California Court of Appeal Puts the Brakes on Contractually Exculpating Liability for Gross Negligence
Riding motocross has been part of my life for nearly twenty years. Every weekend as a kid, I would wake my parents up early, load my motorcycle in the back of a truck, and we would drive to the local motocross track. The line of trucks waiting to enter couldn’t move fast enough. I remember thinking – “Just sign in and let’s go!” Virtually all motocross tracks in the country have riders and spectators print and sign their name to a “sign-in sheet” at the entry gate. That sheet invariably contains language attempting to release the owner of the premises from liability. Today, I still anxiously wait in my truck to sign in and ride at motocross tracks throughout Southern California. But releases like these may not slow down your subrogation case.
In Rosecrans v. Dover Images, Ltd., plaintiff and motocross rider, Jerid Rosecrans, loaded his bike in the back of his truck and drove to Starwest Motocross Track in Perris, California. Before entering, an attendant at the entrance booth gave Jerid a clipboard with a document titled, “Release and Waiver of Liability Assumption of Risk and Indemnity Agreement.” Several paragraphs set forth the waiver and release of liability language. He signed the document and then started riding on the track after putting on his gear (helmet, goggles, chest protector, etc.).
Unfortunately, Jerid crashed on the downside of a blind jump. Luckily, he was not hurt as a result of the initial crash. But his luck ran out as he stood up to get back on his bike. Another rider who was going over the blind jump collided into and injured him. The track did not have a caution flagger stationed at the jump to alert the other rider. Jerid filed a lawsuit against the track alleging that Starwest “negligently owned, operated, maintained and/or controlled” the track because there was not a caution flagger stationed at the take off of the jump to signal that Jerid had crashed.
Starwest moved for summary judgment asserting the waiver as a complete defense to the asserted claims. The trial court agreed with Starwest and concluded that the Release completely barred Jerid’s claims. The California Court of Appeal upheld the Release to the extent that it barred claims for simple negligence. But the Court disagreed with the trial court and held that the Release did not bar claims for gross negligence. The plaintiff’s safety expert opined that not having a caution flagger stationed at a blind jump was “inexcusable, a blatant disregard for riders’ safety, and criminal.” Accordingly, the Court concluded that a reasonable jury could find the track’s conduct to constitute an extreme departure from the standard of care. Ultimately, the Court refused to allow defendants to use a release of liability to shield them from extreme negligent conduct.
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Tort claims arising from construction defects often falter in the looming presence of a contract. The existence of a contract is particularly challenging for the plaintiff who is not in contractual privity with the defendant. Under Michigan law, the distinction between duties owed by a contractor arising from a contract and those arising in the common law plays a critical role in properly pleading a tort claim. The distinction is acutely unclear with respect to claims arising from defective construction.
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Many states, including Pennsylvania, recognize that once a property insurer has paid its insured for a property damage loss, that insurer owns a separate and independent cause of action against the tortfeasor responsible for causing the damage. See State Farm v. Ware's Van Storage, 953 A.2d 568 (Pa. Super 2008). In Ware's Van Storage, State Farm's insured filed a lawsuit seeking compensation for his personal injuries arising out of a truck accident; he did not make a claim for his property damage deductible or any uninsured property damage. State Farm commenced a subrogation action seeking recovery of the amount it paid its insured for property damage arising out of the accident. State Farm did not include the insured's deductible interest of other uninsured claims in its complaint. The defendants in the State Farm case filed preliminary objections in the nature of a demurrer asserting that State Farm had waived its subrogation claim because its insured had already filed a complaint seeking damages arising out of the same transaction or occurrence. The Court concluded that under Pennsylvania law, the subrogated insurer and its insured are not compelled to assert their related claims in a single action. "State Farm's insured, once reimbursed for its property damage under the terms of the insurance policy, has no further interest in pursuing that claim… Once payment is made, the unity of the insurer's interest with that of its insured is eliminated, rendering the parties' interest in litigation qualitatively dissimilar." State Farm and its insured were not subject to the compulsory joinder of their cases and were permitted to maintain separate causes of action for their separate claims. However, the Court noted that if State Farm had included the insured's deductible or any uninsured property damage claim, or if the insured had included a claim to recover its deductible or other property damage in his complaint, the causes of action would have to be consolidated and could not proceed as separate cases.
