Exculpatory Provision Enforced in Transportation Agreement

An exculpatory agreement contained in a contract for transportation services may be enforceable against a plaintiff claiming ordinary negligence.

In Copeland v. Healthsouth/Methodist Rehabilitation Hospital, L.P., No. W2016-02499-COA-R3-CV (Tenn. Ct. App. Aug. 10, 2017), plaintiff was recovering from knee surgery in a hospital and had a follow-up appointment with his surgeon. The hospital helped arrange for defendant transportation service to take plaintiff to this appointment. “After the appointment, [plaintiff] was injured when he fell while getting back into the MedicOne transport van.” Before being transported by defendant, plaintiff signed several documents. One stated that the van provided was “not an ambulance and no care will be given by the…technician.” The second specified that it was for “transportation services” and that “there are inherent risks associated with such transportation which pose a risk of harm or injury.” This agreement also contained a release, which stated that plaintiff “SPECIFICALLY DISCHARGES MEDIC ONE RELATED PARTIES FROM ANY AND ALL CLAIMS ARISING DIRECTLY FROM OR AS A RESULT OF THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ) OF MEDIC ONE RELATED PARTIES.”

Plaintiff filed this negligence suit against the transportation company and the hospital that arranged the service. The trial court granted summary judgment to both defendants, finding that the release was enforceable and waived all claims of ordinary negligence. Plaintiff appealed, but only as to defendant transportation company, and summary judgment was affirmed.

The only issue here was whether the exculpatory clause contained in the agreement signed by plaintiff was enforceable. In Tennessee, “parties may contract that one shall not be liable for his negligence to another[.]” (internal citation and quotation omitted). The Tennessee Supreme Court has held, though, that in some cases “where the public interested would be affected by an exculpatory provision, such provision could be held invalid.”

In Olson v. Molzen, 558 S.W.2d 429 (Tenn. 1977), the Tennessee Supreme Court “adopted six criteria…useful in determining when an exculpatory provision should be held invalid as contrary to public policy.” The criteria are:

(a) It concerns a business of a type generally thought suitable for public regulation.

(b) The party seeking exculpation is engaged in performing a service of great importance to the public, which is often a matter of practical necessity for some members of the public.

(c) The party holds himself out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards.

(d) As a result of the essential nature of the service, in the economic setting of the transaction, the party invoking exculpation possesses a decisive advantage of bargaining strength against                 any member of the public who seeks his services.

(e) In exercising a superior bargaining power the party confronts the public with a standardized adhesion contract of exculpation, and makes no provision whereby a purchaser may pay                         additional reasonable fees and obtain protection against negligence.

(f) Finally, as a result of the transaction, the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or his agents.

In the Olson case, these factors were applied to invalidate an exculpatory agreement between a doctor and patient. Looking back at Olsen and the cases applying it, the Court noted that “a review of relevant Tennessee cases indicates that the exceptions adopted in Olson have generally been restricted to those situations involving professional services, such as legal services, medical treatment, and home-inspections.” (internal citations omitted).

Plaintiff’s first argument on appeal was that the trial court erred by not applying or mentioning the Olson factors. The Court found that while the trial court did not specifically mention Olson, its order “clearly indicates that the trial court declined to apply Olson based on its initial finding that the transportation services provided by [defendant] were not professional services[.]” The trial court stated that the agreement “wasn’t for professional service. This was a transportation service.” While the driver “made his living” driving for defendant, he was not a professional “so as to trigger application of the Olson criteria.” He was not medically trained and had “no qualification other than a valid driver’s license.”

Plaintiff asserted that a Tennessee Supreme Court case had “expressly overruled the rule that the Olson standard was limited to professional service contracts.” (citing Crawford v. Buckner, 839 S.W.2d 754 (Tenn. 1992)). In that case, the Supreme Court invalidated an exculpatory agreement between a landlord and tenant after an apartment fire. The Supreme Court noted in its opinion that the intermediate court had enforced the exculpatory provision based on “their belief that this Court had limited the Olson standard to professional service contracts.” The Supreme Court then went on to apply the six factors to the case and find that the exculpatory agreement should not be enforced.

In the present matter, the Court of Appeals rejected plaintiff’s argument that whether a contract was for professional services was now irrelevant to the exculpatory agreement analysis. The Court stated: “We do not read the Crawford opinion to overturn or negate the professional service criterion discussed in Olson; rather, the Crawford Court merely recognized that, even in the absence of professional services, if the exculpatory agreement contemplates matters of great necessity or public policy, a reviewing court may apply the Olson factors.” In this case, however, the Court found that the transportation agreement was not about “matters of great necessity or public policy.”

Next, although the trial court found that this was not a contract of adhesion because “nothing in the record supports a finding that [plaintiff] believed he had no option other than to sign the contract or take this particular method of transportation,” plaintiff asserted that refusing to sign and being denied the transport “would have caused delay resulting in a difficult choice.” He compared his case to a funeral home case in which plaintiff was told to sign an exculpatory agreement or find another funeral home for her father’s funeral. At this point, the funeral home in question already had possession of the body. The court in that case ruled that the exculpatory agreement was an unenforceable contract of adhesion, noting the “difficult decision” the plaintiff would have faced “had she decided to terminate the relationship.” (citing Wofford v. M.J. Edwards & Sons Funeral Home, Inc., 490 S.W.3d 800 (Tenn. Ct. App. 2015)). The Court rejected plaintiff’s attempted comparison, stating:

No such ‘trust relationship,’ ‘emotional decision,’ or ‘important social consideration’ exist in the instant case. Again, the Agreement [plaintiff] signed was strictly for non-emergent transportation services. There was no preexisting relationship of trust between [plaintiff] and [defendant]; Mr. Holmes was simply the driver who was available at the time [plaintiff] needed transportation. Furthermore, there is no evidence that, had [plaintiff] refused to sign the Agreement, his decision would have caused any crisis. He could simply have called for other transportation (e.g., taxi or Uber), or he could have rescheduled his appointment.

Having found that there was no reason to invalidate the exculpatory agreement, summary judgment was affirmed.

Exculpatory agreements can be hard to avoid in Tennessee. For lawyers who are trying to invalidate an exculpatory agreement contained in a service contract, this case is a good read with a fairly thorough analysis of the factors a court will consider.