James Hancock et ux v. U-Haul Co. of TN

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE

FILED
December 10, 1998
JAMES HANCOCK and wife, )
BRITT HANCOCK, )
Cecil W. Crowson
)
Appellate Court Clerk
Plaintiffs/Appellants, )
) Appeal No.
) 01-A-01-9801-CC-00001
VS. )
) Montgomery Circuit Civil
) No. C11-225
U-HAUL COMPANY OF TENNESSEE )
d/b/a U-HAUL STORAGE FACILITY, )
)
Defendant/Appellee. )

APPEALED FROM THE CIRCUIT COURT OF MONTGOMERY COUNTY
AT CLARKSVILLE, TENNESSEE

THE HONORABLE JAMES E. WALTON, JUDGE

MART G. FENDLEY
107 North Third Street
P. O. Box 925
Clarksville, TN 37041-0925
Attorney for Plaintiffs/Appellants

MICHAEL G. MCLAREN
STEPHEN C. BARTON
2900 One Commerce Square
40 S. Main Street
Memphis, Tennessee 38013
Attorneys for Defendant/Appellee

AFFIRMED AND REMANDED

BEN H. CANTRELL
PRESIDING JUDGE, M.S.

CONCUR:
KOCH, J.
CAIN, J.
 OPINION

The plaintiffs brought suit for the loss of their furniture and other

property, which was stolen from the defendant’s self-storage facility. The defendant

contended that the contract between the parties relieved it of any liability for the

plaintiffs’ loss. The trial court granted summary judgment to the defendant. We

affirm.

I.

James Hancock and his wife Britt sold their home in Clarksville because

they were planning to build a new house in Phoenix, Arizona. They needed to store

their furniture and household goods until their new home was completed, so on July

7, 1995, Mr. Hancock went to a storage facility in Clarksville operated by defendant

U-Haul of Tennessee, Inc.

Mr. Hancock noted with approval the strong physical security features

at the facility, such as the nine or ten foot high chain link fence topped by serpentine

or barbed wire, which surrounded the compound, and the good lighting. He spoke to

Paul Browning, the manager of the facility, who told Mr. Hancock that he and his wife

lived on the premises. Mr. Browning offered Mr. Hancock a contract, which included

a highlighted section with the following provisions:

PROPERTY IS STORED AT OCCUPANT’S SOLE RISK
I understand that this self storage facility:
1. is a commercial business renting space, and is not a
warehouseman;
2. is not responsible for loss to my property;
3. does not provide insurance on my property for me;
and
4. requires that I provide for my own insurance coverage
or be “self insured” (personally responsible for my own
loss).

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 The same section included boxes for the customer to check, to indicate

whether he was choosing to purchase insurance from his own agent; choosing to be

self insured; or choosing to purchase the optional Safestor package, a limited form of

insurance offered by U-Haul, with maximum coverage of $15,000, and premiums of

$24 per month.

Mr. Hancock signed a lease for one storage room at $94.95 per month,

and checked the box for purchasing insurance from his own agent. However he did

not purchase any such insurance. He and his wife subsequently moved all their

household goods into the storage room, and placed their own padlock on the unit.

Shortly thereafter, the Brownings went on vacation. The facility then

came under the supervision of a manager who remained on the premises only during

office hours (7:00 a.m. to 7:00 p.m. on most days). On August 10, 1995, Jim

Habacker, an employee of the defendant, discovered that there was no lock on the

plaintiff’s storage unit. He placed a U-Haul padlock on the unit, but did not notify the

owners. On August 18, 1995, the Hancocks returned to their unit to add a bed

comforter they had purchased, and discovered that most of their property had been

stolen.

From the quantity of the goods taken (allegedly over $50,000 worth), and

the nature of the goods left behind, it appeared that the thieves had the time to bring

a large truck into the facility (perhaps through the rear gate), to “pick through” the

property of the Hancocks, and to fully load the truck. There were no indications of

forced entry. Suspicion naturally fell upon some employees of U-Haul, but no charges

were ever brought.

The Hancocks filed a complaint against U-Haul on December 4, 1995,

alleging that its employees had either been negligent in their management of the

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storage facility, or had participated in the theft. The plaintiffs filed an amended

complaint on August 14, 1997 to add a claim for fraudulent or negligent

misrepresentation under the Tennessee Consumer Protection Act, Tenn. Code Ann.

§ 47-18-101 et seq. The defendant answered the original complaint on March 1,

1996, and filed a Motion for Summary Judgment on August 7, 1997.

U-Haul contended that the exculpatory clause quoted above insulated

it from any liability for the plaintiffs’ loss. The defendant denied that it had made any

representations at all to the plaintiffs as to its security arrangements, and made a

specific denial that the Brownings had represented themselves as a 24 hour a day

“security team” on the premises.

The defendant also argued that there was no proof that any of its own

employees were involved in the theft, but contended that even if they had been, the

company was not liable for the intentional conduct of employees acting outside the

course and scope of their employment. The trial court agreed with the reasoning of

the defendant, and granted the Motion for Summary Judgment on December 1, 1997.

This appeal followed.

II. The Consumer Protection Act

The Tennessee Consumer Protection Act offers protection against

businesses that prey on the consuming public by the use of unfair or deceptive

practices. A long list of such forbidden practices is found in Tenn. Code Ann. § 47-

18-104. In general, these involve false or misleading representations designed to

induce the consumer to deal with the business making those misrepresentations.

In the present case, there is no evidence that U-Haul or its employees

made any verbal or written representations to the Hancocks as to the nature or quality

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of the security measures it would employ to protect its customers’ goods. Since Paul

Browning told James Hancock that he and his wife lived on the premises of the

storage facility, Mr. Hancock apparently assumed this meant that he would receive the

benefit of 24 hour a day surveillance of the facility. But there was no such provision

in the leasing contract, the Brownings did not state that this was being offered, and

they did not promise that they would never take a vacation or otherwise temporarily

leave the facility.

James Hancock testified in deposition that he had previously stored

goods at a U-Haul facility in Mesa, Arizona, and had been impressed by the security

arrangements there. He observed that the defendant’s Clarksville facility was

physically similar to the one in Arizona, and he concluded that it operated the same

way. He argues that the existence of a formidable enclosure around the facility

amounts to an actionable misrepresentation under the Consumer Protection Act,

where it is not accompanied by stringent security measures to prevent entry by

unauthorized individuals.

While the Consumer Protection Act can apply to non-verbal as well as

oral or written representations, we believe it is stretching the point to contend that the

nature of the enclosure around the U-Haul facility amounts to an explicit promise that

any specific level of security will be maintained. We also do not believe that the

existence of similar physical barriers at two different U-Haul locations creates a

guarantee that the same security measures will be employed at both locations.

For example, the record indicates that there are at least two different

modes of controlling public access to customer storage areas that U-Haul employs at

its various locations. At some facilities, two locks are placed on each rented unit, one

by U-Haul and one by the customer. The individual who wishes to have access to his

own unit must first sign in at the office and leave a piece of I.D. before he is given the

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key to U-Haul’s lock. At the Clarksville facility and others, only the customer’s lock is

placed on his unit. Thus, an individual who is wandering around in such a facility

without checking in at the office first is less likely to be challenged. The record shows

that Mr. Hancock never discussed the security arrangements at the Clarksville facility

with Mr. Browning or with any other employee of U-Haul prior to renting his unit.

The record further indicates that during the Brownings’ absence, the

defendant’s employees patrolled the enclosure daily, and kept the front and rear gates

locked after business hours. The appellants contend that the keys to U-Haul’s locks

were accessible to too many people, and that the lock to the rear gate was flimsy.

The magnitude of the Hancock’s loss makes it clear in hindsight that U-Haul’s security

arrangements were inadequate, but we agree with the trial court that the Hancocks

failed to state a claim for a violation of the Consumer Protection Act’s prohibition

against fraudulent or negligent misrepresentations.

III. The Exculpatory Clause

The courts of this state have determined that contracting parties may

make agreements whereby one party can escape from liability for its own negligence,

and shift the risk of loss to the non-negligent party. Chazen v. Trailmobile Inc., 384

S.W.2d 1 (Tenn. 1964); Empress Health and Beauty Spa, Inc. v. Turner, 503 S.W.2d

188 (Tenn. 1973).

There are some exceptions to this general rule. Thus, a common carrier

may not by contract exempt itself from liability for breach of a duty imposed on it for

the benefit of the public. See Parton v. Mark Pirtle Oldsmobile-Cadillac, 730 S.W.2d

634 (Tenn. App. 1987). An individual can contract for freedom from liability for

ordinary negligence, but liability for gross negligence cannot be contracted away.

Adams v. Roark, 686 S.W.2d 73 (Tenn. 1985). A doctor or other licensed practitioner

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cannot contract for immunity from the consequences of professional negligence.

Olsen v. Molzen, 558 S.W.2d 429 (Tenn. 1977).

The Hancocks argue that the language in the storage contract was not

specific enough to notify them that by signing the contract, they were giving up their

right to hold U-Haul accountable for property losses caused by ordinary negligence.

But we agree with the appellee that the contract was unambiguous, and that Mr.

Hancock, a knowledgeable businessman who had managed several franchise

operations during the course of his career, was bound by its provisions.

IV. Public Policy

The Hancocks also urge us to state that exculpatory clauses in contracts

such as the one before us violate Tennessee’s public policy. However the legislature

is primarily responsible for declaring the public policy of this state. The role of the

courts is limited to interpreting the public policy that is evidenced by a constitutional,

statutory, or regulatory provisions. See Stein v. Davidson Hotel, 945 S.W.2d 714

(Tenn. 1997). No such provisions are cited here.

Appellants rely upon the Olsen case, supra, and the case of Crawford

v. Buckner, 839 S.W.2d 754 (Tenn. 1992), both of which found public policy reasons

to bar enforcement of exculpatory clauses. In both cases, the court recited the

following six conditions, which when present in the contract and bargaining posture

of the parties, make enforcement of exculpatory clauses inappropriate. We believe

it would be helpful to recite these conditions once again:

(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

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 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.

558 S.W.2d at 431.

The appellants in the present case argue that the legislature has indeed

seen fit to regulate the self-storage industry; that such storage is a matter of practical

necessity for some people; that U-Haul holds itself out as willing to perform its

services to any member of the public seeking them; that U-Haul possesses a clear

advantage in bargaining strength over individuals seeking its services; that the

contract it offered was a contract of adhesion; and that the transaction in question

placed their valuable property under U-Haul’s control. Finally, appellants note that the

Olsen and Buckner courts both stated that it was not necessary for all six factors to

be present in any given transaction for that transaction to be deemed offensive.

U-Haul admits that it held itself out as willing to perform its services to

any members of the public seeking them, but rebuts, at least in part, the appellants’

arguments on the other five cited factors. The appellee points out that the state’s

regulation of the self-storage industry primarily involves the facility owner’s

enforcement of liens on abandoned property, and is not the sort of comprehensive

regulation which shows a significant state interest in the industry; that the services

provided by self-service facilities are far less important to the public than the practice

of medicine (Olsen v. Molzen) or the safety of residential housing (Crawford v.

Buckner); that U-Haul did not possess a decisive bargaining advantage, because the

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Hancocks could easily have made alternate arrangements for storage of their

furniture; that the lease in question did provide the customer with the opportunity

(however limited) to pay additional fees for insurance against negligence; and that the

Hancocks retained control over their property because they placed their own lock on

the storage unit, and U-Haul did not have access to the key.

Applying the six factors to the present case does not produce a result

that is completely clear-cut, but we are satisfied that U-Haul has made out the better

case, particularly with regard to the important questions of state regulation, the

existence of reasonable alternatives for the individual who is not satisfied with the

terms presented to him, and the question of control over the appellants’ property.

Further, we are reluctant to throw the protective mantle of a declaration

of public policy over a subject that our legislature has not yet chosen to rule upon,

especially in view of our previous opinions which upheld the validity of similar

exculpatory clauses in self-storage contracts. Merritt v. Nationwide Warehouse Co.,

605 S.W.2d 250 (Tenn. App. 1980); Pettit v. Poplar-Union Extended Mini-Storage,

App. No. 02A01-9402-CV-00022 (filed at Jackson, January 26, 1995). We therefore

find the exculpatory clause at issue to be an enforceable one.

V.

The judgment of the trial court is affirmed. Remand this cause to the

Circuit Court of Montgomery County for further proceedings consistent with this

opinion. Tax the costs on appeal to the appellants.

____________________________
BEN H. CANTRELL,
PRESIDING JUDGE, M.S.

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CONCUR:

_____________________________
WILLIAM C. KOCH, JUDGE

_____________________________
WILLIAM B. CAIN, JUDGE

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