Juarez v. Thi of New Mex. At Sunset Villa, LLC
| Decision Date | 15 June 2022 |
| Docket Number | A-1-CA-39144 |
| Citation | 517 P.3d 918 |
| Parties | Beatrice JUAREZ, Plaintiff-Appellee, v. THI OF NEW MEXICO AT SUNSET VILLA, LLC, a Foreign Limited Liability Company, d/b/a Sunset Villa Care Center, Defendant-Appellant. |
| Court | Court of Appeals of New Mexico |
517 P.3d 918
Beatrice JUAREZ, Plaintiff-Appellee,
v.
THI OF NEW MEXICO AT SUNSET VILLA, LLC, a Foreign Limited Liability Company, d/b/a Sunset Villa Care Center, Defendant-Appellant.
No. A-1-CA-39144
Court of Appeals of New Mexico.
Filing Date: JUNE 15, 2022
Parnall Law Firm, LLC, Una Campbell, Albuquerque, NM, for Appellee
Wilson Elser Moskowitz Edelman & Dicker, LLP, Lori D. Proctor, Houston, TX, Coleman M. Proctor, Dallas, TX, for Appellant
MEDINA, Judge.
{1} Defendant THI of New Mexico at Sunset Villa, LLC (Sunset Villa) appeals the district court's denial of Defendant's motion to compel arbitration, pursuant to the New Mexico Uniform Arbitration Act (NMUAA), NMSA 1978, § 44-7A-29(a)(1) (2001). We reverse, and remand.
BACKGROUND
{2} In July 2018, Plaintiff Beatrice Juarez was admitted to Sunset Villa care facility for rehabilitation following a knee replacement surgery. As a condition of her admission, Plaintiff signed both an "Admission Agreement" and an arbitration agreement titled "Agreement for Dispute Resolution Program"
(DRP), which were provided to Plaintiff at the same time, along with other admission materials. Plaintiff alleges that she signed the Admission Agreement and DRP the day after she was admitted to the facility, while Defendant asserts that she was presented with the documents and executed them at the time of admission and that the contracts are dated accordingly.
{3} In bold at the beginning of the document, the DRP stated:
YOUR ADMISSION TO THE FACILITY IS CONTINGENT ON YOU AND YOUR REPRESENTATIVE, IF ANY, ENTERING INTO THIS AGREEMENT TO PARTICIPATE IN THE DRP. BY CHOOSING TO HAVE DISAGREEMENTS RESOLVED THROUGH THE DRP, YOU WILL BE WAIVING THE RIGHT TO HAVE A JUDGE OR A JURY RESOLVE ANY SUCH DISAGREEMENT IN COURT. INSTEAD, IF THERE IS A DISPUTE BETWEEN US, IT WILL BE RESOLVED THROUGH THE DRP. THIS MEANS THAT, IF ALL ELSE FAILS, OUR DISPUTE WILL BE RESOLVED BY A DECISION BY AN ARBITRATOR INSTEAD OF A JUDGE OR JURY.
The DRP also stated that all parties "acknowledge that they are agreeing to mutual arbitration, regardless of who makes the claim" so long as it does not fall into the small claims exception; that "[Defendant] will pay for 100% of the fees charged by the mediator and the arbitrators"; and that "[Defendant] will pay up to $5,000 in attorney[ ] fees that you actually incur if our dispute is arbitrated."
{4} The DRP contained a delegation clause, which stated in part:
The arbitrator is required to apply and enforce the terms of this [a]greement. To the fullest extent permitted by law, any disagreements regarding the applicability, enforceability or interpretation of this [a]greement will be decided by the arbitrator and not by a judge or jury.
Additionally, the DRP specified "[p]rocedurally, and unless otherwise governed by the [Federal Arbitration Act (FAA)], the arbitration will follow the rules and procedures of the Judicial Arbitration and Mediation Services (JAMS)." Finally, the DRP notified the parties that "[t]his [a]greement relates to matters, among others, that are covered by the Admission Agreement, incorporates the Admission Agreement and should be read together with the Admission Agreement."
{5} The Admission Agreement stated that "this [a]greement represents the entire agreement and understanding between the parties and supersedes all previous representations, understandings or agreements, oral or written," and that "[t]he undersigned further acknowledges that he/she has received and read the Admission Handbook and other Admissions materials and understand[s] that these documents are made a part of this [a]greement by reference herein."
{6} Approximately seven months after her admission to Sunset Villa, Plaintiff filed a complaint against Defendant, alleging claims of medical negligence; respondeat superior and vicarious liability; and negligent hiring, training, supervision, and retention of employees. After filing an answer, Defendant moved to compel arbitration, asserting that there was no dispute that Plaintiff signed the DRP, that Defendant was entitled to enforce the DRP, that the DRP was a valid, enforceable agreement supported by consideration, and that the delegation clause clearly required any questions about arbitrability be submitted to the arbitrator.
{7} Plaintiff responded that the DRP was substantively unconscionable because it contained provisions that were unfair and against public policy. Plaintiff also argued that the circumstances of signing the agreement made the DRP procedurally unconscionable. Plaintiff attached an affidavit in support, alleging, among other things, that Plaintiff did not read the paperwork, was not asked to review the paperwork, felt as if she had no choice but to sign, and was on medication at the time of signing. Plaintiff stated that "Plaintiff also challenges this ‘delegation clause’ under the same grounds she challenges the ‘Agreement.’ "
{8} In reply, Defendant argued that Plaintiff failed to specifically challenge the delegation clause and, therefore, a court is
prevented from considering the contract enforcement challenges to the arbitration agreement under New Mexico law. Instead, the challenges are required to be submitted to an arbitrator. Defendant also maintained that Plaintiff failed to establish both procedural and substantive unconscionability.
{9} In May 2020, the district court held a hearing on Defendant's motion to compel arbitration. Plaintiff's counsel reiterated that "the delegation clause in the [DRP] is unenforceable for the same reasons that I have mentioned here, that the [DRP] itself is unenforceable." The district court denied Defendant's motion, citing four grounds for the denial. The district court found that (1) Defendant "failed to present evidence as to the reasonableness of the arbitration provision"; (2) Defendant failed to provide an affidavit to contradict Plaintiff's, although Defendant "referred to and challenged [the affidavit] in argument"; (3) if the DRP was signed before the Admission Agreement, then "it was superseded by the [A]dmission [A]greement"; and (4) if vice versa, "then [there is] no consideration." The district court did not explain its reasoning for rejecting Defendant's argument that the district court was prevented from considering the unconscionability arguments because of the delegation clause. This appeal followed.
DISCUSSION
{10} On appeal, Defendant maintains that the district court erred in considering Plaintiff's contract enforceability arguments because the language of the delegation clause in the DRP requires these questions be submitted to the arbitrator and not the district court. In the alternative, if we were to consider Plaintiff's enforcement arguments, Defendant argues Plaintiff failed to show both substantive and procedural unconscionability. Further, Defendant argues that the district court erred in denying the motion on contract validity grounds because (1) neither party raised these issues below; (2) the DRP is supported by multiple forms of consideration; and (3) the DRP was not superseded by the Admission Agreement, but rather the two documents should be construed together.
{11} We hold that the district court erred in denying the motion to compel arbitration on contract validity grounds because the DRP was supported by alternative consideration, and under the facts of this case, we construe the DRP and Admission Agreement as one instrument. We additionally hold that the language of the delegation clause requires that questions regarding enforceability and unconscionability be submitted to the arbitrator. We therefore do not address Plaintiff's enforcement arguments on appeal.
{12} "Arbitration agreements are a species of contract, subject to the principles of New Mexico contract law." Hunt v. Rio at Rust Ctr., LLC , 2021-NMCA-043, ¶ 12, 495 P.3d 634 (internal quotation marks and citation omitted). "Accordingly, we apply New Mexico contract law in the interpretation and construction of the arbitration agreement." Id...
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