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Yang v. Voyagaire Houseboats, Inc. - 701 N.W.2d 783 (Minn. 2005)

Rule:

Agreements seeking to indemnify the indemnitee for losses occasioned by its own negligence are not favored by the law and are not construed in favor of indemnification unless such intention is expressed in clear and unequivocal terms, or unless no other meaning can be ascribed to it. The court also will not enforce an indemnification clause if it is contrary to public policy. An indemnity agreement that seeks to relieve a party of the consequences of a violation of a public duty imposed by statute is void.

Facts:

Plaintiff Lao Xiong and members of his girlfriend's extended family, rented a houseboat from defendant Voyagaire Houseboats, Inc. Xiong was required to sign a rental agreement that included exculpatory and indemnification clauses. After the vacationing party suffered carbon monoxide poisoning on board the houseboat, they brought personal injury actions against Voyagaire. The company filed a cross-claim against the lessee Xiong for indemnification as to the other plaintiffs' claims. The district court granted summary judgment for defendant company, holding that plaintiffs' claims were barred by the exculpatory clause. Plaintiffs appealed, requesting the appellate court to review the decisions of the courts below that (1) the exculpatory clause in the houseboat rental agreement is enforceable, barring Xiong's claims against Voyagaire; and (2) the indemnification clauses in the houseboat rental agreement are enforceable, requiring Xiong to indemnify Voyagaire for the claims by the other members of his vacationing party.

Issue:

Was the exculpatory and indemnification clauses in a houseboat rental agreement enforceable?

Answer:

No

Conclusion:

On appeal, the court reversed, holding that the exculpatory and indemnification clauses were unenforceable as they violated public policy. The court held that the houseboat company met the definition of an "innkeeper" in Minn. Stat. § 327.70, subds. 3-4 by providing sleeping accommodations to the public, and as a matter of public policy, an innkeeper could not circumvent its duty to protect its guests by requiring them to sign a rental agreement containing an exculpatory clause that purported to release the innkeeper from liability. The court also concluded that the indemnification clause was not enforceable because the language was not clear and unequivocal. The court then remanded to the district court for further proceedings.

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