Filed: November
27, 2013
Opinion by Lynne A. Battaglia
Held: The Maryland Court of Special Appeals erred
by invoking the State’s parens patriae
authority to invalidate the exculpatory clause found in a liability waiver
signed by the father of a five-year-old child who was injured at a kid’s
club.
Facts: Plaintiffs,
mother and father, sued BJ’s Wholesale Club on behalf of their son, who was
injured at the Club’s Owings Mills location.
The Incredible Kids’ Club, is a free supervised play area in BJ’s Wholesale
club, where children can play while their parents shop at the warehouse. Plaintiff’s son was in the club when he fell
from a small apparatus onto the floor, resulting in a serious brain injury. Prior to the day of the accident, along with
other membership documents, the father had executed an agreement, which
contained an exculpatory provision and indemnification language pertaining to
the use of Kids’ Club.
The complaint pled a cause of action in negligence. BJ’s filed an Answer with a general denial in
addition to a counterclaim alleging a breach of contract for failing to
indemnify, defend, and hold BJ’s harmless pursuant to the indemnification
clause. In their Motion for Summary
Judgment under Rule 2-501, BJ’s asserted that no factual matters were in
dispute and that, pursuant to the Court’s decision in Wolf
v. Ford, 335 Md. 525 (1994), the
exculpatory clause was valid and the claim was barred as a matter of law. Plaintiffs filed an opposition contending
that the exculpatory and indemnification clauses were unenforceable, because
they violated Maryland’s public policy interest of protecting children.
The trial court noted that in general, Maryland courts have
upheld exculpatory clauses that were executed by adults on their own
behalf. The trial court recognized that
the issue of whether or not an exculpatory clause signed by a parent on behalf
of their minor child was in fact one of first impression in Maryland. In Wolf,
the Court of Appeals had recognized three circumstances in which enforcement of
an exculpatory clause could be precluded.
The trial court addressed the relevant exception, that public policy
will not permit exculpatory agreements in transactions affecting the public
interest. Under Wolf, “transactions affecting public interest” fall into three
categories. Of those three, the only one
relied upon by the trial court was a catchall category of the public interest
exception to the validity of exculpatory clauses. The trial court recognized this category was
not easily defined, opining that while the Maryland Court of Appeals has
intended to create a public interest exception, without further guidance, the
trial court was not capable of evaluating the “totality of the circumstances”
against a “backdrop of current societal expectations,” as it quoted from the Wolf decision. The trial court closed by indicating that it
did not have the ability to pronounce public policy grounds to invalidate the
clause that the plaintiff had signed on behalf of his minor child, and granted
BJ’s motion for summary judgment on the grounds that the exculpatory clause was
valid.
Analysis: In their appellate
decision, the Court of Special Appeals began by framing the issue as
follows: “The central issue in this case
is whether a parent may waive any and all future tort claims his or her child
may have against a ‘commercial enterprise.’”
Rosen
v. BJ's Wholesale Club, Inc., 206 Md. App. 708,
718 (2012)
To begin its analysis the Court of Special
Appeals emphasized that Maryland case law provided very little guidance on the
issue. The Court turned to the appellate
courts of other states, where they found that a substantial majority of states
(majority view) that had “squarely considered whether a release agreement may
bar future negligence claims of a child, have held that such agreements are
invalid and unenforceable on public policy grounds.” Their observation was that the minority view
– states which held the exculpatory clause signed by the parent to be valid –
only applied where a “commercial enterprise” was not the subject of the release, but instead where the release was
of a claim against either a government agency or non-profit organization, or
its agents. The Court pointed to their
observation that in nearly all of the other states where the majority view was
adopted, the facts were nearly identical to those of the case at bar, in that a
parent had executed, on his or her minor child's behalf, a release agreement
(with or without an indemnification clause) in favor of a private commercial
enterprise, usually as a pre-condition for allowing the child's access to and
participation in some recreational activity. While participating in that
activity, the child sustained injuries, and suit was thereafter brought on the
child's behalf. In each case, the defendant entity attempted to shield itself
from liability by invoking the release agreement, and the trial court granted
summary judgment or a motion to dismiss. Thus, all of the cases presented the
same legal issue and were in essentially the same procedural posture.
With these considerations in mind, the Court
first reflected on the Court of Appeals decision in Wolf. Wolf
v. Ford, 335 Md. 525 (1994). However, where the trial court had stopped by
expressing that it was not capable of evaluating the “totality of the
circumstances” against a “backdrop of current societal expectations,”
the Court of Special Appeals pointed to that third of the three exceptions
discussed above – transactions effecting the public interest – and declared that
such a backdrop may be found 1.) in the Plaintiffs claim 2.) in the Maryland
Code and 3.) in Maryland common law, which, the Plaintiffs point out,
reflected a substantial public interest in protecting children and their rights
to seek redress for negligence, when that negligence results in injury to them. The Court, in addition to relying on this
wording in Wolf, rested their opinion
on two other considerations. First, they
rooted their opinion on a perceived distinction between commercial and
non-commercial enterprises. Second, they
based their decision on the exercise of the State’s parens patriae interest in caring for those, such as minors, who
cannot care for themselves. The Court of
Special Appeals ruled the exculpatory agreement invalid and unenforceable.
The Court of Appeals reversed. In the Court’s review of the statutes and
case law, they observed a reflection of a societal expectation that a parent’s
decision-making is not limited. The
Court did not however believe that the plaintiff’s execution of an exculpatory
agreement on behalf of their son was a transaction affecting the public
interest within the meaning of Wolf,
which otherwise would have impugned the effect of the agreement. The Court took further issue with COSA’s
opinion as to the perceived distinction between commercial and non-commercial
enterprises. The Court disagreed, and
posited that the distinction between commercial and non-commercial entities is
without support in Maryland jurisprudence.
The Court added that whether an agreement which prospectively waived a
claim for negligence executed by a parent on behalf of a child should be
invalidated because a commercial entity may better be able to bear the risk of
loss than a non-commercial entity by purchasing insurance, is a matter for the
legislature to consider. Finally, the
Court addressed COSA’s reference to the State’s parens patraie authority.
The Court clarified that the authority only reflects the State’s
intervention when a parent is unfit or incapable of performing the parenting
function, which was not alleged in the present case.
The Court concluded that they had never applied parens patriae to invalidate, undermine,
or restrict a decision made by a parent on behalf of her child in the course of
the parenting role. The Court held the
exculpatory agreement signed by the plaintiff on behalf of his son to be valid
and enforceable.
The full opinion is available in PDF here.