Debra McMurray v. United States

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-1129
DEBRA ROSE MCMURRAY,
Plaintiff - Appellant,
v.
UNITED STATES OF AMERICA,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Greenville. James C. Dever III,
Chief District Judge. (4:12-cv-00086-D)
Argued: October 31, 2013 Decided: January 7, 2014
Before TRAXLER, Chief Judge, and KING and THACKER, Circuit
Judges.
Vacated and remanded by unpublished per curiam opinion.
ARGUED: Mark A. Sternlicht, BEAVER, HOLT, STERNLICHT & COURIE,
PA, Fayetteville, North Carolina, for Appellant. Joshua Bryan
Royster, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North
Carolina, for Appellee. ON BRIEF: Thomas G. Walker, United
States Attorney, R.A. Renfer, Jr., Assistant United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North
Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Debra Rose McMurray was a passenger in a vehicle being
driven by Michael Rumfalo, a recruiter for the United States
Marine Corps. McMurray sustained serious injuries when Rumfalo
ran a red light and collided with another car, and she
subsequently filed suit against the United States under the
Federal Tort Claims Act (“FTCA”). The district court granted
summary judgment in favor of the United States, and McMurray
appeals. We vacate the judgment of the district court and
remand for further proceedings.
I.
The Marine Corps occasionally conducts workshops for
teachers and other educational professionals at its facility on
Parris Island, South Carolina. The workshops give the educators
valuable information about the Corps and the opportunity to
experience first-hand some elements of basic training.
McMurray, a guidance counselor at a high school near
Fayetteville, North Carolina, frequently counsels students who
are deciding whether to join the military or which branch of the
military would be a good fit. Interested in attending one of
the workshops, McMurray contacted Rumfalo, the Marine Corps
recruiter she knew from school. Rumfalo told McMurray that a
workshop would be held on March 29 through April 2, 2010, and he
forwarded her the necessary paperwork to be completed in order
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to attend. The paperwork included a “Release and Hold Harmless
Agreement” (the “Release”) that released the government from
liability for any injuries arising out of participation in the
workshop, including “riding in government-provided
transportation (to include transportation to and from the
Educator’s Workshop).” J.A. 15.
When Rumfalo came to pick up the paperwork from McMurray,
she had not yet completed the Release. She asked Rumfalo if she
would be allowed to participate if she did not sign the Release
and was told that “everyone has to sign [the Release] to
participate.” J.A. 18. McMurray also asked Rumfalo if she
could drive herself to Raleigh to meet the bus that would take
them to Parris Island, rather than being picked up at her house
and driven to Raleigh by Rumfalo. The answer to that question
was also “no,” an answer that “made it clear” to McMurray that
she “could not negotiate the terms of [her] participation in the
Workshop.” J.A. 19. McMurray therefore signed the Release and
attended the workshop.
After the workshop, a Marine Corps bus brought the workshop
attendees back to Raleigh. Rumfalo was there, waiting to drive
McMurray and an attendee from Fayetteville back to their homes.
While still in Raleigh, Rumfalo ran a red light and collided
with a car that had the right-of-way. McMurray suffered serious
injuries, including a traumatic brain injury. McMurray missed
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work for the remainder of the 2010 school year and through the
entire summer as well. Her medical bills and lost wages exceed
$48,000.
McMurray thereafter commenced this action under the FTCA.
The district court granted summary judgment in favor of the
government, concluding that the Release was enforceable under
North Carolina law and that it barred McMurray’s claims against
the government. This appeal followed.
II.
The FTCA provides a limited waiver of sovereign immunity
for torts committed by federal employees acting within the scope
of their employment “under circumstances where the United
States, if a private person, would be liable to the claimant in
accordance with the law of the place where the act or omission
occurred.” 28 U.S.C. § 1346(b)(1). “In other words, a claimant
has an FTCA cause of action against the government only if she
would also have a cause of action under state law against a
private person in like circumstances. Thus, the substantive law
of each state establishes the cause of action.” Anderson v.
United States, 669 F.3d 161, 164 (4th Cir. 2011) (citation and
internal quotation marks omitted).
The act or omission at issue here took place in North
Carolina, and the substantive law of North Carolina therefore
governs McMurray’s FTCA claim. The sole issue on appeal is the
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enforceability of the Release. If North Carolina law would
enforce the Release had it been executed in favor of a private
person, then we must likewise enforce the Release as barring
McMurray’s claim. See id. (“[S]ubstantive state law establishes
-- and circumscribes -- FTCA causes of action.”). When
resolving that issue, this court “must rule as the North
Carolina courts would, treating decisions of the Supreme Court
of North Carolina as binding, and departing from an intermediate
court’s fully reasoned holding as to state law only if convinced
that the state’s highest court would not follow that holding.”
Iodice v. United States, 289 F.3d 270, 275 (4th Cir. 2002)
(internal quotation marks and alteration omitted).
III.
A.
Although contracts seeking to release a party from
liability for his own negligence “are not favored by the law,”
such contracts are generally enforceable. Hall v. Sinclair
Refining Co., 89 S.E.2d 396, 397 (N.C. 1955). Exculpatory
clauses or contracts, however, “are void and unenforceable”
where the “contractual provisions [are] violative of the law or
contrary to some rule of public policy,” or where a party to the
contract has unequal bargaining power and “must either accept
what is offered or forego the advantages of the contractual
relation in a situation where it is necessary for him to enter
5
into the contract to obtain something of importance to him which
for all practical purposes is not obtainable elsewhere.” Id. at
398; see Fortson v. McClellan, 508 S.E.2d 549, 551 (N.C. Ct.
App. 1998) (“[A]n exculpatory contract will be enforced unless
it violates a statute, is gained through inequality of
bargaining power, or is contrary to a substantial public
interest.”).
McMurray contends that each of the exceptions to the
general rule of enforceability applies in this case. She argues
that the release is unenforceable under the violation-of-statute
exception because the Release is inconsistent with North
Carolina’s red-light statute. See N.C. Gen. Stat. § 20-
158(b)(2) (“When a traffic signal is emitting a steady red
circular light controlling traffic approaching an intersection,
an approaching vehicle facing the red light shall come to a stop
and shall not enter the intersection. . . .”). She further
argues that the Release is unenforceable under the unequal-
bargaining-power exception because the educator’s workshop
provided information and experience important to her as a
guidance counselor that could not be replicated elsewhere and
she lacked the ability to negotiate the terms of her attendance.
As to the public-policy exception, McMurray contends that
operating motor vehicles on public roads is a dangerous and
heavily regulated activity. Given the significant public
6
interests at stake, McMurray argues that it would violate public
policy to permit drivers to absolve themselves of the duty to
exercise reasonable care when driving. We need not consider
McMurray’s arguments under the violation-of-statute or unequal-
bargaining-power exceptions, because we agree that the public-
policy exception renders the Release unenforceable.
B.
As explained by the Supreme Court of North Carolina, the
public-policy exception prohibits a person from contracting to
protect himself from “liability for negligence in the
performance of a duty of public service, or where a public duty
is owed, or public interest is involved, or where public
interest requires the performance of a private duty.” Hall, 89
S.E.2d at 398 (emphasis added; internal quotation marks
omitted). We think it clear that an important public interest
is involved in this case -- the public’s interest in safe
streets and safe driving.
There can be no dispute that driving on public roads is a
dangerous activity, as North Carolina courts have repeatedly
recognized. See Williams v. Henderson, 55 S.E.2d 462, 463 (N.C.
1949) (“A motorist operates his vehicle on the public highways
where others are apt to be. . . . Should he lapse into a state
of carelessness or forgetfulness his machine may leave death and
destruction in its wake.”). Accordingly, in North Carolina, as
7
elsewhere, numerous statutes, regulations, and cases spell out
the rules of the road and the duties of a driver. And as the
case law makes clear, the point of these rules and regulations
is to protect not merely the driver and his passengers, but to
protect the safety of the public:
Our motor traffic regulations are not intended merely
to protect those who are using the highways. They are
designed to protect the life, limb, and property of
any and every person on or about the highway who may
suffer injury to his person or damage to his property
as a natural and proximate result of the violation
thereof.
Aldridge v. Hasty, 82 S.E.2d 331, 337 (N.C. 1954) (emphasis
added); see also State v. Anderson, 164 S.E.2d 48, 50 (N.C. Ct.
App. 1968) (“Death on the highway can no longer be considered as
a personal and individual tragedy alone. The mounting carnage
has long since reached proportions of a public disaster.”),
aff’d, 166 S.E.2d 49 (N.C. 1969). We therefore conclude that,
under North Carolina law, there is a strong public-safety
interest in careful driving and the observance of all traffic-
related rules and regulations. Permitting the government to
absolve itself of the duty to exercise reasonable care when
driving puts members of the public at great risk and is contrary
to that strong public interest.
The district court, however, held -- and the Government
argues on appeal -- that the public-policy exception applies
only to “‘entities or industries that are heavily regulated.’”
8
J.A. 25 (quoting Bertotti v. Charlotte Motor Speedway, Inc., 893
F. Supp. 565, 569 (W.D.N.C. 1995)). In the district court’s
view, the activity of driving is not heavily regulated (at least
where no common carriers are involved), such that the
enforcement of the Release would not “contradict a substantial
public interest.” J.A. 27.
As an initial matter, we question the correctness of the
district court’s determination that the public-policy exception
is limited to cases involving heavily regulated entities or
activities. North Carolina courts have applied the public-
policy exception to invalidate exculpatory contracts and clauses
executed under widely varying circumstances, not all of which
can be said to involve heavily regulated entities or activities.
See Fortson, 508 S.E.2d at 551-52 (invalidating release signed
as condition of participation in motorcycle-safety training
program); Alston v. Monk, 373 S.E.2d 463, 467 (N.C. Ct. App.
1988) (invalidating release signed by customer having hair
colored by student of cosmetology school); Brockwell v. Lake
Gaston Sales & Serv., 412 S.E.2d 104, 106 (N.C. Ct. App. 1992)
(invalidating clause in boat-repair contract that purported to
relieve mechanic of liability for negligence that led to theft
of personal property contained in boat). While the practice of
cosmetology may be heavily regulated, teaching motorcycle safety
or repairing boats is not, yet the releases in Fortson and
9
Brockwell were still invalidated under the public-policy
exception.
In our view, the Hall court’s formulation of the exception,
with its focus on public service, public duty, and public
interest, see Hall, 89 S.E.2d at 398, makes it clear that the
public-policy exception turns not on the level of regulation,
but on the presence or absence of a public interest in the
transaction at issue. The actual application of the exception
by the North Carolina courts confirms this view -- the courts
enforce exculpatory clauses where no public interest is at
stake, without regard to whether the entity seeking protection
is regulated. See Gibbs v. Carolina Power & Light Co., 144
S.E.2d 393, 400 (N.C. 1965) (“Even a public service corporation
is protected by an exculpatory clause when the contract is
casual and private and in no way connected with its public
service.” (emphasis added)); Fortson, 508 S.E.2d at 553 (“[W]hen
[a] public utility engage[s] in non-public activity, freedom of
contract principles appl[y], and the public utility’s contracts
[are] not limited by public policy.” (internal quotation marks
omitted)); see also Blaylock Grading Co. v. Smith, 658 S.E.2d
680, 683 (N.C. Ct. App. 2008) (enforcing exculpatory clause in
land-surveying contract despite regulation of surveying industry
because “the limitation on liability in the contract at issue
does not implicate the public health or safety”); Sylva Shops
10
Ltd. P’ship v. Hibbard, 623 S.E.2d 785, 790, 792 (N.C. Ct. App.
2006) (enforcing exculpatory clause in commercial lease not
because relationship was not heavily regulated, but because
exculpatory clause at issue “[did] not create a risk of injury
to the public or the rights of third parties” and therefore
“[did] not affect the public interest”).
Heavy regulation of an activity or entity may well reflect
the presence of an important public interest that precludes
enforcement of an exculpatory clause. See Fortson, 508 S.E.2d
at 551 (“An activity falls within the public policy exception
when the activity is extensively regulated to protect the public
from danger, and it would violate public policy to allow those
engaged in such an activity to absolve themselves from the duty
to use reasonable care.” (internal quotation marks omitted)).
Nonetheless, we do not read the relevant North Carolina cases as
requiring heavy regulation of the activity or entity before the
public-policy exception may be invoked. 1
The government also contends driving is not the kind of
activity that would justify application of the public-policy
1
In any event, even if heavy regulation were required under
North Carolina law, it is apparent that driving on public roads
is a heavily regulated activity, with numerous statutes and
regulations establishing the requirements for getting and
keeping a license to drive on public roads, and setting out the
driver’s obligations under various circumstances.
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exception. We disagree. In our view, the public-safety
interest at stake in this case is at least as important as the
safety interests involved in motorcycle instruction, see
Fortson, 508 S.E.2d at 552, or the practice of cosmetology, see
Alston, 373 S.E.2d at 467, and significantly more important that
the public interest in the safeguarding of a boat while under
repair, see Brockwell, 412 S.E.2d at 106. Moreover, the
government’s argument in this regard is largely foreclosed by
the North Carolina Court of Appeals’ decision in Fortson.
In Fortson, the plaintiff executed a release when signing
up for a two-day motorcycle safety program and was injured when
the motorcycle she was assigned malfunctioned. The court found
the release unenforceable under the public-policy exception. To
reach its conclusion, the court focused on the risks associated
with motorcycle use and the public-safety interest “in
minimizing the risks associated with motorcycle use,” an
interest that is “recognized in case law and regulated by
statute.” Id. at 552 (emphasis added). 2 In the court’s view,
2
As an example of a case recognizing the public interest in
minimizing the risks of motorcycle use, the Fortson court cited
to State v. Anderson, 164 S.E.2d 48 (N.C. Ct. App. 1968), a case
which upheld North Carolina’s helmet law as valid exercise of
police powers because the law bore “a substantial relation to
the promotion of the welfare and safety of the general public as
distinguished from the welfare solely of the individual riders
of motorcycles.” Id. at 50 (emphasis added).
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the “same interests in public safety” addressed by the cases and
statutes involving motorcycle use “are significantly present in
motorcycle safety instruction,” id. at 554 (emphasis added), and
the court therefore found the release unenforceable: “Given the
hazards to the public associated with motorcycle instruction,
and the extensive regulation of motorcycle use, it would violate
public policy to allow instructors in a motorcycle safety
instruction course, such as the one operated by defendant, to
absolve themselves from the duty to use reasonable care.” Id.
at 552.
The Fortson court’s analysis is thus premised on an
implicit determination that the public-safety interest in the
safe use of motorcycles is substantial enough to invalidate a
release implicating that interest. If the public interest in
the safe use of motorcycles is enough to invalidate a release,
then the public interest in the safe use and operation of cars
is likewise enough.
IV.
As the North Carolina courts have made clear, every driver
owes the public the duty to exercise due care when driving on
public roads; the failure to exercise due care puts people and
property at great risk. See Aldridge, 82 S.E.2d at 337;
Williams, 55 S.E.2d at 463. Careless driving exposes the
public, not merely the driver and his passenger, to great
13
danger, and the Release therefore cannot be viewed as a simple
private contract that should be enforced according to its terms.
See Blaylock Grading Co., 658 S.E.2d at 683; Sylva Shops, 623
S.E.2d at 790.
Accordingly, we conclude that, under the circumstances of
this case, it would violate public policy to permit the
government to “absolve [itself] from the duty to use reasonable
care” when driving. Fortson, 508 S.E.2d at 552; cf. Sylva
Shops, 623 S.E.2d at 790 (“Public policy has been defined as the
principle of law which holds that no citizen can lawfully do
that which has a tendency to be injurious to the public or
against the public good.”). Because the Release is
unenforceable under North Carolina law, we vacate the district
court’s order granting summary judgment in favor of the
government, and we remand for further proceedings on McMurray’s
FTCA claim.
VACATED AND REMANDED
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