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Federal District Court Holds Exculpatory Agreement Only Obligates Signer to Indemnify Jet Ski Rental Agent for Injuries to Others, Not For Own Injuries

Blogs, Product Liability

On February 22, 2011, a Federal District Court in Camden, New Jersey, held a jet ski rental agreement operated only to indemnify the rental agent for injuries caused by the jet skier, not for injuries suffered by him. Dinenno v. Lucky Fin Water Sports, LLC, Civil Action No. 08-CV-5903 (D.N.J., Feb. 22, 2011).

Anthony Dinenno and George Djukanovic rented a jet ski in Wildwood, New Jersey. As Dinenno was a minor, Robert Hughes, one of his friend’s fathers, signed Lucky Fin’s required rental agreement, which contained the following exculpatory and indemnification provisions:

NOW THEREFORE, in consideration of the permission extended to me by Lucky Fin Water Sports, L.L.C., through its officers, and agents to take such a trip or trips, I do hereby for myself, my heirs, executors, and administrators, remise, release and further discharge Lucky Fin Water Sports, L.L.C., . . . from all claims, demands, actions, or causes of action on account of my death or on account of any injury to me which may occur from any cause during the trip or trips or continuation thereof, as well as any operations incident to such trip or trips.

 . . .

The undersigned further agrees they shall indemnify and save harmless Lucky Fin Water Sports, L.L.C., . . . against all loss, cost or damage on account of any injury to persons or property occurring or rising[sic] out of this lease.

Hughes remained in a restaurant while Dinenno and Djukanovic rode the jet ski, and Dinenno was eventually when the jet ski he was riding on collided with another jet ski. Dinenno’s father filed an action against Lucky Fin, Djukanovic, and the operator of the other jet ski. Lucky Fin filed a third-party complaint against Hughes, seeking contribution, common-law indemnification, and contractual indemnification based on the rental agreement. Lucky Fin and Hughes filed cross-motions for summary judgment.

In a fairly terse opinion, Judge Joseph Irenas granted Hughes’ motion for summary judgment, dismissing all third-party claims asserted against him. The Court noted that the clear language of the rental agreement operated only to (1) release Lucky Fin from any claims of negligence resulting from Dinenno’s injuries; and (2) obligate Hughes to indemnify Lucky Fin for injuries that Dinenno might cause to another person. Accordingly, the rental agreement did not obligate Hughes to indemnify Lucky Fin for Dinenno’s own injuries. The Court also dismissed Lucky Fin’s third-party claims for contribution and common-law indemnification against Hughes, noting that as Hughes was sitting in a restaurant at the time of the accident, he could not have been at fault for it.

The Court stated that the true issue was whether under New Jersey law the exculpatory clause in the rental agreement would serve to bar Dinenno’s claims against Lucky Fin, not whether Lucky Fin could seek indemnification from Hughes. This issue has been explored fairly recently by the New Jersey Supreme Court in Stelluti v. Casapenn Enterprises, LLC, 203 N.J. 286 (2010), and by the Superior Court and Appellate Division, in the cases of Semeniken v. Town Sports International, Inc., ESX-L-2008-09 (N.J. Sup. Court, Oct. 29, 2010), Sevastakis v. Tiger Schulman’s Karate Center, A-6145-08T3 (N.J. App. Div., Mar. 9, 2010). In Stelluti, the New Jersey Supreme Court held that exculpatory agreements in favor of recreational facilities would be enforceable if: (1) the agreement clearly served to shield the facility from claims of negligence; (2) it was not unconscionable; (3) it would not be contrary to a public-policy interest; and (4) it would not derogate any common-law duty owed by the facility to the participant. (Click here for this blog’s posts on the StellutiSemeniken, and Sevastakis cases, respectively).

Ultimately, it is unlikely that the exculpatory clause in the rental agreement would be held enforceable against Dinenno’s father. In Hojnowski v. Vans Skate Park, 187 N.J. 323 (2006), the New Jersey Supreme Court held that public policy prohibited the parent of a minor child from releasing the minor’s potential tort claims arising out of the use of a commercial recreation facility. As the agreement in issue was executed not by Dinenno’s father, but by another parent, it is even less likely that the court would find it enforceable under New Jersey law.