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Johanns v. Minnesota Mobile Storage

August 15, 2006

CRAIG JOHANNS, ET AL., RESPONDENTS,
v.
MINNESOTA MOBILE STORAGE, INC., APPELLANT.



Scott County District Court File No. 04-09678.

SYLLABUS BY THE COURT

1. An unambiguous exculpatory provision limiting liability in a rental agreement for a self-storage facility is enforceable unless the damages are caused by the facility owner's willful violation of law.

2. Under the Minnesota Liens on Personal Property in Self-Service Storage Act, Minn. Stat. §§ 514.970-.979 (2004), a rental agreement between a self-storage facility owner and an occupant may limit but may not totally exempt liability for damages caused by the owner's negligence.

The opinion of the court was delivered by: Hudson, Judge

Reversed and remanded

Considered and decided by Hudson, Presiding Judge; Wright, Judge; and Worke, Judge.

OPINION

On appeal from a district court decision after a jury's determination of damages on a special verdict, appellant self-storage facility argues that the district court erred in failing to enforce the unambiguous damage limitation in the parties' rental agreement under the Minnesota Liens on Personal Property in Self-Service Storage Act, Minn. Stat. §§ 514.970-.979 (2004). In a notice of review, respondents contend that in the event this court holds in appellant's favor on those arguments, the matter must be remanded so that the district court can determine whether the exculpatory clause is unenforceable because of appellant's willful violation of law. Respondents also contend that the district court's grant of summary judgment on several other claims was erroneous. Because (a) the parties' rental agreement is an unambiguous, valid partial exculpatory contract; (b) the language of the act is unambiguous and permits rental agreements that provide limited liability for, but not total exemption from, damages caused by the owner's negligence; (c) the district court did not reach the issue of whether the owner's acts were intentional, which would make the exculpatory clause unenforceable due to a willful violation of law; and (d) respondents failed to present specific legal arguments to support their claim that the district court erred in granting summary judgment on several other claims, we reverse and remand.

FACTS

Respondents were moving and needed to temporarily store some of their personal property. After seeing a television commercial for PODS, self-contained storage units that could be brought to the customer's address for packing and then transported to a warehouse for storage, respondent Craig Johanns called the 800 number listed in the advertisement. He arranged to lease a unit and gave the operator his current address, telephone number, and credit card information. As he later learned, he had spoken with an employee of PODS, Inc. Appellant is a franchisee of PODS, which does the accounting, builds the storage units, and provides supplies for its franchisees. On November 10, 2001, the storage unit was delivered to respondents' house. Respondent Mary Johanns signed a rental agreement with appellant to lease the unit for $196.97 per month, and paid for the first month by check. The agreement addressed the owner's liability for negligence, limited damages that respondents could recover for negligence to $5,000, and, among other provisions, included an exception to the exculpatory provision for willful violations of law. Respondents packed the unit, and appellant brought the unit to its storage facility in late November 2001.

Neither PODS nor appellant received any further payments from respondents. Appellant, who had a statutory lien under Minn. Stat. § 514.972 (2004) against the personal property stored in the facility for unpaid rent, eventually enforced the lien and sold respondents' property at an auction for $1,305.

When respondents learned of the sale, they sued appellant on a variety of claims. The district court granted summary judgment on most of the claims, but allowed the breach-of-contract and bailment claims to proceed to trial. At the trial, the parties presented evidence, in relevant part, regarding the circumstances concerning the respondents' failure to make payments, notices allegedly sent to respondents, and the auction. Craig Johanns believed that their payments were being automatically made by credit card. Neither Craig nor Mary Johanns recalled receiving any correspondence from appellant or PODS after the storage unit was picked up until March 2002, when Craig received a letter informing him that the storage unit containing their belongings had been sold at auction on February 21, 2002.

Jacqelin Consentino, the vice president of legal-risk management at PODS, testified that PODS had complied with all statutory requirements in Minnesota to enforce the lien against respondents. On cross-examination, however, a number of discrepancies and problems of proof were revealed.

A jury answered two questions on a special verdict form and determined in relevant part that respondents' damages were $67,750. The district court then resolved most of the remaining issues. It ruled as a matter of law that appellant failed to show that it complied with the procedures for enforcing the lien pursuant to Minn. Stat. § 514.973 (2004). Next, it determined that the $5,000 limit of damages in the contract was invalid under Minn. Stat. §§ 514.976, subd. 4, 514.978 (2004) and awarded damages of $67,750 as found by the jury. Finally, it noted, but did not resolve, the issue of whether appellant acted intentionally such that the exculpatory clause could not be enforced by appellant. This appeal follows.

ISSUES

I. Is a provision in a rental agreement for self-service storage that limits damages to $5,000 an unambiguous, valid exculpatory clause, and, if so, is the clause unenforceable due to willful violation of law?

II. Does Minn. Stat. ยง 514.975 (2004) bar a rental agreement that provides limited liability for, but not total exemption from, damages due to the negligence of the ...


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