MORSE v. BULLSEYE MARKETING, INC., 30891-6-II (Wash.App. 10-5-2004)

BRIDGEWATER, J.

Joanne Morse seeks review of a Clark County Superior Court judgment awarding her damages of $240 based on negligence by The HomeTeam Inspection Service (HomeTeam). The judgment stated that damages amounted to $5,078.21, but ruled that they were limited by an exculpatory clause in the agreement between Morse and HomeTeam. Morse claims that the exculpatory clause should be declared void as against public policy. We affirm the trial court's ruling.

Morse hired HomeTeam to inspect a house she wished to purchase in October 1998. HomeTeam was referred to Morse by her realtor. The HomeTeam had Morse sign an agreement where they would inspect the house for $240. Clause two of the agreement states, `CLIENT AGREES THAT ANY LIABILITY OF HOMETEAM ITS EMPLOYEES, AGENTS, OFFICERS, AND DIRECTORS, SHALL BE LIMITED TO THE AMOUNT OF THE INSPECTION FEE PAID BY CLIENT.' Clerk's Papers (CP) at 14.

Robert Wolff and John Hall of the HomeTeam inspected the premises. The inspection report noted `loose tile guest bath tub' and `second plumbing leak bath area.' CP at 16. The narrative of the report stated, `[t]here are two small leaks that were detected in the crawl area 1 under the master shower drain 2 in the bath area the insulation is wet indicating a leak but could not find the origin without removing insulation.' CP at 20. Morse agreed to have the seller contact a plumber to fix the leaks documented in the inspection report.

The sale closed in January 1999. In August, Morse noticed a soft spot in the vinyl next to the bathtub that eventually got larger. In November, Morse entered the crawl space and found dry rot which caused the bathtub to break through the floor. The bathroom was fixed in January 2000 for $5,078.21.

On September 19, 2000, Morse filed a complaint for damages against Wolff, Hall, and the HomeTeam. The case proceeded to mandatory arbitration, where the exculpatory clause was upheld. Morse moved for summary judgment based on the arbitrator's decision.

In reviewing a grant of summary judgment, this court engages in the same inquiry as the trial court. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982). We consider all facts submitted and all reasonable inferences from them in the light most favorable to the nonmoving party, here HomeTeam. Wilson, 98 Wn.2d at 437. Summary judgment is appropriate where the pleadings, affidavits, depositions, and admissions on file demonstrate the absence of any genuine issues of material fact, and that the moving party is entitled to judgment as a matter of law. CR 56(c). We grant the motion only if, from all the evidence, reasonable persons could reach but one conclusion. Wilson, 98 Wn.2d at 437. Such is the case here.

The general rule is that a party to a contract can limit liability for damages resulting from negligence. See Wagenblast v. Odessa Sch. Dist. 105-157-166J, 110 Wn.2d 845, 848, 758 P.2d 968 (1988). The general rule in Washington is that such exculpatory clauses are enforceable unless (1) they violate public policy; (2) the negligent act falls greatly below the standard established by law for protection of others; or (3) they are inconspicuous. Scott by and through Scott v. Pac. W. Mountain Resort, 119 Wn.2d 484, 492, 834 P.2d 6 (1992). Morse concedes HomeTeam was not grossly negligent and that the exculpatory clause in question was not inconspicuous.

The question whether this exclusionary clause violates public policy is properly analyzed under the six Wagenblast standards. See Wagenblast, 110 Wn.2d at 851-52. These considerations do not provide a fixed formula necessarily leading to the conclusion that a given exculpatory agreement does or does not violate public policy. The Wagenblast court noted that `the more of the foregoing six characteristics that appear in a given exculpatory agreement case, the more likely the agreement is to be declared invalid on public policy grounds.' Wagenblast, 110 Wn.2d at 852.

An invalid exemption involves a transaction which exhibits some or all of the following characteristics: (1) It concerns a business of a type generally thought suitable for public regulation; (2) 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; (3) the party holds himself out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards; (4) 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; and 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; and (5) 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. Am. Nursery Prods., Inc. v. Indian Wells Orchards, 115 Wn.2d 217, 233, 797 P.2d 477 (1990); Wagenblast, 110 Wn.2d at 851-52 (quoting Tunkl v. Regents of Univ. of Cal., 60 Cal. 2d 92, 98-101, 383 P.2d 441 (1963)).

Attached to the summary judgment motion was an affidavit from David Hart. Hart states chapter 16-228 WAC controls pest and dry rot inspections. Inspectors are required to be licensed and bonded in Washington. RCW 15.58.210. Hart includes a manual for inspectors prepared by the Washington State Department of Agriculture and the Washington State Pest Control Association. Inspectors are not specifically regulated in Washington.

A common thread runs through those cases in which exculpatory agreements have been found to be void as against public policy. That common thread is they are all essential public services — hospitals, see Wagenblast, 110 Wn.2d at 854 n. 23 (citing Tunkl, 383 P.2d at 447); housing, McCutcheon v. United Homes Corp., 79 Wn.2d 443, 486 P.2d 1093 (1971); Thomas v. Hous. Auth., 71 Wn.2d 69, 426 P.2d 836 (1967); public utilities, Reeder v. W. Gas Power Co., 42 Wn.2d 542, 256 P.2d 825 (1953); and public education, Wagenblast, 110 Wn.2d 845. In the housing cases, McCutcheon held that a lease provision exculpating a landlord from liability for injury caused by his negligence to anyone entering the premises or building he leased was void as against public policy. Thomas held that a provision in a lease with the public housing authority was not effective to release liability for injuries suffered by a tenants' child because of the negligent maintenance of a hot water heater.

The HomeTeam does not provide an essential public service, such as banks, common carriers, or utility companies provide. An inspection is not necessary in order for a real estate transaction to close. Real estate is routinely bought and sold on an `as is' basis. See Atherton Condo. Apartment-Owners Ass'n Bd. of Dir. v. Blume Dev. Co., 115 Wn.2d 506, 535, 799 P.2d 250 (1990). This service does not rise to a matter of practical necessity.

Home inspections are generally a private business, as evidenced by the advertisements HomeTeam placed in the yellow pages. Additionally, Morse stated in her affidavit that she `hired' the HomeTeam through the referral of her realtor. CP at 32. Thus, HomeTeam holds itself out as willing to perform this service for any member of the public who seeks it. This Wagenblast factor is met.

There is evidence of the availability of many other home inspectors from the yellow pages. Morse, if she had read and disagreed with the limitation of liability clause, was free to seek inspection services from a variety of other sources. Morse argues that she is an individual homeowner and not a sophisticated business concern dealing with an inspector; thus, the transaction is inherently unequal. There is no evidence showing whether these other inspectors would have produced a contract with the same exculpatory clause. The record does not show that Morse could have used another inspector without being required to sign a contract containing a similar exculpatory clause; therefore HomeTeam did not possess a decisive advantage of bargaining strength.

There is no evidence in the record that Morse could have bargained away the exculpatory clause and still have obtained the same inspection services, even at a higher price. The evidence does show the agreement was a form contract prepared by HomeTeam and presented to Morse. It is not clear whether Morse could have paid an additional reasonable fee to obtain protection against HomeTeam's negligence. This factor cannot clearly be met.

The agreement between Morse and HomeTeam stated: `[t]he purpose of the inspection is to identify major, visually-observable defects which are present at the time of the inspection and which, in HOMETEAM's opinion, might affect the use of the property for its intended purpose or the typical homebuyer's decision to purchase.' CP at 14. The earnest money agreement is not included in the record, but Morse's affidavit indicates she had a limited amount of time to complete the inspection under her purchase contract. This indicates some of the findings HomeTeam made could be a deal breaker. Thus, Morse's contractual right to inspect the house was under the control of HomeTeam and subject to the risk of their carelessness. This Wagenblast factor is met.

An invalid exemption exhibits some or all of the Wagenblast characteristics. Two of the six Wagenblast factors (available to the public and control of the furnisher of services) may apply to these facts. The exculpatory clause in the agreement between Morse and HomeTeam is not shown to be contrary to public policy and is therefore enforceable.

Affirmed.

A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.

HOUGHTON, J. and QUINN-BRINTNALL, C.J., Concur.