California Court Finds Exculpatory Clause Does Not Apply to Gross Negligence
In City of Santa Barbara v. Superior Court (Janeway), 38 Cal. Rptr. 3d 434 (Cal. App. 2006), a disabled child drowned while participating in a city-operated recreational program. The court determined that a release barred recovery for ordinary negligence, under the analysis of Tunkl v. Regents of Univ. of Cal., 60 Cal. 2d 92 (1963). At the same time, however, the court held that the release did not shield the city from liability for gross negligence. According to the Janeway court, this is the first time that a published California appellate decision has done so (“No California case has expressly invalidated – or validated – a release of liability for gross negligence . . . .”). The court observed “the majority of courts in other states have concluded that exculpatory agreements cannot preclude claims for more extreme forms of negligence including gross negligence.”
The court suggests that in a case with generally similar facts, but a more explicit release, the plaintiff’s gross negligence claim might not survive. “[T]o release gross negligence, the language used must be comprehensible in its essential details and clearly notify the other party of the scope of exculpation intended to be covered by the release.” The release was sufficiently clear to advise the Janeways that they were releasing the city from liability for ordinary negligence, but not for gross negligence.
It remains to be seen whether Janeway will impact other types of cases. For example, in the subrogation action Fireman’s Fund Ins. Co. v. Morse Signal Devices, 151 Cal. App. 3d 681 (1984), the court considered the “liquidated damage” provisions in the form contracts of various alarm companies. The court expressed its view that “the liquidated damage provisions would not limit the Alarm Companies’ liability in the event of gross negligence.” Yet allegations that some of the alarm companies had “received signals but failed to alert fire or police officials” were found not to rise to the level of gross negligence. As such, the court’s view as to the effect of gross negligence was dicta. A few years later, in Continental Ins. Co. v. American Protective Industries, 197 Cal. App. 3d 322 (1987), the court denied a motion for leave to plead gross negligence against an alarm company, declining to follow the Morse Signal Devices dicta. The American Protective Industries court reasoned “in light of the adoption of the doctrine of comparative negligence in California, any attempt to categorize gross negligence separately from ordinary negligence is unnecessary.”
The Janeway decision contradicts the view that under California law there is never a need to separate gross negligence from ordinary negligence in non-statutory tort cases. We will continue to monitor and report on further developments in this area. •