Judge: Mark A. Young, Case: 23SMCV00074, Date: 2023-05-24 Tentative Ruling
Case Number: 23SMCV00074 Hearing Date: May 24, 2023 Dept: M
CASE NAME: Lindsey-Koontz,
v. Welltower inc., et al.
CASE NO.: 23SMCV00074
MOTION: Petition/Motion
to Compel Arbitration
HEARING DATE: 5/25/2023
Legal
Standard
Under California and federal law,
public policy favors arbitration as an efficient and less expensive means of
resolving private disputes. (Moncharsh
v. Heily & Blase (1992)
3 Cal.4th 1, 8-9; AT&T Mobility
LLC v. Concepcion (2011) 563 U.S. 333, 339.) Accordingly, whether an
agreement is governed by the California Arbitration Act (“CAA”) or the Federal
Arbitration Act (“FAA”), courts resolve doubts about an arbitration agreement’s
scope in favor of arbitration. (Moncharsh, supra, 3 Cal.4th at 9;
Comedy Club, Inc. v. Improv West
Assocs. (9th Cir. 2009) 553 F.3d 1277, 1284; see also Engalla v. Permanente Med. Grp., Inc.
(1997) 15 Cal.4th 951, 971-972 [“California law incorporates many of the basic
policy objectives contained in the Federal Arbitration Act, including a
presumption in favor of arbitrability [citation] and a requirement that an
arbitration agreement must be enforced on the basis of state law standards that
apply to contracts in general”].) “[U]nder both the FAA and California law,
‘arbitration agreements are valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.’ ” (Higgins v. Superior Crout (2006) 140 Cal.App.4th 1238, 1247.)
“Code of
Civil Procedure section 1281.2 requires a trial court to grant a petition to
compel arbitration if the court determines that an agreement to arbitrate the
controversy exists.” (Avery v.
Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59,
quotations omitted.) Accordingly, “when presented with a petition to compel
arbitration, the court’s first task is to determine whether the parties have in
fact agreed to arbitrate the dispute.” (Ibid.) A petition to compel arbitration is in essence a suit in equity
to compel specific performance of a contract. (Id. at 71.) As with any other specific performance claim, “a
party seeking to enforce an arbitration agreement must show the agreement’s
terms are sufficiently definite to enable the court to know what it is to
enforce.” (Ibid. [internal citations omitted].) “Only
the valid and binding agreement of the parties, including all material terms
well-defined and clearly expressed, may be ordered specifically performed.” (Ibid.) An arbitration agreement “must be so interpreted as to give
effect to the mutual intention of the parties as it existed at the time of
contracting, so far as the same is ascertainable and lawful.” (Civ. Code, §
1636.) The language of the contract governs its interpretation if it is clear
and explicit. (Civ. Code, § 1368.) If uncertainty exists, “the language of a
contract should be interpreted most strongly against the party who caused the
uncertainty to exist.” (Civ. Code, § 1654.)
The party
seeking to compel arbitration bears the burden of proving the existence of a
valid arbitration agreement by the preponderance of the evidence. (Engalla v. Permanente Medical Group, Inc.
(1997) 15 Cal.4th 951, 972.) It would then be plaintiff’s burden, in opposing
the motion, to prove by a preponderance of the evidence any fact necessary to her
opposition. (See Ibid.) “In these
summary proceedings, the trial court sits as a trier of fact, weighing all the
affidavits, declarations, and other documentary evidence, as well as oral
testimony received at the court’s discretion, to reach a final determination.” (Ibid.)
Valid Arbitration Agreement
Defendants Welltower
OP LLC (sued as Welltower Inc., Welltower Pegasus Landlord LLC, and PSL
Associates LLC) assert that the instant claims are required to go to
arbitration because Plaintiff Lana Lindsey-Koontz signed an arbitration
agreement covering their claims.
As with any contract, mutual assent
or consent is necessary for the formation of a valid arbitration agreement.
(Civ. Code, §§ 1550, 1565.) “Consent is not mutual, unless the parties all
agree upon the same thing in the same sense.” (Civ. Code, § 1580.) The moving
party bears the initial burden of showing the existence of an agreement to
arbitrate by a preponderance of the evidence. (Mitri v. Arnel Mgmt. Co. (2007) 157 Cal.App.4th 1164, 1169
[“Because the existence of the agreement is a statutory prerequisite to
granting the petition, the petitioner bears the burden of proving its existence
by a preponderance of the evidence.”].)
Here, Defendants present evidence that
Plaintiff, on behalf of Decedent, executed an agreement in April 2020. The
signed agreement has an arbitration clause, which states:
U. Arbitration
By signing below, you agree that
any and all claims and disputes arising from or related to this Agreement or to
your residency, care or services at the Community, whether made against us or
any other individual or entity, including, without limitation, personal injury
or wrongful death claims, shall be resolved by submission to neutral, binding
arbitration in accordance with the Federal Arbitration Act; except that
any claim or dispute involving unlawful detainer proceedings (eviction) or any
claims that can be brought in small claims court shall not be subject to
arbitration unless both parties agree to arbitrate such proceedings. If
someone other than the resident signs this arbitration clause, he/she
understands and agrees that he/she is agreeing to arbitrate on behalf of the
resident and on behalf of him/herself as an individual. You give up your
constitutional right to have any such dispute decided in a court of law before
a jury, and instead accept the use of arbitration. You further waive your right
to participate in a representative capacity, or to participate as a member of a
class, in any litigation or arbitration proceeding with respect to any such
dispute. The arbitration shall be administered by the Judicial Arbitration
and Mediation Services ("JAMS") and shall be conducted in Los Angeles
County, California by a single neutral arbitrator selected by JAMS, unless
otherwise mutually agreed. In reaching a decision, the arbitrator shall prepare
a written decision that includes findings of fact, the reasons underlying the
decision, and conclusions of law. The parties agree not to disclose the existence,
content, or results of the arbitration without the prior written consent of the
parties, unless disclosure is required by court order. Each party shall bear
its own costs and fees in connection with the arbitration, unless otherwise
provided by law. You may withdraw your agreement to arbitrate within thirty
(30) days after signing this Agreement by giving written notice of your
withdrawal to us. After termination of this Agreement, this arbitration
clause shall remain in effect for the resolution of all claims and disputes
that are unresolved as of that date. In the event that any part of this
arbitration clause is determined to be unenforceable, the remaining portions of
the clause shall remain valid and shall be enforced by the parties. If JAMS is unable
to administer the arbitration in accordance with the terms of this clause, the
parties shall select another arbitration administrator that is able to do so,
and if no such arbitration administrator is available, the parties shall select
an arbitrator in accordance with the Federal Arbitration Act. If the
Federal Arbitration Act does not permit arbitration in accordance with this
clause, then the matter shall be arbitrated in accordance with State law.
By signing below, you warrant
that this paragraph has been explained to you, that you understand its
significance, that you voluntarily agree to be bound by it, and that you
understand that agreeing to arbitration is not a condition of admission to the
Community.
(Underlined emphases added)
Defendants argue that Plaintiff had
actual authority to bind Decedent. “Generally, a person who is not a party to an arbitration agreement is
not bound by it. However, there are exceptions. For example, a patient who
signs an arbitration agreement at a health care facility can bind relatives who
present claims arising from the patient’s treatment. Further, a person who is
authorized to act as the patient’s agent can bind the patient
to an arbitration agreement. (Goldman v. SunBridge Healthcare, LLC (2013)
220 Cal.App.4th 1160, 1169, internal citations and quotations omitted.) Defendants present Decedent’s
Power of Attorney (the POA), effective in March 2017, to show that Ms. Koontz
was authorized to act on behalf of Decedent for specified purposes. The POA
states that Ms. Koontz has the power to address “claims and litigation” and has
the power to “determine where I live” and “enter into contracts on behalf of [Decedent]
with hospitals, hospices, nursing homes . . ..” (Stowers Decl., Ex. B.)
Defendants also note that the
causes of actions alleged in the complaint factually arise from Decedent’s
residency, care or services at Defendants’ facility. The Complaint alleges 13
causes of action, including 1) elder abuse, 2) willful misconduct, 3)
negligence, 4) negligence per se, 5) negligent infliction of emotional
distress, 6) violation of Unfair Competition Law, 7) misrepresentation/fraud,
8) breach of contract, 9-11) violation of resident rights (three separate
claims), 12) wrongful death and 13) survival action. The decedent was a
long-term resident at Defendants’ facility (“HAV”). (Compl., ¶¶2, 6, 7.) On
January 21, 2021, Decedent was transferred to the emergency room at Antelope
Valley Hospital and discharged back to HAV on the same day. On January 29,
2021, HAV again transferred Decedent to the emergency room at Antelope Valley
Hospital for medical care, as Decedent had contracted COVID-19. Decedent died
at Antelope Valley Hospital on February 5, 2021. (Compl., ¶21.) Plaintiff
alleges that Decedent died from COVID-19 because Defendants failed to provide
necessary care or follow necessary sanitation procedures, which resulted in
infection. (See Compl., ¶ 29.)
Defendants meet their burden to
show that there is an arbitration agreement which generally covers the claims
asserted in the Complaint. Ms. Koontz does not dispute that she was authorized
to execute the subject arbitration clause on behalf of Decedent. Moreover, the
arbitration agreement states that if Ms. Koontz signed this arbitration clause,
she agreed to arbitration on behalf of the resident and on behalf her own
behalf, individually. Thus, both of Plaintiff’s direct and representative
claims are subject to arbitration.
Plaintiff accordingly has the
burden to show any defense to enforcement. Plaintiff asserts that Health &
Safety Code §1430 renders the arbitration agreement unenforceable. Plaintiff further
argues that arbitration would create the possibility of inconsistent rulings on
question of law and fact between the arbitrable claims, and her individual
claims. Plaintiff also contends that the arbitration agreement is
unconscionable.
The Federal Arbitration Act
Defendants contend that the Federal
Arbitration Act (FAA) applies to this agreement. Arbitration agreements
included in contracts evidencing a transaction involving interstate commerce
“shall be valid, irrevocable, and enforceable, save upon grounds as exist at
law or in equity for the revocation of any contract.” (9 U.S.C. § 2.) Interstate commerce is defined as
“commerce among several states” and required for the application of the FAA. (9
USC § 1.)
The question of whether federal law
governs an arbitration agreement is a question of law involving the
interpretation of statutes and the contract with no extrinsic evidence. (Rodriguez v. Am. Techs., Inc. (2006)
136 Cal.App.4th 1110, 1117.) “In
accordance with choice-of-law principles, the parties may limit the trial
court’s authority to stay or deny arbitration under the CAA by adopting the
more restrictive procedural provisions of the FAA.” (Valencia v. Smyth (2010) 185
Cal.App.4th 153, 157.) Here, the parties
specifically agreed that the arbitration proceedings would be governed by the
FAA. (Exh. A, pp. 14-15.) The
presence of interstate commerce is not the only manner under which the FAA may
apply, and as here, the parties may also voluntarily elect to have the FAA
govern enforcement of the agreement. (See
Victrola 89 LLC v. Jaman Properties 8, LLC (2020) 46 Cal. App. 5th 337, 355.)
Since the FAA applies, Plaintiff’s
statutory defenses would be invalid. California Health and Safety Code provisions are preempted by the FAA to
the extent they barred arbitration of claims under California Patient's Bill of
Rights. (Valley View Health Care, Inc. v. Chapman (2014), 992 F.Supp.2d
1016.) Additionally, the FAA contains no analogous provisions to section
1281.2(c), and therefore that subdivision cannot be applied to deny the
enforcement of arbitration clauses governed by the FAA. (Gloster v. Sonic Automotive,
Inc. (2014) 226 Cal.App.4th 438, 446.)
Unconscionability
In addition to her statutory
defenses, Plaintiff argues that the agreement is unconscionable. The doctrine
of unconscionability refers to “an absence of meaningful choice on the part of
one of the parties together with contract terms which are unreasonably
favorable to the other party.” (Sonic-Calabasas A, Inc. v. Moreno
(2013) 57 Cal.4th 1109, 1133.) It consists of procedural and substantive
components, “the former focusing on oppression or surprise due to unequal
bargaining power, the latter on overly harsh or one-sided results.” (Ibid.) Although both components of unconscionability must be present to
invalidate an arbitration agreement, they need not be present in the same
degree. (Armendariz v. Found Health
Psychcare Servs., Inc. (2000) 24 Cal.4th 83, 114.) “Essentially a
sliding scale is invoked which disregards the regularity of the procedural
process of the contract formation, that creates the terms, in proportion to the
greater harshness or unreasonableness of the substantive terms themselves. [Citations.] In other words, the more
substantively unconscionable the contract term, the less evidence of procedural
unconscionability is required to come to the conclusion that the term is
unenforceable, and vice versa.” (Ibid.) “The party resisting arbitration
bears the burden of proving unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC
(2012) 55 Cal.4th 223, 247.)
The Court finds little to no
procedural unconscionability on this record. Plaintiff has the burden to
produce evidence regarding procedural unconscionability, such as the manner and
circumstances of the execution of the agreement which would show oppression or
surprise due to unequal bargaining power. Plaintiff presents no evidence
regarding this issue. Moreover, the terms of the agreement demonstrate a lack
of procedural unconscionability. The terms clearly state that arbitration is not
a condition of residency and could be revoked within 30 days. This fact
undermines Plaintiff’s unsupported assertions of undue pressure, lack of
explanation or lack of time to consider the agreement. Thus, there is no
procedural unconscionability.
As to substantive
unconscionability, Plaintiff fails to highlight any terms that are
objectionable. An agreement is substantively unconscionable if it
imposes terms that are “overly harsh,” “unduly oppressive,” “unreasonably
favorable,” or “so one-sided as to ‘shock the conscience.’ ” (Sanchez
v. Valencia Holding Co., LLC (2015)
61 Cal.4th 899, 910-911.) “All of these formulations point to the central idea
that unconscionability doctrine is concerned not with ‘a simple old-fashioned
bad bargain’ [citation], but with terms that are ‘unreasonably favorable to the
more powerful party.’ [Citation.]” (Id. at 911.) “These include ‘terms that
impair the integrity of the bargaining process or otherwise contravene the
public interest or public policy; terms (usually of an adhesion or boilerplate
nature) that attempt to alter in an impermissible manner fundamental duties
otherwise imposed by the law, fine-print terms, or provisions that seek to
negate the reasonable expectations of the nondrafting party, or unreasonably
and unexpectedly harsh terms having to do with price or other central aspects
of the transaction.’ ” (Ibid.)
Plaintiff asserts that the
agreement ignores rights claims under Health & Safety Code §1430 and seeks
to extract a waiver of Code Civ. Proc. §1281.2(c). However, Plaintiff points to
no such waivers, and those sections alone do not show unduly oppressive terms. In
any event, the Court has addressed those sections in the above discussion and
finds that they would not bar enforcement of the arbitrable claims.
As there is no procedural or
substantive unconscionability, the Court does not find the agreement
unconscionable.
Conclusion
Defendant meets its burden to
demonstrate the existence of an arbitration agreement between the parties that
covers Plaintiff’s claims. Plaintiff, in turn, fails to demonstrate that the
agreement is unconscionable or any other defense should apply. Defendant’s
motion is therefore GRANTED. The entire action is STAYED pending the completion
of the arbitration. (CCP § 1281.4.) The
Court sets a status conference re arbitration for ___________, 2024 at 8:30
a.m.