Judge: Melvin D. Sandvig, Case: 24CHCV00878, Date: 2025-02-04 Tentative Ruling
Case Number: 24CHCV00878 Hearing Date: February 4, 2025 Dept: F47
Dept.
F-47
Date:
2/4/25
Case
#24CHCV00878
Jury
Trial: 6/1/26
MOTION TO COMPEL ARBITRATION AND MOTION TO STAY
PROCEEDINGS
MOVING
PARTY:
D Sunrise Senior Living Management, Inc; D Welltower Opco Group dba Sunrise
Assisted Living of West Hills
RESPONDING
PARTY:
P Marlaine Stoor, individually, & as Silvia Stoor’s Successor-In Interest
NOTICE: ok
RELIEF
REQUESTED:
·
MPs
move to compel Ps to arbitrate all causes of action; if the wrongful death
claim cannot be compelled to arbitration, MPs request her two remaining causes
of action for elder abuse and negligence be compelled.
·
MPs
move to stay proceedings immediately upon the filing of the motion, pending the
motion to compel being determined, and if the motion to compel is granted,
pending arbitration.
SUMMMARY
OF ACTION:
SAL of West Hills is a Residential Care Facility for the Elderly (“RCFE”) while
SSL Management manages the facility. RCFEs are licensed and inspected by the California
Department of Social Services, Community Care Licensing Division. They are
non-medical facilities which are not required to have nurses, certified nursing
assistants, or doctors on staff. RCFEs are for people who are unable to live by
themselves and who need custodial care and services, but do not need 24-hour
care. Typical services provided usually include room and board, activities,
transportation, medication administration, monitoring, and observation for
changes in condition, as well as ensuring access to medical care. RCFEs must
meet care, safety, and other standards mandated in Health & Safety Code §§
1569 et seq. and Title 22 California Code of Regulations §§ 78100 et seq. Specifically,
SAL of West Hills acts as a care custodian as defined in Welfare and
Institutions Code § 15610.17.
Silvia
Stoor was admitted to the memory care unit of Facility in West Hills on July
18, 2019, at age 104, accompanied by her daughter, Marlaine Stoor, who was also
acting as her agent and attorney-in-fact. Marlaine was authorized to execute
legally binding documents and agreements on Sylvia’s behalf, per a durable
power of attorney (executed by Silvia in 2014). On the day Sylvia was admitted
to Facility, Marlaine signed Sylvia’s intake paperwork which consisted of a
Residential Agreement and an Arbitration Agreement.
Sylvia
Stoore suffered severe malnutrition and other alleged injuries while at the
Facility, including failure to provide a mechanically altered diet, failure to
develop a complete advanced directive, and failure to notify Sylvia’s physician
when she exhibited concerning and significant weight loss after the failure to
monitor meal intakes. After a final weight of 60.4 pounds and decreased oxygen
levels, Sylvia was transferred to West Hills Hospital on September 13, 2022.
Sylvia then suffered cardiac arrest and passed away on September 14, 2022. The
death certificate lists her cause of death as cardiac arrest, severe
protein-calorie nutrition, and Alzheimer’s.
Plaintiffs
filed a Complaint against Defendants for three causes of action, each being
alleged against all Defendants: (1) elder abuse/neglect [Welfare &
Institutions code §15600 et seq]; (2) negligence/willful misconduct; and (3)
wrongful death.
Defendants
now move to compel all causes of action pursuant to the Federal Arbitration Act
(FAA) and Civil Code of Procedure (CCP) § 1281.2 for an order compelling
Plaintiff’s three causes of action—as well as any related claims for punitive
and exemplary damages—to binding arbitration.
RULING: The motion to
compel arbitration is denied. Accordingly, the motion to stay proceedings is also
denied as to “pending arbitration” because the Court is not ordering
arbitration. However, the Court does affirm proceedings were stayed from the
time Defendants filed the underlying motion until this ruling.
MOTION TO COMPEL
ARBITRATION
Defendants argue a valid arbitration agreement exists because Sylvia Stoor
assented through her daughter, agent, responsible party, and attorney-in-fact
(Marlaine) to the Arbitration Agreement, concerning any disputes stemming from
Sylvia Stoor’s residency at the Community. The argreement provides all such
claims should be submitted to binding arbitration. Defendants contend Marlaine
Stoor signed the arbitration agreement both in the capacity of Silvia, and in Marlaine’s
own individual capacity.
Federal
Arbitration Act
Defendants
argue the FAA applies because Defendants procured supplies from vendors outside
of California to operate the Facility which necessitated interstate commerce.
(See Valley View Health Care, Inc. v Chapman (2014) 992
F.Supp.2d 1016 [holding that an arbitration agreement was covered by 9
U.S.C. §2 where California nursing homes purchased goods and services from
vendors outside of California to operate the facility.]) Thus, the FAA
governs the arbitration agreement’s
enforceability pursuant to the express choice of law provision included. Consequently,
state law regarding enforcement of agreement is expressly and completely preempted
by the FAA. Moreover, the FAA is favored by public policy.
Wrongful
Death Claim
On
Opposition, Plaintiffs assert that a wrongful death heir is not bound by an
arbitration agreement unless there is clear evidence that the heir signed the
agreement in their individual or personal capacity. Therefore, heirs who do not
sign an arbitration agreement cannot be compelled to arbitrate their claims, as
doing so would violate fundamental contract law principles. A party cannot be
forced to arbitrate a dispute unless they have expressly agreed to resolve the
matter through arbitration, as emphasized in Goldman v. Sunbridge
Healthcare, LLC (2013) 220 Cal.App.4th 1160, 1176. Thus, Plaintiffs argue
that Marlaine’s wrongful death claim is not derivative of her mother’s and that
Marlaine only intended to sign the arbitration agreement as a representative of
her mother, not in any individual capacity. Defendants argue that irrespective
of Marlaine’s intentions, Marlaine signed the Arbitration Agreement as an
individual, expressly consenting to its terms in accordance with general
principles of contract law.
The Court
notes that pages 21-27 of the Residency Agreement provide signature lines for
“Resident/Responsible Party” and use such terms interchangeably. (Moore Decl.)
On page 51, the signature line provides “Responsible Party, Attorney in Fact or
Guardian Name.” (Id.) Specifically, the Arbitration Agreement uses this
interchangeable “Resident/Responsible Party” language to indicate who shall
sign on the signature line. There is only one set of initials, Marlaine’s, and
there is not a separate signature line for Marlaine as an individual. Thus,
Marlaine signed in the capacity of her mother, Sylvia, and not as an
individual. (Id., pg. 30.) While the Binding Effect section purports to
include heirs, the Court finds that no heirs were present to the agreement at
the time of execution because Marlaine was present in the capacity of an agent
for Silvia.
Thus, the
wrongful death claim, at minimum, is not subject to arbitration.
CCP §§ 1281.2;
1281.2(a)-(d)
Plaintiffs argue
that Defendant SSL Management is a third-party to the arbitration agreement
because SAL West Hills is the only signatory to the agreement. Thus, Plaintiffs
argue § 1281.2 applies to exempt all causes of action from arbitration.
§ 1281.2(c)
provides that “if the court determines that a party to the arbitration is also
a party to litigation in a pending court action or special proceeding with a
third party as set forth under
subdivision (c) herein, the court may refuse to enforce the arbitration
agreement and may order intervention or joinder of all parties in a single
action or special proceeding . . .” (CCP § 1281.2(c).
Defendants argue
that SSL Management is not a third-party to the arbitration agreement and
consequently, § 1281.2(c) does not apply to refuse to enforce the arbitration
agreement because the Residency Agreement identifies “parties” to include SSL
Management. Even if the Court denies the instant motion as to compel
arbitration as to the wrongful death claim, the Court can stay the pending
court action pending the outcome of the arbitration proceeding. Thus, there is
no risk of conflicting rulings, and the FAA continues to preempt state law.
The Court agrees
that all Defendants herein are identified as parties to the Arbitration
Agreement and that there is no risk of conflicting rulings if the Court were to
stay proceedings.
Unconscionability
Plaintiffs argue
the Arbitration Agreement is both procedurally and substantively unconscionable.
An arbitration
agreement is unenforceable if it is unconscionable. (Armedariz v. Foundation
Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.) Unconscionability has both a "procedural" and a
"substantive" element, the former focusing on "oppression"
or "surprise" due to unequal bargaining power, and the latter on
"overly harsh" or "one-sided results." (Armendariz,
24 Cal.4th at 114.) Although both elements must be present before a contract is
rendered unenforceable on grounds of unconscionability, they need not be
present to the same degree. A sliding
scale is applied such that "the greater the degree of substantive
unconscionability, the less the degree of procedural unconscionability that is
required to annul the contract or clause" and vice versa. (Carboni v.
Arrospide (1991) 2 Cal.App.4th 76, 83.)
Procedural
Plaintiffs argue
the Arbitration Agreement is procedurally unconscionable because during the
admission process, Marlaine was presented with an overwhelming amount of
electronic documents (over 70 pages) by Defendants’ employees. (Stoor Decl., ¶¶
3-4.) She also was not given a hard copy to review it in detail later at home
or advised to consult an attorney beforehand. She contends that the arbitration
agreement was buried deep within the admission paperwork and that Cal. Code
Res., tit. 22 § 72516 (d) mandates that the statement “Residents shall not be
required to sign this arbitration agreement as a condition of admission to this
facility” be prominently included in any documents related to arbitration.
(Def.’s Ex. B.) Plaintiffs argue it was not. Further, Health & Safety Code
§ 1599.81(b) states that an arbitration agreement must be presented on a
separate form, distinct from the admission agreement, with designated space for
the signature of any applicant who consents to arbitration. Here, the Court
notes that the Arbitration Agreement is embedded and on page 21 and does not
provide a separate signature for Marlaine as an individual. As mentioned, Marlaine
only signed as a “Resident/Responsible Party.” (Id., pg. 21.)
“[A] compulsory pre-dispute
arbitration agreement is not rendered unenforceable just because it is required
as a condition of employment or offered on a ‘take it or leave it’ basis.” (Lagatree
v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal. App. 4th 1105,
1127.) However, the fact that an arbitration agreement is mandatory for
employment may be a factor in determining that it is procedurally
unconscionable. (See, e.g., Trivedi v. Curexo Technology Corp. (2010)
189 Cal.App.4th 387, 393; Armendariz, supra, 24 Cal.4th at pp.
114-115.) Where a contract of adhesion includes the unequal bargaining power of
contracting parties, with the weaker party's inability to negotiate, this may
indicate procedural unconscionability in the form of oppression. (See Thompson
v. Toll Dublin, LLC (2008) 165 Cal.App.4th 1360, 1372.)
Here, both parties agree the Arbitration Agreement was
not provided on a “take it or leave it” basis or as a contract of adhesion. There
was the option to opt out and Silvia’s admission was not contingent on the
signing of the Agreement. Defendants also argue the FAA preempts the Health
& Safety Code application. However, the fact that it was included on page
21 in the approximate 80-pages of total documents is consistent with unequal
bargaining power because Plaintiffs were less likely to fully comprehend the
terms of the agreement—especially at the time of admission—to such a degree
that they could or would likely bargain with Defendants over its terms.
Moreover, there was not a separate signature line for Marlaine so that it was
made clear that Defendants intended Marlaine to also be bound as a party to the
Arbitration Agreement (as a potential heir). This establishes further
procedural unconscionability.
For the foregoing
reasons, the Arbitration Agreement was executed with moderate procedural
unconscionability.
Substantive
Substantive
unconscionability focuses on the actual terms of the agreement and evaluates
whether they create overly harsh or one-sided results as to shock the
conscience. (Suh v. Superior Court (2010) 181 Cal.App.4th 1504, 1515.)
The paramount consideration in assessing substantive unconscionability is
mutuality. (Carmona, supra, 226 Cal.App.4th at p. 85.)
Plaintiffs argue that the Arbitration Agreement lacks the requisite bilateral
mutuality because the agreement requires residents to arbitrate claims they are
most likely to bring against the facility while allowing the facility to pursue
in court the claims it is most likely to bring against a resident (unlawful
detainer and evictions, as set forth on page 20). (See Lopez, supra,
39 Cal.App.5th at p. 321[finding of substantive unconscionability in a nursing
home arbitration agreement that excluded evictions and collections
affirmed.]) In addition, the Agreement
provides that each party will bear the responsibility for paying their own
attorney’s fees and costs. In Bickel v. Sunrise Assisted Living (2012)
206 Cal.App.4th 1, 13, the court determined that this fee-splitting provision
was against the public policy to protect elderly and vulnerable persons.
Accordingly, the provision was deemed substantively unconscionable and severed
from the rest of the arbitration agreement. (Id. at pp. 12-13.)
Defendants do not address the terms which permit Defendants to bring
unlawful detainer and eviction claims but do not permit claims which plaintiffs
would likely bring. With respect to the cost-splitting, Defendants argue that
the Arbitration Agreement states arbitration shall be administered by JAMS.
(See Ex. B, pg. 20,, Article VII, §C.) Defendants argue that this JAMS
administration provision is relevant because in Defense counsels’ experience,
JAMS routinely deems arbitration agreements between RCFEs and residents as
“consumer arbitrations” whereby JAMS provides that the only fee required to be
paid by the consumer is $250 . . . All other costs must be borne by the company
. . .” (Moore Reply Decl., ¶¶ 6-7, Ex. D.) Thus, Defendants will effectively
cover the costs of arbitration.
Here, the Court finds Defendants are arguing against their own
fee-splitting provision in their own Arbitration Agreement based on a potential
JAMS determination of “consumer arbitration.” If Defendants had wished for such
a provision to govern, Defendants could have stated so therein. Moreover,
Defendants do not address the bilateral mutuality issue with respect to causes
of action that Defendants are likely to bring being precluded from arbitration
while causes of action plaintiffs likely bring being bound by arbitration. Substantive
unconscionability centers of mutuality and, here, Plaintiffs demonstrate a lack
thereof in emphasizing how the fee-splitting provision and exempt claims both
weigh against Plaintiffs.
As such, the Court finds at least moderate substantive
unconscionability.
Severability
Defendants argue that even if a section or provision within an
arbitration agreement is deemed invalid by the Court, the remainder of the
agreement is still valid and enforceable if the objectionable terms can be
severed or restricted. (Little, supra, 29 Cal.4th at p. 1075
[arbitration agreements that fail to meet conscionability standards, or
those that violate public policy, nevertheless may be enforced if the invalid
terms can be severed.]; Armendariz, supra, 24 Cal.4th at pp.
123–124; See Cal. Civ. Code §1670.5(a)). If the invalid terms are
“collateral to the main purpose of the contract” and the invalid provision can
be removed, severance or restriction is appropriate. (Armendariz,
supra, 24 Cal.App.4th at 124.)
Plaintiffs argue that the Supreme Court recognizes that where an
arbitration agreement lacks mutuality, the agreement is permeated to the point
“that there is no single provision a court can strike or restrict in order to
remove the unconscionable taint from the agreement.” (Armendariz, supra,
24 Cal.4th at pp. 124-125.)
Here, the Court finds that the foregoing objectionable provisions
are not severable from the Arbitration Agreement, as the levels of both
procedural and substantive unconscionability do taint the integrity of the
remaining provisions and are collateral to the Agreement.
Thus, the unconscionable provisions are not severable.
Equitable Estoppel
Defendants argue that Plaintiffs are equitably estopped from
opposing arbitration because Plaintiffs are not seeking to invalidate the
Residency Agreement. Instead, Plaintiffs rely on the Residency Agreement to
plead Sylvia Stoor’s claimed injuries. Their grounds for redress stem from
rights allegedly derived from the Residency Agreement.
Equitable Estoppel precludes a party from claiming the benefits of
a contract while simultaneously attempting to avoid the burdens the
contract imposes. (Comer v. Micor, Inc. (9th Cir. 2006) 436 F.3d
1098, 1101). “The fundamental point is that a party may not make use of a
contract containing an arbitration clause and then attempt to avoid the
duty to arbitrate by defining the forum in which the dispute will be resolved.”
(Boucher v. Alliance Title Company, Inc. (2005) 127
Cal.App.4th 262, 271-272).
Plaintiffs argue that Sylvia would have or should have received
care regardless of the arbitration agreement because healthcare facilities are
prohibited by law from conditioning admission or treatment on the signing of
such an agreement. Second, the application of equitable estoppel is not meant
to be used to compel arbitration where there was no valid, knowing, and
voluntary agreement to arbitrate. Sylvia Stoor’s entitlement to care should not
be conflated with consent to arbitrate.
The Court finds Equitable Estoppel does not preclude Plaintiffs
from opposing arbitration because (1) the Arbitration Agreement is
unconscionable both procedurally and substantively; and (2) Plaintiffs are not
seeking to enforce a benefit from the Residence Agreement by filing the
underlying action in Court. Defendants fail to demonstrate how Plaintiffs’
standing (to pursue causes of action for negligence, elder abuse, and wrongful
death in Court) equates to a benefit of the Agreements.
Thus, equitable estoppel does not apply to preclude Plaintiffs from
opposing arbitration.
Plaintiffs’ Objection
Plaintiffs file an additional
declaration from Plaintiffs’ counsel on January 29, 2025, objecting to
Defendants’ argument in their Reply that Plaintiffs’ Opposition is late because
it did not comply with the briefing scheduled pursuant to CCP § 1290.6. Plaintiffs
attach an exhibit from counsel for both parties, showing counsel agreed that
CCP § 1005(b) would govern the briefing schedule.
The Court sustains the
objection, finding the Opposition is not late in accordance with CCP § 1005(b)
and counsels’ agreement.
Conclusion
The motion to compel arbitration is denied.
MOTION TO STAY PROCEEDINGS
Defendants first state that upon the separate filing of their
Motion to Stay Proceedings, the underlying action must be stayed until the
petition to compel arbitration has been determined.
Pursuant to CCP § 1281.4, ¶ 2, “[i]f an application has been
made...for an order to arbitrate a controversy which is an issue involved in an
action or proceeding pending before a court of this State, and such application
is undetermined, 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 the application for an order to arbitrate is determined...”
(emphasis added)
Thus, Defendants
argue that CCP § 1281.4 mandates an immediate stay of the Superior Court action
as of the date of the filing of the instant motion, which remains in effect
until the Court has determined the Petition to Compel Arbitration.
Thus, the Court
affirms that upon the August 21, 2024, filing of the instant Motion to Stay
Proceedings, the action has been stayed and in accordance with established
principle, an interim stay on discovery was effective immediately upon August
21, 2024, until the date of ruling on February 4, 2025. However, given the
Court is denying the associated motion to compel arbitration, the Court does
not issue an order staying action pursuant to CCP § 1281.4 because no further
stay is necessary given arbitration is not ordered.
Thus, the order to
stay was effective August 21, 2024, to February 4, 2025, and is lifted
hereafter.
Conclusion
The motion to stay
proceedings pending arbitration is, accordingly, denied but granted
pending the date of filing the motion to the date of this ruling.