California Court Rules on Waiver/Arbitration Clause Ambiguity Controversy

By Doyice Cotten

2659077377_3a5b714d8a_mMany parties who suffer injuries after having signed a liability waiver still file suit and challenge the waiver in an attempt to collect damages. One of the most common allegations in the challenge is that the waiver is unenforceable because of ambiguity. In a 2012 health club case, a client was injured during a basketball game (Finley v. Club One, Inc., 2012 Cal. App. Unpub. LEXIS 2444).

Interestingly, the clarity and scope of the waiver was not at issue in this case. Finley’s claim alleged that the waiver was ambiguous because of “the coexistence of the release and the binding arbitration provision encompassing claims for personal injuries.”[Emphasis added.] In other words, Finley claimed that the fact the document contained both exculpatory language and a provision for arbitration in the event of an issue created confusion and lack of clarity.

The trial court agreed, reasoning

The language used seems on one hand to waive all personal injury claims of club members while at the same time calling for the submission of such claims to arbitration. While lawyers might not have difficulty understanding these provisions, the average layman would find them to be inconsistent and ambiguous. [Emphasis added.]

The appellate court disagreed, stating “The provision requiring binding arbitration of personal injury claims is not fatally inconsistent with a release of personal injury claims caused by Club One’s actions or omissions, negligent or otherwise.” The court went on to explain:

• A release of claims based on willful misconduct would be unenforceable; in such a case, such claims might need to be resolved by binding arbitration.
• Even if the two clauses are arguably inconsistent, the presence of an arbitration clause does not impact or reduce the clarity or scope of the liability release language.
• The court found no cases in which a waiver was invalidated by the inclusion of an arbitration agreement; and the plaintiff cited no such cases.
• Further, Finley does not provide an alternative, semantically reasonable meaning of the release language due to the presence of the arbitration clause.

The court concluded by stating that a waiver does not have to be perfect to be enforceable. It is sufficient if a waiver is clear, unambiguous, and explicit, and that it expresses an agreement not to hold the released party liable for negligence.
This question has been raised to the author on a few occasions; this is the first time I have seen it addressed in a court decision.

Photo Credit: Thanks to First Baptist Nashville from Flickr.