2d 1167, 1174 (Ind. Ct. App. 2012) (citing Mahan v. Am. Std. Ins. Co., 862 N.E.2d 669, 676 (Ind. Ct. App. 2007)). “When interpreting an insurance contract courts must look at the contract as a whole.” Dunn, 836 N.E.2d at 252 (citing Meridian Mut. Ins. Co. v. Richie, 540 N.E.2d 27, 29 (Ind. 1989)). In construing an insurance contract, the court should do “so as not to render any words, phrases, or terms ineffective or meaningless.” FLM, 973 N.E.2d at 1174 (citing Mahan, 862 N.E.2d at 676). Terms should be given their plain and ordinary meaning. Id. (citing Mahan, 862 N.E.2d at 676). In determining the “plain and ordinary meaning” of a term, courts will frequently turn to dictionaries. See, e.g., Allgood v. Meridian Sec. Ins. Co., 836 N.E.2d 243, 247 (Ind. 2005); [*22] State Farm Mut. Auto. Ins. Co. v. D’Angelo, 875 N.E.2d 789, 797-98 (Ind. Ct. App. 2007).
However, if a provision of an insurance contract is ambiguous, it is to be construed strictly against the insurer. FLM, 973 N.E.2d at 1174 (quoting Lake States Ins. Co. v. Tech Tools, Inc., 743 N.E.2d 314, 318 (Ind. Ct. App. 2001)). An insurance contract is not ambiguous simply because parties each have their own interpretation of a provision. Id. (citing Mahan, 862 N.E.2d at 676). Rather, “[a]n insurance contract is ambiguous when it is susceptible to more than one interpretation and reasonably intelligent persons would honestly differ as to its meaning.” Id. (quoting Allstate Ins. Co. v. Bradtmueller, 715 N.E.2d 993, 997 (Ind. Ct. App. 1999)).
1. Mountaineering Exclusion
In its motion for summary judgment, the defendant begins with the contention that the plaintiff’s injuries directly or indirectly related to or arose from or were in connection with mountaineering activities “where specialized climbing equipment, ropes or guides are normally or reasonably should have been used.” Mountaineering is not defined in the policy.
There is no dispute between the parties that when he was ascending the mountain, [*23] Redmond was mountaineering. But Redmond was not injured on his ascent, and the parties disagree as to whether his descent on skis constituted mountaineering.
The Oxford English Dictionary defines “mountaineering” as, “The action or sport of climbing mountains.” Oxford English Dictionary, (January 15, 2014), http://www.oed.com/view/Entry/239554. Merriam-Webster similarly defines it as “the sport or technique of scaling mountains.” Merriam-Webster, (January 15, 2014), http://www.merriam-webster.com/dictionary/mountaineering. The definition within the American Heritage Dictionary states, “The climbing of mountains, especially using special equipment and techniques on rock, ice, or snow. Also called mountain climbing.” American Heritage Dictionary, (January 15, 2014), http://www.ahdictionary.com/word/search.html?q=mountaineering.
If a person uses the word “climb” or “climbing” in common conversation, the connotation will generally be of an action involving ascent, e.g. climb a ladder, climbing stairs, or climb a tree. This understanding is reflected in the Oxford English Dictionary’s first definition of “climb,” which states, “To raise oneself by grasping or clinging, or by the aid of hands [*24] and feet; ‘to mount by means of some hold or footing’ (Johnson); to creep up; to ascend, come, or go up, a perpendicular or steep place. Often with up.” Oxford English Dictionary, (December 2, 2013), http://www.oed.com/view/Entry/34342 (emphasis in original).
But as any parent knows from having to frequently call after a rambunctious child, the word “climb” is often used alongside “down,” to denote descent, as in, “Climb down from there before you get hurt!” The Oxford English Dictionary recognizes this usage of “climb” as its second definition of the word “climb” stating, “to descend by the same means.” Oxford English Dictionary, (January 15, 2014), http://www.oed.com/view/Entry/34342.
Thus, if “mountaineering” is defined by reference to “climbing” and climbing can denote either ascent or descent, then necessarily, “mountaineering” must include both ascent and descent. The court finds this understanding of mountaineering to be the only logical definition. After all, in the context of mountaineering, the proverb “What goes up, must come down,” is generally literally true.
But a person is not necessarily “mountaineering” when he is descending a mountain simply because he ascended through [*25] mountaineering. A person who has helicopter waiting for him at a peak or who chooses to parasail off a mountain could not be appropriately regarding as “mountaineering” on his descent, notwithstanding the means of his ascent. Rather, as the Oxford English Dictionary notes in its second definition of “climb,” when used in the context of descent, the action must be “by the same means.” The court understands the “same means” to be referring to the means stated in the first definition of “climb,” i.e. “grasping or clinging, or by the aid of hands and feet.” Thus, whether ascending or descending a mountain by means of “grasping or clinging, or by the aid of hands and feet,” the person is “mountaineering.”
Here, Redmond generally hiked and climbed up and attempted to ski down. Obviously, skiing involves “the aid of hands and feet” but so do countless other obviously distinct activities. Common sense and common usage would not equate skiing with mountaineering; the actions are distinct in both connotation and denotation. Redmond engaged in mountaineering in order to go skiing but that predicate or the fact that the skiing occurred on a mountain (as skiing obviously often will) did not transform [*26] his skiing into mountaineering.
Nor does the court find persuasive the defendant’s argument that the policy’s expansive language barring coverage for injuries “arising from or in connection with, for, or as a result of … mountaineering” operates to bar coverage. Obviously, this provision serves a valuable purpose. Without it, perhaps a person who fell while mountaineering could argue that the mountaineering exclusion should not bar coverage because he was injured when he fell, not when he was mountaineering, which, by definition, would not include an uncontrolled fall. But the defendant’s argument stretches this provision too far. In the view of the defendant, because the causal chain the resulted in Redmond’s injury included a mountaineering link, coverage must be barred. The court disagrees.
The court also rejects the defendant’s contention that the mountaineering exclusion encompasses “ski mountaineering,” which the defendant characterizes as a subset of mountaineering. The plaintiff contends that ski mountaineering requires ropes and other specialized equipment that he was not using on the descent, (Docket No. 64 at 23-24), but even accepting for present discussion that Redmond’s [*27] acts fell within a broad definition of “ski mountaineering,” the court finds that the mountaineering exclusion does not encompass the distinct activity of ski mountaineering. In describing the mountaineering exclusion, the policy states that mountaineering involves activities “where specialized climbing equipment, ropes or guides are normally or reasonably should have been used.” Here, Redmond’s downhill skiing would not have called for specialized climbing equipment, ropes, or guides, and thus, even if it came within a broad general definition of “ski mountaineering,” the activity would not come within the policy’s description of “mountaineering.”
Therefore, the court concludes that the mountaineering exclusion does not apply in this case. Thus, the court turns to whether any of the policy’s skiing exclusions apply.
2. Skiing Exclusions
In the portion of the insurance policy listing its exclusions, it also states:
“any Injury or Illness sustained while taking part in … snow skiing except for recreational downhill and/or cross country snow skiing (no cover provided whilst skiing in violation of applicable laws, rules or regulations; away from prepared and marked in-bound territories; [*28] and/or against the advice of the local ski school or local authoritative body)….”
This provision, moving back and forth between coverage and exclusions, is far from a model of clarity. It first excludes coverage for injuries sustained while snow skiing but then immediately excludes from the exclusion (and thus covers) injuries sustained while “recreational downhill and/or cross country snow skiing,” and then adds a parenthetical to now exclude from the exclusion to the exclusion (and thus deny coverage for) injuries sustained while “skiing in violation of applicable laws, rules or regulations; away from prepared and marked in-bound territories; and/or against the advice of the local ski school or local authoritative body.” The net effect of this provision is that injuries sustained as a result of recreational snow skiing are covered provided the skiing was not unlawful, against the advice of certain entities, or “away from prepared and marked in-bound territories.”
The defendant argues that the plaintiff’s skiing was not “recreational” and points to a case where a court found that a life insurance policy did not provide coverage for an insured who was killed in an avalanche while heli-skiing [*29] (traveling via helicopter to a remote location on a mountain and then skiing down the mountain) because, although the insured listed skiing as one of his “recreational activities” he did not disclose that he engaged in backcountry heli-skiing. (Docket No. 81 at 8-12 (discussing W. Coast Life Ins. Co. v. Hoar, 505 F. Supp. 2d 734 (D. Colo. 2007)).) However, Hoar is distinguishable in that the issue before that court was not whether a policy exclusion applied but rather whether the insurer had adequate notice of the risk it was undertaking when it relied upon his application to issue the policy. Moreover, the court’s conclusion that the insurer was not adequately informed of its risk was not based solely upon the fact that the insured identified simply skiing, as opposed to heli-skiing, as a recreational activity, but also the fact that the insured did not disclose heli-skiing when asked if he engaged in “any hazardous activities.” Id. at 744-49.
“Recreational” is not ambiguous. It is readily understood as, “An activity or pastime which is pursued for the pleasure or interest it provides.” Oxford English Dictionary, (January 15, 2014), http://www.oed.com/view/Entry/159954. Thus, competitive [*30] or commercial skiing likely would not be covered under the policy. There is no evidence that Redmond was skiing for any purpose other than the pure pleasure or interest the sport provides, and thus the court concludes that Redmond’s skiing on the day of his injury was recreational.
Nor is there reason to conclude that his skiing was unlawful or against the advice of any relevant entity. The next question is whether he was skiing “away from prepared and marked in-bound territories” when he was injured.
In Redmond’s view, this phrase, when read alongside the other exclusions, means simply that there is no coverage if he is skiing in an area where he has been told not to ski. (Docket No. 64 at 27.) Thus, the exclusion would not apply here because he was skiing in an area where skiing was permitted; in effect, because skiing was permitted anywhere within Grand Teton National Park, the whole park was a prepared and in-bound territory. (Docket No. 64 at 27.)
Moreover, the term “away from” is ambiguous in the view of the plaintiff. It may be interpreted strictly to suggest the skier’s direction. Thus, there would be no coverage if a skier started on a marked and prepared in-bound area but then [*31] left that area. Or, perhaps, there might be coverage for out-of-bounds skiing provided the skier’s path, at some point, would intersect a marked and prepared in-bound territory and thus he was going towards, rather than away from, the in-bound territory. Therefore, a skier taking a shortcut through an out-of-bounds area would still be covered because he was going towards in-bound territory. Alternatively “away from” might be much broader, meaning generally, “outside,” as in how one might say she is “away from home.”
The court does not find the phrase “away from” to be ambiguous. Simply because a term has more than one denotation does not make it ambiguous; otherwise, the majority of words would probably be ambiguous. The differing understandings must also be reasonable given the context before the court will find a term ambiguous. The latter understanding, i.e. that “away from” means, roughly, “outside,” is the only reasonable understanding of the term given the context in which it is used. There may be some arguable ambiguity as to how far from the prepared and in-bound territory a person must be to be “away from” such territory, e.g. whether the term should be read like the NFL rulebook [*32] where one foot on the line is out of bounds or if there might be a sort of “bubble” around a covered territory so that coverage does not necessarily end at a strict boundary line, see York v. Sterling Ins. Co., 114 A.D.2d 665, 666-67, 494 N.Y.S.2d 243 (N.Y. App. Div. 3d Dep’t 1985) (holding that policy provision excluding coverage for injuries “away from” the insured’s property did not bar coverage for injuries sustained when a person riding a dirt bike on insured’s property lost control, traveled over the insured’s property line, and was injured). The follow-up question as to precisely how far one must be to be “away from” is not an issue presently before this court, although it may be relevant for trial. Thus, the court turns its focus to what is meant by “prepared and marked in-bound territories.”
The court rejects the plaintiff’s contention that the court must lump all the exclusions together and conclude that they mean simply that there is coverage so long as he was not skiing in an area where skiing was not banned. Such an interpretation offends the maxim of contract interpretation that, to the extent possible, every term and provision must be given meaning. In saying that there is no coverage [*33] if Redmond was skiing away from prepared and marked in-bound territories, this plainly encompasses more than simply skiing in an area where skiing is not barred. Thus, having concluded that “away from” means roughly “outside of,” restating this exclusion as a positive question, the issue before the court becomes, “Was Redmond skiing in a prepared and marked in-bound territory when he was injured?” Only if he was would the policy possibly afford coverage for his injures.
The plaintiff’s focus upon “in-bound” overlooks two other essential components to the exclusion–“prepared” and “marked.” The plaintiff refers to these terms in only a single inconsequential footnote, (Docket No. 64 at 31, n. 14).) If the plaintiff does not regard his argument on this point worthy of inclusion of the text of his brief, the court hardly regards it as worthy of much consideration; in fact, the court previously expressed its disapproval of the plaintiff’s efforts to raise arguments in footnotes, (Docket No. 80 at 4).
The court agrees with the defendant that “prepared” and “marked” are words of ordinary use. However, this fact does not necessarily mean that the terms are unambiguous as used in the policy. [*34] The only argument offered by either party that approaches a definition of the term “prepared” is the defendant’s suggestion that it means “groomed.” (Docket Nos. 71 at 23; 103 at 3, 9.) As for “marked” there is only the defendant’s footnote where it notes that Redmond testified he did not observe ropes, signs, fences, or other defined physical boundaries on the mountain that day. (Docket No. 71 at 21-22, fn.78.)
The court finds that both “prepared” and “marked” are subject to different interpretations. Again, simply because there are differing interpretations does not mean that the terms are ambiguous or that the policy affords coverage. Rather, for the term to be ambiguous, the differing interpretations must both be reasonable such that “intelligent persons would honestly differ as to its meaning.” Stevenson by Freeman v. Hamilton Mut. Ins. Co., 672 N.E.2d 467, 471 (Ind. Ct. App. 1996) (citing Harden v. Monroe Guaranty Ins. Co., 626 N.E.2d 814, 817 (Ind. Ct. App. 1993)). There is coverage only if one of those reasonable understandings is consistent with coverage. Thus, the court looks to the various meanings of these terms.
While “marked” is readily understood as having some sort of [*35] visible identification, see Oxford English Dictionary, (January 15, 2014), http://www.oed.com/view/Entry/114174, what is unclear is what sort of mark must be utilized or what these marks must indicate. The court presumes that if a ski area is bordered on the sides by signs and ropes demarcating the boundaries of the permissible skiing area, it is likely “marked” within the scope of the policy. But is this the only kind of identification that will render an area “marked?” What if the area is depicted on a map that includes boundary lines indicating the recommended areas for skiing? If markings on a map are sufficient, who must prepare such a map to render the area marked? Must the map be prepared by the entity in charge of the area, e.g. the National Park Service, or would a map prepared by a person with special knowledge of the area suffice? Or must the markings even relate to the in-bound territories? Would a sign in the vicinity of the mountain stating “Ski at your own risk,” suffice as a marking? Perhaps there are many other plausible understandings of this term.
As for “prepared,” again this term has a readily understandable common meaning, e.g. “To bring into a suitable condition [*36] for some future action or purpose; to make ready in advance; to fit out, equip.” Oxford English Dictionary, (January 15, 2014), http://www.oed.com/view/Entry/150447. This definition is exceptionally broad and thus its application to the context of skiing is unclear. Even the defendant’s own expert testified that he was not familiar with what this might mean in the context of skiing. (Docket No. 68-15 at 32.)
If ground has snow on it, to many persons, it is “prepared” for skiing in that it has been brought into a suitable condition for skiing, and thus the policy may be simply excluding coverage when persons attempt to ski on surfaces not suitable for skiing. Or must there be some sort of human intervention? (See Docket No. 68-12 at 12.) If so, what sort of intervention? In the context of backcountry skiing, would inspection for or the mitigation of avalanche dangers be adequate preparation of the territory? If so, who must do this? Or must there be, as the defendant seems to suggest, formal grooming of the area, using, for example, a snow grooming machine? If the latter definition is appropriate, then would there be coverage under the policy if an insured was making a run after a fresh [*37] snowfall, or must he wait for the snow grooming machine to make a pass over the slopes?
The court finds that neither party has adequately articulated, much less supported, an appropriate conclusive meaning for these terms. While the defendant’s understanding of the terms “prepared” and “marked” is, as discussed below in conjunction with the plaintiff’s bad faith claim, reasonable, this understanding is not necessarily the only reasonable understanding. Therefore, because the court is not satisfied that the terms are unambiguous and support the conclusion that there is no coverage under the policy, the court cannot grant the defendant’s motion for summary judgment. However, nor can the court grant the plaintiff’s motion for summary judgment because the plaintiff has not adequately demonstrated that the terms are, in fact, ambiguous and/or support a finding of coverage. The plaintiff largely asks the court to read the terms out of the policy rather than presenting an alternative reasonable understanding of these terms that is consistent with coverage. Although the court offers here hypothetical interpretations of these terms to demonstrate how they terms are not necessarily un-ambiguous, [*38] absent the defendant’s opportunity to respond to these interpretations, the court is not prepared to conclude that any of these proffered interpretations is reasonable. And in any event, even if reasonable, the court could not conclude that the proffered interpretation would be consistent with coverage because the plaintiff has not presented any such factual support to the court.
Consequently, neither party has succeeded in establishing that summary judgment is warranted on their respective motions relating to coverage. Because the understanding of “in-bound” appears to be at least partially dependent upon the definitions of both “prepared” and “marked,” the court finds itself similarly unable to fix a definition of this term at this time. Therefore, the parties’ motions for summary judgment regarding coverage, (Docket Nos. 63, 70), shall be denied.
3. Future Medical Expenses
Based upon its reading of the plaintiff’s complaint, the defendant understood that the plaintiff was seeking payment for medical expenses related to the accident but not incurred prior to the time the policy terminated. Thus, the defendant filed a motion seeking to foreclose this perceived request for damages. (Docket [*39] No. 66.) In response, the plaintiff states that he is seeking coverage only for medical expenses incurred between the date of the accident, July 2, 2011, and the date his coverage expired, October 19, 2012. The reference in the complaint to “costs of the medical care he will continue to receive in the future,” (Docket No. 1-1 at ¶40), was not a demand for coverage beyond the policy period but rather was necessitated by the fact that the complaint was filed within the policy period. In reply, the defendant asks the court to strike the pertinent portion of the complaint and declare that future medical expenses are not available to the plaintiff.
The court finds that the defendant’s motion, (Docket No. 66), is moot and therefore shall be denied as such. Further, the court finds no reason to strike any portion of the plaintiff’s complaint. The parties agree that the plaintiff is not entitled to payment for medical expenses incurred outside the policy period and the court does not read the complaint as seeking such damages. Thus, there is no controversy on this point that requires action by this court.
4. Bad Faith
It is well-established that insurers have a duty to deal in good faith with [*40] their insureds. Monroe Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968, 975 (Ind. 2005) (citing Freidline v. Shelby Ins. Co., 774 N.E.2d 37, 40 (Ind. 2002). “As a general proposition, ‘[a] finding of bad faith requires evidence of a state of mind reflecting dishonest purpose, moral obliquity, furtive design, or ill will.'” Magwerks, 829 N.E.2d 968, 977 (Ind. 2005) (quoting Colley v. Indiana Farmers Mut. Ins. Group, 691 N.E.2d 1259, 1261 (Ind. Ct. App. 1998)). This may be proven if the plaintiff can establish by clear and convincing evidence “that the insurer had knowledge that there was no legitimate basis for denying liability.” Id. at 976 (quoting Freidline, 774 N.E.2d at 40). “Poor judgment or negligence do not amount to bad faith.” Lumbermens Mut. Cas. Co. v. Combs, 873 N.E.2d 692, 714 (Ind. Ct. App. 2007) (quoting State Farm Mut. Auto Ins. Co. v. Gutierrez, 844 N.E.2d 572, 580 (Ind. Ct. App. 2006). Nor is the lack of a diligent investigation sufficient to support a finding of bad faith. Id. (quoting Gutierrez, 844 N.E.2d at 580). Thus, bad faith is not synonymous with a breach of contract. Even if a denial of coverage was improper, it was not necessarily done in bad faith. Id. [*41] (quoting Erie Ins. Co. v. Hickman, 622 N.E.2d 515 (Ind. 1993)).
Redmond’s claim of bad faith is two-pronged. The first prong is Sirius’ conduct before the suit was filed; the second is Sirius’ conduct in defending this suit and pursuing a counterclaim against Redmond.
With respect to Sirius’ pre-litigation conduct, Redmond contends that Sirius acted in bad faith when it failed to conduct an adequate investigation into his claim and denied his claim. Sirius contends that its investigation was appropriate and its decision reasonable. In support, it points primarily to its “claim log,” which it provided to the court, (Docket No. 73-24). However, absent appropriate foundation to establish that this document is a business record under Fed. R. Evid. 803(6), this document is inadmissible hearsay. The defendant fails to support this document by an affidavit or declaration, nor has the defendant directed the court to any relevant deposition testimony that could provide the necessary foundation.
The defendant also relies upon the deposition testimony of Tammie Peters (“Peters”), the person ultimately responsible for denying Redmond’s claim. However, the defendant has provided the court with only [*42] nine pages of her 154 page deposition (three of the provided pages comprise the cover and certification pages), and not always the pages relied upon by the defendant, (see, e.g., Docket No. 73 at ¶130 (citing “Ex. W, Peters Dep. 10:7-9” which is not included in Docket No. 73-23).) In her deposition, Peters is asked to review Exhibit 11, (see Docket No. 68-10), which the questioner posits consists of articles found on the internet and placed in the claims file of Sirius’ underwriter. (Docket No. 73-23 at 6.) At no point in the deposition excerpts provided to the court by the defendant does Peters authenticate these documents or testify that she relied solely upon them to make her coverage decision. Other documents attached to the defendant’s proposed findings of fact and cited by defendant in its proposed findings of fact and in its briefs are similarly un-authenticated. The only other testimony in the portion of Peters’ deposition provided to the court by the defendant that indicates the basis for Peters’ decision to deny Redmond’s claim is her statement that another employee offered his opinion that the claim was not covered because he reviewed an ambulance report and had done some [*43] internet research regarding where Redmond was skiing. (Docket No. 73-23 at 5.)
In contrast to the defendant’s submissions, the plaintiff has provided the court with the entirety of Peters’ deposition and thus the court turns to this document. (Docket No. 68-12.) Having reviewed this document, the court is able to fill in many of the gaps left by the defendant. In her deposition, Peters discusses Exhibit 7, which she describes as “insured notes” comprised of “notes that were put under the insured, Ryan Redmond.” (Docket No. 68-12 at 15.) Exhibit 7, which was provided to the court by the plaintiff as Docket No. 68-7, is largely the same as the “claim log,” (Docket No. 73-24), provided by the defendant, although the formatting of these documents differs and Docket No. 68-7 includes pages and entries beyond those included in the defendant’s excerpt. Based upon this more complete review, the court concludes that Peters’ testimony regarding this document is sufficient to bring the document within Fed. R. Evid. 803(6), and thus it may be appropriately considered by the court in deciding the present motion.
This document indicates that the decision to deny coverage was made by at least July [*44] 29, 2011. (Docket Nos. 73-24 at 3; 68-12 at 20.) The notes indicate that on July 5, 2011, the underwriter was informed that Redmond was in a “skiing accident with a head injury.” (Docket No. 73-24 at 6.) An hour later, another employer of the underwriter spoke with personnel at the hospital and noted, “Admitted through ER / head trauma / fall from cliff.” (Docket No. 73-24 at 5.) Ten days later, following a conversation with the helicopter ambulance service that assisted in Redmond’s rescue, the notes state, “Appeared scene was Lupine Meadows, but was unsure if that is a ski resort or park.” (Docket No. 73-24 at 4.) Later that day, a follow-up call confirmed that Lupine Meadows was in Grand Teton National Park. (Docket No. 73-24 at 4.) Four days thereafter, the underwriter communicated to the hospital that there might not be coverage because preliminary investigation indicated Redmond’s “injuries were as a result of backcountry skiing.” (Docket No. 73-24 at 4.)
The court is not able to find that the information contained in this document was necessarily sufficient to deny Redmond’s claim. Thus, the court looks to what other information was available to the underwriter. Peters testified [*45] that she also relied upon a report from the helicopter ambulance service that transported Redmond. (Docket No. 68-12 at 20.) This report is included in Exhibit AA to Sirius’ statement of proposed facts, (Docket No. 73-27 at 12-16), and, like many of the defendant’s exhibits, is not authenticated by way of a declaration, affidavit, or deposition testimony. Nonetheless, the court shall consider it because the plaintiff does not dispute that this document is the Omniflight Helicopters-Idaho medical records received by the underwriter. (Docket No. 96, ¶107.) The portion of this report captioned “History of Present Illness” states, in part, “Pt had been backcountry skiing when he fell down steep slope approx. 800 ft. Took approx. 2 hrs before pt could be reached.” (Docket No. 73-27 at 12.)
Taken together, all of this information provided a reasonable basis to deny Redmond’s claim pursuant to the skiing exclusion in the policy. As discussed above, the terms “prepared” and “marked,” as used within the skiing exclusion, can be reasonably understood in different ways. One such reasonable understanding would be the understanding that Peters testified she held, which there is no coverage for skiing [*46] outside of the boundaries of a ski run at a traditional ski resort. One could reasonably understand “backcountry skiing” to mean that Redmond was necessarily not skiing at a traditional ski resort. Subsequent information further corroborated the conclusion that Redmond was skiing in a remote wilderness area. (See Docket No. 73-14 (National Park Service Search & Rescue Report received by the underwriter on Sept. 15, 2011).) Thus, based upon the information provided, the decision to deny coverage was reasonable. This decision might prove incorrect, but it was not done in bad faith. There is simply no evidence that could permit a reasonable finder of fact to conclude by clear and convincing evidence that Peters’ decision to deny the claim was the result of a “dishonest purpose, moral obliquity, furtive design, or ill will.”
Thus, the court turns to the question of whether Sirius’ conduct in this litigation might form the basis for a claim of bad faith. Redmond argues that Sirius acted in bad faith by using tactics to try to get Redmond to concede Sirius’ counterclaim, which Sirius eventually withdrew, and by failing to reconsider the denial of coverage after certain deposition testimony. [*47] (Docket No. 89 at 9.)
On the issue of post-litigation conduct vis-à-vis bad faith, courts across the country have been dealing with two distinct issues. The first is evidentiary: whether an insurer’s conduct in litigation following the filing of a claim alleging bad faith might be used as evidence to support that claim of bad faith. The second is substantive: whether an insurer’s conduct in litigation might itself form the basis for a claim of bad faith. The Court of Appeals of Indiana addressed these issues in Gooch v. State Farm Mut. Auto. Ins. Co., 712 N.E.2d 38 (Ind. Ct. App. 1999), and noted the general reluctance of courts to permit post-litigation conduct as evidence to support a prior claim of bad faith. Id. at 42 (discussing Howard v. State Farm Mut. Auto. Ins. Co., 316 S.C. 445, 450 S.E.2d 582 (1994); Palmer v. Farmers Ins. Exch., 261 Mont. 91, 861 P.2d 895 (1993); Nationwide Mut. Ins. Co. v. Clay, 525 So. 2d 1339 (Ala.1987)). With respect to the second question, however, the Court of Appeals of Indiana concluded that when an insurer is sued, under certain circumstances, its post-litigation conduct might form an independent basis for a new bad faith claim.
In Gooch, the plaintiff [*48] sued her insurer seeking coverage under the uninsured motorist provision of her policy. After the action was filed, the defendant insurer insisted that she also pursue an action against another individual in a foreign jurisdiction, an action the plaintiff believed would be frivolous. Believing that the insurance company was making these demands to frustrate her suit and thus pressure her to settle, the plaintiff amended her complaint to also allege bad faith. The court of appeals concluded that such litigation conduct by an insurer might present a cognizable claim of bad faith, and in doing so the court emphasized that the plaintiff was relying upon conduct that occurred only before she filed her bad faith claim.
What Redmond is attempting to allege here are two distinct bad faith claims. The first related to the denial of his claim; the second related to Sirius’ conduct in the litigation. But as the court addressed in a prior order, (Docket No. 80), Redmond’s complaint raises bad faith only with respect to Sirius’ denial of his claim. Although Gooch involved a case initiated on a wholly distinct coverage claim, an insurer is likely not absolved of its duty of good faith simply because [*49] a plaintiff, like Redmond, initiates a suit alleging bad faith. If a suit is commenced containing a claim of bad faith and an insurer subsequently engages in litigation conduct that itself constitutes a distinct claim of bad faith, in accordance with Gooch, that plaintiff may amend her complaint to state a second distinct claim of bad faith.
Here, Redmond did not seek to amend his complaint to add a claim of post-litigation bad faith. Instead, he has attempted to expand the bad faith claim in his complaint by supplementing his discovery responses. The defendant objected and, as is fully discussed in this court’s prior order, (Docket No. 80), the court rejected this means of constructively amending his complaint. There was no amended complaint and therefore no such claim of post-litigation bad faith is properly before the court. Thus, Redmond necessarily cannot obtain the relief he seeks. Accordingly, the court shall grant the defendant’s motion for summary judgment as to the entirety of Redmond’s bad faith claim.
V. MOTION TO STRIKE PLAINTIFF’S DEMAND FOR A JURY TRIAL
Alongside its choice of law and venue provisions, the insurance policy also states, “All trials regarding disputes under [*50] this insurance shall be exclusively presented to and determined solely by the court as the trier of fact, without a jury.”
The plaintiff contends that this waiver of his right to a jury trial is unenforceable because it was not knowingly and intelligently made and the jury waiver provision is unconscionable. (Docket No. 95.) In reply, the defendant cites IFC Credit Corp. v. United Bus. & Indus. Fed. Credit Un., 512 F.3d 989, 993-94 (7th Cir. 2008), for the proposition that a jury waiver provision need not be knowing, voluntary, or intentional to be enforceable. (Docket No. 102 at 2-3.) However, the contract at issue in IFC was a traditional commercial contract under the Uniform Commercial Code. Although insurance policies are a form of contract and traditional rules of contract interpretation are applied, there is a vast difference between a UCC agreement for the sale of goods and a consumer insurance policy.
In deciding whether a contract provision waiving the right to a jury trial is enforceable, the court looks to the state substantive law that governs the contract. IFC, 512 F.3d at 994. Thus, the court looks to Indiana law. The plaintiff cites only Wisconsin law; the defendant, although [*51] citing Indiana law, does not identify any Indiana case explicitly addressing the question of a jury trial waiver in an insurance contract. The court’s own research has failed to identify any court that has applied Indiana law to directly answer this question.
Notwithstanding, the Court of Appeals for the Seventh Circuit noted that when it comes to the waiver of the right to a jury trial, an agreement to arbitrate a claim (and thus give up not only a jury trial but a judicial forum altogether) is arguably more onerous than an agreement to simply have a claim heard by a court instead of a jury, yet arbitration agreements are regularly enforced in all sorts of contracts without any special requirements. Id. Thus, in the absence of any case law addressing the validity of an insurance contract provision waiving simply the right to a jury trial, the court looks to how Indiana would regard a similar provision waiving the right to present a claim in any judicial forum.
Indiana law does not prohibit the use of arbitration provisions in insurance contracts, see Ind. Code sec. 34-57-2-1; rather, Indiana has a strong policy in favor of enforcing arbitration provisions in all contracts, including [*52] insurance contracts, see, e.g., Pekin Ins. Co. v. Hanquier, 984 N.E.2d 227, 228 (Ind. Ct. App. 2013); HemoCleanse, Inc. v. Phila. Indem. Ins. Co., 831 N.E.2d 259, 262 (Ind. Ct. App. 2005).
If an insurer can include in a standard insurance contract a provision whereby an insured will give up his right to not only a trial by jury but also the right to bring his action in any court, the court has little reason to conclude that a provision waiving the right to a jury trial is inherently unenforceable or any extraordinary means are necessary to render it effective. Thus, the court shall enforce the contract as written.
The plaintiff also raises separate arguments limited to the applicability of the waiver of the right to a jury trial to his bad faith claim. These arguments are basically a restatement of the arguments the plaintiff offered to support his contention that the choice of law provision did not apply to the bad faith claim. For the same reasons set forth above in the discussion of that motion, the court would reject these arguments. But more importantly, having concluded that the defendant is entitled to summary judgment on the plaintiff’s bad faith claim, this aspect of the plaintiff’s [*53] argument is moot.
Finally, the court rejects the plaintiff’s argument that the defendant waived the opportunity to object to the plaintiff’s demand for a jury trial. Under the circumstances of this case, the court finds the present stage of litigation to be an appropriate time for the defendant to raise its objection. Therefore, the defendant’s motion to strike the plaintiff’s demand for a trial by jury, (Docket No. 50), shall be granted.
VI. DEFENDANT’S MOTION TO STRIKE PLAINTIFF’S EXPERT REPORT
The defendant objects to opinions offered by the plaintiff’s expert, Daniel Doucette (“Doucette”), many of which are now moot in light of the court’s decisions on other motions. Thus, having concluded that the defendant is entitled to summary judgment on the plaintiff’s bad faith claim, Doucette’s opinions on this topic are no longer relevant. The only topic on which Doucette opined that remains to be resolved is the question of what the phrase “away from prepared and marked in-bound territories” means.
On this topic, Doucette’s conclusions read more like a legal brief than the opinions of an expert. (See Docket No. 61-1 at 19.) He does not opine as to how this phrase is commonly understood in [*54] the insurance industry, but rather offers general conclusions as to what this phrase might mean in the context of skiing. Although Redmond argues that Doucette is qualified to testify also as a ski expert, (Docket No. 91 at 9-10), the court is not persuaded. Doucette may be an experienced skier, but absent additional knowledge, skill, training, or education, the court finds that Doucette is not qualified to testify as an expert on skiing. The court is not going to open the witness stand to a parade of recreational skiers, each of whom would opine as to the meaning of the relevant phrase. An expert is supposed to assist the trier of fact and Doucette’s opinion on these phrases is not at all helpful.
Therefore, to the extent that his opinions are not moot, the court shall grant the defendant’s motion to exclude Doucette from testifying and strike his expert report, (Docket No. 60).
VII. MOTIONS TO STRIKE
Redmond moved to strike portions of the Sirius’ brief in support of its motion for summary judgment on the plaintiff’s bad faith claim, (Docket No. 84), and to strike Sirius’s reply to its proposed findings of fact, (Docket No. 107.)
The first motion to strike, (Docket No. 84), relates to [*55] the fact that in its brief in support of its motion for summary judgment, Sirius relied upon an email exchange it had not previously disclosed in discovery on the grounds that it was privileged, (see Docket No. 76 at 9-10). In response, Sirius apparently does not oppose the motion to strike, (Docket No. 97 at 4 (“Sirius will withdraw the previously withheld document at issue…”); its opposition is limited to the request for sanctions. Having considered the parties’ briefs on the matter, the court does not find that sanctions are appropriate. Therefore, the motion to strike shall be granted; the request for sanctions shall be denied.
The second motion to strike relates to the fact that Sirius replied to Redmond’s response to Sirius’ proposed findings of fact. Responding to this motion, Sirius’ counsel acknowledges that he misread what was permissible under the relevant local rule, Civ. L.R. 56(b)(3)(B), and agrees to withdraw the pleading. (Docket No. 109.) Therefore, the defendant having withdrawn the relevant pleading, (Docket No. 106), the motion to strike, (Docket No. 107), is moot.
VIII. CONCLUSION
Notwithstanding his travels, Redmond was “residing in” Wisconsin when he renewed his [*56] travel insurance policy with Sirius. Therefore, under Wis. Stat. § 631.83(3)(b), the policy’s forum selection clause is unenforceable. Balancing all other relevant factors, the court does not find that transfer to the Southern District of Indiana pursuant to 28 U.S.C. § 1404(a) is appropriate. Therefore, Sirius’ motion to transfer will be denied.
However, the choice of law provision within the contract shall be given its effect, and therefore Sirius’ motion for an order holding that Indiana law applies to the present case will be granted.
As for the parties’ motions for summary judgment, the court concludes that the mountaineering exclusion is unambiguous and does not exclude coverage for Redmond’s injuries. As for the skiing exclusion, Redmond was engaged in recreational skiing, and there is no evidence that Redmond was skiing “in violation of applicable laws, rules or regulations … and/or against the advice of the local ski school or local authoritative body.” However, the provision excluding coverage for skiing “away from prepared and marked in-bound territories” is subject to varying interpretations and the evidence before the court is insufficient to enable the court to conclude [*57] that either party is entitled to summary judgment on the question of whether the policy provides coverage for Redmond’s injuries.
The court shall grant the defendant’s motion for summary judgment with respect to the plaintiff’s bad faith claim. The evidence is insufficient to permit a reasonable finder of fact to conclude that Sirius acted in bad faith in denying Redmond’s claim. Moreover, Sirius’ litigation conduct cannot form the basis for a bad faith claim because Redmond never amended his complaint to state such a claim.
The defendant’s motion to strike the plaintiff’s demand for a jury trial is granted in accordance with the plain language of the policy, and therefore in any trial in this matter, the court shall serve as the finder of fact.
The report of plaintiff’s expert Daniel Doucette is largely moot in light of other conclusions by the court, but to the extent it is not moot, the defendant’s motion to strike is granted. The plaintiff lacks the qualifications to testify as an expert on skiing and his opinions regarding the meaning of the phrase “away from prepared and marked in-bound territories” are insufficiently supported to come within the appropriate ambit of an expert.
Finally, [*58] with respect to the plaintiff’s motions to strike, the defendant concedes both. Therefore, the plaintiff’s motion to strike portions of the defendant’s brief in support of its motion for summary judgment is granted and its reply to the plaintiff’s response to the defendant’s proposed findings of fact is deemed withdrawn. The court declines to impose sanctions.
IT IS THEREFORE ORDERED that the defendant’s motion to transfer this case to the United States District Court for the Southern District of Indiana, (Docket No. 54), is denied.
IT IS FURTHER ORDERED that the defendant’s motion to strike the plaintiff’s demand for a jury trial, (Docket No. 56), is granted.
IT IS FURTHER ORDERED that the defendant’s motion for an order that Indiana law governs the plaintiff’s claims, (Docket No. 58), is granted.
IT IS FURTHER ORDERED that the defendant’s motion to exclude and strike the expert report of Daniel Doucette, (Docket No. 60), is granted to the extent that the motion is not moot.
IT IS FURTHER ORDERED that the plaintiff’s motion for summary judgment on coverage, (Docket No. 63), is denied.
IT IS FURTHER ORDERED that the defendant’s motion for summary judgment on future medical expenses, (Docket [*59] No. 66), is denied as moot.
IT IS FURTHER ORDERED that the defendant’s motion for summary judgment on the plaintiff’s breach of contract claim and the defendant’s breach of contract counterclaim, (Docket No. 70), is denied
IT IS FURTHER ORDERED that the defendant’s motion for summary judgment on the plaintiff’s bad faith claim, (Docket No. 75), is granted.
IT IS FURTHER ORDERED that the plaintiff’s expedited non-dispositive motion to strike, (Docket No. 84), is granted. The request for sanctions is denied.
IT IS FURTHER ORDERED that the plaintiff’s expedited non-dispositive motion to strike, (Docket No. 107), is denied as moot. The defendant’s reply, (Docket No. 106), is considered withdrawn.
IT IS FURTHER ORDERED that the court shall hold a telephonic conference on January 28, 2014 at 9:00 AM (CST) to discuss scheduling this matter for trial. The court will initiate the call. Not less than 48 hours before the call, counsel participating in the call shall provide to the court via email to GoodsteinPO@wied.uscourts.gov a direct telephone number where counsel may be reached for the call. The court strongly discourages the use of mobile phones for conference calls.
Dated at Milwaukee, Wisconsin [*60] this 15th day of January, 2014.
/s/ Aaron E. Goodstein
AARON E. GOODSTEIN
U.S. Magistrate Judge
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Lift tickets are not contracts and rarely work as a release in most states
Posted: December 16, 2013 Filed under: Contract, Ski Area, Skiing / Snow Boarding | Tags: Contract, Lift Ticket, Release, ski area, skiing, snowboarding 2 CommentsNor can they be used to prove assumption of the risk. At best, a lift ticket is another sign informing someone of the risk. If you are relying upon a lift ticket to stop lawsuits, get a release.
In most states where a statute requires language on the back of a lift ticket that warns of the risk, the language is simply that, warning language.
Two decisions have held that a lift ticket is valid to stop a claim at a ski area: Oregon and North Carolina.
These decisions have upheld the use of a lift ticket to bar a claim.
Oregon: Silva v. Mt. Bachelor, Inc., 2008 U.S. Dist. LEXIS 55942
North Carolina: Strawbridge v. Sugar Mountain Resort, 320 F. Supp. 2d 425; 2004 U.S. Dist. LEXIS 14, Strawbridge, v. Sugar Mountain Resort, Incorporated, 152 Fed. Appx. 286; 2005 U.S. App. LEXIS 23459
In most states, the lift ticket is just a warning. To create a contract, a release, the lift ticket would have been a meeting of the minds. The purchaser of the lift ticket would have to understand they are entering a contract and agree to the terms of the contract.
That means the skier or boarder would have to read the back of the lift ticket and say, yes, I agree to the terms of the contract (or “sure.”).
You can’t rely on a lift ticket or any ticket to stop a lawsuit in most states and even in those four states that have held that in these cases, I would not rely on them until additional decisions support the claims.
What do you think? Leave a comment.
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By Recreation Law Rec-law@recreation-law.com James H. Moss #Authorrank
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Assumption of Risk — Checklist
Posted: July 24, 2013 Filed under: Assumption of the Risk, Contract | Tags: Acknowledgment of Risk, assumption of the risk Leave a commentYour second best or maybe only defense to a lawsuit.
The second most important section in a release is the Assumption of Risk or Acknowledgement of Risk section. Assumption of the risk is the second defense when a defense of release is not available. This means if your state does not recognize release as a defense, you should have the best assumption of risk document you can create. See States that do not Support the Use of a Release.
Assumption of the risk may be the only defense you have for claims or injuries from minors. A minor is someone who is too young and therefore, legally unable to contract. See The age that minors become adults.
Assumption of the risk is also valuable in case your defense of release is thrown out for any reason. Your legal agreement, formerly your release, may still be able to prove your guest assumed the risk of their injury.
In some states, Assumption of Risk has been incorporated into Contributory Negligence. The overall effect is the similar. Do not allow the legal definitions to stop you from fully explaining the risks to your client.
To prove Assumption of Risk, you must prove your client knew and understood or appreciated the specific risk that caused the injury. Assumption or Risk includes everything your client hears, sees, or understood before undertaking the activity.
Remember these points when writing an Assumption of Risk section in a release or an A/R document.
- Your Assumption of Risk section should contain the worst-case scenarios for your operation and activities.
- Your Assumption of Risk section should contain the most common hazards, injuries, and risk of your activity no matter how minor.
Contact your insurance company for a list of the claims they have had over the past several years in your activity to determine what should be included in your Assumption of Risk language.
- Make sure your Assumption of Risk section includes all the risks of your activity.
Rafting includes side hikes. Rock climbing includes hikes to the site and debris falling from the cliff. Rope’s courses include group activities as well as high element activities. Overnight trips include sleeping in a tent or outdoors which may be a new experience and a new risk to your guests.
- Assumption of Risk must be stated from your client’s point of view. You understand the risks. Your clients do not.
- Be sure to incorporate a reference or the specific statutes in your state that affect your program. Examples would be covering specific statutes like the Colorado Equine Liability Act if you have horses in your program or the Colorado Ski Act if your program skis.
- Look for any videos that may explain the risk and incorporate those in your safety talk or post them to your site.
- Answer questions honestly about the risks. Never mislead a guest about the risks of the activity.
- Your guest must agree to assume the risk and must agree that they understand the risk.
- The more information you provide your guest the greater your chance of showing your guest assumed the risk.
Assumption of the risk is not the best defense; however, if it is or becomes your only defense, you will be glad you took the effort to work with your attorney to write the risks into your release.
For other articles about Assumption of the Risk See
Release saves riding school, even after defendant tried to show plaintiff how to win the case. http://rec-law.us/14DC7Ad
Plaintiff tried multiple ways to sue whitewater rafting company http://rec-law.us/12l5Ycc
In this cycle race case, the release was void by state law, but could still be used to prove assumption of the risk. http://rec-law.us/OzpHzk
New York Decision explains the doctrine of Primary Assumption of the Risk for cycling. http://rec-law.us/QrTtLl
South Carolina Supreme Court writes a clear decision on Assumption of the Risk for sporting activities. http://rec-law.us/HhuYbY
Rhode Island, applying New Hampshire law states a skier assumes the risk of a collision. http://rec-law.us/Opca1N
Assumption of the risk is used to defeat a claim for injuries on a ropes course http://rec-law.us/SDZlBt
Assumption of the Risk http://rec-law.us/wMtiET
What do you think? Leave a comment.
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By Recreation Law Rec-law@recreation-law.com James H. Moss #Authorrank
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Keeter v. Alpine Towers International, Inc., 399 S.C. 179; 730 S.E.2d 890; 2012 S.C. App. LEXIS 171
Posted: June 17, 2013 Filed under: Challenge or Ropes Course, Climbing Wall, Contract, Legal Case, South Carolina | Tags: Alpine Towers, Alpine Towers International, belay, Belay device, Business, Carowinds, Climbing, Fort Mills, Grigri, negligent design, negligent training, paraplegic, Petzl, Punitive damages, Recreation, Rock climbing, strict liability, Trango 1 CommentKeeter v. Alpine Towers International, Inc., 399 S.C. 179; 730 S.E.2d 890; 2012 S.C. App. LEXIS 171
Lawrence Keeter, Ronald Travis Keeter, and Rebecca Keeter, Appellants/Respondents, v. Alpine Towers International, Inc., and Ashley Sexton, Defendants, Of Whom Alpine Towers International, Inc., is Respondent/Appellant.
Opinion No. 4995
COURT OF APPEALS OF SOUTH CAROLINA
399 S.C. 179; 730 S.E.2d 890; 2012 S.C. App. LEXIS 171
December 6, 2011, Heard
June 27, 2012, Filed
SUBSEQUENT HISTORY: Rehearing denied by Keeter v. Alpine Towers Int’l, Inc., 2012 S.C. App. LEXIS 248 (S.C. Ct. App., July 31, 2012)
PRIOR HISTORY: [***1]
Appeal From York County. Appellate Case No. 2009-137246. John C. Hayes, III, Circuit Court Judge.
DISPOSITION: AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
COUNSEL: Richard A. Harpootlian and Graham L. Newman, both of Richard A. Harpootlian, P.A., of Columbia, for Appellants/Respondents.
Charles E. Carpenter, Jr., and Carmon V. Ganjehsani, of Carpenter Appeals & Trial Support, LLC, of Columbia, and Thomas C. Salane, of Turner, Padget, Graham & Laney, P.A., of Columbia, for Respondent/Appellant.
JUDGES: FEW, C.J. KONDUROS, J., concurs. THOMAS, J., concurring in a separate opinion.
OPINION BY: FEW
OPINION
[*184] [**893] FEW, C.J.: Lawrence “Larry” Keeter and his parents brought this action against Alpine Towers International, Inc., for strict liability, negligent design, and negligent training after Larry broke his back and became a paraplegic as a result of a fall to the ground from a climbing tower designed, manufactured, and installed by Alpine Towers. The jury awarded actual and punitive damages in favor of Larry and actual damages in favor of his parents for Larry’s medical bills. After both sides filed post-trial motions, the trial court entered separate judgments in favor of Larry and his parents. Alpine Towers appeals the trial court’s decision [***2] to deny its motions for directed verdict and judgment notwithstanding the verdict (JNOV) as to actual and punitive damages, and its motion for a new trial due to an alleged error as to apportionment. Larry appeals the trial court’s ruling requiring him to elect between his three causes of action. We affirm the denial of Alpine Towers’ motions. However, we hold the trial court incorrectly interpreted the jury’s verdict and erred in requiring [*185] Larry to elect. We remand to the trial court with instructions to enter judgment in Larry’s favor against Alpine Towers in the amount of $3,400,500.00 actual damages and $1,110,000.00 punitive damages. 1
1 The judgment in favor of Larry’s parents is not affected by this appeal.
I. Facts
On May 5, 2006, the senior students at Fort Mill High School (Fort Mill) participated in a spring fling recreational field day. During field day, Larry fell more than twenty feet from the climbing tower to the ground. When he hit the ground, Larry broke a vertebra and was rendered a permanent paraplegic. He was seventeen.
Alpine Towers originally sold the climbing tower to Carowinds amusement park near Charlotte, North Carolina. Fort Mill bought the tower from Carowinds [***3] in July 2004 and hired Alpine Towers to move it, install it, and train Fort Mill’s faculty to safely use it. Fort Mill’s contract with Alpine Towers identifies Alpine Towers as “seller” and provides: “Installation includes all hardware, materials, . . . labor, . . . design work, . . . and staff training.” The wooden climbing tower is fifty feet tall, has three sides, and is shaped liked an hourglass. The central safety feature of any climbing tower is the belay system. 2 Alpine Towers designed the belay system on this climbing tower to include four participants–the climber, a primary belayer, a back-up belayer, and a faculty supervisor. The system requires the climber to wear a harness, which is secured to a climbing rope. The rope passes through a pulley at the top of the tower and down to a belay device secured to the ground at the base of the tower. The rope is threaded through the belay device, which uses bends in the rope to create friction to control the speed at which the rope passes through the device. As the [**894] climber ascends, the belayer guides the rope through the belay device to keep the rope taut. If the climber falls from the tower while climbing, [*186] the belayer uses the friction [***4] the belay device creates on the rope to keep the rope from passing back through the device, and thus protects the climber from falling all the way to the ground.
2 Alpine Towers’ instruction manual defines “belay” as “the rope or technique . . . that is used to protect a climber from falling to the ground.” See also Merriam-Webster Collegiate Dictionary 111 (11th ed. 2004) (defining belay as “the securing of a person or a safety rope to an anchor point (as during mountain climbing)”).
After a successful climb, or in the event the climber falls before completing the climb, the belayer lowers the climber to the ground in a controlled fashion by guiding the rope back through the belay device. The friction created on the rope allows the belayer to control the speed of the climber’s descent. 3 Because of the hourglass shape of the tower, a climber being lowered to the ground by the belayer is suspended in air, away from the side of the tower.
3 Alpine Towers’ CEO explained that “not very much” strength is required to hold a climber in the air because the weight is transferred through the belay device to the rope attached to the ground, so that a lightweight belayer can easily lower even a heavy [***5] climber.
Ashley Sexton, a senior at Fort Mill, served as Larry’s primary belayer. Fort Mill trained Ashley to belay as a part of the Junior ROTC program. Larry had never been trained in belaying or climbing, but successfully climbed to the top of the tower. Ashley testified that while she was lowering Larry to the ground “the rope . . . got[] tight in the [belay device] almost as if it were stuck” and would not move. Neither Ashley nor anyone at Fort Mill had been taught what to do if the rope became stuck in the belay device. When Ashley tried to free the rope, she lost the assistance of the device, was unable to control the rope, and Larry fell more than twenty feet to the ground.
Alpine Towers designed the belay system on the climbing tower and trained Fort Mill’s faculty how to use it. Alpine Towers provided no notice or warning to Fort Mill’s faculty that the climbing rope could get stuck in the belay device it designed into the system. Alpine Towers also provided no training or instruction on how the belayer or faculty supervisor should handle the situation if it did. Alpine Towers chose not to incorporate into the design a readily available, automatically locking belay device [***6] Larry’s experts testified would have stopped Larry’s fall. Alpine Towers did not train Fort Mill’s faculty to require the faculty supervisor to stand directly beside the belayer, which Alpine Towers admitted at trial [*187] should always be done to ensure that proper procedures were followed in the climb and to assist the belayers in the event of a situation like the one that resulted in Larry’s fall. When Larry fell, no back-up belayer was present, and no faculty supervisor was close enough to assist Ashley.
II. Procedural History
All of Larry’s damages were caused by the broken back he suffered as a result of his fall. Larry asserted three causes of action presenting three alternative theories of Alpine Towers’ liability for those damages: (1) Alpine Towers was strictly liable for the manufacture and sale of a defective and unreasonably dangerous product; (2) Alpine Towers negligently designed the climbing tower without adequate safety equipment, instructions, and warnings; 4 and (3) Alpine Towers was negligent in failing to properly train Fort Mill’s faculty on how to safely use the climbing tower, particularly in failing to train the faculty to teach student belayers to safely use the belay [***7] system.
4 Because Alpine Towers did the “design work” for the installation of the tower at Fort Mill, Larry’s negligent design theory includes allegations of negligence in failing to design the tower to meet the specific safety needs of Fort Mill.
Larry also filed suit against Ashley for negligence. Larry’s parents filed suit against Alpine Towers and Ashley for Larry’s medical bills. Larry and his parents settled with Fort Mill before filing suit and dismissed Ashley as a defendant before trial. The jury returned a verdict for Larry on each cause of action. It awarded $500.00 for strict liability, 5 $900,000.00 in actual damages and $160,000.00 in punitive damages for negligent design of the tower, and $2,500,000.00 in actual damages and $950,000.00 in punitive [**895] damages for Alpine Tower’s negligence in training Fort Mill’s faculty. The jury also returned a verdict for Larry’s parents for $240,000.00 in actual damages.
5 The jury originally returned a verdict on the strict liability cause of action in favor of Larry, but with zero damages. After the trial court instructed the jury that it must either award damages to Larry or find in favor of Alpine Towers, it returned a $500.00 award.
[*188] Alpine [***8] Towers filed a post-trial motion seeking (1) judgment notwithstanding the verdict as to all causes of action and punitive damages, (2) a new trial, (3) an order requiring Larry to elect between the three causes of action, (4) set-off of the settlement paid by Fort Mill, and (5) apportionment under the Contribution Among Joint Tortfeasors Act. The trial court denied the JNOV, new trial, and apportionment motions. The court required Larry to elect between his causes of action and ordered that the settlement from Fort Mill be set-off against Larry’s recovery from Alpine Towers. Larry also filed a post-trial motion asking the trial court to enter judgment in the cumulative amount of the damage awards rather than require him to elect. The court denied Larry’s motion and ordered that judgment be entered in the amount of $2,500,000.00 in actual damages and $950,000.00 in punitive damages on the negligent training cause of action.
III. Alpine Towers’ Appeal
A. Directed Verdict and JNOV–Actual Damages
[HN1] “In ruling on motions for directed verdict and JNOV, the trial court is required to view the evidence and the inferences that reasonably can be drawn therefrom in the light most favorable to the [***9] party opposing the motions.” McMillan v. Oconee Mem’l Hosp., Inc., 367 S.C. 559, 564, 626 S.E.2d 884, 886 (2006). “When we review a trial judge’s . . . denial of a motion for directed verdict or JNOV, we reverse only when there is no evidence to support the ruling or when the ruling is governed by an error of law.” Austin v. Stokes-Craven Holding Corp., 387 S.C. 22, 42, 691 S.E.2d 135, 145 (2010).
In its motions for directed verdict and JNOV, Alpine Towers contested all liability issues, including the sufficiency of the evidence supporting each of Larry’s causes of action. In its Statement of Issues on Appeal, Alpine Towers contends only that the trial court should have granted its motions because the chain of causation was broken as a matter of law. Specifically, Alpine Towers contends the chain of causation was broken by (1) “the intervening and superseding negligent [*189] acts of Fort Mill High School and Ashley Sexton in failing to follow the warnings, directions, and instructions for proper use of the Tower” and (2) “the intervening and superseding negligent acts of Fort Mill High School in failing to undertake its independent duty to properly supervise its students.” However, because [***10] both Larry and Alpine Towers address in their briefs the sufficiency of the evidence supporting each of Larry’s causes of action, we do as well. We find ample evidence to support the jury’s verdict as to each. We also find ample evidence that Ashley’s negligence and any negligence by Fort Mill was foreseeable to Alpine Towers, and thus their negligence does not break the chain of causation from Alpine Towers’ tortious conduct.
1. Strict Liability
In his strict liability theory, Larry focused on Alpine Towers’ design of the climbing tower to incorporate a belay device called Trango Jaws. The Trango Jaws is operated manually and requires the belayer to properly position the climbing rope in the Trango Jaws to create the friction necessary to stop the rope and then control the rate of the climber’s descent. Larry’s expert witness in biomechanics and sports safety, Gerald George, Ph.D., testified that the Trango Jaws relies on the absence of human error to safely belay a climber. He explained that it was feasible to use an alternative design for the climbing tower incorporating a belay device called a GriGri. 6
6 The GriGri costs approximately $75, and the Trango Jaws costs approximately $24. [***11] The CEO of Alpine Towers testified the difference in cost is an “inconsequential amount of money.”
The GriGri is a mechanical device that, when properly threaded, does not rely on the absence of human error. In the event the belayer loses control of the rope, the GriGri automatically stops the rope, and thus protects the climber from falling to the ground. Larry’s climbing wall safety expert, Dan Hague, testified that the GriGri “locks up automatically, . . . you’re not relying on the actions of the belayer to lock the device up.” [**896] He emphasized that the automatic stopping feature of the GriGri is particularly important when students are belaying climbers because of the heightened likelihood of human error. To account for this foreseeable risk, Hague “always uses the GriGri with kids.” In Hague’s opinion, “this injury would not have occurred had a GriGri [*190] been in use that day.” As a normal part of its business, Alpine Towers sells the GriGri for a variety of uses, including on its own climbing towers. Dr. George testified that without incorporating a “fail-safe” belay device such as the GriGri into the design of a climbing tower used for students, the climbing tower is defective and unreasonably [***12] dangerous.
Alpine Towers’ argument that the evidence in support of Larry’s strict liability cause of action is insufficient is that there is no evidence the tower “was in a defective condition, unreasonably dangerous to the user . . . when it left the hands of the defendant.” See Bragg v. Hi-Ranger, Inc., 319 S.C. 531, 539, 462 S.E.2d 321, 326 (Ct. App. 1995). However, the evidence discussed above amply supports the jury’s finding that it was. Moreover, the GriGri qualifies as a “reasonable alternative design” as required under Branham v. Ford Motor Co., 390 S.C. 203, 225, 701 S.E.2d 5, 16 (2010). The trial court correctly denied Alpine Towers’ directed verdict and JNOV motions as to strict liability.
2. Negligent Design
[HN2] “A negligence theory imposes the additional burden on a plaintiff ‘of demonstrating the defendant . . . failed to exercise due care in some respect, and, unlike strict liability, the focus is on the conduct of the seller or manufacturer, and liability is determined according to fault.'” Branham, 390 S.C. at 210, 701 S.E.2d at 9 (quoting Bragg, 319 S.C. at 539, 462 S.E.2d at 326). In his negligent design theory, Larry also relied on the evidence that Alpine Towers should [***13] have used the GriGri in designing a climbing tower to be used by students, particularly student belayers. However, in addition to evidence that the tower was defective and unreasonably dangerous without the GriGri, Larry presented evidence that Alpine Towers failed to exercise reasonable care in the design. Specifically, Larry presented evidence that Alpine Towers conducted a ten-year study ending in 1999 that concluded the majority of accidents on its climbing towers were caused by human error, specifically belayers dropping their climbers. Despite this knowledge, Alpine Towers chose not to design for human error by including a belay device that would automatically lock and prevent the rope from passing back through the [*191] device, thus preventing a fall to the ground such as the one Larry suffered.
Moreover, Larry’s experts testified to several breaches of Alpine Towers’ duty of reasonable care in designing the warnings and instructions on the tower. In particular, Larry’s experts testified faculty supervisors should be instructed to remain within reaching distance of active belay ropes. Alpine Towers’ employee John Mordhurst conceded this instruction was necessary. Mordhurst testified [***14] a faculty supervisor should be at each belay point, and “[t]hey should be . . . in a position to intervene to grab a rope, . . . so they should be right next to the belayers and belay monitors.” In the 1997 edition of Alpine Towers’ instruction manual for the climbing tower, the section entitled “The Belay System” includes this requirement: “[P]rograms should require staff to check the belayer’s and climber’s systems prior to climbing and lowering; . . . the staff member should stand directly beside the climber.” However, Alpine Towers omitted the statement containing this requirement from the 2004 edition of the instruction manual, the edition it provided to Fort Mill.
Additionally, Dr. George testified Alpine Towers should have placed end user warnings on the tower for someone like Larry, who climbed for the first time without any instruction, and Ashley, who never received an instruction manual. Dr. George explained this was necessary to ensure an inexperienced climber such as Larry will know the dangers of climbing and understand how the belay system is designed to work before deciding to begin a climb. This evidence amply supports the jury’s finding that Alpine Towers failed to [***15] exercise reasonable care in designing a defective and unreasonably dangerous climbing tower. Therefore, the trial court was correct to deny Alpine Towers’ motions as to negligent design.
[**897] 3. Negligent Training
In his negligent training theory, Larry presented evidence that despite knowing Fort Mill’s faculty would not be doing most of the belaying, but rather would be teaching students to belay, Alpine Towers did not instruct the faculty how to teach belaying. Larry proved several key facts in support of this claim. First, Alpine Towers uses a written [*192] syllabus when it conducts classes to teach adults how to belay. However, it did not provide the syllabus to Fort Mill to enable Fort Mill to effectively teach students. Second, the belay system designed by Alpine Towers relies on a faculty supervisor to ensure the students are properly belaying the climbers. In addition to Mordhurst’s testimony as to where the faculty supervisor should be positioned, the CEO of Alpine Towers, Joe Lackey, testified, “the staff member should stand directly behind the climber, . . . not thirty feet away.” The obvious purpose of this requirement is to enable the supervisor to keep the students from making errors [***16] and, if they do, to prevent the tragic consequences Larry suffered. However, Larry presented evidence that Alpine Towers did not teach this to the faculty at Fort Mill. One member of Fort Mill’s faculty who attended the Alpine Towers course testified he did not recall being told that a faculty supervisor should stand beside the belayer. When asked why the requirement that “the staff member should stand directly beside the climber” in the 1997 instruction manual was not included in the 2004 edition, Lackey responded, “I’m not sure why it was taken out.”
Moreover, despite knowing that Fort Mill would be teaching students to belay and that students were more susceptible to making belaying errors than adults, Alpine Towers did not teach Fort Mill that it should test the students’ competency before allowing them to belay a climber. Hague testified “as a matter of course in my industry, participants are tested,” including whether they are “able to . . . belay in a competent manner, catch falls, lower somebody . . . off a climb.” He explained:
In a climbing setting you have to be able to assess whether or not the group as a whole is making progress. . . . Since we’re talking about life safety [***17] here and not about math, if someone is not learning at the same rate as the group, you can’t just move to the next topic. You have to slow down. You have to be able to address that one person until everybody’s caught up. In addition, at the end of the training, there needs to be some type of discrete competency test.
Alpine Towers has several employees who serve on the standards committee for the Association for Challenge [*193] Courses Technology, which Lackey called a “climbing society.” Despite evidence of this standard climbing industry practice, Alpine Towers did not teach Fort Mill that it needed to test, how the tests should be conducted, or what particular skills should be tested. 7
7 Ashley testified she was not given a written test, but was required to do a “demonstration” and be watched by a faculty member to make sure she “knew how to do it.” There was no evidence, however, that Alpine Towers took any steps to ensure Fort Mill gave an adequate test of her competency. In fact, Alpine Towers’ instruction manual says only that students “will demonstrate proficiency in belaying before being permitted to belay.”
This evidence provides ample support for the jury’s finding that Alpine Towers [***18] was negligent in failing to properly train the Fort Mill faculty on how to safely use the tower, and thus the trial court properly denied Alpine Towers’ motions as to negligent training.
We affirm the trial court’s decision to deny Alpine Towers’ motions for directed verdict and JNOV as to the sufficiency of the evidence supporting all three of Larry’s causes of action.
4. Intervening Causation
[HN3] The test for whether a subsequent negligent act by a third party breaks the chain of causation to insulate a prior tortfeasor from liability is whether the subsequent actor’s negligence was reasonably foreseeable. “For an intervening act to break the causal link and insulate the tortfeasor from further liability, the intervening act must be unforeseeable.” McKnight v. S.C. Dep’t of Corr., 385 S.C. 380, 387, 684 S.E.2d 566, 569 [**898] (Ct. App. 2009) (internal quotation marks omitted). The trial court properly charged the jury as follows:
The chain of causation between a defendant’s negligence and the injury itself may be broken by the independent intervening acts or omissions of another person over whom the defendant had no control. In order to decide whether an intervening act breaks the chain of causation, [***19] you must determine whether the intervening act or omission was reasonably foreseeable by the defendant. If the intervening act or omission was a probable consequence of the defendant’s negligence, the defendant is responsible for the plaintiff’s [*194] injuries. If, however, you find that the intervening act or omission was not foreseeable, the defendant is not liable.
By finding in favor of Larry, the jury necessarily found the actions of Ashley and Fort Mill were foreseeable, and therefore the chain of causation was not broken to insulate Alpine Towers from liability. There is ample evidence to support this finding. See Cody P. v. Bank of Am., N.A., 395 S.C. 611, 621-22, 720 S.E.2d 473, 479 (Ct. App. 2011) (“Only in rare or exceptional cases may the question of proximate cause be decided as a matter of law. . . . If there may be a fair difference of opinion regarding whose act proximately caused the injury, then the question of proximate cause must be submitted to the jury.” (internal quotation marks and citations omitted)).
Larry presented evidence that Alpine Towers knew Fort Mill would be using high school students to belay climbers, that adolescents are more susceptible to belaying errors [***20] than adults, and that Alpine Towers conducted a study concluding human error is the most common cause of falls to the ground from climbing towers. Dr. George testified Alpine Towers “knew or should have known . . . of these risks.” He stated it was not merely foreseeable, but “almost predictable,” that high school students would not follow proper procedures for belaying climbers. Hague testified that he has trained “thousands and thousands” of people in belaying over fifteen years, including “many hundreds” of adolescents, he takes different approaches to training depending on the maturity level of the belaying student, adolescents “routinely do not” follow procedures, and Alpine Towers “could easily foresee that adolescents aren’t going to follow all the procedures.”
Therefore, the primary risk associated with the use of a climbing tower is that the belayer, back-up, or faculty supervisor might make an error belaying the climber. Each of Larry’s theories of recovery focused on the allegation that Alpine Towers failed to design for and train against human error in belaying and the supervision of students belaying. This is not a “rare or exceptional” case in which the issue of proximate [***21] cause may be decided as a matter of law. Alpine Towers’ argument that “the intervening and superseding negligent acts of Fort Mill High School and Ashley Sexton” broke the chain of causation fails because there is ample evidence in [*195] the record that precisely the same human error that resulted in Larry’s injury was not only foreseeable to Alpine Towers, but was actually foreseen. Accordingly, we find the trial court properly submitted the question of proximate cause to the jury, and we affirm its decision to deny Alpine Towers’ motions for directed verdict and JNOV as to intervening causation.
B. Directed Verdict and JNOV–Punitive Damages
Alpine Towers also argues the trial court erred in denying its directed verdict and JNOV motions as to punitive damages. We disagree.
[HN4] “When ruling on a directed verdict motion as to punitive damages, the circuit court must view the evidence and the inferences that reasonably can be drawn therefrom in the light most favorable to the nonmoving party.” Hollis v. Stonington Dev., LLC, 394 S.C. 383, 393-94, 714 S.E.2d 904, 909 (Ct. App. 2011) (internal quotation marks omitted). This court applies the same standard as the circuit court. 394 S.C. at 394, 714 S.E.2d at 910. [***22] “The issue of punitive damages must be submitted to the jury if more than one reasonable inference can be drawn from the evidence as to whether the defendant’s behavior was reckless . . . .” Mishoe v. QHG of Lake City, Inc., 366 S.C. 195, 201, 621 S.E.2d 363, 366 (Ct. App. 2005). “Recklessness implies the doing of a negligent [**899] act knowingly; it is a conscious failure to exercise due care. If a person of ordinary reason and prudence would have been conscious of the probability of resulting injury, the law says the person is reckless . . . .” Berberich v. Jack, 392 S.C. 278, 287, 709 S.E.2d 607, 612 (2011) (internal citation and quotation marks omitted).
Larry made two separate claims for punitive damages against Alpine Towers: (1) for reckless behavior in its design of the climbing tower and (2) for reckless behavior in its failure to properly train the Fort Mill faculty on how to safely use the climbing tower. The jury awarded punitive damages on each claim, so we address each independently.
As to Larry’s claim for punitive damages based on Alpine Towers’ reckless behavior in designing the tower, Larry presented evidence that Alpine Towers knew the majority [*196] of accidents occurring on its [***23] climbing towers were caused by human error by belayers and back-up belayers. Mordhurst conceded that of the three options for a belay device in the design of a climbing tower, “the GriGri has [the] highest likelihood of arresting the fall” of a climber and thus protecting him from falling to the ground if the belayer loses control of the rope. Lackey testified the additional cost of a GriGri is “inconsequential.” Alpine Towers’ decision to design its climbing tower to incorporate the Trango Jaws instead of the GriGri under these circumstances is sufficient evidence Alpine Towers was “conscious of the probability of resulting injury” from its negligence, and therefore was reckless. The trial court was correct to submit the issue of punitive damages for reckless design to the jury. 392 S.C. at 287, 709 S.E.2d at 612.
As to Larry’s claim for punitive damages based on Alpine Towers’ reckless behavior in failing to properly train the Fort Mill faculty, in addition to the evidence discussed above, Alpine Towers knew Fort Mill would be using student belayers, whom Alpine Towers knew to be less attentive to following procedures and more susceptible to errors in belaying than adults. Nevertheless, [***24] Alpine Towers (1) chose not to train Fort Mill’s faculty to teach others, particularly students; (2) did not include in the training materials given to Fort Mill the syllabus Alpine Towers uses to teach belaying; (3) removed from its training manual the specific instruction for faculty supervisors to “stand directly behind the climber”; (4) did not teach Fort Mill to follow the industry practice of testing belayers on the basic skills of belaying before allowing them to belay climbers; and (5) did not inform Fort Mill it had the option of an automatically locking belay device such as the GriGri to compensate for the greater risk posed by the use of student belayers. This also is sufficient evidence Alpine Towers was “conscious of the probability of resulting injury” from its negligence, and therefore was reckless. The trial court was correct to submit the issue of punitive damages for reckless training to the jury. Id.
Accordingly, we affirm the trial court’s decision to deny Alpine Towers’ directed verdict and JNOV motions as to punitive damages.
[*197] C. Apportionment of Fort Mill’s Fault
Alpine Towers contends it is entitled to a new trial because the trial court did not allow the jury to [***25] consider the fault of Fort Mill when it apportioned fault under section 15-38-15 of the South Carolina Code (Supp. 2011). 8 However, our ruling affirming the jury’s award of punitive damages makes it unnecessary to address this issue as [HN5] the apportionment statute “does not apply to a defendant whose conduct is determined to be . . . reckless.” § 15-38-15(F).
8 After the jury’s verdict as to liability, the trial court required it to apportion fault between Alpine Towers and Ashley. The jury determined that Ashley was 60% at fault and Alpine Towers was 40% at fault. The jury was not asked to consider the fault of Fort Mill.
IV. Larry’s Appeal
Larry appeals the trial court’s post-trial ruling entering judgment in his favor in the amount of $2,500,000.00 in actual damages and $950,000.00 in punitive damages. He contends the trial court erred in interpreting the verdicts as “three awards” and requiring him to elect which cause of action would be his remedy. We agree.
[HN6] “Election of remedies involves a choice between different forms of redress [**900] afforded by law for the same injury . . . . It is the act of choosing between inconsistent remedies allowed by law on the same set of facts.” Taylor v. Medenica, 324 S.C. 200, 218, 479 S.E.2d 35, 44-45 (1996). [***26] Larry asserted three causes of action, but sought only one remedy–damages–for only one injury–a broken back. When a plaintiff seeks only one remedy, there is nothing to elect. See Adams v. Grant, 292 S.C. 581, 586, 358 S.E.2d 142, 144 (Ct. App. 1986) (“Where a plaintiff presents two causes of action because he is uncertain of which he will be able to prove, but seeks a single recovery, he will not be required to elect.”).
The trial court in this case recognized that Larry’s three causes of action sought only one remedy. In its post-trial order, the court wrote:
Here, both products liability claims and the negligence claim represent three theories for recovery for the same injury and damages–personal injuries sustained by [Larry] in his [*198] fall. [Larry] had one fall and all his injury and damages flow therefrom regardless of the number of acts of omission or commission of [Alpine Towers].
Because Larry sought only one remedy, the doctrine of election of remedies does not apply. [HN7] “As its name states, the doctrine applies to the election of ‘remedies’ not the election of ‘verdicts.'” Austin, 387 S.C. at 57, 691 S.E.2d at 153 (defining a “‘remedy’ as ‘[t]he means by which . . . the violation [***27] of a right is . . . compensated.'” (quoting Black’s Law Dictionary 1163 (5th ed. 1979))).
This court addressed a similar situation in Creach v. Sara Lee Corp., 331 S.C. 461, 502 S.E.2d 923 (Ct. App. 1998). The plaintiff in Creach “bit down on a hard substance in a steak biscuit made by Sara Lee Corporation,” “experience[d] severe pain,” and had to undergo “extensive dental work.” 331 S.C. at 463, 502 S.E.2d at 923-24. She sued Sara Lee and others “alleging negligence, breach of warranty, and strict liability.” 331 S.C. at 463, 502 S.E.2d at 923. After a verdict for Creach on all three causes of action, Sara Lee asked the trial judge to require her to elect her remedy. The judge refused to do so, and this court affirmed, holding “while the complaint stated three different causes of action, only one recovery was sought and only one recovery was awarded. Under these circumstances, no election was required.” 331 S.C. at 464, 502 S.E.2d at 924 (citing Taylor, 324 S.C. at 218, 479 S.E.2d at 44-45). Creach supports our holding that because Larry sought one remedy for one injury, the trial court erred in requiring him to elect.
Nevertheless, the trial court and this court must ensure that Larry [***28] does not receive a double recovery. See Collins Music Co. v. Smith, 332 S.C. 145, 147, 503 S.E.2d 481, 482 (Ct. App. 1998) ( [HN8] “It is well settled in this state that there can be no double recovery for a single wrong and a plaintiff may recover his actual damages only once.” (internal quotation marks omitted)). The determination of whether a verdict grants a double recovery begins with the trial court’s responsibility to interpret the verdict in order to ascertain the jury’s intent. The trial court interpreted the jury’s verdict in this case to be “three awards,” and therefore “inconsistent” because [*199] it allowed Larry a double recovery. We find the trial court erred in its interpretation of the verdict.
The error arose from the verdict form. Because Larry asserted three causes of action, the trial court correctly fashioned the verdict form to require the jury to write its verdict for each cause of action. However, because Larry sought only one remedy–damages–and because the amount of those damages could not vary from one cause of action to another, the trial court should have required the jury to write one amount for Larry’s actual damages, and should not have permitted the jury to write [***29] a damages amount for each of the three causes of action. The use of the three blanks for damages in the verdict form left the verdict ambiguous as to the amount of damages the jury intended to award.
[HN9] To determine the jury’s intent in an ambiguous verdict, the court should consider the entire proceedings, focusing on the events and circumstances that reasonably indicate what the jury intended. See Durst v. S. Ry. Co., 161 S.C. 498, 506, 159 S.E. 844, 848 (1931) (stating “the construction of a verdict should, and can, depend upon, not only the language used by the jury, but other things occurring in the trial may be, and [**901] should be, properly regarded in determining what a jury intended to find”); Howard v. Kirton, 144 S.C. 89, 101, 142 S.E. 39, 43 (1928) (stating it is “the duty of the trial judge to decide what the verdict meant, and, in reaching his conclusion thereabout, it was his duty to take into consideration not only the language of the verdict, but all the matters that occurred in the course of the trial”); see also 75B Am. Jur. 2d Trial § 1545 (2007) (“In the interpretation of an ambiguous verdict, the court may make use of anything in the proceedings that serves to show with [***30] certainty what the jury intended, and, for this purpose, reference may be had, for example, to the pleadings, the evidence, the admissions of the parties, the instructions, or the forms of verdict submitted.”).
To correctly interpret the verdict in this case, the trial court was required to consider several indications of the jury’s intention as to damages. First, the court should have considered its own conclusion that Larry sought only one remedy–damages–and that all of his damages flowed from the broken back resulting from his fall from the tower. Thus, it was not [*200] possible for the damages to vary from one cause of action to another. Second, after the jury returned the verdicts, Larry made a motion asking the court to inquire of the jury whether it meant for the damages awarded to be cumulative. Alpine Towers did not object to the request. While the jury was still in the courtroom, the judge asked the forelady if the jury intended the verdicts to be cumulative.
The Court: . . . Before you leave, I’ve got one last question. On the three causes of action you have awarded different amounts of damages. . . . Was it the jury’s intention to award those cumulatively, that is they add up to [***31] [$3.4 million and $500.00] . . . or did you simply mean that the damages as to each cause of action were to be separate . . . .
Forelady: Ask me that again.
. . .
The Court: . . . You have ordered [$500.00] on one, [$900,000.00] on one, and [$2.5 million] on one. Is it the jury’s intention that those are to be added, that is cumulative, or is the jury’s intention that as to each cause of action that award applies only to that cause of action?
Forelady: It’s cumulative.
The Court: Okay. How about . . . as to the punitive, you had [$160,000.00] and [$950,000.00], which adds up . . . to [$1.1 million] [sic]. Is it the same for that also?
Forelady: It’s cumulative.
The trial court then asked each side separately if there was “anything else before the jury’s dismissed?” Both Larry and Alpine Towers answered that they had nothing further, and the trial court dismissed the jury. 9
9 The trial court found, and Alpine Towers argues on appeal, that Larry should have sought further inquiry into the jury’s intent and that his failure to do so forecloses his argument that the jury intended the verdicts to be cumulative. We disagree. Larry is the party who initially asked the court to inquire whether the [***32] jury intended the verdict to be cumulative. Larry’s counsel stated to the court “you can either inquire of the jury here in the courtroom or you can send them out, whatever you’re comfortable with.” Alpine Towers’ counsel stated, “I wouldn’t oppose that request.” The trial court then made the decision to ask only the forelady. The forelady’s answer, “It’s cumulative,” was the answer Larry was looking for, and therefore Larry had no reason to inquire further on that subject. Alpine Towers, who at that point did have reason to inquire further, said nothing. Therefore, to the extent the lack of further inquiry should be considered, we believe it should be held against Alpine Towers.
[*201] In the context that Larry sought, and could obtain, only one damages award for the same injury, this dialogue adequately demonstrates the jury intended the damage amounts written in the three blanks on the verdict form to be added together for a total award to Larry of $3,400,500.00 actual damages and $1,110,000.00 punitive damages. However, there was more to indicate this was the jury’s intention. During deliberations the jury sent a note to the court stating the jurors were deadlocked as to whether to award [***33] $4.5 million or $5 million and asking for suggestions. The court responded that it had no suggestions. The total amount of damages awarded, including the amount awarded to Larry’s parents, was $4.75 million, 10 which is between the two amounts [**902] listed in the note. Further, the court should have considered that it gave the jury no basis on which to find different damage awards on different causes of action. In fact, the only place in the damages instruction where the court differentiated between the causes of action at all was to explain to the jury it may award punitive damages only on the negligence theories of recovery.
10 At the point of the trial when the jury sent this note, the court had not instructed the jury it must award damages on the strict liability claim or find for the defendant. Thus, the $500.00 damages awarded on that cause of action is not included in this figure.
This court has stated that [HN10] “it is the duty of the court to sustain verdicts when a logical reason for reconciling them can be found.” Daves v. Cleary, 355 S.C. 216, 231, 584 S.E.2d 423, 430 (Ct. App. 2003). In fulfilling this duty, we may not substitute our judgment for that of the jury. See Lorick, 153 S.C. at 319, 150 S.E. at 792 [***34] (stating the court has a right to give “effect to what the jury unmistakably found” but cannot “invade the province of the jury”). The jury’s verdict in this case is readily reconciled as we have explained. We can discern no other way to interpret the verdict consistent with the applicable law and the facts of this case, nor can we find in the record any reason to believe this interpretation does not reflect the intent of the jury. Moreover, during arguments on post-trial motions, counsel for Alpine Towers explained to the trial court what he believed the jury did:
[*202] Let me tell you what I think happened. . . . [When they sent the note asking for suggestions,] they advised that they had arrived at a general block of the amount of the damages that they wanted to give to compensate Mr. Keeter. What they then did because the verdict form is listed in such a way that it says actual damages and punitive damages leaving both blank that they went through and parceled out the total amount of compensatory damages that they wanted to award . . . . And the damages for all three claims are identical . . . , there is no differentiation on the damages . . . . [T]hey arrived at a larger figure then [***35] they parceled it up to fill in the blanks. 11
Interpreting the verdict based on “all the matters that occurred in the course of the trial,” Howard, 144 S.C. at 101, 142 S.E. at 43, we disagree with the trial court and find the jury did not make an “inconsistent damages award.” See 75B Am. Jur. 2d Trial § 1556 (2007) (“In order for a verdict to be deemed inconsistent, there must be inconsistencies within each independent action rather than between verdicts in separate and distinct actions.”). Rather, we find that the jury intended the amounts to be added together for a total verdict in Larry’s favor of $3,400,500.00 actual damages and $1,110,000.00 punitive damages. Accordingly, we hold the trial court erred in its interpretation of the verdicts and judgment should have been entered in the cumulative amount of actual and punitive damages the jury wrote on the verdict form for each of Larry’s causes of action.
11 In fairness to counsel, the statement was made as part of his argument that the verdicts were inconsistent. However, we believe the statement accurately explains why the jury put different damage amounts in different blanks.
V. Conclusion
For the reasons explained above, we affirm [***36] the trial court’s decision to deny Alpine Towers’ motions for directed verdict, JNOV, and for a new trial. We reverse the trial court’s interpretation of the jury verdict and remand with instructions that judgment be entered against Alpine Towers in favor of Larry Keeter in the amount of $3,400,500.00 actual damages and $1,110,000.00 punitive damages.
[*203] AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
KONDUROS, J., concurs.
CONCUR BY: THOMAS
CONCUR
THOMAS, J., concurring in a separate opinion.
THOMAS, J.: I concur with the majority as to Alpine Towers’ appeal. As to Larry’s appeal, I concur in result. I agree that this case does not involve the need to elect remedies or an inconsistent verdict. I write separately to clarify that questioning the entire jury and then conforming the jury’s verdict to the jury’s intent are the best practices for ensuring a valid verdict.
[**903] First, when a party raises a question about the jury’s intent for the verdict, the best practice is to poll all of the jurors or allow the foreperson to answer the court’s questions after consulting with the entire jury. Lorick & Lowrance, Inc. v. Julius H. Walker Co., 153 S.C. 309, 314-15, 150 S.E. 789, 791 (1929). The need to clarify the jury’s [***37] intent almost invariably arises when the language used on the verdict form is problematic. Without an inquiry of the remaining jurors, questioning only the foreperson unnecessarily risks that the jury’s precise intent will remain unknown. This danger is heightened by the likelihood of arguments that the foreperson misunderstood the court’s questions or provided a response not reflecting the entire jury’s intent.
Second, if the initial inquiry shows the jury’s intent differs from what the jury wrote on the verdict form, the best practice is to either send the jury back to conform the verdict to the jury’s intent or have the correction made in open court with the jury’s consent. Id. at 314-15, 150 S.E. at 791. After the jury is discharged, the court may construe the verdict in a manner that diverges from the language used by the jury only when the surrounding circumstances make the jury’s intent unmistakable and the court’s construction reflects that intent. Id. at 319-20, 150 S.E. at 792-93.
I disagree with the majority’s statement in footnote 9 that Larry had no reason to seek further inquiry of the jury’s intent after the foreperson testified the actual and punitive damages amounts [***38] were cumulative. The movant has the most [*204] incentive to ask the court to send the jury back to conform the verdict to the jury’s intent or have the correction made in open court with the jury’s consent. These practices best ensure the verdict reflects the jury’s intent, and a verdict rendered in accordance with them is nearly impossible to attack by arguing the jury’s intent is unclear. See Billups v. Leliuga, 303 S.C. 36, 39, 398 S.E.2d 75, 76 (Ct. App. 1990) (stating “a jury verdict should be upheld when it is possible to do so and carry into effect the jury’s clear intention,” and holding the jury’s intent was clear despite “some confusion in the jury’s initial written verdict” because the foreperson testified as to the jury’s intent, the clerk published the jury’s intent after the foreperson put the intent in writing, and the remaining jurors were polled to ensure their intent complied with the published intent); cf. Joiner v. Bevier, 155 S.C. 340, 351, 354-55, 152 S.E. 652, 656-57 (1930) (stating the court has the “duty to enforce a verdict, not to make it” and holding that despite some initial difficulty in getting the jury to render a verdict proper in form, the jury’s intent [***39] was “entirely clear” when the verdict after a second set of deliberations “corresponded exactly” with the special findings obtained prior to sending the jury back to deliberate). Moreover, if the above practices are not used, the movant risks having to meet its burden of establishing that the jury’s intent is absolutely clear using solely the surrounding circumstances of the case. Lorick, 153 S.C. at 319-20, 150 S.E. at 792-93. Here, the jury did not conform the verdict to its intent, nor was the jury polled. 12 Therefore, because the burden to establish the jury’s intent remains on Larry as the movant, 13 he must establish the jury’s intent was unmistakable based on the surrounding circumstances of the case.
12 In fairness to Larry, he asked the trial court to determine whether the verdict in his favor was intended to be cumulative. He suggested to the trial court, “[E]ither inquire of the jury . . . in the courtroom or . . . send them out.” The trial court instead only questioned the foreperson in the presence of the other jurors.
13 In discussing the movant’s incentive and burden, I am not referring to our rules of preservation. This issue is preserved because Larry sufficiently raised [***40] it to the trial court by seeking to clarify the jury’s intent in the above-suggested manner before the jury was discharged and the trial court ruled on his motion.
[*205] Despite the uphill battle undertaken in this case to establish the jury’s intent, I agree to remand for an entry of judgment against Alpine Towers in favor of Larry for $3,400,500.00 actual damages and $1,110,000.00 punitive damages. The surrounding circumstances of this case make the jury’s intent unmistakable. Taken together, the forelady’s testimony, the jury note, the jury charge, the total damages awarded, and the single injury alleged can lead to only one conclusion: the jury intended to award Larry [**904] $3,400,000 in actual damages 14 and $1,110,000 in punitive damages.
14 This amount omits the damages awarded for the strict liability claim because the jury note was sent before the jury re-deliberated the strict liability claim.
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Indemnification agreements? What are you signing?
Posted: March 13, 2013 Filed under: Contract, Insurance | Tags: Business, Contract, Indemnification, Indemnification Agreement, Indemnification Contract, Indemnity, Insurance, Insurance policy, Lawsuit, Manufacturer, Product liability Leave a commentSuddenly, indemnification agreements are flying around the outdoor industry. Make sure you know what you are signing.
Indemnification agreements, either as part of another document or individually are being tossed around the outdoor industry. So far, they have all been written by non-attorneys. By that I mean they are written badly or by someone who does not understand what they are and how they work. Before you sign an indemnification agreement, you need to understand what you are signing and the ramifications of signing it.
An indemnification agreement is similar, not like, but similar, to an insurance policy. Most times an indemnification agreement says you will pay us (indemnify) for any money we spend because of your actions that have cost us money, including our costs and attorney’s fees.
An insurance policy is slightly different than indemnification policy for two reasons.
1. An insurance policy is very specific on what if covers. If it is not written in the policy as something that is insured, then you will not get money.
2. You pay for a policy. The amount of money you pay is based on the risk; the greater the risk, the more money you pay for the policy.
Indemnification agreements in the past have been narrow and focused on specific issues that the parties negotiate. The indemnification agreement said if something you did brings us into a lawsuit, you have to reimburse us for our costs if we are sued because of what you did. Indemnification agreements were written into contracts as part of the overall deal.
An Example would be:
A manufacturer makes a product with a defect, and the retailer is sued because of the defect by the consumer who purchased the product. The liability issues are set forth because the agreement says the retailer must be sued or there must be liability or a claim.
First Problem: Consideration
For a contract to be valid there must be consideration. Consideration is a benefit flowing from one party to the other party. Normally, consideration is money. If a contract and a course of dealing exist between two parties, if one party now wants an indemnification agreement signed, there must be new consideration. You have to pay for the new agreement to be a contract and to be binding. No consideration, no contract.
Second Problem: Overly Broad
The indemnification agreements I am seeing recently have been very broad and cover everything. There are major issues with a document this broad because it is impossible to comply with. By that I mean there are realistic limits to what can be indemnified. The major item controlling indemnification agreements is money. If you don’t have a bank account with enough cash in the account to cover the indemnification bill when it comes due, why sign the agreement to begin with?
1. You can only sign what you can pay for.
Unless you are dealing with broken products (replacement) or fixed amounts (breach of contract), you can only sign an indemnification agreement that has limits that you can afford. If you sign an indemnification agreement knowing there are no way you can pay for it, you are creating additional problems; misrepresentation and fraud (see below). If you can’t pay the bill when it comes due, you will either file bankruptcy and or go out of business.
Make sure you know how much indemnification will cost you and whether or not you can deal with the bill. If you don’t have the cash, then you better have an insurance policy.
2. You can only sign what your insurance policy says it will cover.
99% of the time, an indemnification agreement is really based on your insurance company stepping up and writing a check. The insurance company does that because:
A. There is a legitimate claim covered by the policy.
B. The claim is within the limits of the policy.
C. The insurance company knew about the indemnification and agreed to it in advance! (Oh?)
If your policy is not broad enough, does not cover everything covered in the indemnification, you are again on the hook yourself. Your commercial policy is very different from your homeowner’s policy. Your commercial policy says it covers everything on the list of covered items in the policy. If the claim is not on the list, you have no insurance coverage.
Your insurance policy is written to pay claims, not necessarily contracts. If the indemnification is not based on a claim or legal liability, your insurance policy may just ignore the issue. The insurance company is not contractually required to pay what is not covered in the policy.
3. If your insurance company does not know about the indemnification and agree to it, you still may not have coverage. You are back to writing a check.
Your insurance company in many cases can cover indemnification; however, many policies require knowledge in advance or in some cases need to approve indemnification. Sending an indemnification claim to an insurance company based on a contract you signed without the insurance company knowing about the indemnification agreement in advance is an easy way to get the claim denied or the policy non-renewed the next time it comes up for renewal.
4. Signing an indemnification agreement without the ability to back it up is a misrepresentation in some states.
Misrepresentation pierces the corporate veil making you personally liable for the claims. (The sole exception to this MAYBE if you are an LLC; however several states have not ruled that an LLC can be pierced for misrepresentation and fraud.) Simply put, you sign a contract knowing you cannot complete the contract that is called misrepresentation and maybe fraud. Misrepresentation and fraud on the part of the owner of a corporation, when dealing with monetary issues, is a way to pierce the corporate veil. Piercing the corporate veil is one way of making your personal assets liable for the claims against your business.
This might be a stretch in some cases, but it is clearly within the realm of possibilities, especially if you have a lot of personal assets. Attorneys and insurance companies work harder if they know there is a payoff.
If you can’t fulfill the indemnification agreement, and you have no insurance to cover it, you better not sign it.
5. You should not indemnify someone for something that you are not liable for.
This is simple. If you don’t owe the money, why would you say you owe the money? Many of these agreements are asking for indemnification for issues that you have no legal liability for. It is hard to be liable for how a product is used if they do not read the instructions. An example would be an employee of a retailer store is demonstrating your product without reading the instructions, attending the tech clinic or understanding the product. During the demonstration to the consumer, he injures the consumer.
Why would that be your fault and why should you pay for it? Yet a few indemnification agreements I’ve read lately would require the manufacture to pay for the injuries.
As a manufacturer you are not legally liable for that claim. It is not your fault; you were not negligent. However, the indemnification agreement you signed said you would pay for any claim based on your product. The consumer has a claim against the retailer, because of the product, but not because the product was defective. The retailer is solely liable for the claim, and you should not be.
A. You should only indemnify someone for what you are responsible for.
Conversely, you should agree to indemnify someone for what you are liable for. If it is your fault, you should pay. Many indemnification agreements are being written because the cost of getting a manufacturer or liable party to pay up exceeds the amount owed. I understand that reasoning, and it is sound and smart.
A good example of these is: you are running an event on property owned by a third party. You accept the money for the event, set up the course, review the entrants and totally control the event. The landowner’s sole responsibility in the event was providing the land and pointing out any known or reasonably foreseeable dangers on the land.
If someone is hurt in the event and sues the landowner, the event promoter should protect the landowner.
B. You should not indemnify someone for what you do not have control over.
If the landowner is told by the event promoter that he cannot tell the event promoter how to run the event, the landowner should not be liable. The landowner has no control over the event. Therefore, the landowner should not be liable.
The manufacturer can only be liable for the product. If the sales person working for the retailer tells the consumer that this product will save their lives and prevent all injuries contrary to the manufacturer’s warnings, manual, instructions and marketing, then the manufacturer should not pick up the tab for the injured consumer. The manufacturer had no control over the salesperson, did not even know the salesperson existed, and therefore, should not be liable for someone they have no control over.
A manufacture could be liable if they have not disclaimed the warranty of merchantability or the warranty of fitness for a particular purpose, but that is for another article.
C. You should only indemnify someone for what your insurance company agrees to indemnify someone for.
That means you should only indemnify someone for:
a. What you can control.
b. What you are liable for.
c. What insurance policy says it will cover?
But they are my friends; they would never sue me based on the agreement!
They might not, but your friend may not always be in control of that agreement. Anyone who becomes a beneficiary or an owner of the contract can use the indemnification to sue you. The two best examples of this are:
A Bankruptcy Trustee: A bankruptcy trustee is an attorney whose job is to find every dime that may be owed to the bankrupt business. Any contract that has not been fulfilled, any invoice that has not been paid, and any indemnification agreement that may have money tied available, will be fair game. If the Bankruptcy Trustee can determine if the business that signed the indemnification agreement owes the bankrupt business money, the Trustee by law, must get the money back.
The Bankruptcy Trustee will sue in the name of the Bankrupt Company claiming indemnification for an earlier claim. You will think you are free and clear because the company you signed the indemnification agreement with filed bankruptcy. However, the Bankruptcy Trustee will come rowing back to the courtroom and hold you liable to the point of forcing you to file bankruptcy.
The Insurance Company under the Subrogation clause of an insurance policy believing the indemnification agreement allows them to collect from you. Every insurance policy has a subrogation clause. That means that the insurance company has the right to recover from anyone who caused the claim that the insurance company wrote a check for. Insurance companies will spend days looking for anyone who they can recover money from, and an indemnification agreement is a perfect opportunity. I would guess that 30% or more of the lawsuits in the US are insurance company subrogation claims.
Subrogation claims can be filed by worker’s comp accidents, car accidents, general liability or health insurance claims.
Again, the lawsuit will be in the name of the company you signed the indemnification agreement with, and that company has no choice. If the company does not cooperate with the insurance company, the original claim may not get paid. Insurance companies will finance the lawsuit, so there are no legal games to be played; they know what they want, and they understand the cost of getting it.
If you want Indemnification Agreements…. And you should then get them in a way that works for everyone.
Spending time money legal fees on an agreement that won’t be used or cannot be collected on is a waste of time.
1. Be realistic.
a. With you asking to indemnify for what
b. What they can pay or what insurance they can purchase and afford.
c. With what you need indemnified, with what someone other than you is legally liable for.
2. Be prepared to offer one in return. Why should I sign yours if you are going to leave me out in the cold for any claim or liability you cause? Besides mutual indemnification, agreements take out the consideration issue if written correctly.
3. Make sure it is signed by the right person. A corporation has officers. The board of directors of the corporation authorizes the officers to sign agreements for the corporation. An indemnification agreement is a big deal so make sure the person signing it has the authority to sign the agreement. Having a sales person or sales manager sign the agreement is a waste of trees.
4. An indemnification agreement without a Certificate of Insurance or an Additional Insured document that is tied to the Indemnification Agreement, not just with it, is worthless.
The certificate of insurance must be legally tied to the indemnification agreement or both are worthless. There is no insurance to cover the indemnification and not money to indemnify the problem.
5. Have an attorney write your indemnification agreement so it works.
One last point
Signing indemnification agreements may increase your insurance rates. Basically, instead of insuring you, your policy is not insuring dozens of other businesses and their employees. Your insurance company, if they continue to renew your policy, may increase your premium because the risk has increased.
(Insurance companies also do this based on the number of Additional Insured’s you issue and the coverage you make available to the Additional insured’s. Again, that is another article for another day.)
Indemnification agreements work, but only if written correctly and written with knowledge of how and why they work.
What do you think? Leave a comment.
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Copyright 2012 Recreation Law (720) Edit Law
Twitter: RecreationLaw
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Is an entry form for a race, event or tour a contract? Maybe (it’s a legal answer!)
Posted: February 13, 2013 Filed under: Contract, Racing | Tags: Acceptance, Contract, Entry Form, Legal Capacity, Marathon, New York City Marathon, Offer, Offer and acceptance Leave a commentIt depends on what the agreement says and what you agree too. I.e what is a contract?
This issue popped up when the New York City Marathon was canceled because of Hurricane Sandy. See Is A Race Entry a Contract? The issue in that discussion was whether or not the entry fees would or could be refunded.
Instead of looking at dozens of entry forms let’s look at how you can determine whether you have created a contract or not with your entry form.
First: You should have a release for your event. Your release should not be part of your entry form or entry contract. This also separates the known contract, the release from what you are making. If you do not want to have a contract, then separating it from the release will assist in this goal.
Second: Are you making promises which the entrants are going to rely upon? Are you expecting the entrants to rely upon your statements or promises? The promises have to be important, substantial and something that you can do or would be expected by your guests or entrants.
See If you make a promise to attract participants, you must come through on your promises.
Third: Have your created a contract?
Was there an offer to enter a contract? If you give me money, I’ll give you a race/tour/event usually meets that requirement. Is there an acceptance of the offer? Again if the participants pay their money, they have accepted your offer.
Most times the offer is pretty easy. Advertising, websites or brochures are offers. Acceptance is equally easy, a credit card or check along with the information required in the offer (entry form) are completed.
Is there a meeting of the minds? Do both sides of the agreement agree there is an agreement, a contract? Do both sides understand what they are giving and getting by entering the contract? Is there consideration, money or something of value flowing between the parties?
In a race example, the race organizer is offering a race, t-shirt, prizes for winners and maybe aid stations. If that offer is accepted by the racer paying the entry fee and signing any required form or contract. The entrant gets a race, and the race organizer gets a participant.
Both sides must have the legal capacity to contract. This means that both sides cannot be minors, and both sides must be competent. Legally competent is defined by state law; however, in general this is a very low threshold test.
The sole issue of whether or not there is a contract is the issue of whether the parties intend to be legally bound by the terms of the agreement. Either side can argue that it was not a contract, the side not wanting to be bound by a contract. The other side will want the agreement to be a contract. However, in most cases there is a presumption that if the other issues outlined above are met there is a contract between the parties.
The original question posed in the article was whether or not people would get their money back. If the contract said the entry fee was non-refundable, then no. If there was a contract between the parties, and it was silent as to whether of the entry fees were refundable, then the courts would look to the usage in the industry. Honestly, this could be a toss-up or no. The organizer would argue the money was spent and cannot be refunded.
Do Something
1. Separate your release from your entry agreement.
2. Determine whether you want your entry to be a contract or not.
3. Make sure you understand what promises you are making with or without a contract and make sure you fulfill those promises.
For more articles about contracts see:
Athlete Contracts; as a manufacture do you need one? http://rec-law.us/zxhJaP
Plaintiff raised argument in work/team building situation that they were forced to sign release http://rec-law.us/XiKRug
What do you think? Leave a comment.
If you like this let your friends know or post it on FaceBook, Twitter or LinkedIn
Copyright 2012 Recreation Law (720) Edit Law
Email: blog@rec-law.us
Twitter: RecreationLaw
Facebook: Rec.Law.Now
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By Recreation Law Rec-law@recreation-law.com James H. Moss Jim Moss
#RecreationLaw, #@RecreationLaw, #Cycling.Law #Fitness.Law, #Ski.Law, #Outside.Law, #Recreation.Law, #Recreation-Law.com, #Outdoor Law, #Recreation Law, #Outdoor Recreation Law, #Adventure Travel Law, #law, #Travel Law, #Jim Moss, #James H. Moss, #Attorney at Law, #Tourism, #Adventure Tourism, #Rec-Law, #Rec-Law Blog, #Recreation Law, #Recreation Law Blog, #Risk Management, #Human Powered, #Human Powered Recreation,# Cycling Law, #Bicycling Law, #Fitness Law, #Recreation-Law.com, #Backpacking, #Hiking, #Mountaineering, #Ice Climbing, #Rock Climbing, #Ropes Course, #Challenge Course, #Summer Camp, #Camps, #Youth Camps, #Skiing, #Ski Areas, #Negligence, #Snowboarding, #RecreationLaw, #@RecreationLaw, #Cycling.Law #Fitness.Law, #SkiLaw, #Outside.Law, #Recreation.Law, #RecreationLaw.com, #OutdoorLaw, #RecreationLaw, #OutdoorRecreationLaw, #AdventureTravelLaw, #Law, #TravelLaw, #JimMoss, #JamesHMoss, #AttorneyatLaw, #Tourism, #AdventureTourism, #RecLaw, #RecLawBlog, #RecreationLawBlog, #RiskManagement, #HumanPowered, #HumanPoweredRecreation,# CyclingLaw, #BicyclingLaw, #FitnessLaw, #RecreationLaw.com, #Backpacking, #Hiking, #Mountaineering, #IceClimbing, #RockClimbing, #RopesCourse, #ChallengeCourse, #SummerCamp, #Camps, #YouthCamps, #Skiing, #Ski Areas, #Negligence, #Snowboarding, sport and recreation laws, ski law, cycling law, Colorado law, law for recreation and sport managers, bicycling and the law, cycling and the law, ski helmet law, skiers code, skiing accidents, Recreation Lawyer, Ski Lawyer, Paddlesports Lawyer, Cycling Lawyer, Recreational Lawyer, Fitness Lawyer, Rec Lawyer, Challenge Course Lawyer, Ropes Course Lawyer, Zip Line Lawyer, Rock Climbing Lawyer, Adventure Travel Lawyer, Outside Lawyer, Recreation Lawyer, Ski Lawyer, Paddlesports Lawyer, Cycling Lawyer, #RecreationalLawyer, #FitnessLawyer, #RecLawyer, #ChallengeCourseLawyer, #RopesCourseLawyer, #ZipLineLawyer, #RockClimbingLawyer, #AdventureTravelLawyer, #OutsideLawyer, Entry Form, Offer, Acceptance, Contract, Legal Capacity, Marathon, New York City Marathon,
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