Kocinec v. Public Storage, Inc. (Virginia-NOT PUBLISHED)
(Contents of Public Storage Unit Sold, Plaintiff Alleged Failure to Notify; Limitation of Liability in Storage Contract Enforced)

The plaintiff entered into a rental agreement with the defendant public storage facility.  The plaintiff made a late payment and was later informed that the contents of the storage unit were sold by the defendant.  Plaintiff sued for the value of the contents at $70,000, contending that the defendant failed to provide sufficient notice to him prior to the sale and that the defendant had failed to satisfy its statutory obligations.  The defendant argued that its damages were contractually limited to $5,000 pursuant to the rental agreement. 

The issue before the Court was whether a private party could contractually limit its potential liability to another under Virginia law, and, if so, whether an exception to that right applied to private owners of self-storage facilities. The court stated that “a party . . . may exempt itself from liability for negligence in a contract with a party on equal footing.” Plaintiff argued that just as in the case of a common carrier and a passenger, an occupant and an owner of a self-service storage facility are not on equal footing. In support of this conclusion, plaintiff referred to the Virginia Self-Storage Act, which sets forth certain requirements that an owner of a self-service storage facility must follow before they dispose of an occupant’s personal property. However, the court concluded that the defendant was not in an unfair bargaining position over the plaintiff.

Additionally, the court held that the exculpatory clause contained in the rental agreement did not violate public policy. Such clauses had been prohibited in certain circumstances (e.g., a contract of carriage of a common carrier, unless a reduced fare was charged; a contract of a public utility under a duty to furnish telephone service; or when imposed by an employer as a condition of employment), but there was no established prohibition in the public storage context.

The court found the language contained rental agreement to be readily understood by reasonable parties. It also deemed the relevant provisions to be simple, direct, and concise. There was no complex, legal, or confusing terms that required special expertise. As such. the court found that a reasonable person in plaintiff’s position could have readily understood the import of such exculpatory language. Moreover, the claim at issue was within the contemplation of the parties when they entered into the rental agreement.

The court ultimately determined that that parties may enter into such exculpatory agreements, and that no exception at law precludes a private self-storage facility from limiting its risk as to its customers. Therefore, the court grant defendant’s motion for partial summary judgment. In making the ruling, the court boldly proclaimed, “Exculpatory agreements are routinely enforceable in Virginia, and no basis exists in fact or law to curtail Defendant’s ex ante right to contract for limited liability.”

NOTE: Virginia law has been quite unfavorable with regard to waiver and release and express assumption of the risk agreements in the context of hazardous recreational activities. In 1992, the Virginia Supreme Court determined that a waiver and release used in connection with a triathalon was contrary to public policy because it sought to exculpate the released parties from their own potentially negligent conduct resulting in personal injury. In 1998, the District Court for the Western District of Virginia found that a waiver and release used in connection with an organized bicycle tour was void, and it confirmed that Virginia law provides that pre-injury exculpatory clauses in contracts are void as against public policy. Some of the language in the Kocinec decison appears to contradict this basic position. However, the Kocinec court seems to mix and confuse the concepts of a limitation of liability (e.g., a cap on potential damages) and a complete exculpation of liability. Perhaps, if the rental agreement had precluded liability altogether, the court would have found the agreement to be contrary to public policy.

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