Hunt v. Rio at Rust Ctr., LLC

• Decision Date: 11 June 2020
• Docket Number: No. A-1-CA-37406, A-1-CA-37902,A-1-CA-37406, A-1-CA-37902
• Citation: 495 P.3d 634
• Parties: Lee HUNT, as Personal Representative of the Wrongful Death Estate of Sui Yan, Deceased, Plaintiff-Appellee, v. The RIO AT RUST CENTRE, LLC, a for-profit New Mexico company, d/b/a The Rio at Cabezon; OnPointe Business Services, LLC, a for-profit Texas company; and RCZ Management, LLC, a for-profit Texas company, Defendants-Appellants, and IPC Hospitalists of New Mexico, Inc., a for-profit New Mexico company, Defendant.
• Court: Court of Appeals of New Mexico

495 P.3d 634

Lee HUNT, as Personal Representative of the Wrongful Death Estate of Sui Yan, Deceased, Plaintiff-Appellee,

v.The RIO AT RUST CENTRE, LLC, a for-profit New Mexico company, d/b/a The Rio at Cabezon; OnPointe Business Services, LLC, a for-profit Texas company; and RCZ Management, LLC, a for-profit Texas company, Defendants-Appellants,andIPC Hospitalists of New Mexico, Inc., a for-profit New Mexico company, Defendant.

No. A-1-CA-37406, A-1-CA-37902

Court of Appeals of New Mexico.

Filing Date: June 11, 2020

McGinn, Montoya, Love & Curry, PA, Kathy J. Love, Katie Curry, Michael E. Sievers, Albuquerque, NM, for Appellee

Modrall, Sperling, Roehl, Harris & Sisk, P.A., Michelle A. Hernandez, Tomas J. Garcia, Albuquerque, NM, The Checkett Law Firm, PLLC, Paul J. Sheston, Scottsdale, AZ, for Appellants

HANISEE, Chief Judge.

{1} This opinion consolidates two appeals arising from a single cause of action in district court brought by Lee Hunt (Plaintiff), personal representative of the wrongful death estate of Sui Yan (Decedent), against The Rio at Rust Center, LLC (The Rio), a Rio Rancho skilled nursing facility, OnPointe Business Services, LLC (OnPointe) and RCZ Management, LLC (RCZ), the management/employment entities¹ for The Rio (collectively, Defendants) following Decedent's death while in Defendants' care. Both appeals raise questions related to arbitrability. Specifically, (1) did the arbitration agreement between Decedent and The Rio contain a valid delegation clause such that the threshold questions of arbitrability should have been left to the arbitrator?; and (2) were the arbitration provisions in either or both the admissions agreement or the arbitration agreement unconscionable under New Mexico case law? In the first appeal, OnPointe and RCZ challenge the district court's order granting partial summary judgment to Plaintiff based upon its rejection of Defendants' affirmative defense regarding arbitration, which asserted that the district court "lack[ed] subject matter jurisdiction as a result of an enforceable arbitration agreement[.]" In the second appeal, The Rio appeals the district court's order denying its motion to compel arbitration. We affirm the district court's orders in both appeals.

FACTUAL BACKGROUND

{2} Following Decedent's hip fracture, corrective surgery, and rehabilitation, she and her family hoped Decedent could return to living with her son, Stephan Yan, as soon as possible. However, the Yan family understood that a prerequisite to Decedent qualifying for home healthcare, which she needed since she was no longer able to move freely or take care of herself without falling, was admission to a rehabilitation facility for 90 to 100 consecutive days. The Yan family learned that The Rio was accepting new admissions when other such facilities were not at that time. The family was eager for Decedent to be admitted to The Rio rather than being discharged from the facility overseeing her initial recovery and rehabilitation, because any gap in Decedent's admission status would permanently disqualify her for in-home healthcare and rehabilitation services under Medicare/Medicaid.

{3} On Friday, October 30, 2015, Decedent was admitted to The Rio to continue her recovery. When she arrived, admissions staff did not ask Decedent to read and sign the necessary admissions paperwork or review it with her, despite there being no information suggesting that Decedent was incompetent or otherwise unable to understand or sign such documentation. Rather, admissions staff was aware that Decedent's primary language was Cantonese and she had only limited fluency in English. For such circumstances, however, The Rio had an interpreter hotline, including personnel able to speak Cantonese. Yet in this instance, The Rio's staff did not use this dedicated resource to communicate with Decedent, and instead sought signatures from Decedent's daughter, Cathy Yan, who possessed a power of attorney for Decedent. In that capacity, Cathy occasionally signed documents on behalf of Decedent, and usually with Decedent present so that Decedent could understand what Cathy was signing on Decedent's behalf, ask any questions she might have, and so Cathy could translate for Decedent what medical providers said.

{4} On a typical day, the admissions assistant of The Rio, Alexis Elizondo, reviewed admissions paperwork with three to seven residents or family members. Ms. Elizondo would mark beforehand all the locations in the agreement that had to be signed or initialed. Nicole Balido, the admissions director who trained Ms. Elizondo, confirmed that when reviewing admission paperwork with residents or family members, staff members would go through agreements and ask residents to "initial, initial, [and] sign." Ms. Balido also acknowledged that she and Ms. Elizondo would "paraphrase" rather than read portions of the agreement verbatim. Ms. Elizondo claimed that she would go through the boldfaced type in the admission agreement with residents or family members and summarize it in her own words. Neither Ms. Balido nor Ms. Elizondo had formal training, or training from lawyers, about the admissions agreement or the implication of its terms, nor did either possess authority to negotiate any of its terms.

{5} Per The Rio's policy, the admissions agreement—a standardized, pre-prepared contract—had to be signed within forty-eight to seventy-two hours of a patient's arrival, including weekends. If a resident refused to sign the agreement, the resident would be discharged from the facility. Accordingly, the admissions assistant, Ms. Elizondo, called Cathy to inform her that, as Decedent's power of attorney, Cathy needed to travel to New Mexico as soon as possible to sign the admissions paperwork, and that if Cathy did not sign the paperwork authorizing her mother's care, Decedent would be discharged. Because Cathy lived in Tucson, Arizona at the time, she drove to Albuquerque on Sunday, November 1, 2015, so that she could be present to sign the admissions agreement on Monday morning.

{6} Cathy visited Decedent on Sunday evening at The Rio, but she did not speak with the admissions personnel, nor was she given any paperwork. The next day, Monday, November 2, 2015, Cathy met Ms. Elizondo to sign the admissions paperwork in the morning, and the meeting lasted less than fifteen minutes. The thirty-page admission agreement Cathy was provided to initial and sign included an "optional" four-page "Agreement Regarding the Resolution of Legal Disputes and Waiver of Right to Jury Trial" (the Arbitration Agreement), and the signature page of that Arbitration Agreement stated that it "May Be Revoked By Sending Written Notice To The Facility Within Ten (10) Days After Signature." However, Section 22 of the admissions agreement also contained an additional, conflicting, arbitration provision, which was not optional and mandated the arbitration of all disputes between the resident and The Rio. Furthermore, although Defendants maintain that the Arbitration Agreement was optional, the vice president of operations for OnPointe—an entity with a management agreement for The Rio—reported that the Arbitration Agreement had never been questioned, revoked, or refused by any resident or family member. Moreover, at no point was Decedent, as the resident, involved in the discussion or shown the admissions agreement, and it was Cathy's understanding that The Rio required that she alone, as power of attorney, be the one to sign the paperwork.

{7} Cathy explained that she felt rushed when she signed the paperwork, but she understood that the admissions agreements had to be signed for Decedent to remain at The Rio, and she did not want her mother to become permanently ineligible for in-home rehabilitation services if Decedent was discharged. Ms. Elizondo did not spend significant time explaining the four-page Arbitration Agreement, nor did she ask if Cathy understood what arbitration is. Ms. Elizondo also did not in any way highlight or emphasize Section 22, the separate and non-optional binding arbitration clause that is standard in all of The Rio's admission agreements.

{8} With the admissions paperwork complete, Decedent lived at The Rio from late-October 2015 to mid-February 2016. During her time at The Rio, her health deteriorated, she lost almost twenty pounds, she fell on several occasions, and she suffered a severe pressure ulcer

on her sacrum such that the bone was exposed. On February 21, 2016, Decedent was transferred from The Rio to the emergency department at the adjacent Rust Medical Center, a hospital, where she was diagnosed with a severely advanced pressure ulcer. Due to her declining, and then incurable physical condition, Decedent was discharged home to receive palliative care during her final days. She passed away on March 3, 2016.

PROCEDURAL HISTORY

{9} Plaintiff, as personal representative of Decedent's estate, filed a wrongful death suit alleging multiple claims related to the nursing care and treatment Decedent received at The Rio. The Rio filed a motion to compel arbitration, as to which RCZ and OnPointe filed a "notice of joinder." Plaintiff opposed the joinder as improper under Rule 1-007 NMRA and separately filed a motion for partial summary judgment asking the district court to declare that RCZ and OnPointe were not entitled to enforce the Arbitration Agreement in Decedent's admission contract with the Rio because those Defendants were not parties to nor third-party beneficiaries of the Arbitration Agreement. The district court granted Plaintiff's motion for partial summary judgment, concluding as a matter of law that neither RCZ nor OnPointe had a right to enforce the Arbitration Agreement. The district court also denied The Rio's motion to compel arbitration, finding that the Arbitration Agreement was unenforceable because it was substantively and procedurally unconscionable, and because it was not supported by independent consideration. Defendants ap...