Shotts v. OP Winter Haven, Inc.

• Decision Date: 17 April 2012
• Docket Number: No. SC08–1774.,SC08–1774.
• Parties: Gayle SHOTTS, etc., Petitioner, v. OP WINTER HAVEN, INC., et al., Respondents.
• Court: Florida Supreme Court

86 So.3d 456

Gayle SHOTTS, etc., Petitioner,

v.OP WINTER HAVEN, INC., et al., Respondents.

No. SC08–1774.

Supreme Court of Florida.

Nov. 23, 2011.

Rehearing Denied April 17, 2012.

Isaac Ruiz–Carus, Bennie Lazzara, Jr. and Blair N. Mendes of Wilkes and McHugh, P.A., Tampa, FL, and Susan B. Morrison of Law Offices of Susan B. Morrison, P.A., Tampa, FL, for Petitioner.

Antonio Cifuentes, Daniel E. Dias, and Alyssa L. Katz of Mancuso and Dias, P.A., Tampa, FL, for Respondents.

Matthew J. Conigliaro, Sylvia H. Walbot, and Annette Marie Lang of Carlton Fields, P.A., St. Petersburg, FL, on behalf of Heartland of Zephyrhills, FL, LLC, for Amicus Curiae.

PERRY, J.

Gayle Shotts, personal representative of the estate of Edward Henry Clark, seeks review of the decision of the Second District Court of Appeal in Shotts v. OP Winter Haven, Inc., 988 So.2d 639 (Fla. 2d DCA 2008), on the grounds that it expressly and directly conflicts with a decision of another Florida district court of appeal on a question of law. We have jurisdiction. Seeart. V, § 3(b)(3), Fla. Const.

Edward Clark was involved in an automobile accident in 1977, and he sustained brain damage. For many years, Clark's care was provided by his niece, Gayle Shotts, in her home. Eventually, Clark was admitted to OP Winter Haven, Inc., ¹ a nursing home in Florida. He remained there until his death in 2003, at which time Shotts, as his personal representative, filed a complaint against OP Winter Haven alleging negligence and breach of fiduciary duties. OP Winter Haven moved to compel arbitration based on an agreement Shotts had signed on Clark's admission. The agreement contained the following “limitations of remedies” provisions: (i) the arbitration will be conducted in accordance with the American Health Lawyers Association (AHLA) rules; and (ii) the arbitrators will have no authority to award punitive damages. The agreement also stated that its terms were severable. At the hearing on the motion to compel, Shotts argued that the agreement was unenforceable because it was unconscionable and violated public policy. The trial court granted the motion, and the district court affirmed. Shotts sought discretionary review, which we granted.

Shotts raises several issues, including the following: (1) whether the court or the arbitrator must decide whether the arbitration agreement violates public policy; (2) whether the limitations of remedies provisions violate public policy; and (3) whether the limitations of remedies provisions are severable. OP Winter Haven, in counterpoint, contends that the United States Supreme Court's recent decision in Rent–A–Center, West, Inc. v. Jackson, –––U.S. ––––, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010), is applicable here and entitles OP Winter Haven to relief on its motion to compel.

First, as explained more fully below, we hold that the district court below erred in failing to rule that the court, not the arbitrator, must decide whether the arbitration agreement violates public policy. This Court in Seifert v. U.S. Home Corp., 750 So.2d 633 (Fla.1999), held that it was for the court, not the arbitrator, to determine “whether a valid written agreement to arbitrate exists.” Id. at 636. Later, this Court in Global Travel Marketing, Inc. v. Shea, 908 So.2d 392 (Fla.2005), explained the meaning of the term “valid” in this context: “No valid agreement exists if the arbitration clause is unenforceable on public policy grounds.” Id. at 398. Thus, it is for the court, not the arbitrator, to determine whether an arbitration agreement “is unenforceable on public policy grounds.”

Second, we hold that the district court below erred in failing to rule that the limitations of remedies provisions in this case violate public policy, for they directly undermine specific statutory remedies created by the Legislature. See§§ 400.022, 400.023, Fla. Stat. (2003). In light of the recognized need for these remedies and the salutary purpose they serve, we conclude that any arbitration agreement that substantially diminishes or circumvents these remedies stands in violation of the public policy of the State of Florida and is unenforceable. This conclusion comports with the vast weight of authority in Florida, as explained below.

Third, we hold that the district court below erred in ruling that the limitations of remedies provision that calls for imposition of the AHLA rules is severable. Although the agreement in this case contains a severability clause, the AHLA provision goes to the very essence of the agreement. If the provision were to be severed, the trial court would be forced to rewrite the agreement and to add an entirely new set of procedural rules and burdens and standards, a job that the trial court is not tasked to do. See Local No. 234 v. Henley & Beckwith, Inc., 66 So.2d 818, 821–22 (Fla.1953). Further, if the provision were to be severed, the trial court would be hard pressed to conclude with reasonable certainty that, with the illegal provision gone, “there still remains of the contract valid legal promises on one side which are wholly supported by valid legal promises on the other” id.—particularly, when those legal promises are viewed through the eyes of the contracting parties. See generally id. at 822.

And finally, we conclude that the United States Supreme Court's recent decision in Rent–A–Center, West, Inc. v. Jackson, ––– U.S. ––––, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010), is inapplicable here. Approximately two weeks after this Court heard oral argument in the present case, the United States Supreme Court issued its decision in Jackson, in which that Court addressed the issue of whether the court or the arbitrator must determine whether an arbitration agreement is unconscionable (Jackson claimed that the agreement was unconscionable because it required the splitting of arbitration fees) where the agreement contained a provision, known as a delegation provision, in which the parties specifically agreed to arbitrate the enforceability of the arbitration agreement. The United States Supreme Court held that, where there has been no specific challenge to the delegation provision, the arbitrator, not the court, must decide the issue. In the present case, because the arbitration agreement contains no delegation provision, Jackson is inapplicable.

I. BACKGROUND

The relevant facts of this case are set forth in the district court decision under review:

Gayle Shotts, as personal representative of the estate of her uncle, Edward Henry Clark, appeals the nonfinal order granting the motion to compel binding arbitration filed by the defendants below: OP Winter Haven, Inc.; RE Winter Haven, Inc.; Tandem Regional Management of Florida, Inc.; Tandem Health Care, Inc.; Gail Ward a/k/a Gail Lurie Ward; Nancy C. Thompson; Michael Bradley; and Irena Blackburn a/k/a Irena Tarran Blackburn (as to Tandem Health Care Of Winter Haven) (hereinafter collectively “Tandem”)....

In 1977, Mr. Clark was involved in an automobile accident, and he sustained brain damage. He required twenty-four-hour-a-day care. For many years, Mr. Clark's care was provided by his niece, Ms. Shotts, in her home. Eventually he was placed in a nursing home. Thereafter, on May 23, 2003, Mr. Clark was moved from the nursing home and admitted to Tandem Health Care of Winter Haven. He remained there until his death on November 23, 2003.

Ms. Shotts, as personal representative, filed a complaint against the defendants alleging negligence and breach of fiduciary duties. The complaint contained a claim for wrongful death and an alternative claim for injuries not resulting in death. At least at this point, Ms. Shotts has not sought to amend the complaint to allege punitive damages.

In response to the complaint, Tandem moved to compel arbitration based on an arbitration agreement executed by Ms. Shotts on behalf of her uncle. In her memorandum in opposition to arbitration, and at the hearing conducted to consider the motion, Ms. Shotts argued that the agreement was not valid and enforceable because it was unconscionable and violated public policy. The trial court found no merit in Ms. Shotts argument and granted the motion to compel. It concluded that the agreement was “enforceable, not severable and not repugnant to the public policy of the State of Florida.”

Shotts v. OP Winter Haven, Inc., 988 So.2d 639, 640–41 (Fla. 2d DCA 2008) (footnote omitted) (citation omitted).

The arbitration agreement that Shotts signed on behalf of her uncle included the following terms:

— The arbitration shall be conducted ... in accordance with the American Health Lawyers Association (“AHLA”) Alternative Dispute Resolution Service Rules of Procedure for Arbitration....

—All fees of the arbitrators shall be borne equally between the parties.

—All matters relating the arbitration ... shall remain confidential between the parties.

— [T]he parties expressly agree that this Agreement will be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1–16 (“FAA”).

—The parties agree that damages awarded, if any, in an arbitration conducted pursuant to this Binding Arbitration Agreement shall be determined in accordance with the provision of Florida law applicable to a comparable civil action, except that the parties acknowledge that the arbitrators shall have no authority to award punitive damages or any other damages not measured by the prevailing party's actual damages....

— In the event that any portion of this Agreement will be determined to be invalidor unenforceable, the remainder of this agreement will be deemed to continue to be binding upon the parties

hereby in the same manner as if the invalid or unenforceable provision were not a part of the Agreement.

—The execution of this Agreement is not a precondition to receiving medical treatment or for admission to the Facility.

—The resident has the right to seek legal counsel concerning this Agreement.

(Emphasis added.)

Shotts appealed, and the district court affi...