Maryland top court allows a parent to sign away a minor’s right to sue. Release was not fantastic, but good enough.

Parent’s signed a release to drop kids off at a “kids’ club” while they shopped in the defendant’s store (wholesale club). The release was in the agreement to use the club. Also included in the agreement was an indemnification clause which the court did not rule on.

BJ’s Wholesale Club, Inc. v. Rosen, 435 Md. 714; 80 A.3d 345; 2013 Md. LEXIS 897

Date of the Decision: November 27, 2013

Plaintiff: (Original) Russell Rosen, et. al.

Defendant: (Original) BJ’s Wholesale Club, Inc.

Plaintiff Claims: Defendant had a duty to exercise reasonable care to protect its patrons in the play area from injury. Defendant agents and employees knew or should have known that placing an elevated play structure directly over carpet adhered to a concrete floor would pose a danger to children playing there. Defendant breached its duty of care by placing.

Defendant Defenses: Release and indemnification

Holding: For the defendant (plaintiff in the appeal)

In this Maryland Supreme Court decision, the party named first in the citation to the case is the party that appealed the lower-court opinion. So the original defendant is the party that appealed the decision in the last court and thus is listed as the plaintiff in the citation.

The defendant is a wholesale club. Generally, you pay a yearly fee to shop in the club which sells items for lower prices. As an incentive, this club had a play area called the BJ’s Incredible Kids’ Club. To be able to leave your kids at the club while you shopped you had to sign “BJ’s Incredible Kids’ Club Rules.”

The rules contained a release and indemnification clause.

In the kid’s club, there was an elevated plastic play apparatus called Harry the Hippo. Harry the Hippo was approximately 38” high at its peak. The injured plaintiff was a five-year-old boy who fell off the hippo landing on the floor. The floor was carpeted with no padding covering concrete. The young boy suffered a severe “acute epidural hematoma.” This required surgery to save his life.

The family sued. The trial court dismissed the plaintiff’s complaint based on the release. The next level of court in Maryland, the Court of Special Appeals, reversed the trial court. The case was appealed and accepted by the highest court, in this case the Court of Appeals of Maryland.

Summary of the case

The court first examined the club agreement which contained the release. The release language was just one paragraph long but did contain a clause which released the negligence of the club. The agreement also had rules, one of which was you could not leave your kid in the club for more than 90 minutes.

Right below the release, or exculpatory clause as it was called by the court, was an indemnification clause. The indemnification clause was in smaller font but printed in bold right above the signature line.

The court then worked through the requirements for releases to be valid in Maryland as reviewed by the lower courts in their decisions.

Generally, Maryland Courts will uphold exculpatory clauses that are executed by adults on their own behalf. “There are circumstances, however, under which the public interest will not permit an exculpatory clause in a contract.” “Public policy will not permit exculpatory agreements in transactions affecting the public interest.” “The ultimate determination of what constitutes the public interest must be made considering the totality of the circumstances of any given case against the backdrop of current societal expectations.”

The court then specifically reviewed exculpatory clauses under Maryland law.

An exculpatory clause is a “contractual provision relieving a party from liability resulting from a negligent or wrongful act.” By entering into an exculpatory agreement, “the parties expressly . . . agree in advance that the defendant is under no obligation of care for the benefit of the plaintiff, and shall not be liable for the consequences of conduct which would otherwise be negligent.”

…”[i]n the absence of legislation to the contrary, exculpatory clauses are generally valid, and the public policy of freedom of contract is best served by enforcing the provisions of the clause.” We also have opined that exculpatory clauses are to be construed strictly, requiring that the language of any such clause “clearly and specifically indicates the intent to release the defendant from liability for personal injury caused by the defendant’s negligence.”

The court then reviewed when exculpatory clauses would not be upheld in Maryland. An exculpatory will not protect from liability from intentional harm or extreme forms of negligence. Extreme forms of negligence are generally referred to herein as greater than normal negligence and in Maryland include reckless, wanton or gross negligence.

Second an exculpatory clause cannot be part of a contract that was the product of grossly unequal bargaining power. That means when a party has no choice but to sign the agreement, because that person has no bargaining power so that he is at the mercy of the other’s negligence.

Remember, for the argument of unequal bargaining power to be a valid defense to a release, the agreement must be for something necessary for the health, welfare or safety of the person signing the agreement. Baby sitting or recreational activities are not such necessities that create a true unequal bargaining power that would void a release.

The final group that would void a release are transactions affecting the public interest. Transactions affecting the public interest seem to be very similar to the unequal bargaining power argument, but are viewed by the court from the context of why rather than who. Two were not at issue in this case; public service obligations such as an agreement between a consumer and an electric company and “other transactions “so important to the public good that an exculpatory clause would be patently offensive.”” The example the court gave to explain the second type of contract was in the reverse; an agreement between a health club and a consumer “of no great public importance or practical necessity.”

The court went into depth is reasoning on rejecting the public service obligation because it was the basis for the dissent in the case from two other justices.

The third category of public service exceptions to releases, the court and the dissent stated were not easily defined. In a prior Maryland case, this exception was developed by referring to the California decision in Tunkl v. Regents of University of California, 60 Cal. 2d 92, 32 Cal. Rptr. 33, 383 P.2d 441, 444-46 (Cal. 1963). However, the court found that Tunkl was not valid in defining this exception.

We declined, however, to adopt the Tunkl factors, determining that the “fluid nature of the public interest” renders strict reliance on “the presence or absence of six fixed factors” arbitrary and inappropriate. We recognized, instead, that while the factors may be persuasive to evaluate the public interest, “[t]he ultimate determination of what constitutes the public interest must be made considering the totality of the circumstances of any given case against the backdrop of current societal expectations.”

The best description the court could identify was “societal expectations.” These expectations are best found by looking at the statute and common law. Here the court examined the laws defining the relationship between the parent and the child. Under Maryland law, the parents are given almost absolute control over the acts, welfare, growth and raising of their child. The presumption in Maryland is the parents are going to act in the best interest of the child.

The societal expectation that parents should make significant decisions pertaining to a child’s welfare is manifest in statutes that enable parents to exercise their authority on behalf of their minor child in the most important aspects of a child’s life, including significant physical and mental health decisions. Parents are empowered, on behalf of their children to: consent to medical treatment, consent to having their children give blood, consent to the use of a tanning device by their child, and to authorize another family member to consent to the immunization of a minor child. Parents are also empowered to commit a child, under certain conditions, to: a public or private service that provides treatment for individuals with mental disorders, as well as a private therapeutic group home that provides access to a range of diagnostic and therapeutic mental health services.

Parents also are empowered to permit a fifteen to seventeen-year old child to marry.” Based on the court’s review of these and other statutes, the court found parents in Maryland were empowered to make significant decisions on behalf of children. The next argument was then whether the courts had a duty or obligation to step in and replace the decision making of a parent and when.

The major argument to support this argument is courts in Maryland approve settlements affecting children who were injured as plaintiffs in lawsuits. This is normal in most states and has been developed for many reasons; the main one is to prevent a negligent defendant from taking advantage of a naïve or unknowing parent. However, in Maryland there were exceptions to this law, which allowed parents to settle some claims without judicial review. Based on that exception the court found this argument was not controlling.

We conclude, therefore, that Mr. Rosen’s execution of an exculpatory agreement on behalf of Ephraim to allow him to use the Kids’ Club was not a transaction affecting the public interest within the meaning of Wolf, which otherwise would have impugned the effect of the agreement.

The next argument presented by the injured parties was a commercial entity was better able to bear the risk of loss by purchasing insurance than these parents. The court found several flaws with this argument. Basically, was who was going to determine what a commercial enterprise was. The court used this example to make its point.

For example, is a Boy Scout or Girl Scout, YMCA, or church camp a commercial establishment or a community-based activity? Is a band trip to participate in the Macy’s Thanksgiving Day parade a school or commercial activity? What definition of commercial is to be applied?

The final argument was that the state had a parens patriae obligation to the children of the state. Parens patriae is the legal power of the state to protect those who do not have the legal authority to protect themselves. Minor’s incapacitated adults or adults who mental status is not at the state’s minimum level.

However, under Maryland law the obligation of the state under parens patriae only arises if the parental rights have been abrogated pursuant to a statute. No statute required the courts to intervene, and no statute had removed the injured minor from the legal authority of his parents. Finally, parens patriae is applied when a minor has been adjudicated or become involved in the juvenile delinquency system, which was not present in this case.

The court reversed the lower court’s ruling and sent the case back to the trial court for dismissal.

So Now What?

Maryland now joins the slowing growing ranks of states that allow a parent to sign a release and give up their minor child’s right to sue.

For a complete list see: States that allow a parent to sign away a minor’s right to sue.

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