Covenant Health Rehab of Picayune v. Brown

• Decision Date: 22 February 2007
• Docket Number: No. 2005-CA-02220-SCT.,2005-CA-02220-SCT.
• Parties: COVENANT HEALTH REHAB OF PICAYUNE, L.P., Its Successor and Interest of Picayune Partners, L.P., d/b/a Picayune Convalescent Center; Covenant Dove, Inc.; and Keri Ladner v. Barbara N. BROWN, Margaret Grace and Sharon Goss on Behalf of the Wrongful Death Beneficiaries Of Bernice Brown.
• Court: Mississippi Supreme Court

949 So.2d 732

COVENANT HEALTH REHAB OF PICAYUNE, L.P., Its Successor and Interest of Picayune Partners, L.P., d/b/a Picayune Convalescent Center; Covenant Dove, Inc.; and Keri Ladner v. Barbara N. BROWN, Margaret Grace and Sharon Goss on Behalf of the Wrongful Death Beneficiaries Of Bernice Brown.

No. 2005-CA-02220-SCT.

Supreme Court of Mississippi.

February 22, 2007.

Paul Hobart Kimble, John L. Maxey, II, Jackson, attorneys for appellants.

Woodrow W. Pringle, III, Gulfport, attorney for appellees.

EN BANC.

SMITH, Chief Justice, for the Court.

¶ 1. Plaintiffs, on behalf of the decedent, Bernice Brown, filed a wrongful death suit against the convalescent center in which the decedent resided immediately prior to her admission to the hospital, where she died. Defendants filed a Motion to Compel Arbitration, seeking to enforce the arbitration provision in the admissions agreement, and Plaintiffs sought to have the agreement voided with their Motion to Declare Contract Unconscionable and Void. The trial court struck several clauses in the admissions agreement, including the arbitration provision, finding them substantively unconscionable, prompting this appeal.

¶ 2. We affirm the trial court's finding that the admissions agreement was not procedurally unconscionable. We further affirm the trial court's striking as unconscionable C5, C8 and E7, limiting liability; E8, waiving punitive damages; E5 and E6, providing different judicial remedies to the parties; E12, requiring all resolution costs from one party; and E16, limiting the statute of limitations.

¶ 3. However, we find that the trial court erred in striking the remaining three provisions in the admissions contract as unconscionable and in denying Defendants' motion to compel arbitration. Thus, we continue our precedent of striking unconscionable terms and leaving the remainder of the agreement intact, adhering to our decision in Russell v. Performance Toyota, Inc., 826 So.2d 719, 724-29 (Miss.2002). We reverse and remand with instructions to require the parties to submit to arbitration.

FACTS AND PROCEDURAL HISTORY

¶ 4. On April 8, 2005, Barbara Brown, Sharon Goss, and Margaret Grace, as administrators of the estate of their mother Bernice Brown, filed a complaint in Pearl River County Circuit Court. The complaint alleged that the decedent had been grossly neglected while a resident at Picayune Convalescent Center, from March 19, 2004, until June 2, 2004, and that the center's negligence was the direct and proximate cause of Brown's death on July 5, 2004.

¶ 5. On June 17, 2005, Defendants filed a motion to compel arbitration, pursuant to the arbitration provision in the admissions agreement signed by the decedent. The motion requested, in the alternative, to stay the proceedings until the issue of arbitration might be decided. The trial court, granted the motion on July 6, 2005 ordering a continuance of the trial for resolution of the arbitration-related issues. Plaintiffs filed a motion to declare the admissions agreement unconscionable and void on July 11, 2005, alleging (1) that the agreement was procedurally and substantively unconscionable; (2) that the deceased was incompetent and incapable of understanding the agreement and the terms of the same; (3) that Sharon Goss, signing as a responsible party, had no authority to sign on behalf of Bernice Brown; and (4) that Sharon Goss lacked the capacity to understand the agreement and did not understand the same when she signed it. On October 26, 2005, the court entered an Order granting Plaintiffs' motion, finding the arbitration provision substantively unconscionable and striking all provisions related to arbitration or the limitation of remedies, namely sections C5, C8, D4, E5, E6, E7, E8, E12, E13, E16, and F of the admissions agreement.

¶ 6. Defendants filed a notice of appeal on November 14, 2005, appealing three issues: 1) whether the admissions contract is enforceable when the resident and her responsible party signed the agreement; 2) whether the trial court erred in finding the contract substantively unconscionable; and 3) whether the trial court erred in denying Defendant's motion to compel.

DISCUSSION

¶ 7. The issues raised essentially inquire whether the trial court properly denied Defendants' motion to compel. Thus, the issues will be consolidated to answer that one question.

¶ 8. This Court applies a de novo standard of review to denials of motions to compel. Vicksburg Partners, L.P. v. Stephens, 911 So.2d 507, 513 (Miss.2005). We divide the question into two lines of inquiry.

I. Whether the Trial Court Erred in Not Finding That the Admissions Agreement Was Procedurally Unconscionable Even Though the Resident and Her Responsible Party Signed the Agreement.

¶ 9. Plaintiffs assert that the admissions agreement is procedurally unconscionable because Brown was incompetent and incapable of entering into a contract, and Goss had no authority to bind Brown.

¶ 10. With regard to Goss's authority to bind Brown, Defendants cite Miss.Code Ann. § 41-41-211 (Rev.2005) which says in pertinent part:

(1) A surrogate may make a health-care decision for a patient who is an adult or emancipated minor if the patient has been determined by the primary physician to lack capacity and no agent or guardian has been appointed or the agent or guardian is not reasonably available.

(2) An adult or emancipated minor may designate any individual to act as surrogate by personally informing the supervising health-care provider. In the absence of a designation, or if the designee is not reasonably available, any member of the following classes of the patient's family who is reasonably available, in descending order of priority, may act as surrogate:

(a) The spouse, unless legally separated; (b) An adult child; (c) A parent; or (d) An adult brother or sister.

(7) A health-care decision made by a surrogate for a patient is effective without judicial approval.

Plaintiffs submit in their motion that Brown was incapable of managing her affairs at the time she entered the hospital. Neither party presents a declaration by Brown's primary physician stating that she was incapable of managing her affairs prior to the signing of the admission agreement, but Plaintiffs state in their motion that Brown's admitting physician at the hospital found that she did not have the mental capacity to manage her affairs. Seeing that Brown was incapacitated by virtue of admission by her representatives and corroboration by her admitting physician, she was capable legally of having her decisions made by a surrogate. Her adult daughter, Goss, was an appropriate member of the classes from which a surrogate could be drawn, and thus, Goss could contractually bind Brown in matters of health care.

¶ 11. Having confirmed Goss' authority to sign the agreement, the remaining inquiry is whether Goss signed the agreement in a voluntary and knowledgeable manner. In Vicksburg Partners, this court considered an assertion of procedural unconscionability where the daughter, serving as the responsible party, admitted her father to a nursing home. Vicksburg Partners, 911 So.2d at 510, 516-20. There are two considerations for procedural unconscionability: (1) lack of voluntariness and (2) lack of knowledge. Id. at 517-518 (citing Entergy Miss., Inc. v. Burdette Gin Co., 726 So.2d 1202, 1207 (Miss.1998)).

¶ 12. Goss contends that she signed the agreement in a manner that was not voluntary and not knowing, since the admissions agreement was one of adhesion, the print was inconspicuous, and she did not understand the legal terms. This Court has stated that "[c]ontracts in which one party has minimal bargaining power, also referred to as contracts of adhesion, are not automatically void. Instead, the party seeking to avoid the contract generally must show that it is unconscionable. There is nothing per se unconscionable about arbitration agreements." Vicksburg Partners, 911 So.2d. at 518 (internal quotes and citations omitted).

¶ 13. In Vicksburg Partners, the court found that there was no procedural unconscionability, in that:

there were no circumstances of exigency; the arbitration agreement appeared on the last page of a six-page agreement and was easily identifiable as it followed a clearly marked heading printed in all caps and bold-faced type clearly indicating that section "F" was about "Arbitration;" the provision itself was printed in bold-faced type of equal size or greater than the print contained in the rest of the document; and, appearing between the arbitration clause and the signature lines was an all caps bold-faced consent paragraph drawing special attention to the parties' voluntary consent to the arbitration provision contained in the admissions agreement. Under these facts, it can not be said that there was either a lack of knowledge that the arbitration provision was an important part of the contract or a lack of voluntariness in that [the resident and his responsible party] somehow had no choice but to sign.

This description of the facts, including the location and format of the arbitration provision in the agreement in Vicksburg Partners is identical to the provision in this case, thus controlling in the case at bar. Therefore, we find that in accordance with Stephens, there is no procedural unconscionability in this admissions agreement. The trial court correctly found no procedural unconscionability.

II. Whether the Trial Court Erred in Finding the Stricken Provisions of the Contract Substantively Unconscionable.

¶ 14. When determining whether a contract is substantively unconscionable we look within the four corners of an agreement. Vicksburg Partners, 911 So.2d at 521. Contracts comprised of terms oppressive in character may be found unconscionable. Id. (citing East Ford, 826 So.2d at 714). For a per se finding of unconscionability, the Court must find the contract at issue "by its very language significantly...