## Facts

- Elizabeth Wolf, age 18, invested about $135,000 through a discretionary securities account at a private brokerage firm.
- She signed a discretionary account agreement authorizing her broker to trade at his discretion.
- The agreement included an exculpatory clause releasing the firm and its employees from liability for account losses except those resulting from gross negligence or willful misconduct.
- About one year later, Wolf signed a written confirmation continuing the broker’s discretionary authority, again accepting the same limitation of liability.
- Over several years, Wolf withdrew about $64,000 from the account; after roughly four years she revoked the broker’s discretionary authority, moved the account to another broker at the same firm, and later closed the account.
- Wolf later sued, asserting mishandling of the account based on negligence; she admitted the brokers did not lie or misrepresent facts and did not plead facts supporting gross negligence or willful misconduct.

## Issues

1. Whether an exculpatory clause in a discretionary securities account agreement that waives liability for ordinary negligence (but not gross negligence or willful misconduct) is void as against Maryland public policy in a private investor–broker relationship.

## Decision

- The Maryland Court of Appeals affirmed summary judgment for the brokers and brokerage firm.
- The court held the exculpatory clause was enforceable and not contrary to public policy on these facts.
- Because Wolf’s allegations sounded only in ordinary negligence, the clause barred her claims as a matter of law, and no triable issue remained.

## Legal Principles

- Maryland generally permits parties to contractually exculpate liability for future ordinary negligence, subject to public-policy limits.
- Exculpation is disfavored or invalid where: (a) the defendant owes a public duty (e.g., common carrier/public utility), (b) the transaction is “affected with a public interest” involving compulsion or necessity, (c) the clause purports to waive liability for gross negligence, willful misconduct, or intentional harm, or (d) the contract results from fraud, duress, or extreme bargaining-power disparity.
- A private securities brokerage relationship, entered voluntarily with meaningful alternatives available, is not treated as a compelled public-service relationship for purposes of invalidating an ordinary-negligence waiver.
- Absent a statute or regulation forbidding such a limitation, an exculpatory clause preserving liability for gross negligence or willful misconduct can validly bar ordinary-negligence claims and support summary judgment when no facts support the non-waived misconduct categories.

## Conclusion

The court enforced a discretionary account exculpatory clause limiting a broker and brokerage firm’s liability to gross negligence or willful misconduct, holding that a private investor’s ordinary-negligence claims were barred because the agreement was voluntary, not a public-interest contract, and not prohibited by statute or other clear public policy.


Wolf v. Ford, 335 Md. 525, 644 A.2d 522 (Md. 1994)