KEN KIRSCHENBAUM, ESQ ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE You can read all of our articles on our website. Having trouble getting our emails? Change your spam controls and whitelist ken@kirschenbaumesq.com ****************************** Exculpatory provision precludes liability for personal injury in NJ August 10, 2022 ************************ Exculpatory provision precludes liability for personal injury in NJ ************************ An interesting and helpful [to the alarm industry] case was just decided by a Federal Court in New Jersey. Before reviewing the case I’ll give you the short version and why this case is of interest to the alarm industry. Like other industries the alarm alarm industry relies heavily on properly drafted Agreements which contain protective provisions insulating alarm companies from liability for unintended events and consequences [at least from the alarm company’s perspective]. Prominent among these provisions is the Exculpatory Clause. I spend a lot of time negotiating with potential subscribers over of the terms of the alarm contract and interestingly enough the Exculpatory Clause, once put into perspective to the subscriber and its counsel, raises less challenge than the Limitation of Liability Clause or some of the other protective provisions we often discuss on this forum. The Exculpatory Clause will be carefully scrutinized and enforced only when close to precise and perfect [that’s my language]. I am periodically changing the Exculpatory Clause in the Standard Form Agreements as new cases or laws emerge. A recurring issue is gross negligence and willful misconduct. Put aside what those two terms mean. The issue today is how those two terms affect the enforcement of the Exculpatory Clause. Here’s a short evolution of the provision in alarm contracts. Initially the Exculpatory Clause referred negligence only. Then we changed it to negligence or gross negligence. Then we changed it to negligence to any degree. Now it specifically excludes gross negligence and willful misconduct. And the question is why? The law is pretty clear in just about every jurisdiction in the US that you can’t contract away liability for gross negligence or willful misconduct. So two questions come to mind: 1. Is there any reason to include gross negligence and willful misconduct when we know the provision will not be enforced if those standards are proved? 2. Will the inclusion of gross negligence or willful misconduct void the Exculpatory Clause in its entirety, and maybe the rest of the contract? The court in the case under review made an interesting footnote in his decision: “I also note that Plaintiffs provide no case law to suggest that simply because the Waiver purports to disclaim liability for grossly negligent conduct, inclusion of such language does not render the entire Waiver null and void.” This is not a specific ruling on the issue; it’s what we lawyers and judges call dicta; it’s not a binding finding, but it’s surely a strong indication of how the judge would rule if the issue were before him. In this case the Plaintiff’s didn’t plead or show any facts to suggest or support gross negligence or willful misconduct, so the judge didn’t have to directly address it. I routinely recommend that the alarm contract not to try exclude gross negligence from liability. That term is one I quickly look for to recommend that a contract be revised or updated. But if it’s still in your contract [and it shouldn’t be] I suppose you might be OK in New Jersey. Husband and wife go on fishing boat. They sign an Exculpatory Agreement when boarding. Wave hits boat and husband is thrown from sit and injured; they sue in State court and the case was moved to Federal Court because it falls under Federal Admiralty Law. The court addressed whether Admiralty Law or New Jersey law applied. Turns out there isn’t a conflct: “ A federal court sitting in admiralty jurisdiction may rely on state law as long as the law in question “does not conflict with [federal] maritime law.” Relevant here, admiralty law and New Jersey law recognize that exculpatory contracts are valid and enforceable. The court continued: “Similarly, under New Jersey law, courts also require that an exculpatory clause be clear and unambiguous. (explaining that to enforce an exculpatory clause it must “reflect the unequivocal expression of the party giving up his or her legal rights that this decision was made voluntarily, intelligently and with the full knowledge of its legal consequences” (internal quotation marks and citation omitted)). Furthermore, an exculpatory clause is enforceable if it is not “plainly inconsistent with public policy.” In addition, both admiralty law and New Jersey law provide that exculpatory clauses which disclaim liability for conduct beyond negligence or carelessness are inconsistent with public policy. (noting that “[u]nder federal maritime law [ ], owners of recreational boats may disclaim liability for negligence, but they may not do so for gross negligence” and that “[g]ross negligence goes beyond ordinary negligence and is the willful, wanton, or reckless infliction of harm” (internal quotation marks and citation omitted)); (applying New Jersey law and stating that defendant “could not exculpate itself from [ ] reckless or gross negligence,” but could exculpate itself from “injuries sustained as a matter of negligence”). Finally, New Jersey also recognizes, in connection with certain public policy considerations, that an exculpatory contract can be invalidated if the contract grows “out of unequal bargaining power or is otherwise unconscionable,” such as a contract of adhesion. (holding that “although the terms of the agreement were presented ‘as is' to [plaintiff], rendering this a fairly typical adhesion contract in its procedural aspects, we hold that the agreement was not void based on any notion of procedural unconscionability”). Accordingly, federal admiralty law and New Jersey law are in sync for the purposes of exculpatory clauses. B. The Waiver Is Valid and Enforceable As discussed above, an exculpatory clause under admiralty law is valid if it is (1) clear and unambiguous considering all the circumstances, (2) not inconsistent with public policy, and (3) not a contract of adhesion. Considering these three factors in connection with the evidence in the record in a light most favorable to Plaintiffs, I find that the exculpatory clause in the instant case is valid and enforceable.” Citations omitted “i. The Waiver Is Clear and Unambiguous At the outset, although Plaintiffs do not challenge the clarity of the Waiver, I nonetheless find the Waiver clear and unambiguous. “A waiver is clear and unambiguous if it specifically bars the plaintiff's negligence claim and explicitly exonerates all defendants in the lawsuit.” In contrast, a waiver is ambiguous if “it is reasonably susceptible to more than one interpretation.” However, a release does not need to “list ... each possible manner in which releaser could be injured during an inherently dangerous event.” The Waiver is titled “Reel Reaction Sportfishing LLC Charter Fishing - Assumption of Risk and Complete Release of Liability,” and reads in relevant part: I understand that the purpose of signing this document is to GIVE UP ALL of my rights to sue Reel Reaction Sportfishing LLC, and any of their EMPLOYEES, AND ALL OF ITS BOATS (WHETHER OWNED, OPERATED, CONTROLLED, BORROWED, LEASED, CHARTERED OR OTHERWISE) HEREINAFTER REFERRED TO AS THE RELEASED PARTIES AND TO HOLD THESE ENTITIES HARMLESS FROM ANY AND ALL LIABILITIES ARISING AS A CONSEQUENCE OF ANY ACTS OR OMISSIONS ON THEIR PART, INCLUDING BUT NOT LIMITED TO NEGLIGENCE OF ANY TYPE. [...] I UNDERSTAND THAT THERE ARE INHERENT RISKS INVOLVED WITH BOATING, RISHING, AND WATER ACTIVITIES, including but not limited to equipment failure, perils of the sea, harm by marine creatures (including marine animal bites), acts of fellow participants, entering or exiting the water, injury from hooks or other sharp objects, loss of balance, slipping/falling, and/or motion sickness, and injuries caused by unpredictable weather and/or sea conditions, boarding or disembarking the vessel, injuries caused by fishing equipment, activities on the docks, and I HEREBY ASSUME EACH AND EVERY SUCH RISK WHETHER SPECIFICALLY LISTED HEREIN OR NOT WHETHER FORESEEABLE OR NOT. IT IS MY INTENTION THAT THIS RELEASE BE CONSTRUED AS BROADLY AS POSSIBLE AND IN FAVOR OF THE RELEASED PARTIES. [.] IT IS MY INTENTION BY THIS INSTRUMENT TO GIVE UP MY RIGHT TO SUE ALL PERSONS OR ENTITIES REFERRED TO HEREIN, WHETHER SPECIFICALLY NAMED OR NOT, AND IT IS ALSO MY INTENTION TO EXEMPT AND RELEASE Reel Reaction Sportfishing llc, OPERATOR, OTHER ASSOCIATED PERSONNEL, and its boats (whether OWNED, OPERATED, LEASED, OR CHARTERED), AND TO HOLD THESE ENTITIES HARMLESS FROM ANY AND ALL LIABILITY FROM PERSONAL INJURY, PROPERTY DAMAGE, OR WRONGFUL DEATH CAUSED BY NEGLIGENCE OR GROSS NEGLIGENCE AND I ASSUME ALL RISK IN CONNECTION WITH FISHING, RIDING, AND ALL OTHER BOATING/FISHING ACTIVITIES, INCLUDING BUT LIMITED TO THE MAINTENANCE OF THE EQUIPMENT OR ORGANIZATION OF THIS ACTIVITY.” Red highlight added “Here, the language is perspicuous, negligence was specifically mentioned, and Mr. Boldt's name is printed and signed on the Waiver. While Plaintiffs do not challenge the clarity of the Waiver language, they contend that there was “no discussion whatsoever about the release itself.” In that regard, Mr. Boldt claims that he does not remember the document, and, at the time of execution, he did not understand that he waived liability. Nonetheless, when deposed, Mr. Boldt testified that the signature appearing on the Waiver is, in fact, his. Plaintiffs also highlight the inclusion of a black box at the bottom of the page which contains a rod/reel overboard agreement. Plaintiffs emphasize that although this black boxed section cautions the reader “IMPORTANT - READ CAREFULLY[,]” that separately outlined portion of the Waiver makes no reference to the waivers of fault or negligence mentioned elsewhere in the document. Plaintiffs imply that this specific section of text distracts and detracts from the other, more relevant sections of the Waiver. This argument, however, is belied by the fact that the Waiver, which was only four paragraphs and one page, was not a lengthy document. As shown above, the Waiver also deliberately utilized capital lettering, bold font, and other techniques to signal important phrases and statements to the document's signatories. Thus, I find the Waiver sufficiently put Mr. Boldt on notice of its legal significance and effect. (finding that because the language in the liability waiver signed by the plaintiff was clear and unambiguous, it “unequivocally should have put her on notice of its legal significance and effect”); (a waiver was valid where the terms were spelled out in plain and clear language, even though the information was on the back of the invoice, in small font, and light print), and (a waiver was clear and unambiguous where it clearly stated and explained its terms and critical language was capitalized and bolded), with (a disclaimer was invalid where, among other things, there was no title and critical language was not capitalized or highlighted). Moreover, Defendants correctly emphasize that simply because Mr. Boldt claims that he did not read or understand the Waiver, or that Captain Taylor did not directly discuss the contents of the release with him, does not render the Waiver unenforceable. Rather, when entering a written contract, the party is presumed to understand and assent to its terms unless there is a showing of fraud or duress. (“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”) (citations omitted). Put simply, It is the general rule that where a party affixes his signature to a written instrument, such as a release, a conclusive presumption arises that he read, understood and assented to its terms and he will not be heard to complain that he did not comprehend the effect of his act in the signing.” Citations omitted Bold v.Taylor; United States District Court, D. New Jersey July 18, 2022 ******************************** To order up to date Standard Form Alarm / Security / Fire and related Agreements click here: www.alarmcontracts.com *************************** To order up to date Standard Form Alarm / Security / Fire and related Agreements click here: www.alarmcontracts.com *************************** CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY - You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304. *********************** ALARM ARTICLES: You can always read our Articles on our website at ww.kirschenbaumesq.com/page/alarm-articles updated daily ******************** THE ALARM EXCHANGE - the alarm industries leading classified and business exchange - updated daily ************************* Wondering how much your alarm company is worth? Click here: https://www.kirschenbaumesq.com/page/what-is-my-alarm-company-worth ****************************** Getting on our Email List / Email Articles archived: Many of you are forwarding these emails to friends or asking that others be added to the list. Sign up for our daily newsletter here: Sign Up. You can read articles and order alarm contracts on our web site www.alarmcontracts.com ************************** Ken Kirschenbaum,Esq Kirschenbaum & Kirschenbaum PC Attorneys at Law 200 Garden City Plaza Garden City, NY 11530 516 747 6700 x 301 ken@kirschenbaumesq.com www.KirschenbaumEsq.com
