Thursday, December 26, 2013

BJ's Wholesale Club, Inc. v. Rosen (Ct. of Appeals)

Filed: November 27, 2013

Opinion by Lynne A. Battaglia

Held:  The Maryland Court of Special Appeals erred by invoking the State’s parens patriaeauthority 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.

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