Wolfgang v. Mid-America Motorsports, 111 F.3d 1515

United States Court of Appeals, Tenth Circuit

1997

Chapter

21

Title

The Rights of Nonparties

Page

878

Topic

Third-Party Beneficiaries

Quick Notes

A race car driving is suing the race track and organizer saying he was a third party beneficiary of an obligation to make the race track safe. 

Book Name

Torts Cases, Problems, And Exercises.  Weaver, Third Edition.  ISBN:  978-1-4224-7220-0.

Issue

o         Whether a party needs to be name in the contract or have knowledge of the contract to be an intended third party beneficiary?  No.

Procedure

Trial

o        Jury Award:  $1,215,000 against the defendants.

Appellant

o         Appellant Court:  Upheld against Speedway.  Affirmed against World of Outlaws on the theory that Wolfgang was the intended beneficiary of the K between World of Outlaws and Speedway.

Facts

Reason

Rules

Pl Wolfgang

Df Mid-America Motorsports

How are the Parties?

o         Wolfgang is a race car driver.

o         Mid-America Motorsports (speedway) is race track.

o         World of Outlaws is the organizer of the event.

What happened?

o         During a practice on media day, Wolfgangs car hit a tire at the edge which cause him to hit the wall.

o         His car caught on fire.

o         Because the firefighters were not adequately trained or equipped, they were unable to rescue him for 8 to 10 minutes.

o         As a result, he suffered injury that could have been prevented by proper fire fighter precautions.

Law Suit

o         Wolfgang sued Speedway and World of Outlaws.

o         He claimed that he was a third-party beneficiary of a contract entered into between World of Outlaws and Speedway.

Duty to Ensure Safety

o         World of Outlaws had undertaken a duty to ensure safe racing conditions, including adequate fire protection, during the practice session.

Jury Award

o         $1,215,000 against the defendants.

Appellant Court

o         Upheld against Speedway.

o         Affirmed against World of Outlaws on the theory that Wolfgang was the intended beneficiary of the K between World of Outlaws and Speedway.

World of Outlaw Argues

o         It is merely a sanctioning body for sprint car races.

o         It owed no duty to provide or ensure adequate fire protection for sprint car drivers.

District Courts Response

o         There was sufficient evidence to show that World of Outlaws owed a duty to Mr. Wolfgang to ensure safe racing conditions on the day of the crash.

Contract Discussion

o         Mid-America Motorsports and World of Outlaws contracted to stage sprint car races at Lakeside Speedway.

o         They entered into a standard contract, written by World of Outlaws, which Mid-America Motorsports was not permitted to change or deviate from in any way.

Statement of Cancellation

o         "Designated World of Outlaws officials shall have the right to cancel any event due to unsafe racing conditions."

Wolfgang - Provision Created a Contractual Obligation

o         Mr. Wolfgang alleged that this provision created a contractual obligation on the part of World of Outlaws to ensure that racing conditions were safe, and that as a participating driver, he was a third-party beneficiary to this provision in the contract.

World of Outlaws Wolfgang is not a third-party beneficiary

o         Mr. Wolfgang was not a third-party beneficiary to this contract.

o         Even if he was, the contract only covered the actual race days of April 4 and 5, and not the media day practice session on April 3 during which the crash occurred.

Intended Beneficiaries Rule

o        A person may sue for damages resulting from the breach of a contractual obligation, even though he is not a party to the contract and had no knowledge of it when made,

o        If he is an intended beneficiary of that obligation.

o        It is not necessary that the third party be identified in the contract or at the time of contracting in order to be an intended beneficiary.

o        Such a plaintiff is entitled to recover either in contract or in tort.

Determining Intent of Contracting Parties

o        The court must apply the general rules for construction of contracts.

o        The intention of the parties and the meaning of the contract are to be determined from the instrument itself where the terms are plain and unambiguous.

Facts and Circumstances

o        The court will consider evidence of the facts and circumstances surrounding its execution when the instrument is ambiguous on its face and requires aid to clarify its intent.

Ambiguous Description

o        A contract is ambiguous when the words used to express the meaning and intention of the parties are insufficient in the sense the contract may be understood to reach two or more possible meanings.

Courts - Analysis of Clause

Clause

o        World of Outlaws officials "shall have the right to cancel any event due to unsafe racing conditions."

Conclusion

o        We think it unassailable [impossible to dispute] that the adequacy of fire protection for drivers is contemplated in the phrase "unsafe racing conditions."

o        The phrase "unsafe racing conditions" can only reasonably refer to the World of Outlaws member-drivers and the race-going public who may be trackside watching the race.

It is clear Wolfgang is a beneficiary

o        The instrument could be construed as clearly and unambiguously expressing the parties' intent that "safe racing conditions"  benefit drivers such as Mr. Wolfgang.

It is not clear that he was not a beneficiary (saying the same thing)

o        It is certainly not a clear and unambiguous expression that the parties did not intend to benefit the race car drivers.

Courts Analysis If contract was ambiguous

o        The [court] look[s] to the evidence adduced at trial to determine if the race car drivers were intended beneficiaries.

Evidence to of Parties Intent

o        The President of World of Outlaws admitted they obligation to ensure safe racing conditions.

o        He admitted that the drivers were the direct beneficiaries of that obligation.

o        He acknowledged that the presence of adequate fire fighting equipment was one of the requirements for a race track to be safe,

o        He admitted that World of Outlaws had a responsibility to its member drivers to bring them only to racetracks that had adequate fire fighting capabilities.

o        He testified that if a track did not have adequate fire fighting capabilities as part of its safety equipment, World of Outlaws drivers would be unnecessarily exposed to excessive danger.

Conclusion

o        The court reached the same conclusion using extrinsic evidence to clarify the ambiguous K provision.

Holding

o        World of Outlaws owed a legal duty to its member-drivers to ensure that Lakeside Speedway had adequate protection on the day Wolfgang crashed.

Rules

Intended Beneficiaries Rule

o        A person may sue for damages resulting from the breach of a contractual obligation, even though he is not a party to the contract and had no knowledge of it when made,

o        If he is an intended beneficiary of that obligation.

o        It is not necessary that the third party be identified in the contract or at the time of contracting in order to be an intended beneficiary.

o        Such a plaintiff is entitled to recover either in contract or in tort.

Determining Intent of Contracting Parties

o        The court must apply the general rules for construction of contracts.

o        The intention of the parties and the meaning of the contract are to be determined from the instrument itself where the terms are plain and unambiguous.

Facts and Circumstances

o        The court will consider evidence of the facts and circumstances surrounding its execution when the instrument is ambiguous on its face and requires aid to clarify its intent.

Ambiguous Description

o        A contract is ambiguous when the words used to express the meaning and intention of the parties are insufficient in the sense the contract may be understood to reach two or more possible meanings.

Class Notes