Contractual Waivers and Medical Expense Recovery by Minors

In Blackwell v. Sky High Sports Nashville Operations, LLC, No. M2016-00447-COA-R9-CV (Tenn. Ct. App. Jan. 9, 2017), the Court of Appeals addressed the issue of whether parents in Tennessee may “bind their minor children to pre-injury waivers of liability, releases, or indemnity agreements,” affirming the existing common law rule such agreements were not enforceable against a child when signed by a parent.  The Court also discussed whether a minor had the right to seek recovery of medical expenses in a personal injury case.

Mother took her son to defendant trampoline park, and on their first visit mother was required to sign a “Customer Release of Liability and Assumption of Risk.” This form purported to waive liability for any injury on behalf of both mother and son, and it contained a choice of law provision naming California law as governing the agreement as well as a forum selection provision stating that litigation would be brought in California. The release stated that it would be effective until the son was eighteen. At a later visit, son was injured, and son and mother both brought this action against defendant trampoline park in the Davidson County Circuit Court.

Defendant filed a motion to enforce the contract in the trial court, arguing that the claims had been waived and that the case had to be brought in California and governed by California law. Mother voluntarily dismissed her claim against defendant, and the trial court subsequently denied defendant’s motion to enforce the contract. The trial court found that “neither the forum selection clause nor the choice of law provision were valid because their enforcement would cause a great hardship for Son to prosecute his action in California and, Tennessee, rather than California, has ‘a more significant relationship to the facts surrounding this case.’” The trial court also held that the liability waiver did not operate to waive son’s claims, as “such a contract is not permissible in Tennessee.” In a lengthy decision, the Court of Appeals ultimately affirmed all three of these holdings.

Forum Selection Clause

The Court of Appeals first looked at whether the clause designating California as the proper venue for litigation was enforceable, affirming the trial court’s decision that it was not. The Court noted that the Tennessee Supreme Court has stated that a forum selection clause should be enforced unless:

(1) the plaintiff cannot secure effective relief in the other state, for reasons other than delay in brining the action; (2) or the other state would be a substantially less convenient place for the trial of the action than this state; (3) or the agreement as to the place of the action was obtained by misrepresentation, duress, abuse of economic power, or other unconscionable means; (4) or it would for some other reason be unfair or unreasonable to enforce the agreement.

(quoting Dyersburg Mach. Works, Inc. v. Rentenback Eng’g Co., 650 S.W.2d 378 (Tenn. 1983)).

Here, the Court found that “with respect to the second Dyersburg factor, California is a substantially less convenient place to hold this lawsuit.” While “mere increased litigation expenses will be insufficient to invalidate a forum selection clause, …the Tennessee Supreme Court has previously held that where neither company at issue was a resident of the proposed forum and none of the witnesses were residents of the proposed forum, the party resisting a forum selection clause had met its burden….” In this case, the plaintiffs were Tennessee residents, the injury and treatment occurred in Tennessee, and all apparent witnesses lived in Tennessee. Moreover, defendant was not incorporated nor did it have its principal place of business in California. Defendant’s only alleged connection to California was that the first store that eventually became the bigger nationwide brand was initially opened in California. The Court found that this was not a sufficient connection to justify the forum selection clause and that plaintiff had met his burden of showing that California was “a substantially less convenient forum than Tennessee.”

Before moving on, however, the Court also noted that California law on the ability of parents to bind their children through liability waivers differs from the law in Tennessee. Accordingly, the Court found that “allowing Son to litigate his case in Tennessee provides him with a better opportunity for full relief.”

Choice of Law

The choice of law provision contained in the release was deemed to fail in this case for largely the same reasons as the forum selection clause. The Court ruled that “no material connection exists between the transaction at issue and California,” as the contract was “between Tennessee residents and a Nevada company,” was signed in Tennessee, and “concern[ed] activities taking place in Tennessee.” Because “Tennessee law is clear…that a company’s choice of law provision will only be honored where the proposed state’s law has a material connection to the transaction at issue,” this particular provision was deemed unenforceable.

Liability Waiver on Behalf of Minor

After establishing that Tennessee law applied and Tennessee was the appropriate venue for this case, the Court of Appeals turned to the crux of the matter—whether a liability waiver signed by a parent was enforceable against a minor child. In the 1989 case of Childress v. Madison County, 777 S.W.2d 1 (Tenn. Ct. App. 1989), the Court had “adopted a rule wherein parents or guardians cannot sign indemnity agreements or liability waivers on behalf of minor children or the incompetent.” In that case, the Court of Appeals “specifically invited either the Tennessee Supreme Court or the Tennessee General Assembly to ‘remedy’ this situation if either believed that Tennessee law should be otherwise,” but neither body took up the issue, with the Supreme Court denying the application for appeal. While the Childress case appeared to cover the issue here presented, the defendant trampoline park argued that the rule should be revisited “because changes in constitutional law concerning parental rights following the Tennessee Supreme Court’s decision in Hawk v. Hawk, 855 S.W.2d 573 (Tenn. 1993) and the United States Supreme Court’s decision in Troxel v. Granville, 530 U.S. 57 (2000)…, have resulted in a ‘strong shift’ in the law in this area across the country.”

The Hawk case, which was cited by defendant, dealt with grandparents attempting to obtain visitation rights against parents who had not been deemed unfit. The Supreme Court ultimately denied the state’s ability to grant grandparent visitation in this scenario, holding that “without a substantial danger of harm to the child, a court may not constitutionally impose its own subjective notions of the ‘best interests of the child’ when an intact, nuclear family with fit, married parents is involved.” (quoting Hawk). The Tennessee Supreme Court later extended this holding “to be applicable to all fit parents, not merely those part of ‘an intact, nuclear family.’” (see Nale v. Robertson, 871 S.W.2d 674 (Tenn. 1994)). The United States Supreme Court case cited by defendant to argue that parents have the fundamental right to make decisions for their children also involved grandparent visitation rights. (see Troxel).

Based on these cases, defendant argued that “the Hawk Court’s rejection of the state’s parens patriae power to interfere in a parenting decision is also applicable to Mother’s decision to waive Son’s claims against [defendant].” While the Court acknowledged that several states have now deemed these parent-signed liability waivers enforceable against minors, it noted that there was split of authority on this issue and ultimately decided to continue following the rule as set out in Childress.

The Court reasoned that while Tennessee public policy “does not favor intervention in the parental decisions of fit parents,” “the fundamental parental rights doctrine…is not absolute.” The Court noted that the Tennessee Supreme Court has “recognized the courts’ power to invalidate certain contracts made by parents on behalf of minors,” including fee agreements with attorneys. The Court reasoned that Tennessee statutes and case law show that the state can act “to protect a child’s financial interests,” even if that protection is against the child’s parent. “Indeed, where a child’s financial interests are threatened by a parent’s contract, it appears to be this State’s long-standing policy to rule in favor of protecting the minor.” Ultimately, the Court held that “pre-injury waivers of liability and indemnification agreements [signed by the parent on behalf of the child] are unenforceable under Tennessee law.”

In support of this holding, the Court pointed out that neither the Supreme Court nor the legislature ever overturned the Childress case. Further, the Court pointed out that in the twenty-five years since Childress, there had been no shortage of children’s activities being offered due to unenforceable waivers, a consequence of which the defendant warned. The Court concluded that “there [was] no basis to depart from this Court’s well-reasoned decision in Childress,” and that the son’s claims in this case could proceed.

Pre-Majority Medical Expenses

Also at issue on this appeal was the son’s ability to make a claim for his pre-majority medical expenses. The trial court had denied son’s motion to amend to add these damages to his complaint, and plaintiff asserted that this denial was in error.

The general rule in Tennessee is that “children may not claim pre-majority medical expenses as a measure of damages in the child’s lawsuit because those damages are owed solely to the parents.” (internal citation omitted). Plaintiff argued that “because Mother waived her claims by signing the release, the child is permitted to claim the medical expenses on his own behalf, with Mother acting in her capacity as next friend.”

In Wolfe v. Vaughn, 152 S.W.2d 631 (Tenn. 1941), the Tennessee Supreme Court held that there was an exception to the general rule that children could not recover pre-majority medical expenses “where a child has no parent who can sue for such expenses.” In that case, the child’s mother was deceased and father was incompetent. This rule was applied various times, and in a 2006 Court of Appeals case, the Court interpreted the exception to the rule to allow a child to include pre-majority medical expenses when he brought suit through his next friend. (see Palanki ex rel. Palanki v. Vanderbilt Univ., 215 S.W.3d 380 (Tenn. Ct. App. 2006)). The United States District Court for the Eastern District of Tennessee, however, had a different interpretation. In a 2016 case, that Court expressed concern with the broad exception announced in the Palanki decision and stated that the exception allowing minors to claim their own pre-majority medical expenses was meant only to apply in “a situation in which the parents neither paid for nor were legally responsible for the child’s medical expenses,” or where the “expenses were paid for by the minor himself.” (see Grant v. Kia Motors Corp., 2016 WL 6247319 (E.D. Tenn. May 10, 2016)).

Here, the Court of Appeals decided to depart from its own prior decisions and follow the rationale of the federal court, finding that “the child in this case should not be able to claim pre-majority expenses paid by his parents in an effort to circumvent Mother’s execution of the release, including its waiver and indemnity provision.” The Court reasoned:

[A]llowing the minor child to recover those expenses he himself has paid harmonizes with Tennessee’s public policy of protecting the financial interests of minors. To hold otherwise would prevent the child from being fully compensated for the damages that he actually incurred based upon an arbitrary determination that those expenses were paid by the child’s parent, even in the face of proof to the contrary. Furthermore, to allow the child in this case to claim Mother’s damages despite the fact that she executed a valid release and indemnity agreement would be to frustrate this state’s public policy of enforcing clear and unambiguous exculpatory agreements entered into freely by adults.

The Court held that son could only maintain an action for pre-majority medical expenses he himself actually paid, but that he could present evidence to the trial court of his payments if any such evidence existed.

This case is extremely important for anyone who represents the interests of a minor in tort litigation. First, although it did not establish new law on the issue, it reaffirmed the existing common law rule that a pre-injury waiver signed by a parent is not enforceable against a child. This is vital to remember when evaluating whether a claim exists when a child is injured. Second, it clears up some murky common law regarding whether a child can bring a claim for his or her own pre-majority medical expenses. Based on this case (unless of course the Supreme Court hears this matter on appeal), the current rule appears to be that a minor can only fall into the exception that allows him to bring his own claim for pre-majority medical expenses if the minor truly has no parent to bring the claim and/or paid the expenses himself.   I have written an article for the Tennessee Bar Journal on this aspect of the decision that will be published shortly.  I will link to the article when it is published.