New Jersey ski area pushes “indemnification” clause in release too far and gets told by court its release is an adhesion contract.
Posted: January 22, 2024 Filed under: New Jersey, Release (pre-injury contract not to sue), Skier v. Skier, Skiing / Snow Boarding | Tags: Adhesion Contract, Bright Line, Indemnification, Indemnification Clause, Mountain Creek, New Jersey Skier Statute, Release Leave a comment
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Indemnification agreements in releases fail. You cannot write the language in a release to qualify for indemnification. Here the ski area tried to get greedy and got slammed.
Vladichak v. Mountain Creek Ski Resort, Inc., A-1367-20 (N.J. Super. App. Div. Apr 13, 2022)
State: New Jersey; Superior Court of New Jersey, Appellate Division
Plaintiff: Andrea Vladichak
Defendant: Mountain Creek Ski Resort, Inc., Defendant-Appellant, and Michael Lavin, Defendant-Respondent.
Plaintiff Claims: Indemnification from the co-defendant
Defendant Defenses: The indemnification clause was not valid.
Holding: for the Defendant-Respondent
Year: 2022
Summary
After winning a lawsuit from a skier injured in a skier v. skier collision, Mountain Creek Ski Area sued the at fault skier in the collision for damages. The appelleate court found the indemnification clause in the release was not written correct and then found Mountain Creek’s release to be an adhesion contract.
Facts
Defendant Snow Creek, LLC d/b/a Mountain Creek Resort, Inc. (Mountain Creek) appeals from a November 9, 2020 order denying its motion for summary judgment and granting summary judgment to defendant Michael Lavin (Lavin) dismissing Mountain Creek’s cross-claims for defense costs and contractual indemnification. Judge David J. Weaver (motion judge) concluded in a thorough opinion that the contractual language was ambiguous and therefore Mountain Creek was not entitled to indemnification from Lavin or defense costs incurred to defend plaintiff’s allegations that Mountain Creek itself was negligent. We affirm.
On December 21, 2017, plaintiff sustained personal injuries while skiing at a ski area owned and operated by Mountain Creek in Vernon Township, New Jersey. Plaintiff was struck from behind by Lavin, another skier. Plaintiff filed a complaint alleging Mountain Creek and Lavin were negligent. Plaintiff’s complaint alleged Mountain Creek was independently negligent for failing to provide appropriate warnings to skiers, failing to appropriately designate the difficulty of ski trails, failing to provide skiers with appropriate information about trail conditions, failing to timely remove obvious manmade hazards, and/or otherwise failing to establish adequate procedures to provide a safe skiing environment. The complaint alleged Lavin was negligent for breaching his duty to others to ski in a reasonably safe manner by skiing in a reckless manner and/or intentionally colliding into plaintiff and causing her injuries.
Prior to the incident, Lavin signed an equipment rental agreement (Rental Agreement) and lift ticket agreement (Release Agreement) in which he agreed to defend and indemnify Mountain Creek from any claims related to his own conduct and use of the property’s equipment facilities. On August 7, 2019, Mountain Creek filed an answer and cross-claims seeking defense and indemnification from Lavin based on the executed Rental and Release Agreements. Mountain Creek previously tendered the defense to Lavin on July 16, 2019.
Plaintiff’s counsel served a report from plaintiff’s liability expert, who concluded that Lavin violated the New Jersey Ski Statute, N.J.S.A. 5:13-1 to -12, and the Skier’s Responsibility Code by failing to control his speed and course and by failing to yield to the skiers ahead of him. The expert opined that Lavin’s reckless conduct caused the accident. On March 27, 2020, Judge Stephan C. Hansbury entered an order granting Mountain Creek’s motion for summary judgment dismissing plaintiff’s claims that Mountain Creek was negligent. Lavin and plaintiff settled and filed a stipulation of dismissal with prejudice dated May 29, 2020.
After plaintiff’s settlement with Lavin, Mountain Creek filed its motion seeking reimbursement from Lavin for defending plaintiff’s allegations and indemnification from Lavin.[1] Lavin filed a cross-motion for summary judgment on September 1. That led to the order under review.
The judge concluded that, as a matter of law, the indemnification provisions were ambiguous and thus unenforceable to compel indemnification in favor of Mountain Creek for claims of its own negligence. The motion judge denied Lavin’s cross-motion for summary judgment in part and granted it in part. The motion judge requested the parties submit the detail and extent of defense costs incurred by Mountain Creek for costs incurred for which liability was only vicarious.
Simply put, Mountain Creek and Michael Lavin were sued by the original plaintiff Andrea Vladichak for injuries received due to a skier v. skier collision between Lavin and Vladichak. Mountain Creek was dismissed from the original lawsuit. Lavin settled with Vladichak.
The day of the collision, Lavin had rented equipment from Mountain Creek and signed a release as part of the rental agreement. The release had a poorly worded indemnification clause in it. After Lavin settled and Mountain Creek was dismissed, Mountain Creek sued Lavin using the indemnification clause in an attempt to recover the money Mountain Creek spent defending the lawsuit. Mountain Creek lost the original lawsuit and this is the result of the appeal of that trial court decision.
Analysis: making sense of the law based on these facts.
The basis for the reasoning on why Mountain Creek made these moves seems to have been a report from the plaintiff’s expert witness that found Lavin liable for the accident.
Plaintiff’s counsel served a report from plaintiff’s liability expert, who concluded that Lavin violated the New Jersey Ski Statute, N.J.S.A. 5:13-1 to -12, and the Skier’s Responsibility Code by failing to control his speed and course and by failing to yield to the skiers ahead of him. The expert opined that Lavin’s reckless conduct caused the accident.
The trial judge ruled that the indemnification language did not meet the necessary requirements to be valid in New Jersey.
The judge concluded that, as a matter of law, the indemnification provisions were ambiguous and thus unenforceable to compel indemnification in favor of Mountain Creek for claims of its own negligence.
The Appelleate court set forth how contracts in general are examined by the courts and the special requirements of indemnification clauses.
The judge’s role “in construing a contractual indemnity provision is the same as in construing any other part of a contract-it is to determine the intent of the parties.” Generally, courts give contractual provisions “their plain and ordinary meaning.” “However, indemnity provisions differ from provisions in a typical contract in one important aspect. If the meaning of an indemnity provision is ambiguous, the provision is ‘strictly construed against the indemnitee.
Meaning indemnification language is not looked at as whether the parties agreed to the provisions, but whether the writer of the clause did so meeting the strict requirements the courts require to create indemnification.
This is known as the bright line test, do the words in the clause meet the “bright line” test required.
One of the tests as to whether the language in an indemnification clause is written correctly is whether the act that triggers indemnification is identified in the agreement.
Our Court affirmed and held that “in order to allay even the slightest doubt on the issue of what is required to bring a negligent indemnitee within an indemnification agreement, we reiterate that the agreement must specifically reference the negligence or fault of the indemnitee.”
Indemnification clauses cannot use general language and be used to recover money for any action that may cost one party money. They are clauses that must be written to cover the specific acts set forth in the clause.
Here the language failed to meet that requirement.
We agree with the motion judge that the indemnity provisions in the agreements are ambiguous as to claims of Mountain Creek’s independent negligence. Although the provisions reference Mountain Creek’s negligence in bold and capitalized letters, the language “arising out of or resulting from my conduct . . . whether or not MOUNTAIN CREEK’S NEGLIGENCE contributed thereto in whole or in part” is insufficient to meet the Azurak standard. One could reasonably interpret the provisions to require indemnification and defense of Mountain Creek for any claims of negligence against it caused by Lavin’s conduct even when Mountain Creek is partially at fault or to require Lavin to indemnify and defend Mountain Creek for separate claims of its own negligence.
The clause also failed because the acts that gave rise to litigation against Mountain Creek, or the claims, were not the acts or claims that were brought against Lavin. Here again the language of the indemnification agreement was too broad to meet the specific language requirements required by New Jersey Law.
An indemnitor may expect to indemnify and defend an indemnitee for claims caused by its negligent conduct when the indemnitee may also be at fault but may not expect to be solely responsible to indemnify and defend the indemnitee when the indemnitee has committed separate acts of negligence.
The indemnification clause did not cover the acts of Lavin which Mountain Creek was claiming were covered. Again, Mountain Creek wrote a clause using broad language when the courts require specific language.
The provisions at issue do not meet the bright line rule requiring “unequivocal terms” that the duty to indemnify extends to the indemnitee’s own negligence. Thus, the provisions are ambiguous and must be strictly construed against Mountain Creek.
Lavin argued and the court agreed that the release was a contract of adhesion.
As a threshold issue, we determine that the Release and Rental Agreements were contracts of adhesion. If a contract is characterized as a contract of adhesion, “nonenforcement of its terms may be justified on other than such traditional grounds as fraud, duress, mistake, or illegality. An adhesion contract is one that “is presented on a take-it-or-leave-it basis, commonly in a standardized printed form, without opportunity for the ‘adhering’ party to negotiate except perhaps on a few particulars.” “Although a contract of adhesion is not per se unenforceable, a [judge] may decline to enforce it if it is found to be unconscionable.”
Contracts of adhesion are still enforceable; however, they are easier to void and cannot be enforced if found to be unconscionable. By making this argument, Mountain Creek put a label on its release which will make it easier in the future to beat.
The court then looked at the four factors to determine if under New Jersey law a contract is unconscionable.
When determining whether an adhesion contract is unconscionable, we evaluate four factors that “focus on procedural and substantive aspects of the contract to determine whether the contract is so oppressive, or inconsistent with the vindication of public policy, that it would be unconscionable to permit its enforcement.” Those factors include “the subject matter of the contract, the parties’ relative bargaining positions, the degree of economic compulsion motivating the ‘adhering’ party, and the public interests affected by the contract.”
Nothing like the appelleate court of your state setting out the requirements to void your release. The court found that this release was not unconscionable only the indemnification language was void.
So Now What?
Go to far. A ski area sues one of its customers to recover money for the actions of the customer against a third party, not the ski area. That went to far and the New Jersey Appelleate Court slammed Mountain Creek in two ways for doing so.
- The indemnification clause was void because it was not written correctly.
- The release was labeled a contact of adhesion, providing a road map for future lawsuits to follow.
Indemnification agreements in releases have not been upheld. You must either write them correctly, which is difficult to do or take them out.
I’ve only read one decision where the indemnification clause was upheld and it was a little different. A federal district court in Massachusetts upholds indemnification clause in a release.
Most decisions do not uphold indemnification clauses.
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Vladichak v. Mountain Creek Ski Resort, Inc., A-1367-20 (N.J. Super. App. Div. Apr 13, 2022)
Posted: January 22, 2024 Filed under: New Jersey, Release (pre-injury contract not to sue), Ski Area, Skier v. Skier, Skiing / Snow Boarding | Tags: Adhesion Contract, Bright Line, Inc., Indemnification, Indemnification Clause, Mountain Creek, Mountain Creek Ski Resort, Release, Strictly Construed Leave a commentTo Read an Analysis of this decision see: New Jersey ski area pushes “indemnification” clause in release too far and gets told by court its release is an adhesion contract.
ANDREA VLADICHAK, Plaintiff-Respondent,
v.
MOUNTAIN CREEK SKI RESORT, INC., Defendant-Appellant,
and MICHAEL LAVIN, Defendant-Respondent.
No. A-1367-20
Superior Court of New Jersey, Appellate Division
April 13, 2022
This opinion shall not “constitute precedent or be binding upon any court .” Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
Argued April 4, 2022
On appeal from the Superior Court of New Jersey, Law Division, Sussex County, Docket No. L-0590-18.
Samuel J. McNulty argued the cause for appellant (Hueston McNulty, PC, attorneys; Samuel J. McNulty, of counsel and on the briefs; Edward J. Turro, on the briefs).
Matthew E. Kennedy argued the cause for respondent Michael Lavin (Leary Bride Mergner & Bongiovanni, PA, attorneys; Matthew E. Kennedy, of counsel and on the brief).
Before Judges Fasciale and Sumners.
PER CURIAM
Defendant Snow Creek, LLC d/b/a Mountain Creek Resort, Inc. (Mountain Creek) appeals from a November 9, 2020 order denying its motion for summary judgment and granting summary judgment to defendant Michael Lavin (Lavin) dismissing Mountain Creek’s cross-claims for defense costs and contractual indemnification. Judge David J. Weaver (motion judge) concluded in a thorough opinion that the contractual language was ambiguous and therefore Mountain Creek was not entitled to indemnification from Lavin or defense costs incurred to defend plaintiff’s allegations that Mountain Creek itself was negligent. We affirm.
On December 21, 2017, plaintiff sustained personal injuries while skiing at a ski area owned and operated by Mountain Creek in Vernon Township, New Jersey. Plaintiff was struck from behind by Lavin, another skier. Plaintiff filed a complaint alleging Mountain Creek and Lavin were negligent. Plaintiff’s complaint alleged Mountain Creek was independently negligent for failing to provide appropriate warnings to skiers, failing to appropriately designate the difficulty of ski trails, failing to provide skiers with appropriate information about trail conditions, failing to timely remove obvious manmade hazards, and/or otherwise failing to establish adequate procedures to provide a safe skiing environment. The complaint alleged Lavin was negligent for breaching his duty to others to ski in a reasonably safe manner by skiing in a reckless manner and/or intentionally colliding into plaintiff and causing her injuries.
Prior to the incident, Lavin signed an equipment rental agreement (Rental Agreement) and lift ticket agreement (Release Agreement) in which he agreed to defend and indemnify Mountain Creek from any claims related to his own conduct and use of the property’s equipment facilities. On August 7, 2019, Mountain Creek filed an answer and cross-claims seeking defense and indemnification from Lavin based on the executed Rental and Release Agreements. Mountain Creek previously tendered the defense to Lavin on July 16, 2019.
Plaintiff’s counsel served a report from plaintiff’s liability expert, who concluded that Lavin violated the New Jersey Ski Statute, N.J.S.A. 5:13-1 to -12, and the Skier’s Responsibility Code by failing to control his speed and course and by failing to yield to the skiers ahead of him. The expert opined that Lavin’s reckless conduct caused the accident. On March 27, 2020, Judge Stephan C. Hansbury entered an order granting Mountain Creek’s motion for summary judgment dismissing plaintiff’s claims that Mountain Creek was negligent. Lavin and plaintiff settled and filed a stipulation of dismissal with prejudice dated May 29, 2020.
After plaintiff’s settlement with Lavin, Mountain Creek filed its motion seeking reimbursement from Lavin for defending plaintiff’s allegations and indemnification from Lavin.[1] Lavin filed a cross-motion for summary judgment on September 1. That led to the order under review.
The judge concluded that, as a matter of law, the indemnification provisions were ambiguous and thus unenforceable to compel indemnification in favor of Mountain Creek for claims of its own negligence. The motion judge denied Lavin’s cross-motion for summary judgment in part and granted it in part. The motion judge requested the parties submit the detail and extent of defense costs incurred by Mountain Creek for costs incurred for which liability was only vicarious.
Mountain Creek’s attorneys stipulated that there were no fees or costs incurred from defending vicarious liability claims. On December 14, 2020, Judge Robert J. Brennan entered a consent order resolving all remaining issues as to all parties.
Mountain Creek raises the following arguments on appeal:
POINT I
STANDARD OF REVIEW-DE NOVO[.]
POINT II
THE [MOTION JUDGE] CORRECTLY RULED THAT THE TWO AGREEMENTS WERE NOT CONTRACTS OF ADHESION NOR WERE THEY CONTRARY TO PUBLIC POLICY.
POINT III
THE [MOTION JUDGE] ERRED IN FINDING THAT THE LANGUAGE IN THE AGREEMENTS SIGNED BY . . . LAVIN IS AMBIGUOUS AND INSUFFICIENT TO COMPEL . . . LAVIN TO INDEMNIFY AND DEFEND MOUNTAIN CREEK FOR CLAIMS OF ITS OWN NEGLIGENCE.
A. Special Status Of A Ski Operator.
B. The Two Agreements Were Unambiguous And Should Be Enforced.[2]
Mountain Creek raises the following points in reply, which we have renumbered:
POINT IV
. . . LAVIN’S REQUEST THAT THE APPELLATE DIVISION REVERSE THE [MOTION JUDGE]’S JUDGMENT THAT THE CONTRACTS WERE NOT UNCONSCIONABLE SHOULD BE REJECTED AS NO CROSS-APPEAL WAS FILED.
POINT V
THE AGREEMENTS IN QUESTION ARE ENFORCEABLE AND NOT UNCONSCIONABLE CONTRACTS OF ADHESION.
POINT VI
THE INDEMNIFICATION LANGUAGE IS SUFFICIENT AND EXPRESSLY PROVIDES FOR INDEMNIFICATION FOR CLAIMS ASSERTING MOUNTAIN CREEK’S OWN NEGLIGENCE.
We review the motion judge’s grant of a motion for summary judgment de novo. Branch v. Cream-O-Land Dairy, 244 N.J. 567, 582 (2021). We apply the same standard as the motion judge and consider “whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party.” Brill v. Guardian Life
Ins. Co. of Am., 142 N.J. 520, 540 (1995).
I.
Mountain Creek contends the motion judge erred in ruling the indemnification provisions in the Release and Rental Agreements were ambiguous and unenforceable to compel Lavin to indemnify Mountain Creek for Mountain Creek’s own negligence. Mountain Creek also contends that it should be permitted to obtain indemnification from Lavin based on its special status as a ski area operator under the Ski Statute.
The judge’s role “in construing a contractual indemnity provision is the same as in construing any other part of a contract-it is to determine the intent of the parties.” Kieffer v. Best Buy, 205 N.J. 213, 223 (2011). Generally, courts give contractual provisions “their plain and ordinary meaning.” Ibid. (quoting M.J. Paquet, Inc. v. N.J. Dep’t of Transp., 171 N.J. 378, 396 (2002)). “However, indemnity provisions differ from provisions in a typical contract in one important aspect. If the meaning of an indemnity provision is ambiguous, the provision is ‘strictly construed against the indemnitee.'” Ibid. (quoting Mantilla v. NC Mall Assocs., 167 N.J. 262, 272 (2001)).
We have characterized this approach as a “bright line” rule requiring “explicit language” when “indemnification includes the negligence of the indemnitee.” Azurak v. Corp. Prop. Invs., 347 N.J.Super. 516, 523 (App. Div. 2002). Azurak involved a contract between a janitorial company (PBS) and a shopping mall owner (the Mall) that contained the following provision:
Contractor [PBS] shall indemnify, defend and hold harmless each Indemnitee [the Mall] from and against any claim (including any claim brought by employees of Contractor), liability, damage or expense (including attorneys’ fees) that such Indemnitee may incur relating to, arising out of or existing by reason of (i) Contractor’s performance of this Agreement or the conditions created thereby (including the use, misuse or failure of any equipment used by Contractor or its subcontractors, servants or employees) or (ii) Contractor’s breach of this Agreement or the inadequate or improper performance of this Agreement by Contractor or its subcontractors, servants or employees.
[Azurak v. Corp. Prop. Invs., 175 N.J. 110, 111 (2003) (alterations in original).]
The plaintiff sued the Mall and PBS for injuries she sustained when she slipped on the Mall’s floor. Ibid. The trial judge granted the Mall’s summary judgment motion on the issue of indemnification based on the contract provision. Ibid. At trial, the jury determined “that plaintiff was 30% negligent; the Mall, 30%; and PBS, 40%.” Ibid. This court disagreed with the trial judge, finding that the indemnification provision did not encompass the Mall’s negligence because the provision’s language was neither explicit nor unequivocal as to claims of the Mall’s own negligence. Id. at 111-12. Our Court affirmed and held that “in order to allay even the slightest doubt on the issue of what is required to bring a negligent indemnitee within an indemnification agreement, we reiterate that the agreement must specifically reference the negligence or fault of the indemnitee.” Id. at 112-13.
Mountain Creek’s Release Agreement contained a provision that states:
INDEMNIFICATION. To the fullest extent permitted by law, I agree to DEFEND, INDEMNIFY AND HOLD HARMLESS Mountain Creek from any and all claims, suits, costs and expenses including attorneys’ fees asserted against Mountain Creek by me or third parties arising or allegedly arising out of or resulting from my conduct while utilizing Mountain Creek’s facilities WHETHER OR NOT MOUNTAIN CREEK’S NEGLIGENCE contributed thereto in whole or in part.
One provision of the Rental Agreement states:
To the fullest extent permitted by law, I also agree to DEFEND, INDEMNIFY AND HOLD HARMLESS Mountain Creek from any and all claims, suits, costs and expenses including attorneys’ fees for personal injury, death or property damage against it by me or third parties arising or allegedly arising out of or resulting from my conduct while utilizing Mountain Creek’s facilities or the use of this equipment whether or not MOUNTAIN CREEK’S NEGLIGENCE contributed thereto in whole or in part.
We agree with the motion judge that the indemnity provisions in the agreements are ambiguous as to claims of Mountain Creek’s independent negligence. Although the provisions reference Mountain Creek’s negligence in bold and capitalized letters, the language “arising out of or resulting from my conduct . . . whether or not MOUNTAIN CREEK’S NEGLIGENCE contributed thereto in whole or in part” is insufficient to meet the Azurak standard. One could reasonably interpret the provisions to require indemnification and defense of Mountain Creek for any claims of negligence against it caused by Lavin’s conduct even when Mountain Creek is partially at fault or to require Lavin to indemnify and defend Mountain Creek for separate claims of its own negligence. See Nester v. O’Donnell, 301 N.J.Super. 198, 210 (App. Div. 1997) (noting that a contract is ambiguous if it is “susceptible to at least two reasonable alternative interpretations” (quoting Kaufman v. Provident Life & Cas. Ins. Co., 828 F.Supp. 275, 283 (D.N.J. 1992), aff’d, 993 F.2d 877 (3d Cir. 1993))).
An indemnitor may expect to indemnify and defend an indemnitee for claims caused by its negligent conduct when the indemnitee may also be at fault but may not expect to be solely responsible to indemnify and defend the indemnitee when the indemnitee has committed separate acts of negligence. That is the case here, as plaintiff’s complaint alleged Mountain Creek was separately negligent for failing to provide adequate instructions to skiers and a safe ski environment. A better-and likely enforceable-provision would explicitly state that the indemnitor indemnifies Mountain Creek for claims arising out of indemnitor’s conduct and for claims of Mountain Creek’s independent negligence.
The provisions at issue do not meet the bright line rule requiring “unequivocal terms” that the duty to indemnify extends to the indemnitee’s own negligence. Thus, the provisions are ambiguous and must be strictly construed against Mountain Creek. The same reasoning and standards apply with equal force to Mountain Creek’s defense costs. The provisions’ ambiguity precludes their enforcement against Lavin for recovery of the costs incurred by Mountain Creek for defending its own negligence claims.
We also conclude Mountain Creek’s argument that the Ski Statute supports enforcement of the indemnification provisions is without merit. While the Ski Act may emphasize the inherent risk that skiers assume when skiing, the Act provides separate duties to the ski operator, which include establishing and posting a system for identifying slopes and their difficulty, ensuring the availability of information to skiers, and removing hazards as soon as practicable. N.J.S.A. 5:13-3(a). The allegations in plaintiff’s complaint, which include failing to provide adequate signage and failing to instruct skiers properly, do not fall under the risks that “are essentially impractical or impossible for the ski area operator to eliminate” defined in the statute. N.J.S.A. 5:13-1(b). In fact, plaintiff’s complaint addressed the responsibilities of a ski area operator as prescribed by the Act. Requiring indemnification in favor of a ski resort for claims of its own independent negligence does not further the Ski Act’s purpose of allocating the inherent risk of skiing between the skier and ski resort. Moreover, the public policy of the Ski Act has no bearing on our interpretation of the indemnity provisions and our conclusion that the provisions are ambiguous.
II.
Lavin argues, on an alternative basis, that the Rental and Release Agreements are unconscionable contracts of adhesion. Lavin was not required to file a Notice of Cross-Appeal to preserve this argument for appeal because “appeals are taken from judgments, not opinions, and, without having filed a cross-appeal, a respondent can argue any point on the appeal to sustain the trial [judge’s] judgment.” Chimes v. Oritani Motor Hotel, Inc., 195 N.J.Super. 435, 443 (App. Div. 1984). Even if Lavin were required to file a cross-appeal, we will address the merits of his argument.
As a threshold issue, we determine that the Release and Rental Agreements were contracts of adhesion. If a contract is characterized as a contract of adhesion, “nonenforcement of its terms may be justified on other than such traditional grounds as fraud, duress, mistake, or illegality.” Rudbart v. N. Jersey Dist. Water Supply Comm’n, 127 N.J. 344, 353 (1992). An adhesion contract is one that “is presented on a take-it-or-leave-it basis, commonly in a standardized printed form, without opportunity for the ‘adhering’ party to negotiate except perhaps on a few particulars.” Vitale v. Schering-Plough Corp., 231 N.J. 234, 246 (2017) (quoting Rudbart, 127 N.J. at 355). “Although a contract of adhesion is not per se unenforceable, a [judge] may decline to enforce it if it is found to be unconscionable.” Ibid.
We agree with the motion judge that “the Agreements at issue evidence characteristics of contracts of adhesion.” The Release and Rental Agreements were standardized form contracts that fit our Court’s definition as “take-it-or-leave-it” adhesion contracts. See ibid. All potential skiers at Mountain Creek’s resort are obligated to sign the Release Agreement, and there is little to no negotiating done before the agreements’ execution. However, an agreement found to be an adhesion contract may nevertheless be enforced if it is not unconscionable. See ibid.
When determining whether an adhesion contract is unconscionable, we evaluate four factors that “focus on procedural and substantive aspects of the contract to determine whether the contract is so oppressive, or inconsistent with the vindication of public policy, that it would be unconscionable to permit its enforcement.” Id. at 247 (internal quotation marks omitted) (quoting Rodriguez v. Raymours Furniture Co., Inc., 225 N.J. 343, 367 (2016)). Those factors include “the subject matter of the contract, the parties’ relative bargaining positions, the degree of economic compulsion motivating the ‘adhering’ party, and the public interests affected by the contract.” Rudbart, 127 N.J. at 356. The first three factors speak to procedural unconscionability, and the last factor speaks to substantive unconscionability. See Rodriguez, 225 N.J. at 367. We consider these factors using a “sliding scale analysis.” Stelluti v. Casapenn Enters., LLC, 203 N.J. 286, 301 (2010).
The motion judge correctly relied on Stelluti in determining the agreements are not procedurally unconscionable. In Stelluti, the plaintiff was injured in a spinning class at a private fitness center and argued that the pre-injury waiver of liability she signed was unenforceable on unconscionability grounds. Id. at 291, 300. The Court found that although the pre-printed form was an adhesion contract, it was not procedurally unconscionable. Id. at 301-02. The Court reasoned the plaintiff was not in a position of unequal bargaining power, despite being a layperson and not being fully informed of the legal effect of an adhesion contract, when she had the ability to take “her business to another fitness club,” to find a form of exercise different than joining a private gym, or to contemplate the agreement for some time before joining the gym and using its equipment. Id. at 302.
Under the Court’s reasoning in Stelluti and applying the four-factor test, the Release and Rental Agreements are not procedurally unconscionable. At the time of the incident, Lavin was twenty years old and a layperson without specialized knowledge of the law. He maintains he did not read the agreements before signing them despite having the opportunity to do so. Lavin also stated that he did not have the opportunity to negotiate the terms of the agreement. However, Lavin was engaging in a recreational activity like the adhering party in Stelluti, and he was under no economic duress or obligation to consent to the agreements. Lavin could have chosen to take his business to another ski resort, rented skis from a different facility, or could have simply read the agreements or contemplated them before signing.
As for the remaining factor-the impact on public interest-Mountain Creek points to the “strong public policy of protecting ski operators and allocating the risks and costs of inherently dangerous recreational activities” under the Ski Statute. The Act’s purpose
is to make explicit a policy of this State which clearly defines the responsibility of ski area operators and skiers, recognizing that the sport of skiing and other ski area activities involve risks which must be borne by those who engage in such activities and which are essentially impractical or impossible for the ski area operator to eliminate. It is, therefore, the purpose of this act to state those risks which the skier voluntarily assumes for which there can be no recovery.
We agree that the Agreements are not substantively unconscionable. The agreements do not contain terms that are so “harsh” or “one-sided” to render them unconscionable and unenforceable. See Muhammad v. Cnty. Bank of
Rehoboth Beach, Del., 189 N.J. 1, 15 (2006). Construing the indemnity provision against Mountain Creek due to its ambiguity, the provision requires that Lavin indemnify and defend Mountain Creek for claims arising out of Lavin’s conduct while using Mountain Creek’s equipment and facilities, even when Mountain Creek is partially at fault. This indemnification scheme is consistent with the Ski Act’s purpose to promote “the allocation of the risks and costs of skiing” as “an important matter of public policy.” N.J.S.A. 5:13-1(a). Moreover, in Stelluti, the Court considered that “some activities involve a risk of injury and thus require risk sharing between the participants and operators” and that our Legislature has enacted statutes to address the allocation of risk in those circumstances. 203 N.J. at 308. It would not be against public policy to require indemnification of Mountain Creek by Lavin for claims of vicarious liability due to Lavin’s reckless conduct; however, Mountain Creek stipulated that it did not incur any costs in defending claims of vicarious liability.
Affirmed.
———
Notes:
[1] Mountain Creek did not contribute towards plaintiff’s settlement with Lavin.
[2] To comport with our style conventions, we altered the capitalization of Mountain Creek’s Points A and B but omitted the alterations for readability.
———.
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New Jersey Ski Statute, (N.J.S.A.)
Posted: January 22, 2024 Filed under: New Jersey, Skiing / Snow Boarding | Tags: New Jersey Ski Statute, NJSA, skiing Leave a commentNew Jersey Ski Statute, (N.J.S.A.)
5:13-1. Legislative findings; purpose of law 1
5:13-3. Responsibility of operator 2
5:13-5. Assumption of risk of skier 4
5:13-6. Application of law on comparative negligence 4
5:13-7. Report of injury; precondition to suit; limitation on time 4
5:13-8. Limitation of action 5
5:13-9. Minors; tolling of limitations 5
5:13-10. Provisions of act cumulative with defenses under Tort Claims Act 5
5:13-12. Helmet required for downhill skiers, snowboarders; violations, penalties 5
34:4A-4. Rules, regulations and codes; publication; furnishing to registered operators 7
34:4A-7. Inspection by commissioner or certification of compliance by qualified inspector 8
34:4A-9. Operator aggrieved by order; application for review; hearing; decision; appeal 9
34:4A-10. Illegal operation; penalty 10
34:4A-11. Failure of operator to comply with order; order for cessation of operation 10
34:4A-12. Injunctions to compel compliance 10
34:4A-14. Violations; penalty 11
5:13-1. Legislative findings; purpose of law
a. The Legislature finds that the sport of skiing is practiced by a large number of citizens of this State and also attracts to this State large numbers of nonresidents, significantly contributing to the economy of this State and, therefore, the allocation of the risks and costs of skiing are an important matter of public policy.
b. The purpose of this law is to make explicit a policy of this State which clearly defines the responsibility of ski area operators and skiers, recognizing that the sport of skiing and other ski area activities involve risks which must be borne by those who engage in such activities and which are essentially impractical or impossible for the ski area operator to eliminate. It is, therefore, the purpose of this act to state those risks which the skier voluntarily assumes for which there can be no recovery.
History:
L.1979, c.29, s.1, eff. 2/22/1979.
5:13-1 Legislative findings; purpose of law (New Jersey Statutes (2023 Edition))
5:13-2. Definitions
As used in this act
a. “Operator” means a person or entity who owns, manages, controls or directs the operation of an area where individuals come to ski, whether alpine, touring or otherwise, or operate skimobiles, toboggans, sleds or similar vehicles and pay money or tender other valuable consideration for the privilege of participating in said activities, and includes an agency of this State, political subdivisions thereof or instrumentality of said entities, or any individual or entity acting on behalf of an operator for all or part of such activities.
b. “Ski area” includes all of the real and personal property, under the control of the operator or on the premises of the operator which are being occupied, by license, lease, fee simple or otherwise, including but not limited to all passenger tramways, designated trails, slopes and other areas utilized for skiing, operating toboggans, sleds, or similar vehicles during the skiing season.
c. “Skier” means a person utilizing the ski area for recreational purposes such as skiing or operating toboggans, sleds or similar vehicles, and including anyone accompanying the person. Skier also includes any person in such ski area who is an invitee, whether or not said person pays consideration.
d. “Slopes and trails” means those areas designated as such by the operator.
History:
L.1979, c.29, s.2, eff. 2/22/1979.
5:13-2 Definitions (New Jersey Statutes (2023 Edition))
5:13-3. Responsibility of operator
a. It shall be the responsibility of the operator to the extent practicable, to:
(1) Establish and post a system generally identifying slopes and trails and designating relative degrees of difficulty thereof; and to make generally available to skiers information in the form of trail maps or trail reports.
(2) Make generally available either by oral or written report or otherwise, information concerning the daily conditions of the slopes and trails.
(3) Remove as soon as practicable obvious, man-made hazards.
b. No operator shall be responsible to any skier or other person because of its failure to comply with any provisions of subsection 3.a. if such failure was caused by:
(1) Abrupt changes in weather conditions;
(2) Hazards normally associated with the varying conditions of snow or undercover, including skier use; or
(3) Subject to the provisions of subsection 3.a.(3), the location of man-made facilities and equipment necessary for the ordinary operation of the ski area, such as transportation or grooming vehicles, which are marked by flashing lights or other suitable sight or sound devices towers, fencing of any type, racing poles, or any other object or piece of equipment utilized in connection with the maintenance of trails, buildings or other facilities used in connection with skiing.
c. Grooming shall be at the discretion of the operator.
d. No operator shall be liable to any skier unless said operator has knowledge of the failure to comply with the duty imposed by this section or unless said operator should have reasonably known of such condition and having such knowledge has had a reasonable time in which to correct any condition or comply with any duty set forth in this section.
e. Nothing contained in this act shall be construed as limiting or otherwise affecting the liability and responsibilities of a ski area operator under the “Ski Lift Safety Act” (P.L. 1975, c. 226, C. 34:4A-1 et seq.), or shall prevent the maintenance of an action against a ski area operator for negligent construction, maintenance or operation of a passenger tramway.
History:
L.1979, c.29, s.3, eff. 2/22/1979.
5:13-3 Responsibility of operator (New Jersey Statutes (2023 Edition))
5:13-4. Duties of skiers
a. Skiers shall conduct themselves within the limits of their individual ability and shall not act in a manner that may contribute to the injury of themselves or any other person.
b. No skier shall:
(1) Board or dismount from a ski lift except at a designated area;
(2) Throw or expel any object from any tramway, ski lift, commercial skimobile, or other similar device while riding on the device;
(3) Act in any manner contrary to posted rules while riding on a rope tow, wire rope tow, j-bar, t-bar, ski lift, or similar device that may interfere with the proper or safe operation of the lift or tow;
(4) Knowingly engage in any act or activity by his skiing or frolicking which injures other skiers while such other skiers are either descending any trail, or standing or congregating in a reasonable manner, and due diligence shall be exercised in order to avoid hitting, colliding with or injuring any other skier or invitee.
(5) Knowingly engage in any type of conduct which may injure any person, or place any object in the uphill ski track which may cause another to fall, while traveling uphill on a ski lift;
(6) Cross the uphill track of a j-bar, t-bar, rope tow, wire rope tow, or other similar device except at designated locations.
c. Every skier shall maintain control of his speed and course at all times, and shall stay clear of any snow grooming equipment, any vehicle, any lift tower, and any other equipment on the mountain.
d. A skier shall be the sole judge of his ability to negotiate any trail, slope, or uphill track and shall not attempt to ski or otherwise traverse any trail, slope or other area which is beyond the skier’s ability to negotiate.
e. No skier shall board a rope tow, wire rope tow, j-bar, t-bar, ski lift, or other similar device unless he has sufficient knowledge and ability to use the lift. If the skier does not have such knowledge or ability, he shall ask for and receive, or follow any posted, written or oral instructions prior to using such device.
f. No person shall ski on other than designated trails or slopes.
g. No person on foot or on any type of sliding device shall knowingly operate said device so as to cause injury to himself or others, whether such injury results from a collision with another person or with an object.
h. A person embarking on a lift or tow without authority, or failing to pay appropriate consideration for its use shall be considered to be a trespasser.
History:
L.1979, c.29, s.4, eff. 2/22/1979.
5:13-4 Duties of skiers (New Jersey Statutes (2023 Edition))
5:13-5. Assumption of risk of skier
A skier is deemed to have knowledge of and to assume the inherent risks of skiing, operating toboggans, sleds or similar vehicles created by weather conditions, conditions of snow, trails, slopes, other skiers, and all other inherent conditions. Each skier is assumed to know the range of his ability, and it shall be the duty of each skier to conduct himself within the limits of such ability, to maintain control of his speed and course at all times while skiing, to heed all posted warnings and to refrain from acting to a manner which may cause or contribute to the injury of himself or others.
History:
L.1979, c.29, s.5, eff. 2/22/1979.
5:13-5 Assumption of risk of skier (New Jersey Statutes (2023 Edition))
5:13-6. Application of law on comparative negligence
The assumption of risk set forth in section 5 shall be a complete bar of suit and shall serve as a complete defense to a suit against an operator by a skier for injuries resulting from the assumed risks, notwithstanding the provisions of P.L. 1973, c. 146 (C. 2A:15-5.1 et seq.), relating to comparative negligence, unless an operator has violated his duties or responsibilities under this act, in which case the provisions of P.L. 1973, c. 146 shall apply. Failure to adhere to the duties set out in sections 4 and 5 shall bar suit against an operator to compensate for injuries resulting from skiing activities, where such failure is found to be a contributory factor in the resulting injury, unless the operator has violated his duties or responsibilities under the act, in which case the provisions of P.L. 1973, c. 146 shall apply.
History:
L.1979, c.29, s.6, eff. 2/22/1979.
5:13-6 Application of law on comparative negligence (New Jersey Statutes (2023 Edition))
5:13-7. Report of injury; precondition to suit; limitation on time
As a precondition to bringing any suit in connection with a skiing injury against an operator, a skier shall report in writing to the ski area operator all the details of any accident as soon as possible, but in no event longer than 90 days from the time of the incident giving rise to the suit.
The report shall include at least the following: name, address, brief description of incident, location, alleged cause, others involved and witnesses, if any. If it is not practicable to give the report because of severe physical disability resulting from a skiing accident or incident, the report shall be given as soon as practicable. This section is not applicable with respect to a ski area unless the operator conspicuously posts notice to skiers of the requirements of the section.
A skier who fails to give the report within 90 days from the time of the accident or incident may be permitted to give the report at any time within 1 year after the accident or incident, in the discretion of a judge of the superior court, if the ski area operator is not substantially prejudiced thereby. Application to the court for permission to give a late report shall be made upon motion based upon affidavits showing sufficient reasons for the skier’s failure to give the report within 90 days from the time of the accident or incident.
History:
L.1979, c.29, s.7, eff. 2/22/1979.
5:13-7 Report of injury; precondition to suit; limitation on time (New Jersey Statutes (2023 Edition))
5:13-8. Limitation of action
Sections 2, 3, 4 and 5, and any other law notwithstanding, an action for injury or death against a ski area operator, ski area or its employees or owner, whether based upon tort or breach of contract or otherwise arising out of skiing, operating toboggans, sleds or similar vehicles shall be commenced no later than 2 years after the occurrence of the incident or earliest of incidents giving rise to the cause of action.
History:
L.1979, c.29, s.8, eff. 2/22/1979.
5:13-8 Limitation of action (New Jersey Statutes (2023 Edition))
5:13-9. Minors; tolling of limitations
If a skiing accident or incident, or an action based upon a skiing accident or incident, involves a minor, the time limits set forth in sections 7 and 8 shall not begin to run against the minor until he reaches the age of majority.
History:
L.1979, c.29, s.9, eff. 2/22/1979.
5:13-9 Minors; tolling of limitations (New Jersey Statutes (2023 Edition))
5:13-10. Provisions of act cumulative with defenses under Tort Claims Act
The provisions of this act are cumulative with the defenses available to a public entity or public employee under the New Jersey Tort Claims Act (P.L. 1972, c. 45, C. 59:1-1 et seq.).
History:
L.1979, c.29, s.10, eff. 2/22/1979.
5:13-10 Provisions of act cumulative with defenses under Tort Claims Act (New Jersey Statutes (2023 Edition))
5:13-11. Severability
The provisions of this act shall be deemed to be severable, and if any phrase, clause, sentence or provision of this act is declared to be unconstitutional or the applicability thereof to any person is held invalid, the remainder of this act shall not thereby be deemed to be unconstitutional or invalid.
History:
L.1979, c.29, s.11, eff. 2/22/1979.
5:13-11 Severability (New Jersey Statutes (2023 Edition)) 5:13-12.
5:13-12. Helmet required for downhill skiers, snowboarders; violations, penalties
a. A person under 18 years of age engaged in the activity of downhill skiing or operation of snowboards, including the use of ski tows, lifts and tramways, shall wear a securely fitted protective helmet. As used in this act, “helmet” means a type of molded headgear equipped with a neck or chin strap specifically designed by the manufacturer to be used while engaged in the activity of recreational downhill skiing.
b. The parent, legal guardian, or adult acting in a supervising position of a person under 18 years of age shall ensure that the person wears a protective helmet as required by subsection a. of this section. A parent, legal guardian or adult acting in a supervising position who does not comply with this requirement shall be fined a maximum of $25 for the person’s first offense and a maximum of $100 for a subsequent offense. Local law enforcement agencies shall have exclusive authority to enforce this section and the penalty imposed shall be collected and enforced by summary proceedings under the “Penalty Enforcement Law of 1999,” P.L. 1999, c. 274(C.2A:58-10 et seq.).
c. Nothing in this act shall be construed to extend liability to the ski area operator.
History:
Added by L. 2011, c. 41,s. 1, eff. 11/1/2011.
5:13-12 Helmet required for downhill skiers, snowboarders; violations, penalties (New Jersey Statutes (2023 Edition))
New Jersey Ski Lift Safety Act
34:4A-1. Short title
This act shall be known and may be cited as the ‘Ski Lift Safety Act.’
History:
L.1975, c.226, s.1, eff. 10/15/1975.” 34:4A-1 Short title (New Jersey Statutes (2023 Edition))
34:4A-2. Public policy
It shall be the policy of the State of New Jersey to protect its citizens and visitors from unnecessary mechanical hazards in the operation of ski tows, lifts and tramways, to ensure that proper design and construction are used, that accepted safety devices and sufficient personnel are provided for, and that periodic inspections and adjustments are made which are deemed essential to the safe operation of ski tows, ski lifts and tramways. The primary responsibility for design, construction, maintenance and inspection rests with the operators of such passenger tramway devices. The State, through the Department of Labor and Industry, as hereinafter provided, shall register all ski lift devices, establish reasonable standards of design and operational practices and make such independent inspections as may be necessary in carrying out this policy.
History:
L.1975, c.226, s.2, eff. 10/15/1975.
34:4A-2 Public policy (New Jersey Statutes (2023 Edition))
34:4A-3. Definitions
As used in this act, except where otherwise clearly required by the context,
a. “Passenger tramway” means a device used to transport passengers uphill, on skis or in cars on tracks or suspended in the air, by the use of steel cables, chains or belts or by ropes, and usually supported by trestles or towers with one or more spans, and includes
(1) “aerial passenger tramway,” a device used to transport passengers in two open or enclosed cars attached to and suspended from a moving wire rope, or attached to a moving wire rope and supported on a standing wire rope, or similar devices;
(2) “multicar aerial passenger tramway,” a device used to transport passengers in several open or enclosed cars attached to and suspended from a moving wire rope, or attached to a moving wire rope and supported on a standing wire rope, or similar devices;
(3) “skimobile,” a device in which a passenger car running on steel or wooden tracks is attached to and pulled by a steel cable, or similar devices;
(4) “chairlift,” a type of transportation on which passengers are carried on chairs suspended in the air and attached to a moving cable, chain or link belt supported by trestles or towers with one or more spans, or similar devices;
(5) “J-bar,” “T-bar,” “poma lift” or “platter pull,” so called and similar types of devices, being means of transportation which pull skiers riding on skis by means of an attachment to a main overhead cable supported by trestles or towers with one or more spans;
(6) “rope tow,” a type of transportation which pulls the skiers riding on skis as the skier grasps the rope manually, or similar devices;
b. “Operator” means a person who owns, manages or directs the operation of a passenger tramway, and includes the State or any political subdivision or instrumentality thereof;
c. “Commissioner” means the Commissioner of the Department of Labor and Industry, or any officer or employee of the department assigned by him to carry out any of the functions, duties and powers conferred or imposed upon him by this act.
History:
L.1975, c.226, s.3, eff. 10/15/1975.
34:4A-3 Definitions (New Jersey Statutes (2023 Edition))
34:4A-4. Rules, regulations and codes; publication; furnishing to registered operators
The commissioner may adopt and from time to time supplement, alter or repeal reasonable rules, regulations and codes relating to public safety in the construction, operation and maintenance of passenger tramways. Such rules, regulations and codes shall conform as nearly as practicable to established standards, if any, and shall not be discriminatory in their application to operators of passenger tramways. The procedures regarding such adoption, supplement, alteration or repeal shall conform to the applicable provisions of the “Administrative Procedure Act” (P.L. 1968, c. 410; C. 52:14B-1 et seq.). The commissioner shall cause the text of such rules, regulations and codes and of any changes therein resulting from supplement, alteration or repeal from time to time to be published in pamphlet form and a copy thereof furnished without charge to each registered operator. Rules, regulations or codes adopted by the commissioner shall in no way reduce or diminish the standard of care imposed upon passenger tramway operators under existing law.
History:
L.1975, c.226, s.4, eff. 10/15/1975.
34:4A-4 Rules, regulations and codes; publication; furnishing to registered operators (New Jersey Statutes (2023 Edition))
34:4A-5. Passenger tramway; registration; application; issuance; inspections; supplemental application; expiration; display
a. A passenger tramway shall not be operated in this State unless it has been registered by the commissioner, in the manner provided in this section.
b. On or before October 1 in 1974 and each year thereafter, every operator of a passenger tramway shall apply to the commissioner, on forms supplied by him, for registration of the passenger tramway or tramways which such operator owns or manages or the operation of which he directs. The application shall contain such information as the commissioner may reasonably require in order for him to determine whether the passenger tramways sought to be registered comply with the intent of this act and the rules, regulations and codes adopted pursuant to this act.
c. The commissioner shall issue to the applying operator without delay registration certificates for each passenger tramway for which such registration is sought when he is satisfied.
(1) that the facts in the application are sufficient to enable him to fulfill his duties under this act; and
(2) that each such passenger tramway sought to be registered complies with the rules and regulations adopted pursuant to this act.
d. In order to satisfy himself that the conditions described in paragraphs (1) and (2) of subsection c. of this section have been fulfilled, the commissioner may cause to be made such inspections described in section 7 of this act as he may reasonably deem necessary.
e. When an operator installs a passenger tramway subsequent to October 1 of any year, such operator shall file a supplemental application for registration of such passenger tramway. Upon receipt of such supplemental application the commissioner shall proceed immediately to initiate proceedings leading to the registration or rejection of registration of such passenger tramway pursuant to the provisions of this act.
f. Each registration shall expire on September 30 next following the day of issue.
g. Each operator shall cause the registration certificate for each passenger tramway thus registered to be displayed prominently at the place where passengers are loaded thereon.
History:
L.1975, c.226, s.5, eff. 10/15/1975.
34:4A-5 Passenger tramway; registration; application; issuance; inspections; supplemental application; expiration; display (New Jersey Statutes (2023 Edition))
34:4A-6. Construction of new or alteration of passenger tramway; submission of plans and specifications
Before constructing a new or altering an existing passenger tramway the operator or prospective operator shall submit plans and specifications to the commissioner. The commissioner may make recommendations relative to the safety of the layout and equipment, but such recommendations shall not relieve the operator or prospective operator of his primary responsibility as set forth in section 2 of this act.
History:
L.1975, c.226, s.6, eff. 10/15/1975.
34:4A-6 Construction of new or alteration of passenger tramway; submission of plans and specifications (New Jersey Statutes (2023 Edition))
34:4A-7. Inspection by commissioner or certification of compliance by qualified inspector
The commissioner may cause to be made such inspection of the construction, operation and maintenance of passenger tramways as he may reasonably require for the purpose of assuring compliance with the codes, rules and regulations adopted pursuant to this act. Certification of compliance by a qualified inspector who has been approved by the commissioner may be accepted instead of other inspection. In any legal proceedings, a certificate of compliance issued pursuant to this section shall be competent evidence only for the purpose of establishing the fact of issuance of said certificate, and for no other purpose.
History:
L.1975, c.226, s.7, eff. 10/15/1975.
34:4A-7 Inspection by commissioner or certification of compliance by qualified inspector (New Jersey Statutes (2023 Edition))
34:4A-8. Violation of rules, regulations or code; report; complaint by any person; forwarding to operator; investigation; order; service; emergency order to stop operation
a. If as a result of an inspection it is found that there exists any violation of the rules, regulations or codes, adopted under this act, or that there exists a condition in passenger tramway construction, operation or maintenance endangering the safety of the public, an immediate report shall be made to the commissioner for appropriate investigation and order.
b. Any person may make written complaint to the commissioner setting forth any thing or act claimed to be done or omitted to be done by any registered operator which is alleged to be in violation of any rule, regulation or code adopted under this act, or setting forth any condition in passenger tramway construction, operation or maintenance which is alleged to endanger the safety of the public. Thereupon the commissioner shall cause a copy of said complaint to be forwarded to the registered operator complained of, which may be accompanied by an order requiring that the matters complained of be answered in writing within a time to be specified by the commissioner. The commissioner may investigate the matter complained of if it shall appear that there are reasonable grounds therefor.
c. If after investigation the commissioner finds that such a violation of rules, regulations or codes exists, or that there is a condition in passenger tramway construction, operation or maintenance endangering the safety of the public, he shall forthwith issue a written order setting forth his findings, the corrective action to be taken, and fixing a reasonable time for compliance therewith. Such order shall be served upon the operator involved by registered mail, and shall become final, unless the operator shall apply to the commissioner for a hearing in the manner provided in this section.
d. When facts are presented to the commissioner tending to show that an unreasonable hazard exists in the continued operation of a tramway, he may, after such verification of the facts as is practical under the circumstances and consistent with the public safety, issue an emergency order requiring the operator of said tramway forthwith to cease using the same for the transportation of passengers. Such emergency order shall be in writing and notice thereof may be served by any person upon the operator or his agent immediately in control of said tramway by a true and attested copy of such order, the return of such service to be shown by an affidavit on the back thereof. Such emergency order shall be effective for a period not to exceed 48 hours from the time of service. Immediately after the issuance of an emergency order hereunder, the commissioner shall conduct an investigation into the facts of the case as contemplated in subsection c. of this section and shall take such action under subsection c. as may be appropriate.
History:
L.1975, c.226, s.8, eff. 10/15/1975.
34:4A-8 Violation of rules, regulations or code; report; complaint by any person; forwarding to operator; investigation; order; service; emergency order to stop operation (New Jersey Statutes (2023 Edition))
34:4A-9. Operator aggrieved by order; application for review; hearing; decision; appeal
a. Any operator who is aggrieved by an order issued pursuant to subsection c. of section 8 of this act may, within 10 days after the service of such order, apply to the commissioner for a review of such order. It shall be the duty of the commissioner to provide such hearing at the earliest convenient day. At such hearing the operator shall have the right to be heard personally or by counsel, to cross-examine witnesses appearing against him and to produce evidence in his own behalf. After such hearing the commissioner shall report his findings in writing and make such order as the facts may require. Such hearing and decision shall conform to the applicable provisions of the “Administrative Procedure Act” (P.L. 1968, c. 410; C. 52:14B-1 et seq.).
b. Any operator aggrieved by a decision of the commissioner after such hearing may, within 45 days after the effective date thereof, appeal therefrom to the Superior Court. No such appeal shall suspend the operation of an order made by the commissioner; but the court may suspend such order pending determination of the appeal whenever in the opinion of the court justice may require such suspension. The Superior Court shall hear the appeal at the earliest convenient day and shall make such decree as justice may require.
History:
L.1975, c.226, s.9, eff. 10/15/1975.
34:4A-9 Operator aggrieved by order; application for review; hearing; decision; appeal (New Jersey Statutes (2023 Edition))
34:4A-10. Illegal operation; penalty
Any operator who operates a passenger tramway which has not been registered by the commissioner as provided in this act, or after its registration has been suspended or its operation forbidden by a lawful order of the commissioner under this act, is a disorderly person and shall be subject to a fine of not more than $50.00 or imprisonment for not more than 10 days, or both; and each day during which such illegal operation of a passenger tramway continues shall constitute a separate offense.
History:
L.1975, c.226, s.10, eff. 10/15/1975.
34:4A-10 Illegal operation; penalty (New Jersey Statutes (2023 Edition))
34:4A-11. Failure of operator to comply with order; order for cessation of operation
If any operator fails to comply with a lawful order issued by the commissioner pursuant to the provisions of this act, the commissioner may order the operator to cease operations for such time as the commissioner considers necessary for the protection of the safety of the public.
History:
L.1975, c.226, s.11, eff. 10/15/1975.
34:4A-11 Failure of operator to comply with order; order for cessation of operation (New Jersey Statutes (2023 Edition))
34:4A-12. Injunctions to compel compliance
The commissioner shall have the power to bring injunctive proceedings in any court of competent jurisdiction to compel compliance with any lawful order made by him pursuant to the provisions of this act.
History:
L.1975, c.226, s.12, eff. 10/15/1975.” 34:4A-12 Injunctions to compel compliance (New Jersey Statutes (2023 Edition))
34:4A-13. Discharge or discrimination against employee due to actions to help enforce this act; penalties
Any operator who discharges or in any other manner discriminates against any employee because such employee has made any complaint to the commissioner regarding a violation of this act or any rule or regulation promulgated hereunder, or because such employee has caused to be instituted or is about to cause to be instituted any proceeding under or related to this act or any rule or regulation promulgated hereunder, or because such employee has testified or is about to testify in any such proceeding, shall be guilty of a misdemeanor and shall, upon conviction therefor, be fined not less than $50.00 nor more than $200.00. Such operator shall be required, as a condition of such judgment of conviction, to offer reinstatement in employment to any such discharged employee and to correct any such discriminatory action, and also to pay to any such employee, in full, all wages lost as a result of such discharge or discriminatory action.
History:
L.1975, c.226, s.13, eff. 10/15/1975.
34:4A-13 Discharge or discrimination against employee due to actions to help enforce this act; penalties (New Jersey Statutes (2023 Edition))
34:4A-14. Violations; penalty
In addition to any other sanctions herein or otherwise provided by law, the commissioner, upon notice and hearing, may impose a penalty not exceeding $500.00 for any violation of this act or of any rule or regulation promulgated hereunder. Unsatisfied penalties shall be recovered by and in the name of the commissioner in a civil action by a summary proceeding under the Penalty Enforcement Law (N.J.S. 2A:58-1). Where any violation of this act or of any rule or regulation promulgated hereunder is of a continuing nature, each day during which such violation continues after the date fixed by the commissioner in any order or notice for the correction or termination of such violation, shall constitute an additional, separate, and distinct offense.
History:
L.1975, c.226, s.14, eff. 10/15/1975.
34:4A-14 Violations; penalty (New Jersey Statutes (2023 Edition))
34:4A-15. Fees
The commissioner shall charge operators a reasonable fee for conducting inspections, processing applications, and meeting all other responsibilities under this act.
History:
L.1975, c.226, s.15, eff. 10/15/1975.” 34:4A-15 Fees (New Jersey Statutes (2023 Edition))
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New Jersey Supreme Court holds the Rescue Doctrine only applies to rescuing people and not property unless rescuing the property saves people.
Posted: April 24, 2023 Filed under: Assumption of the Risk, New Jersey, Search and Rescue (SAR) | Tags: New Jersey, New Jersey Supreme Court, Person in Peril, Rescue Doctrine, Supreme Court of New Jersey Leave a commentFamily sues after wife is injured attempting to rescue neighbor’s dog. Supreme court holds rescuing a dog does not qualify under the rescue doctrine.
State: New Jersey; Supreme Court of New Jersey
Plaintiff: Ann Samolyk and John Samolyk
Defendant: Dorothy Berthe, III, Defendant, and Ilona Destefanis and Robert Destefanis
Plaintiff Claims: Rescue Doctrine
Defendant Defenses:
Holding: For the Defendants
Year: 2022
Summary
The rescue doctrine in New Jersey can only be used to recover for injuries sustained when rescuing a person. Rescuing property, in this case a dog, does not apply.
Facts
This matter arises from injuries sustained by plaintiff Ann Samolyk while trying to rescue a dog owned by defendants Ilona and Robert DeStefanis. Ann’s[1] husband, John Samolyk, filed a civil action against defendants, as Ann’s guardian ad litem, alleging defendants were liable under the rescue doctrine by negligently allowing their dog to fall or jump into the canal that borders their property, prompting Ann to dive into the water to prevent the dog from drowning. The complaint also included a per quod claim by John seeking compensation for any loss or impairment of his spouse’s services, society, and companionship due to injuries Ann sustained as a proximate result of defendants’ negligence.
The parties are neighbors in Forked River, an unincorporated bayfront community within Lacey Township. Their homes are situated on a canal. In the evening of July 13, 2017, defendants’ dog fell or jumped into the canal that snakes around the rear area of this shore community. Ann claimed she heard someone calling for help to rescue their dog that had fallen into the canal.[2] A report filed by a Lacey police officer describes the incident as “a report of a dog swimming in the lagoon.” The report states that Ann “entered the lagoon to rescue the dog.” The dog “was removed from the lagoon,” without any apparent harm, by defendants’ son and a family friend. Regrettably, Ann was found “unconscious on a floating dock.” In response to defendants’ interrogatories, plaintiffs allege Ann sustained neurological and cognitive injuries as a result of the incident.
Analysis: making sense of the law based on these facts.
The basic claim of the plaintiff was
“Plaintiffs’ counsel argued that defendants “invited the rescue because the dog was in peril, . . . [and Ann] would not [have] jump[ed] in the lagoon and [nearly] drown[ed] but for the dog being in there and people screaming about having to rescue the dog.”
The rescue doctrine allows an injured rescuer to recover damages from the person who placed another in peril or placed themselves in peril.
The rescue doctrine established in Wagner was originally limited to situations “where three persons are involved, i.e., one party by his culpable act has placed another person in a position of imminent peril which invites a third person, the rescuing plaintiff, to come to his aid.” New York courts later expanded the rescue doctrine “to encompass a two-party situation where the culpable party has placed himself in a perilous position which invites rescue.”
The New Jersey Supreme Court found the claims of the plaintiff wanted to expand the rescue doctrine to the injuries received from rescuing property.
In this appeal, we are asked to expand the scope of the rescue doctrine to include those who voluntarily choose to expose themselves to significant danger in an effort to safeguard the property of another. We decline to modify the rescue doctrine to incorporate such a far-reaching departure from the fundamental principles embedded in Wagner.
Several states have expanded the rescue doctrine to cover property; however, the NJ Supreme Court declined to extend the doctrine in New Jersey. Unless the property being rescued would result in saving a human life, the rescue doctrine could not be used to recover for injuries of the rescuer.
Against this analytical backdrop, we decline to expand the rescue doctrine to include injuries sustained to protect property, except in settings in which the plaintiff has acted to shield human life.
The court then wrote an example of how the rescue doctrine could be used in a case like this.
Following that line of reasoning, plaintiffs’ cause of action would have survived a motion for summary judgment had she jumped into the canal after defendants’ dog as a simultaneous reaction to seeing a child of tender years running after the animal and quickly approaching the edge of the dock. In that hypothetical situation, Ann’s actions to protect the child from imminent danger by rescuing the dog may have been reasonable and could therefore have served as the basis for a cognizable cause of action under the rescue doctrine.
Here the sole cause of the plaintiff’s injuries came from her desire to rescue property, a dog.
By contrast, the uncontested evidence here shows that Ann’s actions were based solely on her perception of danger to the dog’s life. These nuanced distinctions are intended to acknowledge and reaffirm the public policy underpinning the rescue doctrine in our state, to wit, the protection of human life. Thus, plaintiffs’ complaint was properly dismissed because Ann’s decision to jump into the canal to save the dog’s life does not give rise to a cognizable claim under the rescue doctrine.
So Now What?
The rescue doctrine started out, as stated above that someone who rescued someone who had been placed in peril by another could recover for their injuries from the party at fault, the party that placed the person in peril.
The doctrine has expanded from what once was an attempt to punish those who created problems and reward those who solved the problem to providing money to someone who tried to help.
The rescue doctrine does not apply to commercial guides and outfitters because they have a higher duty to keep their customers safe and as such, no matter how the person came to be in peril; it is the fault of the outfitter or guide and their responsibility to rescue them.
The rescue doctrine is interpreted differently in every state, so make sure you understand it before you attempt to recover for your injuries.
Other cases that talk about the Rescue Doctrine see:
Great analysis of the “Rescue Doctrine” in a ballooning case from South Dakota http://rec-law.us/1HCQ0Px
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Jim Moss is an attorney specializing in the legal issues of the outdoor recreation community. He represents guides, guide services, outfitters both as businesses and individuals and the products they use for their business. He has defended Mt. Everest guide services, summer camps, climbing rope manufacturers; avalanche beacon manufactures and many more manufacturers and outdoor industries. Contact Jim at Jim@Rec-Law.us |
Jim is the author or co-author of six books about the legal issues in the outdoor recreation world; the latest is Outdoor Recreation Insurance, Risk Management and Law.
To see Jim’s complete bio go here and to see his CV you can find it here.
Copyright 2022 Recreation Law (720) 334 8529
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Author: Outdoor Recreation Insurance, Risk Management and Law
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By Recreation Law Rec-law@recreation-law.com James H. Moss
@2023 Summit Magic Publishing, LLC
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Samolyk v. Berthe (N.J. 2022)
Posted: April 24, 2023 Filed under: Assumption of the Risk, New Jersey, Search and Rescue (SAR), Uncategorized | Tags: New Jersey, New Jersey Supreme Court, Person in Peril, Rescue, Rescue Doctrine, Supreme Court Leave a commentAnn Samolyk and John Samolyk, Plaintiffs-Appellants,
v.
Dorothy Berthe, III, Defendant,
and Ilona Destefanis and Robert Destefanis, Defendants-Respondents.
No. A-16-21
Supreme Court of New Jersey
June 13, 2022
Argued February 1, 2022
On certification to the Superior Court, Appellate Division.
William D. Wright argued the cause for appellants (The Wright Law Firm, attorneys; William D. Wright and David T. Wright, on the briefs).
John Burke argued the cause for respondents (Burke & Potenza, attorneys; John Burke, of counsel and on the brief).
FUENTES, P.J.A.D. (temporarily assigned), writing for a unanimous Court.
In this appeal, the Court considers whether to expand the common law rescue doctrine to permit plaintiffs to recover damages for injuries sustained as a proximate result of attempting to rescue defendants’ dog.
Plaintiff Ann Samolyk sustained neurological and cognitive injuries when she entered a lagoon in Forked River to rescue her neighbors’ dog, which had fallen or jumped into the water. Samolyk’s husband filed a civil action against defendants, alleging they were liable under the rescue doctrine by negligently allowing their dog to fall or jump into the water, prompting Samolyk to attempt to save the dog.
Neither the Law Division nor the Appellate Division found the doctrine applicable. The Court granted certification. 248 N.J. 518 (2021).
HELD: After reviewing the noble principles that infuse the public policy underpinning this cause of action, the Court declines to consider property, in whatever form, to be equally entitled to the unique value and protection bestowed on a human life. The Court nevertheless expands the rescue doctrine to include acts that appear to be intended to protect property but are in fact reasonable measures ultimately intended to protect a human life.
1. Under the rescue doctrine, “[t]he state that leaves an opening in a bridge is liable to the child that falls into the stream, but liable also to the parent who plunges to its aid.” Wagner v. Int’l Ry. Co., 133 N.E. 437, 437-38 (N.Y. 1921). The doctrine has also been held to provide a source of recovery to one who is injured while undertaking the rescue of another who has negligently placed himself in peril. Thus, an actor is liable for harm sustained by a rescuer where the conduct of the actor has created a danger only to himself, if at the time of such conduct he should reasonably anticipate that others might attempt to rescue him from his self-created peril, and sustain harm in doing so. The Restatement (Second) of Torts and a majority of states have extended the rescue doctrine to efforts to save property. (pp. 6-11)
2. The Court declines to expand the rescue doctrine to include injuries sustained to protect property, except in settings in which the plaintiff has acted to shield human life. Notwithstanding the strong emotional attachment people may have to dogs, cats, and other domesticated animals, or the great significance some may attribute to family heirlooms, or works of art generally considered as irreplaceable parts of our cultural history, sound public policy cannot sanction expanding the rescue doctrine to imbue property with the same status and dignity uniquely conferred upon a human life. The risk protected by the rescue doctrine is calibrated only by the reasonableness of the actions taken by the rescuer because all human life is equally precious. The same calculation, considering the necessarily subjective attachments to property, would prove untenable. (p. 12)
3. The Court explains that certain preemptive acts that appear to be driven by the protection of property are, at their core, adjuncts to the protection of human life and thus may give rise to a cause of action under the rescue doctrine. By contrast, the uncontested evidence here shows that Samolyk’s actions were based solely on her perception of danger to the dog’s life. The complaint was properly dismissed because the decision to jump into the canal to save the dog’s life does not give rise to a cognizable claim under the rescue doctrine. (pp. 13-14)
AFFIRMED.
CHIEF JUSTICE RABNER and JUSTICES ALBIN, PATTERSON, SOLOMON, and PIERRE-LOUIS join in JUDGE FUENTES’s opinion.
OPINION
FUENTES JUDGE (temporarily assigned).
This appeal requires this Court to determine whether to expand the common law rescue doctrine to permit plaintiffs to recover damages for injuries sustained as a proximate result of attempting to rescue defendants’ dog. After reviewing the noble principles that infuse the public policy underpinning this cause of action, we decline to consider property, in whatever form, to be equally entitled to the unique value and protection we bestow on a human life. We nevertheless expand the cognizable scope of the rescue doctrine to include acts that facially appear to be intended to protect property, but are in fact reasonable measures ultimately intended to protect a human life.
I.
This matter arises from injuries sustained by plaintiff Ann Samolyk while trying to rescue a dog owned by defendants Ilona and Robert DeStefanis. Ann’s[1] husband, John Samolyk, filed a civil action against defendants, as Ann’s guardian ad litem, alleging defendants were liable under the rescue doctrine by negligently allowing their dog to fall or jump into the canal that borders their property, prompting Ann to dive into the water to prevent the dog from drowning. The complaint also included a per quod claim by John seeking compensation for any loss or impairment of his spouse’s services, society, and companionship due to injuries Ann sustained as a proximate result of defendants’ negligence.
The parties are neighbors in Forked River, an unincorporated bayfront community within Lacey Township. Their homes are situated on a canal. In the evening of July 13, 2017, defendants’ dog fell or jumped into the canal that snakes around the rear area of this shore community. Ann claimed she heard someone calling for help to rescue their dog that had fallen into the canal.[2] A report filed by a Lacey police officer describes the incident as “a report of a dog swimming in the lagoon.” The report states that Ann “entered the lagoon to rescue the dog.” The dog “was removed from the lagoon,” without any apparent harm, by defendants’ son and a family friend. Regrettably, Ann was found “unconscious on a floating dock.” In response to defendants’ interrogatories, plaintiffs allege Ann sustained neurological and cognitive injuries as a result of the incident.
After joinder of issue and the parties’ answers to interrogatories, as well as production of relevant documentary evidence, but before the parties took depositions, the Law Division judge assigned to manage the case directed the parties to file dispositive motions addressing whether plaintiffs raised a cognizable claim under the rescue doctrine.
Plaintiffs’ counsel argued that defendants “invited the rescue because the dog was in peril, . . . [and Ann] would not [have] jump[ed] in the lagoon and [nearly] drown[ed] but for the dog being in there and people screaming about having to rescue the dog.” In rebuttal, defense counsel noted that no court in this State had extended the rescue doctrine to apply to the protection of property. The Law Division judge agreed with defendants’ position. The judge noted he was not empowered “to start defining what level of property is worth risking a human life.”
The Appellate Division reached the same conclusion in an unpublished opinion, noting that “no reported case from any New Jersey court has applied the rescue doctrine to support a cause of action brought by the rescuer of real or personal property against a defendant who, through his negligence, placed the property in peril.”
The Appellate Division’s thoughtful opinion recognized, however, that the Restatement (Second) of Torts § 472 (Am. Law Inst. 1965) has extended the rescue doctrine to the protection of property. Plaintiffs also relied on caselaw from our sister states tracking the Restatement’s approach. Although the Appellate Division found that “[s]ome of that authority is persuasive and raises a legitimate question [as to] why the rescue doctrine should be limited to the rescue of another human being,” it nevertheless declined to expand the scope of this common law doctrine in deference to its role as an intermediate appellate court.
This Court granted plaintiffs’ petition for certification to determine whether the rescue doctrine extends to property, specifically here, a dog. 248 N.J. 518 (2021).
II.
The parties rely on the arguments they made before the Appellate Division. Plaintiffs urge this Court to rely on the Restatement, as the majority of our sister states have done, and extend the rescue doctrine to protect property. In response, defendants argue it is unclear whether a majority of states have extended the doctrine to protect property, and they emphasize that New Jersey courts have consistently applied the rescue doctrine to encourage voluntary exposure to danger only to protect human life.
III.
A.
This Court reviews the grant of a motion for summary judgment de novo, applying the same standard used by the trial court. Woytas v. Greenwood Tree Experts, Inc., 237 N.J. 501, 511 (2019). We must “consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party.” Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); R. 4:46-2(c). The issue before us concerns the development of our state’s common law, a responsibility exclusively entrusted to this Court. See DCPP v. J.R.-R., 248 N.J. 353, 373 (2021).
B.
The rescue doctrine is best described by quoting the words of Justice Benjamin N. Cardozo, then Judge of the New York Court of Appeals, in Wagner v. International Railway Co.:
Danger invites rescue. The cry of distress is the summons to relief. The law does not ignore these reactions of the mind in tracing conduct to its consequences. It recognizes them as normal. It places their effects within the range of the natural and probable. The wrong that imperils life is a wrong to the imperiled victim; it is a wrong also to his rescuer. The state that leaves an opening in a bridge is liable to the child that falls into the stream, but liable also to the parent who plunges to its aid.
[133 N.E. 437, 437-38 (N.Y. 1921).]
The rescue doctrine established in Wagner was originally limited to situations “where three persons are involved, i.e., one party by his culpable act has placed another person in a position of imminent peril which invites a third person, the rescuing plaintiff, to come to his aid.” See Provenzo v. Sam, 244 N.E.2d 26, 28 (N.Y. 1968). New York courts later expanded the rescue doctrine “to encompass a two-party situation where the culpable party has placed himself in a perilous position which invites rescue.” Ibid.
The rescue doctrine “has long been a part of our State’s social fabric.” Saltsman v. Corazo, 317 N.J.Super. 237, 248 (App. Div. 1998) (quoting Burns
v. Mkt. Transition Facility, 281 N.J.Super. 304, 310 (App. Div. 1995)). The doctrine has been applied “to situations where the rescuer . . . sues the rescued victim who is either completely, or partially, at fault for creating the peril that invited the rescue.” Id. at 249. The Appellate Division has consistently applied the doctrine to cases where the rescuer is injured when trying to rescue another person. See id. at 247; Blackburn v. Broad St. Baptist Church, 305 N.J.Super. 541, 544-46 (App. Div. 1997); Tornatore v. Selective Ins. Co. of
Am., 302 N.J.Super. 244, 252 (App. Div. 1997). The first time this Court directly considered the rescue doctrine was in Ruiz v. Mero, a case in which we affirmed the Appellate Division’s opinion, which held that the Legislature abrogated the “firefighters’ rule”[3] when it adopted N.J.S.A. 2A:62A-21. 189 N.J. 525, 527 (2007). In Ruiz, a unanimous Court upheld the right of a police officer to rely on the rescue doctrine to sue “a commercial landowner for injuries he suffered when quelling a disturbance at the owner’s bar.” Ibid. In the course of explaining the statute’s unambiguous conflict with the firefighters’ rule, Justice Long noted the rescue doctrine was “[d]eeply rooted” in our state’s common law and “provides a source of recovery to one who is injured while undertaking the rescue of another who has negligently placed himself in peril.” Id. at 528-29.
In Estate of Desir v. Vertus, we reviewed the applicability of the rescue doctrine in the context of a “tragic shooting death of an individual by a criminal fleeing from a business.” 214 N.J. 303, 308 (2013). The estate of the victim filed a civil action against the defendant based in part on the rescue doctrine. Ibid. We held the defendant did not negligently create the danger that caused the decedent to come to his aid because the
evolution of the rescue doctrine remains grounded upon essential tort concepts of duty and foreseeability. As the doctrine has been explained, an actor is liable for harm sustained by a rescuer “where the conduct of the actor has created a danger only to himself, if at the time of such conduct he should reasonably anticipate that others might attempt to rescue him from his self-created peril, and sustain harm in doing so.”
[Id at 321 (quoting Restatement (Second) of Torts § 445 cmt. d).]
Those cases illustrate that, as the guardians of our state’s common law, this Court has limited the application of the rescue doctrine to reflect the sound public policy Justice Cardozo eloquently described in Wagner.
C.
In this appeal, we are asked to expand the scope of the rescue doctrine to include those who voluntarily choose to expose themselves to significant danger in an effort to safeguard the property of another. We decline to modify the rescue doctrine to incorporate such a far-reaching departure from the fundamental principles embedded in Wagner.
We acknowledge that the Restatement (Second) of Torts extends the rescue doctrine to property and provides that
[i]t is not contributory negligence for a plaintiff to expose himself to danger in an effort to save himself or a third person, or the land or chattels of the plaintiff or a third person, from harm, unless the effort itself is an unreasonable one, or the plaintiff acts unreasonably in the course of it.
[§ 472 (emphasis added).]
See also Prosser & Keeton on Torts, § 44 (5th ed. 1984) (explaining that, “[a]lthough there has been some disagreement, the great majority of courts now apply the [rescue doctrine] to one who tries to rescue the property of another, even when under no duty to do so, and even though the property involved is that of the defendant”).
The Second Restatement, however, acknowledges that “a plaintiff may run a greater risk to his own personal safety in a reasonable effort to save the life of a third person than he could run in order to save the animate or inanimate chattels of his neighbor or even of himself.” § 472 cmt. a. Furthermore, the Restatement (Third) of Torts: Liability for Physical and Emotional Harm includes the extension to property, noting: “This Section is also applicable to a rescuer of imperiled property, whether that property is owned by another or by the rescuer.” § 32, cmt. b (Am. Law Inst. 2010).
A majority of our sister states that have extended the rescue doctrine to cover property have done so in accord with the Restatement (Second) of Torts. See, e.g., Estate of Newton v. McNew, 698 P.2d 835, 837 (Colo.App. 1984) (holding that the doctrine is applicable to property after finding that a “majority of states apply” the doctrine to “one who tries to rescue the property of another”); Neff v. Woodmen of the World Life Ins. Soc’y, 529 P.2d 294, 296 (N.M. Ct. App. 1974) (finding the doctrine applicable to property and noting that “[t]he majority of courts . . . have extended [the doctrine] to include situations where property is in danger of being severely damaged or destroyed”); Henjum v. Bok, 110 N.W.2d 461, 463 (Minn. 1961) (holding that the doctrine is applicable “where an attempt is being made to save human life or property”).
Other jurisdictions have declined to expand the rescue doctrine to include the protection of property. For example, the Missouri Eastern District Court of Appeals held in Welch v. Hesston Corp. that, “[u]nlike a majority of other jurisdictions,” it has consistently declined to extend the rescue doctrine to include the protection of property. 540 S.W.2d 127, 129 (Mo.Ct.App. 1976). The court explained that
[t]he policy basis of the distinction in treatment of rescuers of persons and rescuers of property seems “to rest upon that high regard in which the law holds human life and limb; whereas, when mere property is involved, one may not voluntarily subject another to greater liability than that which he seeks to avert.”
[Id. at 129-30 (quoting Tayer v. York Ice Mach. Corp., 119 S.W.2d 240, 246 (Mo. 1937)).]
IV.
Against this analytical backdrop, we decline to expand the rescue doctrine to include injuries sustained to protect property, except in settings in which the plaintiff has acted to shield human life. We are convinced that any attempt to reform the application of the rescue doctrine to include the protection of property, whether animate or inanimate, realty or chattel, must emanate from our innate instinct to protect human life. Notwithstanding the strong emotional attachment people may have to dogs, cats, and other domesticated animals, or the great significance some may attribute to family heirlooms, or works of art generally considered as irreplaceable parts of our cultural history, sound public policy cannot sanction expanding the rescue doctrine to imbue property with the same status and dignity uniquely conferred upon a human life.
The words uttered by Justice Cardozo describe the contours of a cause of action that tolerates a concomitant degree of harm a plaintiff is reasonably willing to risk and, if necessary, endure to protect a human life. The risk factor is calibrated only by the reasonableness of the actions taken by the rescuer because all human life is equally precious. The same calculation, considering the necessarily subjective attachments to property, would prove untenable.
We are also aware, however, that certain preemptive acts that appear to be driven by the protection of property are, at their core, adjuncts to the protection of human life and thus may give rise to a cause of action under the rescue doctrine. For example, consider a neighbor who reports a fire in a nearby house to the proper authorities, then attempts to squelch the fire based on a reasonable, good faith belief that children or other vulnerable inhabitants may be in immediate danger, or because it appears likely the fire may spread to other occupied properties. Under those circumstances, if the fire was negligently started, the neighbor may have a cognizable basis to invoke the rescue doctrine to recover damages for injuries caused by the preemptive measures taken to limit the intensity of the fire, even if it is later determined there was no actual risk to human life because the house was unoccupied.
Following that line of reasoning, plaintiffs’ cause of action would have survived a motion for summary judgment had she jumped into the canal after defendants’ dog as a simultaneous reaction to seeing a child of tender years running after the animal and quickly approaching the edge of the dock. In that hypothetical situation, Ann’s actions to protect the child from imminent danger by rescuing the dog may have been reasonable and could therefore have served as the basis for a cognizable cause of action under the rescue doctrine.
By contrast, the uncontested evidence here shows that Ann’s actions were based solely on her perception of danger to the dog’s life. These nuanced distinctions are intended to acknowledge and reaffirm the public policy underpinning the rescue doctrine in our state, to wit, the protection of human life. Thus, plaintiffs’ complaint was properly dismissed because Ann’s decision to jump into the canal to save the dog’s life does not give rise to a cognizable claim under the rescue doctrine.
V.
The judgment of the Appellate Division is affirmed.
CHIEF JUSTICE RABNER and JUSTICES ALBIN, PATTERSON, SOLOMON, and PIERRE-LOUIS join in JUDGE FUENTES’s opinion.
———
Notes:
[1] We refer to plaintiffs by their first names because they share the same last name. We do not intend any disrespect.
[2] Although defendants dispute this part of the facts presented to the Law Division, we will accept them as accurate for the purpose of addressing the dispositive legal issue raised by the parties.
[3] The firefighters’ rule was a common law affirmative defense absolving the owner or occupier of land of liability “to a paid fireman for negligence with respect to the creation of a fire.” Krauth v. Geller, 31 N.J. 270, 273 (1960).
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New Jersey Federal District Court decision attempts to narrow New Jersey law on releases by restricting the scope of the release.
Posted: August 8, 2022 Filed under: New Jersey, Release (pre-injury contract not to sue) | Tags: looked upon unfavorably, Release, reviewed with enhanced scrutiny, Shooting Sports, subject to close judicial scrutiny, Unconscionable, views such exculpatory releases with disfavor, Waiver Leave a commentNJ only allows releases to be interpreted narrowly and can only cover one issue.
Martin v. Hudson Farm Club, Inc. (D. N.J. 2021)
State: New Jersey, United States District Court, D. New Jersey
Plaintiff: David Martin and Luisa Martin
Defendant: Hudson Farm Club, Inc.; Lukas Sparling; and Griffin & Howe, Inc.
Plaintiff Claims: Not stated specifically, obviously negligence
Defendant Defenses: Release
Holding: For the Plaintiff
Year: 2021
Summary
The New Jersey appellate court found a release was void because it was written to cover a shooing event and NJ law does not allow releases to be interpreted broadly to cover the injury the plaintiff suffered, falling out of a trailer.
Facts
On September 19, 2017, Martin participated in a charitable clay shooting event at HFC in Andover, New Jersey. Upon arriving at HFC, Martin signed a Release and Hold Harmless Agreement (the “Release“), which consists of three “Sections” on a single page. (
The clay shooting event had multiple starting stations at which the charity participants would begin their shooting activities. While the charity participants at certain locations walked to those locations, others-including Martin- were transported to their starting location in wagons pulled by vehicles. Defendant Sparling drove the vehicle which pulled the wagon in which Martin rode. In route to the station, the tractor ascended an incline and, during the ascent, the vehicle stalled. While Sparling engaged the vehicles’ brakes, the vehicle and attached wagon began skidding backwards. Martin at some point during the descent leapt from the wagon and suffered injuries as a result.
Analysis: making sense of the law based on these facts.
The decision by the trial court came on a Motion for Summary Judgement. This case was brought in the Federal court system where decisions of the trial court are reported. State courts do not report decisions until they have been appealed to the appellate courts above the trial courts. Consequently, decisions by trial courts in the Federal system should be understood to be trial court decisions and in cases like these federal judges interpreting state law.
The defendant in this case filed a motion for summary judgement to dismiss the case based on the release. This decision then is based solely on the paperwork presented to the court without a trail or evidentiary hearings.
To start there were some evidentiary issues that the court pointed out as the plaintiff tried to wiggle out of prior sworn testimony. The plaintiff testified under oath at his deposition. After a deposition, you have the right to correct mistakes made by the court reporter during the deposition. A lot of time a lot of corrections are made to clean up testimony. In this case, fighting the defendant’s motion for summary judgment, the plaintiff filed affidavits, sworn statements, there were contrary to his sworn testimony during his deposition.
At best, the testimony made during a deposition is used a trial to make the deponent look bad. The person on the stand says he saw ABC, and the opposing attorney asks if he remembers being deposed, and if he remembers stating he says XYZ. Either the person on the stand looks like a liar or wiggles he way out of the mess.
Here the judge just noticed the issue.
There can be no dispute that the Martin Affidavit attests to certain facts that are contrary to those which he testified under oath in prior sworn testimony. Martin’s deposition testimony clearly evidenced that he did not read the Release prior to signing the document…
Later, the judge closed the door on the plaintiff’s attempt to play the system by being deposed and stating one thing and then trying to change those sworn statements by providing affidavits that stated differently.
Martin cannot now-well after discovery closed and nearly two and half years after he was deposed-contradict his own testimony to give rise to a dispute of material fact in connection with the Parties’ competing motions. This is plainly improper, and the affidavit will be set aside as a sham affidavit.
The court then went into whether the release was valid under New Jersey law. New Jersey has a plain language statute, Plain Language Review Act (“PLRA”), N.J.S.A. 56:12, that applies to all consumer contracts. The statute has six factors the court must review to make sure the consumer contract does not violate the statute.
The statute sets forth six non-exclusive factors that a court “may consider” in its determination of whether a consumer contract is “clear, understandable and easily readable, ” including:
(1) Cross references that are confusing;
(2) Sentences that are of greater length than necessary;
(3) Sentences that contain double negatives and exceptions to exceptions;
(4) Sentences and sections that are in a confusing or illogical order;
(5) The use of words with obsolete meanings or words that differ in their legal meaning from their common ordinary meaning;
(6) Frequent use of Old English and Middle English words and Latin and French phrases.
The court found, other than the font size, that the release did not violate the plain language statute. However, the court found that since the plaintiff admitted he never read the release; the size of the font could not have any bearing on the legal issues.
New Jersey has a four-point test the release must meet to be valid.
…will be enforced if (1) it does not adversely affect the public interest; (2) the exculpated party is not under a legal duty to perform; (3) it does not involve a public utility or common carrier; or (4) the contract does not grow out of unequal bargaining power or is otherwise unconscionable.
The court started out reviewing why releases in these cases are such a problem in American law. US law in all fifty states requires business owners to keep their premises safe for their guests. Safe does not mean the elimination of the inherent risk of entering into a business or the open and obvious risk upon entering the premises. Nor is the business owner liable beyond the “ordinary duty owed to business invitees, including exercise of care commensurate with the nature of the risk, foreseeability of injury, and fairness in the circumstances.”
A release, therefore, waives the duties of a business owner to keep the premises safe. That bothers most courts hence you get the line “reviewed with enhanced scrutiny,” “views such exculpatory releases with disfavor,” “looked upon unfavorably” or “subject to close judicial scrutiny.” These are legal terms of art used to identify this chasm in the legal field. The duty of a business owner to keep the premises safe and ability for two parties to freely contract.
In this case, this issue allowed the court to look at the release only as to the risky activity, not broadly for any injury that could befall the plaintiff. As such, the release was for injury for engaging in shooting sports, not for riding on a trailer. The release is not reviewed broadly in New Jersey, thus the injury the plaintiff suffered since it was not from engaging in a shooting sports activity, was not covered.
By contrast, New Jersey courts will set aside exculpatory clauses where a potential claim arises from an activity that is not squarely within the ambit of the risky activity offered by an establishment.
The court further divided the risks in its analysis.
Here, the “inherent risky nature” of Defendants’ firearm business was immaterial to the injury Martin suffered. Martin’s injury occurred while he was being transported in a tractor-pulled wagon to his starting shooting location. The Release, while clearly referring to various elements of using a firearm-such as the “rental, instruction, [or] use . . . of firearms” and “discharge of firearms and firing of live ammunition”- does not self-evidently concern transportation while on the property.
The court then went on and held that were so disputed material facts, facts that can only be decided by a jury, that summary judgement could not be granted. This issue came back to whether or not the plaintiff had time to review the release before signing.
The court then circled back around to the “time to sign” issues. The plaintiff stated:
However, Plaintiffs contend that Martin had a limited opportunity to review and consider the Release prior to assenting to its terms. When asked at his deposition why he failed to read the Release, Martin testified that “there was about twenty people in line behind me, and we were a press for time to get the events started.
The court felt that this situation created “procedural unconscionability” if the plaintiff felt rushed to sign the release. If a release is unconscionable, then it is void in New Jersey. This is the fourth test to determine if a release is valid under New Jersey law.
A long appellate court opinion to determine two legal arguments as to why a release would not stop the claims of the plaintiff.
So Now What?
New Jersey is sliding into one of those states where releases are difficult to write. Over a decade ago the court held a parent could not sign away a minor’s right to sue, and this decision is following down the path of narrowing what a release can accomplish.
The issue that is frustrating is whether or not the plaintiff had time to read the release before signing. The law consistently states if you signed the document you read the document.
To prevent this from happening in your business you should do several things. First make sure you tell everyone who may be attending your event, program or business that they must sign a release. Second, make sure you make the release available to everyone in advance. Put the release on your website and allow participants and guests to download the release in advance of attending. Third put language in the release that states the signor agrees they have had ample time to read and review the release, and they understand what they are signing and what the effects of their signing will be.
It is also interesting that after finding the release did not protect against the plaintiff’s claims because the release was too broad, it also developed the defense of unconscionability which also sent the release back to trial.
It is also interesting that because the plaintiff admitted to not reading the release, the court found this did not violate the New Jersey consumer contract law, and then later found because he said he had no time to read the release; it was improper to hold him to the release.
What do you think? Leave a comment.
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Martin v. Hudson Farm Club, Inc. (D. N.J. 2021)
Posted: August 8, 2022 Filed under: New Jersey, Release (pre-injury contract not to sue) | Tags: Broad, Charity, New Jersey Plain Language Review Act, Release, Shooting Sports, Unconscionable, Waiver Leave a commentDAVID MARTIN and LUISA MARTIN, Plaintiffs,
v.
HUDSON FARM CLUB, INC.; LUKAS SPARLING; and GRIFFIN & HOWE, INC Defendants.
Civil Action No. 18-02511
United States District Court, D. New Jersey
December 31, 2021
NOT FOR PUBLICATION
OPINION
Stanley R. Chesler, United States District Judge
This matter comes before the Court on the motions for summary judgment filed by Defendants Hudson Farm Club (“HFC”) and Lukas Sparling (collectively, the “HFC Defendants”), and Defendant Griffin & Howe, Inc. (“G&H” and, collectively with the HFC Defendants, “Defendants”), respectively, as to certain affirmative defenses which Defendants have asserted, pursuant to Federal Rule of Civil Procedure 56, and the motion filed by Plaintiffs David and Luisa Martin (“Plaintiffs”)[1] to strike those same affirmative defenses. As described, infra, the Court will convert Plaintiffs’ motion to strike into a competing motion for summary judgment concerning Defendants’ affirmative defenses. The Court has reviewed the papers submitted and proceeds to rule without oral argument, pursuant to Federal Rule of Civil Procedure 78. For the reasons that follow, Plaintiffs’ motion for summary judgment will be granted and Defendants’ motions for summary judgment will be denied.
On September 19, 2017, Martin participated in a charitable clay shooting event at HFC in Andover, New Jersey. (Pls.’ 56.1 Statement ¶ 1, 22-23; HFC 56.1 Statement ¶ 1; G&H 56.1 Statement ¶ 1.) Upon arriving at HFC, Martin signed a Release and Hold Harmless Agreement (the “Release”), which consists of three “Sections” on a single page. (Pls.’ 56.1 Statement ¶ 2; HFC 56.1 Statement ¶ 8; G&H 56.1 Statement ¶ 2.) Section I of the Release reads:
I HAVE BEEN ADVISED THAT THE RECREATIONAL USE OF FIREARMS IS AN INHERENTLY DANGEROUS ACTIVIT WHICH CAN AND DOES RESULT IN SERIOUS BODILY INJURY AND/OR DEATH ESPECIALLY IF SAFETY RULES ARE NOT OBEYED
In return for the use of the premises and equipment, I agree to indemnify, hold harmless and defend [G&H], [HFC] and [non-party] IAT Reinsurance Company Ltd. and its instructors, employees, directors, officers, agents, representatives, heirs, successors, and assigns from and against any and all claims, demands, causes of action, personal injury (including death), damages, costs, and expenses (including attorney’s fees), arising out of, related to, or connected with the rental of a firearm, instruction, use or discharge of firearms. I hereby further agree, on behalf of myself, executors and assigns, that I will not make any claim or institute any suit or action at law or in equity against [G&H], [HFC] and IAT Reinsurance Company Ltd. Related [sic] directly or indirectly to my use of the firearm referenced in this document or from my use or participation in any activity on this property. I expressly assume the risk of taking part in the activities on the premises, which include the discharge of firearms and firing of live ammunition.
Section II is entitled “FIREARM RENTAL USE” and requires that the signatory attest that they are “not subject to any of the disabilities set forth in N.J.S.A. 2C:58-3, ” concerning the purchase of firearms, and further requires that the signatory certify to other statements relevant to the individual’s rental of a firearm.[3] Section III is entitled “CONSENT FOR USE OF LIKENESS.” While Sections I and II bear Martin’s signature, Section III does not.
By his signature to Section I of the Release, Martin acknowledged that “[he] carefully read this agreement and fully underst[ood] its contents, ” (ii) that he was aware that the Release was an important legal document, and (iii) that he intended to be “fully bound by it.” (Pls.’ 56.1 Statement ¶ 16; HFC 56.1 Statement ¶ 9; G&H 56.1 Statement ¶ 4.) Notwithstanding this, Martin testified that he signed the Release without reading it.[4] (HFC 56.1 Statement ¶¶ 10-11; G&H 56.1 Statement ¶ 5; Martin Dep. Tr. at 44:3-25.)
The clay shooting event had multiple starting stations at which the charity participants would begin their shooting activities. (HFC 56.1 Statement ¶ 2; G&H 56.1 Statement ¶ 6.) While the charity participants at certain locations walked to those locations, others-including Martin- were transported to their starting location in wagons pulled by vehicles. (Pls.’ 56.1 Statement ¶¶ 26; HFC 56.1 Statement ¶¶ 10-11; G&H 56.1 Statement ¶ 6.) Defendant Sparling drove the vehicle which pulled the wagon in which Martin rode. (HFC 56.1 Statement ¶ 3; G&H 56.1 Statement ¶ 8.) In route to the station, the tractor ascended an incline and, during the ascent, the vehicle stalled. (HFC 56.1 Statement ¶¶ 10-11; G&H 56.1 Statement ¶ 9.) While Sparling engaged the vehicles’ brakes, the vehicle and attached wagon began skidding backwards. (HFC 56.1 Statement ¶ 4; G&H 56.1 Statement ¶ 9.) Martin at some point during the descent leapt from the wagon and suffered injuries as a result. (HFC 56.1 Statement ¶ 5; G&H 56.1 Statement ¶ 10.)
II. Discussion
Defendants bring their motions pursuant to Federal Rule of Civil Procedure 56 seeking summary judgment as to their respective affirmative defenses of release and waiver as a result of the Release, while Plaintiffs’ motion is styled as a motion to strike those affirmative defenses. Notwithstanding that the Parties have pursued motions under different rules, those motions concern solely the validity of the Release.[5]
Rule 12(f) of the Federal Rules of Civil Procedure, concerning a motion to strike, allows this Court to strike “any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter” in a pleading. Fed.R.Civ.P. 12(f). However, a motion to strike may be treated as a motion for partial summary judgment under Rule 56(d) when facts outside the pleadings are offered. See, e.g., United States v. Manzo, 182 F.Supp.2d 385, 395 n.6 (D.N.J. 2000) (“Because both parties refer to matters outside the pleadings and for the sake of consistency and clarity, the Court will generally treat the motion to strike as a motion for summary judgment.”); see also 5A Charles Alan Wright & Arthur Miller, Federal Practice and Procedure § 1380, at 647 (“[S]ome courts, when faced with affidavits on a Rule 12(f) motion to strike a defense, have treated the motion to strike as one for partial summary judgment.”).
In addition to the Parties’ initial submissions indicating their apparent understanding that they intended the Court to consider their motions on the evidentiary record established over the past three and a half years, the Court on October 1, 2021 ordered that the Parties comply with Rule 56(a) in setting forth that evidentiary record. In light of the facts presented in the various Rule 56.1 Statements and declarations and in consideration of the arguments set forth in the voluminous briefing before the Court, it makes little sense to treat Plaintiffs’ motion as a Rule 12(f) motion to strike a defense. Here, seeing no prejudice to Plaintiffs who have briefed the issue sufficiently and had the opportunity to proffer evidence in support of their arguments, the Court will exercise its discretion and consider Defendant’s Rule 12(f) motion to strike as a Rule 56(a) motion for partial summary judgment.
In evaluating the competing motions, the Court applies the well-established legal standard for summary judgment. Rule 56(a) provides that a “court shall grant summary judgment if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986) (construing the similarly worded Rule 56(c), predecessor to the current summary judgment standard set forth in Rule 56(a)). A factual dispute is genuine if a reasonable jury could return a verdict for the non-movant, and it is material if, under the substantive law, it would affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In considering a motion for summary judgment, a district court “must view the evidence ‘in the light most favorable to the opposing party.'” Tolan v. Cotton, 134 S.Ct. 1861, 1866 (2014) (quoting Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970)). It may not make credibility determinations or engage in any weighing of the evidence. Anderson, 477 U.S. at 255; see also Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (holding same).
A. The Evidentiary Record Properly Before the Court.
Once the moving party has satisfied its initial burden, the nonmoving party must establish the existence of a genuine issue as to a material fact to defeat the motion. Jersey Cent. Power & Light Co. v. Lacey Twp., 772 F.2d 1103, 1109 (3d Cir. 1985). To create a genuine issue of material fact, the nonmoving party must come forward with sufficient evidence to allow a jury to find in its favor at trial. Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138 (3d Cir. 2001), overruled on other grounds by Ray Haluch Gravel Co. v. Cent. Pension Fund of the Int’l Union of Operating Eng’rs and Participating Emp’rs, 134 S.Ct. 773 (2014). The party opposing a motion for summary judgment cannot rest on mere allegations; instead, it must present actual evidence that creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at 248; see also Schoch v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990) (holding that “unsupported allegations in [a] memorandum and pleadings are insufficient to repel summary judgment”).
1. The Court Will Disregard Plaintiffs’ Responses to Defendants’ Rule 56.1 Statements in Support of Defendants’ Respective Motions for Summary Judgement.
Rule 56(c)(1) expressly requires a party who asserts that a fact is genuinely disputed to support that assertion by:
(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.
Fed. R. Civ. P. 56(c)(1). If the non-movant fails to “properly support an assertion of fact or fails to properly address another party’s assertion of fact as required by Rule 56(c), the court may . . . consider the fact undisputed for purposes of the motion.” Fed.R.Civ.P. 56(e)(2). In the District of New Jersey, Local Civil Rule 56.1 imposes an additional requirement on both movants and non-movants related to summary judgment motions. The party moving for summary judgment must file a statement which lists, in separately numbered paragraphs, material facts the movant asserts are not in dispute, with citations to the specific portions of the record supporting those factual assertions. In turn, the party opposing summary judgment “shall furnish, with its opposition papers, a responsive statement of material facts, addressing each paragraph of the movant’s statement, indicating agreement or disagreement and, if not agreed, stating each material fact in dispute and citing to the affidavits and other documents submitted in connection with the motion.” L. Civ. R. 56.1(a). Indeed, the local rule warns that “any material fact not disputed [in such a responsive statement] shall be deemed undisputed for purposes of the summary judgment motion.” Id.
On August 23, 2021, in connection with Plaintiffs’ Motion (ECF No. 124), Plaintiffs submitted, among other things, the certification of their counsel, Howard R. Engle. (ECF Nos. 124-1; 124-3.) Mr. Engle’s certification, which purported to be factual in nature, consisted of (i) facts not within his personal knowledge, (ii) legal arguments, and (iii) conclusions of law. (ECF No. 124-1.) Furthermore, in connection with Plaintiffs’ September 15, 2021 opposition to Defendants’ respective motions, Plaintiffs submitted “Certification[s] and Statement[s] of Undisputed Facts” by Mr. Engle. (ECF Nos. 129-1; 130-1.) These documents were far from the “responsive statement[s] of material facts” required pursuant to Local Rule 56.1(a).[6] Rather than “indicating agreement or disagreement” with “each paragraph” of Defendants’ Rule 56.1 Statements as required by the Rules, Plaintiffs proceeded to set forth dozens of their own purportedly “undisputed material facts.”[7] In light of these procedural improprieties, on October 1, 2021, the Court struck certain certifications which Plaintiffs submitted in support of their Motion and in Opposition to Defendants Motions and, to establish an orderly recounting of the material facts, ordered that Plaintiffs file: (i) a statement of material facts not in dispute in support of their motion, pursuant to Local Rule 56.1(a) and (ii) proper statements of material facts not in dispute in response to those submitted by Defendants in support of their respective motions. (ECF No. 138).
While Plaintiffs complied with the command to submit a Rule 56.1 statement in support of their motion, they again failed to submit responses to Defendants’ respective Rule 56.1 statements in a manner which complied with the Rules. Instead of making a submission consistent with the Rules, Plaintiffs again submitted statements of purported facts that are unmoored from and unresponsive to those statements which Defendants submitted. Plaintiffs have now twice failed to comply with Rule of Federal Civil Procedure 56.1 and Local Rule 56.1-including after the Court’s express order that Plaintiffs do so-by failing to address, on a paragraph-by-paragraph basis, the material facts as set forth in the Defendants’ Rule 56.1 Statements. Plaintiffs have provided no explanation for their repeated and continued violation of the Rules.
However, Plaintiffs’ Rule 56.1 Statement in support of their motion-which Plaintiffs submitted pursuant to the Court’s October 1 Order-is sufficiently in conformance with Rule 56.1 to allow the Court to consider it in the evidentiary record. Accordingly, the Court will disregard their responses and will consider Defendants’ Rule 56.1 Statements in support of their respective motions as undisputed, except to the extent which Defendants’ Rule 56.1 Statements may be tension with Plaintiffs’ Rule 56.1 Statement.
2. Martin’s September 16, 2021 Affidavit Will Be Set Aside Under the Sham Affidavit Doctrine.
In connection with the instant motions, Martin submits an affidavit (ECF Nos. 129-4; 130-4; 133-1; 134-1, the “Martin Affidavit”)[8] which Defendants ask the Court to set aside as a “sham affidavit” designed to defeat their motions for summary judgment. “[I]f it is clear that an affidavit is offered solely for the purpose of defeating summary judgment, it is proper for the trial judge to conclude that no reasonable jury could accord that affidavit evidentiary weight . . . .” Jiminez v. All Am. Rathskeller, Inc., 503 F.3d 247, 253 (3d Cir. 2007) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (2007) (internal citations omitted). The timing of the affidavit, whether there is a plausible explanation for the contradictory statements, and whether there is independent evidence in the record supporting the affidavit, may be considered when determining whether an affidavit is a sham. See EBC, Inc. v. Clark Bldg. Sys., Inc., 618 F.3d 253, 268-69 (3d Cir. 2010).
There can be no dispute that the Martin Affidavit attests to certain facts that are contrary to those which he testified under oath in prior sworn testimony. Martin’s deposition testimony clearly evidences that he did not read the Release prior to signing the document:
[PLAINTIFFS’ COUNSEL]: Did you read it before you signed it?
[MARTIN]: No, I did not.
Q. [Counsel for HFC] Why didn’t you read it before you signed it?
A. There was about twenty people in line behind me and we were in a press for time to get the events started.
Q. So you didn’t know what you were signing? –
A. At the time I did not know what I was signing and until I just read it just now, I didn’t know what I signed.
Q. You always sign things without knowing what you signed?
A. From time to time apparently, yes.
Q. Well in this – –
A. In this instance, yes, I did not read it.
(Martin Dep. Tr. at 44:3-25.) Martin now certifies that “he did not read the release entirely before [he signed] it” and that he “tried to read [the Release]” prior to signing the document (Martin Aff. ¶¶ 16-17). Acknowledging that this recounting of the facts is at odds with his prior testimony, Martin goes so far as to assert that “[w]hile [during the deposition] I said I did not read it, what I meant was that I couldn’t read the whole thing carefully.” (Martin Aff. ¶ 19.) He further asserts that he “was able to skim it and did read what was big enough and what I could understand.” (Martin Aff. ¶ 20.) Counsels’ questions-including that which Martin’s own counsel posed-during Martin’s deposition were perfectly clear, as were his responses. He did not equivocate in his recollection of the facts and repeated it on multiple occasions during the deposition. This is not a discrepancy which merely relates to the weight of the evidence at issue, and instead is a direct contradiction of his prior testimony. Cf. Jiminez 503 F.3d at 254 (“[C]orroborating evidence may establish that the affidavit was ‘understandably’ mistaken, confused, or not in possession of all the facts during the previous deposition.”). Martin cannot now-well after discovery closed and nearly two and half years after he was deposed-contradict his own testimony to give rise to a dispute of material fact in connection with the Parties’ competing motions. This is plainly improper, and the affidavit will be set aside as a sham affidavit.[9]
3. Plaintiffs’ Submission of an Affidavit by a Forensic Document Examiner is Improper and Will Be Set Aside.
In a similar vein, Plaintiffs submit the affidavit of John Paul Osborn, a forensic document examiner, and accompanying exhibits demonstrating Osborn’s credentials in connection with the motions. (ECF Nos. 129-3; 130-3; 133-2; 134-2, the “Osborn Affidavit”.) This too will be excluded from the Court’s consideration in resolving these motions.
Pursuant to Rule 26(a)(2), “a party must make [expert] disclosures at the times . . . that the court orders.” Fed.R.Civ.P. 26(a)(2)(D). The disclosures must contain: (i) a complete statement of all opinions the witness will express and the basis and reasons for them; (ii) the facts or data considered by the witness in forming them; (iii) any exhibits that will be used to summarize or support them; (iv) the witness’s qualifications, including a list of all publications authored in the previous 10 years; (v) a list of all other cases in which, during the previous 4 years, the witness testified as an expert at trial or by deposition; and (vi) a statement of the compensation to be paid for the study and testimony in the case. Fed.R.Civ.P. 26(a)(2)(B). “Expert disclosure requirements are meant to ensure the playing field remains level, to afford the opposing party an opportunity to challenge the expert’s qualifications and opinions, and to avoid undue prejudice and surprise.” Bouder v. Prudential Fin., Inc., No. CIV.A.06-4359(DMC), 2010 WL 2026707, at *2 (D.N.J. May 21, 2010). Rule 37 of the Federal Rules of Civil Procedure further provides that “[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Fed.R.Civ.P. 37(c)(1).
In evaluating whether a non-disclosure warrants exclusion, the Third Circuit has identified four factors to consider: “(1) the prejudice or surprise of the party against whom the excluded evidence would have been admitted; (2) the ability of the party to cure the prejudice; (3) the extent to which allowing the evidence would disrupt the orderly and efficient trial of the case or other cases in the court; and (4) bad faith or willfulness in failing to comply with a court order or discovery obligation.” Nicholas v. Pa. State Univ., 227 F.3d 133, 148 (3d Cir.2000). The party who has failed to disclose information bears the burden to show that the non-disclosure was substantially justified or is harmless. See D&D Assocs., Inc. v. Bd. of Educ. of N. Plainfield, 2006 WL 1644742, at *4 (D.N.J. June 8, 2006). Ultimately, whether to exclude evidence is left to the trial court’s discretion. Fed.R.Civ.P. 37(c)(1)(A)-(C); Newman v. GHS Osteopathic, Inc., 60 F.3d 153, 156 (3d Cir.1995) (“[T]he imposition of sanctions under Rule 37 is a matter within the discretion of the trial court.”).
On June 25, 2020, Magistrate Judge Waldor entered an Order which granted Defendants’ Motion to Amend/Correct the Answer to the Amended Complaint regarding Defendants’ affirmative defenses relating to the Release. (ECF No. 82.) The Order further “permit any discovery necessary to explore” the defenses. (Id. at 7.) Plaintiffs subsequently retained Osborn on February 26, 2021. (Osborn Aff. at 24.) On June 21, 2021, the Parties reported in a letter to the Court that discovery concerning the Release had been completed. (ECF No. 118.)
Plaintiffs evidently contemplated prior to the June 21 submission that Osborn may proffer a report in connection with this action, yet openly represented to the Court in the June 21 Letter that discovery was complete. Plaintiffs offer no explanation as to why the Court should entertain this untimely submission, let alone do they demonstrate why this delinquency is substantially justified or harmless.
Upon consideration of the factors which the Third Circuit outlined in Nicholas, the Court finds that exclusion of the Osborn Affidavit is warranted. This last-minute disclosure is both prejudicial and a surprise. The Osborn Affidavit was not provided until Defendants were under a deadline to prepare and file their reply brief, and Defendants have had no opportunity to cross-examine the proffered expert’s credentials and statements. Furthermore, allowing Plaintiffs to rely upon the Osborn Affidavit would interfere with the pending motions, and Defendants would be unable to cure such prejudice without the reopening of expert discovery, thus expending additional time, resources and money and further delaying resolution of the motions. See, e.g., Brooks v. Price, 121 Fed.Appx. 961, 965 (3d Cir. 2005). Whether or not Plaintiffs acted in bad faith, these factors are sufficient to warrant the exclusion of the Osborn Affidavit.[10]
B. The Release Does Not Violate the New Jersey Plain Language Review Act
New Jersey sets forth certain guidelines regarding consumer contracts-such as the Release-under the Plain Language Review Act (“PLRA”), N.J.S.A. 56:12. Section 2 of the PLRA requires that a consumer contract “shall be written in a simple, clear, understandable and easily readable way.” N.J.S.A. 56:12-2. The PLRA is designed so that consumer contracts “use plain language that is commonly understood by the wide swath of people who comprise the consuming public.” Kernahan v. Home Warranty Adm’r of Florida, Inc., 236 N.J. 301, 321 (2019). “With such protections in place . . . ‘[a] party who enters into a contract in writing, without any fraud or imposition being practiced upon him, is conclusively presumed to understand and assent to its terms and legal effect.'” Id. (citing Rudbart v. N. Jersey Dist. Water Supply Comm’n, 127 N.J. 344, 353 (1992) (internal citation omitted)).
According to the PLRA, “[a] creditor, seller, insurer or lessor who fails to comply with section 2 of this act shall be liable to a consumer who is a party to the consumer contract for actual damages sustained, if the violation caused the consumer to be substantially confused about the rights, obligations or remedies of the contract . . .” N.J.S.A. 56:12-3. The statute sets forth six non-exclusive factors that a court “may consider” in its determination of whether a consumer contract is “clear, understandable and easily readable, ” including:
(1) Cross references that are confusing;
(2) Sentences that are of greater length than necessary;
(3) Sentences that contain double negatives and exceptions to exceptions;
(4) Sentences and sections that are in a confusing or illogical order;
(5) The use of words with obsolete meanings or words that differ in their legal meaning from their common ordinary meaning;
(6) Frequent use of Old English and Middle English words and Latin and French phrases.
N.J.S.A. 56:12-10. Furthermore, the PLRA provides that “[c]onditions and exceptions to the main promise of the agreement shall be given equal prominence with the main promise, and shall be in at least 10 point type.” Id. The Court maintains broad discretion in its determination of how much consideration should be given to the factors individually and collectively. Boddy v. Cigna Prop. & Cas. Companies, 334 N.J.Super. 649, 655 (App. Div. 2000).
Plaintiffs contend that the Release runs afoul of the PLRA in numerous ways and, accordingly, that the Release must be set aside on statutory grounds. Primary among these arguments is Plaintiffs’ contention that the font size in the Release does not meet the requirement that it be “in at least 10 point type.” (Pls.’ Mot at 16.)[11] Plaintiffs further allege that the Release is in violation of the PLRA because it contains: (i) confusing cross references; (ii) sentences of greater length than necessary; (iii) sentences with double negatives and exceptions to exceptions; (iv) sentences and sections that are in confusing or illogical order; (v) the use of words with obsolete meaning or words that differ in their legal meaning from their common ordinary meaning; (vi) sections that are not logically divided and captioned; and (vii) conditions and exceptions to the main promise of the agreement do not have equal prominence. (Pls.’ Mot. at 17.)
Apart from Plaintiffs’ challenge to the font size found within the relevant language of the Release, Plaintiffs’ complaints amount to a mere recitation of the PLRA factors and Plaintiffs fail to establish how these other factors weigh in their favor. Indeed, upon the Court’s review of the Release, it finds that none of these elements exist within the Release.[12]
Even accepting that the font size may be smaller than the 10-point font guideline outlined in the PLRA, the waiver provision in this case is no less prominent than the remainder of the agreement: The document itself is entitled “SHOOTING SCHOOL AT HUDSON FARM – RELEASE & HOLD HARMLESS AGREEMENT, ” the waiver provision constitutes Section I of the Release, critical elements of the waiver provision are bolded and capitalized, and the font size of the waiver provision is similar to the font used throughout the one-page document. The fact that the font size of the relevant language may be marginally smaller than the statutory guidelines does not violate the mandate that the Release be “simple, clear, understandable and easily readable.” See, e.g., Kang v. La Fitness, 2016 WL 7476354, at *10 (D.N.J. Dec. 29, 2016) (finding the waiver provision in the relevant exculpatory clause was no less prominent than the remainder of the agreement where the font throughout the document was “about size 8”).[13]
In any event, all of Plaintiffs’ complaints are academic: Martin could not have been confused by the Release because he never read it. Inherent in any violation of the PLRA is that a contract that is not “clear, understandable and easily readable” must “cause[]” a consumer’s “substantial confusion” regarding the contents of the contract. N.J.S.A. 56:12-3 (emphasis added); see, e.g., Sauro v. L.A. Fitness Int’l, LLC, No. 12-3682, 2013 WL 97880, at *12 (D.N.J. Feb. 13, 2013) (citing Bosland v. Warnock Dodge. Inc., 396 N.J.Super. 267, 279 (App. Div. 2007), aff’d on other grounds, 197 N.J. 543 (2009)) (“New Jersey courts have held that a . . . plaintiff must allege that she was ‘substantially confused’ about the contract’s terms, as ‘substantial confusion’ is ‘a requirement of the Plain Language Act.'”). Accordingly, the Release could not have served to “substantially confuse” Plaintiff, and his challenge under the PLRA must fail as a matter of law.
C. The Release is Unenforceable Against Plaintiffs.
As a general and long-standing matter, contracting parties are afforded the liberty to bind themselves as they see fit. See Twin City Pipe Line Co. v. Harding Glass Co., 283 U.S. 353, 356 (1931); Walters v. YMCA, 437 N.J.Super. 111, 117-18 (App. Div. 2014) (“The Court must give ‘due deference to the freedom to contract and the right of competent adults to bind themselves as they see fit.'”). However, certain categories of substantive contracts, including those that contain exculpatory clauses, are disfavored and thus have been subjected to close judicial scrutiny. See Stelluti v. Casapenn Enterprises, LLC, 203 N.J. 286, 303 (2010) (citing 11 Williston on Contracts, § 30:9, at 103-04). New Jersey courts have identified four considerations pertinent to the enforcement of an exculpatory agreement, advising that such an agreement:
will be enforced if (1) it does not adversely affect the public interest; (2) the exculpated party is not under a legal duty to perform; (3) it does not involve a public utility or common carrier; or (4) the contract does not grow out of unequal bargaining power or is otherwise unconscionable.
Id. at 304 (quoting Gershon, Adm’x Ad Prosequendum for Est. of Pietroluongo v. Regency Diving Ctr., Inc., 368 N.J.Super. 237, 248 (App. Div. 2004)).[14]
1. The Release is Inimical to the Public Interest as Applied to Plaintiffs’ Claims
The common law imposes a duty of care on business owners to maintain a safe premises for their business invitees because the law recognizes that an owner is in the best position to prevent harm. Id. at 306 (“[B]usiness establishments in New Jersey have well-established duties of care to patrons that come upon their premises.”). In light of this duty, “[t]he law does not favor exculpatory agreements because they encourage a lack of care.” Gershon, 368 N.J.Super. At 247. But “public policy does not demand a per se ban against enforcement of an exculpatory agreement based on the mere existence of a duty recognized in the common law in respect of premises liability.” Stelluti, 203 N.J. at 306. “[T]he law recognizes that for certain activities conducted by operation of some types of business, particularly those that pose inherent risks to the participant, the business entity will not be held liable for injuries sustained so long as [the business] has acted in accordance with ‘the ordinary duty owed to business invitees, including exercise of care commensurate with the nature of the risk, foreseeability of injury, and fairness in the circumstances.'” Id. at 307 (quoting Hojnowski v. Vans Skate Park, 187 N.J. 323, 340-41 (2006)). For example, “[w]hen it comes to physical activities in the nature of sports-physical exertion associated with physical training, exercise, and the like-injuries are not an unexpected, unforeseeable result of such strenuous activity.” Id.
Defendants cite Justice LaVecchia’s dissent in Hojnowski to argue that “recreational activities such as skateboarding do not implicate the public interest” and therefore clay shooting- itself a recreational activity-cannot implicate the public interest. (HFC Opp. at 14-15.) Defendants’ position would result in a per se enforcement of unbounded waivers of liability in the context of recreational activities, which is plainly contrary to New Jersey jurisprudence. As the Stelluti court acknowledged, there remains a standard for liability even in contact recreational sports. Id. at 311 (“[T]here is also a limit to the protections that a private fitness center reasonably may exact from its patrons through the mechanism of an exculpatory agreement.”). In particular, Stelluti requires that business owners be held “to a standard of care congruent with the nature of their business.” Id. at 312.
The scope of the liability that may be waived in connection with recreational activities was explored in Walters. 437 N.J.Super. 111. There, the Appellate Division considered the enforceability of an exculpatory agreement where a patron at a fitness club sued the club for personal injuries he sustained when he slipped and fell on an allegedly negligently maintained stair tread leading to club’s pool. Id. at 118-19. The hold harmless provision within the patron’s membership agreement released the club for injuries sustained by the patron “WHILE ON ANY YMWCA PREMISES OR AS A RESULT OF A YMWCA SPONSORED ACTIVITIES [SIC].” Id. at 116 (emphasis in original). In refusing to enforce the broader clause of the exculpatory agreement-concerning injuries sustained “while on any YMWCA premises”-the Appellate Division found that “if applied literally, [the clause] would eviscerate the common law duty of care owed by defendant to its invitees, regardless of the nature of the business activity involved.” Id. at 118-19. This, the Walters panel continued, “would be inimical to the public interest because it would transfer the redress of civil wrongs from the responsible tortfeasor to either the innocent injured party or to society at large, in the form of taxpayer-supported institutions.” Id. at 119. While the court refused to enforce this broader reading of the exculpatory agreement, it still proceeded to consider whether the patron’s injury fell within the ambit of the narrower exculpatory clause. Id. at 120 (finding that an accident resulting from slipping on the steps leading into the pool did not occur while the plaintiff was “using the pool” and thus was not a “sponsored activit[y]” covered by the exculpatory agreement.).
Similar to the waiver at issue in Walters, if the terms of the Release are applied literally- to “any activity” on the property-Defendants would be released from any claim arising while an invitee was on the property “regardless of the nature of the business activity involved.” Id. at 118- 19.[15] Such a broad waiver of liability then constitutes an exculpatory agreement that is “inimical to the public interest.” Id. at 119.
While the literal reading of the Release cannot be sustained, Defendants are free to craft a release with regard “to a standard of care congruent with the nature of their business.” Stelluti, 203 N.J. at 312. To that end, other exculpatory clauses within the Release are tailored to the nature of Defendants’ business insofar as they limit the release to firearm-related activities. (See Release (“In return for the use of the premises and equipment, I agree to indemnify [Defendants] from and against any and all claims . . . arising out of, related to, or connected with the rental of a firearm, instruction, use or discharge of firearms;” “I hereby further agree . . . that I will not make any claim or institute any suit . . . directly or indirectly to my use of the firearm referenced in this document . . .;” or “I expressly assume the risk of taking part in the activities on the premises, which include the discharge of firearms and firing of live ammunition.”).) The question thus becomes whether Martin’s injury occurred in connection with a firearm-related activity.[16]
New Jersey courts narrowly construe exculpatory waivers in light of Stelluti‘s admonition that they are disfavored. Walters, 437 N.J.Super. at 328 (“Any ambiguities in language about the scope of an exculpatory agreement’s coverage, or doubts about its enforceability, should be resolved in favor of holding a tortfeasor accountable.”). Courts will enforce an exculpatory clause where a claim is “not an unexpected, unforeseeable result of” the risky activity offered by a facility. Stelluti, 203 N.J. at 307; see, e.g., Pulice v. Green Brook Sports, 2017 WL 3013086 (N.J.Super.Ct.App.Div. July 17, 2017) (finding a fitness club’s release enforceable as to plaintiff when a ten-pound dumbbell fell on her face as her trainer handed it to her to perform an exercise); Skarbnik v. Life Time Fitness, Inc., 2021 WL 3923270, at *4 (N.J.Super.Ct.App.Div. Sept. 2, 2021) (upholding fitness club’s release where plaintiff slipped on sweat immediately following a hot yoga class, because sweat on the floor “was a natural consequence” of the activity); Kyung Pak v. N.J. Fitness Factory, Inc., No. A-5084-16T2, 2018 WL 1865462, at *1 (N.J.Super.Ct.App.Div. Apr. 19, 2018) (release enforced when a fitness club employee directed plaintiff to step onto a running treadmill during an exercise class); Kang, 2016 WL 7476354, at *10 (release enforced where plaintiff injured while using a fitness machine). By contrast, New Jersey courts will set aside exculpatory clauses where a potential claim arises from an activity that is not squarely within the ambit of the risky activity offered by an establishment. See, e.g., Walters, 437 N.J.Super. at 111 (accident resulting from slipping on the steps leading into the facility’s pool not considered a “sponsored activity” subject to the release); Crossing-Lyons v. Towns Sports Int’l, Inc., 2017 WL 2953388, at *1 (N.J.Super.Ct.App.Div. July 11, 2017) (release inapplicable where plaintiff tripped over a weight belt left on the floor, an “incident[] that could have occurred in any business setting”); see also Martinez-Santiago v. Public Storage, 38 F.Supp.3d 500 (D.N.J. 2014) (refusing to enforce exculpatory agreement where patron sustained slip-and-fall injuries on ice on a walkway at a self-storage facility).
Defendants contend that “transportation while at HFC” constitutes an activity associated with sporting clay shooting, and the injury occurred within the scope of the Release. (E.g. HFC Mot. at 14.) In making this argument, Defendants analogize sporting clay shooting to golf, with G&H contending that transportation by way of a tractor and wagon is “similar to a golf event” insofar as it was “necessary so that the participants could stagger their starting locations. ((G&H Mot. at 6.) (“To find that attending a sporting clay event does not include transportation from one station to the next is like finding that playing golf does not start until golfers tee off, ends as soon as they retrieve their balls from the cup, and does not begin again until they tee off, and so on. Sporting clay shooting, like playing golf, includes all of the activities associated with attendance at the event, including transportation throughout the course.”).) These arguments “ignore[] the cause of the accident.” Walters, 437 N.J.Super. at 120. Here, the “inherent risky nature” of Defendants’ firearm business was immaterial to the injury Martin suffered. Martin’s injury occurred while he was being transported in a tractor-pulled wagon to his starting shooting location. The Release, while clearly referring to various elements of using a firearm-such as the “rental, instruction, [or] use . . . of firearms” and “discharge of firearms and firing of live ammunition”- does not self-evidently concern transportation while on the property.[17] Much like the Appellate Division’s refusal to consider “an accident resulting from slipping on the steps leading into the pool . . . covered under the ‘activities’ part of” the release clause in Walters, Plaintiffs claims do not arise in connection with the activities involved with using a firearm. 437 N.J.Super. at 111. Instead, Plaintiffs’ claims are more akin to a “garden variety” personal injury action. Id. Accordingly, the exculpatory clause of the Release is void and unenforceable as to Plaintiffs’ claims.[18]
2. Even if the Release Applied to the Wagon Ride, Disputes Over Material Facts Would Preclude Summary Judgment.
Even if the Court accepted that transportation to the shooting range is covered under the Release, the application of the final factor relevant to the enforcement of an exculpatory clause under New Jersey law-that the contract does not grow out of unequal bargaining power or is otherwise unconscionable-gives rise to a dispute of material facts. Gershon, 368 N.J.Super. at 248. “Procedural unconscionability requires examination of ‘unfairness in the formation of the contract’ while substantive unconscionability considers whether the contract’s terms are ‘excessively disproportionate.” Marcinczyk v. State of New Jersey Police Training Com’n, 406 N.J.Super. 608 (2009). In ascertaining whether a contract is unconscionable, these substantive and procedural aspects are subjected to a sliding-scale analysis. Delta Funding Corp. v. Harris, 189 N.J. 28, 40 (2006).
Plaintiffs assert that the Release is substantively unconscionable insofar as it should “shock the Court’s conscience” that “Defendants sought to release themselves from all responsibility to paying guests at their business.” (Mot. at 31.) Courts routinely uphold exculpatory releases, particularly concerning recreational activities, and Plaintiffs offer no meaningful argument as to how the Release departs from other exculpatory releases in such a manner as to shock the conscience.
Similarly, many of Plaintiffs’ arguments underlying their claim of procedural unconscionability fall flat. As previously noted, the purpose of the PLRA is to enable the courts to “confidently state that, even in the consumer context, ‘[a] party who enters into a contract in writing, without any fraud or imposition being practiced upon him, is conclusively presumed to understand and assent to its terms and legal effect.'” Kernahan v. Home Warranty Adm’r of Florida, Inc., 236 N.J. 301, 321, 199 A.3d 766 (2019). Among other things, Plaintiffs argue that (i) Martin’s “lack of education and sophistication rendered him unable” to enter into the release; (ii) the Release was not negotiated personally by Martin; and (iii) he lacked representation by counsel.[19] Setting aside the impracticalities that would result if the Court accepted Plaintiffs’ arguments, Plaintiffs’ primary authority in support of these arguments, O’Brien v. Star Gas Propane, L.P., 2006 WL 2008716 (App. Div. 2006), concerning whether a union-represented employee knowingly released certain discrimination claims against his employer, does not translate to the consumer contract context.[20]
However, Plaintiffs contend that Martin had a limited opportunity to review and consider the Release prior to assenting to its terms. When asked at his deposition why he failed to read the Release, Martin testified that “there was about twenty people in line behind me and we were n a press for time to get the events started.” (Martin Dep. Tr. 44:6-10.) And, when asked whether he saw any other individual sign the Release, Martin testified that “it was very, very rushed . . . [s]o there was no time, they was like — they were like ‘we need to get to the shooting location’ . . . .” (Martin Dep. Tr. 172:14-173:2.) At this juncture, even if the Release was enforceable as to Plaintiffs’ claims, there remains a question of material fact regarding whether Martin had a meaningful opportunity to review the agreement. See Delta Funding Corp., 189 N.J. at 40 (acknowledging that plaintiff alleged facts which suggested “a high level of procedural unconscionability” where signatory was “rushed” into signing the papers); Miller v. Miller, 160 N.J. 408, 419 (1999) (considering whether plaintiff was “rushed into signing” an agreement in determining that the agreement was unconscionable).
III. Conclusion
For the reasons set forth above, Plaintiffs have demonstrated that they are entitled to summary judgment regarding Defendants’ affirmative defenses of release and waiver, pursuant to Federal Rule of Civil Procedure 56(a). Defendants’ motions for summary judgment regarding those same affirmative defenses are denied. An appropriate Order will issue.
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Notes:
[1] Unless otherwise specified, references to “Martin” in this Opinion concern David Martin.
[2] As relevant to the instant motions, and as discussed further infra at Section II.A, the following papers and their attendant exhibits establish the evidentiary record:
• In connection with Plaintiffs’ Motion (“Pls.’ Mot.”) (ECF No. 124), Plaintiffs submitted a Rule 56.1 Statement (“Pls.’ 56.1 Statement”) (ECF No. 139), the HFC Defendants submitted a Response to Plaintiffs’ Rule 56.1 Statement (“HFC’s 56.1 Response In Opp.”) (ECF No. 143), and the G&H Defendants submitted a Response to Plaintiffs’ Rule 56.1 Statement (“G&H’s 56.1 Response In Opp.”) (ECF No. 144).
• In connection with the HFC Defendants’ Motion for Summary Judgment (“HFC Mot.”) (ECF No. 122), the HFC Defendants submitted a Rule 56.1 Statement (“HFC’s 56.1 Statement”) (ECF No. 122-2).
• In connection with the G&H Defendants’ Motion for Summary Judgment (“G&H Mot.”) (ECF No. 123), the G&H Defendants submitted a Rule 56.1 Statement (“G&H’s 56.1 Statement”) (ECF No. 123-2).
[3] These include, among other things, that a signatory certify that he or she (1) has “never been convicted of a crime, ” (2) has “not consumed alcohol in the last 12 hours and [is] not under the influence of any prescription or other drug or substance that would affect my ability to safely handle a firearm, ” and (3) “know[s] of no reason(s) why [their] possession of a firearm would not be in the interest of public health, safety, or welfare.”
[4] In connection with the instant motions, Martin submits an affidavit attesting that he did in fact read the release. (See Affidavit of David Martin (ECF No. 129-4) ¶¶ 16-20). For the reasons discussed, infra at II.A.2, the affidavit and all attendant facts will be set aside as a sham affidavit.
[5] On July 1, 2021, Magistrate Judge Waldor adopted a briefing schedule proposed by the Parties and ordered that the Parties file “any motions regarding the Release and Hold Harmless Agreement” pursuant to that schedule. (ECF No. 124.)
[6] Indeed, the Rules do not contemplate that a nonmovant will submit a statement of “undisputed” material facts. Instead, the nonmovant may furnish a “supplemental statement of disputed material facts, ” to which the movant shall reply. L. R. 56.1(a)
[7] As just one example, Mr. Engle attests: “Certainly we know from Mr. Martin’s affidavit that he did not read Section 1 and instead skimmed over it precisely because it was ‘too small and dense.’ Whether this was a reasonable thing to do, given the fact that it was in 9-point font, is a jury question.” (ECF No. 129 ¶ 10.) Such a statement is far from an “undisputed fact, ” nor does it follow the plain requirements of Local Rule 56.1(a).
[8] While the Martin Affidavit was submitted on multiple occasions in connection with the various motions, each submission is identical and the Court will refer to it as a single document.
[9] Counsel for the HFC Defendants assert that Plaintiffs should be sanctioned for submitting this sham affidavit. (HFC Opp. at 7.) To the extent that this request is more than mere bluster, it must be made as its own motion and pursuant to Rule 11 of the Federal Rules of Civil Procedure.
[10] As the Court has concluded exclusion is proper, there is no need to reach Defendants’ substantive objections to the Osborn Report. In any event, for reasons discussed infra, the Court’s consideration of the Report’s contents would not change the conclusion that the Release did not violate the PLRA.
[11] Relying on the deposition testimony of Laurel Auriemma, G&H’s Compliance Officer, Plaintiffs contend that most of the text in Section 1 of the Release is 9-point Times New Roman, the sole exception being the statement “I HAVE CAREFULLY READ THIS AGREEMENT AND FULLY UNDERSTAND THE CONTENTS, ” found at the bottom of Section 1 of the Release, which Plaintiffs claim is in 8-point Times New Roman. (Pls.’ 56.1 Statement ¶¶ 12, 13, 15, 16.) Defendants object to these statements as mischaracterizations of Ms. Auriemma’s testimony, and instead (correctly) claim that Ms. Auriemma’s testimony concerned the font size of a Microsoft Word version of the Release she had in her possession- rather than the signed Release. (HFC’s 56.1 Response In Opp ¶¶ 12, 13, 15, 16; G&H 56.1 Response In Opp ¶¶ 12, 13, 15, 16.) While the record does not establish an undisputed determination of the relevant language’s font size, even when the Court credits Plaintiffs’ accounting of the facts, their challenge to the language under the PLRA fails for the reasons that follow.
[12] Plaintiffs also contend that “Mr. Martin’s affidavit alone creates several N.J.S.A. 56:12(1-6) issues of fact.” (Pls.’ Mot at 14.) For reasons previously discussed, the Court will not credit the Martin Affidavit. See supra at II.A.2.
[13] Plaintiffs’ reliance on Kernahan and Rockel v. Cherry Hill Dodge, 368 N.J.Super. 577 (App. Div. 2004), is misplaced. To the extent the court in Kernahan considered the 6.5-point font size of the relevant language in the 5-page contract, it was one of several factors-also including a “confusing sentence order” and “misleading caption”-weighing in favor of finding it unenforceable. 236 N.J. at 326. Furthermore, the Kernahan decision focused predominantly on the heightened requirements underlying the enforcement of arbitration provisions, an issue not present here. Id. at 301-326 (citing Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430 (2014)).
Meanwhile, while the court in Rockel acknowledged that “[t]he size of the print and the location of the arbitration provision in a contract has great relevance to any determination to compel arbitration, ” its decision relied largely on the presence of two conflicting arbitration provisions. 368 N.J.Super. at 585. Indeed, the court in Rockel did not consider any challenge to the language under the PLRA.
[14] The third factor is inapplicable here because Defendants are neither public utilities nor common carriers.
[15] To underscore this point, John Ursin, G&H’s attorney and a principal drafter of the Release, during his deposition was asked whether the language was meant to “include every possible accident on the activity.” (Ursin Dep. Tr. 27:15-23.) While he declared that this would be an “overstatement, ” he only offered the hypothetical the Release was not intended to disclaim liability “if . . . there was a plane crash on the property.” (Id.) To limit Defendants’ liabilities under the exculpatory to acts of god would “eviscerate” the duty of care they have to their patrons. Cf. Walters, 437 N.J.Super. at 118-19.
[16] Plaintiffs argue unconvincingly that, because the Release does not contain a severability clause, the Release must be voided as a whole. Here, striking the unenforceable portions of the Release still “leaves behind a clear residue that is manifestly consistent with the ‘central purpose’ of the contracting parties, and that is capable of enforcement.” Jacob v. Norris, McLaughlin & Marcus, 128 N.J. 10, 33 (1992).
[17] Further to their proposed analogy between transportation during sporting clay shooting to the rental of golf carts in connection with a golf tournament, Defendants offer Post v. Belmont Country Club, Inc., 60 Mass.App.Ct. 645 (2004) as support for their argument that injuries during transportation should be covered within the Release. However, in Post, the relevant exculpatory clause in the golf membership handbook expressly included transportation on the golf court, id. at 646, and applied Massachusetts’ more permissive rules with respect to exculpatory agreements, id. at 651 (refusing to require “strict construction” of the relevant exculpatory clause when asked to apply other states’ rules of construction).
[18] Plaintiffs also argue, unpersuasively, that the Release violates Defendants’ statutory duties imposed upon them under New Jersey Code of Criminal Justice, Title 2C Section 2C:58-3.1. Under 2C:58-3.1, a legal owner of a handgun, rifle or shotgun may temporarily transfer the firearm to a person who is 18 years of age or older, if the transfer is made upon a firing range “for the sole purpose of target practice, trap or skeet shooting, or competition upon that firing range.” Upon the transfer, “[t]he firearm shall be handled and used by the person to whom it is temporarily transferred only in the actual presence or under the direct supervision of the legal owner of the firearm.” Id. Plaintiffs make no claim that any injury was the result of a failure to supervise him upon the transfer of a firearm, and Martin has acknowledged that he was not in possession of a firearm during the wagon ride at issue. (Martin Dep. Tr. 51 5-12.)
[19] The Release, which Defendants presented on a take-it-or-leave-it basis, in a standardized printed form, and without opportunity for the Martin to negotiate, is a contract of adhesion. Gamble v. Connolly, 399 N.J.Super. 130, 142 (2007) (A contract of adhesion means “‘a contract where one party must accept or reject the contract.'”). However, “‘the determination that a contract is one of adhesion is the beginning, not the end, of the inquiry into whether a contract…should be deemed unenforceable based on policy considerations.'” Id. “When making the determination that a contract of adhesion is unconscionable and unenforceable, [the court] consider[s], using a sliding scale analysis, the way in which the contract was formed and, further, whether enforcement of the contract implicates matters of public interest.” Stelluti, 203 N.J. at 301 (citing Delta Funding, 189 NJ. at 39-40).
[20] Plaintiffs also argue that the “language of the release was technical and cumbersome” and “[i]ts sentences were overly long and difficult to understand.” (Pls.’ Opp, to HFC Mot. at 24; Pls.’ Opp to G&H Mot. at 27.) These arguments fail for reasons already discussed. See supra at II.B.
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Sometimes you can go too far and in this case Mountain Creek Ski Resort went stupid far.
Posted: August 1, 2022 Filed under: New Jersey, Release (pre-injury contract not to sue), Ski Area, Skier v. Skier | Tags: Indemnification, Indemnification Clause, Mountain Creek Ski Resort, Release, Rental Agreement, Ski Equipment Rental Agreement, skier collision, Skier v. Skier Collision Leave a commentIn attempting to recover their defense costs and attorney’s fees based on a rental agreement, they court found the agreement was a contact of adhesion.
Vladichak v. Mountain Creek Ski Resort, Inc. (N.J. Super. App. Div. 2022)
State: New Jersey
Plaintiff: Andrea Vladichak
Defendant: Mountain Creek Ski Resort, Inc., and Michael Lavin
Defendant Lavin Claims: indemnity clause is ambiguous
Defendant Defenses: Indemnity Clause is valid
Holding: For the defendant Lavin & against Mountain Creek Ski Resort
Year: 2022
Summary
The ski area one the lawsuit when brought into a skier v. skier collision lawsuit. Afterwards, they attempted to sue the plaintiff in the skier v. skier case for their costs in defending based on the “indemnification” clause in the rental agreement he signed when the plaintiff rented ski equipment.
The court tore through the release holding for the original plaintiff. The court’s interpretation will not affect this case; however, the interpretation will have a negative bearing on any future case.
Facts
On December 21, 2017, plaintiff sustained personal injuries while skiing at a ski area owned and operated by Mountain Creek in Vernon Township, New Jersey. Plaintiff was struck from behind by Lavin, another skier. Plaintiff filed a complaint alleging Mountain Creek and Lavin were negligent. Plaintiff’s complaint alleged Mountain Creek was independently negligent for failing to provide appropriate warnings to skiers, failing to appropriately designate the difficulty of ski trails, failing to provide skiers with appropriate information about trail conditions, failing to timely remove obvious manmade hazards, and/or otherwise failing to establish adequate procedures to provide a safe skiing environment. The complaint alleged Lavin was negligent for breaching his duty to others to ski in a reasonably safe manner by skiing in a reckless manner and/or intentionally colliding into plaintiff and causing her injuries.
Prior to the incident, Lavin signed an equipment rental agreement (Rental Agreement) and lift ticket agreement (Release Agreement) in which he agreed to defend and indemnify Mountain Creek from any claims related to his own conduct and use of the property’s equipment facilities. On August 7, 2019, Mountain Creek filed an answer and cross-claims seeking defense and indemnification from Lavin based on the executed Rental and Release Agreements. Mountain Creek previously tendered the defense to Lavin on July 16, 2019.
The co-defendant Lavin rented skis from the ski area Mountain Creek. The rental agreement included a release and an indemnification clause. Like 99% of the indemnification clauses in releases it was written badly, but Mountain Creek tried to sue Lavin for their costs in defending the lawsuit by the original plaintiff and lost!
Analysis: making sense of the law based on these facts.
Indemnification agreements are not understood by 95% of the outdoor industry. 99% of them when attempted to be used by the courts have been thrown out, but you still find the language in releases.
Get rid of that language, it does not work and only makes judges mad!
In this case, the indemnification language was in the rental agreement signed by the co-defendant when he rented skis. The language was the general “I don’t know what this means, but I’ll stick it in a release” language.
After the ski area had won its lawsuit, and the co-defendant had settled with the plaintiff, the ski area sued the co-defendant to recover their attorney fees and costs they spent in defending the lawsuit.
The court, in this case, started by looking at New Jersey state law covering indemnification agreements. Because they are such of a particular type of contracts, each state has evolved its own set of laws on how an indemnification agreement is going to be interpreted. New Jersey:
… indemnity provisions differ from provisions in a typical contract in one important aspect. If the meaning of an indemnity provision is ambiguous, the provision is ‘strictly construed against the indemnitee.
Meaning the courts interpreted the agreement strictly. “We have characterized this approach as a “bright line” rule requiring “explicit language” when “indemnification includes the negligence of the indemnitee.”
The court then looked at the indemnification language in the ski equipment rental agreement and said the language fails.
We agree with the motion judge that the indemnity provisions in the agreements are ambiguous as to claims of Mountain Creek’s independent negligence. Although the provisions reference Mountain Creek’s negligence in bold and capitalized letters, the language “arising out of or resulting from my conduct . . . whether or not MOUNTAIN CREEK’S NEGLIGENCE contributed thereto in whole or in part” is insufficient to meet the Azurak standard. One could reasonably interpret the provisions to require indemnification and defense of Mountain Creek for any claims of negligence against it caused by Lavin’s conduct even when Mountain Creek is partially at fault or to require Lavin to indemnify and defend Mountain Creek for separate claims of its own negligence.
The court then proceeded to destroy the entire idea that an indemnity agreement in this case would ever work.
An indemnitor may expect to indemnify and defend an indemnitee for claims caused by its negligent conduct when the indemnitee may also be at fault but may not expect to be solely responsible to indemnify and defend the indemnitee when the indemnitee has committed separate acts of negligence.
Simply stated the court found “The provisions at issue do not meet the bright line rule requiring “unequivocal terms” that the duty to indemnify extends to the indemnitee’s own negligence.”
The ski area then argued the New Jersey Skier Safety Act supported the indemnification. The court struck this down with one sentence.
This indemnification scheme is consistent with the Ski Act’s purpose to promote “the allocation of the risks and costs of skiing” as “an important matter of public policy.” N.J.S.A. 5:13-1(a). Moreover, in Stelluti, the Court considered that “some activities involve a risk of injury and thus require risk sharing between the participants and operators”
The court went into the entire issue of the release that contained the indemnification provision and found the release was a contract of adhesion.
As a threshold issue, we determine that the Release and Rental Agreements were contracts of adhesion. If a contract is characterized as a contract of adhesion, “nonenforcement of its terms may be justified on other than such traditional grounds as fraud, duress, mistake, or illegality.” An adhesion contract is one that “is presented on a take-it-or-leave-it basis, commonly in a standardized printed form, without opportunity for the ‘adhering’ party to negotiate except perhaps on a few particulars.” “Although a contract of adhesion is not per se unenforceable, a [judge] may decline to enforce it if it is found to be unconscionable.”
The court reviewed under New Jersey law what a contract of adhesion was and how it was determined to be one.
When determining whether an adhesion contract is unconscionable, we evaluate four factors that “focus on procedural and substantive aspects of the contract to determine whether the contract is so oppressive, or inconsistent with the vindication of public policy, that it would be unconscionable to permit its enforcement.” Id. at 247 (internal quotation marks omitted) Those factors include “the subject matter of the contract, the parties’ relative bargaining positions, the degree of economic compulsion motivating the ‘adhering’ party, and the public interests affected by the contract.” The first three factors speak to procedural unconscionability, and the last factor speaks to substantive unconscionability. We consider these factors using a “sliding scale analysis.”
The court then applied the test for an adhesion contract to the rental agreement.
applying the four-factor test, the Release and Rental Agreements are not procedurally unconscionable. At the time of the incident, Lavin was twenty years old and a layperson without specialized knowledge of the law. He maintains he did not read the agreements before signing them despite having the opportunity to do so. Lavin also stated that he did not have the opportunity to negotiate the terms of the agreement. However, Lavin was engaging in a recreational activity like the adhering party in Stelluti, and he was under no economic duress or obligation to consent to the agreements. Lavin could have chosen to take his business to another ski resort, rented skis from a different facility, or could have simply read the agreements or contemplated them before signing.
The court found the rental agreement was a contract of adhesion. However, in this situation it was not void on its face.
However, that creates a ruling that all other courts in New Jersey must rely upon in reviewing the rental agreement of Mountain Creek Ski Resort. By pushing the issue, they created a lower step for the plaintiff’s bar to overcome in the future.
So Now What?
If you have indemnification language in your release, and it was not written by me, have an attorney remove it. It is a waste of space on the paper and only can be used to make judges mad.
Indemnification agreements must be written in a special way to cover very specific circumstances that must be outlined in the agreement.
If you want to understand an indemnification agreement, read your automobile insurance policy. (Think about shrinking that to fit into your release…..)
That does not mean indemnification agreements in releases are all bad. They can be used, IF WRITTEN PROPERLY, to indemnify the outfitter for their actions if backed up by other documents or contracts. Meaning if you live in a state that charges for rescue, you can require your guests to indemnify you for any rescue costs you may incur on their behalf.
What do you think? Leave a comment.
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Author: Outdoor Recreation Insurance, Risk Management and Law
Facebook Page: Outdoor Recreation & Adventure Travel Law
Email: Jim@Rec-Law.US
By Recreation Law Rec-law@recreation-law.com James H. Moss
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Vladichak v. Mountain Creek Ski Resort, Inc. (N.J. Super. App. Div. 2022)
Posted: August 1, 2022 Filed under: New Jersey, Release (pre-injury contract not to sue), Ski Area, Skier v. Skier | Tags: equipment rental, Indemnification, Indemnification Clause, Mountain Creek Ski Resort, New Jersey, Release, Rental, Ski Rental, Skier v. Skier Collision, Waiver Leave a commentANDREA VLADICHAK, Plaintiff-Respondent,
v.
MOUNTAIN CREEK SKI RESORT, INC., Defendant-Appellant,
and MICHAEL LAVIN, Defendant-Respondent.
No. A-1367-20
Superior Court of New Jersey, Appellate Division
April 13, 2022
This opinion shall not “constitute precedent or be binding upon any court .” Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
Argued April 4, 2022
On appeal from the Superior Court of New Jersey, Law Division, Sussex County, Docket No. L-0590-18.
Samuel J. McNulty argued the cause for appellant (Hueston McNulty, PC, attorneys; Samuel J. McNulty, of counsel and on the briefs; Edward J. Turro, on the briefs).
Matthew E. Kennedy argued the cause for respondent Michael Lavin (Leary Bride Mergner & Bongiovanni, PA, attorneys; Matthew E. Kennedy, of counsel and on the brief).
Before Judges Fasciale and Sumners.
PER CURIAM
Defendant Snow Creek, LLC d/b/a Mountain Creek Resort, Inc. (Mountain Creek) appeals from a November 9, 2020 order denying its motion for summary judgment and granting summary judgment to defendant Michael Lavin (Lavin) dismissing Mountain Creek’s cross-claims for defense costs and contractual indemnification. Judge David J. Weaver (motion judge) concluded in a thorough opinion that the contractual language was ambiguous and therefore Mountain Creek was not entitled to indemnification from Lavin or defense costs incurred to defend plaintiff’s allegations that Mountain Creek itself was negligent. We affirm.
On December 21, 2017, plaintiff sustained personal injuries while skiing at a ski area owned and operated by Mountain Creek in Vernon Township, New Jersey. Plaintiff was struck from behind by Lavin, another skier. Plaintiff filed a complaint alleging Mountain Creek and Lavin were negligent. Plaintiff’s complaint alleged Mountain Creek was independently negligent for failing to provide appropriate warnings to skiers, failing to appropriately designate the difficulty of ski trails, failing to provide skiers with appropriate information about trail conditions, failing to timely remove obvious manmade hazards, and/or otherwise failing to establish adequate procedures to provide a safe skiing environment. The complaint alleged Lavin was negligent for breaching his duty to others to ski in a reasonably safe manner by skiing in a reckless manner and/or intentionally colliding into plaintiff and causing her injuries.
Prior to the incident, Lavin signed an equipment rental agreement (Rental Agreement) and lift ticket agreement (Release Agreement) in which he agreed to defend and indemnify Mountain Creek from any claims related to his own conduct and use of the property’s equipment facilities. On August 7, 2019, Mountain Creek filed an answer and cross-claims seeking defense and indemnification from Lavin based on the executed Rental and Release Agreements. Mountain Creek previously tendered the defense to Lavin on July 16, 2019.
Plaintiff’s counsel served a report from plaintiff’s liability expert, who concluded that Lavin violated the New Jersey Ski Statute, N.J.S.A. 5:13-1 to -12, and the Skier’s Responsibility Code by failing to control his speed and course and by failing to yield to the skiers ahead of him. The expert opined that Lavin’s reckless conduct caused the accident. On March 27, 2020, Judge Stephan C. Hansbury entered an order granting Mountain Creek’s motion for summary judgment dismissing plaintiff’s claims that Mountain Creek was negligent. Lavin and plaintiff settled and filed a stipulation of dismissal with prejudice dated May 29, 2020.
After plaintiff’s settlement with Lavin, Mountain Creek filed its motion seeking reimbursement from Lavin for defending plaintiff’s allegations and indemnification from Lavin.[1] Lavin filed a cross-motion for summary judgment on September 1. That led to the order under review.
The judge concluded that, as a matter of law, the indemnification provisions were ambiguous and thus unenforceable to compel indemnification in favor of Mountain Creek for claims of its own negligence. The motion judge denied Lavin’s cross-motion for summary judgment in part and granted it in part. The motion judge requested the parties submit the detail and extent of defense costs incurred by Mountain Creek for costs incurred for which liability was only vicarious.
Mountain Creek’s attorneys stipulated that there were no fees or costs incurred from defending vicarious liability claims. On December 14, 2020, Judge Robert J. Brennan entered a consent order resolving all remaining issues as to all parties.
Mountain Creek raises the following arguments on appeal:
POINT I
STANDARD OF REVIEW-DE NOVO[.]
POINT II
THE [MOTION JUDGE] CORRECTLY RULED THAT THE TWO AGREEMENTS WERE NOT CONTRACTS OF ADHESION NOR WERE THEY CONTRARY TO PUBLIC POLICY.
POINT III
THE [MOTION JUDGE] ERRED IN FINDING THAT THE LANGUAGE IN THE AGREEMENTS SIGNED BY . . . LAVIN IS AMBIGUOUS AND INSUFFICIENT TO COMPEL . . . LAVIN TO INDEMNIFY AND DEFEND MOUNTAIN CREEK FOR CLAIMS OF ITS OWN NEGLIGENCE.
A. Special Status Of A Ski Operator.
B. The Two Agreements Were Unambiguous And Should Be Enforced.[2]
Mountain Creek raises the following points in reply, which we have renumbered:
POINT IV
. . . LAVIN’S REQUEST THAT THE APPELLATE DIVISION REVERSE THE [MOTION JUDGE]’S JUDGMENT THAT THE CONTRACTS WERE NOT UNCONSCIONABLE SHOULD BE REJECTED AS NO CROSS-APPEAL WAS FILED.
POINT V
THE AGREEMENTS IN QUESTION ARE ENFORCEABLE AND NOT UNCONSCIONABLE CONTRACTS OF ADHESION.
POINT VI
THE INDEMNIFICATION LANGUAGE IS SUFFICIENT AND EXPRESSLY PROVIDES FOR INDEMNIFICATION FOR CLAIMS ASSERTING MOUNTAIN CREEK’S OWN NEGLIGENCE.
We review the motion judge’s grant of a motion for summary judgment de novo. Branch v. Cream-O-Land Dairy, 244 N.J. 567, 582 (2021). We apply the same standard as the motion judge and consider “whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party.” Brill v. Guardian Life
Ins. Co. of Am., 142 N.J. 520, 540 (1995).
I.
Mountain Creek contends the motion judge erred in ruling the indemnification provisions in the Release and Rental Agreements were ambiguous and unenforceable to compel Lavin to indemnify Mountain Creek for Mountain Creek’s own negligence. Mountain Creek also contends that it should be permitted to obtain indemnification from Lavin based on its special status as a ski area operator under the Ski Statute.
The judge’s role “in construing a contractual indemnity provision is the same as in construing any other part of a contract-it is to determine the intent of the parties.” Kieffer v. Best Buy, 205 N.J. 213, 223 (2011). Generally, courts give contractual provisions “their plain and ordinary meaning.” Ibid. (quoting M.J. Paquet, Inc. v. N.J. Dep’t of Transp., 171 N.J. 378, 396 (2002)). “However, indemnity provisions differ from provisions in a typical contract in one important aspect. If the meaning of an indemnity provision is ambiguous, the provision is ‘strictly construed against the indemnitee.'” Ibid. (quoting Mantilla v. NC Mall Assocs., 167 N.J. 262, 272 (2001)).
We have characterized this approach as a “bright line” rule requiring “explicit language” when “indemnification includes the negligence of the indemnitee.” Azurak v. Corp. Prop. Invs., 347 N.J.Super. 516, 523 (App. Div. 2002). Azurak involved a contract between a janitorial company (PBS) and a shopping mall owner (the Mall) that contained the following provision:
Contractor [PBS] shall indemnify, defend and hold harmless each Indemnitee [the Mall] from and against any claim (including any claim brought by employees of Contractor), liability, damage or expense (including attorneys’ fees) that such Indemnitee may incur relating to, arising out of or existing by reason of (i) Contractor’s performance of this Agreement or the conditions created thereby (including the use, misuse or failure of any equipment used by Contractor or its subcontractors, servants or employees) or (ii) Contractor’s breach of this Agreement or the inadequate or improper performance of this Agreement by Contractor or its subcontractors, servants or employees.
[Azurak v. Corp. Prop. Invs., 175 N.J. 110, 111 (2003) (alterations in original).]
The plaintiff sued the Mall and PBS for injuries she sustained when she slipped on the Mall’s floor. Ibid. The trial judge granted the Mall’s summary judgment motion on the issue of indemnification based on the contract provision. Ibid. At trial, the jury determined “that plaintiff was 30% negligent; the Mall, 30%; and PBS, 40%.” Ibid. This court disagreed with the trial judge, finding that the indemnification provision did not encompass the Mall’s negligence because the provision’s language was neither explicit nor unequivocal as to claims of the Mall’s own negligence. Id. at 111-12. Our Court affirmed and held that “in order to allay even the slightest doubt on the issue of what is required to bring a negligent indemnitee within an indemnification agreement, we reiterate that the agreement must specifically reference the negligence or fault of the indemnitee.” Id. at 112-13.
Mountain Creek’s Release Agreement contained a provision that states:
INDEMNIFICATION. To the fullest extent permitted by law, I agree to DEFEND, INDEMNIFY AND HOLD HARMLESS Mountain Creek from any and all claims, suits, costs and expenses including attorneys’ fees asserted against Mountain Creek by me or third parties arising or allegedly arising out of or resulting from my conduct while utilizing Mountain Creek’s facilities WHETHER OR NOT MOUNTAIN CREEK’S NEGLIGENCE contributed thereto in whole or in part.
One provision of the Rental Agreement states:
To the fullest extent permitted by law, I also agree to DEFEND, INDEMNIFY AND HOLD HARMLESS Mountain Creek from any and all claims, suits, costs and expenses including attorneys’ fees for personal injury, death or property damage against it by me or third parties arising or allegedly arising out of or resulting from my conduct while utilizing Mountain Creek’s facilities or the use of this equipment whether or not MOUNTAIN CREEK’S NEGLIGENCE contributed thereto in whole or in part.
We agree with the motion judge that the indemnity provisions in the agreements are ambiguous as to claims of Mountain Creek’s independent negligence. Although the provisions reference Mountain Creek’s negligence in bold and capitalized letters, the language “arising out of or resulting from my conduct . . . whether or not MOUNTAIN CREEK’S NEGLIGENCE contributed thereto in whole or in part” is insufficient to meet the Azurak standard. One could reasonably interpret the provisions to require indemnification and defense of Mountain Creek for any claims of negligence against it caused by Lavin’s conduct even when Mountain Creek is partially at fault or to require Lavin to indemnify and defend Mountain Creek for separate claims of its own negligence. See Nester v. O’Donnell, 301 N.J.Super. 198, 210 (App. Div. 1997) (noting that a contract is ambiguous if it is “susceptible to at least two reasonable alternative interpretations” (quoting Kaufman v. Provident Life & Cas. Ins. Co., 828 F.Supp. 275, 283 (D.N.J. 1992), aff’d, 993 F.2d 877 (3d Cir. 1993))).
An indemnitor may expect to indemnify and defend an indemnitee for claims caused by its negligent conduct when the indemnitee may also be at fault but may not expect to be solely responsible to indemnify and defend the indemnitee when the indemnitee has committed separate acts of negligence. That is the case here, as plaintiff’s complaint alleged Mountain Creek was separately negligent for failing to provide adequate instructions to skiers and a safe ski environment. A better-and likely enforceable-provision would explicitly state that the indemnitor indemnifies Mountain Creek for claims arising out of indemnitor’s conduct and for claims of Mountain Creek’s independent negligence.
The provisions at issue do not meet the bright line rule requiring “unequivocal terms” that the duty to indemnify extends to the indemnitee’s own negligence. Thus, the provisions are ambiguous and must be strictly construed against Mountain Creek. The same reasoning and standards apply with equal force to Mountain Creek’s defense costs. The provisions’ ambiguity precludes their enforcement against Lavin for recovery of the costs incurred by Mountain Creek for defending its own negligence claims.
We also conclude Mountain Creek’s argument that the Ski Statute supports enforcement of the indemnification provisions is without merit. While the Ski Act may emphasize the inherent risk that skiers assume when skiing, the Act provides separate duties to the ski operator, which include establishing and posting a system for identifying slopes and their difficulty, ensuring the availability of information to skiers, and removing hazards as soon as practicable. N.J.S.A. 5:13-3(a). The allegations in plaintiff’s complaint, which include failing to provide adequate signage and failing to instruct skiers properly, do not fall under the risks that “are essentially impractical or impossible for the ski area operator to eliminate” defined in the statute. N.J.S.A. 5:13-1(b). In fact, plaintiff’s complaint addressed the responsibilities of a ski area operator as prescribed by the Act. Requiring indemnification in favor of a ski resort for claims of its own independent negligence does not further the Ski Act’s purpose of allocating the inherent risk of skiing between the skier and ski resort. Moreover, the public policy of the Ski Act has no bearing on our interpretation of the indemnity provisions and our conclusion that the provisions are ambiguous.
II.
Lavin argues, on an alternative basis, that the Rental and Release Agreements are unconscionable contracts of adhesion. Lavin was not required to file a Notice of Cross-Appeal to preserve this argument for appeal because “appeals are taken from judgments, not opinions, and, without having filed a cross-appeal, a respondent can argue any point on the appeal to sustain the trial [judge’s] judgment.” Chimes v. Oritani Motor Hotel, Inc., 195 N.J.Super. 435, 443 (App. Div. 1984). Even if Lavin were required to file a cross-appeal, we will address the merits of his argument.
As a threshold issue, we determine that the Release and Rental Agreements were contracts of adhesion. If a contract is characterized as a contract of adhesion, “nonenforcement of its terms may be justified on other than such traditional grounds as fraud, duress, mistake, or illegality.” Rudbart v. N. Jersey Dist. Water Supply Comm’n, 127 N.J. 344, 353 (1992). An adhesion contract is one that “is presented on a take-it-or-leave-it basis, commonly in a standardized printed form, without opportunity for the ‘adhering’ party to negotiate except perhaps on a few particulars.” Vitale v. Schering-Plough Corp., 231 N.J. 234, 246 (2017) (quoting Rudbart, 127 N.J. at 355). “Although a contract of adhesion is not per se unenforceable, a [judge] may decline to enforce it if it is found to be unconscionable.” Ibid.
We agree with the motion judge that “the Agreements at issue evidence characteristics of contracts of adhesion.” The Release and Rental Agreements were standardized form contracts that fit our Court’s definition as “take-it-or-leave-it” adhesion contracts. See ibid. All potential skiers at Mountain Creek’s resort are obligated to sign the Release Agreement, and there is little to no negotiating done before the agreements’ execution. However, an agreement found to be an adhesion contract may nevertheless be enforced if it is not unconscionable. See ibid.
When determining whether an adhesion contract is unconscionable, we evaluate four factors that “focus on procedural and substantive aspects of the contract to determine whether the contract is so oppressive, or inconsistent with the vindication of public policy, that it would be unconscionable to permit its enforcement.” Id. at 247 (internal quotation marks omitted) (quoting Rodriguez v. Raymours Furniture Co., Inc., 225 N.J. 343, 367 (2016)). Those factors include “the subject matter of the contract, the parties’ relative bargaining positions, the degree of economic compulsion motivating the ‘adhering’ party, and the public interests affected by the contract.” Rudbart, 127 N.J. at 356. The first three factors speak to procedural unconscionability, and the last factor speaks to substantive unconscionability. See Rodriguez, 225 N.J. at 367. We consider these factors using a “sliding scale analysis.” Stelluti v. Casapenn Enters., LLC, 203 N.J. 286, 301 (2010).
The motion judge correctly relied on Stelluti in determining the agreements are not procedurally unconscionable. In Stelluti, the plaintiff was injured in a spinning class at a private fitness center and argued that the pre-injury waiver of liability she signed was unenforceable on unconscionability grounds. Id. at 291, 300. The Court found that although the pre-printed form was an adhesion contract, it was not procedurally unconscionable. Id. at 301-02. The Court reasoned the plaintiff was not in a position of unequal bargaining power, despite being a layperson and not being fully informed of the legal effect of an adhesion contract, when she had the ability to take “her business to another fitness club,” to find a form of exercise different than joining a private gym, or to contemplate the agreement for some time before joining the gym and using its equipment. Id. at 302.
Under the Court’s reasoning in Stelluti and applying the four-factor test, the Release and Rental Agreements are not procedurally unconscionable. At the time of the incident, Lavin was twenty years old and a layperson without specialized knowledge of the law. He maintains he did not read the agreements before signing them despite having the opportunity to do so. Lavin also stated that he did not have the opportunity to negotiate the terms of the agreement. However, Lavin was engaging in a recreational activity like the adhering party in Stelluti, and he was under no economic duress or obligation to consent to the agreements. Lavin could have chosen to take his business to another ski resort, rented skis from a different facility, or could have simply read the agreements or contemplated them before signing.
As for the remaining factor-the impact on public interest-Mountain Creek points to the “strong public policy of protecting ski operators and allocating the risks and costs of inherently dangerous recreational activities” under the Ski Statute. The Act’s purpose is to make explicit a policy of this State which clearly defines the responsibility of ski area operators and skiers, recognizing that the sport of skiing and other ski area activities involve risks which must be borne by those who engage in such activities and which are essentially impractical or impossible for the ski area operator to eliminate. It is, therefore, the purpose of this act to state those risks which the skier voluntarily assumes for which there can be no recovery.
[N.J.S.A. 5:13-1(b).]
We agree that the Agreements are not substantively unconscionable. The agreements do not contain terms that are so “harsh” or “one-sided” to render them unconscionable and unenforceable. See Muhammad v. Cnty. Bank of
Rehoboth Beach, Del., 189 N.J. 1, 15 (2006). Construing the indemnity provision against Mountain Creek due to its ambiguity, the provision requires that Lavin indemnify and defend Mountain Creek for claims arising out of Lavin’s conduct while using Mountain Creek’s equipment and facilities, even when Mountain Creek is partially at fault. This indemnification scheme is consistent with the Ski Act’s purpose to promote “the allocation of the risks and costs of skiing” as “an important matter of public policy.” N.J.S.A. 5:13-1(a). Moreover, in Stelluti, the Court considered that “some activities involve a risk of injury and thus require risk sharing between the participants and operators” and that our Legislature has enacted statutes to address the allocation of risk in those circumstances. 203 N.J. at 308. It would not be against public policy to require indemnification of Mountain Creek by Lavin for claims of vicarious liability due to Lavin’s reckless conduct; however, Mountain Creek stipulated that it did not incur any costs in defending claims of vicarious liability.
Affirmed.
———
Notes:
[1] Mountain Creek did not contribute towards plaintiff’s settlement with Lavin.
[2] To comport with our style conventions, we altered the capitalization of Mountain Creek’s Points A and B but omitted the alterations for readability.
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This is a confusing case concerning whether or not a person is an independent contractor or employee, has the right to sue the employer and whether the insurance company for the employer must provide coverage because of the confusion
Posted: May 9, 2022 Filed under: Climbing, Mountaineering, New Jersey, Release (pre-injury contract not to sue), Rock Climbing | Tags: Atain Speciality Insurance, Condition of Coverage, Insurance policy, Mountain Clmbing, Mountaineering, NE Mountain Guiding, Negligence, Northeast Mountain Guiding, Recision, Rock climbing, SAR, Search and Rescue Leave a commentThis is a long and complicated case because no one understood what was needed and no one read their insurance policy.
Atain Specialty Ins Co v Ne Mountain Guiding LLC D NJ 2020
State: New Jersey, US District Court for the District of New Jersey
Plaintiff: Atain Specialty Insurance Co.
Defendant: Northeast Mountain Guiding, LLC, et al.,
Plaintiff Claims: negligence
Defendant Defenses:
Holding: Mostly for the Plaintiff
Year: 2020
Summary
An employee or independent contractor was hurt, maybe working, and sued his employer over his injuries. The insurance company for the employer, mountain guiding company, denied coverage because he was not an employee and they did not provide coverage for independent contractors.
This case is still a mess, but the important part is make sure you are honest on your insurance applications and make sure you know what you are buying when you purchase a policy.
Facts
Vulpis is the founder and sole member of NMG, a limited liability company in the outdoor adventure and education industry Vulpis has significant training and experience, as well as multiple certifications, in the field in which NMG operates. Enberg provided administrative assistance to NMG, developed a search and rescue training for NMG to provide to clients, and served as a mountaineering guide for NMG. Manchester performed work for NMG as a Lead Backpacking Guide and Assistant Rock Guide.
Donald Pachner is the sole member of Pachner & Associates, LLC and Pachner Risk Management, LLC. Donald Pachner and Pachner & Associates, LLC possess insurance broker licenses under New Jersey law.
Vulpis retained Pachner to obtain general commercial liability insurance for NMG. As part of this process, Pachner and Vulpis worked together to fill out an application (the “Application”) for insurance. The Application required Vulpis to estimate NMG’s gross revenues for the coming year. On Pachner’s advice, Vulpis checked the “No” box when answering the Application’s question concerning whether NMG “hire[s] Concessionaires, Independent Contractors, or Subcontractors.” As part of the Application, Vulpis initialed next to a requirement NMG (1) obtain from all participants an Atain-approved waiver of liability form, and (2) maintain those forms for three years. In response to NMG’s Application, Atain issued an insurance quote (the “Quote”), which Vulpis reviewed with Pachner. Among other things, the Quote contains a summary of several of the terms the Policy would contain
Pachner procured insurance (the “Policy”) from Atain for NMG. The Policy limits coverage to “GUIDED MOUNTAINEERING INCLUDING TOP ROPE CLIMBING & RAPPELLING; GUIDED KAYAK TRIPS; GUIDED SNOWSHOEING; GUIDED HIKING/BACKPACKING INCLUDING CAMPING.” The Policy excludes coverage for injuries suffered “in the course of employment by or service to” NMG.
On November 21, 2015, Manchester suffered an injury (the “Injury”) while using certain equipment (the “Equipment”) to engage in a certain activity (the “Activity”). Much of the dispute in this case centers on the proper characterization of the Activity and the Equipment. The essence of the Activity is that the participant uses the Equipment to move between two points. The evidence conflicts concerning whether the Equipment is a “Tyrolean Traverse” or a “Clifftop Zipline.” Ziplines were derived from Tyrolean Traverses, but the differences are too fine for untrained individuals to differentiate between the two.
On November 21, 2015, three NMG guides—Christy DeMarco, Enberg, and Vulpis—went to Allamuchy State Park to test the Equipment NMG expected to offer in the future for its customers. Vulpis and the other three guides set up the Equipment. Manchester was present at the time, and engaged in the Activity by traveling on the Equipment. While engaged in the Activity, Manchester suffered the Injury.
Following his Injury, Manchester filed a state court negligence action against Vulpis, Enberg, and NMG. NMG made a claim for coverage with Pachner and Atain. When reporting the claim to Atain, Pachner described Manchester as an independent contractor for NMG.
Atain filed this coverage action against its Vulpis, Enberg, and NMG, and also joined Manchester as a defendant. Atain seeks declaratory judgments against Vulpis, Enberg, NMG, and Manchester, authorizing Atain to disclaim coverage Manchester’s Injury. Additionally, Atain seeks a declaratory judgment voiding the Policy under common law rescission principles and the New Jersey Insurance Fraud Prevention Act, N.J. Stat. Ann. § 17:33A-1 et seq.
Vulpis, Enberg, and NMG brought a third-party action against NMG’s insurance broker Pachner, alleging Pachner’s negligence caused any failure of coverage by Atain. Manchester brought a similar action against Pachner.
Analysis: making sense of the law based on these facts.
The is the second of two decisions so far in this case, and it is still on going. This decision is based on multiple motions to dismiss, and motions for summary judgment filed by everyone.
I’m not even going to cover every issue involved in this order, just a few to make some points.
Another issue is the language of mountaineering, rock climbing and guiding is not totally understood by the court, so in some cases the decisions are not made for that reason. That can be because the court was not made away of the issues or the attempt to educate the court failed on the part of the parties.
First Issue: The activity giving rise to the injury is not covered.
The first issue is whether the activity giving rise to the injury is one that is covered under the insurance policy. The injured employee/contractor was not on the trip to learn; he just tagged along. He had not paid to attend the training and was not required to be there.
Because the insurance policy is unclear as to how it is interpreting what occurred, and the court is unclear on what relationship employee/contractor had while on the trip, the court determined it could not decide the issues on a motion for summary judgement.
Second Issue: Worker’s comp exclusion
In every general liability policy, there is an exclusion, no coverage for claims that should be insured by worker’s compensation. In this case that exclusion was called Employer’s Liability Exclusion. Employees in all states must be covered by worker’s compensation for any injury they receive while on the job. Since this person was claiming, in some aspects of the case, to be an employee, the general liability insurance company based on this exclusion should not have to pay for the damages.
The court refused to rule on this saying several of the statements made by the injured employee/contractor indicate he was not an employee.
Manchester was a participant acting outside the scope of his NMG employment at the time of his Injury. Manchester testified he had come to participate in the Activity because he “thought it would be fun.” Vulpis testified similarly: Manchester “came just to travel along the Tyrolean traverse. He wanted to try it out.” Manchester testified he never informed NMG he would be attending the Activity and further testified NMG did not know he would be attending. Manchester did not consider himself an employee or representative of Vulpis or Enberg at the time of the Injury.
At the same time, the court found several issues that indicated the injured employee/contractor was an employee at the time of his injury.
Most importantly, Manchester acknowledged he performed work for NMG as a Lead Backpacking Guide and Assistant Rock Guide. Vulpis and Manchester both testified Manchester came to be at Allamuchy State Park on the date of his Injury because Vulpis posted an invitation to a Facebook group whose members consisted only of NMG guides and staff Enberg testified although Manchester was not involved in setting up the Equipment and mostly observed others do so, Manchester did help Enberg “pull tension once, so just pull on a rope for me.” Enberg also testified, “[A]s far as I know, we just there all volunteering and testing the system.”
Until a jury determines the legal classification for the injured plaintiff, what insurance coverage is available cannot be decided.
Issue three: recission of the policy
Recission of an insurance policy is a rarely seen legal argument. It is granted when there is proof of fraud when entering into the contract. When there is recission of a policy, the court places the parties back in the position they were before the policy was issued. The insured gets a full refund, and the insurance company does not have to pay a claim.
“In the field of insurance, rescission has long been recognized as an available and necessary remedy to combat fraudulent behavior by an insured” It is settled that a material factual misrepresentation made in an application for insurance may justify rescission [of the resulting insurance policy] if the insurer relied upon it to determine whether or not to issue the policy” Rescission voids the [insurance policy] ab initio, meaning that it is considered ‘null from the beginning’ and treated as if it does not exist for any purpose.”
Here the insurance company was requesting recission of the policy because of fraudulent misrepresentation.
Rescission of an insurance policy for fraudulent misrepresentation is appropriate if four conditions are satisfied: (1) the applicant must make an “untruthful” representation to the insurer, (2) the representation must be “material to the particular risk assumed by the insurer,” (3) the insurer must “actually and reasonably rel[y] upon [the representation] in the issuance of the policy,” and (4) if the “insurance application . . . calls for subjective information,” then “the insured [must] kn[o]w that the information was false when completing the application.”
Again, the court would not rule on this motion because recission takes more than a mere oversight or honest mistake. It must be based on a specific intentional act or acts to defraud the insurance company. Here the answers placed on the policy were done so with the help of the insurance agent. And the court was not sure the acts of the insured were intentional. The other issue was, did the insurance agent supply the answers or where the answers supplied by the insured.
Fourth Issue: Projected Revenues
Most insurance policies are issued based on the projected revenues of the company. In rare instances, some outdoor recreation policies are issued based on expected user days. User days are used when it is easy to verify the number of user’s days, as in a whitewater rafting company working on river controlled by a federal land management agency which is also tracking user days. User days are the number or days a client is on the river. A half day counts as a full user day.
So, an insurance policy application has a place for the applicant to enter an estimate of the projected revenues for the season or year. Your premium is based on that number. When you sign the application, in most cases, you are also agreeing to be audited to make sure the number you put on the application is what your sales or income is. In this case, those projections were lower than the prior year.
Atain argues the projected amount listed on the Application was substantially lower than NMG’s actual revenue for the year preceding the Application and disproportionately less than the revenue NMG actually received in the Policy year.
The court rejected this argument because the projection was based on several factors that made the insured believe that his income was going to be lower that year.
First, Vulpis was divorcing his spouse, which he believed would impact NMG’s ability to remain in business. Second, Vulpis had hired new guides, and expected revenues would be lower while his new guides gained experience. Third, “a chronic, life-threatening auto-immune disease” hospitalized Vulpis shortly before he filed the Application, and he was “not sure [he] would live through” the year, “much less have any revenues in NMG.” Even taking those factors into account, the revenue Vulpis projected on the Application was approximately equal to NMG’s annual revenue two years prior to the Application, and was slightly lower than the average of the revenue for the preceding three years. Taking these facts in the light most favorable to NMG, a reasonable fact-finder could determine NMG did not knowingly misrepresent its projected income.
Fifth Issue: use of independent contractors
The outfitter specifically stated on the insurance application that he did not use sub-contractors or independent contractors. Then after the accident it came to light that some people working for the outfitter might be independent contractors.
The court did not accept this motion because it was unclear what the people working for the outfitter were. Also, the outfitter had been told by the insurance agent to say no on the application about sub-contractors or independent contractors.
You had two conflicting issues that prevented the appellate court from deciding this issue. The first was further complicated because the court felt the insurance did not understand what an independent contractor was.
Sixth Issue: Knowing Misrepresentation
The insurance company argued that the policy should be rescinded because the outfitter made knowing misrepresentations, about whether or not he was hiring independent contractors or used only employees.
The court through this motion because it felt the outfitter really did not know the difference.
Given the issue’s complexity, the Court is not surprised Vulpis’s testimony suggests he had genuine difficulty distinguishing between employees and independent contractors. Vulpis’s testimony concerning his thinking at the time demonstrates his confusion. For instance, Vulpis described his guides as “1099 employees,” something of a misnomer. When completing the Application, Vulpis discussed how to answer the “independent contractor” question with Donald Pachner, whose less-than-illuminating explanation was to describe the meaning of independent contractor as a “gray area Even when answering interrogatories in this case—presumably with the assistance of counsel—Vulpis initially described his guides as independent contractors, then amended his answer to strike that characterization. The Application does not instruct the applicant on the meaning of “independent contractor,” nor does it suggest which (if any) of the legal tests an applicant should apply—missing an opportunity to dispel Vulpis’s confusion.
The court stated:
The variety of tests creates a “paradoxical truth that even when the same person performs the same acts at the same time in the same place under the same conditions,” the person “may be considered an employee for one purpose and an independent contractor for another.”
The court recognized the issue that whether or not a person working for you is an independent contractor or not is not only confusing and constantly litigated by the courts, not necessarily something a non-lawyer can understand.
Viewed in the light most favorable to non-movant NMG, a reasonable fact-finder could determine Vulpis merely failed to appreciate every nuance of the difference between employees and independent contractors when he wrote on the Application NMG did not use independent contractors or subcontractors. Such a misunderstanding would constitute an “honest mistake,” not a “lie” or a “willful” falsification.
Seventh Issue: Failure to Maintain Signed Liability Waivers
This next issue is a two-factor issue. If the employee/contractor signed a release, he was probably not an employee and was either a contractor or guest. A release was a factor required by the insurance company. If a release was signed it would stop the lawsuit by the injured employee/contractor. A release or liability waiver signed by all participants was a condition of coverage under the policy.
If there was no release signed, then the injured employee/contractor was probably an employee and covered by Worker’s Compensation. Either way, a signed release or no release provided an out for the insurance company.
New Jersey law permits an insurer to escape liability for its obligations under an insurance policy if the insured breaches a condition of coverage, but only if the insurance carrier suffers appreciable prejudice from the breach.
There is a two-factor test under New Jersey law the insurance company must meet to win on a coverage condition argument.
“[F]irst, ‘whether substantial rights have been irretrievably lost’ as a result of the insured’s breach, and second, ‘the likelihood of success of the insurer in defending against the accident victim’s claim’ had there been no breach.”
Since the insurance company wrote the policy, the insurance company has the burden of proving both factors of the test.
The motion for summary judgment was denied because the outfitter said that he misplaced the waiver. An even bigger reason for not granting the motion was:
Second, even if Atain cannot obtain Manchester’s waiver in time to rely on the waiver against Manchester in the underlying state court litigation, the absence of Manchester’s waiver will not necessarily reduce “the likelihood of success of the insurer in defending against the accident victim’s claim.”
The court is probably correct in this statement because the injured guide had signed several releases previously. There was just not one for the day of the accident.
NMG has provided Atain with Manchester’s signed acknowledgment of receipt of NMG’s employee handbook, which contains a waiver form. Moreover, while Vulpis acknowledged he could not locate the forms, Vulpis testified Manchester had previously signed a waiver (1) when Manchester initially became was a customer of NMG prior to serving as a guide, and (2) for the year 2015, when Manchester served as a guide. The only contrary evidence is Manchester did not sign a waiver on the day of the Injury. Atain points to no evidence contradicting Vulpis’s testimony concerning Manchester previously signing a waiver before the day of the Injury. Viewing the facts in the light most favorable to NMG, a genuine issue of material fact exists concerning whether NMG’s loss of Manchester’s waiver will appreciably prejudice Atain’s defense of Manchester’s underlying state court litigation.
At this point, the case is scheduled to proceed to trial.
So Now What?
1. I’ve said dozens of times, every person on a trip has to be identified as either an employee or a participant. If the person is an employee, they have to be listed on the worker’s compensation insurance. Everyone else, paying customer, friend, independent contractor or your mother-in-law must sign a release.
2. Independent contractors are a liability mess. Many companies attempt to use independent contractors because they believe it saves them state and federal taxes. It might. And it can be a good way to get a company started for the first several months. However, the issue of independent contractors has more traps than value.
There are no liability savings. As the outfitter or company, you are liable for any incident no matter if the person who caused the issues is an employee or independent contractor. If nothing else, you are liable for hiring an independent contractor who failed to do their job properly.
First contractors, especially in the outdoor industry, don’t have health insurance. So many, if injured, have no way to pay for their medical bills. Consequently, using independent contracts increases your chances of having a lawsuit, just like this one, because an independent contractor needs money to pay his or her medical bills and other bills when they can’t work.
On top of the other issues, proving someone is an independent contractor is very difficult. Many states have adopted the rule that says unless certain requirements are met, such a written contract, an independent contractor is an employee. An independent contractor has the right to show up at the job site at any time they want unless written differently in the contract. They should bring their own tools to work and have the freedom to make decisions. The only control the person hiring the contractor has over the independent contractor is to specify the job, the time frame, and how much they are going to pay for the job.
An even bigger issue for an employer is what is everyone else in the industry doing. If all of your competitors are using employees and not independent contractors, you face an insurmountable hurdle.
As the court stated:
Distinguishing independent contractors from employees is among the most contentiously litigated issues in courts today, arising in a host of different contexts, each with a different standard.
3. UNDERSTAND your insurance application, do not lie on it. If there are issues or questions, then attach a supplemental letter to the broker or to the policy explaining the decisions or answers on the application.
4. When you get your policy read it. You must know and understand all conditions of coverage. What must you do to make sure the policy covers you.
You also must know what you bought. Does the policy cover the activities that your company is doing? If in the summer you teach fishing at a pond and once in a while in the winter people ice skate on the same pond, you are more than a fishing guide and you better have coverage for ice skating.
What do you think? Leave a comment.
Who am I
Jim Moss
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I represent Manufactures, Outfitters, Guides, Reps, College & University’s, Camps, Youth Programs, Adventure Programs and Businesses
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Atain Specialty Ins. v. Ne. Mountain Guiding, LLC (D. N.J. 2020)
Posted: May 9, 2022 Filed under: Climbing, New Jersey, Release (pre-injury contract not to sue) | Tags: Atain Speciality Insurance, Condition of Coverage, Employee, Independent Contractor, Insurance policy, Mountain Climbing, Mountaineering, NE Mountain Guiding, Northeast Mountain Guiding, Rock climbing Leave a commentTo Read an Analysis of this decision see: This is a confusing case concerning whether or not a person is an independent contractor or employee, has the right to sue the employer and whether the insurance company for the employer must provide coverage because of the confusion
Atain Specialty Ins. v. Ne. Mountain Guiding, LLC (D. N.J. 2020)
ATAIN SPECIALTY INSURANCE CO. Plaintiff,
v.
NORTHEAST MOUNTAIN GUIDING, LLC, et al., Defendants.
Case No. 3:16-cv-05129-BRM-LHG
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
January 30, 2020
NOT FOR PUBLICATION
OPINION
MARTINOTTI, DISTRICT JUDGE
Before this Court are Motions for Summary Judgment (ECF Nos. 70 & 73) filed by Plaintiff Atain Specialty Insurance Co. (“Atain”) and Third-Party Defendants Donald Pachner, Pachner & Associates, LLC, and Pachner Risk Management (collectively, “Pachner”). Defendant Michael Manchester (“Manchester”) opposes both motions. (ECF No. 80.) Defendants Northeast Mountain Guiding, LLC (“NMG”), Joseph Vulpis (“Vulpis”), and Bryan Enberg (“Enberg”) also oppose both motions. (ECF No. 86.) Pachner supports part and opposes part of Atain’s motion. (ECF No. 81.) Atain opposes part of Pachner’s motion and takes no position as to the remainder. (ECF No. 85.)
Having reviewed the parties’ submissions filed in connection with the motions and having declined to hear oral argument pursuant to Federal Rule of Civil Procedure 78(b), for the reasons set forth below and for good cause having been shown, Atain’s motion is DENIED and Pachner’s motion is GRANTED IN PART and DENIED IN PART.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Northeast Mountain Guiding and Its Guides
Vulpis is the founder and sole member of NMG, a limited liability company in the outdoor adventure and education industry. (ECF No. 86-14 ¶ 4.) Vulpis has significant training and experience, as well as multiple certifications, in the field in which NMG operates. (ECF No. 86-14 ¶¶ 5-7.) Enberg provided administrative assistance to NMG, developed a search and rescue training for NMG to provide to clients, and served as a mountaineering guide for NMG. (ECF No. 86-15 ¶ 3.) Manchester performed work for NMG as a Lead Backpacking Guide and Assistant Rock Guide. (ECF No. 70-8, at 16:6-20.)
B. Pachner Procures Insurance from Atain for Northeast Mountain Guiding
Donald Pachner is the sole member of Pachner & Associates, LLC and Pachner Risk Management, LLC. (ECF No. 73-3 ¶ 1.) Donald Pachner and Pachner & Associates, LLC possess insurance broker licenses under New Jersey law. (ECF No. 73-31, at 1-2.)
Vulpis retained Pachner to obtain general commercial liability insurance for NMG. (ECF No. 73-3 ¶ 7.) As part of this process, Pachner and Vulpis worked together to fill out an application (the “Application”) for insurance. (ECF No. 73-3 ¶¶ 8-10; ECF No. 73-33, at ATN000331-41.) The Application required Vulpis to estimate NMG’s gross revenues for the coming year. (ECF No. 73-33, at ATN000332.) On Pachner’s advice, Vulpis checked the “No” box when answering the Application’s question concerning whether NMG “hire[s] Concessionaires, Independent Contractors, or Subcontractors.” (ECF No. 73-33, at ATN 000334; ECF No. 73-12, at 221:11-222:11.) As part of the Application, Vulpis initialed next to a requirement NMG (1) obtain from all participants an Atain-approved waiver of liability form, and (2) maintain those forms for three years. (ECF No. 70-17, at ATN000339.) In response to NMG’s Application, Atain issued an insurance quote (the “Quote”), which Vulpis reviewed with Pachner. (ECF No. 72-1, at 233:24-234:23.) Among other things, the Quote contains a summary of several of the terms the Policy would contain. (ECF No. 73-37, at 2.)
Pachner procured insurance (the “Policy”) from Atain for NMG. (ECF No. 73-3 ¶ 12.) The Policy limits coverage to “GUIDED MOUNTAINEERING INCLUDING TOP ROPE CLIMBING & RAPPELLING; GUIDED KAYAK TRIPS; GUIDED SNOWSHOEING; GUIDED HIKING/BACKPACKING INCLUDING CAMPING.” (ECF No. 86-6, at Atain 47.) The Policy excludes coverage for injuries suffered “in the course of employment by or service to” NMG. (ECF No. 70-5, at ATN000402.)
C. Manchester’s Injury
On November 21, 2015, Manchester suffered an injury (the “Injury”) while using certain equipment (the “Equipment”) to engage in a certain activity (the “Activity”). Much of the dispute, in this case, centers on the proper characterization of the Activity and the Equipment. The essence of the Activity is that the participant uses the Equipment to move between two points. (ECF No. 73-12, at 16:2-7.) The evidence conflicts concerning whether the Equipment is a “Tyrolean Traverse” or a “Clifftop Zipline.” (ECF No. 86-14 ¶¶ 33-36; ECF No. 73-12, at 75:1-10, 186:6-191:4.) Ziplines were derived from Tyrolean Traverses, but the differences are too fine for untrained individuals to differentiate between the two. (ECF No. 73-12, at 58:5-7.)
On November 21, 2015, three NMG guides—Christy DeMarco, Enberg, and Vulpis—went to Allamuchy State Park to test the Equipment NMG expected to offer in the future for its customers. Vulpis and the other three guides set up the Equipment. (ECF No. 86-14 ¶ 46.) Manchester was present at the time, and engaged in the Activity by traveling on the Equipment. (ECF No. 86-14 ¶¶ 46-47.) While engaged in the Activity, Manchester suffered the Injury. (ECF No. 86-14 ¶ 47.)
D. Litigation
Following his injury, Manchester filed a state court negligence action against Vulpis, Enberg, and NMG. (ECF No. 1 ¶ 12.) NMG made a claim for coverage with Pachner and Atain. (ECF No. 86-14 ¶ 51-52.) When reporting the claim to Atain, Pachner described Manchester as an independent contractor for NMG. (ECF No. 70-21, at 161:11-13.)
Atain filed this coverage action against its Vulpis, Enberg, and NMG, and also joined Manchester as a defendant. (ECF No. 1 ¶ 1-5.) Atain seeks declaratory judgments against Vulpis, Enberg, NMG, and Manchester, authorizing Atain to disclaim coverage Manchester’s Injury. (ECF No. 1 ¶¶ 31-51.) Additionally, Atain seeks a declaratory judgment voiding the Policy under common law rescission principles and the New Jersey Insurance Fraud Prevention Act, N.J. Stat. Ann. § 17:33A-1 et seq. (ECF No. 1 ¶¶ 52-65.)
Vulpis, Enberg, and NMG brought a third-party action against NMG’s insurance broker Pachner, alleging Pachner’s negligence caused any failure of coverage by Atain. (ECF No. 29 ¶¶ 28-34.) Manchester brought a similar action against Pachner. (ECF No. 28, at 3-7.)
II. LEGAL STANDARD
Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Farrell v. Planters Lifesavers Co., 206 F.3d 271, 278 (3d Cir. 2000). A factual dispute is genuine only if there is “a sufficient evidentiary basis on which a reasonable jury could find for the non-moving party,” and it is material only if it has the ability to “affect the outcome of the suit under governing law.” Kaucher v. Cnty. of Bucks, 455 F.3d 418, 423 (3d Cir. 2006); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment. See id. at 248. “In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the non-moving party’s evidence ‘is to be believed and all justifiable inferences are to be drawn in his favor.'” Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at 255)); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, (1986); Curley v. Klem, 298 F.3d 271, 276-77 (3d Cir. 2002). “Summary judgment may not be granted . . . if there is a disagreement over what inferences can be reasonably drawn from the facts even if the facts are undisputed.” Nathanson v. Med. Coll. of Pa., 926 F.2d 1368, 1380 (3rd Cir. 1991) (citing Gans v. Mundy, 762 F.2d 338, 340 (3d Cir.)); Ideal Dairy Farms, Inc. v. John Labatt, Ltd., 90 F.3d 737, 744 (3d Cir. 1996).
The party moving for summary judgment has the initial burden of showing the basis for its motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party bears the burden of persuasion at trial, summary judgment is appropriate only if the evidence is not susceptible to different interpretations or inferences by the trier of fact. Hunt v. Cromartie, 526 U.S. 541, 553 (1999). On the other hand, if the burden of persuasion at trial would be on the non-moving party, the party moving for summary judgment may satisfy Rule 56’s burden of production by either (1) “submit[ting] affirmative evidence that negates an essential element of the non[-]moving party’s claim” or (2) demonstrating “that the nonmoving party’s evidence is insufficient to establish an essential element of the nonmoving party’s claim.” Celotex, 477 U.S. at 330 (Brennan, J., dissenting). Once the movant adequately supports its motion pursuant to Rule 56(c), the burden shifts to the non-moving party to “go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Id. at 324; see also Matsushita, 475 U.S. at 586; Ridgewood Bd. of Ed. v. Stokley, 172 F.3d 238, 252 (3d Cir. 1999). In deciding the merits of a party’s motion for summary judgment, the court’s role is not to evaluate the evidence and decide the truth of the matter, but to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249. Credibility determinations are the province of the factfinder. Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992).
There can be “no genuine issue as to any material fact,” however, if a party fails “to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322-23. “[A] complete failure of proof concerning an essential element of the non[-]moving party’s case necessarily renders all other facts immaterial.” Id. at 323; Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir. 1992).
A. Coverage for “Guided Mountaineering”
Atain and Pachner both argue Manchester’s Injury is not covered under the Policy because the Policy covers only “guided mountaineering,” and Vulpis and Enberg both testified Manchester’s Injury did not occur during a “guided” activity. (ECF No. 72-1, at 221:4-10; ECF No. 70-7, at 115:19-116:6.) Conflicting evidence prevents the Court from granting summary judgment. First, Vulpis’s testimony was more nuanced than Atain and Pachner suggest. While Vulpis testified he would not consider the Activity to be “guided,” Vulpis did consider the Activity to be “part of guided mountaineering.” (ECF No. 72, at 115:22-116:2.) Second, Vulpis testified Manchester received training and instruction from both Vulpis and Enberg for the Activity immediately prior to Manchester’s Injury. (ECF No. 72, at 85:20-86:12.) A reasonable jury could conclude Vulpis’s and Enberg’s training and instruction “guided” Manchester, who had little previous experience with the Equipment. (ECF No. 72, at 28:7-10.)
The Court is unpersuaded by Atain’s and Pachner’s argument alleging Vulpis’s and Enberg’s testimonies demonstrate the parties’ “intent” the Policy not cover the Activity. “[W]hen interpreting an insurance contract, the basic rule is to determine the intention of the parties . . . .” Simonetti v. Selective Ins. Co., 859 A.2d 694, 698 (N.J. Super. Ct. App. Div. 2004). While the contractual language is the Court’s primary tool, the Court may consider evidence of the parties’ intention beyond the four corners of the contract when, as here, the language of the insurance contract is ambiguous. See, e.g., Welcome v. Just Apts., No. L-9821-01, 2008 WL 2696252, at *3-4 (N.J. App. Div. July 11, 2008).
Vulpis’s and Enberg’s testimonies are two such pieces of evidence, but not the only evidence, of NMG’s intent when agreeing to the Policy. Other evidence suggests NMG did intend the Policy to cover the Activity. For instance, Vulpis testified he considered the Activity to be “part of guided mountaineering.” (ECF No. 72, at 115:22-116:2.) Enberg testified he understood a “guided” activity to be an activity in which there is “a guide who is leading the activity.”2 (ECF No. 70-7, at 115:17-18.) According to Vulpis’s testimony, this is exactly what happened. Vulpis and Enberg lead the Activity, instructing Manchester before Manchester participated. (ECF No. 72, at 85:20-86:12.) Manchester did not have the requisite training to serve as a guide on the Activity. (ECF No. 86-14 ¶ 11.) In light of this conflicting evidence, a genuine issue of material fact exists concerning whether or not the parties intended for the Policy to cover the Activity. Accordingly, the Court cannot grant summary judgment on this ground.
B. Injury “In the Course of Employment . . . or Service”
Atain next argues the Court should grant it summary judgment because the Employer’s Liability Exclusion precludes coverage for Manchester’s Injury because Manchester was acting “in the course of employment by or service to” NMG. (ECF No. 70-5, at ATN000402.) Pachner3 seeks summary judgment against Atain on this claim, arguing the Employer’s Liability Exclusion does not apply. Neither party is entitled to summary judgment concerning the effect of the Employer’s Liability Exclusion because the evidence conflicts concerning whether Manchester was, in fact, acting in the course of his NMG employment.
Several facts weigh in favor of finding Manchester was a participant acting outside the scope of his NMG employment at the time of his Injury. Manchester testified he had come to participate in the Activity because he “thought it would be fun.” (ECF No. 70-8, at 61:25-62:1.) Vulpis testified similarly: Manchester “came just to travel along the Tyrolean traverse. He wanted to try it out.” (ECF No. 72, at 85:13-14.) Manchester testified he never informed NMG he would be attending the Activity and further testified NMG did not know he would be attending. (ECF No. 70-8, at 62:18-20, 68:5-7.) Manchester did not consider himself an employee or representative of Vulpis or Enberg at the time of the Injury. (ECF No. 70-8, at 20:10-19.)
However, other factors weigh in favor of finding Manchester was acting within the scope of his employment or service to NMG. Most importantly, Manchester acknowledged he performed work for NMG as a Lead Backpacking Guide and Assistant Rock Guide. (ECF No. 70-8, at 16:6-20.) Vulpis and Manchester both testified Manchester came to be at Allamuchy State Park on the date of his injury because Vulpis posted an invitation to a Facebook group whose members consisted only of NMG guides and staff. (ECF No. 72, at 56:11-57:14; ECF No. 70-8, at 162:8-21.) Enberg testified although Manchester was not involved in setting up the Equipment and mostly observed others do so, Manchester did help Enberg “pull tension once, so just pull on a rope for me.” (ECF No. 70-7, at 95:23-96:8.) Enberg also testified, “[A]s far as I know, we just there all volunteering and testing the system.” (ECF No. 70-7, at 96:19-20.)
In short, the conflicting evidence creates a genuine issue of material fact. Accordingly, no party is entitled to summary judgment either for or against Atain’s claim concerning whether the Employer’s Liability Exclusion precludes coverage.
C. Rescission of the Policy
Atain also argues it is entitled to rescind the Policy in light of NMG’s material misrepresentations in the Application. Pachner argues the Court should grant summary judgment against Atain because Atain ratified the Policy despite knowing of the misrepresentations. The Court cannot grant summary judgment either for or against rescission because genuine issues of material fact remain (1) concerning whether NMG knowingly misrepresented any material facts, and (2) about the factual bases for rescission.
“In the field of insurance, rescission has long been recognized as an available and necessary remedy to combat fraudulent behavior by an insured.” Rutgers Cas. Ins. Co. v. LaCroix, 946 A.2d 1027, 1035 (N.J. 2008). “It is settled that a material factual misrepresentation made in an application for insurance may justify rescission [of the resulting insurance policy] if the insurer relied upon it to determine whether or not to issue the policy.” Citizens United Reciprocal Exch. v. Perez, 121 A.2d 374, 378 (N.J. 2015). “Rescission voids the [insurance policy] ab initio, meaning that it is considered ‘null from the beginning’ and treated as if it does not exist for any purpose.” First Am. Title Ins. Co. v. Lawson, 827 A.2d 230, 237 (N.J. 2003).
Rescission of an insurance policy for fraudulent misrepresentation is appropriate if four conditions are satisfied: (1) the applicant must make an “untruthful” representation to the insurer, (2) the representation must be “material to the particular risk assumed by the insurer,” (3) the insurer must “actually and reasonably rel[y] upon [the representation] in the issuance of the policy,” and (4) if the “insurance application . . . calls for subjective information,” then “the insured [must] kn[o]w that the information was false when completing the application.” Id.
Examples of subjective information include when an insurer asks an insured to indicate a belief about the status of his or her health, or when . . . an insurer asks whether an applicant is aware of any circumstances which may result in a claim being made against the firm[.] [A] subjective question will not constitute equitable fraud if the question is directed toward probing the knowledge of the applicant and determining the state of his mind and . . . the answer is a correct statement of the applicant’s knowledge and belief[.]
Id. (citations omitted).
A “mere oversight or honest mistake” will not support rescission. Rutgers, 945 A.2d at 1035 (quoting Longobardi v. Chubb Ins. Co. of N.J., 582 A.2d 1257, 1261 (N.J. 1990)). “The lie must be willful.” Longobardi, 582 A.2d at 1261. The insurer bears the burden of demonstrating the applicant “knew and believed” the information provided on the application was false and “knowingly misrepresented” the information provided to be true, but need not demonstrate the applicant “harbored an intent to defraud.” Mass. Mut. Life Ins. Co. v. Manzo, 584 A.2d 190, 195 (N.J. 1991).
1. Projected Revenues
First, Atain argues this Court should void the Policy because NMG materially misrepresented its projected revenues on its Application. The Court disagrees because the evidence, viewed in the light most favorable to non-movant NMG, precludes the Court from finding NMG knowingly4 misrepresented its projected revenues.5
Atain argues the projected amount listed on the Application was substantially lower than NMG’s actual revenue for the year preceding the Application and disproportionately less than the revenue NMG actually received in the Policy year. The Court declines to find these numerical discrepancies demonstrate a knowing misrepresentation. Vulpis testified several considerations left him doubtful NMG would succeed financially in the coming year when he filled out the Application for NMG. (ECF No. 86-14 ¶ 23.) First, Vulpis was divorcing his spouse, which he believed would impact NMG’s ability to remain in business. (ECF No. 86-14 ¶ 23.) Second, Vulpis had hired new guides, and expected revenues would be lower while his new guides gained experience.6 (ECF No. 86-14 ¶ 23.) Third, “a chronic, life-threatening auto-immune disease” hospitalized Vulpis shortly before he filed the Application, and he was “not sure [he] would live through” the year, “much less have any revenues in NMG.” (ECF No. 86-14 ¶ 23.) Even taking those factors into account, the revenue Vulpis projected on the Application was approximately equal to NMG’s annual revenue two years prior to the Application and was slightly lower than the average revenue for the preceding three years. (ECF No. 86-14 ¶ 23.) Taking these facts in the light most favorable to NMG, a reasonable fact-finder could determine NMG did not knowingly misrepresent its projected income.
Atain also points to Vulpis’s testimony about how he projected NMG’s revenue by merely “guess[ing] what I thought we might do for the season” and answered “no” when asked if he did any math to figure out the projected revenue. (ECF No. 72-1, at 217:3-12.) Atain argues these answers demonstrate Vulpis did not make a good faith revenue projection. The Court disagrees. When read in context, a reasonable fact-finder could determine Vulpis attempted to accurately project NMG’s revenues. Immediately before testifying he “guessed,” Vulpis testified he “guestimated” the revenue figures, and further testified his projection considered revenues “from previous years of business.” (ECF No. 72-1, at 216:23, 217:13-14.) Combined with his more detailed testimony about how Vulpis considered his divorce, new hires, and his medical condition when projecting revenue on the Application, and viewed in the light most favorable to NMG, genuine issues of material fact exists concerning whether Vulpis failed to make a good faith attempt to project NMG’s revenue.
2. Independent Contractors
Atain argues it is entitled to summary judgment because a second, unrelated misrepresentation on the Application—Vulpis’s statement claiming NMG did not use subcontractors or independent contractors—warrants rescission of the Policy. Pachner7 argues the Court should grant summary judgment against Atain on this ground because NMG accurately represented it did not use independent contractors. Pachner also argues summary judgment is appropriate against any claim Pachner negligently (1) advised Vulpis to answer “no” to the question on the Application asking about NMG’s use of subcontractors or independent contractors or (2) misidentified Manchester as an independent contractor when communicating with Atain. The Court rejects all these arguments because the evidence creates genuine issues of material fact concerning whether NMG (1) knowingly misrepresented its use of independent contractors, and (2) used independent contractors at all.8
i. Knowing Misrepresentation
Distinguishing independent contractors from employees is among the most contentiously litigated issues in courts today, arising in a host of different contexts, each with a different standard.9 The variety of tests creates a “paradoxical truth that even when the same person performs the same acts at the same time in the same place under the same conditions,” the person “may be considered an employee for one purpose and an independent contractor for another.” EEOC v. Zippo Mfg. Co., 713 F.2d 32, 35-36 (3d Cir. 1983) (“paradoxical truth”); Hoag v. Brown, 935 A.2d 1218, 1228 (N.J. Super. Ct. App. Div. 2007) (“may be considered”).
Given the issue’s complexity, the Court is not surprised Vulpis’s testimony suggests he had genuine difficulty distinguishing between employees and independent contractors. Vulpis’s testimony concerning his thinking at the time demonstrates his confusion. For instance, Vulpis described his guides as “1099 employees,” something of a misnomer.10 (ECF No. 86-14 ¶ 17.) When completing the Application, Vulpis discussed how to answer the “independent contractor” question with Donald Pachner, whose less-than-illuminating explanation was to describe the meaning of independent contractor as a “gray area.” (ECF No. 72-1, at 221:19-222:17.) Even when answering interrogatories in this case—presumably with the assistance of counsel—Vulpis initially described his guides as independent contractors, then amended his answer to strike that characterization. (ECF No. 72, at 19:7-23:20.) The Application does not instruct the applicant on the meaning of “independent contractor,” nor does it suggest which (if any) of the legal tests an applicant should apply—missing an opportunity to dispel Vulpis’s confusion. (ECF No. 70-17, at ATN00034.)
Viewed in the light most favorable to non-movant NMG, a reasonable fact-finder could determine Vulpis merely failed to appreciate every nuance of the difference between employees and independent contractors when he wrote on the Application NMG did not use independent contractors or subcontractors. Such a misunderstanding would constitute an “honest mistake,” not a “lie” or a “willful” falsification. Rutgers, 945 A.2d at 1035; Longobardi, 582 A.2d at 1261. Drawing all inferences in non-movant NMG’s favor, a genuine issue of material fact remains concerning whether Vulpis knowingly misrepresented NMG’s use of independent contractors.
ii. Independent Contractors vs. Employees
While Atain is not entitled to summary judgment on its claim concerning Vulpis’s knowing misrepresentation of his use of independent contractors, neither is Pachner entitled to summary judgment against Atain on the same issue. Pachner argues Vulpis’s representation was accurate because NMG’s guides were not independent contractors. A host of evidence suggests the opposite. For instance, Vulpis deducted over $10,000 for “cost of contract labor” and “subcontractors” on the 2015 federal income tax form (and corresponding worksheet) covering NMG’s profit and loss. (ECF No. 70-19, at sch. C, line 11.11) Manchester testified NMG classified its guides as “subcontractors” in its accounting software. (ECF No. 70-7, at 54:12-20.) Manchester further testified Vulpis repeatedly used the term “independent contractor” to describe guides. (ECF No. 70-7, at 54:23-55:8.) Viewed in the light most favorable to non-movant Atain, this evidence creates a genuine issue of material fact concerning whether NMG’s guides were in fact, independent contractors.
iii. Pachner’s Advice to Vulpis
Pachner also argues summary judgment is appropriate against any claim concerning Pachner’s negligent advice to Vulpis to answer “no” to the question on the Application asking about NMG’s use of subcontractors or independent contractors. However, as Pachner points out, Pachner’s negligence in this instance “is only relevant insofar [as] Atain is seeking to rescind the Policy based on [NMG’s] answer” concerning independent contractors or subcontractors. (ECF No. 73-2, at 19.) Because genuine issues of material fact exist concerning whether Atain may rescind the Policy on the basis of NMG’s use of independent contractors, see part III.C.2.i., supra, the same genuine issues of material fact necessarily exist concerning Pachner’s alleged negligent advice to Vulpis concerning this question. Accordingly, the Court cannot grant summary judgment on this ground.
iv. Pachner’s Misidentification of Manchester as a Contractor
Pachner asks the Court to grant summary judgment on any claim concerning Pachner’s negligent mislabeling of Manchester as an independent contractor when Pachner first reported Manchester’s Injury to Atain. The Court cannot grant summary judgment. As with Pachner’s advice to Vulpis, Pachner’s statement to Atain identifying Manchester as an independent contractor relates only to Atain’s claim for rescission of the Policy for NMG’s misrepresentation of its use of independent contractors. Because genuine issues of material fact exist concerning whether Atain may rescind the Policy on this basis, see part III.C.2.i., supra, the same genuine issues of material fact exist concerning Pachner’s characterization to Atain of Manchester as an independent contractor. Accordingly, the Court cannot grant summary judgment on this ground.
3. Training and Education Relating to “Search and Rescue” Operations
Atain also argues NMG committed a knowing misrepresentation when it failed to disclose its training and education programs concerning search and rescue operations. The Court declines to grant summary judgment on this claim, because Atain did not plead this claim in its complaint.
“Each and every claim for relief that a plaintiff seeks to press must be set forth in the Complaint.” Bravo v. Union Cty., Civ. No. 12-2848, 2013 WL 2285780, at *8 (D.N.J. May 23, 2013). Failure to do so has consequences. One consequence is that this Court may not “grant[] summary judgment on a claim that was never pleaded.” Day v. White, 764 F. App’x 164, 166 (3d Cir. 2019) (quoting Michelson v. Exxon Rsrch. & Eng’g Co., 808 F.2d 1005, 1009 (3d Cir. 1987)). “To the extent the plaintiff discovers new information giving rise to additional claims, the plaintiff must amend the Complaint to assert those claims and properly put the defendant on notice of them.” Bravo, 2013 WL 2285780, at *8; see also Tavarez v. Twp. of Egg Harbor, Civ. No. 09-6119, 2012 WL 13186197, at *4 (D.N.J. Aug. 3, 2012); Durham v. Vekios, Civ. No. 09-5376, 2011 WL 3667560, at *4 (D.N.J. Aug. 22, 2011).
Atain contends it “asserted a cause of action for rescission based upon material misrepresentation” in its complaint, which Atain argues is broad enough to cover any misrepresentation relating to NMG’s training and education programs concerning search and rescue. (ECF No. 93, at 29.) The Court disagrees because Atain’s “Material Misrepresentation” claim—Count Six12—alleges only a material misrepresentation concerning NMG’s engagement in “Ropes/Challenge Course Facilitation.” (ECF No. 1 ¶¶ 52-59.) Count Six does not mention search and rescue, much less alleging a material misrepresentation relating to NMG’s education and training concerning search and rescue operations.
Atain further argues it did not learn of the misrepresentation concerning search and rescue operations until well into the discovery period of this litigation. This fact does not excuse Atain from seeking to amend its complaint. If Atain learned late in the litigation it had an additional claim of which it was previously unaware, its appropriate course was to seek leave to amend its complaint to add the new claim. See Bravo, 2013 WL 2285780, at *8. Atain did not do so. Because Atain’s complaint does not plead any claim related to search and rescue operations, Atain may not obtain summary judgment on this unpleaded claim. See Day, 764 F. App’x at 166.
However, even if Atain did plead this claim, a genuine issue of material fact precludes summary judgment concerning whether NMG knowingly failed to disclose its education and training programs concerning search and rescue operations. The record contains evidence Vulpis and Enberg both believed these activities were no different than NMG’s other activities NMG had already disclosed on NMG’s initial Application. (ECF No. 86-14 ¶¶ 37-42; ECF No. 86-15 ¶¶ 3-6.) Viewed in the light most favorable to non-movant NMG, this evidence13 is sufficient to create a genuine issue of material fact.
4. Ratification of the Policy
Pachner14 argues the Court should grant summary judgment against Atain on its claim for rescission because Atain has ratified the Policy. The Court disagrees because (1) the Federal Rules of Civil Procedure prohibit this Court from construing the allegations in one claim as an admission against an alternative or inconsistent second claim, and (2) the evidence conflicts concerning whether Atain’s actions constitute ratification of the Policy.
i. Ratification by Lawsuit
First, Pachner argues Atain cannot file a lawsuit demanding both to disclaim coverage or, in the alternative, to rescind the Policy. Doing so, Pachner argues, constitutes ratification of the Policy and bars rescission. See Merchants Indem. Corp. v. Eggleston, 179 A.2d 505, 514 (N.J. 1962). Assuming without deciding New Jersey law treats an action to disclaim coverage as a ratification of the Policy and thus prohibits a claim for rescission, Pachner is still not entitled to summary judgment because “[t]he Federal Rules of Civil Procedure permit parties to file pleadings containing inconsistent factual and legal allegations.” W.V. Realty, Inc. v. N. Ins. Co., 334 F.3d 306, 316 (3d Cir. 2003).
“A party may state as many separate claims or defenses as it has, regardless of consistency.” Fed. R. Civ. P. 8(d)(3). For instance, a plaintiff may simultaneously plead claims for both breach of contract (which requires the existence of a contract) and unjust enrichment (which requires the non-existence of a contract). See Hughes v. TD Bank, N.A., 856 F. Supp. 2d 673, 680 n.4 (D.N.J. 2012); Dewey v. Volkswagen AG, 558 F. Supp. 2d 505, 528-29 (D.N.J. 2008); cf. Showalter v. Brubaker, 283 F. App’x 33, 36 (3d Cir. 2008) (permitting defendants in a civil rights action under 42 U.S.C. § 1983 to simultaneously plead both (1) they are entitled to governmental immunity and (2) their actions were wholly private and therefore not under color of state law).
Importantly, this allowance for inconsistent claims “has been interpreted to mean that a court ‘may not construe [a plaintiff’s] first claim as an admission against another alternative or inconsistent claim.'” Indep. Enters. v. Pitt. Water & Sewer Auth., 103 F.3d 1165, 1175 (3d Cir. 1997) (quoting Henry v. Daytop Village, 42 F.3d 89, 95 (2d Cir. 1994)). For instance, a claim for abuse of process does not implicitly concede the legitimacy of prosecution so as to invalidate a simultaneous claim for malicious prosecution. See Evans v. City of Newark, Civ. No. 14-120, 2016 WL 2742862, at *5 n.7 (D.N.J. May 10, 2016).
Atain’s claims are subject to this rule. Assuming without deciding a claim to disclaim coverage and a claim to rescind the Policy are inconsistent under New Jersey law, the Federal Rules of Civil Procedure permit Atain to make both claims simultaneously. Accordingly, Atain’s claim for a disclaimer of coverage does not constitute a ratification of the Policy.
ii. Ratification by Action
Second, Pachner argues Atain’s actions constitute ratification of the contract. Genuine issues of material fact preclude the issuance of summary judgment on this ground.
“[T]he remedy [of rescission] is discretionary and will not be granted where the claimant has not acted within a reasonable time or where there has been substantial performance.” Farris v. Cty. of Camden, 61 F. Supp. 2d 307, 336 (D.N.J. 1999) (quoting Notch View Assocs. v. Smith, 615 A.2d 676, 680 (N.J. Super. Ct. Law Div. 1992)); see also Rowen Petrol. Props., LLC v. Hollywood Tanning Sys., Inc., Civ. No. 08-4764, 2011 WL 6755838, at *10 (D.N.J. Dec. 23, 2011) (same). “[W]here a party ‘is cognizant of fraud or misrepresentation and fails to promptly rescind the . . . agreement or transaction, and instead engages in conduct which assumes the validity of the [agreement], then the agreement or transaction may be deemed ratified.'” Everest Nat’l Ins. Co. v. Sutton, Civ. No. 07-722, 2008 WL 3833586, at *8 (D.N.J. Aug. 13, 2008) (quoting Notch View, 615 A.2d at 685).
Pachner argues Atain received notice of its potential grounds for rescission on or before November 30, 2015, when Atain received an e-mail with a description of the events leading to Manchester’s Injury and a discussion of how Manchester was an “independent contractor” for NMG. (ECF No. 73-43, at Atain 73-75.) Assuming without deciding this e-mail put Atain on notice of its potential grounds for rescission,15 the evidence of ratification following this date is mixed, precluding summary judgment.
For instance, Atain issued a “Notice of Conditional Renewal” to NMG on January 6, 2016, “to advise that [Atain is] agreeable to renewing this policy subject to” new terms and conditions and a rate increase. (ECF No. 73-45, at 1.) This explicit statement suggests Atain treated the Policy as valid. However, this evidence of ratification is tempered by testimony from Atain’s former director of underwriting for recreational programs, Grace Cunningham, who noted Atain issued the conditional renewal “until [Atain] received more information about the claim.” (ECF No. 73-16, at 270:10-11.) Cunningham also testified, “We rescinded this,” after Atain learned more. (ECF No. 73-16, at 270:16-19.)
Other evidence is also ambiguous. Although, Atain appears to have kept the Policy premium16 rather than refund it to NMG, the normal course of rescission litigation appears to allow an insurer to maintain the premium while litigation is pending, and to refund the policyholder after the litigation is successful. See, e.g., Liebling v. Garden State Indem., 767 A.2d 515, 465 n.1 (N.J. Super. Ct. App. Div. 2001). Additionally, Atain negotiated an explicit agreement with Vulpis, Enberg, and NMG to allow Atain to follow this procedure. (ECF No. 70-13, at ATN000051, ATN000068.) Under these circumstances, the Court cannot say Atain’s retention of the Policy premium necessarily demonstrates Atain ratified the Policy.
The record also contains contrary evidence suggesting Atain did not act to ratify the Policy, but instead acted with diligence concerning the possibility of rescinding the Policy. For example, Atain wrote a letter to NMG on February 23, 2016, in which it sought to reserve its right to rescind the Policy. (ECF No. 73-44, at 2.) Likewise, Atain negotiated and, on August 8, 2016, executed non-waiver agreements with Vulpis, Enberg, and NMG to protect Atain’s right to seek rescission of the Policy. (ECF No. 70-13, at ATN000049-53, ATN000066-70.) And, of course, Atain filed this action on August 23, 2016. (ECF No. 1, at 21.) Pachner points to deficiencies in Atain’s reservation-of-rights letter, but no matter the deficiencies, the letter, non-wavier agreement, and declaratory judgment action are not the acts of a company taking action to ratify the Policy. Cf. Annito v. Trump Marina Hotel Casino, No. L-5622-02, 2005 WL 4344137, at *8 (N.J. Super. Ct. App. Div. July 25, 2006) (“By paying his casino debts when he was sober, plaintiff ratified his prior promises to repay the loans, even if they were made while he was intoxicated and not competent to contract.”).
However, the most important evidence is missing. Pachner’s critical argument is Atain ratified the Policy by failing to act promptly after learning of the potential grounds for rescission as a result of the November 30, 2015 e-mail. (ECF No. 73-43, at Atain 73-75.) Pachner does not point to any evidence—other than the mere passage of time—showing Atain failed to follow up on the e-mail or to investigate the potential grounds for rescission the e-mail raised. Coupled with the ambiguous or contrary evidence above, a genuine issue of material fact exists concerning whether Atain ratified the Policy. Accordingly, the Court cannot grant summary judgment against Atain on its claim for rescission.
D. Failure to Maintain Signed Liability Waivers
Atain’s final argument is NMG’s failure to comply with a coverage condition—namely, obtaining a signed waiver and release of liability from all participants in NMG’s activities, and maintaining the signed document for three years—relieves Atain from its obligation to cover NMG’s exposure to Manchester’s underlying litigation. The Court rejects this argument because a genuine issue of material fact exists concerning whether the loss of Manchester’s waiver form appreciably prejudices Atain’s defense of Manchester’s underlying state court litigation.
New Jersey law permits an insurer to escape liability for its obligations under an insurance policy if the insured breaches a condition of coverage, but only if the insurance carrier suffers appreciable prejudice from the breach. See, e.g., Gazis v. Miller, 847 A.2d 591, 595 (N.J. Super. Ct. App. Div. 2005). When determining the existence of appreciable prejudice, a court must consider two factors. “[F]irst, ‘whether substantial rights have been irretrievably lost’ as a result of the insured’s breach, and second, ‘the likelihood of success of the insurer in defending against the accident victim’s claim’ had there been no breach.” Hager v. Gonsalves, 942 A.2d 160, 164 (N.J. Super. Ct. App. Div. 2008) (quoting Sagendorf v. Selective Ins. Co. of Am., 679 A.2d 709, 715 (N.J. Super. Ct. App. Div. 1996)); see also Ohaus v. Continental Cas. Ins. Co., 679 A.2d 179, 185 (N.J. Super. Ct. App. Div. 1996).
The insurer bears the burden of demonstrating appreciable prejudice. See, e.g., Kenny v. N.J. Mfrs. Ins. Co., 746 A.2d 57, 59 (N.J. Super. Ct. App. Div. 2000). The existence of appreciable prejudice is generally a question for the finder-of-fact, and generally not appropriate for summary judgment. See, e.g., State Nat’l Ins. Co. v. Cty. of Camden, 10 F. Supp. 3d 568, 582-83 (D.N.J. 2014).
A genuine issue of material fact exists concerning whether the loss of Manchester’s misplaced waiver form will appreciably prejudice Atain. First, the record is not clear whether Manchester’s waiver form—and therefore, Atain’s ability to defend the underlying state court litigation using Manchester’s waiver—has been “irretrievably lost.” Hager, 942 A.2d at 164. Although NMG cannot locate the waiver at present, Atain points to no evidence NMG will be unable to locate the waiver in the future. In fact, NMG indicates it will willing to allow opposing counsel access to its physical files to conduct its own search for Manchester’s missing waiver. (ECF No. 86-2 ¶ 5.) Atain does not indicate it has accepted NMG’s offer.
Second, even if Atain cannot obtain Manchester’s waiver in time to rely on the waiver against Manchester in the underlying state court litigation, the absence of Manchester’s waiver will not necessarily reduce “the likelihood of success of the insurer in defending against the accident victim’s claim.” Hager, 942 A.2d at 164. NMG has provided Atain with Manchester’s signed acknowledgment of receipt (ECF No. 86-4, at 1) of NMG’s employee handbook, which contains a waiver form (ECF No. 86-3, at 22-24). Moreover, while Vulpis acknowledged he could not locate the forms, Vulpis testified Manchester had previously signed a waiver (1) when Manchester initially became a customer of NMG prior to serving as a guide, and (2) for the year 2015, when Manchester served as a guide. (ECF No. 72, at 55:13-56:3, 87:1-6.) The only contrary evidence is Manchester did not sign a waiver on the day of the Injury. (ECF No. 72, at 99:18-100:4; ECF No. 70-8, at 161:23-162:1.) Atain points to no evidence contradicting Vulpis’s testimony concerning Manchester previously signing a waiver before the day of the Injury. Viewing the facts in the light most favorable to NMG, a genuine issue of material fact exists concerning whether NMG’s loss of Manchester’s waiver will appreciably prejudice Atain’s defense of Manchester’s underlying state court litigation.
E. Pachner’s Insurance Producer Licenses
Pachner argues it is entitled to summary judgment on any negligence claim relating to Pachner’s failure to maintain insurance producer licenses. No party opposes Pachner’s argument. Assuming without deciding Pachner owes a duty to its clients or third parties to maintain appropriate licenses as an insurance producer, the uncontested evidence demonstrates Pachner in fact possessed the requisite licenses at the time he assisted NMG with its search for insurance coverage. (ECF No. 73-31, at 1-2.) Therefore, there is no genuine dispute of material fact concerning Pachner’s licensure, and Pachner is entitled to summary judgment on this claim.
F. Pachner’s Explanation of the Policy to NMG
Pachner argues the Court should grant summary judgment against NMG’s claims relating to Pachner’s failure to explain mountaineering-related terms in the Policy or the Application. The Court declines to grant summary judgment because a genuine issue of material fact remains concerning whether Pachner fulfilled his obligations to NMG as a broker.17
An insurance broker’s obligations are “(1) to procure the insurance; (2) to secure a policy that is neither void nor materially deficient; and (3) to provide the coverage he or she undertook to supply.” President v. Jenkins, 853 A.2d 247, 569 (N.J. 2004). “[A]n insurance broker owes a duty to his principal to exercise diligence in obtaining coverage in the area his principal seeks to be protected.” Satec, Inc. v. Hanover Ins. Grp., 162 A.3d 311, 317 (N.J. Super. Ct. App. Div. 2017) (quoting Werrmann v. Aratusa, Ltd., 630 A.2d 302, 304 (N.J. Super. Ct. App. Div. 1993)). A broker’s failure to inform a client about critical facts related to the client’s pursuit of insurance can constitute a breach of the broker’s duty. See Brill v. Guardian Life Ins. Co. of Am., 666 A.2d 146, 157 (N.J. 1995).
1. Subjective vs. Objective Understanding of Policy Terms
Pachner is not entitled to summary judgment concerning whether Pachner failed to explain certain mountaineering-related terms. The report of NMG’s expert Frank Seigel explains Pachner breached an insurance broker’s duty because Pachner “should have been familiar with how Atain handled and considered ‘mountaineering’ and ‘guided mountaineering’ and whether or not those terms, in Atain’s eyes, included the assembly and use of a Tyrolean Traverse.” (ECF No. 80-4, at 13.) Pachner argues Atain’s subjective understanding of these contested terms is irrelevant because of “the general rule that the terms in an insurance policy should be interpreted in accordance with their plain and commonly-understood meaning,” not the subjective meaning of the insurer. Cypress Point Condo. Ass’n v. Adria Towers, LLC, 143 A.3d 273, 286 (N.J. 2016).
This argument does not entitle Pachner to summary judgment. Pachner is correct that courts must “first consider the plain meaning of the language at issue.” N.J. Transit Corp. v. Underwriters at Lloyd’s, London, ___ A.3d ___, 2019 WL 6109144, at *4 (N.J. Super. Ct. App. Div. Nov. 18, 2019). But the plain language analysis is only one part of the approach to the interpretation of insurance contracts. Courts’ “goal in interpreting [insurance] policies is to ‘discover the intention of the parties[,]’ by considering ‘the contractual terms, the surrounding circumstances, and the purpose of the contract.'” Id. at *5 (quoting Marchak v. Claridge Commons, Inc., 633 A.2d 531 (1993). Atain’s subjective understanding of these terms is relevant to “discover[ing] the intention of the parties.” Id.
2. Vulpis’s Reliance on Pachner’s Information
Pachner also argues none of the Pachner entities breached any duty to inform NMG about relevant Policy terms because Vulpis testified he did not rely on Pachner for information about these terms. Vulpis’s testimony does not entitle Pachner to summary judgment because Vulpis could not have relied on Pachner for information Pachner did not provide, but should have. Cf. Brill, 666 A.2d at 157.
3. Vulpis’s Greater Level of Expertise Compared to Pachner
Pachner further argues Vulpis, as an expert in the mountaineering field, had greater familiarity than Pachner with terms like “mountaineering” and equipment like a “Tyrolean Traverse.” Therefore, Pachner argues, NMG had no need for any explanation from an individual like Pachner with a lesser level of expertise than Vulpis. The Court cannot grant summary judgment on this ground. The fact an insured possesses greater knowledge and expertise in a field than the insured’s broker does not relieve the broker from “exercis[ing] diligence in obtaining coverage in the area his principal seeks to be protected.” Satec, 162 A.3d at 317.
4. Pachner’s and Vulpis’s Awareness of NMG’s Activities
Pachner next points out Vulpis informed Pachner NMG engaged in “mountaineering” activities and requested insurance for those activities (ECF No. 70-17, at ATN000336), but Vulpis never alerted Pachner that NMG engaged in the Activity. Pachner asks this Court for summary judgment because, the argument goes, Pachner could not reasonably have been expected to procure coverage for an Activity of which it had no knowledge. Pachner also argues summary judgment is appropriate because Vulpis was aware the Policy did not cover the Activity because the Activity was not a “mountaineering” activity. The same genuine issue of material fact—namely, the conflicting evidence concerning whether the Activity qualified as a “mountaineering” activity (ECF No. 72-1, at 253:19-24; ECF No. 70-20, at 18:8-13; ECF No. 70-8, at 20:20-21:4)—precludes the entry of summary judgment on both grounds.
G. Pachner’s Failure to Recommend Workers’ Compensation Insurance
Pachner asks the Court to grant summary judgment on NMG’s claim related to Pachner’s failure to procure workers’ compensation insurance, as required by law. The Court cannot grant summary on this basis because genuine issues of material fact exist concerning whether (1) Pachner attempted to procure workers’ compensation insurance for NMG and (2) workers’ compensation insurance would have protected either NMG or Manchester.
An insurance broker’s obligations are “(1) to procure the insurance; (2) to secure a policy that is neither void nor materially deficient; and (3) to provide the coverage he or she undertook to supply.” President v. Jenkins, 853 A.2d 247, 569 (N.J. 2004). “[A]n insurance broker owes a duty to his principal to exercise diligence in obtaining coverage in the area his principal seeks to be protected.” Satec, Inc. v. Hanover Ins. Grp., 162 A.3d 311, 317 (N.J. Super. Ct. App. Div. 2017) (quoting Werrmann v. Aratusa, Ltd., 630 A.2d 302, 304 (N.J. Super. Ct. App. Div. 1993)). When a client retains a broker to procure insurance, the broker must procure legally mandated workers’ compensation insurance. See Schustrin v. Globe Indem. Co. of N.Y., 130 A.2d 897, 898 (N.J. Super. Ct. App. Div. 1957) (noting the jury’s finding that the broker was obligated to procure workers’ compensation insurance for the client).
Pachner argues a broker owes no duty to recommend additional coverage for a client. This argument does not affect the Court’s analysis. Pachner correctly points out New Jersey law imposes “no duty [on an insurance broker] to advise an insured to consider higher amounts of homeowner’s insurance.” Carter Lincoln-Mercury, Inc., Leasing Div. v. EMAR Grp., 638 A.2d 1288, 1292 (N.J. 1994) (citing Wang v. Allstate Ins. Co., 592 A.2d 527, 532-33 (N.J. 1991)). Assuming without deciding this principle extends to workers’ compensation, the principle still does not apply here. NMG does not claim Pachner failed to advise NMG to consider the option of purchasing higher policy limits. Instead, the case concerns an alleged failure by a broker to obtain workers’ compensation insurance for a client who was legally mandated to obtain such insurance. (ECF No. 80-4, at 13-14.) Were the Court to adopt Pachner’s argument, then NMG would possess a legal obligation to obtain workers’ compensation insurance, see N.J. Stat. Ann. § 34:15-71 (requiring employers to obtain workers’ compensation insurance), but NMG’s insurance broker Pachner would have no legal obligation to procure the insurance for NMG. This is not the law in New Jersey. See Schustrin, 130 A.2d at 898.
The delineation of a broker’s duties does not end the Court’s inquiry, because a plaintiff must show more than the failure to procure workers’ compensation insurance before liability will attach. “To succeed in an action against an insurance broker, the plaintiff must prove that in addition to being negligent, the broker’s negligence was a proximate cause of the loss.” Harbor Commuter Serv., Inc. v. Frenkel & Co., 951 A.2d 198, 207 (N.J. Super. Ct. App. Div. 2008). Put another way, the plaintiff must “establish[] that its loss would not have occurred but for defendant’s negligence, or that defendants’ negligence constituted a substantial contributing factor to the loss.” Id.
Two genuine issues of material fact preclude summary judgment. First, the record contains conflicting evidence concerning whether Pachner in fact attempted to obtain workers’ compensation insurance for NMG. (ECF No. 73-3 ¶¶ 4-5; ECF No. 73-10, at 6; ECF No. 86-14 ¶ 18.) Taking the evidence in the light most favorable to non-movants NMG and Manchester while making all reasonable inferences in their favor, a reasonable jury could find Pachner did not attempt to obtain workers’ compensation insurance for NMG.
The second genuine issue of material fact concerns whether (1) Pachner’s failure to procure workers’ compensation insurance for NMG either contributed to NMG’s and Manchester’s loss or (2) their loss would not have occurred had NMG purchased workers’ compensation insurance. As discussed earlier, genuine issues of material fact remain concerning whether Manchester qualified as an employee or an independent contractor. See part III.B., supra. Given this uncertainty, the record does not conclusively demonstrate whether or not workers’ compensation insurance would have covered Manchester’s Injury. Viewing this uncertainty in the light most favorable to non-movants NMG and Manchester while making all reasonable inferences in their favor, a reasonable jury could find Pachner’s failure to procure workers’ compensation insurance for NMG either contributed to NMG’s and Manchester’s loss, or their loss would not have occurred but for Pachner’s failure. In light of the two genuine issues of material fact, the Court cannot grant summary judgment against NMG’s and Manchester’s claims related to Pachner’s failure to procure workers’ compensation insurance for NMG.
H. Pachner’s Failure to Provide a Copy of the Policy
Pachner requests summary judgment on any claim it negligently failed to provide NMG with a copy of the Policy. The Court cannot grant summary judgment in light of the conflicting evidence.
An insurance broker has a duty to provide its client with any policy it receives from the insurer within 10 days of receipt by the broker. See N.J. Admin Code § 11:17A-4.6. According to Pachner, when “Pachner & Associates received a copy of the Policy, we made it available to NMG through our web portal.” (ECF No. 73-3 ¶ 13.) Vulpis testified that he never received the Policy until after Manchester’s Injury. (ECF No. 72, at 112:16-25.) In light of the conflicting evidence, a genuine issue of material fact precludes summary judgment.
Pachner argues even if Pachner did not provide Vulpis with a copy of the Policy, Pachner’s failure did not proximately cause any of NMG’s damages because Vulpis received a copy of the Quote. (ECF No. 72-1, at 233:21-236:8.) A genuine issue of material fact also precludes summary judgment on this basis. “To succeed in an action against an insurance broker, the plaintiff must prove that in addition to being negligent, the broker’s negligence was a proximate cause of the loss.” Harbor Commuter Serv., Inc. v. Frenkel & Co., 951 A.2d 198, 207 (N.J. Super. Ct. App. Div. 2008). Put another way, the plaintiff must “establish[] that its loss would not have occurred but for defendant’s negligence, or that defendants’ negligence constituted a substantial contributing factor to the loss.” Id.
A genuine issue of material fact exists concerning whether Pachner’s failure to provide the Policy to NMG substantially contributed to NMG’s loss by depriving Vulpis of important Policy details that would have prompted Vulpis to make inquiries about and adjustments to, NMG’s insurance. The Policy contains substantially more details about coverage than the Quote. For instance, while the Quote merely mentions the insurance “Excludes Injury to Employees, Leased Workers, Volunteers, and Independent Contractors,” the Policy actually defines several of these terms. (ECF No. 73-37, at 2; ECF No. 70-5, at ATN000373-76.) Unlike the Quote, the Policy spells out the exact terms of the exclusion for injury to employees or independent contractors. (ECF No. 70-5, at ATN000383.) Making all reasonable inferences in favor of non-movant NMG, a reasonable jury could find Vulpis would use the more detailed information in the Policy to inquire about his insurance and adjust it so as to explicitly cover incidents like the one in which Manchester suffered an Injury. Accordingly, the Court cannot grant summary judgment.
I. Pachner’s Duty to Manchester
Pachner asks this Court to grant summary judgment against Manchester because New Jersey law precludes Manchester from bringing an action against Pachner until Manchester obtains a judgment against NMG and the judgment is returned unsatisfied.18 The Court disagrees because Manchester is a foreseeable injured third party to whom Pachner, a broker, owes a duty. See Carter Lincoln-Mercury, Inc., Leasing Div. v. EMAR Grp., 638 A.2d 1288, 1297-98 (N.J. 1994).
“[A]n insurance broker may owe a duty of care not only to the insured who pays the premium and with whom the broker contracts but to other parties found within the zone of harm emanating from the broker’s actions as well.” Id. at 1297. When a broker negligently fails to procure insurance that would cover the injuries of a third party, the broker owes a duty to the third party, making the third party an appropriate plaintiff in a negligence action against the broker. See Impex Ag. Commodities Div. Impex Overseas Corp. v. Parness Trucking Corp., 576 F. Supp. 587, 591 (D.N.J. 1983) (applying New Jersey law). Pachner, as a broker, owes a duty to procure appropriate insurance not just to NMG, but also to Manchester—a foreseeable, injured third-party whose Injury NMG expected the Policy to cover. Because Pachner owes Manchester a duty, Manchester is therefore an appropriate plaintiff in a negligence action. Accordingly, summary judgment against Manchester on this basis is inappropriate. Pachner argues New Jersey is not a direct action state, meaning an injured third party may not bring an action directly against a tortfeasor’s insurance company in lieu of the tortfeasor. See Manukas v. Am. Ins. Co., 237 A.2d 898, 524 (N.J. Super. Ct. App. Div. 1968). But Pachner is not an insurance company against whom Manchester brings an action in lieu of the tortfeasor. Rather, Pachner is the tortfeasor. Manchester brings a negligence action against Pachner for Pachner’s negligent failure to obtain appropriate insurance for NMG that would cover Manchester’s Injury. Manchester does not bring an action against Pachner in the capacity of an insurer. Therefore, Pachner’s “direct action” argument is inapposite.
Pachner further argues New Jersey law imposes a bar against direct actions such as this one until the plaintiff obtains a judgment against the tortfeasor and is unable to execute on the judgment. See N.J. Stat. Ann. § 17:28-2. This argument does not entitle Pachner to summary judgment against Manchester for two reasons. First, as previously explained, Manchester has not brought a direct action against an insurer, because Pachner is the tortfeasor, not the tortfeasor’s insurer. Second, the statute’s language merely imposes a requirement on insurance contracts; it does not limit the circumstances under which a plaintiff may bring a tort action. See id. (“No policy of insurance . . . shall be issued or delivered in this state by any insurer authorized to do business in this state, unless [the policy allows the plaintiff to recover directly against the insurer if the tortfeasor is insolvent.]”). Because Manchester is not bringing an action for breach of an insurance contract, the statute has no application here.
Finally, Pachner argues Manchester cannot bring an action against Pachner until it has obtained a judgment against NMG. See Estate of Atanasoski v. Arcuri Agency, Inc., No. A-2291-17T4, 2019 WL 1986539, at *3-6 (N.J. Super. Ct. App. Div. May 6, 2019). Because an action by Manchester against NMG concerning Manchester’s Injury is pending in state court, the appropriate course for this Court would not be to grant summary judgment against Manchester (which would permanently extinguish Manchester’s right to recover against Pachner), but to await the outcome of the state court case before issuing any final judgment against Pachner in favor of Manchester.
J. Action Against Pachner Risk Management
Pachner argues, and the Court agrees, summary judgment is appropriate against Pachner Risk Management (“PRM”) because PRM had no relationship with Manchester, Enberg, Vulpis, or NMG, nor was PRM involved in procuring insurance for NMG. No party contests this argument, and the evidence supports it. Donald Pachner testified PRM has always been an inactive company and further testified PRM has never had anything to do with NMG. (ECF No. 73-11, at 126:14-127:5.) When asked whether “there was anything you came across that suggested [PRM] owed or breached any duty to [NMG],” NMG’s expert Frank Seigel testified he did not recall any reference to PRM in the file he reviewed. (ECF No. 73-15, at 180:8-23.) Because the undisputed evidence shows PRM had no connection to NMG, Vulpis, or the other parties in this case, the Court will grant summary judgment in favor of PRM.
K. Donald Pachner as Agent of His Disclosed Principal, Pachner & Associates
Pachner argues the Court should grant summary judgment in favor of Donald Pachner because he cannot be liable for the torts of his disclosed principal Pachner & Associates if Donald Pachner was merely serving as the agent of Pachner & Associates. See City of Millville v. Rock, 683 F. Supp. 2d 319, 326-28 (D.N.J. 2010). In light of New Jersey’s “participation theory” of principal-agent tort liability, the court disagrees.
Under New Jersey law, the “long-standing rule [is] that ‘[a]n agent who does an act otherwise a tort is not relieved from liability by the fact that he acted at the command of a principal or on account of the principal.'” Ballinger v. Del. River Port Auth., 800 A.2d 97, 110 (N.J. 2002) (quoting Restatement (Second) of Agency § 343 (1958)). New Jersey law refers to this as the “participation theory” of principal-agent tort liability.
[T]he essence of the participation theory is that a corporate officer can be held personally liable for a tort committed by the corporation when he or she is sufficiently involved in the commission of the tort. A predicate to liability is a finding that the corporation owed a duty of care to the victim, the duty was delegated to the officer and the officer breached the duty of care by his own conduct.
Saltiel v. GSI Consults., Inc., 788 A.2d 268, 272 (N.J. 2002); see also Reliance Ins. Co. v. The Lott Grp., 776-77 (N.J. Super. Ct. App. Div. 2004).
As the sole member of Pachner & Associates who served as the primary individual responsible for dealing with NMG during NMG’s effort to insure its activities, Donald Pachner meets these requirements. (ECF No. 73-3 ¶ 1; ECF No. 86-14 ¶ 16.) Accordingly, the Court may not grant summary judgment on this ground.
IV. CONCLUSION
For the reasons set forth above, Atain’s motion is DENIED and Pachner’s motion is GRANTED IN PART in favor of PRM on all claims and in favor of all Pachner parties on any claims relating to Pachner’s negligent failure to maintain appropriate licensure and DENIED IN PART in all other respects. An appropriate order will follow.
/s/ Brian R. Martinotti
HON. BRIAN R. MARTINOTTI
UNITED STATES DISTRICT JUDGE
Dated: January 30, 2020
——–
Footnotes:
1. The Court has jurisdiction pursuant to 28 U.S.C. § 1332.
2. Pachner also argues the Activity could not be “guided” as the Policy uses the term unless Vulpis or Enberg met the definition of “guide” in NMG’s Guide Handbook—”specially trained and experienced mountaineers, climbers, instructors, and outdoor professionals for hire.” (ECF No. 73-35, at 7.) The Court rejects this argument—which Pachner raises for the first time in a reply brief—because “arguments raised for first time in [a] reply brief will not be considered.” Washington v. Doran, 717 F. App’x 151, 155 (3d Cir. 2017).
Were the Court to consider Pachner’s argument on its merits, the argument would fail. First, Pachner offers no evidence the parties intended the Guide Handbook’s definition of “guide” to govern the Policy’s coverage for “guided” activities, nor any evidence the parties even considered the Guide Handbook’s definition at the time Atain issued the Policy. Second, even if the Guide Handbook’s definition did govern the Policy’s coverage for “guided” activities, Vulpis and Enberg meet the definition. Both Vulpis and Enberg possess special training, and were available for hire. (ECF No. 86-14 ¶¶ 4-7; ECF No. 86-15 ¶¶ 2-3.) The Guide Handbook’s definition does not require Manchester in fact have hired Vulpis or Enberg to guide Manchester on the day of the incident.
3. Manchester joins Pachner’s arguments. (ECF No. 80, at 19.) NMG, Vulpis, and Enberg also join Pachner’s arguments. (ECF No. 86, at 30.)
4. Because a genuine issue of material fact exists concerning whether NMG knowingly misrepresented its projected revenue, the Court need not decide (1) whether NMG’s projected revenue was material to the particular risk assumed by the Atain, nor (2) whether Atain’s remedy is limited to a retroactive increase in the Policy premium.
5. The Court declines to consider two of Atain’s arguments concerning whether NMG knowingly misrepresented its projected revenues. First, Atain argues—for the first time in its reply brief (ECF No. 93, at 25)—Vulpis improperly projected zero revenue from NMG’s Professional Services Division, which NMG had created shortly before applying for Atain’s insurance. Second, Atain argues—again, for the first time in its reply brief (ECF No. 93, at 25-26)—even if NMG’s revenue figures were reasonable at the time of the Application, NMG’s failure to update the figures as circumstances changed constitutes a knowing misrepresentation. The Court will not consider either argument because an argument raised for the first time in a reply brief is waived. See Haberle v. Borough of Nazareth, 936 F.3d 138, 141 n.3 (3d Cir. 2019).
Were the Court to consider Atain’s arguments on their merits, neither argument would prevail. With regard to revenue from NMG’s newly created Professional Services Division, the Court notes, “[m]ost new businesses fail. Pretty much all studies agree on that.” Thomas J. McIntyre, Note, Discriminatory Opportunism: Why Undertaking Self-Employment to Mitigate Damages Creates Unique Challenges, 45 Suffolk U. L. Rev. 549, 550 n.11 (2012) (quoting Scott A. Shane, The Illusions of Entrepreneurship 98 (2008)). That Vulpis projected no revenue from NMG’s new venture is unsurprising. In conjunction with the other evidence and viewed in the light most favorable to non-movant NMG, a reasonable fact-finder could still determine Vulpis did not knowingly misrepresent NMG’s projected revenue. With regard to NMG’s failure to update its revenue figures as its circumstances changed, the evidence viewed in a light most favorable to NMG does not rule out the possibility NMG’s failure to update its Application was a “mere oversight or honest mistake.” Rutgers, 945 A.2d at 1035 (quoting Longobardi, 582 A.2d at 1261).
6. Atain argues the existence of new hires indicates NMG’s business was growing, and is reason to expect a good faith estimate of NMG’s revenues would have been higher. While Atain’s argument is one permissible inference concerning this piece of evidence, the Court must draw all inferences concerning the new hires in favor of non-movant NMG.
7. Manchester joins Pachner’s arguments. (ECF No. 80, at 19.) NMG, Vulpis, and Enberg also join Pachner’s arguments. (ECF No. 86, at 30.)
8. Because these two genuine issues of material fact preclude summary judgment on these issues for both Atain and Pachner, the Court need not decide (1) whether principles of preclusion or estoppel require the Court to treat the guides as independent contractors for purposes of this litigation, nor (2) whether NMG’s representation concerning subcontractors and independent contractors was material to the particular risk assumed by Atain.
9. In the copyright context, a work is “made for hire” if the work’s author or creator is an “employee” under a non-exhaustive thirteen-factor test derived from the common law of agency. See Cmty. for Creative Non-Violence v. Reid (“CCNV”), 490 U.S. 730, 751 (1989). The Fair Labor Standards Act regulates the wages of individuals who meet a six-factor, totality-of-the-circumstances test focusing on the “economic reality” of the employer-employee relationship. See Verma v. 3001 Castor, Inc., 937 F.3d 221, 229-30 (3d Cir. 2019). The Americans with Disabilities Act covers businesses with a minimum number of “employees” as determined by a different six-factor, totality-of-the-circumstances test, focusing on the employer’s right to control the employee. See Clackamas Gastroenterology Assocs. v. Wells, 538 U.S. 440, 449-50 (2003). New Jersey’s Conscientious Employee Protection Act protects a person from retaliation against whistle-blowing if the person is an “employee” under the totality of the circumstances after analyzing a three-consideration, twelve-factor test analyzing both the employer’s right to control the employee and the economic realities of the employer-employee relationship. See D’Annunzio v. Prudential Ins. Co. of Am., 927 A.2d 113, 120-22 (N.J. 2007). When distinguishing employees from independent contractors in the context of federal employment taxes, the U.S. Tax Court, the Internal Revenue Service, and the Court of Federal Claims each use a different test. The Tax Court considers seven factors while the IRS considers twenty, and the Court of Federal Claims adopts the Reid test from copyright law. See Ewens & Miller, Inc. v. Comm’r, 117 T.C. 263, 270 (2001); Consol. Flooring Servs. v. United States, 38 Fed. Cl. 450, 455 (1997) (quoting CCNV, 490 U.S. at 751-52); Rev. Rul. 87-41, 1987-1 C.B. 296, 298-299). This is not an exhaustive list.
10. A business uses IRS Form W-2 to report payments to an employee, but uses IRS Form 1099 to report payments to a non-employee independent contractor. See Hopkins v. Duckett, Civ. No. 02-5589, 2006 WL 3373784, at *4 & n.2 (D.N.J. Nov. 21, 2006).
11. The Court reminds the parties of their obligation to redact social security numbers and tax identification numbers from filings, including copies of tax returns attached as exhibits. See Fed. R. Civ. P. 5.2(a). The parties shall coordinate with the assigned magistrate judge to bring all non-compliant filings into compliance with this rule.
12. Atain does not contend Count Seven, a claim under the New Jersey Insurance Fraud Prevention Act, N.J. Stat. Ann. § 17:33A-1 et seq., covers the claim for misrepresentation concerning the training and education programs for search and rescue operations. (ECF No. 93, at 28-33.)
13. The Court rejects Atain’s argument asking the Court to disregard Vulpis’s and Enberg’s declarations as “conclusory, self-serving affidavits . . . insufficient to withstand a motion for summary judgment.” Gonzalez v. Sec’y of Dep’t of Homeland Sec., 678 F.3d 254, 263 (3d Cir. 2012) (quoting Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d 156, 161 (3d Cir. 2009)). Vulpis’s and Enberg’s declarations “detail[] the specific circumstances” surrounding NMG’s education and training programs concerning search and rescue operations, rendering the declarations far from conclusory. Kirleis, 560 F.3d at 161. Notwithstanding any arguable inconsistencies with his deposition testimony, Enberg’s declaration is not so unbelievable that “the [C]ourt, based on all of the evidence, can say with confidence that a rational trier of fact could not credit” Enberg’s declaration. United States v. 717 S. Woodward Street, 2 F.3d 529, 534 (3d Cir. 1993). Both Vulpis’s and Enberg’s declarations (like all declarations) are self-serving, but this is no reason to disregard them entirely. See Paladino v. Newsome, 885 F.3d 203, 209 (3d Cir. 2018). Accordingly, the Court must consider Vulpis’s and Enberg’s testimony, and their testimony creates a genuine issue of material fact precluding summary judgment.
14. Manchester joins Pachner’s arguments. (ECF No. 80, at 19.) NMG, Vulpis, and Enberg also join Pachner’s arguments. (ECF No. 86, at 30.)
15. Atain argues the relevant date is January 5, 2016, when NMG received a letter from Manchester’s attorneys providing a notice of claim. (ECF No. 85-5, at 2.)
16. The record is ambiguous on this point. When asked whether, after Manchester’s Injury, Atain retained NMG’s Policy premiums or returned them to NMG, Atain’s representative testified, “I don’t believe so. I don’t know for sure. I can’t verify.” (ECF No. 73-18, at 149:14-15.) For the purpose of Pachner’s motion, the Court assumes Atain did not refund the Policy premium to NMG in light of Atain’s argument claiming Atain may retain the premium without forfeiting Atain’s right to rescission. (ECF No. 85, at 13-14.)
17. As part of its argument, Pachner contends the testimony of Grace Cunningham is irrelevant because Cunningham was not designated as Atain’s organizational representative under Federal Rule of Civil Procedure 30(b)(6) and because she did not work at Atain at the time of her deposition. Accordingly, Pachner argues, the Court should disregard not only Cunningham’s testimony but other evidence relying on Cunningham’s testimony. The Court disagrees. Cunningham’s testimony is relevant to this case and the Court will consider it.
A person need not be an organizational representative under Rule 30(b)(6) nor still employed with a defendant to provide relevant testimony. Cf. Lacey v. Cessna Aircraft Co., 932 F.3d 170, 183 (3d Cir. 1991) (observing “many potentially relevant witnesses may no longer be employed by” a defendant company). Testimony is relevant to the extent “(a) it has any tendency to make a fact more or less probable than it would be without [her testimony]; and (b) the fact is of consequence in determining [this] action.” Fed. R. Evid. 401.
Pachner does not argue any particular item of Cunningham’s testimony fails to meet this definition. Instead, Pachner argues only the Court should wholesale disregard Cunningham’s entire testimony because none of it can be relevant if Atain no longer employs Cunningham. The Court cannot agree. As the director of underwriting for recreational programs at Atain when NMG contracted with Atain under the Policy, Cunningham was personally involved with Atain’s issuance of the Policy to NMG. (ECF No. 70-20, at 12:22-13:6, 32:19-23.) Given her position and personal involvement, the Court cannot say her testimony is entirely irrelevant. Accordingly, the Court considers both Cunningham’s testimony and other evidence relying on her testimony.
18. Pachner characterizes this argument by saying Manchester lacks “standing” to sue Pachner. (ECF No. 73-2, at 25-26; ECF No. 92, at 4-5.) The Court declines to adopt this phrasing, to avoid confusion with the doctrine of justiciability under Article III of the Constitution. See, e.g., Gill v. Whitford, 138 S. Ct. 1916, 1929 (2018). Pachner’s underlying argument concerns whether Manchester is an appropriate plaintiff—which, in a negligence action like this, is best analyzed in terms of whether Pachner owes a duty to Manchester.
@2023 Summit Magic Publishing, LLC SummitMagic@gmail.com
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A Parent cannot sign away a minor’s right to sue in New Jersey, however, a parent can agree to arbitrate the minor’s claims.
Posted: January 24, 2022 Filed under: Indoor Recreation Center, Minors, Youth, Children, New Jersey, Release (pre-injury contract not to sue) | Tags: #TrampolineParks, Arbitration, Arbitration clause, Indoor Trampoline Park, Minor, New Jersey, Release, SKY ZONE INDOOR TRAMPOLINE PARK, Trampolene Park, Trampoline, Waiver Leave a commentAnother trampoline park case where the plaintiffs were required to arbitrate their claim even though the release which included the arbitration clause was not enforceable in New Jersey.
Johnson v. Sky Zone Indoor Trampoline Park in Springfield (N.J. Super. App. Div. 2021)
State: New Jersey
Plaintiff: David Johnson, an infant by his guardian ad litem, Shalonda Johnson, and Shalonda Johnson, individually
Defendant: Sky Zone Indoor Trampoline Park in Springfield, Sky Zone, LLC, Sky Zone Franchise Group, LLC, and Go Ahead and Jump 4, LLC
Plaintiff Claims: negligence
Defendant Defenses: release required arbitration of the claims
Holding: For the defendants, claims must be arbitrated
Year: 2021
Summary
The New Jersey Supreme Court held Hojnowski v. Vans Skate Park, 187 N.J. 323 (2006), that a parent could not sign away a minor’s right to sue. See However, in Hojnowski the court stated a parent could agree to arbitrate a minor’s claims. This decision of the injuries received at a trampoline park held the same decision. When signing the release, the mother agreed to arbitration of any claims.
Facts
On July 14, 2018, ten-year-old David and his mother visited the Park. Before they were permitted entry, however, a Park employee apprised Johnson she was required to sign a “Participation Agreement, Release and Assumption of Risk” (the Agreement) on an electronic tablet. On August 15, 2018, plaintiffs again visited the Park and, while jumping on a trampoline, David seriously injured his leg. The appellate record did not include evidence of whether Johnson executed a second waiver.
The Agreement is presented to the patrons at a kiosk in the form of an electronic document. The patrons are expected to read it and acknowledge their consent to be bound by the terms contained therein by placing an electronic “checkmark” and entering certain personally identifying information. Defendants argue David’s mother placed an electronic checkmark where indicated, and thus acknowledged she understood and agreed “to arbitrate any dispute as set forth in this section” and waived “[her] right, and the right(s) of [her] minor child(ren) . . . to maintain a lawsuit against [defendants] . . . for any and all claims covered by this Agreement.”
The mother filed a lawsuit for herself and her son. The defendant argued the arbitration clause in the release should apply. That would remove the litigation from the state court system and have a neutral arbitrator decide the case. Normally arbitrators do not hand out damages to the extent a jury would. The court agreed, leading to this appeal.
Analysis: making sense of the law based on these facts.
The argument was quite simple. The plaintiff argued that since the New Jersey Supreme Court had decided that a parent could not sign away a minor’s right to sue, that the release, including the arbitration clause, should be thrown out.
The plaintiff first argued there was no real notice because the plaintiff had checked a box on the electronic form and that was not enough notice required to alert the plaintiff that she was going to have to arbitrate any claim. The defense countered that the plaintiff had completed the form giving the defendant a lot of contact information.
In response, defense counsel argued Johnson did a great deal more than merely place a checkmark on a section of an electronic document. “We don’t just have the electronic signatures. We have her name, her address, her phone number, her date of birth . . . it’s not merely that you have [Janay’s] certification.
The plaintiff then argued the arbitration clause was ambiguous and unenforceable as a matter of law.
As a matter of public policy, our Supreme Court has upheld arbitration as a “favored means of dispute resolution.” Hojnowski, 187 N.J. at 342. The Court has consistently endorsed a “strong preference to enforce arbitration agreements, both at the state and federal level.” In determining whether a valid agreement to arbitrate exists, we will apply “state contract-law principles.” Hojnowski, 187 N.J. at 342. Guided by these principles, “[a]n arbitration agreement is valid only if the parties intended to arbitrate because parties are not required ‘to arbitrate when they have not agreed to do so.
The statement that the arbitration clause is only valid if the parties intended to arbitrate is good for arbitration clauses and contracts. The court also found the language requiring arbitration was not ambiguous or unenforceable.
Mutuality of assent is the hallmark of an enforceable contract. Thus, the initial inquiry is whether the parties actually and knowingly agreed to arbitrate their dispute. To reflect mutual assent to arbitrate, the terms of an arbitration provision must be “sufficiently clear to place a consumer on notice that he or she is waiving a constitutional or statutory right . . . .” “No particular form of words is necessary to accomplish a clear and unambiguous waiver of rights.” If, “at least in some general and sufficiently broad way,” the language of the clause conveys arbitration is a waiver of the right to bring suit in a judicial forum, the clause will be enforced.
The court went further to state:
The language in the arbitration clause states plaintiffs were “agreeing to arbitrate any dispute as set forth in this section” and were “waiving [their] right . . . to maintain a lawsuit.” It sets forth, “[b]y agreeing to arbitrate, [plaintiffs] understand that [they] will NOT have the right to have [their] claim[s] determined by a jury.” This language clearly and unambiguously puts plaintiffs on notice that they are waiving the right to a jury trial and the right to pursue their claims in a court of law. This part of the Agreement is therefore enforceable.
The plaintiff then argued that forcing her to sign an exculpatory contract of adhesion right before a birthday party was a violation of the doctrines of procedural and substantive unconscionability.
We next address plaintiffs’ arguments attacking the enforcement of the arbitration clause based on the doctrines of procedural and substantive unconscionability. In essence, plaintiffs argue requiring Johnson to read and sign an ambiguous contract of adhesion immediately before a birthday party left her with no other choice but to assent.
In New Jersey, there is a four-part test to determine if an agreement is a contract of adhesion.
[I]n determining whether to enforce the terms of a contract of adhesion, [a court] look[s] not only to the take-it-or-leave-it nature or the standardized form of the document but also to [(1)] the subject matter of the contract, [(2)] the parties’ relative bargaining positions, [(3)] the degree of economic compulsion motivating the “adhering” party, and [(4)] the public interests affected by the contract.
The court’s response was they could not find anything in the agreement that rose to the level that the contract was a contract of adhesion under New Jersey law.
Although the case is not over, any damages will probably significantly reduced by requiring arbitration.
So Now What?
This is the second decision that is almost identical to this one. Can a release in New Jersey at a trampoline park require the parent to arbitrate the minor’s claim. See New Jersey does not allow a parent to sign away a minor’s right to sue so a binding arbitration agreement is a good idea if it is written correctly. This decision does not mention the decision is Weed v. Sky NJ, LLC., 2018 N.J. Super. Unpub. LEXIS 410, 2018 WL 1004206 which is almost identical in the facts.
There are two ways to limit damages in a state that does not allow a parent to sign a release giving up a minor’s right to sue. Assumption of the risk agreements and the defense of assumption of the risk. Did the parent AND the minor knowingly and voluntarily enter into the risk that caused the injury. This is only valid if you can prove the minor knew or you provided the minor with the education or knowledge to knowingly and voluntarily assume the risk. Voluntary is the easy part proving the minor knew of the risk is difficult.
Arbitration then is the next defense in this ladder to reduce damages. Most states do not allow an arbitrator to award more than the basic damages. Punitive damages cannot be awarded by arbitrators. Also, arbitrators are not overcome by emotion or other factors that would influence them into awarding large damages.
Before putting an arbitration clause in your agreement, you need to determine two things.
- Is arbitration better than the court system in your state. If your state supports the use of a release, a release gets you out of a case without any damages. Even though arbitration will generally not give the plaintiff large awards, they usually award something.
- Are there benefits to arbitration in your state that outweigh other means of resolving the dispute.
In those states that do not support a parent signing away a minor’s right to sue, arbitration is probably a good result. See States that allow a parent to sign away a minor’s right to sue.
 James H. “Jim” Moss |
Jim Moss is an attorney specializing in the legal issues of the outdoor recreation community. He represents guides, guide services, outfitters both as businesses and individuals and the products they use for their business. He has defended Mt. Everest guide services, summer camps, climbing rope manufacturers, avalanche beacon manufacturers, and many more manufacturers and outdoor industries. Contact Jim at Jim@Rec-Law.us |
Outdoor Recreation Insurance, Risk Management, and Law
Jim is the author or co-author of six books about the legal issues in the outdoor recreation world; the latest is Outdoor Recreation Insurance, Risk Management and Law.
To see Jim’s complete bio go here and to see his CV you can find it here. To find out the purpose of this website go here.
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Johnson v. Sky Zone Indoor Trampoline Park in Springfield (N.J. Super. App. Div. 2021)
Posted: January 24, 2022 Filed under: Indoor Recreation Center, Minors, Youth, Children, New Jersey, Release (pre-injury contract not to sue) | Tags: Arbitration, GO AHEAD AND JUMP 4, Indoor Trampolene Park, Minor, New Jersey, Release, SKY ZONE INDOOR TRAMPOLINE PARK, Trampolene Park, Waiver 1 CommentTo Read an Analysis of this decision see: A Parent cannot sign away a minor’s right to sue in New Jersey, however, a parent can agree to arbitrate the minor’s claims.
Johnson v. Sky Zone Indoor Trampoline Park in Springfield (N.J. Super. App. Div. 2021)
DAVID JOHNSON, an infant by his guardian ad litem, SHALONDA JOHNSON, and SHALONDA JOHNSON, individually, Plaintiffs-Appellants,
v.
SKY ZONE INDOOR TRAMPOLINE PARK IN SPRINGFIELD, SKY ZONE, LLC, SKY ZONE FRANCHISE GROUP, LLC, and GO AHEAD AND JUMP 4, LLC, Defendants-Respondents.
No. A-2489-20
Superior Court of New Jersey, Appellate Division
December 6, 2021
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 10, 2021
On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-5446-20.
Edward M. Colligan argued the cause for appellants (Colligan & Colligan attorneys; Edward M. Colligan, on the brief).
Kelly A. Waters argued the cause for respondents (Wood Smith Henning & Berman, attorneys; Kelly A. Waters, of counsel and on the brief; Jill A. Mucerino and Sean P. Shoolbraid, on the brief).
Before Judges Fuentes, Gilson, and Gooden Brown.
PER CURIAM
David Johnson, a child under the age of eighteen, was injured while visiting a trampoline park owned and operated by Sky Zone, LLC, Sky Zone Franchise Group, LLC and Go Ahead and Jump 4, LLC (collectively, Park or defendants). Shalonda Johnson, individually and as guardian ad litem of her minor son (collectively, plaintiffs), [1] filed a civil action against defendants in the Superior Court, Law Division, in Union County, seeking compensatory damages. In lieu of filing a responsive pleading, defendants moved before the Law Division to enforce an arbitration clause contained in an electronic document Johnson signed as a condition of being permitted to enter the Park. After considering the arguments of counsel and the exhibits submitted, the Law Division judge assigned to the case granted defendants’ motion to enforce the arbitration clause and dismissed the case with prejudice in an order entered on March 24, 2021.
In this appeal, plaintiffs argue the arbitration clause contained in this electronic general liability release contract is unenforceable. After reviewing the record presented to the Law Division judge, we affirm the part of the order enforcing the arbitration clause, vacate the dismissal of plaintiffs’ complaint with prejudice, and remand for the court to stay judicial proceedings related to this case pending the outcome of the arbitration.[2]
I.
A.
On July 14, 2018, ten-year-old David and his mother visited the Park. Before they were permitted entry, however, a Park employee apprised Johnson she was required to sign a “Participation Agreement, Release and Assumption of Risk” (the Agreement) on an electronic tablet. On August 15, 2018, plaintiffs again visited the Park and, while jumping on a trampoline, David seriously injured his leg.[3] The appellate record did not include evidence of whether Johnson executed a second waiver.
The Agreement contains a general release provision “intended to release and provide other benefits, legal protections and consideration” to defendants. For example, it contains an “acknowledgement of potential injuries” provision, which places patrons on notice that “participating in trampoline and other activities is inherently and obviously dangerous.” The Agreement also includes a “voluntary assumption of risk acknowledgment” provision, which informs patrons that they “are participating voluntarily at [their] own risk” and could suffer “significant bodily injuries” or “die or become paralyzed, partially or fully, through their use of the Sky Zone facility and participation in Sky Zone activities.”
Finally, the Agreement contains a “release of liability” section, which requires patrons to “forever, irrevocably and unconditionally release, waive, relinquish, discharge from liability and covenant not to sue [Sky Zone]” for
any and all claims . . . of whatever kind or nature, in law, equity or otherwise, . . . related to or arising, directly or indirectly, from [their] access to and/or use of the Sky Zone [f]acility, . . . including, without limitation, any claim for negligence, failure to warn or other omission, . . . personal injury, . . . [or] bodily harm . . . .
The enforceability of these exculpatory provisions are not part of this appeal. We express no opinion as to whether these exculpatory provisions are enforceable under our State’s common law, as expressed by our Supreme Court in Stelluti v. Casapenn Enters., LLC, 203 N.J. 286 (2010), and Hojnowski v. Vans Skate Park, 187 N.J. 323 (2006).
The dispositive issue in this appeal concerns the enforceability of the section in the Agreement entitled, in part, “arbitration of disputes.” The Agreement is presented to the patrons at a kiosk in the form of an electronic document. The patrons are expected to read it and acknowledge their consent to be bound by the terms contained therein by placing an electronic “checkmark” and entering certain personally identifying information. Defendants argue David’s mother placed an electronic checkmark where indicated, and thus acknowledged she understood and agreed “to arbitrate any dispute as set forth in this section” and waived “[her] right, and the right(s) of [her] minor child(ren) . . . to maintain a lawsuit against [defendants] . . . for any and all claims covered by this Agreement.” This section also provides the following recitation of the rights plaintiffs agreed to waive as a precondition to enter the Park and participate in the activities available therein:
By agreeing to arbitrate, I understand that I will NOT have the right to have my claim determined by a jury, and the minor child(ren) above will NOT have the right to have claim(s) determined by a jury. Reciprocally, [the Sky Zone defendants] waive their right to maintain a lawsuit against [plaintiff] . . . for any and all claims covered by this [a]greement, and they will not have the right to have their claim(s) determined by a jury. ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO MY OR THE CHILD’S ACCESS TO AND/OR USE OF THE SKY ZONE PREMISES AND/OR ITS EQUIPMENT, INCLUDING THE DETERMINATION OF THE SCOPE OR APPLICABILITY OF THIS AGREEMENT TO ARBITRATE, SHALL BE BROUGHT WITHIN ONE YEAR OF ITS ACCRUAL (i.e., the date of the alleged injury) FOR AN ADULT AND WITHIN THE APPLICABLE STATUTE OF LIMITATIONS FOR A MINOR AND BE DETERMINED BY ARBITRATION IN THE COUNTY OF THE SKY ZONE FACILITY . . . BEFORE ONE ARBITRATOR. THE ARBITRATION SHALL BE ADMINISTERED BY [JUDICIAL ARBITRATION AND MEDIATION SERVICES (JAMS)] PURSUANT TO ITS RULE 16.1 EXPEDITED ARBITRATION RULES AND PROCEDURES. JUDGMENT ON THE AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. THIS CLAUSE SHALL NOT PRECLUDE PARTIES FROM SEEKING PROVISIONAL REMEDIES IN AID OF ARBITRATION FROM A COURT OF APPROPRIATE JURISDICTION. This [a]greement shall be governed by, construed and interpreted in accordance with the laws of the State of New Jersey, without regard to choice of law principles. Notwithstanding the provision with respect to the applicable substantive law, any arbitration conducted pursuant to the terms of this [a]greement shall be governed by the Federal Arbitration Act (9 U.S.C., Sec. 1-16). I understand and acknowledge that the JAMS Arbitration Rules to which I agree are available online for my review at jamsadr.com, and include JAMS Comprehensive Arbitration Rules & Procedures; Rule 16.1 Expedited Procedures; and, Policy On Consumer Minimum Standards Of Procedural Fairness.
[(Emphasis in original).]
The Agreement also contained a merger and a severability clause, in which Johnson acknowledged: “I have had sufficient opportunity to read this entire document. I have read and understood and voluntarily agree to be bound by its terms.” The clause further provided:
This [a]greement constitutes and contains the entire agreement between [Sky Zone] and [plaintiffs] relating to the . . . use of the Sky Zone Facility. There are no other agreements, oral, written, or implied, with respect to such matters. . . . If any term or provision of this [agreement] shall be held illegal, unenforceable, or in conflict with any law governing this [agreement] the validity of the remaining portions shall not be affected thereby. B.
Plaintiffs filed their personal injury complaint against defendants on August 13, 2020. The Law Division entered default against defendants on December 28, 2020, for failure to file a timely responsive pleading. On January 8, 2021, defendants’ counsel notified plaintiffs’ counsel he intended to file a motion to dismiss the complaint in lieu of an answer pursuant to Rule 4:6-2(e), based on plaintiffs’ failure to state a claim upon which relief may be granted. The attorneys thereafter entered into a Consent Agreement, stating in relevant part:
This matter having come before the [c]ourt upon the Consent of the parties, whereby the parties consent, stipulate, and agree that the default entered against Defendants, SKY ZONE FRANCHISE GROUP, LLC and GO AHEAD AND JUMP 4, LLC, be vacated and the time for Defendant to Answer or Otherwise Plead be extended until January 30, 2021 . . . .
[(Strikethrough in original).]
Plaintiff’s counsel unilaterally struck “or Otherwise Plead” from the Consent Order. On February 2, 2021, the Law Division accepted the Consent Agreement and vacated the default. Defendants moved to dismiss the complaint and compel arbitration on January 30, 2021. Defendants’ motion came for oral argument before the Law Division on March 24, 2021. Plaintiffs’ counsel argued the arbitration clause presented to Johnson was unenforceable based on both the obscure, technical language used in the document, and by presenting it as part of an electronic document in a kiosk located outside the Park’s entrance. Plaintiff’s counsel also emphasized the circumstances under which Johnson allegedly waived her son’s constitutional right to a jury trial: “[M]y client went in July [2018] to be a guest at a birthday party. The . . . defense . . . alleges that she signed this Agreement at that time and at that time, they’re saying that she signed an agreement that was good forever.”
In response, defense counsel argued Johnson did a great deal more than merely place a checkmark on a section of an electronic document. “We don’t just have the electronic signatures. We have her name, her address, her phone number, her date of birth . . . it’s not merely that you have [Janay’s] certification. You have identifiers that Skyzone would not have gotten without the plaintiff.” The reference made by defense counsel to “Janay’s certification” relates to Michael Janay, the Managing Member of defendant Go Ahead and Jump 4, LLC., who averred:
As a matter of business practice, all patrons who enter the Park for the first time are required to electronically sign a Participant Agreement, Release and Assumption of Risk . . . at a kiosk, or online, as a pre-condition to entry. Patrons are not permitted entry into the Park unless a Participation Agreement has been executed on their behalf and there are signs throughout the Park indicating the same. . . . [A]ll patrons who enter the Park are required to provide a valid email address when electronically signing the Participation Agreement.
. . . [O]nce the Participation Agreement is electronically signed, a copy of the executed Participation Agreement is sent to the email address provided by the patron.
. . . .
Based on the information provided, a copy of this Participation Agreement was sent to Shalonda Johnson’s email following Shalonda Johnson’s execution of the Participation Agreement at the Park on July 14, 2018. As indicated, Shalonda Johnson listed her son David Johnson[, ] who is the Minor[-]Plaintiff, and another minor Kevin Johnson. On that basis, Shalonda Johnson, David Johnson, and Kevin Johnson were permitted entry into the Park on July 14, 2018.
After considering the arguments of counsel, the motion judge granted defendants’ motion on March 24, 2021. The judge explained the basis of his decision in a Statement of Reasons attached to the order.
II.
Against this factual backdrop, plaintiffs argue the arbitration agreement is ambiguous and unenforceable as a matter of law. We reject these arguments and affirm the part of the Law Division’s Order upholding the enforceability of the arbitration clause. Because the Law Division’s decision to enforce this arbitration provision is purely a question of law, our standard of review is de novo. Flanzman v. Jenny Craig, Inc., 244 N.J. 119, 131 (2020); see also Kernahan v. Home Warranty Adm’r of Fla., Inc., 236 N.J. 301, 316 (2019) (“Whether a contractual arbitration provision is enforceable is a question of law, and we need not defer to the interpretative analysis of the trial . . . court[] unless we find it persuasive.”).
As a matter of public policy, our Supreme Court has upheld arbitration as a “favored means of dispute resolution.” Hojnowski, 187 N.J. at 342. The Court has consistently endorsed a “strong preference to enforce arbitration agreements, both at the state and federal level.” Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013). In determining whether a valid agreement to arbitrate exists, we will apply “state contract-law principles.” Hojnowski, 187 N.J. at 342. Guided by these principles, “[a]n arbitration agreement is valid only if the parties intended to arbitrate because parties are not required ‘to arbitrate when they have not agreed to do so.'” Kernahan, 236 N.J. at 317 (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478 (1989)).
Mutuality of assent is the hallmark of an enforceable contract. Thus, the initial inquiry is whether the parties actually and knowingly agreed to arbitrate their dispute. To reflect mutual assent to arbitrate, the terms of an arbitration provision must be “sufficiently clear to place a consumer on notice that he or she is waiving a constitutional or statutory right . . . .” Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 443 (2014). “No particular form of words is necessary to accomplish a clear and unambiguous waiver of rights.” Id. at 444. If, “at least in some general and sufficiently broad way,” the language of the clause conveys arbitration is a waiver of the right to bring suit in a judicial forum, the clause will be enforced. Id. at 447. “The key . . . is clarity.” Barr v. Bishop Rosen & Co., 442 N.J.Super. 599, 607 (App. Div. 2015).
Here, plaintiffs claim the arbitration clause is ambiguous and therefore unenforceable because it contains “void, inaccurate, misleading and ambiguous language . . . .” and “confusing lower[-]case passages and all upper[-]case bold passages.” Plaintiffs argue Hojnowski, 187 N.J. at 327, “prohibits a parent of a minor child from releasing the child’s potential tort claims arising out of the use of a commercial recreational facility.” According to plaintiffs, JAMS, the named forum in the arbitration provision, is “not permitted to conduct arbitration in New Jersey” and thus the agreement should fail. We disagree.
The language in the arbitration clause states plaintiffs were “agreeing to arbitrate any dispute as set forth in this section” and were “waiving [their] right . . . to maintain a lawsuit.” It sets forth, “[b]y agreeing to arbitrate, [plaintiffs] understand that [they] will NOT have the right to have [their] claim[s] determined by a jury.” This language clearly and unambiguously puts plaintiffs on notice that they are waiving the right to a jury trial and the right to pursue their claims in a court of law. This part of the Agreement is therefore enforceable. See Flanzman, 244 N.J. at 137-38 (citing Atalese, 219 N.J. at 444-45).
Plaintiffs’ reliance on Hojnowski is misplaced. Writing for a unanimous Court, then Justice Zazzali[4] made clear “permitting arbitration of a minor’s claims is consistent with New Jersey case law discussing the enforceability of arbitration agreements that affect the rights of children.” 187 N.J. at 343. Here, plaintiff’s mother signed the Agreement that included an arbitration clause.
The unavailability of JAMS does not render the arbitration clause unenforceable. Although the parties agree JAMS is not available to arbitrate this case, the Agreement contains a severability clause that states: “If any term or provision of this [agreement] shall be held illegal, unenforceable, or in conflict with any law governing this [agreement] the validity of the remaining portions shall not be affected thereby.” Severability clauses “are indicative of the parties’ intent that the agreement as a whole survives the excision of an unenforceable provision.” Arafa v. Health Express Corp., 243 N.J. 147, 169 n.2 (2020). As the Supreme Court explained in Flanzman:
No New Jersey statutory provision or prior decision has elevated the selection of an “arbitral institution” or the designation of a “general process for selecting an arbitration mechanism or setting” to the status of essential contract terms, without which an arbitration agreement must fail.
To the contrary, the [New Jersey Arbitration Act (NJAA)] makes clear that its default provision for the selection of an arbitrator may operate in the absence of contractual terms prescribing such procedures. See N.J.S.A. 2A:23B-11(a). The NJAA reflects the Legislature’s intent that the parties’ omission of an arbitrator or arbitral organization, or their failure to set forth the method by which they will choose an arbitrator in the event of a dispute, will not preclude the enforcement of their agreement. Ibid.
[244 N.J. at 139.]
The arbitration clause at issue here must be interpreted in accordance with New Jersey law and the Federal Arbitration Act (FAA). The FAA and the NJAA provide for a court-appointed arbitrator if the designated arbitrator is unavailable. Id. at 141. The arbitration clause enables the parties to seek from a court “provisional remedies in aid of arbitration.” The language in the Agreement does not show the parties intended to forego arbitration if JAMS is unavailable. The designation of JAMS was not integral to the enforcement of the arbitration clause. Thus, the unavailability of JAMS does not invalidate the arbitration clause.
We next address plaintiffs’ arguments attacking the enforcement of the arbitration clause based on the doctrines of procedural and substantive unconscionability. In essence, plaintiffs argue requiring Johnson to read and sign an ambiguous contract of adhesion immediately before a birthday party left her with no other choice but to assent. Our Supreme Court has described the factors that constitute the doctrines of procedural and substantive unconscionability:
The defense of unconscionability, specifically, calls for a fact-sensitive analysis in each case, even when a contract of adhesion is involved. [The] Court has recognized that contracts of adhesion necessarily involve indicia of procedural unconscionability. [The Court has] identified, therefore, four factors as deserving of attention when a court is asked to declare a contract of adhesion unenforceable.
[I]n determining whether to enforce the terms of a contract of adhesion, [a court] look[s] not only to the take-it-or-leave-it nature or the standardized form of the document but also to [(1)] the subject matter of the contract, [(2)] the parties’ relative bargaining positions, [(3)] the degree of economic compulsion motivating the “adhering” party, and [(4)] the public interests affected by the contract. [Delta Funding Corp. v. Harris, 189 N.J. 28, 39-40 (2006) (internal citations omitted) (quoting Rudbart v. N. Jersey Dist. Water Supply Comm’n, 127 N.J. 344, 356 (1992)).]
Here, plaintiffs merely recycle their arguments relying on the Agreement’s alleged ambiguity without applying or analyzing the factors established by the Court in Delta Funding. We discern no basis, in fact or in law, to conclude this arbitration provision is substantively unconscionable. Finally, plaintiffs’ allegations that defendants acted intentionally and recklessly have no basis in fact and are not worthy of further comment by this court. Plaintiffs’ remaining argument lack sufficient merit to warrant discussion in a written decision. R. 2:11-3(e)(1)(E).
The order of the Law Division upholding the enforceability of defendants’ arbitration clause is affirmed. However, we vacate the part of the order that dismisses plaintiffs’ complaint with prejudice and remand the matter to the Law Division to stay any judicial proceedings related to this case pending the outcome of the arbitration. GMAC, 205 N.J. at 584 n.7; N.J.S.A. 2A:23B-7(g).
Affirmed in part, reversed in part, and remanded consistent with this opinion. We do not retain jurisdiction. ———
Notes:
[1] In the interest of clarity, we will occasionally also refer to plaintiffs by their names; we will refer to the child by his first name and his mother by her last name. No disrespect is intended.
[2] Although an order entered by the Law Division compelling or denying arbitration is appealable to this court as of right, pursuant to Rule 2:2-3(a)(3), the trial court must stay any judicial proceeding pending the outcome of the arbitration. The court may also limit the stay to arbitrable claims if other claims are severable. GMAC v. Pittella, 205 N.J. 572, 584 n.7 (2011) (citing N.J.S.A. 2A:23B-7(g)).
[3] In a certification submitted to the motion judge, Johnson averred the injury damaged “the growth plate in my son’s leg . . . and his leg did not continue to grow properly. He has undergone surgery to shorten the opposite leg and may need additional treatment in the future.”
[4] In October 2006, Governor Jon Corzine appointed Justice Zazzali to succeed Deborah T. Poritz as Chief Justice. Chief Justice Zazzali served in this capacity until June 17, 2007, when he reached the mandatory retirement age for all members of the New Jersey Judiciary.
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Hojnowski v. Vans Skate Park, 187 N.J. 323; 901 A.2d 381; 2006 N.J. LEXIS 1080
Posted: January 24, 2022 Filed under: Minors, Youth, Children, New Jersey, Release (pre-injury contract not to sue) | Tags: Agreement to Arbitrate, Arbitration, arbitration agreements, arbitration provision, arbitrator, best interests, bind, Cause of action, commercial enterprise, enforceable, exculpatory, guardian, implicate, Inherent Risks, invalidate, minor child, parental, patriae, post-injury, pre-injury, Public Interest, Public Policy, reasonableness, recreational, recreational facility, Settlement, tort claims, unenforceable, waive Leave a commentHojnowski v. Vans Skate Park, 187 N.J. 323; 901 A.2d 381; 2006 N.J. LEXIS 1080
Andrew Hojnowski, a Minor, through his Parents and Guardians Ad Litem, Jerry Hojnowski and Anastasia Hojnowski and Jerry Hojnowski and Anastasia Hojnowski, in their own right, Plaintiffs-Respondents and Cross-Appellants, v. Vans Skate Park, Defendant-Appellant and Cross-Respondent, and Mccown Deleeuw Company, John Doe(s) Skate Park Owner (a fictitious name) and Jane Doe(s) Insurance Company (for med pay only), Defendants.
A-17/A-45 September Term 2005
SUPREME COURT OF NEW JERSEY
187 N.J. 323; 901 A.2d 381; 2006 N.J. LEXIS 1080
January 30, 2006, Argued
July 17, 2006, Decided
PRIOR HISTORY: [***1] On appeal from the Superior Court, Appellate Division, whose opinion is reported at 375 N.J. Super. 568, 868 A.2d 1087 (2005).
Hojnowski ex rel. Hojnowski v. Vans Skate Park, 375 N.J. Super. 568, 868 A.2d 1087, 2005 N.J. Super. LEXIS 79 (App.Div., 2005)
CASE SUMMARY:
PROCEDURAL POSTURE: Plaintiffs, a minor and his parents, sued defendant skate park for negligence. The park moved to compel arbitration; the trial court granted the park summary judgment and dismissed the suit. Plaintiffs appealed; the New Jersey Superior Court, Appellate Division, affirmed the grant of summary judgment but held that the waiver of liability contained in a pre-injury release signed by a parent was void. Plaintiffs sought further review.
OVERVIEW: Plaintiffs alleged the minor fractured his femur when an aggressive skateboarder, about whom his parents had complained to the park, forced him off a skateboard ramp. One parent had executed a release on the minor’s behalf that provided for mandatory arbitration of claims against the park and limited its liability. Plaintiffs moved to invalidate the release; the trial court did not rule on the validity of the limitation of liability, leaving this issue for the arbitrators to decide. The intermediate appellate court held that the arbitration provision was valid, that the trial court should have ruled on the validity of the liability waiver, and that it was invalid. The high court agreed. Under the parens patriae doctrine, the public policy of New Jersey prohibited a parent of a minor child from releasing the child’s potential tort claims arising out of the use of a commercial recreational facility. But under the public policy expressed in the New Jersey Arbitration Act, former N.J. Stat. Ann. §§ 2A:24-1 to -11, a parent’s agreement to arbitrate was enforceable against any tort claims asserted on the minor’s behalf, in the absence of fraud, duress, unconscionability, or ambiguity.
OUTCOME: The high court affirmed the judgment of the intermediate appellate court and referred the matter to the arbitrator for further proceedings.
CORE TERMS: arbitration, pre-injury, minor child, public policy, exculpatory, parental, settlement, bind, post-injury, tort claims, arbitration agreements, agreement to arbitrate, recreational, enforceable, arbitrator, arbitrate, arbitration provision, unenforceable, public interest, inherent risks, reasonableness, guardian, waive, commercial enterprise, recreational facility, best interests, cause of action, invalidate, implicate, patriae
SYLLABUS
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
Andrew Hojnowski, a minor v. Vans Skate Park, et als. (A-17/45-05)
Argued January 30, 2006 — Decided July 17, 2006
ZAZZALI, J., writing for the Court.
The issue before the Court is whether a parent can bind a minor child to either a pre-injury waiver of liability or an agreement to arbitrate.
In January 2003, twelve-year-old Andrew Hojnowski was injured while skateboarding at a facility operated by Vans, Inc. (Vans). On a previous visit to the facility, Andrew’s mother had executed a release on Andrew’s behalf, which was required in order for Andrew to enter the skate park. The exculpatory release contained a clause agreeing to submit any claims against Vans to arbitration, as well as provisions limiting Vans’ liability for injury.
[***2] In August 2003, Andrew, acting through his parents as guardians ad litem, and his parents, in their own right, filed suit against Vans. Their complaint alleges, among other things, negligent supervision and failure to warn, and negligent failure to provide a safe place. Vans responded by filing a demand for commercial arbitration with the American Arbitration Association. The Hojnowskis then moved to enjoin the arbitration and invalidate the pre-injury release signed by Andrew’s mother and Vans cross-moved for summary judgment. The trial court granted Vans’ motion, dismissing the Hojnowskis’ complaint without prejudice and ordering arbitration. The trial court did not rule on the validity of the liability release, finding the issue for the arbitrators to determine.
On appeal, the Appellate Division unanimously affirmed the trial court’s grant of summary judgment in respect of the validity of the arbitration provision. In addition, the panel found that because the issue presented a question of public policy, the trial court should have ruled on the validity of the waiver. The panel was divided in its resolution of that question. The majority determined that a pre-injury release [***3] of liability executed by a parent on behalf of a minor child violates public policy and is, therefore, unenforceable. The dissent argued that the court should have deferred to the parent’s decision to enter into the agreement and, hence, should have enforced the waiver.
Vans appealed to the Supreme Court as of right on the issue of the validity of the pre-injury release of liability. The Court granted certification on the question of whether a parent can bind a minor child to arbitration.
HELD: Although a parent may agree to bind a minor child to an arbitration provision, which in essence constitutes a choice of forum, a parent may not bind a minor child to a pre-injury release of a minor’s prospective tort claims resulting from the minor’s use of a commercial recreational facility.
1. Because exculpatory agreements can encourage a lack of care, courts closely scrutinize liability releases and invalidate them if they violate public policy. The relevant public policy implicated in this case is the protection of the best interests of the child under the parens patriae doctrine, which refers to the State’s capacity as provider of protection to those unable to care [***4] for themselves. In keeping with that doctrine, the Legislature and the courts have historically afforded considerable protections to claims of minor children. The most significant of those protections concerns the compromise or release of a minor’s post-injury claims, requiring the parent to obtain statutory or judicial approval to dispose of the minor’s existing cause of action. The purpose underlying the post-injury settlement rule also applies in the pre-injury context. (Pp. 9-15)
2. Business owners owe invitees a duty of reasonable or due care to provide a safe environment because it is the business owners who are in the best position to control the risk of harm. In this case, the risk of loss should fall on the party best suited to avert injury. The operator of a commercial recreational enterprise can inspect the premises for unsafe conditions, train staff in respect of the facility’s proper operation, and regulate the types of activities permitted to occur. The business operator can also obtain insurance and spread the costs of insurance among its customers. Children are not in a position to discover hazardous conditions or insure against risks. In addition, the expectation [***5] that a commercial facility will be reasonably safe is especially important where the patron’s are minors. To permit waivers of liability would remove a significant incentive for operators of these types of facilities that attract children to take reasonable steps to protect their safety. The overwhelming majority of jurisdictions are in accord with the decision to invalidate such waivers. (Pp. 15-19)
3. In view of the protections that New Jersey historically has afforded to a minor’s claims and the need to discourage negligent activity on the part of commercial enterprises attracting children, a parent’s execution of a pre-injury release of a minor’s future tort claims arising out of the use of a commercial recreational facility is unenforceable. (P.19)
4. Vans’ remaining contentions are unconvincing. Van’s argument that allowing a pre-injury release of a minor’s potential tort claim is no different than a parent’s decision never to bring suit on the child’s behalf ignores the tolling provisions enabling a minor to retain the right to sue for most personal injuries for two years after reaching the age of majority. Nor does the Court accept the argument that the parental release [***6] implicates the parent’s fundamental right to direct the upbringing of the child. Nor is the Court persuaded by the argument that such releases are necessary to ensure the continued validity of businesses offering sports activities to minors. Tort liability is not an unreasonable economic restraint on the ability of business owners to operate commercial recreational facilities. (Pp. 19-23)
5. Federal policy has favored the enforcement of arbitration agreements for many years. In New Jersey, arbitration is also a favored means of dispute resolution. An agreement to arbitrate generally will be valid under State law unless it violates public policy. Allowing a parent to bind a minor child to arbitrate future tort claims is not contrary to the Court’s duty as parens patriae to protect the best interests of the child. A pre-injury agreement to arbitrate does not require the minor to give up any substantive rights; rather, it specifies only the forum in which those rights are redressed. Furthermore, permitting arbitration of a minor’s claims is consistent with New Jersey case law discussing the enforceability of arbitration agreements that affect the rights of children. Case law [***7] from other jurisdictions reinforces this conclusion. (Pp. 23-31)
Judgment of the Appellate Division is AFFIRMED and the matter is referred to an arbitrator for further proceedings consistent with this opinion.
JUSTICE LaVECCHIA, concurring in part and dissenting in part, in which JUSTICE RIVERA-SOTO joins, is in full agreement with that portion of the majority’s decision that affirms the enforcement of the parties’ agreement to subject their dispute to arbitration. Justice LaVecchia dissents from the majority’s invalidation of the waiver of liability that the parties executed as a condition of the minor’s use of Van’s property to skateboard. Because the type of waiver entered into in this case generally would be enforceable as against an adult, there is no reason why this Court should prevent a parent from ratifying such a waiver on behalf of the minor, provided that a court or arbitrator determines that the release is reasonable.
COUNSEL: Richard C. Wischusen argued the cause for appellant and cross-respondent (Reilly, Supple & Wischusen, attorneys; Alex W. Raybould, on the briefs).
Robert A. Porter argued the cause for respondents and cross-appellants (Bafundo, [***8] Porter, Borbi & Clancy, attorneys).
David G. Evans submitted a brief on behalf of amicus curiae, Pacific Legal Foundation.
JUDGES: Justice ZAZZALI delivered the opinion of the Court. Justice LaVECCHIA, concurring in part and dissenting in part. Justice RIVERA-SOTO joins in this opinion. Chief Justice PORITZ and Justices LONG, ZAZZALI, ALBIN and WALLACE. Justices LaVECCHIA and RIVERA-SOTO. CHIEF JUSTICE PORITZ and JUSTICES LONG, ALBIN, and WALLACE join in JUSTICE ZAZZALI’s opinion. JUSTICE LaVECCHIA filed a separate opinion concurring in part and dissenting in part, in which JUSTICE RIVERA-SOTO joins.
OPINION BY: ZAZZALI
OPINION
[*327] [**383] Justice ZAZZALI delivered the opinion of the Court.
In this appeal, we must determine whether a parent can bind a minor child to either a pre-injury waiver of liability or an agreement to arbitrate. In January 2003, twelve-year old Andrew Hojnowski was injured while skateboarding at a skate park facility operated by defendant Vans, Inc. (Vans). On a previous visit to the facility, Andrew’s mother had executed a release on Andrew’s behalf. That release contained a clause agreeing to submit any claims against Vans to arbitration, as well as a provision limiting Vans’ liability. After Andrew and his parents (plaintiffs) brought suit seeking recovery for Andrew’s injuries, Vans filed for commercial arbitration. Plaintiffs then moved to enjoin arbitration and to invalidate the [***9] liability release signed by Andrew’s mother.
The trial court found that plaintiffs were bound by the arbitration provision and dismissed their complaint without prejudice. The court declined to rule on whether the liability release was valid, concluding that that issue should be determined by the arbitrator. On appeal, the Appellate Division unanimously voted to uphold the arbitration provision but divided on the validity of the liability release. The majority determined that a pre-injury release of liability executed by a parent on behalf of a minor child violates public policy and is therefore unenforceable. The dissent argued that the court should have deferred to the parent’s decision to enter into the agreement and enforced the waiver. We affirm the majority and hold that although a parent may agree to bind a minor child to an arbitration provision, which in essence constitutes a choice of forum, a parent may not bind a minor child to a pre-injury release of a minor’s prospective tort claims resulting from the minor’s use of a commercial recreational facility. Pursuant to our parens patriae duty to protect the best interests [*328] of the child, we will not enforce such a release [***10] in the context of this case.
I.
In January 2003, twelve-year old Andrew Hojnowski and his mother, Anastasia Hojnowski, visited a Vans Store in Moorestown, New Jersey. Defendant Vans operated the retail store that sold skateboards and related merchandise and maintained a recreational skateboard facility. To enter the skate park, Vans required Andrew’s mother to sign an exculpatory release. It appears that Andrew’s mother did not execute a release on the date in question but had executed a release in December 2002, which Vans had kept on file.
The release, entitled “RELEASE AND WAIVER OF LIABILTY AND JURY TRIAL WITH INDEMNITY (FOR ALL VANS SKATEPARKS, STORES AND FACILITIES (COLLECTIVELY, ‘PARKS’) IN NEW JERSEY),” begins by stating:
Please read this document. It affects Your legal rights against Vans, Inc. if you are injured. Do not sign this document unless you understand it. If You are a minor, Your parent or guardian is required to sign this legal document.
The document then provides, in relevant part:
2. Can You Make A Claim For Money If You Are Injured?
If you are injured and want to make a claim, you must file a demand before the American Arbitration [***11] Association (the “AAA”). . . . You agree that any dispute between You and Vans will be decided by the AAA. Vans, Inc. will pay all costs of the arbitration for You. . . .
[**384] 3. Vans Is Asking You To Give Up Legal Rights in Order to Enter This Park
Because using Vans’ Park, or even entering the Park as a spectator may increase your risk of harm, Vans is asking you to give up certain valuable legal rights. Here are the rights you are giving up when you sign this document:
(a) You give up your right to sue Vans in a court of law.
(b) You give up your right to a trial by jury.
(c) You give up the right to claim money from Vans if you are injured unless Vans intentionally failed to prevent or correct a hazard caused by unsafe equipment or devices.
(d) You give up the right to claim money from Vans if you wait more than one year from the injury in order to make a claim.
[*329] (e) You give up the right to claim money from Vans, Inc. if you are injured by another person.
(f) You give up the right to recover damages to punish or make an example of Vans, Inc.
4. Rights You Do Not Give Up
You do not give up the right:
(a) To have safe equipment, [***12] structures and devices at the Park for Your intended use.
(b) To claim compensation for Your injury from Vans, Inc. if you are hurt because the equipment, structures and devices at the Park are not safe for Your intended use.
. . . .
(e) To make a claim if Vans, Inc. or anyone working for Vans, Inc. intentionally hurts you.
5. Who Is Bound By This Document?
You are bound by this document. Anyone who has or can obtain Your rights is also bound by this document, such as Your family, relatives, guardians, executors or anyone responsible for You. . . .
6. Other Information Important For You To Know
You have the right to demand money if You believe Vans, Inc. intentionally caused You harm. If parts of this document are determined to be invalid, then that portion will be unenforceable and the remainder of the document will continue in full legal force and effect. . . .
Following those provisions, Andrew’s mother answered “Yes” to the question: “Do You understand that You are giving up rights by signing this document if You are hurt?” The document also informed customers that “[b]y signing this document You agree that Vans, Inc. may rely [***13] on Your answers.” Andrew’s mother signed the release on Andrew’s behalf in the space provided beneath that provision.
Plaintiffs claim that, during his use of Vans’ facility in January 2003, Andrew suffered a fractured femur when an aggressive skateboarder, about whom his parents had complained to Vans, forced him off a skateboard ramp. Consequently, in August 2003, Andrew, acting through his parents as guardians ad litem, and his parents, in their own right, filed suit against Vans. Their complaint alleges that Vans “negligently fail[ed] to supervise the activities at the skate park, negligently failed to control activities of aggressive skateboarders, negligently failed to warn Plaintiffs’ parents that [*330] the activities of aggressive skateboarders would not be monitored, and negligently failed to provide a safe place to skateboard.” Plaintiffs also filed suit against an unnamed corporate owner and insurance company. Vans responded by filing a demand for commercial arbitration with the American Arbitration Association. [**385] Plaintiffs then moved to enjoin the arbitration and to invalidate the pre-injury release signed by Andrew’s mother, and Vans cross-moved for summary judgment. The [***14] trial court granted Vans’ motion, dismissing plaintiffs’ complaint without prejudice and ordering arbitration. The trial court, however, did not rule on the validity of the liability release, finding that the issue is “for the arbitrators to determine.”
On appeal, the Appellate Division unanimously affirmed the trial court’s grant of summary judgment concerning the validity of the arbitration provision. Hojnowski v. Vans Skate Park, 375 N.J. Super. 568, 574-75, 868 A.2d 1087 (App.Div.2005). The panel held that “a parent can enter into an enforceable contract, binding on the parent’s minor child, that waives the right to trial by jury of the minor’s bodily injury claims and requires submission of ‘any dispute’ to arbitration.” Ibid. The panel also found that because the validity of a pre-injury liability waiver presents a question of public policy, the trial court should have ruled on the waiver’s validity and not referred that question to the arbitrator. Id. at 581-82, 868 A.2d 1087. The panel then divided on the resolution of that issue.
The majority concluded that, under the circumstances of this matter, a parent lacks the authority “to sign a pre-tort [***15] agreement limiting the liability of a tortfeasor to exclude negligent conduct” and therefore voided the release. Id. at 583, 868 A.2d 1087. The majority reasoned that “the judiciary must stand as guardians of the State’s children” and that
[w]ere [the court] to decide otherwise, [it] would be relieving an alleged wrongdoer from its traditional legal responsibility to provide compensation for injuries caused by its negligence and shifting the economic burden to families, public welfare agencies and private charities without any concomitant benefit to either an injured child or his parents.
[*331] [Id. at 590, 868 A.2d 1087.]
Judge Fisher dissented, arguing that the court should have enforced the liability waiver and deferred to a parent’s decision regarding such matters. Id. at 591-92, 868 A.2d 1087 (Fisher, J., concurring in part and dissenting in part). In his view, “in the absence of parental unfitness, courts should not overrule parental decisions but should instead defer to a parent’s own weighing of the benefits and risks when entering into agreements that relate to the activities of their children.” Id. at 592, 868 A.2d 1087 (Fisher, J., concurring [***16] in part and dissenting in part).
Vans appealed to this Court as of right on the issue of the validity of the pre-injury release of liability. R. 2:2-1(a)(2). We also permitted the Pacific Legal Foundation to submit a brief as amicus curiae on that issue and granted plaintiffs’ petition for certification on the question whether a parent can bind a minor child to arbitration. 1 185 N.J. 36, 878 A.2d 853 (2005).
1 On appeal, plaintiffs did not raise the issue of the enforceability of the arbitration provision or the pre-injury liability release against the parents in their own right. Accordingly, our analysis is limited to a determination of the enforceability of those provisions against the minor child. Because the issue is not before us, we neither express nor imply an opinion concerning whether a waiver-of-rights provision of the nature entered into by the parties would be enforceable as against an adult.
II.
We first address whether New Jersey’s public policy permits [***17] a parent to release a minor child’s potential tort claims arising out of the minor’s use of a commercial recreational facility. Plaintiffs argue that [**386] a parent may not waive a minor child’s right to sue for negligence. Relying on Fitzgerald v. Newark Morning Ledger Co., 111 N.J. Super. 104, 267 A.2d 557 (Law Div.1970), and numerous out-of-state decisions, plaintiffs claim that the vast majority of states have held that a parent’s attempt to waive a child’s prospective cause of action is void as a matter of public policy. Plaintiffs assert that public policy disfavors pre-injury waivers of liability [*332] because they encourage tortious conduct by absolving a commercial enterprise of its ordinary duty to exercise due care. Plaintiffs also maintain that because a parent is not permitted to settle a child’s post-injury tort claim without judicial approval, a parent should not be allowed to waive a child’s potential claim before an injury occurs.
Defendant recognizes that the enforcement of parental liability waivers has been “treated in varied fashions by different states.” However, defendant asserts that “[t]he more substantial and well-considered decisions favor enforcement [***18] of exculpatory agreements based on the fundamental right of parents to raise their children as they decide.” Defendant further contends that it is “erroneous” to equate pre-tort releases of liability with post-tort releases because “[t]he conflict of interest and potential for harm to befall a minor are far different in the context of a release of an accrued tort claim where settlement funds are present and may be misappropriated.” Finally, defendant claims that “[w]ithout enforceable [r]eleases many activities available to children may be forced to close due to liability concerns.”
A.
We begin our analysis of that issue by noting that there is ambiguity in the pre-injury release concerning whether the agreement extinguishes or merely limits plaintiffs’ ability to recover against defendant for negligence. For example, although paragraph 3(c) provides that plaintiffs have “give[n] up the right to claim money from [defendant] unless [defendant] intentionally failed to prevent or correct a hazard caused by unsafe equipment or devices,” paragraph 4(b) states that plaintiffs have not “give[n] up the right to claim compensation [if] the equipment, structures and devices [***19] at the Park are not safe for [their] intended use.” We need not determine the precise scope and meaning of those terms, however, because we hold that the public policy of New Jersey prohibits a parent of a minor child from releasing a minor child’s [*333] potential tort claims arising out of the use of a commercial recreational facility.
B.
[HN1] Exculpatory agreements have long been disfavored in the law because they encourage a lack of care. See, e.g., Gershon v. Regency Diving Ctr., 368 N.J. Super. 237, 247, 845 A.2d 720 (App.Div.2004); Ultimate Computer Servs., Inc. v. Biltmore Realty Co., 183 N.J. Super. 144, 151, 443 A.2d 723 (App.Div.), certif. denied, 91 N.J. 184, 450 A.2d 522 (1982). For that reason, courts closely scrutinize liability releases and invalidate them if they violate public policy. See, e.g., Lucier v. Williams, 366 N.J. Super. 485, 491, 841 A.2d 907 (App.Div.2004) (“[C]ourts have not hesitated to strike limited liability clauses that are unconscionable or in violation of public policy.”). It is well settled that to contract in advance to release tort liability resulting from intentional or reckless conduct [***20] violates public policy, Kuzmiak v. Brookchester, Inc., 33 N.J. Super. 575, 580, 111 A.2d 425 (App.Div.1955); Restatement (Second) of Contracts § 195 (1981), as does a contract that releases liability from a statutorily-imposed duty, [**387] McCarthy v. NASCAR, Inc., 48 N.J. 539, 542, 226 A.2d 713 (1967). Further, courts have found that exculpatory agreements for negligence claims violate public policy in a variety of settings, such as in residential leases, Cardona v. Eden Realty Co., 118 N.J. Super. 381, 384, 288 A.2d 34 (App.Div.), certif. denied, 60 N.J. 354, 289 A.2d 799 (1972), or in connection with rendering professional services, Lucier, supra, 366 N.J. Super. at 495, 841 A.2d 907; Erlich v. First National Bank, 208 N.J. Super. 264, 287, 505 A.2d 220 (Law Div.1984).
The relevant public policy implicated in this matter is the protection of the best interests of the child under the parens patriae doctrine. [HN2] Parens patriae refers to “the state in its capacity as provider of protection to those unable to care for themselves.” Black’s Law Dictionary 1144 (8th ed.2004). [***21] In keeping with that policy, the Legislature and the courts historically [*334] have afforded considerable protections to claims of minor children. The most significant of those protections concerns the compromise or release of a minor’s post-injury claims. Under Rule 4:44, after a minor has suffered a tortious injury, a minor’s parent or guardian may not dispose of a minor’s existing cause of action without statutory or judicial approval. See
Moscatello ex rel. Moscatello v. Univ. of Med. & Dentistry of N.J., 342 N.J. Super. 351, 361, 776 A.2d 874 (App.Div.), certif. denied, 170 N.J. 207, 785 A.2d 435 (2001); Riemer v. St. Clare’s Riverside Med. Ctr., 300 N.J. Super. 101, 110-11, 691 A.2d 1384 (App.Div.), certif. denied, 152 N.J. 188, 704 A.2d 18 (1997); Colfer v. Royal Globe Ins. Co., 214 N.J. Super. 374, 377, 519 A.2d 893 (App.Div.1986). That Rule applies regardless of whether suit has been filed on the minor’s behalf, see, e.g., Moscatello, supra, 342 N.J. Super. at 361, 776 A.2d 874, and its purpose is “to guard a minor against an improvident compromise [and] to secure the minor against dissipation of [***22] the proceeds,” Colfer, supra, 214 N.J. Super. at 377, 519 A.2d 893.
Although the Rule governing post-injury settlements is not dispositive of our treatment of pre-injury releases, we find that the purposes underlying the post-injury settlement rule also apply in the present context. First, children deserve as much protection from the improvident compromise of their rights before an injury occurs as Rule 4:44 affords them after the injury. Moreover, at the time a parent decides to release the potential tort claims of his or her child, the parent may not fully understand the consequences of that action and may not have even read the waiver before signing. As the Utah Supreme Court has noted:
These clauses are . . . routinely imposed in a unilateral manner without any genuine bargaining or opportunity to pay a fee for insurance. The party demanding adherence to an exculpatory clause simply evades the necessity of liability coverage and then shifts the full burden of risk of harm to the other party. Compromise of an existing claim, however, relates to negligence that has already taken place and is subject to measurable damages. Such releases involve actual negotiations [***23] concerning ascertained rights and liabilities. Thus, if anything, the policies relating to restrictions on a parent’s right to compromise an existing claim apply with even greater force in the preinjury, exculpatory clause scenario. [Hawkins v. Peart, 2001 UT 94, 37 P.3d 1062, 1066 (2001) (emphasis added).]
[*335] Further, in both the pre- and post-injury context, it is necessary to ensure that children retain the ability to seek compensation for an injury. When a parent signs a pre-injury release of liability and the child is later injured, the parent is [**388] left to provide for the child’s injuries while the negligent party suffers no liability. If a parent is unable to finance the child’s injuries, the child may be left with no resources to obtain much needed care or support. See
Cooper v. Aspen Skiing Co., 48 P.3d 1229, 1235 (Colo.2002) (“[T]o allow a parent to release a child’s possible future claims for injury caused by negligence may as a practical matter leave the minor in an unacceptably precarious position with no recourse, no parental support, and no method to support himself or care for his injury.” (footnote omitted)); Scott v. Pac. W. Mountain Resort, 119 Wn.2d 484, 834 P.2d 6, 12 (1992) [***24] (“[W]here parents are unwilling or unable to provide for a seriously injured child, the child would have no recourse against a negligent party to acquire resources needed for care.”).
Those concerns are even more acute in the context of commercial premises liability. [HN3] In New Jersey, “[b]usiness owners owe to invitees a duty of reasonable or due care to provide a safe environment for doing that which is in the scope of the invitation.” Nisivoccia v. Glass Gardens, Inc., 175 N.J. 559, 563, 818 A.2d 314 (2003). That is because business owners “are in the best position to control the risk of harm. Ownership or control of the premises, for example, enables a party to prevent the harm.” Kuzmicz v. Ivy Hill Park Apartments, Inc., 147 N.J. 510, 517, 688 A.2d 1018 (1997) (citations omitted). It follows that in this case the risk of loss should fall on the party best suited to avert injury. See
Hopkins v. Fox & Lazo Realtors, 132 N.J. 426, 447, 625 A.2d 1110 (1993) (recognizing “salutary effect of shifting the risk of loss . . . to those who should be able and are best able to bear them”). The operator of a commercial recreational enterprise [***25] can inspect the premises for unsafe conditions, train his or her employees with regard to the facility’s proper operation, and regulate the types of activities permitted to occur. Such an operator also can obtain [*336] insurance and spread the costs of insurance among its customers. Children, on the other hand, are not in a position to discover hazardous conditions or insure against risks. Moreover, the expectation that a commercial facility will be reasonably safe to do that which is within the scope of the invitation, see
Nisivoccia, supra, 175 N.J. at 563, 818 A.2d 314, is especially important where the facility’s patrons are minor children. If we were to permit waivers of liability, we would remove a significant incentive for operators of commercial enterprises that attract children to take reasonable precautions to protect their safety.
In finding that the exculpatory provision in this matter is invalid, we are in agreement not only with our own State’s case law, but also with the overwhelming majority of other jurisdictions. See, e.g., Fitzgerald, supra, 111 N.J. Super. at 108, 267 A.2d 557 (invalidating exculpatory agreement executed by parent on behalf of minor [***26] child that released defendant from liability to child for future injuries and required parent to indemnify defendant for any claims brought by minor); In re Royal Caribbean Cruises Ltd., 403 F. Supp. 2d 1168, 1172-73 (S.D.Fla.2005) (stating that where “a release of liability is signed on behalf of a minor child for an activity run by a for-profit business, outside of a school or community setting, the release is typically unenforceable against the minor”); Simmons v. Parkette Nat’l Gymnastic Training Ctr., 670 F. Supp. 140, 144 (E.D.Pa.1987) (concluding that parent’s execution of pre-injury release did not exculpate third party from potential claims of minor child); Apicella v. Valley Forge Military Acad. & Junior Coll., 630 F. Supp. 20, 24 (E.D.Pa.1985) (“Under Pennsylvania law, parents do not possess the authority to release . . . potential claims of a minor [**389] child merely because of the parental relationship.”); Cooper, supra, 48 P.3d at 1233-35 (holding that Colorado’s public policy prohibits parents from contractually releasing child’s future claims for injury caused by negligence); Meyer v. Naperville Manner, Inc., 262 Ill. App. 3d 141, 634 N.E.2d 411, 415, 199 Ill. Dec. 572 (1994) [***27] (concluding that because “parent’s waiver of liability was not authorized by any statute or judicial approval, it had no effect to bar the minor child’s (future) [*337] cause of action”); Santangelo v. City of New York, 66 A.D.2d 880, 411 N.Y.S.2d 666, 667 (1978) (holding that minor was not bound by exculpatory release executed by parent on minor’s behalf); Munoz v. II Jaz, Inc., 863 S.W.2d 207, 209-10 (Tex.Ct.App.1990) (concluding that allowing parent to waive child’s right to sue for personal injury “would be against the public policy to protect minor children”); Scott, supra, 834 P.2d at 12 (“To the extent a parent’s release of a third party’s liability for negligence purports to bar a child’s own cause of action, it violates public policy and is unenforceable.”); Hawkins, supra, 37 P.3d at 1065-66 (concluding that “a parent does not have the authority to release a child’s claims before an injury”); see also
Auto. Workers v. Johnson Controls, Inc., 499 U.S. 187, 213, 111 S. Ct. 1196, 1211, 113 L. Ed. 2d 158, 183 (1991) (White, J., concurring in part and concurring in the judgment) [***28] (stating that “the general rule is that parents cannot waive causes of action on behalf of their children”); Doyle v. Bowdoin Coll., 403 A.2d 1206, 1208 n.3 (Me.1979) (stating in dicta that parent cannot release child’s cause of action); Williams v. Patton, 821 S.W.2d 141, 147 n.8, 35 Tex. Sup. Ct. J. 65 (Tex.1991) (Doggett, J., concurring) (stating that parental releases of minor’s potential tort claims are “outrightly disfavored”).
Although we recognize that jurisdictions are not uniform on the question of waiver, our research discloses that the only published decisions in which such agreements have been upheld are in connection with non-commercial ventures, such as volunteer-run or non-profit organizations. See, e.g., Hohe v. San Diego Unified Sch. Dist., 224 Cal. App. 3d 1559, 274 Cal. Rptr. 647, 648-50 (1990) (upholding parental agreement releasing any claims of minor child resulting from child’s participation in school-sponsored event); Gonzalez v. City of Coral Gables, 871 So. 2d 1067, 1067 (Fla.Dist.Ct.App.2004) (upholding parental liability release in context of “community or school supported activities”); Zivich v. Mentor Soccer Club, Inc., 82 Ohio St. 3d 367, 1998 Ohio 389, 696 N.E.2d 201, 207 (1998) [***29] (holding that parent may bind minor child to provision releasing volunteers and sponsors of non-profit sports activity from liability for negligence); Sharon v. City of Newton, 437 Mass. 99, 769 [*338] N.E.2d 738, 741, 745 (2002) (concluding that parent had authority to bind minor child to exculpatory release as condition of child’s participation in public-school extracurricular sports activities). Without expressing an opinion on the validity of parental liability releases in such settings, it suffices to note that volunteer, community, and non-profit organizations involve different policy considerations than those associated with commercial enterprises. Such a distinction is buttressed by the fact that the Legislature has afforded civil immunity from negligence to certain volunteer athletic coaches, managers, officials, and sponsors of non-profit sports teams, see, e.g., N.J.S.A. 2A:62A-6 to -6.2, while not providing similar immunities from negligence in the commercial realm.
Accordingly, [HN4] in view of the protections that our State historically has afforded to a minor’s claims and the need to discourage negligent activity on the part [***30] of commercial enterprises attracting children, we hold that a parent’s execution of a pre-injury [**390] release of a minor’s future tort claims arising out of the use of a commercial recreational facility is unenforceable.
C.
In so holding, we find that defendant’s remaining contentions and those of the dissent below are unconvincing. First, we are not persuaded by the argument that we should allow for parental liability releases because a pre-injury release of a minor’s potential tort claims is no different than a parent’s decision not to bring suit on a minor’s behalf. That argument ignores the fact that, under the tolling provisions of N.J.S.A. 2A:14-21, a minor retains the right to sue for most personal injuries for two years after reaching the age of majority, N.J.S.A. 2A:14-2. One of the rationales behind the tolling provision is that a child should not “be penalized for the ignorance or neglect of his parents or guardian in failing to assert [his or her legal] rights.” O’Connor v. Altus, 67 N.J. 106, 131-32, 335 A.2d 545 (1975) (Pashman, J., concurring in part and dissenting in part). Consequently, although [***31] a parent may control a minor’s right to seek tort compensation [*339] until the age of majority–either by choosing not to sue or by neglecting to do so–a minor’s claim is not eliminated by the parent’s decision; it merely is delayed. Were we to uphold the challenged pre-injury release, however, we would permanently bar the minor’s tort claim, a far more draconian effect.
Nor do we accept the argument that a parental release of liability on behalf of a minor child implicates a parent’s fundamental right to direct the upbringing of his or her child. [HN5] Although parents undoubtedly have a fundamental liberty interest “in the care, custody, and control of their children,” Troxel v. Granville, 530 U.S. 57, 65, 120 S. Ct. 2054, 2060, 147 L. Ed. 2d 49, 56 (2000), the question whether a parent may release a minor’s future tort claims implicates wider public policy concerns and the parens patriae duty to protect the best interests of children. See
Cooper, supra, 48 P.3d at 1235 n.11 (concluding that parental release of child’s right to sue for negligence is “not of the same character and quality as those rights recognized as implicating parents’ fundamental [***32] liberty interest in the ‘care, custody and control’ of their children”). As the majority opinion below noted, “[w]ere it otherwise, existing restrictions on parental conduct in the context of litigation involving minors would long ago have been abrogated in New Jersey.” Hojnowski, supra, 375 N.J. Super. at 585, 868 A.2d 1087. Indeed, the post-injury settlement rule is but one example of such restrictions. Moreover, nothing in our analysis interferes with the constitutionally protected right of a parent “to permit or deny a child’s participation in any or all of the recreational activities that may be available.” Id. at 597, 868 A.2d 1087 (Fisher, J., concurring in part and dissenting in part).
We also reject defendant’s argument that enforcing parental releases of liability is necessary to ensure the continued viability of businesses offering sports activities to minors. We do not view tort liability as an unreasonable economic restraint on the ability of business owners to operate commercial recreational facilities. See
Scott, supra, 834 P.2d at 12 (finding “[n]o legally sound reason . . . for removing children’s athletics from the normal tort system”). [***33] [*340] Indeed, by invalidating pre-injury releases of liability executed by a parent on a minor’s behalf, we are not altering the landscape of common-law tort liability principles by which commercial enterprises typically must abide. Rather, we are preserving the traditional duties owed by business owners to their invitees. Further, as noted, because such facilities [**391] derive economic benefit from their operation, they are better able to assume the costs associated with proper maintenance and the prevention of injury than are the children to whom they cater.
Finally, the dissent below argued that invalidating parental releases of liability “is at odds with our Legislature’s willingness to render participants solely responsible for injuries resulting from the inherent risks of similar activities.” Hojnowski, supra, 375 N.J. Super. at 593, 868 A.2d 1087 (Fisher, J., concurring in part and dissenting in part). That argument refers to legislative acts in the areas of skiing, N.J.S.A. 5:13-1 to -11; roller skating, N.J.S.A. 5:14-1 to -7; and equestrian activities, N.J.S.A. 5:15-1 to -12, which place the [***34] responsibility for injuries resulting from “inherent risks” of the sport on the participant. However, those statutes do not absolve an operator of a facility from liability for its own negligence. Instead, the statutes apply only to inherent risks, which, by their very nature, are those “that cannot be removed through the exercise of due care if the sport is to be enjoyed.” Brett v. Great Am. Recreation, Inc., 144 N.J. 479, 499, 677 A.2d 705 (1996); see also
Pietruska v. Craigmeur Ski Area, 259 N.J. Super. 532, 537, 614 A.2d 639 (Law Div.1992) (finding that “[i]mproper operation of a ski lift is not an inherent risk of skiing since, with due care, it can be eliminated”). As such, inherent risks need not be the subject of waiver because “the general law of negligence has long recognized that a defendant has no duty with regard to such risks.” Brett, supra, 144 N.J. at 499, 677 A.2d 705; see also
Meistrich v. Casino Arena Attractions, Inc., 31 N.J. 44, 49, 155 A.2d 90 (1959) (stating that assumption of inherent risk “is an alternate expression for the proposition that defendant was not negligent”). Thus, a commercial enterprise [***35] is [*341] not liable for injuries sustained as a result of an activity’s inherent risks so long as that enterprise has acted in accordance with “the ordinary duty owed to business invitees, including exercise of care commensurate with the nature of the risk, foreseeability of injury, and fairness in the circumstances.” Rosania v. Carmona, 308 N.J. Super. 365, 374, 706 A.2d 191 (App.Div.), certif. denied, 154 N.J. 609, 713 A.2d 500 (1998).
III.
The second issue that we must decide is whether a parent can bind a minor child to an agreement to arbitrate future disputes arising out of a commercial recreation contract. Plaintiffs contend that “[although] arbitration is an approved alternative to a jury trial, an unsophisticated parent, about to have [his or her] child enter a recreational facility, should not be permitted to bind [his or her] child to a waiver of a trial by jury.” Defendant counters that this Court should enforce the parent’s agreement to submit the minor’s claims to arbitration because the Appellate Division previously upheld such an agreement in Allgor v. Travelers Insurance Co., 280 N.J. Super. 254, 654 A.2d 1375 (App.Div.1995). [***36] Defendant also argues that plaintiffs should be bound to arbitrate the present matter because public policy favors the arbitration of disputes. We agree and find that a parent’s agreement to arbitrate a minor’s potential tort claims is not contrary to public policy.
A.
[HN6] Federal policy has favored the enforcement of arbitration agreements for many years. In 1925, Congress enacted the Federal Arbitration Act (FAA), 9 U.S.C.A. §§ 1-16, to reverse then existing judicial hostility to arbitration agreements and “to place arbitration agreements upon [**392] the same footing as other contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S. Ct. 1647, 1651, 114 L. Ed. 2d 26, 36 (1991). To that end, § 2 of the FAA provides:
[HN7] [*342] A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such a contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. [Emphasis added.]
[HN8] Although the FAA applies to both state [***37] and federal judicial proceedings, state contract-law principles generally govern a determination whether a valid agreement to arbitrate exists. See, e.g., First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920, 1924, 131 L. Ed. 2d 985, 993 (1995) (“When deciding whether the parties agreed to arbitrate a certain matter (including arbitrability), courts generally . . . should apply ordinary state-law principles that govern the formation of contracts.”). However, “a state cannot subject an arbitration agreement to more burdensome requirements than those governing the formation of other contracts.” Leodori v. CIGNA Corp., 175 N.J. 293, 302, 814 A.2d 1098, cert. denied, 540 U.S. 938, 124 S. Ct. 74, 157 L. Ed. 2d 250 (2003).
[HN9] In New Jersey, arbitration also is a favored means of dispute resolution. See, e.g., Martindale v. Sandvik, Inc., 173 N.J. 76, 84-85, 800 A.2d 872 (2002); Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124, 131, 773 A.2d 665 (2001); Marchak v. Claridge Commons Inc., 134 N.J. 275, 281, 633 A.2d 531 (1993). Our Legislature [***38] codified its endorsement of arbitration agreements in the Arbitration Act, N.J.S.A. 2A:24-1 to -11, which, like its federal counterpart, provides that agreements to arbitrate shall be valid save for “such grounds as exist at law or in equity for the revocation of a contract,” N.J.S.A. 2A:24-1. 2 In accordance with those principles, an agreement to arbitrate generally will be valid under state law unless it violates public policy. See, e.g., Marchak, supra, 134 N.J. at 281-82, 633 A.2d [*343] 531 (“Honoring an agreement to submit a matter to arbitration is consistent with the premise that, as long as the agreement does not violate public policy, parties may bargain freely.”); Faherty v. Faherty, 97 N.J. 99, 105, 477 A.2d 1257 (1984) (“A court generally will enforce an arbitration agreement unless it violates public policy.”).
2 N.J.S.A. 2A:24-1 to -11 was superseded by a modified version of the Arbitration Act, N.J.S.A. 2A:23B-1 to -32, effective January 1, 2003, and applicable to agreements entered into on or after that date, N.J.S.A. 2A:23B-3a. Because the arbitration agreement at issue in this appeal was executed prior to that date, this matter is governed by the former statute.
[***39] B.
In light of the strong public policy favoring the settlement of disputes through arbitration, we conclude that allowing a parent to bind a minor child to arbitrate future tort claims is not contrary to our duty as parens patriae to protect the best interests of the child. As opposed to a pre-injury release of liability, a pre-injury agreement to arbitrate does not require a minor to forego any substantive rights. Rather, such an agreement specifies only the forum in which those rights are vindicated. See, e.g., Global Travel Mktg., Inc. v. Shea, 908 So. 2d 392, 403 (Fla.2005) (stating that distinction between waiver of forum in which claim is presented and outright waiver of legal claim “is a crucial consideration in determining whether state’s interest in protecting children renders [**393] the waiver unenforceable”); Cross v. Carnes, 132 Ohio App. 3d 157, 724 N.E.2d 828, 836 (1998) (stating that “parent’s consent and release to arbitration only specifies the forum for resolution of the child’s claim; it does not extinguish the claim”). In that respect, our Appellate Division has observed that
[t]he ancient practice of [***40] arbitration “[i]n its broad sense, . . . is a substitution, by consent of the parties, of another tribunal for the tribunal provided by the ordinary processes of law. The object of arbitration is the final disposition, in a speedy, inexpensive, expeditious, and perhaps less formal manner, of the controversial differences between the parties.”
[Carpenter v. Bloomer, 54 N.J. Super. 157, 162, 148 A.2d 497 (App.Div.1959) (quoting E. Eng’g Co. v. City of Ocean City, 11 N.J. Misc. 508, 510-11, 167 A. 522 (Sup.Ct.1933)).]
Further, although this Court previously has not ruled on the issue, permitting arbitration of a minor’s claims is consistent with New Jersey case law discussing the enforceability of arbitration agreements that affect the rights of children. For example, in [*344] Allgor, supra, the Appellate Division concluded that a father’s contractual agreement to submit to arbitration disputes arising under his underinsured motorist policy also bound his minor son who filed a claim under that policy. 280 N.J. Super. at 262-65, 654 A.2d 1375. The court rejected the contention that “arbitration is not appropriate when the best interests [***41] of a child are at stake.” Id. at 261, 654 A.2d 1375. Our decision in Faherty also supports enforcement of the arbitration provision at issue. In that case, we held that public policy permits spouses to include provisions in their separation agreements for arbitration of child support disputes, subject only to heightened judicial review of the arbitrator’s award. Faherty, supra, 97 N.J. at 108-09, 477 A.2d 1257. We reasoned that
[w]e do not agree with those who fear that by allowing parents to agree to arbitrate child support, we are interfering with the judicial protection of the best interests of the child. We see no valid reason why the arbitration process should not be available in the area of child support; the advantages of arbitration in domestic disputes outweigh any disadvantages.
[Id. at 109, 477 A.2d 1257 (emphasis added).]
Finally, a review of case law from other jurisdictions reinforces our conclusion that a parent should be permitted to bind a minor child to arbitration. In Global Travel Marketing, supra, the Florida Supreme Court recently reversed a Florida Court of Appeals ruling, upon which plaintiffs relied, [***42] which held that parents lack authority to bind a minor child to arbitrate prospective claims arising out of a commercial travel contract for an African safari. 908 So. 2d at 394-95. In finding that such agreements are “not contrary to the public policy of protecting children,” id. at 405, the court recognized a “crucial” distinction between an outright waiver of a minor’s legal claims and a waiver of the forum in which the claims are presented, id. at 403.
The Ohio Court of Appeals reached a similar conclusion in Cross, supra, 724 N.E.2d 828. There, the producers of a television show sought to enforce an arbitration agreement signed by a parent on behalf of a child who sued the show for fraud and defamation after the show allegedly portrayed [*345] the child as a bully. Id. at 830-31. The court upheld that agreement and found that “a parent has the authority to bind his or her child to a resolution of the child’s claims [**394] through arbitration.” Id. at 836. The court reasoned that the Ohio Supreme Court previously had upheld a liability waiver executed by a parent on behalf of a minor participating in a recreational [***43] activity sponsored by a non-profit organization. Ibid. (citing Zivich, supra, 82 Ohio St.3d 367, 696 N.E.2d 201). In relying on Zivich, however, the court noted that
[a] parent’s consent and release to arbitration only specifies the forum for resolution of the child’s claim; it does not extinguish the claim. Logically, if a parent has the authority to bring and conduct a lawsuit on behalf of the child, he or she has the same authority to choose arbitration as the litigation forum.
[Ibid.]
See also
Doyle v. Giuliucci, 62 Cal. 2d 606, 401 P.2d 1, 3, 43 Cal. Rptr. 697 (1965) (stating that arbitration provision in contract for medical services signed by parent on minor’s behalf “is a reasonable restriction, for it does no more than specify a forum for the settlement of disputes”); accord
Leong v. Kaiser Found. Hosps., 71 Haw. 240, 788 P.2d 164, 169 (1990) (concurring with reasoning of Doyle and holding that minor was bound by arbitration provision in contract for medical services signed by father).
Although we recognize that certain cases from other jurisdictions have found a minor’s claims to be non-arbitrable, [***44] those cases are distinguishable because they were decided solely on the basis of the individual contracts at issue in those appeals. They did not directly rule on the larger issue presented by this appeal–whether a parent can bind a minor child to arbitrate future disputes. Fleetwood Enters. Inc. v. Gaskamp, 280 F.3d 1069, 1077, reh’g denied, 303 F.3d 570 (5th Cir.2002) (holding that minor children were not bound to arbitrate injuries suffered as result of formaldehyde inhalation because children were neither signatories to mobile-home sales contract signed by their parents nor third-party beneficiaries of that contract); Billieson v. City of New Orleans, 863 So. 2d 557, 562-63 (La.Ct.App.2003) (concluding that children’s claims for lead poisoning were not precluded by [*346] arbitration agreement between city housing authority and property management company because children were not third-party beneficiaries of agreement); see also
Lewis v. Cedu Educ. Servs., 135 Idaho 139, 15 P.3d 1147, 1152 (2000) (concluding that child was not bound to arbitrate based on language of contract and expressly declining to determine [***45] whether “minors should or should not be bound to arbitrate disputes arising out of contracts entered into on their behalf by their parents”); Accomazzo v. Cedu Educ. Servs., Inc., 135 Idaho 145, 15 P.3d 1153, 1156 (2000) (same). Therefore, [HN10] in the absence of any allegations relating to fraud, duress, or unconscionability in the signing of the contract or that the agreement to arbitrate was not written in clear and unambiguous terms, we conclude that a parent’s agreement to arbitrate is valid and enforceable against any tort claims asserted on a minor’s behalf.
IV.
We affirm the judgment of the Appellate Division and refer this matter to the arbitrator for further proceedings consistent with this opinion.
CHIEF JUSTICE PORITZ and JUSTICES LONG, ALBIN, and WALLACE join in JUSTICE ZAZZALI’s opinion. JUSTICE LaVECCHIA filed a separate opinion concurring in part and dissenting in part, in which JUSTICE RIVERA-SOTO joins.
CONCUR BY: LaVECCHIA (In Part)
DISSENT BY: LaVECCHIA (In Part)
DISSENT
Justice LaVECCHIA, concurring in part and dissenting in part.
I am in full agreement with that portion of the majority’s decision that affirms enforcement of the parties’ agreement to subject [***46] their dispute to arbitration. I part company from my colleagues, however, in so far as they have chosen to invalidate the [**395] waiver of liability that the parties to this appeal executed as a condition of the minor Andrew’s use of defendant’s property to skateboard. In that respect, I am in substantial agreement with the Appellate Division dissent that was penned by Judge Fisher. Essentially, because a waiver of rights of the type entered into by these parties generally would be enforceable as against an adult, I see no reason why this Court should prevent a parent from ratifying such a waiver on behalf of a child, provided that a court or arbitrator determines that the release is reasonable.
[*347] Although the majority declines to express any view on whether the waiver would be invalid if enforced against an adult, it is noteworthy that the waiver does not appear to involve any of the grounds that New Jersey courts have heretofore invoked to invalidate an exculpatory waiver. For example, the waiver does not exempt defendant from liability for a “future intentional tort or willful act or gross negligence.” Kuzmiak v. Brookchester, Inc., 33 N.J. Super. 575, 580, 111 A.2d 425 (App.Div.1955). [***47] Nor does the waiver seek a release from any statutorily imposed duty. McCarthy v. NASCAR, Inc., 48 N.J. 539, 542, 226 A.2d 713 (1967). Furthermore, although the majority notes that “[e]xculpatory agreements have long been disfavored in the law,” that proposition has been invoked not to invalidate a waiver, as the Court does here, but rather to explain that such waivers should be narrowly construed:
Contracts of this nature are not favored by the law. They are strictly construed against the party relying on them and clear and explicit language in the contract is required to absolve a person from such a liability.
[McCarthy v. NASCAR, Inc., 87 N.J. Super. 442, 450, 209 A.2d 668 (Law Div.1965), aff’d, 90 N.J. Super. 574, 218 A.2d 871 (App.Div.1966), aff’d, 48 N.J. 539, 226 A.2d 713 (1967).]
See also
Gershon v. Regency Diving Ctr., Inc., 368 N.J. Super. 237, 247, 845 A.2d 720 (App.Div.2004) (stating more recently that because “the law does not favor exculpatory agreements,” “[a]ny doubts or ambiguities as to the scope of the exculpatory language must be resolved against the drafter”).
The fact that exculpatory waivers receive [***48] narrow construction from courts does not render such waivers unenforceable. Previously, we have stated that “[w]here [exculpatory agreements] do not adversely affect the public interest, exculpatory clauses in private agreements are generally sustained.” Mayfair Fabrics v. Henley, 48 N.J. 483, 487, 226 A.2d 602 (1967). Such clauses most commonly are used and enforced in a “commercial context,” Chem. Bank, N.A. v. Bailey, 296 N.J. Super. 515, 527, 687 A.2d 316 (App.Div.), certif. denied, 150 N.J. 28, 695 A.2d 671 (1997), and generally are valid and enforceable against individuals so long as the particular exculpatory clause does not involve a matter of [*348] public interest. McCarthy v. NASCAR, Inc., 48 N.J. 539, 543, 226 A.2d 713 (1967) (citing Boyd v. Smith, 372 Pa. 306, 94 A.2d 44, 46 (1953)). Many states also look to the notion of “public interest,” or other related concepts, when determining whether to uphold the validity of an exculpatory waiver. The California Supreme Court’s decision in Tunkl v. Regents of the University of California, 60 Cal. 2d 92, 383 P.2d 441, 445-46, 32 Cal. Rptr. 33 (1963), [***49] provides arguably the most widely accepted test applied to exculpatory agreements. Tunkl set forth six factors, one of which is whether “[t]he party seeking exculpation is engaged in performing a service of great importance to the public, which is often a matter of practical necessity for some [**396] members of the public.” Id. at 33, 383 P.2d at 445.
In my view, recreational activities such as skateboarding do not implicate the “public interest.” 1 The majority apparently does not assert otherwise, lodging no objection to the content of the waiver. Rather, the majority focuses on the fact that defendant is attempting to enforce this particular waiver of rights against a minor.
1 That conclusion is in accord with the majority of jurisdictions that have addressed the subject; they have concluded that recreational activities do not implicate the public interest. See, e.g.
Chauvlier v. Booth Creek Ski Holdings, Inc., 109 Wn. App. 334, 35 P.3d 383, 388 (2001) (stating that “skiing is not a ‘service of great importance to the public,’ much less a service of ‘practical necessity.'”). Courts have upheld liability waivers in the context of the following recreational activities: automobile racing, being a spectator at an automobile race, scuba diving, horseback riding, roller skating, skydiving, mountain biking, recreational sumo wrestling, weightlifting at a fitness center, motorcycle racing, go-cart racing, bicycling, and ski racing. Hanks v. Powder Ridge Rest. Corp., 276 Conn. 314, 885 A.2d 734, 752-53 (2005) (Norcott, J., dissenting) (collecting cases). On the other hand, a minority of states have found that snow-tubing and skiing activities do implicate the public interest. See
Hanks, supra, 276 Conn. 314, 885 A.2d 734 (majority opinion); Spencer v. Killington, Ltd., 167 Vt. 137, 702 A.2d 35 (Vt. 1997); Dalury v. S-K-I, Ltd., 164 Vt. 329, 670 A.2d 795 (1995). I find those cases unpersuasive. To find that recreational activities implicate the “public interest,” would strip that term of meaningful content.
[***50] Invoking the “best interests” of children under the parens patriae doctrine, the majority holds that the waiver is invalid as [*349] against public policy, and analogizes the instant situation to the requirement under Rule 4:44 that parental settlement of a minor’s post-injury claims receive judicial approval. There is an important difference between the present pre-injury waiver and the circumstances Rule 4:44 seeks to address. “Our rules for friendly settlements, R. 4:44-1 et seq., are intended to minimize or prevent conflicts of interest from occurring and to assure the reasonableness of settlements.” Zukerman v. Piper Pools, 232 N.J. Super. 74, 90, 556 A.2d 775 (App.Div.1989). See also
Colfer v. Royal Globe Ins. Co., 214 N.J. Super. 374, 377, 519 A.2d 893 (App.Div.1986) (noting that “[t]he purpose of the rule is not only to guard a minor against an improvident compromise but also to secure the minor against dissipation of the proceeds.”). Because the pre-injury setting does not involve the specter of a potential monetary settlement that looms over post-injury settlements, conflicts are of little [***51] concern in the pre-injury setting. See
Sharon v. City of Newton, 437 Mass. 99, 769 N.E.2d 738, 747 n.10 (2002); Zivich v. Mentor Soccer Club, Inc., 82 Ohio St. 3d 367, 1998 Ohio 389, 696 N.E.2d 201, 206 (1998); Angeline Purdy, Note, Scott v. Pacific West Mountain Resort: Erroneously Invalidating Parental Releases of a Minor’s Future Claim, 68 Wash. L. Rev. 457 (1993).
Assuming, nonetheless, that a pre-injury contractual setting is similar to a post-injury setting, that does not support the conclusion that all waivers entered into on behalf of minors are unenforceable, a conclusion that simply goes too far. Rule 4:44 does not bar parental settlements. Rather, the rule requires judicial scrutiny “to ensure the reasonableness of settlements.” Zukerman, supra, 232 N.J. Super. at 90, 556 A.2d 775. If Rule 4:44 provides an appropriate analogy, then the standard of reasonableness that applies to post-injury settlements should apply to the review of pre-injury waivers.
I acknowledge that as a general rule, minors can, before they reach the age of majority, disaffirm contracts into which they enter. [**397] Mechanics Fin. Co. v. Paolino, 29 N.J. Super. 449, 453, 102 A.2d 784 (App.Div.1954) [***52] (stating that “[i]t is generally true that an [*350] infant may avoid his contract.”); Boyce v. Doyle, 113 N.J Super. 240, 241, 273 A.2d 408 (Law Div.1971) (stating that “[t]here can be no doubt but that contracts not of necessity may be voided by an infant either before or a reasonable time after he obtains his majority.”); Restatement (Second) of Contracts §§ 12, 14 (1981); 7 Corbin on Contracts § 27.2 (Perillo rev.2002); 5 Williston on Contracts § 9.5 (Lord ed., 4th ed.1993). That general rule is not altered by a parent’s signing of the contract on behalf of a minor. See 42 Am. Jur. 2d Infants § 46 (2000) (stating that “[a]s a general rule, an infant’s right to avoid his contract is not defeated by the fact that the contract was made by the infant and his or her parent, was made with the approval of his or her parent [or] was approved and ratified by his or her guardian”); Del Bosco v. U.S. Ski Ass’n, 839 F. Supp. 1470, 1474 n.2 (D.Colo.1993) (noting that “[c]ourts that have decided the issue have determined that the signature of a parent does not validate [***53] an infant’s contract.”).
However, contracts entered into by minors can be enforceable if the contract is approved by a court. Indeed, as noted, Rule 4:44 allows settlement agreements involving minors to be enforced so long as a reviewing court determines that the agreement is “reasonable.” Zukerman, supra, 232 N.J. Super. at 90, 556 A.2d 775. Beyond the settlement context, other states have enacted statutory schemes that bar minors from disaffirming certain contracts that have received judicial approval. See, e.g., Cal. Fam. Code § 6750-53 (2006) (covering entertainers and athletes); Cal. Lab. Code § 1700.37 (2006) (covering contracts between a minor and a talent agency); N.Y. Arts & Cult. Affr. Law § 35.03 (2006) (covering entertainers and athletes).
Although our Legislature has not yet enacted similar legislation, freedom of contract principles lead me to the conclusion that a pre-tort waiver entered into by a minor, or ratified by a parent on behalf of a minor, should be enforceable when a reviewing court or arbitrator determines that the waiver was reasonable and not [***54] based on unequal bargaining positions. See
Simmons v. Parkette Nat’l Gymnastic Training Ctr., 670 F. Supp. 140, 144 (E.D.Pa. [*351] 1987) (invalidating minor’s pre-injury waiver and relying, in part, on the fact that “there was no court involvement in the transaction”). If the reasonableness of the waiver is approved, then a minor should be barred from disaffirming the contract, an approach that is consistent with Rule 4:44. It differs somewhat from Rule 4:44 in that I would allow a trial court to review the “reasonableness” of a pre-tort waiver when a defendant, post-injury, raises the waiver as a defense to a suit brought by an injured party. 2
2 Under Rule 4:44 litigants must obtain court approval at the time of entry into the settlement agreement. Requiring judicial approval at the time that a minor enters into a pre-injury waiver would be impractical and inefficient. Review would have to be limited to situations when an injury actually occurs. The reviewing court, of course, would have to view the “reasonableness” of the waiver as of the time that the waiver was executed.
[***55] Post-injury review of pre-injury waivers eliminates the certainty that is provided by Rule 4:44 or, for example, the process established by statute in California and New York, all of which mandate that courts review contracts at the time they are executed. Potential defendants may, however, wish to bear the risk of such uncertainty given the benefits of any waiver ultimately upheld as reasonable. Absent action by the Legislature, I would permit court or arbitrator review and approval, as described, to validate a minor’s [**398] contract in respect of the type of pre-injury liability waivers presented herein. In so stating, I offer no judgment about what forms of liability defendant purported to waive by this exculpatory release. I would have allowed the arbitrator to sort out the reasonableness and the reach of the waiver executed by the parties.
Accordingly, I would affirm in part, reverse in part, and remand the matter for further proceedings.
Justice RIVERA-SOTO joins in this opinion. [*352]
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New Jersey holds that if you signed the release, you are held to its terms even if you cannot read English.
Posted: June 3, 2019 Filed under: Health Club, New Jersey, Release (pre-injury contract not to sue) | Tags: Common Carrier, Duty to Perform, English, Equal Bargaining Power, Exculpatory clause, Fitness International, font, Font Size, Gym, Health club, Korean, LA Fitness, Legal Duty to Perform, Membership, Mutual Assent, ordinary meaning, Plain Language Act, Public Interest, Pull Up Machine, Release, Release and Waiver, Small Type, Type Size, Unconscionability, Understand English, Unequal Bargaining Power, Waiver Leave a commentThere were a ton of issues that in many states might have voided the release, 8 pt font, missing initials and the plaintiff not understanding English were just a few of them.
Citation: Kang v. LA Fitness, 2016 U.S. Dist. LEXIS 179934, 2016 WL 7476354
State: New Jersey, United States District Court, D. New Jersey
Plaintiff: Soon Ja Kang
Defendant: LA Fitness, LA Fitness of South Plainfield, John Does 1-5, et al.
Plaintiff Claims: Negligence
Defendant Defenses: Release
Holding: for the Defendant
Year: 2016
Summary
If you sign the membership agreement containing a release in New Jersey, you are held to the terms of the release, even if you can’t speak or read English. The plaintiff could not read or speak English, signed the LA Fitness membership agreement, and could not sue after she was injured on a piece of equipment.
Facts
Fitness International, LLC d/b/a LA Fitness (incorrectly designated as LA Fitness of South Plainfield) (“LA Fitness”) operates a fitness facility located in Piscataway, NJ. See Final Pretrial Order Stipulation of Facts. On December 30, 2013, plaintiff Soon Ja Kang went to LA Fitness with her husband to sign up for membership.
On December 31, 2013, Kang was injured while working out on a chin/dip assist pull up machine at LA Fitness’s Piscataway location. She filed the instant action on September 29, 2014 in state court, and LA Fitness filed a notice of removal in this Court on November 14, 2014 on the basis of diversity jurisdiction. The complaint alleges that Kang was injured as a result of negligence on the part of LA Fitness. Id. Prior to completion of expert discovery, LA Fitness moved for summary judgment on the issue of whether the waiver and liability provision bars the instant action.
Analysis: making sense of the law based on these facts.
The court started its analysis by looking at the release and the injury the plaintiff suffered. The court found the injury fell within the confines of the release.
As her negligence claim for an injury allegedly sustained while using a piece of workout equipment at an LA Fitness facility clearly falls within the ambit of the liability waiver, the issue becomes whether the waiver itself is enforceable against Kang on the facts of this case.
The issue then became whether or not the release applied to someone who did not speak or read English. Releases in New Jersey are enforceable if:
…(1) it does not adversely affect the public interest; (2) the exculpated party is not under a legal duty to perform; (3) it does not involve a public utility or common carrier; or (4) the contract does not grow out of unequal bargaining power or is otherwise unconscionable.
The court throughout the third factor because the defendant was not a public utility or common carrier. The court then reviewed whether the exculpatory clause affected the public interest. The court found it did not.
[W]e are satisfied that, at least with respect to equipment being used at the club in the course of an exercise class or other athletic activity, the exculpatory agreement’s disclaimer of liability for ordinary negligence is reasonable and not offensive to public policy.
There seemed to be somewhat of a limit to the release based on the court’s next comment about the reach of the release.
The Court agrees with the analysis in Stelluti and finds that the exculpatory clause here does not adversely affect the public interest, at least to the extent that it purports to exculpate LA Fitness with respect to acts or omissions amounting to ordinary negligence.
The plaintiff then argued the release violates the New Jersey Plain Language Act. N.J. Stat. Ann. § 56:12-2. The act requires a consumer contract to be “written in a simple, clear, understandable and easily readable way.”
The plaintiff then argued the act was violated because the print size (font) was 8 points, and the margins of the paper were .5″ “reflecting the intentions of the drafter to squeeze in additional words.”
Reviewing examples of bad language found in the act, the court determined the release did not violate the Plain Language Act.
Reviewing Kang’s membership agreement in light of the above guidelines, the Court finds that the waiver provision does not violate the New Jersey Plain Language Act. The waiver provision does not contain any cross references, nor does it contain any double negatives or exceptions to exceptions. It does not contain words with obsolete meanings, nor is it clouded by the use of Old English, Middle English, Latin or French phrases. And Kang does not argue-nor does the Court find-that the sentences of the waiver provision are set forth in a confusing or illogical order.
The next issue was whether there was any legal duty to perform on the part of the defendant part 2 of the four requirements.
There were no state statutes or regulations setting standards for fitness facilities. The plaintiff argued that National Associations had created standards that applied to fitness facilities. However, the court could not find that to be valid. “However, there is no indication that these national standards apply with the force of law in New Jersey so as to constitute public policy of the state.”
The final argument was the release was unconscionable because of unequal bargaining power between the plaintiff and defendant.
Kang argues that the waiver was invalid for lack of mutual assent, based upon the following assertions: (1) Neither Kang nor her husband speaks English; (2) LA Fitness knew as much, as the Kangs’ daughter was present to translate; (3) an LA Fitness employee explained the contract duration and payment terms to the Kangs’ daughter, but did not explain the liability waiver to her; (4) only Kang’s husband was asked to initial next to the waiver provision in his membership agreement, but no one explained to him what he was initialing; and (5) no employee went over the waiver provision with Kang or her daughter.
The court did not agree with any of the plaintiffs’ arguments. And stated in clear language that the plaintiff’s inability to speak English did not stop her from becoming bound to the terms of the release.
As an initial matter, Kang’s inability to speak English does not bar her from becoming contractually bound. Notwithstanding the fact that her daughter was present to translate, New Jersey courts have unequivocally held that in the absence of fraud, one who signs an agreement is conclusively presumed to understand and assent to its terms and legal effect:
The court went on to explain that if you sign the agreement, you are bound to the terms of the agreement, whether or not you understood the agreement.
In the absence of fraud or imposition, when one fails to read a contract before signing it, the provisions are nevertheless binding, and the party is conclusively presumed to understand and assent to its terms and legal effect . . . . Even illiterate individuals have been held bound by a signed contract in the absence of misrepresentation. One who signs a document in those circumstances should know its contents or have it read (or otherwise have the contents made known) to him or her.
The final issue was the missing initials in the document. Because she had signed the agreement, the signature at the bottom of the agreement was all that was needed for the release to be valid.
Finally, the Court is not aware of, nor has Kang cited, any requirement that she must have initialed the waiver provision for that clause to be enforceable against her. While she did not initial the waiver provision, she did sign the membership agreement containing it. In the absence of fraud, that is enough to bind her to its terms.
The plaintiff then argued the release and fitness contract containing the release were unconscionable. The court summed up the plaintiffs’ unconscionable argument as an amalgamation of all of her other arguments. The court found the exculpatory clause did not offend public policy, and the other arguments for unconscionability did not change the release validity.
Kang was a layperson without any specialized knowledge of exculpatory contracts, and the Court gives her the benefit of the inference that LA Fitness did not explain the legal effect of the waiver provision to her. However, also like the defendant in Stelluti, Kang was not under any undue pressure to execute the agreement and she could have sought advice before signing. Indeed, her daughter was present to translate. As noted above, the fact that Kang does not speak English does have any legal effect on the contract’s enforceability. Thus, in accordance with Stelluti, the Court finds that although the LA Fitness membership agreement may have been offered on a “take-it-or-leave-it” basis, it is not void on the basis of unconscionability.
The motion for summary judgment of the defendant was granted the plaintiff’s claims were dismissed.
So Now What?
New Jersey is another state that upholds the idea that if you sign a release, you are bound to the terms of the release no matter if you could understand the release, the type was too small; you did not read or speak English, or you just want out of the release.
At the same time, this list from my studies has only two states on it, California being the other state. See Balloon ride in California is not a common carrier, and the release signed by the plaintiff bars the plaintiff’s claims even though she did not read or speak English.
 Jim Moss |
Jim Moss is an attorney specializing in the legal issues of the outdoor recreation community. He represents guides, guide services, and outfitters both as businesses and individuals and the products they use for their business. He has defended Mt. Everest guide services, summer camps, climbing rope manufacturers, avalanche beacon manufacturers, and many more manufacturers and outdoor industries. Contact Jim at Jim@Rec-Law.us |
Outdoor Recreation Insurance, Risk Management, and Law
Jim is the author or co-author of six books about legal issues in the outdoor recreation world; the latest is Outdoor Recreation Insurance, Risk Management, and Law.
To see Jim’s complete bio go here and to see his CV you can find it here. To find out the purpose of this website go here.
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New Jersey does not allow a parent to sign away a minor’s right to sue so a binding arbitration agreement is a good idea, if it is written correctly.
Posted: April 15, 2019 Filed under: Contract, Indoor Recreation Center, New Jersey | Tags: Arbitration, bind, Binding Arbitration, defendants', Minor, New Jersey, parent, Right to Sue, Skyzone, Trampoline, Trampoline facility, Trampoline Park, waiving Leave a commentThe arbitration agreement in this case did not state how long the agreement was valid for, so the court held it was only valid for the day it was signed.
Citation: Weed v. Sky NJ, LLC., 2018 N.J. Super. Unpub. LEXIS 410, 2018 WL 1004206
State: New Jersey: Superior Court of New Jersey, Appellate Division
Plaintiff: Lorianne Weed and Scott Trefero as parents and natural guardians of A.M., a minor,
Defendant: Sky NJ, LLC a/k/a and/or d/b/a Skyzone Moorestown and/or a/k/a and/or d/b/a Skyzone and David R. Agger
Plaintiff Claims: Contract failed to compel arbitration
Defendant Defenses: Arbitration
Holding: For the Plaintiff
Year: 2018
Summary
When a parent cannot sign a release for a minor, because the states don’t enforce them, one option may be a binding arbitration agreement. Arbitration usually does not allow massive damages, is cheaper and quicker than going to trial.
However, your arbitration agreement, like a release, must be written in a way to make sure it is effective. This one was not, and the plaintiff can proceed to trial.
Facts
Plaintiff visited the trampoline facility in July 2016. Entrance to the park is conditioned on all participants signing a “Conditional Access Agreement, Pre-Injury Waiver of Liability, and Agreement to Indemnity, Waiver of Trial, and Agreement to Arbitrate” (the Agreement). Weed executed the agreement on behalf of her son in July 2016.
Plaintiff returned to the facility with a friend in November 2016, and was injured while using the trampolines during a “Glow” event, which plaintiff submits used different and less lighting than was present at his earlier visit. Plaintiff entered the facility in November with an agreement signed by his friend’s mother on behalf of both her daughter and A.M.[2] In an affidavit submitted by Weed in opposition to the motion, she stated that she was unaware that her son was going to the facility at the time of the November visit.
After Weed filed suit on behalf of her son, defendants moved to compel arbitration pursuant to the agreement. Defendants argued that the agreements contained “straightforward, clear, and unequivocal” language that a participant was waiving their right to present claims before a jury in exchange for conditional access to the facility. They asserted that the first agreement signed by Weed remained in effect at the time of plaintiff’s subsequent visit in November as there was no indication that it was only valid for the one day of entry in July. Finally, defendants contended that any dispute as to a term of the agreement should be resolved in arbitration.
Plaintiff opposed the motion, asserting that nothing in the first agreement alerted Weed that it would remain in effect for either a certain or an indefinite period of time. To the contrary, defendants’ policy of requiring a new agreement to be signed each time a participant entered the park belied its argument that a prior agreement remained valid for a period of time.
On May 19, 2017, Judge Joseph L. Marczyk conducted oral argument and denied the motion in an oral decision issued the same day. The judge determined that the first agreement did not apply to the November visit because it did not contain any language that it would remain valid and applicable to all future visits. Therefore, there was no notice to the signor of the agreement that it would be in effect beyond that specific day of entry, and no “meeting of the minds” that the waiver and agreement to arbitrate pertained to all claims for any future injury.
As for the second agreement, the judge found that there was no precedent to support defendants’ contention that an unrelated person could bind plaintiff to an arbitration clause. This appeal followed.
Analysis: making sense of the law based on these facts.
In a state where there are no defenses except assumption of the risk for claims by minor’s arbitration can be a good way to speed up the process and limit damages. Each state has laws that encourage arbitration and, in most cases, create limits on what an arbitration panel (the people hearing the case) can award in damages. In man states, arbitration judges cannot award punitive damages.
You need to check your state laws on what if any benefits arbitration provides.
However, if you can use a release, the release is the best way to go because it cuts off all damages. Many times, in arbitration damages are awarded, they are just less.
To determine which states do not allow a parent to sign away a minor’s right to sue see States that allow a parent to sign away a minor’s right to sue.
The best way of dealing with minor claims is the defense of assumption of the risk. However, this takes more time on the front end in making sure the minor participants understand the risk before embarking on the activity.
There were two issues before the appellate court: Whether the first agreement signed by the mother of the injured plaintiff extended beyond the day it was signed. The second issue was whether a second agreement signed by a friend, not a parent, legal guardian or someone acting under a power of attorney had any legal validity.
The first agreement was silent as to how long it was valid. There was no termination date, (which is a good thing) and nothing to indicate the agreement was good for a day or a lifetime. Because the contract was blank as to when the agreement was valid, the court ruled against the creator of the contract.
There is no evidence in the record before us to support defendants’ argument as the agreements are silent as to any period of validity. Defendants drafted these agreements and required a signature from all participants waiving certain claims and requiring submission to arbitration prior to permitting access to the facility. Any ambiguity in the contract must be construed against defendants.
When a contract is written any issues are held against the writer of the agreement. Here because the contract had no end date or did not say it was good forever, there was a gap in the agreement that was held against the defendant as the writer of the agreement.
So, the court ruled the agreement signed by the mother was only valid on the day it was signed and was not valid the second time when the minor came in and was injured.
The second argument made by the defendant was the friend who signed for the minor on the second visit signed an agreement that should be enforced and compel arbitration.
The court laughed that one out the door.
We further find that defendants’ argument regarding the November agreement lacks merit. The signor of that agreement was neither a parent, a legal guardian, nor the holder of a power of attorney needed to bind the minor plaintiff to the arbitration agreement. Defendants’ reliance on Hojnowski v. Vans Skate Park, is misplaced. While the Court found that a parent had the authority to waive their own child’s rights under an arbitration agreement in Hojnowski, there is no suggestion that such authority would extend to a non-legal guardian. Not only would such a holding bind the minor to an arbitration agreement, it would also serve to bind the minor’s parents, waiving their rights to bring a claim on behalf of their child. We decline to so hold.
So Now What?
New Jersey law is quite clear. A parent cannot sign away a minor’s right to sue, Hojnowski v. Vans Skate Park. Consequently, arbitration was probably the way to go. In this case, one little slip up made the arbitration agreement worthless.
The one flaw in using an arbitration agreement is you could use a release to stop the claims for a parent. So, you should write a release that stops the claims of the parents/legal guardians and compels arbitration of the minor’s claims. Those get tricky.
And as far as another adult signing for a minor who is not their child, that is always a problem. A parent can sign for a minor, to some extent, and a spouse can sign for another spouse in certain situations. An officer of a corporation or a manager of a limited liability company can sign for the corporation or company. The trustee can sign for a trust, and any partner can sign for a partnership. But only you can sign for you.
The issue that outdoor businesses see all day long is a volunteer youth leader take groups of kids to parks, amusement rides and climbing walls, etc. Neighbors take the neighborhood kids to the zoo, and friends grab their kids’ friends to take on vacation. Unless the adult has a power of attorney saying they have the right to enter agreements on behalf of the minor child, their signature only has value if they are a celebrity or sports personality.
What do you think? Leave a comment.
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Weed v. Sky NJ, LLC., 2018 N.J. Super. Unpub. LEXIS 410, 2018 WL 1004206
Posted: April 2, 2019 Filed under: Contract, Indoor Recreation Center, Legal Case, Minors, Youth, Children, New Jersey | Tags: Arbitration, bind, Binding Arbitration, defendants', Minor, New Jersey, parent, Right to Sue, Skyzone, Trampoline, Trampoline facility, Trampoline Park, waiving Leave a commentWeed v. Sky NJ, LLC., 2018 N.J. Super. Unpub. LEXIS 410, 2018 WL 1004206
Lorianne Weed and Scott Trefero as parents and natural guardians of A.M., a minor, Plaintiffs-Respondents, v. Sky NJ, LLC a/k/a and/or d/b/a Skyzone Moorestown and/or a/k/a and/or d/b/a Skyzone and David R. Agger, Defendants-Appellants.
No. A-4589-16T1
Superior Court of New Jersey, Appellate Division
February 22, 2018
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 18, 2018
On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-2790-16.
Marco P. DiFlorio argued the cause for appellants (Salmon, Ricchezza, Singer & Turchi LLP, attorneys; Joseph A. Ricchezza and Marco P. DiFlorio, on the briefs).
Iddo Harel argued the cause for respondents (Ross Feller Casey, LLP, attorneys; Joel J. Feller and Iddo Harel, on the brief).
Before Judges Currier and Geiger.
PER CURIAM
Defendants Sky NJ, LLC a/k/a/ Sky Zone Moorestown and David Agger (defendants) appeal from the May 19, 2017 order denying their motion to compel arbitration in this personal injury suit brought by plaintiffs after A.M.[1] suffered severe injuries while jumping on a trampoline at defendants’ facility. After a review of the presented arguments in light of the record before us and applicable principles of law, we affirm.
Plaintiff visited the trampoline facility in July 2016. Entrance to the park is conditioned on all participants signing a “Conditional Access Agreement, Pre-Injury Waiver of Liability, and Agreement to Indemnity, Waiver of Trial, and Agreement to Arbitrate” (the Agreement). Weed executed the agreement on behalf of her son in July 2016.
Plaintiff returned to the facility with a friend in November 2016, and was injured while using the trampolines during a “Glow” event, which plaintiff submits used different and less lighting than was present at his earlier visit. Plaintiff entered the facility in November with an agreement signed by his friend’s mother on behalf of both her daughter and A.M.[2] In an affidavit submitted by Weed in opposition to the motion, she stated that she was unaware that her son was going to the facility at the time of the November visit.
Both agreements required the submission of all claims to binding arbitration and contained the following pertinent language:
I understand that this Agreement waives certain rights that I have in exchange for permission to gain access to the [l]ocation. I agree and acknowledge that the rights I am waiving in exchange for permission to gain access to the [l]ocation include but may not be limited to the following:
a. the right to sue [defendants] in a court of law;
b. the right to a trial by judge or jury;
c. the right to claim money from [defendants] for accidents causing injury within the scope of the risk assumed by myself;
d. the right to claim money from [defendants] for accidents causing injury unless [defendants] committed acts of gross negligence or willful and wanton misconduct; and
e. the right to file a claim against [defendants] if I wait more than one year from . . . the date of this Agreement.
Waiver of Trial, and Agreement to Arbitrate
IF I AM INJURED AND WANT TO MAKE A CLAIM AND/OR IF THERE ARE ANY DISPUTES REGARDING THIS AGREEMENT, I HEREBY WAIVE ANY RIGHT I HAVE TO A TRIAL IN A COURT OF LAW BEFORE A JUDGE AND JURY. I AGREE THAT SUCH DISPUTE SHALL BE BROUGHT WITHIN ONE YEAR OF THE DATE OF THIS AGREEMENT AND WILL BE DETERMINED BY BINDING ARBITRATION BEFORE ONE ARBITRATOR TO BE ADMINISTERED BY JAMS[3] PURSUANT TO ITS COMPREHENSIVE ARBITRATIONRULES AND PROCEDURES.I further agree that the arbitration will take place solely in the state of New Jersey and that the substantive law of New Jersey shall apply. I acknowledge that if I want to make a claim against [defendants], I must file a demand before JAMS. … To the extent that any claim I have against [defendants] has not been released or waived by this Agreement, I acknowledge that I have agreed that my sole remedy is to arbitrat[e] such claim, and that such claim may only be brought against [defendants] in accordance with the above Waiver of Trial and Agreement to Arbitrate.
After Weed filed suit on behalf of her son, defendants moved to compel arbitration pursuant to the agreement. Defendants argued that the agreements contained “straightforward, clear, and unequivocal” language that a participant was waiving their right to present claims before a jury in exchange for conditional access to the facility. They asserted that the first agreement signed by Weed remained in effect at the time of plaintiff’s subsequent visit in November as there was no indication that it was only valid for the one day of entry in July. Finally, defendants contended that any dispute as to a term of the agreement should be resolved in arbitration.
Plaintiff opposed the motion, asserting that nothing in the first agreement alerted Weed that it would remain in effect for either a certain or an indefinite period of time. To the contrary, defendants’ policy of requiring a new agreement to be signed each time a participant entered the park belied its argument that a prior agreement remained valid for a period of time.
On May 19, 2017, Judge Joseph L. Marczyk conducted oral argument and denied the motion in an oral decision issued the same day. The judge determined that the first agreement did not apply to the November visit because it did not contain any language that it would remain valid and applicable to all future visits. Therefore, there was no notice to the signor of the agreement that it would be in effect beyond that specific day of entry, and no “meeting of the minds” that the waiver and agreement to arbitrate pertained to all claims for any future injury.
As for the second agreement, the judge found that there was no precedent to support defendants’ contention that an unrelated person could bind plaintiff to an arbitration clause. This appeal followed.
“[O]rders compelling or denying arbitration are deemed final and appealable as of right as of the date entered.” GMAC v. Pittella, 205 N.J. 572, 587 (2011). We review the judge’s decision to compel arbitration de novo. Frumer v. Nat’1 Home Ins. Co., 420 N.J.Super. 7, 13 (App. Div. 2011). The question of whether an arbitration clause is enforceable is an issue of law, which we also review de novo. Atalese v. U.S. Legal Servs. Group, L.P., 219 N.J. 430, 445-46 (2014). We owe no deference to the trial court’s “interpretation of the law and the legal consequences that flow from established facts.” Manalapan Realty v. Twp. Comm., 140 N.J. 366, 378 (1995).
Defendants argue that the trial court erred when it determined that the first arbitration agreement signed by Weed four months before plaintiff’s injury was no longer binding on the parties at the time of plaintiff’s injury. We disagree.
While we are mindful that arbitration is a favored means of dispute resolution in New Jersey, the threshold issue before us is whether Weed’s signature on the July agreement would be binding on plaintiff for all subsequent visits. We apply well-established contract principles, and ascertain the parties’ intent from a consideration of all of the surrounding circumstances. James Talcott, Inc. v. H. Corenzwit & Co., 76 N.J. 305, 312 (1978). “An agreement must be construed in the context of the circumstances under which it was entered into and it must be accorded a rational meaning in keeping with the express general purpose.” Tessmar v. Grosner, 23 N.J. 193, 201 (1957).
It is undisputed that neither agreement contains any reference to a term of validity. The parties submitted conflicting affidavits in support of their respective positions. Weed stated there was nothing in the agreement she signed to apprise a participant that the agreement was in effect for longer than the day of entry. Defendants contend that plaintiff did not need a second agreement signed for the November visit as the initial agreement remained in effect.
There is no evidence in the record before us to support defendants’ argument as the agreements are silent as to any period of validity. Defendants drafted these agreements and required a signature from all participants waiving certain claims and requiring submission to arbitration prior to permitting access to the facility. Any ambiguity in the contract must be construed against defendants. See Moscowitz v. Middlesex Borough Bldq. & Luan Ass’n, 14 N.J.Super. 515, 522 (App. Div. 1951) (holding that where a contract is ambiguous, it will be construed against the drafting party). We are satisfied that Judge Marczyk’s ruling declining enforcement of the July agreement was supported by the credible evidence in the record.
We further find that defendants’ argument regarding the November agreement lacks merit. The signor of that agreement was neither a parent, a legal guardian, nor the holder of a power of attorney needed to bind the minor plaintiff to the arbitration agreement. Defendants’ reliance on Hojnowski v. Vans Skate Park, 187 N.J. 323, 346 (2006) is misplaced. While the Court found that a parent had the authority to waive their own child’s rights under an arbitration agreement in Hojnowski, there is no suggestion that such authority would extend to a non-legal guardian. Not only would such a holding bind the minor to an arbitration agreement, it would also serve to bind the minor’s parents, waiving their rights to bring a claim on behalf of their child. We decline to so hold. See Moore v. Woman to Woman Obstetrics & Gynecology, LLC, 416 N.J.Super. 30, 45 (App. Div. 2010) (holding there is no legal theory that would permit one spouse to bind another to an agreement waiving the right to trial without securing consent to the agreement).
As we have concluded the threshold issue that neither the July nor the November agreement is enforceable as to the minor plaintiff, we do not reach the issue of whether the arbitration provision contained within the agreement accords with our legal standards and case law. Judge Marczyk’s denial of defendants’ motion to compel arbitration was supported by the evidence in the record.
Affirmed.
Notes:
[1] Lorianne Weed is A.M.’s mother. Because A.M. is a minor, we use initials in respect of his privacy and we refer to him hereafter as plaintiff.
[2] The agreement required the adult to “certify that [she was] the parent or legal guardian of the child(ren) listed [on the agreement] or that [she had] been granted power of attorney to sign [the] Agreement on behalf of the parent or legal guardian of the child(ren) listed.” There were no proofs presented that the adult met any of these requirements.
[3] JAMS is an organization that provides alternative dispute resolution services, including mediation and arbitration.
The blurry line between agent, independent contractor and employee can be used against you if you do not understand the differences and put it in writing.
Posted: December 11, 2017 Filed under: Minors, Youth, Children, New Jersey, Summer Camp | Tags: Apparent Authority, appearance of authority, Brochure, campers, citation omitted, Contractor, discovery, Duty of care, genuine, golf, Golf Camp, golf club, hired, home builder, Independent Contractor, logo, Marketing, master-servant, minor child, mouth, New Jersey Professional Golf Association, NOLS, non-moving, Outward Bound, PGA NJPGA, planning, Professional Golf Association, professional golfer, renewed, Respondeat Superior, servant, Standard of review, Summary judgment, Summer Camp, supposed, YMCA, Youth Camp Leave a commentThe use of the PGA name was not enough to tie the PGA to a golf camp where they had no relationship or control. As such, they were dismissed from the suit because they had no duty to the injured minor.
Choi and Keane v. Hunterdon County YMCA, Inc., et. al., 2017 N.J. Super. Unpub. LEXIS 2737
State: New Jersey, Superior Court of New Jersey, Appellate Division
Plaintiff: Seung Yon Choi and Gerald J. Keane on behalf of E.K., a Minor as Guardian Ad Litem, and Seung Yon Choi, and Gerald J. Keane, individually, Plaintiffs-Appellants
Defendant: Hunterdon County YMCA, Inc., Michael Trianio, Chris Nallen, Alex Baker, Erica Croat, The New Jersey Professional Golfers Association, Inc. (NJPGA), James Mullen, Defendants, and The Professional Golfers Association, Inc.
Plaintiff Claims: negligent supervision
Defendant Defenses: no relationship to create an agency
Holding: for the defendant
Year: 2017
Summary
A minor was injured by another camper at a golf camp. The parents sued everyone involved including the PGA. The PGA filed a motion to dismiss because they had nothing to do with the camp.
The motion was granted because there was no legal relationship between the camp and the PGA. The use of the PGA logo by the camp in its brochure was not enough, if allowed by the PGA, to establish liability.
Facts
The minor, age 5, was enrolled in a YMCA golf camp. The golf camp in its brochure advertised the camp would be run or the instructors would be PGA professionals. The PGA logo was used on the brochure.
The minor was struck in the face by a golf club swung by another minor at the camp. The parents sued the defendants listed above for negligent supervision. Prior to this motion, the plaintiff settled with all the defendants except the PGA (Professional Golf Association). The PGA filed a motion for summary judgment arguing it owed no duty of care to the minor plaintiff. The motion was granted by the court, and the plaintiff’s appealed.
Analysis: making sense of the law based on these facts.
The issue was the involvement of the PGA in the operation and control of the camp. The PGA argued they had nothing to do with the camp, almost indicating their name and logo had been used without their permission.
The parents argued two issues. The PGA was liable under the theory of respondeat superior and camp, and the professional golfer hired by the camp had apparent authority to act for the PGA.
The phrase respondeat superior means the employer could be found liable for the acts of an employee, if at the time of the occurrence the employee was acting within the scope of his or her employment. The easiest example of this is you have an employee who in their personal car goes to collect the company mail at the post office. On the way back to the office the employee has a car accident where the employee is at fault. The employer is liable for the acts of the employee because he or she was working or doing work for the employer at the time of the accident.
Under respondeat superior, an employer can be found liable for the negligence of an employee causing injuries to third parties, if, at the time of the occurrence, the employee was acting within the scope of his or her employment.” To establish liability, a plaintiff must show “that a master-servant relationship existed.” “If no master-servant relationship exists, no further inquiry need take place because the master-servant relationship is sine qua non to the invocation of respondeat superior.”
If you have employees do this make sure you have non-owned auto coverage under your company business insurance or purchase a business automobile policy.
In this case, the professional golfer hired to instruct at the camp was an independent contractor of the YMCA and not employed by the PGA. The master servant relationship was created because the professional golfer was an independent contractor of the YMCA and did not work for the PGA.
The record indicates Nallen was hired by the NJ Golf Foundation as an independent contractor to run the YMCA’s Golf Camp. The NJ Golf Foundation paid Nallen $2700 for his services, which was reflected in an IRS form 1099-MISC used for reporting income paid to independent contractors. The PGA is not mentioned in the agreement signed by the YMCA and the NJPGA. Plaintiffs failed to offer any evidence that would show, or even create a
genuine dispute of fact, that Nallen was in a master-servant relationship with the PGA. We agree with the trial court that a master-servant relationship was not established merely because Nallen was a professional golfer who had competed in PGA events as a member of the PGA.
The second theory was there was an apparent agency between the PGA and the professional golfer.
If a principal cloaks an independent contractor with apparent authority or agency, the principal can be held liable as if the contractor were its own employee if it held out the contractor to the plaintiff as its own servant or agent.” Liability may be imposed on the principal based upon “apparent authority” when “the principal’s actions have misled a third-party into believing that a relationship of authority in fact exists.”
The issue is the principal, in this case the PGA must cloak the agent, the professional golfer with the authority to do something on behalf of the principal.
Liability arises if “the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business uses, and the nature of the particular business, is justified in presuming that such agent has the authority to perform the particular act in question.”
Because the PGA did nothing, possibility did not even know about the camp, the PGA could and did not cloak the professional golfer with any authority to do anything.
To satisfy its burden of establishing the apparent authority or apparent agency relationship, plaintiffs had to establish: “(1) that the appearance of authority has been created by the conduct of the alleged principal and it cannot be established ‘alone and solely by proof of [conduct by] the supposed agent,’ (2) that a third party has relied on the agent’s apparent authority to act for a principal, and (3) that the reliance was reasonable under the circumstances.”
This prevents the principals of the world from being drug into every lawsuit any blowhard could create. You have no control over the people walking around saying they work for you, you may not even know they are saying it let alone even know they exist. Therefore, their actions cannot drag you into litigation that you have no knowledge of.
By contrast, there was no evidence of voluntary conduct on the part of the PGA to create an appearance that the YMCA or Nallen had authority to act for the PGA. Indeed, there was no evidence the PGA was involved in any aspect of the planning or administration of the YMCA’s camp. There was no evidence the PGA was even aware of the use of its logo or name in the YMCA’s brochure prior to this lawsuit, let alone that it authorized its use for the YMCA’s marketing purposes. Again, the appearance of authority “cannot be established ‘alone and solely by proof of [conduct by] the supposed agent[.]'”
Since there were no acts or actions on the part of the PGA they were allowed to be dismissed from the suit.
So Now What?
I suspect that the PGA is going to maintain a closer hold on the use of its name in the future. I also suspect that in a couple of states, this might have had more traction. The PGA, like many other organizations, works hard to uphold the values and qualifies its name represents. Consequently, legitimacy can be provided to a program or camp by using its name.
The same issues appear in the outdoor recreation world. I just finished an article where name NOLS was used to describe a program, that was not a NOLS program. NOLS and Outward Bound represent the top tier of outdoor training in the US short of the AMGA for more technical skills. As such always be a little suspicious when their names are bandied about. Is it truly a course being offered by them or are they using the name to provide legitimacy to what they are trying to do.
The other issue is who has authority to do what for your business or program. Keep your eyes and ears open for the use of your name by anyone.
Finally, this might have gone another way if there was not a written agreement between the professional golfer and the camp. Everyone wants to blur the lines when there is an injury. The IRS lives on blurred lines when taxes are not filed. If you hire independent contractors, you should look at hiring them with a written contract.
At the same time, hiring independent contractors to do the work of employees will also get you in hot water. If in the industry, normally employees do the work that your “independent contractors” are doing, you will be writing big checks to the IRS, Workers Compensation and to the employees themselves.
What do you think? Leave a comment.
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Any angry injured guest or a creative attorney will try about anything to win. In this case, the New Jersey Consumer Fraud Act was used to bring a Pennsylvania Ski Area to court in New Jersey
Posted: October 9, 2017 Filed under: Assumption of the Risk, New Jersey, Pennsylvania, Ski Area, Skiing / Snow Boarding | Tags: actionable, advertised, advertisement, ascertainable loss, Assumption of risk, assumption of the risk, business practice, Camelback Mountain Ski Resort, Cammelback, Cause of action, cognizable, common law, concealment, Consumer, consumer fraud, Downhill, factual allegations, Immunity, Legal Case, material fact, merchandise, misleading, New Jersey, New Jersey Consumer Fraud Act, NJCFA, omission, Pennsylvania, presumed to know, quotation marks omitted, reasonable inference, residents, ski area, Ski Area Statutes, Ski Resort, Skier's Responsibility Act, skiing, Skiing / Snow Boarding, Snow, Sport, tort liability, unlawful practice Leave a commentThe lawsuit failed, this time. However, the failure was due to Pennsylvania law more than New Jersey law. The plaintiff argued it was a violation of the act to advertise to New Jersey residents to come skiing in Pennsylvania and now warn of the difficulty of suing for injury’s skiing.
Cole, et al., v. Camelback Mountain Ski Resort, et al., 2017 U.S. Dist. LEXIS 100183
State: Pennsylvania, United States District Court for the Middle District of Pennsylvania
Plaintiff: Gyl Cole, Ronald Cole, her husband
Defendant: Camelback Mountain Ski Resort
Plaintiff Claims: Violation of the New Jersey Consumer Fraud Act
Defendant Defenses: The statute did not apply
Holding: For the defendant
Year: 2017
Summary
In this case the plaintiff sued arguing, the New Jersey consumer Fraud Act was violated by the defendant ski area because it did not put a notice in its ad that was seen in New Jersey, that suing a Pennsylvania ski area was difficult, if not impossible, because of the Pennsylvania Skier’s Responsibility Act.
However, there was nothing in the act that applied to advertising nor was there anything in the law requiring a defendant to inform the consumer about the law that might apply to any relationship between the guest and the ski area.
Facts
The plaintiff and her husband lived in Waretown New Jersey. They went skiing at defendant Camelback Mountain Ski Resort, which is located in Pennsylvania. Although not stated, allegedly they went skiing after reading an advertisement by Camelback.
While skiing on a black diamond run the plaintiff slammed into a six-inch metal pipe and sustained severe injuries.
The plaintiff sued, first in New Jersey state court. The case was transferred to the Federal District Court in New Jersey. How the case was transferred to the Pennsylvania Federal court that issued this opinion is not clear.
The Pennsylvania Federal District Court dismissed the plaintiff’s complaint with the above captioned opinion.
Analysis: making sense of the law based on these facts.
The basis of the plaintiff’s complaint was that a ski area advertising in New Jersey needed to inform New Jersey residents that it was impossible to sue and win a lawsuit against a Pennsylvania ski area. Because the ads of the defendant ski area did not mention that fact, the plaintiffs claimed that the defendant had violated the New Jersey New Jersey Consumer Fraud Act.
All states have a Consumer Fraud Act. Each states act is different from any other state, but generally they were enacted to prevent scam artists from ripping people off. The New Jersey Act awards treble damages and attorney’s fees if a consumer could prove there was “(1) an unlawful practice, (2) an ascertainable loss, and (3) a causal relationship between the unlawful conduct and the ascertainable loss.…”
Most state consumer fraud statutes include greater than simple damages as a penalty to keep fraudulent acts from happening. Many also include attorney fees and costs to encourage attorneys to take up these cases to defend the consumer put fraudulent practices or business on notice or out of business.
Under the act, an unlawful practice was defined as:
[t]he act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate . . .
An unlawful practice was defined as falling into one of three categories: “affirmative acts, knowing omissions, and regulation violations.”
A failure to inform, the argument being made by the plaintiff, was an omission. You could sue based upon the omission if you could prove the defendant “(1) knowingly concealed (2) a material fact (3) with the intention that the consumer rely upon the concealment.”
The underlying duty on the part of the defendant was a duty to disclose. If there was no duty to disclose, then there was no omission. The plaintiffs argued, the Pennsylvania Skier’s Responsibility Act prevented lawsuits against ski areas, or as the
plaintiff’s argued, indemnified ski areas from lawsuits. That information the plaintiff argued needed to be included in the ad, or it violated the New Jersey Act.
The court then looked at Pennsylvania Supreme Courts interpretations of the Pennsylvania Skier’s Responsibility
Act. Those decisions stated the act did not create new law, but kept in place long standing principles of the common law. Meaning that the act reinforced the common law assumption of the risk defense that preceded the Pennsylvania Skier’s Responsibility Act.
The common law in which the Act preserves, the doctrine of voluntary assumption of risk, “has also been described as a ‘no-duty’ rule, i.e., as the principle that an owner or operator of a place of amusement has no duty to protect the user from any hazards inherent in the activity.” In Pennsylvania, “this ‘no-duty’ rule applies to the operators of ski resorts, so that ski resorts have no duty to protect skiers from risks that are ‘common, frequent, and expected,’ and thus ‘inherent’ to the sport of downhill skiing.
Since the act did not create new law, only codified the law, there was little if any requirement of a duty to inform anyone of the law.
Going back to the New Jersey New Jersey Consumer Fraud Act, nothing in the act nor had any court decision interpreting the act held a requirement to inform any consumer of any law. In fact, the law is based on the fact that all people know and understand the law. (A tenet of the law that I personally find confusing. You must know the law; however, to give legal advice you must go to law school. After law school, I know I don’t know all the laws!)
Consequently, there can be no duty to tell a consumer what the law states because they already know law. “…a finding that Plaintiffs’ claim was cognizable under the NJCFA would run counter to a well-known legal maxim: “[a]ll citizens are presumptively charged with knowledge of the law.”
There are exceptions to this rule, when a statute specifically requires some type of notice be given to the consumer, but that was not the case here.
Finally, the court held that to find in favor of the plaintiffs would create a never-ending liability on businesses. In that part of the US, an ad could be seen by someone living in Pennsylvania, New Jersey and New York. No ad could fully inform consumers in all three states about the possible laws that might be in play in that particular ad. “Indeed, the number of relevant legal concept that a business “omitted” from its advertisement would only be limited by the creativity and imagination of the lawyers involved.”
The case was dismissed.
So Now What?
I don’t think you can simply think that this case has no value. You need to take a look, or have your attorney look, at your own state consumer fraud statute. Placing disclaimers in ads would not be logical, but making sure you don’t cross the line and violate your state consumer fraud law can keep you from being sued for violation of the statute in your own state. And damages can skyrocket in many cases once they are trebled and attorney fees, costs and interest are added.
Remember, Marketing makes Promises Risk Management has to pay for©
What do you think? Leave a comment.
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Cole, et al., v. Camelback Mountain Ski Resort, et al., 2017 U.S. Dist. LEXIS 100183
Posted: October 8, 2017 Filed under: Assumption of the Risk, Legal Case, New Jersey, Pennsylvania, Ski Area, Skiing / Snow Boarding | Tags: actionable, advertised, advertisement, ascertainable loss, Assumption of risk, assumption of the risk, business practice, Camelback Mountain Ski Resort, Cammelback, Cause of action, cognizable, common law, concealment, Consumer, consumer fraud, Downhill, factual allegations, Immunity, material fact, merchandise, misleading, New Jersey, New Jersey Consumer Fraud Act, NJCFA, omission, presumed to know, quotation marks omitted, reasonable inference, residents, Ski Resort, Skier's Responsibility Act, skiing, Snow, Sport, tort liability, unlawful practice Leave a commentCole, et al., v. Camelback Mountain Ski Resort, et al., 2017 U.S. Dist. LEXIS 100183
Gyl Cole, et al., Plaintiffs, v. Camelback Mountain Ski Resort, et al., Defendants.
3:16-CV-1959
UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
2017 U.S. Dist. LEXIS 100183
June 28, 2017, Decided
June 28, 2017, Filed
CORE TERMS: skiing, advertisement, omission, ski resort, consumer, immunity, consumer fraud, presumed to know, residents, quotation marks omitted, downhill, common law, cause of action, factual allegations, assumption of risk, unlawful practice, sport, business practice, ascertainable loss, material fact, merchandise, concealment, advertised, cognizable, actionable, misleading, snow, Skier’s Responsibility Act, tort liability, reasonable inference
COUNSEL: [*1] For GYL COLE, RONALD COLE, her husband, Plaintiffs: EDWARD F. BEZDECKI, LEAD ATTORNEY, TOMS RIVER, NJ.
For CAMELBACK MOUNTAIN SKI RESORT, Defendant: Samuel J. McNulty, LEAD ATTORNEY, Hueston, McNulty, PC, Florham Park, NJ.
JUDGES: Robert D. Mariani, United States District Judge.
OPINION BY: Robert D. Mariani
OPINION
MEMORANDUM OPINION
This matter presents the following question to the Court: Does a plaintiff state a cause of action for violation of the New Jersey Consumer Fraud Act when he or she alleges that a Pennsylvania ski resort advertised its business in New Jersey but failed to include any information in its advertisements regarding the protections from tort liability the business enjoyed under Pennsylvania law? For the reasons that follow, the Court finds that such a claim is not cognizable under the New Jersey Consumer Fraud Act.
I. Introduction and Procedural History
The above captioned matter was first removed from the Superior Court of New Jersey, (Doc. 1), and then transferred by the District Court for the District of New Jersey to this Court, (Docs. 10). Plaintiffs, Gyl and Ronald Cole, represented by counsel, bring a two count Complaint against Camelback Mountain Ski Resort (“Camelback”), and two John [*2] Doe maintenance companies, (Doc. 1-1), concerning injuries that Gyl Cole sustained while skiing at Defendant Camelback’s skiing facility. Plaintiffs, both residents of New Jersey, allege that Defendants are liable both for negligence (Count I), and for violation of the New Jersey Consumer Fraud Act, N.J. Stat. Ann. § 56:8-2, (Count II). Defendant Camelback now moves to dismiss Count II of Plaintiffs’ Complaint. (Doc. 20).
II. Factual Allegations
Plaintiffs’ Complaint alleges the following facts:
Plaintiffs, Gyl and Ronald Cole, are husband and wife and reside in Waretown, New Jersey. (Doc. 1-1). Camelback is a snow skiing resort facility located in Pennsylvania. (Id. at 14). According to Plaintiffs’ Complaint, Camelback advertises its business heavily in New Jersey through a variety of forms of media. (Id.). Camelback’s advertisements, however, contain no information that, under Pennsylvania law, skiing facilities enjoy “immunity” from liability for the injuries patrons sustain while skiing. (Id.). On March 15, 2014, presumably after viewing one of Camelback’s advertisements, Gyl and Ronald Cole went skiing at Camelback’s skiing facility. (Id. at ¶¶ 1 , 3-4). While skiing on one of the black diamond slopes, Gyl Cole [*3] slammed into a six inch metal pipe and sustained severe injuries. (Id. at ¶ 3).
III. Standard of Review
A complaint must be dismissed under Federal Rule of Civil Procedure 12(b)(6) if it does not allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974, 167 L. Ed. 2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009).
“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of a cause of action’s elements will not do.” Twombly, 550 U.S. at 555 (internal citations and alterations omitted). In other words, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Id. A court “take[s] as true all the factual allegations in the Complaint and the reasonable inferences that can be drawn from those facts, but . . . disregard[s] legal conclusions and threadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Ethypharm S.A. France v. Abbott Laboratories, 707 F.3d 223, 231 n.14 (3d Cir. 2013) (internal citations and quotation marks omitted).
Twombly and Iqbal [*4] require [a court] to take the following three steps to determine the sufficiency of a complaint: First, the court must take note of the elements a plaintiff must plead to state a claim. Second, the court should identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth. Finally, where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.
Connelly v. Steel Valley Sch. Dist., 706 F.3d 209, 212 (3d Cir. 2013).
“[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged–but it has not show[n]–that the pleader is entitled to relief.” Iqbal, 556 U.S. at 679, 129 S. Ct. at 1950 (internal citations and quotation marks omitted). This “plausibility” determination will be a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id.
IV. Analysis
Count II of Plaintiffs’ Complaint alleges a violation of the New Jersey Consumer Fraud Act (“NJCFA”). (Doc. 1-1 at ¶¶ 13-22). The NJCFA was enacted to address “sharp practices and dealings in the marketing of merchandise1 and real estate whereby the consumer could be victimized by being lured [*5] into a purchase through fraudulent, deceptive or other similar kind of selling or advertising practices.” Daaleman v. Elizabethtown Gas Co., 77 N.J. 267, 390 A.2d 566, 569 (N.J. 1978). “The Act creates a private cause of action, but only for victims of consumer fraud who have suffered an ascertainable loss.” Weinberg v. Sprint Corp., 173 N.J. 233, 801 A.2d 281, 291 (N.J. 2002).
1 Under the NJCFA, the term “merchandise” is broadly defined to “include any objects, wares, goods, commodities, services or anything offered, directly or indirectly to the public for sale.” N.J. Stat. Ann. § 56:8-1
“A consumer who can prove (1) an unlawful practice, (2) an ascertainable loss, and (3) a causal relationship between the unlawful conduct and the ascertainable loss, is entitled to legal and/or equitable relief, treble damages, and reasonable attorneys’ fees.” Gonzalez v. Wilshire Credit Corp., 207 N.J. 557, 25 A.3d 1103, 1115 (N.J. 2011) (quotation marks omitted).
Unlawful practices include
[t]he act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate . . .
N.J. Stat. Ann. § 56:8-2. The New Jersey Supreme Court has specified that “[u]nlawful practices fall into three general categories: affirmative acts, knowing omissions, and regulation violations.” Cox v. Sears Roebuck & Co., 138 N.J. 2, 647 A.2d 454, 462 (N.J. 1994).
In the case at hand, Plaintiffs assert that the unlawful practice that Defendant Camelback allegedly engaged [*6] in was a failure to inform, i.e., an omission. (Doc. 1-1 at ¶ 14; Doc. 29 at 4). Under the NJCFA, an omission is actionable “where the defendant (1) knowingly concealed (2) a material fact (3) with the intention that the consumer rely upon the concealment.” Arcand v. Brother Int’l Corp., 673 F. Supp. 2d 282, 297 (D.N.J. 2009). “Implicit in the showing of an omission is the underlying duty on the part of the defendant to disclose what he concealed to induce the purchase.” Id.
Plaintiffs’ Complaint alleges that Defendant Camelback failed to include any information in its advertisements with respect to the protections from tort liability it enjoyed under Pennsylvania law. Specifically, Plaintiffs’ Complaint alleges the following:
Camelback knew that their [sic] advertising heavily in New Jersey induced New Jersey residents to attend Camelbacks [sic] site in Pennsylvania. Camelback knew that it had immunity granted to it through the legislation passed by the Pennsylvania Legislature but at no time did Camelback ever tell New Jersey residences [sic] that if they utilize the services of Camelback that they would be subject to the immunity clause granted to Camelback. Knowing full well that they [sic] had this immunity, Camelback elected not to notify any of [*7] the invitees to their [sic] site about the immunity.
(Doc. 1-1 at ¶ 14).2 Defendant Camelback argues that this is insufficient to state a claim under NJCFA. (Doc. 22 at 7). Plaintiffs respond that they have adequately pleaded that “Camelback knew and should have advised the skiing public [through its advertisements] . . . that if they utilize the services of Camelback that they would be subject to the immunity clause granted to Camelback by the Pennsylvania Legislature.” (Doc. 29 at 4).
2 Additionally, and somewhat confusingly, the Complaint also alleges that “Camelback misrepresented to the New Jersey residents at large through its media blitz that the New Jersey residences [sic] can use Camelback facilities for snow skiing.” (Doc. 1-1 at ¶ 17). This singular statement is in stark contrast with the rest of the Complaint which alleges that Plaintiffs, both residents of New Jersey, did in fact engage in snow skiing at Camelback.
The inaptly described “immunity clause” Plaintiffs refer to is no doubt the Pennsylvania Skier’s Responsibility Act, 42 Pa. C.S. § 7102(c). The Act states:
(c) Downhill skiing.–
(1) The General Assembly finds that the sport of downhill skiing is practiced by a large number of citizens of this Commonwealth and also attracts to this Commonwealth large numbers of nonresidents significantly contributing to the economy of this Commonwealth, It is recognized that as in some other sports, there are inherent risks in the sport of downhill skiing.
(2) The doctrine of voluntary assumption of risk as it applies to downhill skiing injuries and damages is not modified by [42 Pa. C.S. § 7102(a)-(a.1)]
42 Pa. C.S. § 7102, The Pennsylvania Supreme Court has made clear that “the Act did [*8] not create a new or special defense for the exclusive use of ski resorts, but instead kept in place longstanding principles of common law.” Chepkevich v. Hidden Valley Resort, L.P., 607 Pa. 1, 2 A.3d 1174, 1186 (Pa. 2010). The common law in which the Act preserves, the doctrine of voluntary assumption of risk, “has also been described as a ‘no-duty’ rule, i.e., as the principle that an owner or operator of a place of amusement has no duty to protect the user from any hazards inherent in the activity.” Id. In Pennsylvania, “this ‘no-duty’ rule applies to the operators of ski resorts, so that ski resorts have no duty to protect skiers from risks that are ‘common, frequent, and expected,’ and thus ‘inherent’ to the sport of downhill skiing.” Id.
Thus, the Court arrives at the question of whether Plaintiffs’ state a claim under the NJCFA when they allege that Defendant Camelback advertised its Pennsylvania skiing facility to New Jersey residents but failed to include a disclaimer with respect to the Pennsylvania Skier’s Responsibility Act or the common law doctrine of voluntary assumption of risk. As this is a question of New Jersey state law, this Court must turn to the decisions of that state’s courts for an answer. U.S. Underwriters Ins. Co. v. Liberty Mut. Ins. Co., 80 F.3d 90, 93 (3d Cir. 1996). The parties have not directed the Court to any [*9] New Jersey case–and the Court’s own research did not uncover any–that squarely addresses this issue. Nor have New Jersey courts apparently addressed the analogous issue of whether, under the NJCFA, advertisers are ever obliged to educate the public on the law applicable to their product absent other specific authority requiring such disclosures. Accordingly, it falls to this Court to predict how the highest tribunal in New Jersey would rule on the matter. Id. For the following reasons, this Court predicts that the New Jersey Supreme Court would find that such a claim is not cognizable under the NJCFA.
First, this is simply not the type of omission contemplated by the NJCFA. The Court is cognizant of the fact the NJCFA “is intended to be applied broadly in order to accomplish its remedial purpose, namely, to root out consumer fraud, and therefore to be liberally construed in favor of the consumer.” Gonzalez, 25 A.3d at 1115 (internal citations and quotation marks omitted). Additionally, the Court is aware that “[t]he statutory and regulatory scheme is . . . designed to promote the disclosure of relevant information to enable the consumer to make intelligent decisions in the selection of products and services.” Div. of Consumer Affairs v. Gen. Elec. Co., 244 N.J. Super. 349, 582 A.2d 831, 833 (N.J. Super. Ct. App. Div. 1990). [*10] Nevertheless, the NJCFA has limits. To qualify as an unlawful practice under the NJCFA, “[t]he practice must be misleading and outside the norm of a reasonable business practice.” Hughes v. TD Bank, N.A., 856 F. Supp. 2d 673, 680 (D.N.J. 2012); see also Miller v. Bank of Am. Home Loan Servicing, L.P., 439 N.J. Super. 540, 110 A.3d 137, 144 (N.J. Super. Ct. App. Div. 2015). Indeed, the “advertisement must have ‘the capacity to mislead the average consumer in order for it to be actionable. Adamson v. Ortho-McNeil Pharm., Inc., 463 F. Supp. 2d 496, 501 (D.N.J. 2006) (quoting Union Ink Co., Inc. v. AT&T Corp., 352 N.J. Super. 617, 801 A.2d 361, 379 (N.J. Super. Ct. App. Div. 2002)). Finally, the omission must concern a material fact. Arcand, 673 F. Supp. 2d at 297. The alleged omission in this case, however, is not one of fact, is not misleading, and does not fall outside the norm of reasonable business practices.
Plaintiffs’ allege that Defendant Camelback failed to provide information in its advertisements concerning the Pennsylvania Skier’s Responsibility Act and the common law doctrine of voluntary assumption of risk. Initially, as omissions of law, these allegations fall outside of the statutory language of the NJCFA. Additionally, the type or nature of legal defenses to liability which a business may assert in the event of a lawsuit is not information normally included in an advertisement, as both parties have equal access to that information. Consequently, Defendant Camelback’s alleged failure to include such information does not imply its nonexistence and is therefore not [*11] misleading nor outside of the norm of a reasonable business practice. As such, omissions of this type are not actionable under the NJCFA.
Second, a finding that Plaintiffs’ claim was cognizable under the NJCFA would run counter to a well-known legal maxim: “[a]ll citizens are presumptively charged with knowledge of the law.” Atkins v. Parker, 472 U.S. 115, 130, 105 S. Ct. 2520, 86 L. Ed. 2d 81 (1985); see also Gilmore v. Taylor, 508 U.S. 333, 360, 113 S. Ct. 2112, 124 L. Ed. 2d 306 (1993) (“[A] citizen . . . is presumed to know the law . . . .”); Anela v. City of Wildwood, 790 F.2d 1063, 1067 (3d Cir. 1986) (“Private citizens are presumed to know the law . . . .”); State v. Moran, 202 N.J. 311, 997 A.2d 210, 216 (N.J. 2010) (“Every person is presumed to know the law.”); Maeker v. Ross, 219 N.J. 565, 99 A.3d 795, 802 (N.J. 2014) (“[E]veryone is presumed to know the law . . . .”); Widmer v. Mahwah Twp., 151 N.J. Super. 79, 376 A.2d 567, 569 (N.J. Super. Ct. App. Div. 1977) (“[T]he principle is well established that every person is conclusively presumed to know the law, statutory and otherwise.”); cf. Commonwealth v. McBryde, 2006 PA Super 289, 909 A.2d 835, 838 (Pa. Super. Ct. 2006) (“[E]veryone is presumed to know the law; an out-of-state driver is not absolved from following the laws of this Commonwealth or any other state in which he or she chooses to drive.”). Thus, as a matter of law, Defendant Camelback’s advertisement did not have the capacity to mislead because the law presumes that Plaintiffs–and everyone else for that matter–already knew the information Defendant Camelback allegedly omitted. Stated otherwise, the law should not obligate Defendant Camelback to inform its prospective customers of what they [*12] already know.3
3 The Court, however, may have come to a different conclusion had Plaintiffs alleged that Defendant Camelback made an affirmative misrepresentation of the law in its advertisements. Nevertheless, such a situation is not presently before this Court.
Finally, if this Court were to come to the opposite conclusion, businesses would have almost unending liability. For example, a Pennsylvania retailor may be liable under the NJCFA if it advertised its clothing outlet to New Jersey residents but failed to include a disclaimer stating that a customer injured at the store by an employee’s negligence may have his or her recovery reduced if the shopper was also negligent. See 42 Pa. C.S. § 7102(a) (“[A]ny damages sustained by the plaintiff shall be diminished in proportion to the amount of negligence attributed to the plaintiff.”). Or a marketer of a curling iron may be liable under the NJCFA for failing to disclose to consumers that, even if they are injured due to a design flaw in the product, the users may not be able to recover for their injuries if “there was no reasonable alternative design” for the curling iron at the time of manufacturing. See Cavanaugh v. Skil Corp., 164 N.J. 1, 751 A.2d 518, 520 (N.J. 2000) (quotation marks omitted); see also N.J. Stat. Ann. § 2A:58C-3(a)(1). Indeed, the number of relevant legal concept that a business “omitted” from its advertisement would only be limited by the creativity and imagination of the lawyers involved.
V. Conclusion
For the reasons outlined above, this Court will grant Defendant Camelback Mountain [*13] Ski Resort’s Motion to Dismiss Plaintiffs’ claim for violation of the New Jersey Consumer Fraud Act, (Doc. 20). A separate Order follows.
/s/ Robert D. Mariani
Robert D. Mariani
United States District Judge
ORDER
AND NOW. THIS 29th DAY OF JUNE, 2017, upon consideration of Defendant Camelback Mountain Ski Resort’s partial Motion to Dismiss, (Doc.20), IT IS HEREBY ORDERED THAT the Motion is GRANTED. Count II of Plaintiffs’ Complaint, (Doc. 1-1), is DISMISSED WITH PREJUDICE.
/s/ Robert D. Mariani
Robert D. Mariani
United States District Court Judge
Is it a negligent act to open a car door into a bike lane when a cyclist is in the lane in New Jersey?
Posted: September 26, 2016 Filed under: Cycling, New Jersey | Tags: Accident Investigation, Bicycle Lane, Bike, Bike Lane, Car Door, Cycling, Damages, Dooring, Riding in Bike Lane 2 CommentsAt the same time, if the defendant photographed the scene, measured the distance his car was from the curb or how wide his door was, the plaintiff might not have succeeded in her claims.
Gwinner, v. Michael Matt, et al., 2012 U.S. Dist. LEXIS 108827
State: New Jersey, United States District Court for the District of New Jersey
Plaintiff: Sheila Gwinner and Horst Gwinner
Defendant: Michael Matt, et al.
Plaintiff Claims: failing to observe [her] bicycle on the bicycle path” and “failing to keep a reasonable lookout for other vehicles lawfully on the road
Defendant Defenses: Plaintiff cannot prover her claims that the defendant opened his car door into the bikeway
Holding: For the Plaintiff, sent back for trial
Year: 2012
This is sort of an odd case for me, but after spending a week with the bicycle community at Interbike it seemed appropriate. This case looks at the legal issues when a driver of a car after parking opens his door into a bicycle lane injuring a cyclist.
In this case, the defendant was from Pennsylvania visiting his parents at a tourist town in New Jersey. The Plaintiff was also from Pennsylvania riding her bike in the bike lane in the same town in New Jersey.
Allegedly, the defendant parked his car and opened his car door into the bike lane where the plaintiff was riding and caused her injury.
The real issue was the plaintiff could not recall the accident and could not say with certainty that the defendant’s door was in the bike lane. However, she was in the bike lane, and she hit the defendant’s car door.
The case was filed in Federal Court because the accident occurred in New Jersey, where the lawsuit was occurred but the plaintiff was a resident of Pennsylvania.
The basis for this decision was a motion filed by the defendant to dismiss the case because the plaintiff’s lack of proof of whether the door opened in the bike lane. There was also substantial discussion about the application of New Jersey automobile law to the accident (a bicycle is a vehicle) and what damages would be applicable to this case. That part of the decision is not covered in this article.
Analysis: making sense of the law based on these facts.
The court started its analysis looking to the requirements to prove a negligence case under New Jersey law.
Under New Jersey law, for a plaintiff to establish a negligence claim she must show that the defendant “breached a duty of reasonable care, which constituted a proximate cause of the plaintiff’s injuries.” Furthermore, “negligence must be proved and will never be presumed, indeed there is a presumption against it, and the burden of proving negligence is on the plaintiff.”
As in all states, the plaintiff must prove, and has the burden of proving that the defendant owed the plaintiff a duty of care, which he breached causing her injuries. In this case, the allegation of the Plaintiff was the duty was not to open a car door into the bike lane.
To establish a duty of care in New Jersey requires the passing of a two-part test. “The question of whether a duty to exercise reasonable care to avoid the risk of harm to another exists is one of fairness and policy that implicates many factors.”
The first part is whether the accident was foreseeable. The second test in New Jersey is whether the application of the duty would be fair and be supported by public policy.
The defendant knew about the bike lanes and was a resident of the city; he also knew about the bike lanes on that particular road. And whenever a bike is in close proximity to a car, there is an obvious risk of harm to the cyclist.
As a result, where bicycles and motor vehicles are in close proximity, the risk of harm presented by obstructing or entering into the bike lane, or, more generally a bicyclist’s lane of travel, was clearly foreseeable to Mr. Matt at the time of the accident.
The fairness and policy considerations were easy and obvious.
…both were using vehicles on the limited roadway space of a public thoroughfare. Imposing a duty of care on Mr. Matt in terms of obstructing or otherwise interfering with a bicyclist’s lane of travel is fair as a matter of public policy. The City of Avalon has created bike lanes presumably to promote bicycling generally and as an attempt to attract visitors. The explicit purpose of a bike lane is to minimize the risks inherent in roadways that accommodate automobiles, bicycles, and pedestrians by providing bicyclists an exclusive lane of travel. Finally, imposing a duty of care in terms of keeping a proper lookout before crossing, entering into, or otherwise obstructing a bicyclists’ lane of travel does not unduly burden motorists. At most, this duty requires a driver to ensure his automobile is parked fully in the parking lane and to check his review mirrors, or otherwise look out for bicyclists, prior to opening his car door and exiting his vehicle.
The bike lanes were built to make cycling safer, and the bike lanes were put in by the city. It is fair to assume that there was an expectation of safety while riding the bike lanes and since the bike lanes were created by the city, there was obviously no violation of public policy.
In conclusion, the possibility of a collision between a cyclist and a car or car door on roadways shared by cyclists and motorists, is foreseeable. Moreover, the public interest in promoting bicycle safety and the minimal burden placed on motorists to exercise reasonable care can lead only to the conclusion that Mr. Matt owed Ms. Gwinner a duty of care when parking and exiting his vehicle along Dune Drive.
The next issue the court looked at was whether the plaintiff could prove the defendant breached a duty to her. Because she could not remember whether or not the car door was in the bike lane, the defendant argued the door was not in the lane, and it did not breach a duty to the plaintiff.
The evidence in the record pertaining to Plaintiff’s negligence claim is scant. There were no witnesses to the accident, aside from Mr. Matt and Ms. Gwinner. Neither Mr. Matt nor Ms. Gwinner took photographs or made measurements of the accident scene; more specifically, there are no photographs 4 or measurements relating to the distance of Mr. Matt’s passenger-side tires from the curb or how far Mr. Matt’s car door extended when opened on the day of the incident. Finally, though both parties independently visited the Avalon Police Station after the accident, no police report was produced.
However, the pleadings and deposition testimony of the plaintiff were enough to make a case that should be heard by a jury.
However, Ms. Gwinner’s deposition testimony describing the accident is sufficient to demonstrate the existence of a question of material fact, which should be decided by a jury. She states, “Is all I know I was [sic] riding my bike. And the poor man was as startled as I was. The door started opening and I just went into it.” When Ms. Gwinner’s description of the accident is considered along with her testimony that she was riding her bike within the bike lane when she collided with Mr. Matt’s car door a fact finder could reasonably infer Mr. Matt’s car door must have entered the bike lane and caused the collision, and choose to believe Ms. Gwinner’s account of the accident rather than Mr. Matt’s.
Although there was not specific proof the car door was in the bike lane, the jury could reach a conclusion by a preponderance of the evidence that car door was in the bike lane.
As such, the case was sent back for trial.
The decision continues on the application of New Jersey automobile and insurance law to the case and whether there were any limits on the damages available for the plaintiff.
So Now What?
Here the plaintiff or the defendant could have photographed the scene, measured the door, the car to the curb, and the width of the bike lane and ended this case. If you have the opportunity, after the victim(s) have been taken care of document the accident.
At the same time, when both victims filed complaints at the police department, the police did nothing. Don’t wait and go to the police department, call 911 and have them show up.
These facts will also lead to a big argument on the actual damages the plaintiff suffered. If she was able to go to the police department rather than going to the hospital, she must not have been injured as much as she might claim.
What do you think? Leave a comment.
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Gwinner, v. Michael Matt, et al., 2012 U.S. Dist. LEXIS 108827
Posted: September 25, 2016 Filed under: Cycling, Legal Case, New Jersey | Tags: Bicycle Lane, Bike, Bike Lane, Car Door, Cycling, Dooring, Riding in Bike Lane Leave a commentGwinner, v. Michael Matt, et al., 2012 U.S. Dist. LEXIS 108827
Sheila Gwinner and Horst Gwinner, Plaintiffs, v. Michael Matt, et al., Defendants.
Civil No. 10-3001 (JBS/AMD)
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
2012 U.S. Dist. LEXIS 108827
August 2, 2012, Decided
August 3, 2012, Filed
COUNSEL: [*1] Appearances: Thomas Sacchetta, Esq., SACCHETTA & BALDINO, Marlton, NJ, Attorney for Plaintiffs.
Barbara J. Davis, Esq., Jessica D. Wachstein, Esq., MARSHALL, DENNEHY, MARSHALL, COLEMMAN & GOGGIN, Cherry Hill, NJ, Attorneys for the Defendants.
JUDGES: HONORABLE JEROME B. SIMANDLE, Chief United States District Judge.
OPINION BY: JEROME B. SIMANDLE
OPINION
SIMANDLE, Chief Judge:
I. INTRODUCTION
This matter involving the alleged negligence of a motorist opening his car door on a roadway with a designated bike lane is before the Court on Defendant’s motion for summary judgment pursuant to Fed. R. Civ. P. 56(a). [Docket Item 17.] The principal issue to be determined is whether a dispute of fact exists that Defendant breached a duty of care owed to Plaintiff when she collided with his car door as he was exiting his vehicle. As will be explained at length below, the Court finds Plaintiff’s negligence claim raises a question of material fact to be decided by a jury. Plaintiff has also raised a dispute of fact that her alleged injuries are permanent and causally related to the accident for purposes of the limitation-on-lawsuit threshold of the New Jersey Automobile Insurance Cost Reduction Act, so Defendant’s motion will be [*2] denied.
II. BACKGROUND
Plaintiff, Sheila Gwinner, filed this lawsuit against Defendant, Michael Matt, based on an accident that occurred in June 2008, when Ms. Gwinner collided with Mr. Matt’s car door while she was bicycling on Dune Drive in Avalon, New Jersey. Ms. Gwinner alleges Mr. Matt negligently opened his car door into the bike lane where she was traveling, striking her and causing her to suffer serious personal injuries.
On June 14, 2010, Plaintiff commenced a civil action against Defendant in the United States District Court for the District of New Jersey based on diversity jurisdiction under 28 U.S.C. § 1332(d). 1 [Docket Item 1.] According to Ms. Gwinner’s Complaint, Mr. Matt’s negligence consisted of, in part, “failing to observe [her] bicycle on the bicycle path” and “failing to keep a reasonable lookout for other vehicles lawfully on the road.” Compl. at ¶ 12. Ms. Gwinner then claims that, as a result of Mr. Matt’s negligence, she suffered “severe and painful injuries,” which required medical treatment, restricted her personal and work activities, and resulted in permanent injuries. Id. at ¶ 13.
1 Both Plaintiffs are citizens of Pennsylvania, and Defendant is a citizen of [*3] New Jersey. Compl. at ¶ 1.
On the morning of June 15, 2008 Mr. Matt parked his vehicle in front of his father’s house, in the parking lane along Dune Drive. Matt Dep., Ex. F at 17:23-24. At this location, Dune Drive is a four-lane roadway, two lanes north and two lanes south, with a bike lane and a parking lane. Id. at 19:4-7. When Mr. Matt opened his door, he “heard a loud bang,” and then observed a “young lady [] on the ground with her bicycle in front of the car to the left a little bit.” Id. at 28:5-8. Ms. Gwinner was traveling at fifteen miles per hour along Dune Drive on the morning of the accident, and she did not observe Mr. Matt’s vehicle prior to the collision. Gwinner Dep., Ex. H at 34:5-10. Additionally, Ms. Gwinner testified that, when the accident occurred, she was riding within the bike lane (id. at 34:20-21); however, she did not observe and does not know whether Mr. Matt’s car door actually extended into the bike lane. Id. at 40:7-13.
Ms. Gwinner carries automobile insurance provided by Progressive Insurance, an insurance company authorized to conduct business in the State of New Jersey. She alleges that as a result of the accident, she suffered “traumatic multi level [*4] disc herniation/protrusion/radiculopathy, traumatic right knee fracture/contusion/anterior horn tear, and traumatic right hand/thumb tendonitis with radial/median nerve neuritis and joint inflammation.” Compl. at ¶ 13. 2 Plaintiff claims that these injuries demonstrate a “permanent injury” as set forth in the New Jersey Automobile Insurance Cost Reduction Act (“AICRA”) at N.J. Stat. Ann. § 39:6A-8(a) and that she has produced sufficient objective medical evidence to support her claim. Pl.’s Opp’n Br. at 4.
2 Plaintiff includes a medical report in support of this allegation. Pl. Ex. D.
In the present motion, Defendant argues that he is entitled to summary judgment because Plaintiff has failed to “establish proof a negligence claim as a matter of law.” Def.’s Br. in Supp. Summ. J. at 2. Specifically, Defendant argues Plaintiff has failed to establish the alleged breach of duty, as she “produced no evidence that Mr. Matt’s car door extended into the bike lane.” Id. at 3. Defendant also argues that Plaintiff is barred from pursuing noneconomic damages 3 because she has failed to produce objective medical evidence demonstrating she suffered permanent injuries, as a result the accident in question, [*5] to her neck, right knee, and right wrist. Id. at 15-16.
3 “Noneconomic damages” are defined by statute as “pain, suffering and inconvenience.” N.J. Stat. Ann. § 39:6A-2(i). By contrast, “economic loss” is defined as “uncompensated loss of income or property, or other uncompensated expenses, including, but not limited to, medical expenses.” Id. at § 39:6A-2(k). The Court notes that Plaintiff appears to claim only noneconomic losses. Additionally, Defendant requests dismissal of Plaintiff’s claim in its entirety, not just dismissal of Plaintiff’s claim for noneconomic losses. Plaintiff does not refute this by presenting economic losses and arguing that, should the Court find in Defendant’s favor, her claims for economic losses must survive. Therefore, dismissal is the result of finding for Defendant.
For the following reasons, the Court finds Plaintiff has sufficiently raised a question of material fact regarding her breach of duty claim; Defendant’s motion is denied on this issue. Additionally, the Court finds Plaintiff has provided sufficient objective medical evidence from which a reasonable jury could conclude that she suffered permanent injuries as a result of the accident; therefore, [*6] Plaintiff has met AICRA’s limitation-on-lawsuit threshold, and Defendant’s motion is denied.
III. DISCUSSION
A. Standard of Review
[HN1] Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is “material” only if it might affect the outcome of the suit under the applicable rule of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). Summary judgment will not be denied based on mere allegations or denials in the pleadings; instead, some evidence must be produced to support a material fact. Fed. R. Civ. P. 56(c)(1)(A); United States v. Premises Known as 717 S. Woodward Street, Allentown, Pa., 2 F.3d 529, 533 (3d Cir. 1993). However, the Court will view any evidence in favor of the nonmoving party and extend any reasonable favorable inferences to be drawn from that evidence to that party. Hunt v. Cromartie, 526 U.S. 541, 552, 119 S. Ct. 1545, 143 L. Ed. 2d 731 (1999). Where the nonmoving party bears the burden of persuasion at trial, the moving party may be entitled to summary judgment merely by showing that there is an absence of evidence to support an essential element of [*7] the nonmoving party’s case. Fed. R. Civ. P. 56(c)(1)(B); Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986).
B. Summary Judgment as to Plaintiff’s Negligence Claim
[HN2] Under New Jersey law, for a plaintiff to establish a negligence claim she must show that the defendant “breached a duty of reasonable care, which constituted a proximate cause of the plaintiff’s injuries.” Brown v. Racquet Club of Bricktown, 95 N.J. 280, 288, 471 A.2d 25, 29 (1984). Furthermore, ” [HN3] negligence must be proved and will never be presumed, [] indeed there is a presumption against it, and [] the burden of proving negligence is on the plaintiff.” Buckelew v. Grossbard, 87 N.J. 512, 525, 435 A.2d 1150 (1981) (citing Hansen v. Eagle-Picher Lead Co., 8 N.J. 133, 139, 84 A.2d 281 (1951)).
Plaintiff claims Defendant acted negligently when he opened his car door “into the bike lane where [she] was operating her bicycle.” Pl.’s Opp’n Br. 2. She also alleges she suffered injuries as a result of Defendant’s negligence. Id.
Defendant argues Plaintiff has failed to present a valid negligence claim because she has not alleged a breach of duty that was the proximate cause of her injuries. Def.’s Br. in Supp. Summ. J. 2. Defendant [*8] argues Plaintiff has not produced evidence showing his car door entered into or obstructed the bike lane. Id. at 3. Defendant also claims the evidence shows Ms. Gwinner was solely responsible for her injuries because she was riding her bicycle outside of the bike lane when she collided with his car door. Id. To support this claim, Defendant argues that after the accident, he fully opened his door to see if it extended into the bike lane, which, he claims, it did not. Id. at 1.
1. Duty of Care
Neither party has addressed the existence of a duty of care in the instant case. Because the existence of a duty is essential to all negligence claims, however, the Court must tackle the issue.
[HN4] “The question of whether a duty to exercise reasonable care to avoid the risk of harm to another exists is one of fairness and policy that implicates many factors.” Carvalho v. Toll Bros. and Developers, 143 N.J. 565, 573, 675 A.2d 209, 212. (citing Dunphy v. Gregor, 136 N.J. 99, 110, 642 A.2d 372 (1994)). Foreseeability is the first factor considered, as it is “the predicate for the duty to exercise reasonable care.” Id. at 573. While foreseeability is needed to determine whether a duty of care exists, it [*9] is not the only factor. Id. at 572. Courts also consider fairness and policy factors such as “the relationship of the parties, the nature of the attendant risk, the opportunity and ability to exercise care, and the public interest in the proposed solution.” Id. at 573 (quoting Hopkins v. Fox & Lazo Realtors, 132 N.J. 426, 439, 625 A.2d 1110. (1993)).
The Court will first address foreseeability. Mr. Matt was a resident of Avalon, who was aware of the existence of the bike lane along Dune Drive, and who had used the Dune Drive bike lane prior to the accident in question. Matt Dep., Ex. F at 9:20; 20:16-19, 22-23; 21:1-2. Mr. Matt was also aware that the Dune Drive bike lane was regularly used during the summer months, Avalon’s tourist season. Id. at 46:3-7. The risk of harm posed by a collision between a cyclist and an automobile, or automobile door, is obvious. As a result, where bicycles and motor vehicles are in close proximity, the risk of harm presented by obstructing or entering into the bike lane, or, more generally a bicyclist’s lane of travel, was clearly foreseeable to Mr. Matt at the time of the accident.
” [HN5] Once the foreseeability of an injured party is established, . . . considerations [*10] of fairness and policy govern whether the imposition of a duty is warranted.” Carvalho at 573, 675 A.2d at 212 (quoting Carter Lincoln Mercury, Inc. v. EMAR Group, Inc., 135 N.J. 182, 194-95, 638 A.2d 1288 (1994)). In Carvalho, a construction worker was killed when trench walls collapsed on him. Id. at 571-572, 675 A.2d at 212. In a suit against the site engineer, the New Jersey Supreme Court, after determining the risk of harm was foreseeable, held that imposing a duty of care on the engineer was warranted because there was a contractual relationship between the parties; the engineer was responsible for monitoring work progress, which implicated worksite safety; the engineer had control to change work conditions; and the engineer had actual knowledge of the dangerous condition because other trench walls had collapsed at the site. Id. at 575-578, 675 A.2d at 214-15.
Here, Mr. Matt and Ms. Gwinner had no prior existing relationship. In fact, their first actual encounter occurred after Ms. Gwinner had already collided with Mr. Matt’s car door. Matt Dep., Ex. F at 28:4-15; Gwinner Dep., Ex. H at 37:4-10. Additionally, Mr. Matt had never previously been involved in an automobile accident [*11] involving a bicyclist. Ex. F at 46:12-16. But their relationship was a functional one: both were using vehicles on the limited roadway space of a public thoroughfare. Imposing a duty of care on Mr. Matt in terms of obstructing or otherwise interfering with a bicyclist’s lane of travel is fair as a matter of public policy. The City of Avalon has created bike lanes presumably to promote bicycling generally and as an attempt to attract visitors. The explicit purpose of a bike lane is to minimize the risks inherent in roadways that accommodate automobiles, bicycles, and pedestrians by providing bicyclists an exclusive lane of travel. Finally, imposing a duty of care in terms of keeping a proper lookout before crossing, entering into, or otherwise obstructing a bicyclists’ lane of travel does not unduly burden motorists. At most, this duty requires a driver to ensure his automobile is parked fully in the parking lane and to check his review mirrors, or otherwise look out for bicyclists, prior to opening his car door and exiting his vehicle.
In conclusion, the possibility of a collision between a cyclist and a car or car door on roadways shared by cyclists and motorists, is foreseeable. Moreover, [*12] the public interest in promoting bicycle safety and the minimal burden placed on motorists to exercise reasonable care can lead only to the conclusion that Mr. Matt owed Ms. Gwinner a duty of care when parking and exiting his vehicle along Dune Drive.
2. Breach of Duty
[HN6] Because breach of duty is an essential element of a negligence claim, facts relating to a defendant’s breach are material to the success of the claim. In the instant case, the material fact regarding breach of duty is whether Defendant Matt’s car door entered into the bike lane, causing the collision. Because Ms. Gwinner has the burden of proving negligence at trial, Mr. Matt would be “entitled to summary judgment merely by showing that there is an absence of evidence” supporting Ms. Gwinner’s negligence claim. Celotex Corp. at 325. The Court finds Plaintiff has minimally succeeded in providing evidence to support her claim that Defendant breached a duty of care.
Ms. Gwinner alleges Mr. Matt breached the duty by negligently opening his car door into the bike lane, causing her to collide with the door and suffer injuries. Mr. Matt claims Ms. Gwinner has failed to produce evidence his car door entered the bike lane. Mr. [*13] Matt also claims the evidence in the record shows that Ms. Gwinner was actually the sole cause of the collision and her injuries because his car door did not extend into the bike lane, so, he infers, Ms. Gwinner must have been riding her bicycle in the parallel parking lane at the time of the accident.
The evidence in the record pertaining to Plaintiff’s negligence claim is scant. There were no witnesses to the accident, aside from Mr. Matt and Ms. Gwinner. Matt Dep., Ex. F at 35:5-7; Gwinner Dep., Ex. H at 44:14-15. Neither Mr. Matt nor Ms. Gwinner took photographs or made measurements of the accident scene; more specifically, there are no photographs 4 or measurements relating to the distance of Mr. Matt’s passenger side tires from the curb or how far Mr. Matt’s car door extended when opened on the day of the incident. Matt Dep., Ex. F at 37:22-24, 38:1-2; Gwinner Dep., Ex. H at 47:1-5. Finally, though both parties independently visited the Avalon Police Station after the accident, no police report was produced. Matt Dep., Ex. F at 43:19-22, 44:1-3; Gwinner Dep., Ex. H at 70:13-15, 71:18-21.
4 There is photographic evidence of Dune Drive at the accident site as of February 2011. While [*14] the photographs tell us little about the actual scene of the accident in June 2008, they do confirm that a Honda Accord parked close enough to the curb in the parking lane can fully open its driver side door without the door entering into the bike lane. However, the photographer used a Honda Accord to make this demonstration. Ex. G. On the day of the accident, Mr. Matt was driving a Cadillac CTS. Ex. F at 23:5-6. Car width and door length vary from make to make and model to model; as a result, the Court notes that Defendant’s photographs are of limited value on the relevant question of whether Mr. Matt’s Cadillac could similarly park in the parking lane and fully open his car door without obstructing the bike lane. The demonstrative Honda exhibit’s materiality also depends upon how close to the curb Defendant’s vehicle was parked at the time of the accident.
Ms. Gwinner’s recitation of what she remembers from the date of the accident is also meager. Though she claims to have been riding in the bike lane along the right side of the lane, at no time before, during or after the accident did she observe Mr. Matt’s car door extending into the bike lane. 5 Gwinner Dep., Ex. H at 34:8-10, [*15] 40:7-10, 19-23. Additionally, she did not observe and does not know how close to the curb Mr. Matt parked his car. Id. at 48:2-5.
5 During her deposition, Ms. Gwinner participated in the following exchange with Defense attorney Barbara J. Davis:
Q: But did you see at all how far the car door extended out?
A: No, I didn’t.
Q: As you sit here today, do you know if the car door extended out into the bike lane, Mr. Matt’s car door?
A: I don’t.
However, Ms. Gwinner’s deposition testimony describing the accident is sufficient to demonstrate the existence of a question of material fact, which should be decided by a jury. She states, “Is all I know I was [sic] riding my bike. And the poor man was as startled as I was. The door started opening and I just went into it.” Id. at 34:6-10. When Ms. Gwinner’s description of the accident is considered along with her testimony that she was riding her bike within the bike lane when she collided with Mr. Matt’s car door (id. at 36:15-17), a fact finder could reasonably infer Mr. Matt’s car door must have entered the bike lane and caused the collision, and choose to believe Ms. Gwinner’s account of the accident rather than Mr. Matt’s.
Because all reasonable inferences [*16] must be given to the nonmovant, the Court finds Ms. Gwinner has raised a genuine issue of material fact as to whether Mr. Matt breached a duty of care by negligently opening his car door into a bicyclist’s lane of travel, or otherwise failing to reasonably look out for bicyclists before exiting his vehicle. Therefore, Mr. Matt has failed to meet the summary judgment standard set forth under Fed. R. Civ. P. 56(c)(1)(B) and Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986) and his motion will be denied as to Plaintiff’s negligence claim.
C. Summary Judgment as to Plaintiff’s Inability to Satisfy AICRA’s Limitation-on-Lawsuit Threshold
1. The Applicability of the New Jersey’s “Deemer Statute” and AICRA
Because Ms. Gwinner is insured by Progressive Insurance, an insurance company authorized to conduct business in the State of New Jersey, Defendant argues, and Plaintiff does not dispute, Plaintiff is subject to New Jersey’s “Deemer Statute” and the “limitation-on-lawsuit threshold” set forth in AICRA.
[HN7] The Deemer Statute, N.J. Stat. Ann. § 17:28-1.4, “requires insurers authorized to transact automobile insurance business in New Jersey to provide coverage to out-of-state residents consistent [*17] with New Jersey law ‘whenever the automobile or motor vehicle insured under the policy is used or operated in this State.'” Zabilowicz v. Kelsey, 200 N.J. 507, 513-514, 984 A.2d 872, 875-876 (2009). The Deemer Statute also requires affected insurance companies “to provide personal injury protection [(“PIP”)] benefits pursuant to N.J. Stat. Ann. [§] 39:6A-4.” Id. at 514, 984 A.2d at 876. “In short, the Deemer Statute furnishes the covered out-of-state driver with New Jersey’s statutory no-fault PIP and other benefits and, in exchange, deems that driver to have selected the limitation-on-lawsuit option of [N.J. Stat. Ann. §] 39:6A-8(a).” Id. Because Plaintiff conceded to Defendant’s assertion that Plaintiff is subject to the limitation-on-lawsuit threshold via the Deemer Statute, even though Plaintiff was riding her bicycle rather than driving an automobile at the time the accident, the Court assumes that the Deemer Statute applies to the facts of this case.
AICRA represents an effort by the New Jersey’s Legislature to curb rising auto insurance costs by limiting the opportunities for accident victims to sue for noneconomic damages. This effort began with New Jersey’s implementation of [*18] a no-fault insurance scheme in 1972 when New Jersey passed the New Jersey Automobile Reparation Act and has since undergone numerous revisions, in a process described as “tortured,” which need not be recounted here. See, e.g., Branca v. Matthews, 317 F. Supp. 2d 533, 537-539 (D.N.J. 2004). The New Jersey Legislature passed AICRA in 1998 with three distinct goals “containing [insurance premium] costs, rooting out fraud within the system, and ensuring a fair rate of return for insurers.” DiProspero v. Penn, 183 N.J. 477, 488, 874 A.2d 1039, 1046 (2005).
2. The Limitation-on-Lawsuit Threshold
[HN8] To contain automobile insurance costs, AICRA established the limitation-on-lawsuit threshold, which “bars recovery for pain and suffering unless the plaintiff suffers an injury that results in (1) death; (2) dismemberment; (3) significant disfigurement or significant scarring; (4) displaced fractures; (5) loss of fetus; or (6) permanent injury within a reasonable degree of medical probability ….” Id. (quoting N.J. Stat. Ann. § 39:6A-8(a))(internal quotation marks omitted).
[HN9] An insured bound by the limitation-on-lawsuit threshold is barred from suing for noneconomic damages unless her injuries fall [*19] within AICRA’s six categories. Johnson v. Scaccetti, 192 N.J. 256, 261, 927 A.2d 1269, 1273 (2007). In the summary judgment context, a plaintiff can proceed to trial if she demonstrates that her alleged injuries, if proven, fall into one of the six threshold categories. Davidson v. Slater, 189 N.J. 166, 187, 914 A.2d 282, 295 (2007) (citing Oswin v. Shaw, 129 N.J. 290, 294, 609 A.2d 415, 417 (1992)). A plaintiff must also prove that the alleged statutory injury was caused by the accident in question or “risk dismissal on summary judgment if the defendant can show that no reasonable fact-finder could conclude that the defendant’s negligence caused plaintiff’s alleged … injury.” Id. at 188, 914 A.2d at 295. However, where, as here, a plaintiff alleges she suffered more than one injury as a result of the accident in question, the plaintiff need only establish one of her injuries meets the limitation-on-lawsuit threshold for the jury to consider all of the injuries when calculating noneconomic damages. Johnson at 279, 927 A.2d at 1282.
3. Permanent Injury
[HN10] AICRA defines “permanent injury” as “[w]hen the body part or organ, or both, has not healed to function normally and will not heal to [*20] function normally with further medical treatment.” N.J. Stat. Ann. 39:6A-8(a). Additionally, in adopting AICRA, the New Jersey Legislature explicitly adopted a threshold requirement, the objective medical evidence standard, established by the New Jersey Supreme Court in Oswin v. Shaw, 129 N.J. 290, 609 A.2d 415 (1992). DiProspero v. Penn, 183 N.J. 477, 495, 874 A.2d 1039, 1050 (2005). A plaintiff’s alleged limitation-on-lawsuit injury “must be based on and refer to objective medical evidence.” Id. (emphasis removed).
Plaintiff claims her neck, right wrist, and right knee injuries are permanent injuries within the meaning of AICRA. See supra pp. 4-5. Additionally, Ms. Gwinner claims the medical report created by Dr. James F. Bonner, her physical therapy physician (Pl.’s Opp’n Br., Ex. D), “sets forth his opinion within a reasonable degree of certainty as to the permanency of [her] injuries and their relatedness to the accident”; as such, she has satisfied the limitation-on-lawsuit threshold. Pl.’s Opp’n Br. 4.
Mr. Matt argues that Ms. Gwinner has failed to produce objective medical evidence demonstrating she suffered permanent injuries, as a result the accident in question, to her neck, [*21] right knee, and right wrist. Def.’s Br. in Supp. Summ. J. at 11. First, Defendant claims Dr. Bonner’s report shows that Ms. Gwinner had a pre-existing cervical injury and that the report fails to present evidence showing Ms. Gwinner’s cervical condition is causally connected to the accident. Id. at 11-12. Second, Defendant argues Plaintiff’s alleged knee injuries fail to meet the threshold because there is evidence of pre-existing injuries and surgeries, a failure to connect the injuries to the accident, and Plaintiff “has testified she has full use of her right knee and is not restricted in any of her physical activities.” Id. 12-14. Finally, Defendant claims Plaintiff has not presented objective medical evidence of a permanent injury to her right wrist because the medical reports show that she had been treated for right wrist problems prior to the accident and that the reports alleging a right wrist injury after the accident are based on Ms. Gwinner’s subjective complaints and not objective medical testing. Id. at 14-15.
Because Ms. Gwinner need only demonstrate that one of her injuries, if proven, is permanent under AICRA’s definition, the Court will evaluate each alleged injury [*22] individually. First, however, the Court will address Defendant’s broader assertion that Plaintiff’s claim should be dismissed because she did not provide a comparative analysis distinguishing the injuries allegedly caused by the accident from other, preexisting injuries, as required by Davidson v. Slater, 189 N.J. 166, 914 A.2d 282 (2007). In Davidson, The New Jersey Supreme Court did not create a blanket rule. Instead, it held,
When a plaintiff alleges aggravation of preexisting injuries as the animating theory of the claim, then plaintiff must produce comparative evidence to move forward with the causation element of that tort action. When a plaintiff does not plead aggravation of preexisting injuries, a comparative analysis is not required to make that demonstration.
189 N.J. at 179, 914 A.2d at 284. The New Jersey Supreme Court then cautioned plaintiffs with preexisting injuries not required to provide such a report, stating, ” [HN11] [T]he plaintiff who does not prepare for comparative medical evidence is at risk of failing to raise a jury-worthy factual issue about whether the subject accident caused the injuries.” Davidson, at 188, 914 A.2d at 295.
As was the case in Davidson, Plaintiff [*23] Gwinner has not explicitly alleged that her injuries were aggravations of preexisting injuries. 6 The only medical report provided by Ms. Gwinner to support her claim that she suffered permanent injuries as a result of the accident, however, makes no mention of new injuries. Pl. Ex. D. Instead, the one-page report prepared in 2009 by Dr. Bonner states Ms. Gwinner had previous injuries or previously received medical treatment to the alleged injured areas and that she suffered “advanced impairment … as a direct result of her 6/15/08 trauma.” Id. Moreover, the report specifically mentions Plaintiff’s “old knee problem” and concludes the accident caused “a higher pain/dysfunction level.” Id. While this report might appear to indicate all of Plaintiff’s alleged injuries are exacerbations, Dr. Bonner produced a more detailed report on July 1, 2008, on which the 2009 report partially relies. 7 Reviewing the medical reports referenced in Dr. Bonner’s report reveals some of the injuries described are in fact new injuries.
6 Plaintiff did not allege her injuries were either new or exacerbations of previous injuries and conditions; she was silent on this issue. Compl. at ¶ 13. However, Plaintiff’s [*24] allegations regarding her injuries appear to be direct quotes from Dr. Bonner’s 2009 report. See supra. p. 4. and note 2.
7 In addition to his July 1, 2008 report, Dr. Bonner also referenced a July 9, 2008 report created by Dr. Philip S. Yussen of Mainline Open MRI (Def. Ex. I). Both reports discuss new injuries Ms. Gwinner suffered as a result of the accident. See infra pp. 23-26.
When considering Ms. Gwinner’s complaint and supporting evidentiary documents, it is clear some of her alleged injuries are aggravations of previously existing injuries and medical conditions. But because she has not alleged aggravation injuries in her Complaint, she is not required to provide a comparative report to support the causation element of her tort claim. The New Jersey Supreme Court’s warning in Davidson, however, is pertinent to the instant case because the lack of a comparative analysis has clouded the Court’s effort to properly evaluate whether Plaintiff provided sufficient evidence of causation. Nevertheless, the surplus of medical reports provided has allowed the Court to satisfactorily investigate which alleged injuries are sufficiently supported by evidence of causation and which are not.
a. [*25] Cervical Injury
Though Ms. Gwinner claims to have suffered permanent injury in the form of traumatic multi level disc herniation, protrusion, and radiculopathy, there is no evidence suggesting the alleged injuries are permanent. First, Ms. Gwinner had an MRI done in 2007, prior to the accident, because she was experiencing pain in her neck dating back to 2000. Gwinner Dep., Ex. H 13:15-21, 14:15-23. At the request of Dr. Bonner, Ms. Gwinner received another MRI in July 2008. The report written by Dr. Philip S. Yussen states, “Current examination demonstrates the cervical vertebral bodies to maintain normal stature. There is partial straightening of the cervical lordosis, which may be related to patient positioning, muscle spasm, or even a chronic finding given that this was evident on the previous MRI study as well.” Def. Ex. O (emphasis added). The report goes on to conclude,
There has not been a significant change in the MRI appearance of the cervical spine as compared to the previous MRI study of 8/9/07. The previously noted fatty marrow island at C7 and small low signal presumed development focus at C5 right of midline are again noted, and are stable. No new osseous abnormalities [*26] are seen referable to the cervical vertebrae as compared to the previous study.
Id. Dr. Yussen’s report can only be read to state that the condition of Ms. Gwinner’s neck has not changed, let alone deteriorated, as a result of the accident.
Additionally, Defendant’s medical expert, Dr. Brian K. Zell examined Ms. Gwinner in May of 2011, two years after the medical report provided by Plaintiff, and produced a report (Def. Ex. N). According to Dr. Zell, Ms. Gwinner suffered from a preexisting degenerative disease of the cervical spine, and “[t]he automobile accident in question is not considered a responsible event for the progression of preexisting degenerative changes in the cervical spine.” Def. Ex. N. at 17. Ms. Gwinner has not offered any evidence to rebut these findings. As a result, Plaintiff’s cervical injury cannot serve as a basis for her noneconomic claims. See Kauffman v. McCann, Civ. No. 05-3687, 2007 U.S. Dist. LEXIS 23514, 2007 WL 1038696 at *4 (D.N.J. March 29, 2007) (” [HN12] Because it is plaintiff’s burden at trial to show Defendant caused her permanent injuries within the meaning of AICRA, Plaintiff may not merely rest on her pleadings once Defendant has come forward with evidence tending to show that Plaintiff [*27] is not suffering permanent injury.”). Plaintiff has offered no evidence raising a dispute of fact that, since at least 2008, she has suffered from any spinal injury caused by the 2008 accident.
b. Right Knee Injury
Plaintiff also claims her “traumatic right knee fracture/contusion/anterior horn tear” constitutes a permanent injury under AICRA. The evidence in the record is very close as to whether Ms. Gwinner’s right knee injuries are permanent; however, there is insufficient evidence demonstrating the injuries are causally related to the accident.
Ms. Gwinner underwent medial meniscus surgery to her right knee in 1999. Gwinner Dep., Ex. H 8:23-24, 9:1-4. After the accident, Ms. Gwinner was first evaluated Dr. Bonner on July 1, 2008. Regarding Ms. Gwinner’s right knee, Dr. Bonner wrote, “Her past medical history is remarkable for a medical meniscetomy seven years ago for which she recovered had not had problems involving the right knee.” Def. Ex. K. Dr. Bonner then concluded that, “as a direct result of the accident,” Ms. Gwinner suffered a “contusion to the distal one third of the medial subcutaneous surface of the tibia.” Id. Thus, Dr. Bonner’s initial evaluation attributed only a contusion [*28] to the accident in question.
Eight days later, Ms. Gwinner received an MRI and evaluation at Main Line MRI. In a report dated July 9, 2008, Dr. Philip S. Yussen also noted symptoms consistent with “mild strain or subtle contusion.” Def. Ex. I. Dr. Yussen further noted that the MRI revealed there were no tears to the posterior cruciate ligament, anterior cruciate ligament, or medial collateral ligament. Id. Additionally, “no lateral meniscal tear or significant degenerative signal change” was apparent. Id. Finally, while Dr. Yussen’s examination did reveal “free edge blunting of the posterior horn region” as well as some “small” tears in the medial meniscus region, he was unable to determine the cause of these injuries. Id. He stated, “Given the provided history, the appearance may in part be related to previous partial meniscus tear.” Id.
An orthopaedic surgeon, Dr. Marc S. Zimmerman, then evaluated Ms. Gwinner’s right knee. In a report dated July 28, 2008, Dr. Zimmerman stated, “[Ms. Gwinner’s] right knee gives out on her. She denies popping and clicking. She does not think it is swollen at this time.” Def. Ex. J at 1. Dr. Zimmerman described his evaluation of Ms. Gwinner’s right knee [*29] as follows:
Evaluation of the right knee reveals no swelling or effusion. She has full range of motion without pain. There is minimal tenderness over the lateral joint line with no tenderness over the medial joint line. On the McMurray’s test on internal rotation, there is a click appreciated over the lateral joint line. There is a negative Lachman’s test. There is no varus/vulgus laxity.
Id. at 2. Dr. Zimmerman found there “appear[ed] to be a tear in the posterior horn of the medial meniscus,” but concluded the possible tear was “most likely related to the previous surgery and injury.” Id. As with the two previous evaluations, Dr. Zimmerman noted a bone contusion “at the lateral plateau in the anterolateral aspect.” Id.
In conclusion, because Plaintiff has failed to provide a comparative analysis detailing her previous right knee injuries and then distinguishing any preexisting conditions from the injuries she allegedly suffered as a result of the accident in question, the Court is only able to find causation with regards to the bone contusion. This injury was consistently reported in all three medical evaluations conducted in 2008 and was the only injury explicitly connected to the [*30] accident. However, this injury cannot be considered permanent. Plaintiff’s medical report was prepared on December 16, 2009. Regarding Ms. Gwinner’s right knee, the report merely states, “She also injured her right knee.” It then concludes Ms. Gwinner suffered “traumatic right knee fracture/contusion/anterior horn tear.” Defendant’s medical expert, Dr. Zell, examined Ms. Gwinner’s right knee approximately one-and-a-half years later in May 2011. This represents the most recent evaluation of Ms. Gwinner’s right knee. Dr. Zell noted that the MRI taken by Main Line MRI in 2008 revealed a contusion, but concluded that as of May 2011, the right knee “is entirely within normal limits … [and] further intervention with respect to the patient’s right knee as a consequence of the bicycle versus automobile collision is not warranted.” Def. Ex. N. at 17.
Again, Plaintiff has not offered any evidence to rebut the evidence offered by Defendant showing Plaintiff’s right knee is within normal limits and does not require further treatment. Moreover, Plaintiff offers no additional evidence permitting the reasonable inference that the right knee contusion is permanent. Therefore, it is insufficient to [*31] support a claim for noneconomic damages under AICRA.
c. Right Wrist Injury
Ms. Gwinner alleges that, as a result of the accident, she suffered traumatic right hand/thumb tendonitis with radial/median nerve neuritis and joint inflammation. After reviewing the many doctors’ reports discussing Ms. Gwinner’s right wrist, the Court finds Ms. Gwinner has successfully demonstrated that, if proven, these injuries constitute a causally related permanent injury with the meaning of AICRA.
Dr. Bonner was the first medical professional to evaluate Ms. Gwinner’s wrist after the June 2008 accident. On July 1, 2008, Dr. Bonner wrote that Ms. Gwinner reports “numbness in the right thumb, index finger, and long finger primarily on the tip.” Def. Ex. K. Dr. Bonner then noted Ms. Gwinner had been previously treated for numbness in her right hand and that she stopped treatment in November 2007, prior to the accident. Id. Relevant to causation, this report stated, the “condition had resolved until following this accident.” Id. Dr. Bonner also found “positive phalen’s 8 and tinel’s sign 9 [sic] at the right wrist with tenderness over the … carpal metacarpal joint of the thumb.” Id. The report concludes that [*32] “as a direct result” of the accident in question Ms. Gwinner’s right wrist is indicative of “[p]ost traumatic sprain of the carpal/metacarpal joint of the right thumb with carpal tunnel syndrome being evident.” Id.
8 Dorland’s Illustrated Medical Dictionary 1714 (Elsevier Saunders 32nd ed. 2012) defines “Phalen sign” as the “appearance of numbness or paresthesias within 30 to 60 seconds during the Phalen test, a positive sign for carpal tunnel syndrome.” A Phalen sign is detected by performing a Phalen test, which is a “[a] test for carpal tunnel syndrome. The patient flexes the wrist for 1 minute. Carpal tunnel syndrome is confirmed if the patient experiences a tingling that radiates into the thumb, index finger and the middle and lateral half of the ring finger.” Volume 4 M-PQ, J.E. Schmidt, M.D., Attorney’s Dictionary of Medicine P-208 (Matthew Bender). In light of these definitions, the Court interprets positive Phalen sign to represent that carpal tunnel syndrome was detected.
9 Dorland’s Illustrated Medical Dictionary 1716 (Elsevier Saunders 32nd ed. 2012) defines “Tinel sign” as “a tingling sensation in the distal end of a limb when percussion is made over the site of a divided [*33] nerve. It indicates a partial lesion or the beginning regeneration of the nerve.” The Court thus interprets Positive Tinel sign to indicate possible presence of a lesion(s) in the tested area.
Dr. Zimmerman also evaluated Ms. Gwinner’s right wrist during her July 28, 2008 visit because she reported “some numbness and tingling in the thumb and second finger of her right hand.” Def. Ex. J. Dr. Zimmerman’s report sheds light on the issues of previous existing injuries and causation. He states that while Ms. Gwinner’s past medical history includes numbness and tingling in her right hand, that condition “had resolved but is now present again . . . since the most recent accident.” Id. Moreover, an EMG was performed on Ms. Gwinner in 2007, and “she was told there was no permanent damage.” 10
10 It should be noted, however, that Dr. Zimmerman determined there were “negative Tinel’s and negative Phalen’s signs.” Def. Ex. J.
In December of 2008, Ms. Gwinner visited Dr. William H. Kirkpatrick of Hand Surgical Associates. Def. Ex. L. In his report, Dr. Kirkpatrick similarly noted, “[Ms. Gwinner] had approximately six months of tingling in the thumb, index and long fingers before her bike accident [*34] for which she was treated by a chiropractor” but that the symptoms resolved prior to the June 2008 collision. Id. Dr. Kirkpatrick saw no swelling in the right wrist, full active range of motion, and no tenderness. However, the report found positive Tinel signs “over the superficial radial nerve several centimeters proximal to the wrist” and ultimately diagnosed Ms. Gwinner with right “superficial radial nerve neuritis, probably right median neuritis, and right thumb joint CMC joint inflammation.” Id. This report also noted that Ms. Gwinner’s right wrist injuries were her “primary concern.” Id.
The Court finds the reports of Dr. Bonner, Dr. Zimmerman and Dr. Kirkpatrick sufficient to demonstrate that while Ms. Gwinner had experienced some numbness and tingling prior to the June 2008, that condition had ceased and was deemed nonpermanent prior to the accident. Because both Dr. Bonner and Dr. Zimmerman’s reports noted positive Phalen and Tinel signs, among other injuries, a reasonable fact finder could determine that any injuries found in Ms. Gwinner’s right wrist in these post-accident reports are causally connected to the June 2008 collision. Therefore, Ms. Gwinner has sufficiently demonstrated [*35] causation.
Dr. Bonner’s December 16, 2009 report and Dr. Zell’s May 31, 2011 report are relevant to the Court’s inquiry into the permanency of Ms. Gwinner’s alleged right wrist injuries. Dr. Bonner’s 2009 report described Ms. Gwinner’s injuries as “traumatic right hand/thumb tendonitis with radial/median nerve neuritis and joint inflammation.” Pl. Ex. D. The report stated these injuries have resulted in “permanent restriction to no impact forces to those affected areas.” Id.
Again, the Defendant’s medical expert, Dr. Zell, was the last doctor to evaluate Ms. Gwinner’s right wrist. As of May 2011, Ms. Gwinner’s still complained of tightness and numbness in her right wrist. Def. Ex. N. at 5. Dr. Zell found, “The bicycle versus automobile collision in question has a chronological association with ongoing complaints referable to the median nerve at the right wrist.” Id. And while he found “the absence of a Tinel at the carpal tunnel on the right side,” Dr. Zell did not entirely rule out carpal tunnel syndrome, concluding, “If this patient does in fact have a carpal tunnel syndrome, it is subclinical.” Id.
There is substantially more evidence regarding Ms. Gwinner’s alleged right wrist injury. [*36] While some of the medical reports seem to contradict each other, particularly in regard to Phalen and Tinel signs, all reasonable inferences must be given to the nonmovant. Thus, the Court finds Plaintiff has provided evidence sufficient for a reasonable fact finder to determine her right wrist injuries are permanent and causally connected to the June 2008 accident.
Defendant’s final argument in support of his motion for summary judgment is that Ms. Gwinner’s deposition testimony indicates “she does not have any physical restrictions or limitations.” Def.’s Br. in Supp. Summ. J. at 15. Defendant claims Ms. Gwinner experiences no restrictions in her ability to “perform all of her household chores, go[] skiing, and … ride her bike approximately 50 miles.” Id. While Ms. Gwinner did state she did not miss any time from work as a result of the accident (Gwinner Dep., Ex. H 7:12-14) and she is able to conduct her life somewhat normally, Defendant has not provided a full picture of Ms. Gwinner’s statements. Regarding her ability to perform household chores, Ms. Gwinner participated in the following exchange:
Q: Are you able to do all your household chores?
A: I can do almost everything I that [*37] want. It’s–I’m losing dexterity in this hand because of numbness.
Q: Indicating your right hand?
A: Yes. Like I have good strength it in to go like this.
Q: To make a fist?
A: To make a fist. And if you put your hand, I can break your fingers with my strength, but it dwindles, it doesn’t stay.
Gwinner Dep., Ex. H 66:18-24, 67:1-6. And while Ms. Gwinner stated that she is able to ride her bike, she also stated that when she is finished her hands are numb. Id. at 67:23-24. When viewing Ms. Gwinner’s statements in their entirety, it appears they are supportive of the proposition that the injuries suffered to her wrist are permanent within the meaning of AICRA, especially because, as of the deposition date, May 16, 2011, Ms. Gwinner’s right wrist had not healed to function normally.
In conclusion, the Court finds Ms. Gwinner has provided evidence sufficient to demonstrate injuries suffered to her right wrist were permanent and caused by the accident in question. Because Plaintiff need only demonstrate one of her injuries, if proven, satisfies AICRA’s limitation-on-lawsuit threshold, and she has done so, the Court will allow all of her noneconomic claims to go to a jury.
CONCLUSION
For the reasons [*38] set forth above, Defendant’s motion for summary judgment shall be denied. The accompanying Order will be entered, and the case will be scheduled for trial.
August 2, 2012
DATE
/s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge
New Jersey decision explains the reasoning why ski areas owe the highest degree of care to people riding chairlifts.
Posted: April 25, 2016 Filed under: New Jersey, Ski Area, Skiing / Snow Boarding | Tags: Chair Lift, Common Carrier, Great American Recreation, Highest Degree of Care, Loading Area, New Jersey, NJ, ski area Leave a commentChair lifts are to be operated under the common carrier standard of care by ski areas in New Jersey.
State: New Jersey
Plaintiff: Kathleen A. D’Amico and Allen N. D’Amico
Defendant: Great American Recreation, Inc.
Plaintiff Claims: negligent in its operation and supervision of the ski lift
Defendant Defenses:
Holding: for the plaintiff
Year: 1992
The facts don’t lend themselves to what you would normally think as a chairlift accident. However, the decision explains in easy detail why the court requires the operator of a chairlift to operate it at the highest degree of care for the riders.
The plaintiff was in line to ride the chairlift. When she was next to board, another skier, skied into the path of the chair. The intervening skier hit the chair the plaintiff was to ride making the chair swing and hitting the plaintiff. The plaintiff suffered injuries from being hit by the chair.
The plaintiff and her husband sued. Prior to trial, the plaintiff moved for a motion in limine determining the standard of care of a ski area to riders of a chairlift. This decision is the result of that motion.
Analysis: making sense of the law based on these facts.
The court looked at decisions from all the other states where the question had been answered. What is the duty of care owed by an operator of a chair lift to a passenger.
At the time of this decision, most other states that had looked into the issue had determined that the standard of care was that of a common carrier. A common carrier is required to exercise the highest degree of care to is passengers.
A passenger of a common carrier places himself in the care of that common carrier. A passenger is unable to use his own faculties in order to prevent or avoid accidents and is forced to rely on the common carrier to ensure that accidents are avoided. The carrier has this responsibility because they exercise control of the equipment used in the transportation of the passenger. Only the carrier can ensure that the equipment is in proper working order and is being operated correctly.
Just like a passenger on a train who has no opportunity to ensure that the locomotive is operating properly, a skier cannot determine whether a ski lift is operating properly. When skiers board a ski lift, they are entrusting their care in the hands of another. Once they have committed themselves to riding that chair up the mountain, they are powerless to control their own safety. The chair lifts the skier off the ground as she sits down. The chair is suspended off the ground at considerable distance. The skier has no ability to stop the cable from moving. Furthermore, a skier can’t exit the chair once it has begun its ascent. Because of the skier’s helplessness, ski lift operators should be held to the highest standard of care.
The defendant argued it was not a common carrier because it did not hold itself out to the public as a transportation carrier. Also, the transportation provided by the chairlift was incidental to the sport of skiing. However, the court did not buy that argument.
However, skiers come to ski areas to ski. If ski areas did not provide transportation up a mountain, it would be impossible for skiers to ski down the mountain. Transportation of skiers up the mountain is one of the primary functions of a ski area operator. It is the reason skiers purchase “lift tickets”.
The ski area also argued that the plaintiff was not on the lift when she was injured. However, the court did not agree with this argument either.
The fact that this plaintiff was not physically on the lift when she was injured does not help defendant. The duty of care of a common carrier includes providing a safe means of ingress and egress for its passengers.
The court summed up its analysis.
Based upon the applicable well-reasoned decisions from other jurisdictions and the analysis set forth above, this court holds that ski area operators are common carriers in the operation of ski lifts. It is, of course, within the power of the Legislature to follow the examples of New York and New Hampshire and amend existing law to exclude ski lift operators from common carrier liability. Great American Recreation will be held to the standard of care applicable to other types of common carriers in the operation of its Vernon Valley chairlift. This standard has been de-scribed as the highest possible care consistent with the nature of the undertaking involved.
So Now What?
There were still defenses available to the defendant ski area. The first is the intervening skier. The actions that lead to the injury of the plaintiff were not caused by the ski area but by a third party who intervened, was between the actions of the ski area and the injury to the plaintiff.
However, in New Jersey, from the moment a skier gets on the loading ramp until the skier leaves, the ski area is held to the highest degree of care to riders of its lifts, that of a common carrier.
Don’t know how this applies to lift lines?
What do you think? Leave a comment.
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Author: Outdoor Recreation Insurance, Risk Management and Law
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By Recreation Law Rec-law@recreation-law.com James H. Moss
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