Sunday, February 3, 2013

Waivers, Releases and Indemnification Agreements Signed By Parents on Behalf of their Minor Children are Unenforceable In Maryland

          It is not uncommon for a business to require parents to sign a release before their child can participate in an activity that the business conducts.  A release that sometimes has a provision indemnifying the business from any claim brought on behalf of the child.  In a case of first impression, the Maryland Court of Special Appeals has ruled that such releases are invalid as a matter of public policy.

          In Rosen v. BJ's Wholesale Club, Inc., 206 Md. App. 708, 51 A.3d 100 (2012), Russell and Beily Rosen were members and shopped at the BJ’s Wholesale store in Owings Mills, Maryland. The store provided a free, supervised children’s play area for members. However, before their children could use the play center, members were required to sign a release, containing both an exculpatory and indemnification clause. In July of 2005, Russell Rosen signed that release. About fifteen months later, Beily Rosen took her five-year-old son, Ephraim, to the BJ’s Wholesale store. Beily dropped Ephraim off at the play center and proceeded to shop. While Biely was shopping in the BJ’s, Ephraim fell and hit his head on the floor of the play area, sustaining life-threatening injuries.

         The Court of Special Appeal, lacking any guidance in Maryland, looked to other states. The majority of which hold that such agreements are invalid and unenforceable on public policy grounds. When looking to other states the Court found many common threads. First, unlike in Maryland, many states had a statute or rule prohibiting a parenting from releasing a child's claim without court approval.  Second, these release agreements tend to remove an important incentive to act with reasonable care, and they are often imposed without any bargaining or opportunity to pay for insurance.  Third, commercial businesses are in a better position than the minors to eliminate hazards and insure themselves against unavoidable risks.  Finally, many decisions cited the state’s duty to act as parens patriae to protect children from harm.

        Adopting the majority view that a parent many not legally bind a minor child to a pre-injury release of tort liability in favor of a commercial enterprise, the Court stated that the ruling would provide incentives for commercial enterprises to take reasonable precautions in operating and maintaining their facilities, and to obtain adequate insurance to cover for negligence.  With regard to the agreement's indemnification provisions, the court ruled that they were an invalid attempt to avoid the public policy that invalidated the release language.  

      The Court declined to address whether this ruling applied when nonprofit or governmental entities are involved.

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