Hayes v. Oakridge Home
| Decision Date | 07 May 2009 |
| Docket Number | No. 2008-0784.,2008-0784. |
| Citation | 122 Ohio St.3d 63,2009 Ohio 2054,908 N.E.2d 408 |
| Parties | HAYES; Musser, Exr., Appellee, v. The OAKRIDGE HOME, Appellant, et al. |
| Court | Ohio Supreme Court |
Buckingham, Doolittle & Burroughs, L.L.P., Dirk E. Riemenscheider, Beth A. Nagel, Cleveland, Thomas R. Himmelspach, Canton, and Timothy A. Spirko, Cleveland, for appellant.
{¶ 1} This case concerns the enforceability of an arbitration agreement entered into between a nursing home and its resident. Appellee Florence Hayes1 asserts that the arbitration clause was procedurally and substantively unconscionable, and she would have us fashion a rule that disfavors arbitration agreements between a nursing home and its resident. Conversely, appellant The Oakridge Home, a nursing home,2 contends that an arbitration agreement cannot be set aside as procedurally unconscionable based only on the resident's age. Oakridge further argues that the inclusion of terms in an arbitration agreement waiving the right to trial and the right to seek punitive damages and attorney fees is not a basis for a finding of substantive unconscionability.
{¶ 2} For the following reasons, we hold that an arbitration agreement voluntarily executed by a nursing-home resident upon her admission and not as a precondition to admission is not rendered procedurally unconscionable solely by virtue of the resident's age. We further hold that an arbitration agreement voluntarily executed by a nursing-home resident and not as a precondition to admission that waives the right to trial and the right to seek punitive damages and attorney fees is not substantively unconscionable. We therefore reverse the judgment of the court of appeals and reinstate the judgment of the trial court.
{¶ 3} On May 31, 2005, Hayes was admitted to Oakridge. She was 95 years old at the time of her admission. Upon her admission, Hayes signed an arbitration agreement whereby she agreed to submit any future malpractice claims against Oakridge to arbitration and to waive her right to trial and her right to recover punitive damages and attorney fees.
{¶ 4} The arbitration agreement states at the top in boldface capital letters that it is a voluntary agreement. In capital letters just below the heading, it instructs the resident to "please read carefully." Section I of the agreement explains the benefits and the drawbacks of the arbitration process and reemphasizes that the arbitration agreement is optional. Section III of the agreement again specifies that "execution of this Arbitration Agreement is voluntary" and states that execution "is not a precondition to receiving medical treatment at or for admission to the Facility." The voluntariness of the parties' consent is again stated in boldface capital letters at the end of the agreement, immediately above the signature lines.
{¶ 5} The arbitration agreement states that by executing the agreement, the parties are giving up their constitutional right to a jury trial. Section II provides that the parties must pay their own attorney fees and that any arbitration award shall not include any amount for exemplary or punitive damages.
{¶ 6} The agreement also contains the following "acknowledgments":
{¶ 7} 1. The resident has been informed and acknowledges that the arbitration agreement cannot be submitted to the resident for approval when the resident's condition prevents her from making a rational decision on whether or not to agree;
{¶ 8} 2. The resident understands that she has a right to consult with an attorney of her choice before signing the agreement; and
{¶ 9} 3. The resident understands, agrees to, and has received a copy of the arbitration agreement, acknowledges that the terms have been explained to her by an agent of the facility, and acknowledges that she had the opportunity to ask questions about the arbitration agreement.
{¶ 10} Hayes and a representative of Oakridge both signed the arbitration agreement on the day she was admitted to the nursing home.
{¶ 11} Hayes filed this action in the Cuyahoga County Court of Common Pleas alleging that she had suffered injuries from a fall while she was a resident at Oakridge and that the fall was the direct and proximate result of the negligence and/or recklessness of Oakridge and/or its agents. Oakridge moved to stay the proceedings pursuant to R.C. 2711.02 on the grounds that Hayes's allegations were covered by the arbitration agreement entered into between the parties. The trial court granted Oakridge's motion to stay and ordered that all claims were to be resolved pursuant to the parties' voluntary arbitration agreement.
{¶ 12} Hayes appealed to the Eighth District Court of Appeals. She argued that the trial court's judgment was erroneous because the arbitration agreement was procedurally and substantively unconscionable. Oakridge countered that there was no evidentiary basis for a finding of procedural or substantive unconscionability.
{¶ 13} A divided court of appeals held that the arbitration agreement was both procedurally and substantively unconscionable. Hayes v. Oakridge Home, 175 Ohio App.3d 334, 2008-Ohio-787, 886 N.E.2d 928, ¶ 6. The appellate court found that the arbitration agreement was substantively unconscionable because it took away Hayes's rights to attorney fees, punitive damages, and a jury trial. Id. at ¶ 15 and 18. The court of appeals also ruled that the arbitration agreement was procedurally unconscionable because Hayes was a 95-year-old woman with no business or contract experience, and Oakridge had all the bargaining power. Id. at ¶ 19. The court further held that no one had explained the terms to Hayes, and there were no alternatives for her because finding a quality nursing home is difficult. Id.
{¶ 14} Oakridge appealed to this court, and we accepted jurisdiction to address two issues: (1) whether a nursing-home resident's age can render an arbitration agreement executed by the resident procedurally unconscionable and (2) whether an arbitration agreement that waives a nursing-home resident's right to trial and to recover punitive damages and attorney fees is substantively unconscionable. Hayes v. Oakridge Home, 119 Ohio St.3d 1407, 2008-Ohio-3880, 891 N.E.2d 768. We answer both questions in the negative.
{¶ 15} Both the Ohio General Assembly and Ohio courts have expressed a strong public policy favoring arbitration. R.C. Chapter 2711; Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 27; Williams v. Aetna Fin. Co. (1998), 83 Ohio St.3d 464, 471, 700 N.E.2d 859. As this court has stated, "`[A]rbitration is favored because it provides the parties thereto with a relatively expeditious and economical means of resolving a dispute.'" Schaefer v. Allstate Ins. Co. (1992), 63 Ohio St.3d 708, 712, 590 N.E.2d 1242, quoting Mahoning Cty. Bd. of Mental Retardation & Dev. Disabilities v. Mahoning Cty. TMR Edn. Assn. (1986), 22 Ohio St.3d 80, 83, 22 OBR 95, 488 N.E.2d 872. Arbitration also has the additional benefit of unburdening crowded court dockets. Mahoning Cty. Bd. of Mental Retardation, 22 Ohio St.3d at 83, 22 OBR 95, 488 N.E.2d 872. In light of the strong presumption favoring arbitration, all doubts should be resolved in its favor. Ignazio v. Clear Channel Broadcasting, Inc., 113 Ohio St.3d 276, 2007-Ohio-1947, 865 N.E.2d 18, ¶ 18.
{¶ 16} The General Assembly has endorsed the strong policy in favor of arbitration of disputes in R.C. 2711.01(A), which provides that an arbitration agreement "shall be valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract."
{¶ 17} R.C. 2711.02 provides for the enforcement of an arbitration agreement. A party to such an agreement may obtain a stay of litigation in favor of arbitration under R.C. 2711.02(B), which provides:
{¶ 18} "If any action is brought upon any issue referable to arbitration under an agreement in writing for arbitration, the court in which the action is pending upon being satisfied that the issue involved in the action is referable to arbitration under an agreement in writing for arbitration, shall on application of one of the parties stay the trial of the action until the arbitration of the issue has been had in accordance with the agreement, provided the applicant for the stay is not in default in proceeding with arbitration."
{¶ 19} As noted above, an arbitration agreement is enforceable unless grounds exist at law or in equity for revoking the agreement. R.C. 2711.01(A). Unconscionability is a ground for revocation of an arbitration agreement. Taylor Bldg., 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 33. In Taylor, we recently explained unconscionability in this context as follows:
{¶ 20} Taylor Bldg., 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 34.
{¶ 21} Upon appeal of a...
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