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Minnesota’s Highest Court Invalidates a Parental Waiver lacking an unequivocal intent to release “Negligence”

 

By Alexander “Sandie” Pendleton

In a long-awaited decision, the Minnesota Supreme Court has ruled unenforceable a parental waiver agreement signed by a mother of a seven-year-old boy who was seriously injured at a commercial indoor play area. While not holding that all such agreements are void as a matter of law in Minnesota, the court refused to enforce the agreement, finding it failed to express “a clear and unequivocal intent to release” the company that owned the play area from its own negligence. Justice v. Marvel, LLC, No. A20-1318, 2022 WL 4361324 (Minn. Sept. 21, 2022).

Background

In February 2007, when the plaintiff Carter Justice was 7 years old, he attended a birthday party at Pump It Up Parties, an inflatable amusement play area owned by Marvel, LLC.Before Justice entered the play area, Justice’s mother signed a waiver of liability on “her own behalf, and/or on behalf of” her son. The waiver contained a liability release, in which Justice’s mother agreed to “release and hold harmless MARVEL, LLC … from and against any and all claims, injuries, liabilities or damages arising out of or related to our participation in any and all Pump It Up programs, activities, parties, the use of the play area and/or inflatable equipment”(emphasis added). The waiver stated that she acknowledged the “inherent risks associated with participation in Pump It Up programs, parties, and/or use of the play area and inflatable equipment” and that she and Carter “knowingly and freely assume[d] all such risks, both known and unknown, including those that may arise out of the negligence of other participants”(emphasis added).

When Justice was playing on an inflatable, he fell and hit his head on the concrete floor at Marvel, which was covered with nothing more than commercial grade carpet. Justice was taken to a hospital and treated in the intensive care unit for a traumatic brain injury.

Prior Proceedings

In 2018, when Justice turned 18, he sued Marvel claiming that Marvel was negligent for not using pads on the floor near the inflatables. Justice alleged that he experienced “severe and permanent injuries” attributable to the traumatic brain injury that he suffered because of his fall.

Marvel defended based on the waiver and indemnification agreement. The trial court granted Marvel summary judgment. Based on prior Minnesota decisions, that trial court concluded as initial matter that parents have the authority to sign liability waivers on behalf of their children. The court then concluded that the waiver was enforceable because it was unambiguous, did not purport to release Marvel from liability for intentional acts (in which case the waiver would be unenforceable), and did not violate public policy. The court concluded that Minn. Stat. § 184B.20 (which voids waivers in certain “inflatable bouncy castle” settings, but which was not enacted until after 2007), did not apply retroactively to void the waiver. The court of appeals affirmed the trial court’s decision, and the plaintiff sought certiorari.

The Supreme Court’s Majority Opinion

On appeal to the Minnesota Supreme Court, the court (in a 5-2 decision)reversed the trial court’s decision, and remanded the case for further proceedings.

The majority indicated that the issue in the case was whether an exculpatory clause that purports to release a recreational provider from “any and all claims” is enforceable against a claim of negligence against the provider. Because the waiver in question did not specifically reference the provider’s own conduct, or otherwise sufficiently express that the provider was being released from liability for its own negligence, the court concluded that the waiver did not release the provider from liability for its own negligence.

Key to the majority opinion is the standard that Minnesota courts should apply when construing waiver and indemnification agreements. The court begins its discussion (as almost all waiver decisions begin) by noting that waivers are “not favored in the law,”and that waiver “provisions will be strictly construed against the benefited party.”Further, it notes at the outset that an exculpatory clause will not be enforced if it “is either ambiguous in scope or purports to release the benefited party from liability for intentional, willful or wanton acts.”And that when construing ambiguities in a waiver, strict construction against the beneficiary of the waiver must be applied.

The majority then moves to what it sees as a never before addressed issue under Minnesota law:

But we have never addressed how strict construction applies when an exculpatory clause purports to release all claims of liability without specific reference to negligent acts. This question is one of first impression.

(Emphasis added.) The court looked to how it had applied strict construction to indemnity agreements previously, noting that in its 2018 Dewitt decision, it had held the following:

. . . “[f]or an indemnity clause to pass strict construction, the contract must include an express provision that indemnifies the indemnitee for liability occasioned by its own negligence; such an obligation will not be found by implication.”Indemnity clauses “need not include the word ‘negligence,’ but [they] must use specific, express language that clearly and unequivocally states the contracting parties’ intent.”Broad language that “necessarily includes the indemnitee’s own negligence” does not survive strict construction; “indemnity cannot be established by implication.”

(Emphasis added, internal citations omitted.) The court then goes on to conclude that it is proper that both indemnity clauses and exculpatory clauses be subject to the same standard of strict construction.

Applying that strict construction standard to the waiver agreement at issue, the majority concludes:

Marvel’s waiver includes an acknowledgement of the “inherent risks” involved with inflatables and states that [Justice] assumes those risks, “including those that may arise out of the negligence of other participants.” But the waiver does not state whether [Justice] was releasing Marvel for Marvel’s own conduct, whether negligent or intentional. Where the waiver mentions negligence, it only refers to the “negligence of other participants,”not Marvel’s own negligence.The risk of other participants is a different type of risk than that of operator negligence. Operator negligence is the type of risk that this court requires to be explicitly rather than implicitly waived. In short, the waiver here does not “fairly apprise” the parties “in clear and unequivocal language” that [Justice] was releasing Marvel from liability for its own acts and omissions. Accordingly, the provision—strictly construed—does not release Marvel from liability for its own negligence.

(Emphasis added, internal citations omitted.)

Dissent

Two justices dissented. In the dissent’s view, previously, Minnesota law has treated waiver agreements and indemnification agreements differently, and applied different standards when deciding their enforceability. This difference grew out of the different consequences that can flow from such agreements. With a waiver, an individual may be giving up claims the individual may have in the future; in contrast, with an indemnification agreement, an individual may be taking on the responsibility of reimbursing another not only as to the individual’s claims, but also as to the claims of many others.[1]To the dissent:

Although an exculpatory clause, as we have here, can release a negligent party from liability, it need not be viewed with the same degree of skepticism as an indemnification clause because it presents no risk of similar ballooning liability for the injuries of other parties. Put another way, an exculpatory clause is not a trap for the unwary in the same manner as an indemnity agreement.

To the dissent, this change in Minnesota law was one that “upset[] the settled expectations” of contracting parties, for no good or substantive reason:

And unlike a holding based in public policy that would prevent this type of waiver in all circumstances . . . this holding presents a mere form management problem for companies like Marvel going forward.These companies may still contract to limit their potential liability; the court merely holds that they must use the correct magic words to do so.Whether less sophisticated parties will know that they must invoke the appropriate phraseology to protect themselves from liability is doubtful.

(Emphasis added.)[2]

The dissent saw absolutely no ambiguity in the term “any and all claims,” or in any of the provisions of the agreement, and based on such, concluded that a court should not be able to interpret the agreement in such a way as to find it unenforceable.

Lessons and Implications

The good news for Minnesota providers of recreational opportunities is that Minnesota’s highest court has not held that all parental waiver agreements are void as a matter of law (as more than a dozen other states have done).

Justice is another example of a case in which a court gives a very close reading to a waiver agreement, and finds that the drafter of the agreement failed to include just the right words, to protect the drafter’s client. This too is another example of a case in which, if the drafter had included the words “including claims as to the owner’s own negligence,” the court would likely have enforced the waiver. Expressly referring to such claims when drafting waivers has long been recommended by the leading treatise in this area of the law. See Doyice Cotten and Mary Cotten, Waivers & Releases of Liability(10th ed. 2019).

As indicated by the dissent, the result the defendant obtained in the case could have been avoided “by [the company] adding a few words to their contracts.”

Every word counts in a waiver agreement, and every word will be closely scrutinized if an injury occurs. As such, drafting waiver agreements is generally not something that should be done by the uninformed, the inexperienced, or the careless.

Finally, note that the injury-incident at issue in Justice occurred in 2007 (when the plaintiff was seven years old), and the lawsuit arising out of the incident was not commenced until 2018 (when the plaintiff turned 18). This time gap highlights the importance of recreational opportunity providers (and their insurers) having in place administrative procedures that (1) ensure that signed waiver agreements are properly stored for the amount of time during which a claim can be made (which can be many years when minors are injured); and (2) insurers are promptly notified of injury events that may result in claims. (Providing such notice enables insurers to gather evidence—for example, taking witness statements, and gathering copies of any agreements and after event reports—and ensuring such is preserved.)The failure to do either of the above could result in losses of defenses, if lawsuits are later commenced.

 

[1] The dissent pointed to a prior Minnesota Supreme Court indemnification case (Yang, 2005), in which the owner/lessor of a “party”houseboat had a lessee sign a waiver and indemnification agreement whereby the lessee agreed he would indemnify the houseboat owner/lessor for any and all claims that might arise out of the rental. When a carbon monoxide poisoning event occurred on the houseboat that sickenedeighteen passengers, the owner/lessor sought to enforce the indemnification agreement, seeking to have the lessee defend and indemnify the owner/lessor as to all the claims brought by all the poisoned passengers on the houseboat.

[2]As always, it pays to read the footnotes to a case, because it is in footnotes that justices will debate points, and identify key issues that may be at issue in future cases. The Justice decision helps to prove this point, as there are several arguments made by the dissent, that the majority refutes in footnotes to the majority opinion. This includes the dissents comment about “magic words, which the majority responds to as follows:

We . . . disagree [with the dissent] that our holding today requires parties to “use the correct magic words” to properly limit their liability. We are not demanding that parties use certain words to make their exculpatory clauses enforceable. Rather, we insist that a party who wishes to limit their liability for negligence do so by using specific, express language that clearly and unequivocally states such an intent; no certain words are required to satisfy this standard.

*************

Alexander “Sandie” Pendleton is an attorney in Milwaukee, who helps recreational opportunity providers create and properly deploy precisely-crafted waiver and other risk-management agreements. Sandie is the co-author (with Doyice J. Cotten) of the forthcoming Eleventh Edition of Waivers & Releases of Liability (a book that is the leading guide in the United States as to such agreements). Sandie can be reached at [email protected]

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