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The In-House Advisor Published by Shepard Davidson & Renee Inomata

Concerns Regarding Tort Claim Waivers

Posted in Contracts, Settlements and Releases

When Richard Angelo died during a triathlon sponsored by USA Triathlon, USAT thought that the waiver/indemnity Richard had executed would protect the organization.  Unfortunately for USAT, that liability limitation turned out not to be nearly as ironclad as USAT had hoped.  Now, USAT faces the prospect of defending a case that could subject it to hundreds of thousands of dollars – or more – in damages.

Angelo v. USA Triathlon began in 2011 when Richard Angelo renewed his USAT membership and, as part of that process, electronically signed a “Waiver and Release of Liability, Assumption of Risk and Indemnity Agreement,” stating the following:

I hereby Release, Waive and Covenant Not to Sue, and further agree to Indemnify, Defend and Hold Harmless … USAT … with respect to any liability … which may arise out of, result from, or relate to my participation in [any] Event, including claims for Liability caused in whole or in part by the negligence of [USAT]. I further agree that if, despite this Agreement, I, or anyone on my behalf, makes a claim for Liability against [USAT], I will indemnify, defend and hold harmless [USAT] from any such Liability which … may be incurred as the result of such claim.

In February of 2012, while competing in the swim portion of a triathlon in Burlington, Vermont,  Richard died.  Richard’s widow, Cheryl, sued USAT on behalf of Richard’s estate (for wrongful death and conscious pain and suffering) and in her individual capacity (for negligent infliction of emotional distress).

While USAT contended that these claims could not proceed based on the above waiver/indemnity, USAT only had limited success.  As an initial matter, the Court noted that a claim for wrongful death is not truly a claim of the estate, and any funds recovered would not be part of the general assets of the estate.  As such, the waiver did not apply because Richard only could waive his claims and the wrongful death claim was not his.  The waiver also did not protect USAT in connection with Cheryl’s claim for negligent infliction of emotional distress, as this claim alleged that Cheryl was directly harmed by USAT’s conduct.

USAT then tried to make an end by arguing that even if the waiver did not apply, USAT would be able to use the indemnity that Richard gave to force his estate to pay off any judgment entered against it in the litigation.  (Thus, if USAT was ordered to pay $1 million for wrongful death, it could be reimbursed by the estate with the very money initially paid out in damages.) While this seemed to be a solid tactic, it was flawed in two respects.  First, as the above language indicates, Richard only agreed to indemnify USAT for claims that he brought or that were brought on his behalf.  As such, the agreement to indemnify did not apply to the wrongful death claim or Cheryl’s claim for negligent infliction of emotional distress.

Second, while the claim for conscious pain and suffering was a claim of the estate, a waiver/indemnity of the sort at issue in Angelo only is enforceable if a party acts negligently.  Thus, Cheryl said that she only would proceed on the wrongful death and pain and suffering claims on a theory that USAT acted with gross negligence.  As such, the waiver/indemnity was of no help to USAT on those claims.

The lessons for in-house counsel who draft waivers/indemnities in the tort context are two-fold.  First, be precise in what language you use to be sure that you cover all possible claims. In Angelo, for instance, USAT may have had a much better chance of protecting itself if the indemnity covered “all claims asserted by anyone, arising out of any injury I suffer,” rather than only covering claims “asserted by me or on my behalf.”  Second, in-house counsel should advise their clients that the law places limits on the enforceability of waivers/indemnities that cannot be overridden – no matter how well they may be drafted.  Failing to do so can lead to a very uncomfortable conversation down the road.