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A Utah appellate court [not the highest court in Utah] has reversed a trial judge and refused to enforce an exculpatory clause in a residential lease for an apartment complex. You can and should read the decision on our web site at
https://www.kirschenbaumesq.com/article/pdf/002241-utah-279-p-3d-391.pdf
The loss suffered by the tenants in this case was the result of a fire started by an arsonist at the apartment complex. As a result of the fire, Tenants suffered property damage and personal injuries. They filed suit against the landlord alleging that its negligence contributed to their damages from the fire. Specifically, Tenants claimed that the landlord was negligent because it failed to (1) warn residents that the building did not contain fire blocking, (2) take any measures to reduce or eliminate fire hazards when it knew about a previous fire at the apartment complex, (3) have a
functional fire alarm system, (4) have security at the premises, (5) remove a couch from a stairwell that served as the ignition for the fire, and (6) provide adequate access to firefighters.
This court did not consider whether exculpatory clauses in residential leases are categorically unenforceable on public policy and public interest grounds. The court did address Utah's law [not really that different than most states on this issue] regarding enforcement of the exculpatory clause.
The exculpatory clause is worded satisfactorily. The issue in this case is whether a landlord should be able to avoid liability. Alarm companies often face the same argument. Most courts have recognized that alarm companies do have the right to enforce a contractual exculpatory clause; that no overriding public policy would prohibit that enforcement. So all you need is a properly drafted alarm contract with the exculpatory clause and other protective provisions. Then you'll need proper defense counsel should you get sued !
This appellate court criticized the landlord's counsel for not adequately briefing the issues raised by the Tenants. The decision almost punishes them. How that affected the judge's decision is anyone's guess.
AMC is the landlord. Here are a few quotes from the decision:
"Finally, AMC attempts to circumvent Tenants' arguments that the Exculpatory Clause violates public policy and the public interest by asserting that the Agreement and the Exculpatory Clause were not contracts of adhesion. But AMC does not point out that this argument relates to one of the Tunkl factors set forth in Tenants' brief. In fact, it never recognizes Tenants' argument that the Clause is unenforceable under the Tunkl factors at all. Thus, AMC fails to provide us with meaningful analysis of how its assertion that the Agreement and the Exculpatory Clause are not contracts of adhesion relates to the enforceability of the Clause under the Tunkl factors set forth in Tenants' brief. Moreover, even if the Agreement and the Exculpatory Clause are not contracts of adhesion, such that the relevant Tunkl factor does not apply in this case, AMC never refutes Tenants' argument that the other five Tunkl factors apply here and are sufficient bases for concluding that the Exculpatory Clauseis unenforceable.
Thus, AMC fails to meaningfully address Tenants' claim that the Clause is unenforceable or provide us with legal analysis addressing the points Tenants raise. Indeed, Tenants note in their reply brief that AMC does not squarely address their arguments. Further, at oral argument, counsel for AMC conceded that its brief failed to address Tenants' arguments regarding the enforceability of the Clause under the Tunkl factors. When asked why AMC did not address these arguments in its brief, counsel for AMC admitted that he had not personally reviewed the brief before submitting it to the court.
Finally, AMC attempts to circumvent Tenants' arguments that the Exculpatory Clause violates public policy and the public interest by asserting that the Agreement and the Exculpatory Clause were not contracts of adhesion. But AMC does not point out that this argument relates to one of the Tunkl factors set forth in Tenants' brief. In fact, it never recognizes Tenants' argument that the Clause is unenforceable under the Tunkl factors at all. Thus, AMC fails to provide us with meaningful analysis of how its assertion that the Agreement and the Exculpatory Clause are not contracts of adhesion relates to the enforceability of the Clause under the Tunkl factors set forth in Tenants' brief. Moreover, even if the Agreement and the Exculpatory Clause are not contracts of adhesion, such that the relevant Tunkl factor does not apply in this case, AMC never refutes Tenants' argument that the other five Tunkl factors apply here and are sufficient bases for concluding that the Exculpatory Clause is unenforceable."
The court's discussion regarding the exculpatory clause would apply to alarm contracts. Unfortunately it's difficult to know to what extent, if any, this court punished the landlord because of the criticism of the landlord's attorneys failing, in the court's opinion, to properly brief the issues. Apparently in Utah the judge's don't like to do their own research.
Here is another quote:
"Under the Tunkl standard, an exculpatory clause may be unenforceable on public interest grounds when the party seeking to enforce the clause (1) is involved in "business of a type generally thought suitable for public regulation"; (2) "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"; (3) "holds himself out as willing to perform this service for any member of the public who seeks it"; (4) "possesses a decisive advantage of bargaining strength against any member of the public who seeks his services";
(5) "confronts the public with a standardized adhesion contract of exculpation, and makes no provision whereby a purchaser [or lessee] may pay additional
reasonable fees and obtain protection against negligence"; and (6) places "the
person or property of the purchaser [or lessee] . . . under the control of the seller [or lessor], subject to the risk of carelessness by the seller [or lessor,] or his agents."18 "Consideration of these traits is a flexible endeavor; the activity at issue need exhibit only a sufficient number of Tunkl characteristics such that one may be convinced of the activity's affinity to the public interest."19 Tenants put forth credible arguments that all of the Tunkl factors apply in this case. But they also argue that each of these factors "standing on its own" provides a basis for concluding that the Exculpatory Clause is unenforceable."
The appellate court reversed the lower court, reinstated the complaint and sent the case back to the lower court for a trial. The fire was in 2005. Hopefully we'll be kept informed of the outcome.
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