Yang v. Voyagaire Houseboats, Inc.
2005 Minn. LEXIS 465, 701 N.W.2d 783, 2005 WL 1838964 (2005)
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Rule of Law:
Exculpatory and indemnification clauses in contracts for services that are public in nature, such as providing temporary lodging like a commercial houseboat rental, are unenforceable as they violate public policy. A business providing such public services cannot contractually waive its duty to protect its guests from its own negligence.
Facts:
- In 2002, Lao Xiong planned a family vacation and contacted Voyagaire Houseboats, Inc. to rent a houseboat.
- Xiong paid 'a couple thousand' dollars in advance to reserve a 'Deluxe Sportcruiser—440' houseboat, which was equipped with sleeping, kitchen, and bathroom facilities.
- On June 8, 2002, when Xiong and his party of ten arrived at Voyagaire's location, he was presented with a rental agreement for the first time.
- The agreement contained clauses stating Xiong waived his right to sue Voyagaire for any injury, even if caused by Voyagaire's negligence, and that he would indemnify Voyagaire against any claims from others.
- Xiong told a Voyagaire owner, James Janssen, that he did not understand the agreement; Janssen allegedly replied he did not understand it either but that optional insurance would 'cover everything.'
- Xiong signed the agreement, believing he would not be allowed to take the houseboat otherwise.
- Near the end of the week-long rental, Xiong and five other members of his party suffered carbon monoxide poisoning while on the houseboat.
- It was later discovered that a wire for the carbon monoxide detector had been disconnected.
Procedural Posture:
- Lao Xiong sued Voyagaire Houseboats, Inc. in St. Louis County District Court (trial court), alleging negligence.
- Other members of Xiong's party also filed negligence lawsuits against Voyagaire, and the cases were consolidated.
- Voyagaire denied negligence and brought a third-party action against Xiong, seeking to enforce the indemnification clause for the claims made by the other plaintiffs.
- Voyagaire moved for summary judgment to enforce the exculpatory and indemnification clauses, and the district court granted the motion.
- The district court dismissed Xiong’s claims and ordered him to indemnify Voyagaire for the claims of the other plaintiffs.
- Xiong, as appellant, appealed the summary judgment ruling to the Minnesota Court of Appeals.
- The Court of Appeals affirmed the district court's decision, holding the clauses were enforceable.
- The Supreme Court of Minnesota granted Xiong's petition for review.
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Issue:
Do exculpatory and indemnification clauses in a commercial houseboat rental agreement, where the rental functions as a form of public accommodation, violate public policy and are therefore unenforceable?
Opinions:
Majority - Russell A. Anderson
Yes. The exculpatory and indemnification clauses in the houseboat rental agreement violate public policy and are unenforceable. The court's reasoning is that exculpatory clauses are disfavored and strictly construed, and they are void if they contravene public policy. The key factor is the type of service being offered. Voyagaire's business of renting 'floating homes' with sleeping and housekeeping accommodations qualifies it as a 'resort' and an 'innkeeper' under Minnesota statutes, which are considered public services suitable for regulation. Innkeepers have a well-established common law duty to take reasonable action to protect their guests. Public policy forbids such a business from contractually absolving itself of liability for its own negligence or shifting that liability onto a guest, as this would undermine its fundamental duty of care.
Analysis:
This decision significantly clarifies the scope of the 'public service' exception to the general enforceability of liability waivers. By classifying a houseboat rental company as an 'innkeeper,' the court prioritized the functional nature of the service—providing public lodging—over its recreational context. This precedent makes it substantially more difficult for businesses offering any form of public accommodation, even non-traditional ones, to enforce exculpatory or indemnification clauses against their customers for the business's own negligence. The ruling reinforces a strong public policy of holding providers of public lodging accountable for guest safety, regardless of contractual language to the contrary.
