Curtis v. Ryder TRS Inc.

Citation: 43 F. App'x 103Docket: No. 00-36010; D.C. No. CV-98-01054-KI

Court: Court of Appeals for the Ninth Circuit; July 30, 2002; Federal Appellate Court

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Plaintiff-Appellant Capri Curtis appeals a district court's summary judgment against her in a diversity action involving tort claims and damages for breach of implied warranties of fitness and merchantability related to her 1997 rental of a truck and tow dolly from Defendant-Appellee Ryder TRS, Inc. in Tennessee. The claims arose after mechanical issues, including a brake failure that caused an accident while moving to Washington State. The district court dismissed her contract claims based on a warranty disclaimer in the rental agreement.

On appeal, Curtis argues that the disclaimer was not conspicuous, violated public policy, and was outside the parties' mutual assent. The appellate court agrees that the disclaimer was conspicuous under Tennessee law and the Uniform Commercial Code, noting that it was in capitals and bolded, positioned prominently in the contract, and required Curtis's signature as acknowledgment of having read the terms. 

Despite Curtis's claim that the Rental Information Folder’s exculpatory clauses violated public policy, the remaining claim on appeal pertains solely to contract issues. Even if public policy were applied, Tennessee law would not necessitate invalidation of the warranty disclaimer in this case. Thus, while the district court's finding on conspicuousness stands, the appellate court reverses the dismissal of Curtis's claims based on the disclaimer being outside the parties' circle of assent.

Tennessee's doctrine regarding exculpatory provisions in contracts of adhesion, particularly those benefiting a party with superior bargaining power, is narrowly applicable to certain situations involving significant public interest. The Olson case, cited by Curtis, established an exception to the general rule allowing parties to contract against their own negligence, particularly in professional contexts where public interest and state licensure are involved. This doctrine is intended to apply only to services of great importance where the seller's control over the buyer's person or property poses risks of negligence.

While the principles in Olson might theoretically extend to Curtis's situation, the court determined that the Supreme Court did not intend for this rule to apply to typical marketplace transactions. Therefore, the contract in question was not deemed invalid based on public policy. However, the court found that a Tennessee court would likely agree with Curtis that the disclaimer was ineffective under the "circle of assent" doctrine, which governs contracts with boilerplate clauses. This doctrine states that parties are considered to have assented only to negotiated terms and any reasonable terms that do not undermine those negotiated terms.

For a reallocation of risks to be enforceable, it must be conspicuous, comprehensible to the party against whom it is enforced, and that party must have had a reasonable choice regarding the reallocation. Curtis, having signed a boilerplate contract, is bound by the terms negotiated and any reasonable additional terms. The court noted that Curtis’s signature on the Rental Agreement, which indicated she read the Rental Information Folder, does not conclusively demonstrate her assent to the disclaimer, especially since the rental agent did not ensure she understood it or had the opportunity to review it thoroughly. The totality of circumstances surrounding her signature is critical in assessing her assent.

In Taylor v. Liberty Mutual Insurance Co., the Tennessee Court of Appeals examined the concept of "circle of assent" regarding a liability release presented to an accident victim. The court noted that the insurance company did not adequately highlight the release's significance. Similarly, in Curtis's case against Ryder, the Rental Agreement included highlighted paragraphs for certain terms but omitted the disclaimer, which was printed in small type amid more prominent, reassuring language. The disclaimer's heading, "Vehicle Condition," did not clearly convey its purpose as a warranty disclaimer. The court referenced a precedent where a clause was deemed outside the circle of assent due to misleading headings. Ultimately, the court concluded that the disclaimer was not effectively communicated to Curtis, thus not forming part of the agreement. It stated that a Tennessee court would likely hold the disclaimer ineffective under state law. The court reversed the lower court's decision and remanded the case, while also noting that Curtis did not appeal the dismissal of her tort claims based on the statute of limitations. Additionally, it mentioned that the statutory requirements for a written disclaimer were not disputed by Curtis.