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Yang v. Voyagaire Houseboats8/4/2005
d alleged that Xiong's claims were barred by the exculpatory clause in the rental agreement. Voyagaire also brought a third-party action against Xiong, alleging that he had agreed to indemnify Voyagaire from any claim or lawsuit arising from his use and operation of the houseboat. Voyagaire moved for summary judgment, seeking to enforce the exculpatory and indemnification clauses in the rental agreement. Xiong filed a cross-motion for summary judgment, arguing that the exculpatory and indemnification clauses are unenforceable. The district court granted Voyagaire's motion for summary judgment. The district court later issued a clarifying order dismissing Xiong's claims and requiring Xiong to indemnify Voyagaire for the claims of the remaining nine plaintiffs.
The court of appeals affirmed summary judgment. Yang v. Voyagaire Houseboats, Inc., Nos. A03-1842 & A03-2000, 2004 WL 2049843 (Minn. App. Sept. 14, 2004). The court of appeals concluded that Xiong's claims are barred by the exculpatory clause because "(1) Voyagaire does not provide a necessary or public service; (2) renting a houseboat is a recreational activity; (3) there was no disparity in bargaining power; and (4) the contract is not ambiguous." Id. at *4. The court of appeals also concluded that Xiong is required to indemnify Voyagaire for the claims of the other nine plaintiffs because "the indemnification clause is sufficiently clear, sufficiently broad, and is not void on public-policy grounds." Id. at *6. We granted review to determine the enforceability of the exculpatory and indemnification clauses in the houseboat rental agreement.
I.
On appeal from summary judgment, we determine whether there are any genuine issues of material fact and whether a party is entitled to judgment as a matter of law. Christensen v. Milbank Ins. Co., 658 N.W.2d 580, 584 (Minn. 2003). Here, we view the facts in the light most favorable to Xiong, the party against whom summary judgment has been granted. See Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). Whether a clause in a rental agreement--a contract provision--is ambiguous is a question of law reviewed de novo. Denelsbeck v. Wells Fargo & Co., 666 N.W.2d 339, 346 (Minn. 2003). The construction and effect of an unambiguous contract also are questions of law. Id.
II.
We first examine the enforceability of the exculpatory clause in the houseboat rental agreement. Exculpatory clauses are "not favored," and they are "strictly construed against the benefited party." Schlobohm v. Spa Petite, Inc., 326 N.W.2d 920, 923 (Minn. 1982). An exculpatory clause is unenforceable if it is ambiguous in scope, purports to release the benefited party from liability for intentional, willful or wanton acts; or contravenes public policy. Id. In determining whether an exculpatory clause violates public policy, we consider (1) whether there was a disparity in bargaining power between the parties and (2) the types of services being offered or provided, taking into consideration whether they are public or essential services. Id.; see also Restatement (Second) of Contracts ยง 195(2)(b) (1981) (stating that " term exempting a party from tort liability for harm caused negligently is unenforceable on grounds of public policy if * * * the term exempts one charged with a duty of public service from liability to one to whom that duty is owed.").
In this case, we focus our analysis on the public policy considerations. We conclude that the dispositive factor in determining the enforceability of the exculpatory clause here is the type of service that Voyagaire offers. In examining whether the service being offered is a public or essential service, we "consider whether it
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