CYNTHIA L. MARTIN, Judge.
Village of Big Lake, Missouri ("Big Lake") appeals from the trial court's grant of summary judgment in favor of BNSF Railway Company, Inc. ("BNSF") and Massman Construction Co. ("Massman") (collectively "Respondents"). The Respondents claimed that language in permit agreements between Big Lake and BNSF's predecessor, Burlington Northern Railroad, released Big Lake's claims for negligence and trespass relating to damage to Big Lake's underground water lines and a fire hydrant. Because genuine issues of material fact as to which Respondents bear the burden of proof and persuasion remain in dispute, the entry of summary judgment is precluded as a matter of law. We reverse and remand to the trial court for further proceedings.
On May 13, 2013, Big Lake filed a two count petition against BNSF and Massman
In lieu of filing an answer,
Big Lake opposed the motion for summary judgment, though it admitted the majority of the uncontroverted facts set forth in the motion. The admitted uncontroverted facts establish the following:
• Big Lake is a Missouri municipality located in Holt County, Missouri. BNSF operates and maintains an intercontinental railroad, including a line near the southern boundary of Big Lake. In the summer of 2011, a flood occurred at or around the Big Lake area. At all pertinent times, Big Lake has operated and maintained a water line at or near the southern boundary of Big Lake. This water line goes through and under BNSF tracks at two separate points. Massman entered into a contractual relationship with BNSF in which Massman agreed to perform work on the BNSF rail line in the Big Lake area at BNSF's direction.
• On November 5, 1991, Big Lake entered into two permit agreements with BNSF's predecessor, Burlington. In these pipeline permits, BNSF's predecessor allowed Big Lake, in consideration for a fee and for the covenants and promises made in the permits, to construct and operate its water line, upon, along, or across the BNSF right of way, underneath the surface thereof, and under and along the BNSF tracks. Pipeline permit No. PX-91-8090 allows Big Lake "license and permission to excavate for, construct, maintain, and operate one (1) water line under our Burlington tracks near MP 4.66 Survey Station 244 + 84." Pipeline permit No. PX-91-8091 allows Big Lake "license and permission to excavate for, construct, maintain, and operate one (1) water line under our Burlington tracks near MP 5.73 Survey Station 301 + 22." Both permits referred to the specific water line location therein described as: "Facility upon, along or across the right-of-way of Burlington, underneath the surface thereof, and under and along the tracks of Burlington, as the case may be ..."
• The pipeline permits provide that BNSF may cancel and terminate the license and permission extended to Big Lake upon thirty days written notice. Big Lake continues to operate and maintain its water lines pursuant to the pipeline permits.
• Following the flooding of 2011, BNSF and Massman undertook a massive effort to return the BNSF tracks in the Big Lake area to service. Big Lake alleges that during this repair work, BNSF and Massman covered or destroyed a water line and a fire hydrant belonging to Big Lake. Big Lake alleges that the damage to its water line at the intersection of Cemetery Road was 175 feet from BNSF's center track, and 200 feet from the BNSF East and West Center Line. Big Lake further alleges that the damaged fire hydrant was located at the Highway 111 track intersection, approximately 53 feet from the center track.
Big Lake denied only two of the "uncontroverted facts" set forth in the Respondents' motion. Big Lake denied the Respondents' statement that "Paragraph 7 of both pipeline permits releases BNSF from any liability for damage or destruction of the water line," noting the statement was not a contention of fact, but instead a legal conclusion. Big Lake also denied as a legal conclusion Respondents' statement that "[t]he pipeline permits place the responsibility for the construction, reconstruction, repair, or maintenance of the water lines solely upon Big Lake."
Big Lake contested the Respondents' right to summary judgment as a matter of law. Big Lake argued that the damage to the water line and fire hydrant (which was alleged to have occurred anywhere from 53 to 200 feet from the tracks) was not within the scope of the release because the damage was not "on or near" BNSF's premises. Big Lake argued that the release did not use the words "negligence" or "fault" or their equivalents as required by the Supreme Court's decision in Alack v. Vic Tanny International of Missouri, Inc., 923 S.W.2d 330 (Mo. banc 1996), rendering the release invalid as a matter of law to release Big Lake's negligence claim. Big Lake argued that the release was unenforceable to release Big Lake's claims of trespass and gross negligence, future claims which cannot be released as a matter of law pursuant to Alack. Finally, Big Lake argued that it was not a sophisticated party as "it is a small town that is rarely involved in matters such as these, while the railroad regularly enters in to these types of contracts."
In their reply suggestions, the Respondents acknowledged that the requirements for release of future negligence claims are different for a consumer than for sophisticated parties, and argued that the release was negotiated between sophisticated parties. The Respondents alternatively argued that the language in the release satisfies the requirements for consumer transactions set forth in Alack because it is "clearly stated and explicit."
On November 7, 2013, the trial court entered an amended judgment granting the Motion for Summary Judgment.
"Appellate review of the grant of summary judgment is de novo." Dilley v. Valentine, 401 S.W.3d 544, 547-48 (Mo. App.W.D.2013) (citing ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993)). "We review the record in the light most favorable to the party against whom the judgment was entered." Jordan v. Peet, 409 S.W.3d 553, 557 (Mo.App.W.D. 2013). "`Summary judgment is appropriate when the moving party has demonstrated, on the basis of facts to which there is no genuine dispute, a right to judgment as a matter of law.'" Id. (quoting Roberts v. BJC Health System, 391 S.W.3d 433, 437 (Mo. banc 2013)).
Big Lake raises four points on appeal. Big Lake contends that the trial court erred because the claims alleged in Big Lake's petition were not released in that (1) the liability waiver in the pipeline permits did not explicitly mention that it waived negligence; (2) the petition contained a well-pled claim for trespass, an intentional tort, which cannot be released in advance under Missouri law; (3) the petition contained a well-pled claim for gross negligence which cannot be released in advance under Missouri law; and (4) the basis for the summary judgment was an affirmative defense which was not first raised in a responsive pleading. Big Lake's first point relied on is dispositive of this appeal.
Big Lake contends that paragraph 7 of the pipeline permits was ineffective to release its claim of negligence pursuant to the Supreme Court decision in Alack because it did not explicitly mention that it waived negligence. In Alack, the plaintiff was injured using health club facilities. 923 S.W.2d at 332. The plaintiff "had signed a two-page, seventeen-paragraph `Retail Installment Contract' containing a general exculpatory clause." Id. The Supreme Court held that the clause was ambiguous and that the club "did not insulate itself from liability for future negligence because the exculpatory clause did not use the word `negligence' or `fault' or their equivalents so that a clear and unmistakable waiver occurred." Id. In reaching this decision, the Supreme Court noted that "[h]istorically, Missouri appellate courts have required that a release from one's own future negligence be explicitly stated." Id. at 336. The Supreme Court concluded that:
Id. at 337.
Applying its holding, the court held that the clause at issue used the terms "any damages," "any ... injuries," and "any and all claims, demands, damages, rights of action, present or future ... [] arising out of the Member's ... use ... of said gymnasium ..." was "ambiguous because it did not specifically state that a member was releasing [the club] for its own future negligence." Id. The court concluded that:
Id. at 337-38 (emphasis added).
Paragraph 7 of the pipeline permits does not satisfy the requirements of Alack. Paragraph 7 contains five clauses:
(Emphasis added.)
The first clause plainly addresses the subject of Big Lake's release of claims for its own damages, and releases Burlington. The second clause addresses the subject of Big Lake's assumption of liability, and by its plain terms comes into play only where loss or damage to someone other than Big Lake is caused by use of, or work of some sort on, the water line, a factual scenario not implicated in this case. The third and fourth clauses address Big Lake's obligation to indemnify and defend Burlington for claims of third parties arising from loss or damage described in the second clause. The fifth clause refers to the "liability assumed" by Big Lake, and thus to the second clause, and states that Big Lake's assumed liability will be unaffected by the negligence of Burlington or others.
Plainly, the second, third, fourth and fifth clauses of paragraph 7 of the pipeline permits are not applicable to this case. Each addresses the subject of Big Lake's assumption of liability, and thus its indemnity obligation. Indemnity and release are "distinct legal concepts." Tri-State Gas Co. v. Kansas City Southern Ry. Co., 484 S.W.2d 252, 254 (Mo.1972). A contract of release extinguishes liability,
The first clause releases Burlington (now BNSF) from liability for damage to "said Facility" (Big Lake's water line) or to any other property belonging to Big Lake "located on or near" BNSF's premises. The release language does not use the words "`negligence' or `fault' or their equivalents ... so that a clear and unmistakable waiver and shifting of risk occurs." Alack, 923 S.W.2d at 337. The release clause in Paragraph 7 does not meet the Alack requirements.
The Respondents counter that Alack does not apply where sophisticated parties negotiate a release at arm's length. It is true that Alack acknowledged that, "This case does not involve an agreement negotiated at arm's length between equally sophisticated commercial entities. Less precise language may be effective in such situations, and we reserve any such claims." 923 S.W.2d at 338 n. 4. The Supreme Court's later holdings in Purcell Tire and Rubber Co., Inc. v. Executive Beechcraft, Inc., 59 S.W.3d 505 (Mo. banc 2001) and Utility Service and Maintenance Inc. v. Noranda Aluminum, Inc., 163 S.W.3d 910 (Mo. banc 2005) solidified that the holding in Alack does not apply to a release negotiated between "equally sophisticated commercial entities."
In Purcell, the plaintiff decided to buy a used airplane and hired Beechcraft to perform a pre-purchase survey of the plane for the price of $1,250.00. 59 S.W.3d at 507-08. The last paragraph of the contract provided that Beechcraft's liability, if any, under the contract was limited to the cost of services performed and that the parties agree to indemnify and hold harmless Beechcraft from any damages or expenses claimed by any party to the contract beyond the cost of the services. Id. at 508. Purcell later discovered an oil leak that Beechcraft did not mention. Id. Purcell sued Beechcraft for breach of contract and negligence seeking damages in the amount of $372,458. Id. Beechcraft moved for summary judgment citing the affirmative defense that the contract limited liability to $1,250.00. Id. The trial court granted summary judgment in favor of Beechcraft. Id.
On appeal, the Supreme Court began its analysis by observing that both Purcell and Beechcraft are "
This conclusion did not mean the exculpatory clause in Purcell was automatically enforceable. The clause remained subject to a claim that it was otherwise unenforceable because of ambiguity. Purcell argued that the liability limitation was also ambiguous because it encompassed "any" damages or injuries, including claims that cannot be released in advance as a matter of public policy in Missouri. Id. at 510. Purcell relied on Alack, where the Supreme Court held:
923 S.W.2d at 337. In rejecting this argument, the Court in Purcell found that "[l]anguage that is ambiguous to an unsophisticated party may not be ambiguous to a sophisticated commercial entity. Beechcraft and Purcell Tire were
Noranda involved an indemnity provision in a contract between two businesses which provided that, "Seller shall indemnify and save Purchaser free and harmless from and against any and all claims, damages, liabilities or obligations of whatsoever kind...." 163 S.W.3d 910, 911. Following a bench trial, the trial court held that the provision was not enforceable. Id. at 912. On appeal, the Supreme Court acknowledged that in its review of release clauses in contracts, it "
It is thus clear that a different standard applies to determine whether general exculpatory clauses or indemnity clauses can cover claims of future negligence depending upon whether the parties to the contract are "sophisticated businesses, experienced in this type of transaction." Purcell, 59 S.W.3d at 510-11. Here, the parties disagree on the subject of who bore the burden to prove, or disprove, the "sophisticated parties" exception mentioned in Alack and formalized in Purcell. No Missouri case has addressed this precise question.
There is only one "exception to the general rule in regard to releases in that where the execution of a release purporting to rest on [] consideration is admitted the burden is on the plaintiff to prove some invalidity in the release." Jenkins, 472 S.W.2d at 420. "Invalidity" refers to the legal enforceability of the release. See, e.g., Angoff v. Mersman, 917 S.W.2d 207, 211 (Mo.App.W.D.1996) ("To avoid an affirmative defense alleged in an answer, a plaintiff must plead specifically matters of affirmative avoidance," such as fraud, mistake or unfair dealing); Landmark North County Bank & Trust Co. v. National Cable Training Centers, Inc., 738 S.W.2d 886, 890 (Mo.App.E.D.1987) (holding that the burden to prove invalidity effecting enforceability of a release shifts to the party opposing the defense).
The Respondents correctly argue that once Big Lake admitted execution of the permits, and thus of the release, the burden shifted to Big Lake to "prove some invalidity in the release." Jenkins, 472 S.W.2d at 420. Big Lake argued in its response to the motion for summary judgment that the release was facially invalid pursuant to Alack because it released future negligence without express reference to same, and it released future intentional torts and gross negligence. Unlike scenarios where fraud, mistake, unfair dealing, or other similar defenses to enforcement of a release are alleged, Big Lake's assertion of legal invalidity was established without the requirement of further evidence. Cf. Landmark North County Bank & Trust Co., 738 S.W.2d at 890 (holding that bank president's bare allegations that release was invalid because it was induced by fraudulent misrepresentation and duress would not defeat summary judgment in absence of facts in dispute that would establish these claims).
Once Big Lake "prove[d] some invalidity in the release," Jenkins, 472 S.W.2d at 420, we conclude that the burden shifted back to the Respondents to prove that the release fell within the exception for contracts between "sophisticated parties." Where established precedent renders the terms of a contract facially
The Respondents have not met this burden, and have thus failed to establish a right to summary judgment as a matter of law. In the suggestions in support of their motion for summary judgment, the Respondents summarily stated that "the Pipeline Permits were negotiated between two sophisticated parties." Though no Missouri court has declared the subject of this statement to be a question of fact, we believe the proposition to be self-evident. In Purcell, the Supreme Court went to great lengths to set forth the apparently uncontroverted credentials of the parties before concluding that the parties were sophisticated businesses in the "
Here, the uncontroverted facts in Respondents' summary judgment motion are devoid of any facts from which the trial court could have concluded as a matter of law that the pipeline permits were negotiated at arm's length between business or commercial entities of equal power and sophistication in such transactions. The Respondents' uncontroverted facts state only that Big Lake is "a Missouri municipality." The Respondents cite to no authority suggesting that this admitted fact supports the conclusion as a matter of law that the pipeline permits were negotiated between parties sophisticated in such transactions.
"`The movant bears the burden of establishing both a legal right to judgment and the absence of any genuine issue of material fact required to support the claimed right to judgment.'" Dilley, 401 S.W.3d at 550 (quoting Kinnaman-Carson v. Westport Ins. Corp., 283 S.W.3d 761, 765 (Mo. banc 2009)). "The defendant establishes the right to judgment as a matter of law by showing ... facts necessary to support his properly pleaded affirmative defense." Jordan, 409 S.W.3d at 557. A motion for summary judgment must be denied if the factual assertions are insufficient to entitle the movant to judgment as a matter of law. Id. The Respondents have not established that Big Lake was a sophisticated party in connection with the negotiation and execution of the permits, and thus has not established all facts essential to their right to judgment on the affirmative defense of release as a matter of law.
We reverse the trial court's entry of summary judgment and remand this matter to the trial court for further proceedings consistent with this Opinion.
All concur.
Similarly, the release clause in paragraph 7 "releases and discharges Burlington." Big Lake admitted as an uncontroverted fact that BNSF is the successor to Burlington. However, the uncontroverted facts do not address how or why Massman is covered by the release clause. BNSF argued to the trial court that the "all caps" language in paragraph 7 (what we refer to in this Opinion as clause 5) extends the scope of the release clause to Massman because it refers to Burlington's agents. We have explained, however, that clause 5 in paragraph 7 of the permits applies only to Big Lake's indemnity obligations, and not to the release clause. It will thus remain the Respondents' obligation on remand to establish that Massman is covered by the release clause. See Alack, 923 S.W.2d at 334 ("It is a `well-established rule of construction that a contract provision exempting one from liability for his or her negligence will never be implied but must be clearly and explicitly stated.'") (citation omitted); State ex rel. Normandy Orthopedics, Inc., 581 S.W.2d at 834 (holding wrongdoer must establish he is within the intended scope of a release where he is not expressly named).
