Exculpatory Clauses in Indiana: Make Sure to Specifically Release Negligence in your Waivers

On March 28, 2014, the Indiana Court of Appeals issued a decision in the matter of Kramer v. Catholic Charities of the Diocese of Fort Wayne-South Bend (pdf) which, in my mind, further confuses the application of “inherent risk” analysis versus “latent defect” analysis when determining the effectiveness in exculpatory clauses.These are both concepts used by the Indiana courts when attempting to determine whether a release will be effective against a claim of negligence when the release language does not specifically mention “negligence.”

This particular case involved an organization that facilitated adoptions. The agreement between the organization and the adopting parents said, in pertinent part:

We further acknowledge our understanding and agreement that Catholic Charities has made no promise or representations to us regarding the permanency of this placement. We understand that the placement is at-risk and subject to termination. . . .

In addition, we understand that the father/putative father of the child may possess and/or exercise certain legal rights concerning the child, which could adversely affect the placement of the child with us and/or our ability to adopt the child. We understand that the placement of the child with us will remain at-risk until the successful completion of the timely filed adoption proceedings and all rights of the father/putative father are fully and finally terminated or waived in accordance with the law. . . .

We also understand that[,] if the father/putative father claims or chooses to exercise his legal rights within the limits of the law, we will immediately return the child to the custody of Catholic Charities at the request of Catholic Charities without recourse against Catholic Charities.

The allegations were that Catholic Charities had a policy of checking the putative father registry before a child is placed with adoptive parents. The adoptive parents further alleged that Catholic Charities failed to do so, the result being that the child was placed with them then taken back.

Catholic Charities requested dismissal of the lawsuit because, among other things, it argued that the release meant that the adoptive parents could not bring the lawsuit even if, for the sake of argument, Catholic Charities was negligent. The trial court agreed but the Court of Appeals in this case has reversed.

The issue is that Indiana has taken what I like to call a “magic word” approach to releases that arguably excuse someone from liability for damages caused by their allegedly negligent behavior. Indiana courts really don’t favor such releases but still recognize them as legally permissible. The result has been that past case law has indicated that “an exculpatory clause will not act to absolve a party from liability from negligence unless it ‘specifically and explicitly refers to the negligence of the party seeking release from liability.'” In other words, to be effective, the release should contain something like, “I release you from liability for any damage that I may suffer, even if that damage is caused by your negligent acts or omissions.”

However, from time to time, the Court of Appeals has softened that stance and reasoned that maybe the release doesn’t have to be “explicit” on the subject of negligence if the injury caused by the alleged negligence is the result of a risk inherent in the activity. (Note: this “inherent risk” discussion sounds confusingly similar to “incurred risk” which is a related but distinct concept.)

In Anderson v. Four Seasons Equestrian Center, Inc., 852 N.E.2d 576 (Ind. Ct. App. 2006), the plaintiff’s complaint alleged that Four Seasons was negligent in caring for, conditioning, and training the Plaintiff’s horse such that, when she mounted it, the horse moved causing her to fall and injure herself. The release signed by the Andersons did not explicitly mention negligence. However, the court still found the release sufficient to bar the case because “an exculpatory clause not referring to the negligence of the releasee may act to bar liability for those damages incurred which are inherent in the nature of the activity.” Because being thrown from a horse while riding is a risk inherent in equine activities, the court held that even though the injury was allegedly caused by the defendant’s negligence and even though the waiver did not specifically mention “negligence,” the claim was still barred.

Similarly, in  Wabash County Young Men’s Christian Ass’n v. Thompson, 975 N.E.2d 362 (Ind. Ct. App. 2012), the Court of Appeals enforced a waiver that didn’t mention negligence in the context of youth baseball. The allegation was that the YMCA was negligent in their choice of bases, that it used bases that were too rigid and when the player slid into second, he was injured due to that negligence. The release signed by the player or his parents did not mention negligence but did contain an acknowledgment of risk that injuries can occur while playing baseball. The court reasoned that getting hurt while sliding into a base is an inherent risk of playing baseball and enforced the waiver. It rejected the plaintiff’s argument that the player’s injury was the result of the “latent defect” of the defendant’s negligent failure “to inspect, warn, and implement preventive measures designed to eliminate or reduce dangers posed by the condition of the second base ‘such that it was fixed as a rigid obstacle for participants to encounter while sliding into the base.'” The Court in that case observed “one can take almost any on-field mishap and seek to couch it in terms of negligence by arguing for more padding, softer playing surfaces, rule changes, etc., but the fact remains that the injury arose because of a risk inherent in the game.”

In the present case, the Court discusses Anderson but not YMCA. The Catholic Charities Court said that the Catholic Charities waiver did not apply in the absence of a specific mention of negligence because:

[T]he inherent nature of the activity exception does not apply, and a specific release from negligence is required, where “‘the risk of harm is a latent danger’” such as “‘the defendant’s own negligence.’”

One is left to wonder when the defendant’s negligence is going to be regarded as a “latent danger” and when it is going to, instead, be encompassed as an “inherent risk” in the activity. If it’s the former, the release will not be effective; if it’s the latter, the release will be effective.

The safest bet is to simply use the magic words and include a release for negligent behavior in the exculpatory clause of your waivers.

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