December 30, 2010

Communities that have exercise facilities or classes generally require users and participants to sign waiver of liability documents. While these waivers do not unconditionally or absolutely protect the association, they are useful.

The New Jersey Supreme Court recently issued a decision which addressed the enforceability of such a waiver in the context of a health club that offers memberships to the public. In Stelluti v. Casapenn Enterprises, LLC, the Court upheld the enforcement of a waiver of liability agreement executed by a fitness center patron, even in the face of the fitness center’s ordinary negligence. It is not certain that such an agreement will be upheld in the context of a community association, but the Court’s reasoning is instructive nonetheless.

Spinning Out of Control

In Stelluti, a gym patron was exercising on a spinning bike when the handlebars broke causing an injury. The gym patron sued, alleging the gym was negligent in maintaining the bike, failed to provide proper warnings and failed to advise as to the proper use of the bike. The gym moved for summary judgment based upon a waiver of liability agreement executed by the injured customer.

The trial court granted the motion and dismissed the case. The Appellate Division affirmed the dismissal. The New Jersey Supreme Court agreed with the lower courts.

The Court reasoned that while the agreement was a contract of adhesion (one in which one side has all the bargaining power and therefore writes the contract to its advantage), it was enforceable because the patron could have gone to another fitness center, sought advice on the use of the equipment or participated in another type of physical activity.

The Court further noted that the patron had to assume some risk and that to be held liable, the gym’s conduct must exceed general negligence. Further, the public interest favors enforcement of the agreement.

Injuries are common, so requiring a gym to guarantee against all risks to a patron would be a hindrance on gyms in general. Nonetheless, the Court did specify that the gym could not turn a blind eye to known problems with equipment and that it could still be held liable for reckless or gross negligence.

Going Forward

The effect of this decision upon community associations is yet to be seen. Many community associations have fitness centers located on common property. Stelluti supports the proposition that requiring members of those associations to execute liability waivers prior to use is enforceable.

If a profit-making commercial enterprise can insulate itself from liability by a waiver agreement, it seems logical that a private, noncommercial entity also should be able to do so.

However, a court analyzing such a situation also may consider that a community association member is required to pay for a portion of the gym. Further, members arguably do not have a similar exercise alternative within the confines of the association’s property.

Therefore, while for-profit gyms now may limit liability, the issue of whether a waiver of liability imposed by a community association is enforceable has yet to be determined.

Note that Stelluti has no effect upon the New Jersey tort immunity statute, N.J.S.A. 2A:62A-13, which already prevents unit owners from seeking damages for bodily injuries due to an association’s ordinary negligence when such a prohibition is contained in an association’s governing documents.