Broadley v. Mashpee Neck Marina, Inc.

United States Court of Appeals
For the First Circuit

No. 05-2822

MARK BROADLEY,

Plaintiff, Appellant,

v.

MASHPEE NECK MARINA, INC.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Patti B. Saris, U.S. District Judge]

Before

Boudin, Chief Judge,
Torruella and Dyk,* Circuit Judges.

Thomas M. Bond with whom Matthew H. Snell and The Kaplan/Bond
Group were on brief for appellant.
John H. Bruno, II with whom Masi & Bruno was on brief for
appellee.

December 22, 2006

*
Of the Federal Circuit, sitting by designation.
 BOUDIN, Chief Judge. On August 25, 2002, Mark Broadley

was injured at the Mashpee Neck Marina ("Marina") at Cape Cod when

his foot became caught in a gap between the main dock and a

floating dock where his vessel was moored. The gap between the

docks is about two to three inches wide when the water is calm, but

the wake of a passing boat can cause the docks to move and the gap

to widen. Broadley fractured his ankle and was left with a

permanent loss of function.

Broadley alleged that Marina's negligence caused the

accident: the space between docks was a potential hazard that could

have been mitigated either by using a flexible material to cover

the gap or by tying the docks together more tightly. Marina denied

liability, citing the boilerplate exculpatory clause of the

contract for seasonal mooring between the parties. That clause

read:

The OWNER [Broadley] warrants and [covenants] that
. . . the OWNER . . . will [not] make any claims,
demands, causes of action of any kind and nature,
or obtain or enforce any judgments, executions or
levies thereon . . . against MARINA, its officers,
directors, agents, servants, or its employees,
arising out of any damage, loss, personal injury
or death suffered by [him]. . . . The OWNER . . .
agree[s] and covenant[s] that [he] will defend,
indemnify and save MARINA harmless from any and
all of such claims, demands, causes of action,
judgments and executions, and the MARINA shall be
entitled to responsible attorneys fees in the
event of breach of the OWNER's covenant hereunder.

Marina claimed that this exculpatory clause precluded

Broadley from bringing suit for personal injury due to Marina's

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negligence. Broadley responded that under admiralty law, a party

may limit but may not completely absolve itself from liability for

ordinary negligence; and that the clause was over-broad and

therefore unenforceable insofar as it absolved Marina of liability

for gross negligence and intentional wrongdoing. Because of its

connection to maritime activities, the clause is governed by

federal admiralty law. S.C. State Ports Auth. v. Silver Anchor,

S.A., 23 F.3d 842, 846 n.3 (4th Cir. 1994).

The district court issued summary judgment in Marina's

favor, holding that the clause should be reformed to limit it to

ordinary negligence. Broadley had conceded that Marina's

negligence did not rise to the level of gross negligence, so as

reformed the clause barred his claim. This appeal followed. We

review grants of summary judgment de novo. Iverson v. City of

Boston, 452 F.3d 94, 98 (1st Cir. 2006).

Broadley's main argument on appeal is that, under

admiralty law, a party may not completely absolve itself of

liability for ordinary negligence; for support, Broadley cites the

Supreme Court's decision in Bisso v. Inland Waterways Corp., 349

U.S. 85 (1955), and our own decision in La Esperanza de P.R., Inc.

v. Perez Y Cia de P.R., Inc., 124 F.3d 10 (1st Cir. 1997).

Bisso could be read as laying down a flat rule,

applicable to all cases, forbidding clauses that entirely exculpate

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a party for its own simple negligence.1 However, Bisso focused on

towing contracts and the special threat of "monopolistic

compulsions." 349 U.S. at 91. The Court also cited case law

forbidding exculpatory clauses in common law relationships where

unequal bargaining power is presumed (e.g., utilities and their

customers). 349 U.S. at 90-91. Thus Bisso can easily be read as

limited to relationships where unequal power is inherent or

established.

Agreements to waive claims for mere negligence are

generally enforceable at common law. See Keeton et al., Prosser &

Keeton on Torts § 68, at 482-83 (5th ed. 1984). Qualifications

exist-–the relevant doctrines are unconscionability and contracts

of adhesion-–turning on factors like adequate disclosure, relative

bargaining power and the like. 1-2 Farnsworth, Farnsworth on

Contracts §§ 4.26, 4.28, 5.2 (3d ed. 2004). But an admiralty rule,

flatly preventing parties from contracting away claims for simple

negligence in all circumstances, would be surprising.

Since Bisso, decisions in other circuits have addressed

this issue in admiralty cases but no consensus exists as to how

Bisso should be read. Two circuits would allow a release from all

1
The Court applied the "judicial rule, based on public policy,
invalidating contracts releasing towers from all liability for
their negligence," and noted that "[t]his rule is merely a
particular application to the towage business of a general rule
long used by courts and legislatures to prevent enforcement of
release-from-negligence contracts." Bisso, 349 U.S. at 90.

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liability for negligence (at least in the dockage context) and one

circuit arguably would not.2 Another circuit has upheld

exculpatory clauses that limited but did not entirely preclude

liability for negligence; but in our case the clause completely

exculpates from such liability, so this last circuit's cases are

distinguishable.3

As for this circuit, the main thrust of the language in

La Esperanza was to uphold exculpatory clauses directed to mere

negligence so long as "expressed clearly in contracts entered into

freely by parties of equal bargaining power." The sentence ended

with the phrase: "provided that the clause not provide for a total

absolution of liability." 124 F.3d at 19. But this may simply

mean (unexceptionally) that parties cannot contract out of gross

negligence.

Nor did La Esperanza hold invalid a properly disclosed

clause, not unfairly imposed, waiving all claims for all

negligence. The decision upheld application of a clause barring

recovery for lost profits or lost use of vessel caused by a

2
Compare Sander v. Alexander Richardson Invs., 334 F.3d 712,
719 (8th Cir. 2003), and Morton v. Zidell Explorations, Inc., 695
F.2d 347, 350-51 (9th Cir. 1982), cert. denied, 460 U.S. 1039
(1983), with Edward Leasing Corp. v. Uhlig & Assocs., Inc., 785
F.2d 877, 888-89 (11th Cir. 1986).
3
Todd Shipyards Corp. v. Turbine Serv., Inc., 674 F.2d 401,
410 (5th Cir.), cert. denied sub nom, 459 U.S. 1036 (1982); Alcoa
S.S. Co. v. Charles Ferran & Co., 383 F.2d 46, 55 (5th Cir. 1967),
cert. denied, 393 U.S. 836 (1968); see also Diesel "Repower", Inc.
v. Islander Invs. Ltd., 271 F.3d 1318, 1325 (11th Cir. 2001).

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shipyard's negligence. So La Esperanza's dicta, however read,

cannot control the present case. See United States v. Barnes, 251

F.3d 251, 258 (1st Cir.), cert. denied, 534 U.S. 967 (2001). In

our view, the better rule is that an exculpatory clause limited to

barring liability for ordinary negligence would be valid, assuming

it were not inflicted by a monopolist or one with greatly superior

bargaining power.

Broadley does not claim that Marina had undue bargaining

power--presumably because there are alternative marinas in the

general area--but this is not the end of the inquiry. There is no

doubt that the clause as written is vastly overbroad and against

public policy insofar as it purports to absolve Marina of liability

for gross negligence, recklessness and intentional wrongdoing.4

Thus, the question remains whether a court should be willing to

narrow the clause and apply it only to the extent that it excludes

liability for simple negligence.

The district court said that it would "reform" the

clause, narrowing it to apply only to negligence; but reformation

is normally appropriate where the language somehow fails to express

the actual intention of the parties and is conformed merely to

reflect their actual intent or, where the contents have been

4
Royal Ins. Co. v. Southwest Marine, 194 F.3d 1009, 1016 (9th
Cir. 1999) (exculpatory clause in admiralty contract may not limit
liability for gross negligence); La Esperanza, 124 F.3d at 19
(same); Prosser & Keeton on Torts § 68, at 484 (same in common law
context).

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fraudulently misrepresented by one party, to conform the contract

to the terms conveyed to the defrauded party. See Restatement

(Second) Contracts §§ 155, 166; 2 Farnsworth on Contracts § 7.5.

Neither situation is present here.

The doctrine pertinent where a contract provision is

unlawfully overbroad is that which permits a court to sever or

divide provisions that are unlawful as written, retaining those

provisions or applications of them that are permissible.

2 Farnsworth on Contracts § 5.8. State law is not uniform, but a

modern version of the doctrine, as reflected in the Restatement

(Second) of Contracts § 184 (emphasis added) provides:

A court may treat only part of a term as
unenforceable . . . if the party who seeks to
enforce the term obtained it in good faith and
in accordance with reasonable standards of
fair dealing.

One of the illustrations makes clear that where the

parties actually negotiated an overbroad exculpatory clause that

clearly encompasses negligence, a good case can be made for

narrowing it to apply only to negligence, id. § 184 illus. 4; but

another comment, arguably more pertinent here, says that "[t]he

fact that the [overbroad] term is contained in a standard form

supplied by the dominant party argues against aiding him in this

request." Id. § 184 cmt. b.

There is no finding in this case as to the good or bad

faith of the marina owner. Quite possibly this was a form contract

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of a kind often furnished by trade associations seeking to give

their members every advantage. In all events, we will assume that

there was no subjective bad faith by Marina. Instead, the question

for us is whether the clause represents fair dealing so that a

judicial narrowing is sound public policy.

The substantial overbreadth of the clause has two

negative consequences. Obviously such a clause can discourage

perfectly legitimate claims-–e.g., for gross negligence or

deliberate wrongdoing--from ever being brought by the injured

party. The injured slip-renter often has ample reason to hesitate

about suing--time, uncertainty, expenses--especially where, as

here, the contract provides for attorney's fees to Marina for

breach of the agreement not to sue.

A second concern is that the clause never says that it

exempts Marina from negligence. The language used, although

broader, is also blander: there is no reference to fault; and,

although the clause literally encompasses negligence, Sander, 334

F.3d at 716, it is less likely to convey an effective warning to

the reader than would a clear and specific disclaimer of liability

for negligence.

Finally, Marina does not suggest that there was actual

negotiation about such terms. If the negligence issue had been the

subject of actual bargaining and discussion, we might well have a

different reaction; but this is evidently a typical case of

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boilerplate. Boilerplate even in contracts of adhesion is not

automatically unlawful; but it is a relevant consideration in

deciding whether to rescue the contract from overbreadth. See,

e.g., Richards v. Richards, 513 N.W.2d 118, 123 (Wis. 1994);

Restatement (Second) Contracts § 184 cmt. b.

The case law is not very helpful in providing a

controlling answer. There are two admiralty cases in other

circuits sharing our reading of Bisso that have narrowed such

clauses;5 but neither addresses specifically the considerations of

concern to us. Cases applying state law are divided, with some

courts narrowing such clauses and others declining to do so very

much for the reasons we have already given.6 We find the latter

more persuasive.

The marina agreement in this case has, as part of the

boilerplate, a severability clause. But the same public policy

concerns we have described lead us to reject the application of

this clause to rescue the overbroad exculpatory clause. Otherwise,

the narrow and explicit language, which we think should be

5
Sander, 334 F.3d at 716; Royal Ins. Co., 194 F.3d at 1014.
6
Compare, e.g., In re Pacific Adventures, Inc., 27 F. Supp. 2d
1223, 1224-25 (D. Haw. 1998) (applying Hawaii law), and Richards,
513 N.W.2d at 122-23, with Harmon v. Mt. Hood Meadows, Ltd., 932
P.2d 92, 95-96 (Or. Ct. App. 1997), and Swartzentruber v. Wee-K
Corp., 690 N.E.2d 941, 944-46 (Ohio Ct. App.), appeal denied, 678
N.E.2d 1231 (1997).

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required, could be side-stepped by leaving the broad language in

place and including the severability clause as a companion.

In declining to narrow the exculpatory clause, we rely on

the extreme overbreadth of the clause and the plainness of its

illegality, the boilerplate character of the contract and lack of

specific negotiation, the absence of an explicit reference to

negligence which would provide better warning, and the attorney's

fees clause. Any competent lawyer could write a straightforward

exclusion of liability for negligence that we would sustain.

Only some elements of this analysis were made by

Broadley. In the district court a simple overbreadth argument was

adverted to; in this court Broadley stresses lack of clarity. A

litigant is not expected to guess just how a court will explain its

result; but it would be easy enough for us to avoid the issue and

to affirm on the ground that the overbreadth argument was not

adequately developed and is therefore forfeit. United States v.

Zannino, 895 F.2d 1, 17 (1st Cir.), cert. denied, 494 U.S. 1082

(1990).

But the forfeiture doctrine is not an absolute limitation

on judicial power but a prudential limitation subject to the

reviewing court's discretion. Indeed, a court may, although rarely

will, forgive a knowing waiver where extreme injustice would be

done. United States v. La Guardia, 902 F.2d 1010, 1013 (1st Cir.

1990). Here, it is important that the validity issue be resolved

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for the sake of future case law, and invalidity is the juster

result.

The only concern where the court develops issues not

adequately argued is that a party not apprised may have arguments

against the court's reasoning. But in this instance an overbreadth

claim as such was raised in the district court and we know what

Marina said in response. Similarly, we are especially open in

cases of this kind to petitions for rehearing and are ready to

revise reasoning and result if this is warranted.

With that qualification, we reverse the decision of the

district court and remand for further proceedings. No criticism of

the very able district judge is intended; we are dealing with

poorly developed and confusing admiralty law in aggravated

circumstances, and the district court did not receive much help.

Each side will bear its own costs on this appeal.

It is so ordered.

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