Brown v. Genesis HealthCare Corp., Nos. 35494

CourtSupreme Court of West Virginia
Writing for the CourtJustice DAVIS
Citation724 S.E.2d 250
PartiesClayton BROWN, as guardian for and on behalf of Clarence BROWN, Plaintiff Below, Appellant v. GENESIS HEALTHCARE CORPORATION; Genesis Healthcare Holding Company II, Inc.; Genesis Health Ventures, Inc. of West Virginia; Genesis Eldercare Corporation; Genesis Eldercare Network Services, Inc.; Genesis Eldercare Management Services, Inc.; Genesis Eldercare Rehabilitation Services, Inc.; Genesis Eldercare Staffing Services, Inc.; Genesis Eldercare Hospitality Services, Inc.; Marmet SNF Operations, LLC; 1 Sutphin Drive Associates, Llc; 1 Sutphin Drive Operations, LLC; Genesis WV Holdings, LLC; Glenmark Associates, Inc.; Marmet Health Care Center, Inc. n/k/a MHCC, Inc.; Canoe Hollow Properties, LLC; Robin Sutphin; and Shawn Eddy, Defendants Below, Appellees.Jeffrey Taylor, personal representative of the Estate of Leo Taylor, Plaintiff Below, Appellant v. MHCC, Inc., f/k/a Marmet Health Care Center; Canoe Hollow Properties, LLC; Genesis Healthcare Corporation d/b/a Marmet Health Care Center; Glenmark Associates, Inc.; Glenmark Limited Liability Company I; Glenmark Properties, Inc.; Genesis Healthcare Corporation; Genesis Health Ventures of West Virginia, Inc.; Genesis Health Ventures of West Virginia, LP; Genesis Eldercare Corporation; Genesis Eldercare Network Services, Inc.; Genesis Eldercare Management Services, Inc; Genesis Eldercare Rehabilitation Services, Inc.; Genesis Eldercare Staffing Services, Inc.; Genesis Eldercare Physician Services, Inc.; Genesis Eldercare Hospitality Services, Inc.; Horizon Associates, Inc.; Horizon Mobile, Inc.; Horizon Rehabilitation, Inc.; GMA Partnership Holding Company, Inc.; GMA–Madison, Inc.; GMA–Brightwood, Inc.; Helstat, Inc.; Formation Capital, Inc.; FC–Gen Acquisition, Inc.; Gen Acquisition Corporation; and Jer Partners, LLC, Defendants Below, Appellees.Sharon A. Marchio, Executrix of the Estate of Pauline Virginia Willett, Plaintiff v. Clarksburg Nursing & Rehabilitation Center, Inc., a West Virginia Corporation, d/b/a Clarksburg Continuous Care Center; Sheila K. Clark, Executive Director of Clarksburg Nursing & Rehabilitation Center, Inc., d/b/a Clarksburg Continuous Care Center; John/Jane Doe # 1; and Jennifer Mcwhorter, Defendants.
Decision Date29 June 2011
Docket Number35635.,Nos. 35494,35546

724 S.E.2d 250

Clayton BROWN, as guardian for and on behalf of Clarence BROWN, Plaintiff Below, Appellant
v.
GENESIS HEALTHCARE CORPORATION; Genesis Healthcare Holding Company II, Inc.; Genesis Health Ventures, Inc. of West Virginia; Genesis Eldercare Corporation; Genesis Eldercare Network Services, Inc.; Genesis Eldercare Management Services, Inc.; Genesis Eldercare Rehabilitation Services, Inc.; Genesis Eldercare Staffing Services, Inc.; Genesis Eldercare Hospitality Services, Inc.; Marmet SNF Operations, LLC; 1 Sutphin Drive Associates, Llc; 1 Sutphin Drive Operations, LLC; Genesis WV Holdings, LLC; Glenmark Associates, Inc.; Marmet Health Care Center, Inc. n/k/a MHCC, Inc.; Canoe Hollow Properties, LLC; Robin Sutphin; and Shawn Eddy, Defendants Below, Appellees.Jeffrey Taylor, personal representative of the Estate of Leo Taylor, Plaintiff Below, Appellant
v.
MHCC, Inc., f/k/a Marmet Health Care Center; Canoe Hollow Properties, LLC; Genesis Healthcare Corporation d/b/a Marmet Health Care Center; Glenmark Associates, Inc.; Glenmark Limited Liability Company I; Glenmark Properties, Inc.; Genesis Healthcare Corporation; Genesis Health Ventures of West Virginia, Inc.; Genesis Health Ventures of West Virginia, LP; Genesis Eldercare Corporation; Genesis Eldercare Network Services, Inc.; Genesis Eldercare Management Services, Inc; Genesis Eldercare Rehabilitation Services, Inc.; Genesis Eldercare Staffing Services, Inc.; Genesis Eldercare Physician Services, Inc.; Genesis Eldercare Hospitality Services, Inc.; Horizon Associates, Inc.; Horizon Mobile, Inc.; Horizon Rehabilitation, Inc.; GMA Partnership Holding Company, Inc.; GMA–Madison, Inc.; GMA–Brightwood, Inc.; Helstat, Inc.; Formation Capital, Inc.; FC–Gen Acquisition, Inc.; Gen Acquisition Corporation; and Jer Partners, LLC, Defendants Below, Appellees.Sharon A. Marchio, Executrix of the Estate of Pauline Virginia Willett, Plaintiff
v.
Clarksburg Nursing & Rehabilitation Center, Inc., a West Virginia Corporation, d/b/a Clarksburg Continuous Care Center; Sheila K. Clark, Executive Director of Clarksburg Nursing & Rehabilitation Center, Inc., d/b/a Clarksburg Continuous Care Center; John/Jane Doe # 1; and Jennifer Mcwhorter, Defendants.

Nos. 35494

35546

35635.

Supreme Court of Appeals of West Virginia.

Submitted Jan. 19, 2011.Decided June 29, 2011.


Preempted

West's Ann.W.Va.Code, 16–5C–15(c)

[724 S.E.2d 260]

Syllabus by the Court

1. “The Supremacy Clause of the United States Constitution, Article VI, Clause 2, invalidates state laws that interfere with or are contrary to federal law.” Syllabus Point 1, Cutright v. Metropolitan Life Ins. Co., 201 W.Va. 50, 491 S.E.2d 308 (1997).

2. “When it is argued that a state law is preempted by a federal law, the focus of analysis is upon congressional intent. Preemption is compelled whether Congress' command is explicitly stated in the statute's language or implicitly contained in its structure and purpose.” Syllabus Point 4, Morgan v. Ford Motor Co., 224 W.Va. 62, 680 S.E.2d 77 (2009).

3. “To establish a case of express preemption requires proof that Congress, through specific and plain language, acted within constitutional limits and explicitly intended to preempt the specific field covered by state law.” Syllabus Point 6, Morgan v. Ford Motor Co., 224 W.Va. 62, 680 S.E.2d 77 (2009).

4. “There are two recognized types of implied preemption: field preemption and conflict preemption. Implied field preemption occurs where the scheme of federal regulation is so pervasive that it is reasonable to infer that Congress left no room for the states to supplement it. Implied conflict preemption occurs where compliance with both federal and state regulations is physically impossible, or where the state regulation is an obstacle to the accomplishment or execution of congressional objectives.” Syllabus Point 7, Morgan v. Ford Motor Co., 224 W.Va. 62, 680 S.E.2d 77 (2009).

5. “When a trial court is required to rule upon a motion to compel arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1–307 (2006), the authority of the trial court is limited to determining the threshold issues of (1) whether a valid arbitration agreement exists between the parties; and (2) whether the claims averred by the plaintiff fall within the substantive scope of that arbitration agreement.” Syllabus Point 2, State ex rel. TD Ameritrade, Inc. v. Kaufman, 225 W.Va. 250, 692 S.E.2d 293 (2010).

6. Under the Federal Arbitration Act, 9 U.S.C. § 2, a written provision to settle by arbitration a controversy arising out of a contract that evidences a transaction affecting interstate commerce is valid, irrevocable, and enforceable, unless the provision is found to be invalid, revocable or unenforceable upon a ground that exists at law or in equity for the revocation of any contract.

7. The purpose of the Federal Arbitration Act, 9 U.S.C. § 2, is for courts to treat

[724 S.E.2d 261]

arbitration agreements like any other contract. The Act does not favor or elevate arbitration agreements to a level of importance above all other contracts; it simply ensures that private agreements to arbitrate are enforced according to their terms.

8. A state statute, rule, or common-law doctrine, which targets arbitration provisions for disfavored treatment and which is not usually applied to other types of contract provisions, stands as an obstacle to the accomplishment and execution of the purposes and objectives of the Federal Arbitration Act, 9 U.S.C. § 2, and is preempted.

9. Nothing in the Federal Arbitration Act, 9 U.S.C. § 2, overrides normal rules of contract interpretation. Generally applicable contract defenses—such as laches, estoppel, waiver, fraud, duress, or unconscionability—may be applied to invalidate an arbitration agreement.

10. Under the Federal Arbitration Act, 9 U.S.C. § 2, parties are only bound to arbitrate those issues that by clear and unmistakable writing they have agreed to arbitrate. An agreement to arbitrate will not be extended by construction or implication.

11. To the extent that the West Virginia Nursing Home Act, W.Va.Code, 16–5C–15(c) [1997], attempts to nullify and void any arbitration clause in a written contract, which evidences a transaction affecting interstate commerce, between a nursing home and a nursing home resident or the resident's legal representative, the statute is preempted by the Federal Arbitration Act, 9 U.S.C. § 2.

12. The doctrine of unconscionability means that, because of an overall and gross imbalance, one-sidedness or lop-sidedness in a contract, a court may be justified in refusing to enforce the contract as written. The concept of unconscionability must be applied in a flexible manner, taking into consideration all of the facts and circumstances of a particular case.

13. “An analysis of whether a contract term is unconscionable necessarily involves an inquiry into the circumstances surrounding the execution of the contract and the fairness of the contract as a whole.” Syllabus Point 3, Troy Mining Corp. v. Itmann Coal Co., 176 W.Va. 599, 346 S.E.2d 749 (1986).

14. “A determination of unconscionability must focus on the relative positions of the parties, the adequacy of the bargaining position, the meaningful alternatives available to the plaintiff, and ‘the existence of unfair terms in the contract.’ ” Syllabus Point 4, Art's Flower Shop, Inc. v. Chesapeake and Potomac Telephone Co. of West Virginia, Inc., 186 W.Va. 613, 413 S.E.2d 670 (1991).

15. “Unconscionability is an equitable principle, and the determination of whether a contract or a provision therein is unconscionable should be made by the court.” Syllabus Point 1, Troy Mining Corp. v. Itmann Coal Co., 176 W.Va. 599, 346 S.E.2d 749 (1986).

16. If a court, as a matter of law, finds a contract or any clause of a contract to be unconscionable, the court may refuse to enforce the contract, enforce the remainder of the contract without the unconscionable clause, or limit the application of any unconscionable clause to avoid any unconscionable result.

17. Procedural unconscionability is concerned with inequities, improprieties, or unfairness in the bargaining process and formation of the contract. Procedural unconscionability involves a variety of inadequacies that results in the lack of a real and voluntary meeting of the minds of the parties, considering all the circumstances surrounding the transaction. These inadequacies include, but are not limited to, the age, literacy, or lack of sophistication of a party; hidden or unduly complex contract terms; the adhesive nature of the contract; and the manner and setting in which the contract was formed, including whether each party had a reasonable opportunity to understand the terms of the contract.

18. A contract of adhesion is one drafted and imposed by a party of superior strength that leaves the subscribing party little or no opportunity to alter the substantive terms, and only the opportunity to adhere to the contract or reject it. A contract of adhesion should receive greater scrutiny than a contract with bargained-for terms to determine if it imposes terms that are oppressive,

[724 S.E.2d 262]

unconscionable or beyond the reasonable expectations of an ordinary person.

19. Substantive unconscionability involves unfairness in the contract itself and whether a contract term is one-sided and will have an overly harsh effect on the disadvantaged party. The factors to be weighed in assessing substantive unconscionability vary with the content of the agreement. Generally, courts should consider the commercial reasonableness of the contract terms, the purpose and effect of the terms, the allocation of the risks between the parties, and public policy concerns.

20. A contract term is unenforceable if it is both procedurally and substantively unconscionable. However, both need not be present to the same degree. Courts should apply a “sliding scale” in making this determination: the more substantively oppressive...

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98 practice notes
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    • United States
    • United States District Courts. 4th Circuit. Southern District of West Virginia
    • August 10, 2015
    ...justified in refusing to enforce the contract as written." Brown ex rel. Brown v. Genesis Healthcare Corp. (Brown I), 228 W.Va.646, 724 S.E.2d 250, 283 (2011), vacated on other grounds by 119 F.Supp.3d 528 Marmet Health Care Ctr., Inc. v. Brown, ––– U.S. ––––, 132 S.Ct. 1201, 182 L.Ed.......
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    ...agreements to arbitrate are enforced according to their terms.” Syllabus point 7, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011), overruled on other grounds by Marmet Health Care Center, Inc. v. Brown, ––– U.S. ––––, 132 S.Ct. 1201, 182 L.Ed.2d 42 (2012) (per curiam......
  • In re Timber M., No. 12–1138.
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    ...as to whether the circuit court's decision was right or wrong.” Brown ex rel. Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 689, 724 S.E.2d 250, 293 (2011) (internal citations omitted). This is the position in which this Court now finds itself. Although our general rule is that issues n......
  • Taylor v. Extendicare Health Facilities, Inc., No. 19 WAP 2015
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    ...Supreme Court of Appeals highlighted this constitutional concern in Brown et al . v. Marmet Health Care Ctr. et al ., 228 W.Va. 646, 724 S.E.2d 250 (2011). Relying in part upon the state constitution's provision of the right to a jury trial, W. Va. Const. art. III, § 13, the West Virginia c......
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100 cases
  • New v. Gamestop, Inc., No. 12–1371.
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    • Supreme Court of West Virginia
    • November 6, 2013
    ...rel. TD Ameritrade, Inc. v. Kaufman, 225 W.Va. 250, 692 S.E.2d 293 (2010).” Syl. Pt. 5, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011), overruled in part on other grounds by Marmet Health Care Center, Inc. v. Brown, ––– U.S. ––––, 132 S.Ct. 1201, 182 L.Ed.2d 42 (201......
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    • June 27, 2013
    ...also discussed a case from the West Virginia Supreme Court of Appeals, Brown ex rel. Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011), which has since been reversed by the United States Supreme Court, Marmet Health Care Center, Inc. v. Brown, 565 U.S. ––––, ––––, 132 ......
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    ...that exists at law or in equity for the revocation of any contract.Syllabus Point 6, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011) (“Brown I ”) (overruled on other grounds by Marmet Health Care Center, Inc. v. Brown, ––– U.S. ––––, 132 S.Ct. 1201, 182 L.Ed.2d 42 (2......
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    ...Virginia Constitution and concerns about nursing home admission practices. In Brown v. Genesis Healthcare Corporation, 228 W.Va. 646, 724 S.E.2d 250 (2011), the seventy-page opinion giving rise to Marmet Health Care, the West Virginia Supreme Court stated "[t]he admission agreements in this......
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