Judge Frank M. Tavelman, Case 22BBCV00702 2023-03-24 Tentative Ruling

TENTATIVE RULING AFTER ADDITIONAL BRIEFING

MARCH 24, 2023

Los Angeles Superior Court Case # 22BBCV00702

Gloribel Baires (“Gloribel”), individually and as successor-in-interest to and on behalf of Maria Baires (“Decedent”), together with Mirna Vanegas (“Mirna”) and Samuel Baires (“Samuel”) (collectively, “Plaintiffs”) filed suit against RG Legacy I LLC dba Golden Rose Care Center (“Golden Rose”) & Two Palms Skilled Care LLC dba Two Palms Care Center (“Two Palms,” collectively “Defendants”), alleging Decedent received substandard care as a resident at Defendants’ facilities. Plaintiff’s also named ICC Convalescent Corp. (“ICC”) as defendants in the suit. While no arbitration agreement exists as between ICC and Plaintiffs, ICC’s existence as a party is relevant for purposes of this motion. On October 3, 2022, Plaintiffs filed a Complaint alleging three causes of action: (1) Elder Abuse and Neglect (Welf. & Ins. Code § 15600 et seq.); (2) Negligence; and (3) Wrongful Death.

On December 1, 2022, Golden Rose and Two Palms filed their Motions to Compel Arbitration and Motions for Stay. On January 23, 2023, Plaintiffs filed oppositions to these motions. On January 27, 2023, Golden Rose and Two Palms filed replies.

On February 3, 2023, Defendants motion came on for hearing before the Court. Plaintiff’s counsel raised concern that facts mentioned by the Court in its tentative ruling tracked to defendant Imperial Care Center (“Imperial”), with whom Plaintiff has no arbitration agreement. Plaintiffs’ counsel also raised concerns regarding CCP §1281.2(c), arguing that allowing Imperial claims to go to trial while submitting those of Golden Rose and Two Palms would produce inconsistent rulings. The Court acknowledged its factual references were unclear and took the matter under submission.

On March 1, 2023, the Court issued a ruling on the submitted matter. The Court requested additional briefing from the parties on whether the Two Palms agreement is subject to §1281.2(c). The Court also requested additional briefing as to the impact that proceeding with the ICC lawsuit would have relative to the arbitration of Golden Rose and Two Palms. The Court was particularly concerned with a potential basis for inconsistent rulings.

On March 16, 2023 Plaintiffs and Defendants both submitted additional briefing. The Court now issues this final ruling on the motions.

C.C.P. § 1281.2 states: “[o]n petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement arbitrate the controversy exists.” A party seeking to compel arbitration has the initial burden to prove, by a preponderance of the evidence, the existence of a valid and enforceable arbitration agreement. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) If the moving party has met its initial burden, then the burden shifts to respondents to prove the falsity or unenforceability of the arbitration agreement. (Id.)

The Court first considers the arguments as to the enforceability of the Golden Rose and Two Palms agreements as outlined in additional briefing.

Plaintiffs argue the Court improperly ruled on the Golden Rose agreement’s procedural unconscionability. Specifically, Plaintiffs argue the Golden Rose agreement does not contain disclosures or language which distinguish it from Lopez v. Bartlett Care Center, LLC (2019) 39 Cal.App.5th 311 and Magno v. College Network, Inc. (2016) 1 Cal.App.5th 277.

Upon review, the Court agrees it previously discussed the disclosure in the Two Palms agreement but failed to address the Golden Rose agreement. The Golden Rose agreement reads in relevant part:

“Article 4. This Agreement shall be binding for any dispute, except for disputes pertaining to collections or evictions. This Agreement is binding on all parties, including the Resident's representatives, executors, family members, and heirs who bring any claims individually or in a representative capacity. The Resident's representatives, agents, executors, family members, successors in interest and heirs who execute this Agreement below on the signature line are doing so not only in their representative capacity for the Resident, but also in their individual capacity and thus agree that any claims brought individually by any such representatives, agents, executors, family members, representatives, successors in interest and heirs are subject to binding arbitration. This Agreement may be rescinded by written notice within thirty (30) days of signature.”

This language is present in the main body of the agreement and is in the same size font as the rest of the agreement. The Court finds this language is sufficient to distinguish the Golden Rose agreement from those in Lopez and Magno, where the disclosures were either absent or hidden. As such, the Court finds the Golden Rose agreement is not procedurally unconscionable.

Plaintiffs also argue the Court improperly ruled on the Golden Rose Agreement’s substantive unconscionability. Plaintiffs argue the Court only ruled on the substantive unconscionability of the Two Palms agreement.

Upon review, the Court agrees it previously discussed the disclosure in the Two Palms agreement but failed to address the Golden Rose agreement. The Golden Rose agreement reads in relevant part:

“Article 4. This Agreement shall be binding for any dispute, except for disputes pertaining to collections or evictions.”

The Court finds this language is identical to the language the court in Lopez found procedurally unconscionable. As such, the Court finds the Golden Rose agreement procedurally unconscionable for lack of mutuality; it unfairly benefits Golden Rose for the types of cases they most likely would bring while mandating that the Plaintiff arbitrate the types of claims they would most likely bring.

However, both procedural and substantive unconscionability must be shown to invalidate an agreement to arbitrate. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83.) The Golden Rose agreement is still enforceable as Plaintiffs have only shown substantive unconscionability.

“The Federal Arbitration Act ("FAA"), not state law, will control and applies to the arbitration of disagreements between the parties and the parties agree to incorporate such laws into this Agreement. This Agreement will otherwise be governed by the State law where the Facility is located. This shall include local court rules governing discovery, and state law governing state medical liability act(s), if applicable. If it is determined that the FAA does not apply to arbitration under this Agreement, the parties agree to resolve any disagreement through arbitration under control of state law”

The Court previously ruled that, because the FAA has no equivalent provision to C.C.P. § 1281.2(c), the statute was not preempted unless the agreement explicitly stated so. Defendants now argue that because the FAA is procedural and not substantive in nature, the FAA controls as a default. The Court does not find that this argument defeats exclusion under C.C.P. §1281.2(c). The Cronus court is clear that where the language of the agreement is ambiguous, as is the case here, the FAA does not preempt C.C.P. §1281.2(c). Contracting around C.C.P. §1281.2(c) requires an explicit statement, which is presumably why the Golden Rose agreement contains one.

The Court maintains its previous ruling that the Two Palms agreement does not contract around C.C.P. §1281.2(c). The Court also maintains its previous ruling that the Golden Rose agreement does contract around C.C.P. §1281.2(c).

As such, the Court must reconsider the parties’ arguments as to the application of C.C.P. §1295 to Plaintiffs’ claims for wrongful death against Two Palms.

C.C.P. §1295 permits patients consenting to arbitration to bind their heirs in wrongful death claims when the agreement manifests an intent to bind. Section 1295 is part of California's Medical Injury Compensation Reform Act (“MICRA”) which created certain requirements for arbitration agreements of “any dispute as to professional negligence of a health care provider.” (C.C.P. §1295(a).) It defines “professional negligence” as “a negligent act or omission to act by a health care provider in the rendering of professional services, which act or omission is the proximate cause of a personal injury or wrongful death, provided that such services are within the scope of services for which the provider is licensed and which are not within any restriction imposed by the licensing agency or licensed hospital.” (C.C.P. §1295(g)(2).)

Defendants argue that the entirety of Plaintiffs’ claims are governed by C.C.P. §1295. This is important as CCP §1281.2(c) provides an exception to its application which reads as follows:

This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.

In wrongful death cases, the heirs are only bound when the underlying wrongful death is based on professional negligence. (Avila, supra, 20 Cal.App.5th at 841-842.) When the primary basis is based on the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, §15600 et seq.), C.C.P. §1295 does not apply. (Id. at 842.)

Here, the arbitration agreement was signed by Gloribel on behalf of the Decedent. Plaintiffs claim that Gloribel did not sign the arbitration agreement in her individual capacity. Regardless, she may still be bound by the agreement as Decedent’s heir. The determining factor is whether the FAC’s wrongful death claim is primarily based on professional negligence or physical elder abuse.

Avila’s holding turns on whether the “primary basis” for the wrongful death claim sounds in professional negligence or elder abuse. It would be nonsensical for a plaintiff to avoid arbitration by simply alleging claims based upon professional negligence but not stating an express cause of action for professional negligence. The Court of Appeals in Avila instructs the difference between the two claims rests on whether the pleading alleges a failure to provide medical services, which reads as elder abuse; or the substandard performance of medical services that were provided. (Id. at 843.)

The Court’s previous ruling found that the allegations as to both Golden Rose and Two Palms sound primarily in professional negligence. The Court relied upon Fenimore v. Regents of University of California (2016) 245 Cal.App.4th 1339, which held that allegations of understaffing can support a cause of action for elder abuse when accompanied by other allegations of neglect. The Court found the allegations of understaffing as to Golden Rose and Two Palms to be insufficient. As such, the Court found Plaintiffs did not satisfy their burden to show that the wrongful death causes of action were non-arbitrable.

Plaintiffs now argue the Court misunderstood the allegations in the Complaint. Plaintiffs argue the complaint does allege Golden Rose and Two Palms committed violations of Health and Safety Code § 1276.5. Plaintiffs point to paragraph 75 of the complaint, which reads as follows:

DEFENDANTS owed a duty to MARIA BAIRES to “employ an adequate number of qualified personnel to carry out all of the functions of the facility” as set forth in 22 C.C.R. 25 §72527(a)(24), Health and Safety Code Section 1599.1(a) and other regulations. DEFENDANTS failed to meet this duty to MARIA BAIRES thereby causing MARIA BAIRES injury.

Plaintiffs clarify that the allegations in paragraph 75 are pled as to Imperial, Golden Rose, and Two Palms under the collective label of “DEFENDANTS”. The Court finds this clarification helpful and reconsiders its prior ruling.

The court in Fenimore held that “…recklessness may be inferred when the neglect recurs in a significant pattern.” (Fenimore supra, 245 Cal.App.4th 1339 at 1350.) The court in Fenimore found the ruling in Sababin v. Superior Court (2006) 144 Cal.App.4th 81, to be instructive. The Sababin plaintiffs alleged pattern of understaffing resulting in a significant pattern of ignoring care plans, ultimately resulting in harm to residents. (Sababin supra, 144 Cal.App.4th 81 at 89.) The Fenimore court also distinguished the ruling in Worsham v. O'Connor Hospital (2014) 226 Cal.App.4th 331. In Worsham, plaintiff suffered a fall in a hospital’s rehab unit and alleged chronic understaffing had enabled the fall to occur. (Worsham supra, 226 Cal.App.4th 331 at 334.) The Fenimore court distinguished Worsham on the basis that the complaint in Worsham lacked additional allegations of recklessness. (Fenimore supra, 245 Cal.App.4th 1339 at 1350.)

In addition to the overarching allegation of Health and Safety Code violations, the Complaint individually addresses each facility’s understaffing. Plaintiffs allege each facility was indifferent to the acuity levels for each facility. As evidence for this indifference, Plaintiffs point to the poor scores for each facility under the Center for Medicare and Medicaid Services (“CMS”) Five-Star Rating System. (Complaint ¶¶ 94, 104, 108.) The Complaint then explains at length the effect this disregard for acuity level had on the resident population at each facility. (Complaint ¶¶ 96-103, 105-107, 108-114.) Plaintiffs allege that this pattern of understaffing by all Defendants stretched the staff at each facility too thin to provide adequate care to decedent. (Complaint ¶¶ 59, 66, 68, 69.) Furthermore, Plaintiff alleges all Defendants had a standard practice of staffing their facilities based on the number of patients rather than patient acuity level , and that all Defendants participated in understaffing as a mechanism to reduce labor costs. (Complaint ¶¶ 84, 88.) The Court finds all these allegations together satisfy the holding of Fenimore. Plaintiffs have alleged a consistent pattern of understaffing undertaken by each defendant in pursuit of reducing labor costs and at the expense of patient welfare. Plaintiffs have alleged that this practice of understaffing underscores the injuries sustained by Decedent which ultimately led to her passing.

Plaintiffs were free to plead their case as one for professional negligence or elder abuse. They chose to plead a cause of action for elder abuse and have done so successfully. The Court holds that the Arbitration Agreement is not controlled by section 1295. While Decedent could bind herself to arbitration of her elder abuse claims, the Arbitration Agreement does not bind Gloribel, Mirna, and Samuel as to their wrongful death claims.

The Court now considers arguments as to the risk of inconsistent rulings. The Court previously requested additional briefing on this issue.

Plaintiffs argue allowing the claims against Golden Rose and Two Palms to be arbitrated while the Imperial claims are tried by a jury or judge will likely produce inconsistent rulings. Plaintiffs primarily express concern over conflicting findings of how each trier of fact apportions fault under Civil Code §1430. (P.Brief pg. 3.) Plaintiffs argue that if the jury determines Two Palms and Golden Rose are entirely at fault and the arbitrators determine Imperial is entirely at fault, a situation exists in which Plaintiffs are completely unable to recover. (Id. at 4.)

The Court agrees that CCP §1281.2(c) is intended to prevent the inconsistent outcomes Plaintiffs describe. The Court finds that there is a significant risk of conflicting rulings on issues of fact requiring the court to exercise its discretion denying arbitration of the Two Palms claims. As such, the Court DENIES the motion to compel arbitration as to Two Palms.

The fact remains the Golden Rose agreement explicitly contracts around CCP § 1281.2(c) and is enforceable. As such, the Court GRANTS the motion to compel arbitration as to Golden Rose.

The Court finds Decedents claims are subject to arbitration. The Court GRANTS the motion to compel arbitration as to Plaintiff Maria Baires.

The Court finds the wrongful death claims of Gloribel Baires, Mirna Vanegas, and Samuel Baires against Golden Rose Care Center are arbitrable. The Court GRANTS Golden Rose Care Center’s motion to compel arbitration.

The Court finds the wrongful death claims of Gloribel Baires, Mirna Vanegas, and Samuel Baires against Two Palms Care Center are not arbitrable. The Court DENIES Two Palms Care Center’s motion to compel arbitration.

Once arbitration has been compelled, in whole or in part, a stay of proceedings is mandatory if the issues in the arbitration and the pending action overlap. (C.C.P. § 1281.4 (if a court “has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.”))

“The purpose of the statutory stay [under section 1281.4] is to protect the jurisdiction of the arbitrator by preserving the status quo until arbitration is resolved. In the absence of a stay, the continuation of the proceedings in the trial court disrupts the arbitration proceedings and can render them ineffective.” (Federal Ins. Co. v. Superior Court (1998) 60 Cal.App.4th 1370, 1374-1375 (citations omitted).)

As the Court grants the motion to compel arbitration in part, the Court also grants the motion to stay the proceedings pending arbitration as to defendant Golden Rose.

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

RG Legacy I LLC dba Golden Rose Care Center & Two Palms Skilled Care LLC dba Two Palms Care Center’s Motion to Compel Arbitration and Stay Proceedings came on regularly for hearing on March 24, 2023, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows:

THE MOTION TO COMPEL ARBITRATION AS TO CLAIMS BY PLAINTIFF MARIA BAIRES IS GRANTED.

THE MOTION TO COMPEL ARBITRATION AS TO THE WRONGFUL DEATH CLAIMS OF GLORIBEL BAIRES, MIRNA VANEGAS, AND SAMUEL BAIRES AGAINST GOLDEN ROSE CARE CENTER IS GRANTED.

THE MOTION TO STAY PROCEEDINGS IS GRANTED AS TO GOLDEN ROSE AND THE CLAIMS OF MARIA BAIRES.

THE MOTION TO COMPEL ARBITRATION AS TO THE WRONGFUL DEATH CLAIMS OF GLORIBEL BAIRES, MIRNA VANEGAS, AND SAMUEL BAIRES AGAINST TWO PALMS CARE CENTER IS DENIED.