The ALEI legal specialists often educate Maryland farmers about liability risks and how the use of liability waivers is one way farmers can reduce their liability exposure. In response to the presentations, we often get the following question from a farmer in one form or another, “Are waivers actually enforceable?” In other words, “If someone gets hurt at my farm will the fact that he or she signed a waiver really protect me?” In September 2016, a U.S. District Court in Pennsylvania in Melendez v. Happy Trails and Riding Center, Inc. (2016 WL 5402745) examined a liability waiver, giving us some insight into the answer to that question.
Melendez, a customer at Happy Trails and Riding Center, Inc. (“Happy Trails”) horse riding operation, signed an explicit liability wavier in which he waived his right to hold the operation liable for injuries related to horse riding. Specifically the waiver provided that Melendez released Happy Trails “from any and all claims, demands, or cause of action that I ... may hereafter have for injuries and/or damages arising out of my participation in Happy Trails activities, including but not limited to, losses caused by negligence.” After signing the waiver, Melendez took a ride and was subsequently injured due to a faulty stirrup. Melendez then sued, claiming Happy Trails negligently supplied him with defective equipment, causing his injury.
Let’s start with the good news. The federal court found that the liability waiver prevented Melendez from being able to successfully pursue a claim against Happy Trails for negligence. The court found the waiver was valid and was not convinced by Melendez’s argument that the waiver was not effective to prevent the claim because it failed to specifically include negligence related to equipment.
Now for the bad news. The court did not find the waiver prevented Melendez from pursuing a legal claim that the owner of Happy Trails’ conduct amounted to recklessness. Recklessness is different from negligence and requires a conscious action or inaction which creates a substantial risk of harm to others. The court found the owner of Happy Trails displayed “a somewhat cavalier attitude about safety.” Testimony the court used to reach this conclusion included that of the owner of Happy Trails himself, who said he had no records (purchase, inspection, repair, etc.) pertaining to his equipment nor a system to periodically check his equipment for safety. The owner of Happy Trails incorrectly thought his customers assumed all the risks associated with riding. The court found a question of fact existed as to recklessness, and thus, the claim was not barred at the summary judgment level. And so the case will continue; it is unclear whether the court will ultimately find the conduct of the Happy Trails owner amounts to recklessness.
In Maryland, there are three exceptions where the public interest will render a liability waiver unenforceable. They are: (1) when the party protected by the clause intentionally causes harm or engages in acts of reckless, wanton, or gross negligence; (2) when the bargaining power of one party to the contract is so grossly unequal so that they are at the mercy of the other's negligence; and (3) when the transaction involves the public interest. Therefore, no matter how clear and valid a waiver might be, it will not protect a Maryland farmer from liability caused by recklessness or gross negligence. This is a good reminder for all operators that they cannot put their customers’ safety at risk through action or inaction and expect to be shielded from all liability by a waiver.
Interestingly, the court in Melendez also found that the Pennsylvania Equine Activities Immunity Act (“Act”) (4 P.S. §§ 601-606) itself did not prevent the legal claim from being dismissed at the summary judgment level. According to the court, the Act only prevents liability for negligence when the injured party voluntary assumed a risk; in other words Melendez had to know the riding equipment he was provided might break and take the ride in spite of that knowledge. Given the Happy Trails owner’s testimony that he had never seen anyone injured due to faulty equipment, the court found it unlikely Melendez knew of and assumed the risk of faulty equipment causing an injury. The takeaway point from this part of the decision is that had Happy Trails not had a liability waiver, the Equine Immunity Act would not have prevented a negligence claim. Liability waivers shielding business owners from liability stemming from negligence thus have value even in states with equine immunity laws.
Although Melendez is a federal case and state courts are not bound to follow federal decisions. There is a lot Maryland farmers can learn from Melendez. It is a good illustration of the power and limitations of liability waivers.
To help farmers craft a viable liability waiver, ALEI has created a checklist of waiver considerations as well as a model waiver of liability form that can be customized for any operation. To read more about the enforceability of liability waivers, check out this past blog post.
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