Romano ex rel. Romano v. Manor Care, Inc.

• Decision Date: 01 October 2003
• Docket Number: No. 4D02-3852.,4D02-3852.
• Citation: 861 So.2d 59
• Parties: Josephine ROMANO, by and through Lawrence ROMANO, Sr., Plenary Guardian, Appellant, v. MANOR CARE, INC., Manor Care of America, Inc., Manorcare Health Services, Inc., New Manorcare Health Services, Inc., Manorcare Health Services of Boynton Beach, Inc., and Manor Care of Boca Raton, Inc. (as to Manorcare Health Services-Boca Raton), Appellees.
• Court: Florida District Court of Appeals

861 So.2d 59

Josephine ROMANO, by and through Lawrence ROMANO, Sr., Plenary Guardian, Appellant, v. MANOR CARE, INC., Manor Care of America, Inc., Manorcare Health Services, Inc., New Manorcare Health Services, Inc., Manorcare Health Services of Boynton Beach, Inc., and Manor Care of Boca Raton, Inc. (as to Manorcare Health Services-Boca Raton), Appellees.

No. 4D02-3852.

District Court of Appeal of Florida, Fourth District.

October 1, 2003.

Rehearing Denied January 12, 2004.

Susan B. Morrison and Melanie L. Bossie of Wilkes & McHugh, P.A., Tampa, for appellant.

Christopher B. Hopkins and Andrew I. Glenn of Cole, Scott & Kissane, P.A., West Palm Beach, for appellees.

WARNER, J.

The husband and guardian of a nursing home resident filed a claim against Manor Care, the nursing home, for deprivation of the resident's rights as set forth in sections 400.022 and 400.023, Florida Statutes (2001). The nursing home moved to compel arbitration pursuant to the arbitration agreement signed by the husband upon his wife's admission to the home. The trial court determined that the parties had entered into a valid arbitration agreement. Because the arbitration agreement contained provisions that defeat the remedial purposes of the statute, we hold that it was unenforceable and therefore reverse.

Josephine Romano, seventy-nine years old, was hospitalized after a fall in her home. Because Josephine was a poor surgical candidate, Lawrence, her husband, placed her at Manor Care, a nursing home for rehabilitation, when their first choice was unavailable. Lawrence admitted Josephine was mentally competent and participated in this decision.

On the day Josephine was admitted to the facility, the Romanos were not furnished any admission documents, but Lawrence was informed that such paperwork needed to be completed. The next day, a Manor Care representative gave him the admission documents to sign. He was presented with, and signed, eight separate documents, one of which was a six-page arbitration agreement. It was comprehensive in its terms, providing for the arbitration of all disputes, including those brought pursuant to statute. The agreement made specific provisions for discovery, including a prohibition of any depositions except those of expert witnesses, and provisions for the appointment of a former judge as an arbitrator and for the payment of costs. Neither party was entitled to attorney's fees in arbitration. The agreement also contained a limitation of liability provision which excluded punitive damages and limited non-economic damages to a maximum of $250,000. While the first page of the agreement stated that it contained a waiver of statutory rights, it did not inform the resident that she had a statutory right to sue for punitive damages which she was waiving in the agreement. The resident could cancel the agreement within three days of its signing.

The administrator who supervised the signing of the "Admission Packet" gave each document to Lawrence to sign but did not attempt to explain any of the terms used in the documents. The administrator testified that she really did not understand what the arbitration agreement meant. Although she said that a resident would not be ousted from the home if the arbitration agreement was not signed, she did not tell Lawrence that, nor did the agreement indicate the consequence of not signing it. In fact, Lawrence testified that the administrator simply told him that he had to sign the admission papers. He thought they all had to do with his wife's health care and admission to the facility.

Josephine resided at Manor Care for only one month. During that time, her physical condition deteriorated rapidly. After leaving the nursing home, Lawrence and Josephine filed suit against Manor Care alleging that the nursing home failed to provide Josephine with adequate health care and protective services, constituting a deprivation of her rights pursuant to sections 400.022 and 400.023. Manor Care moved to compel arbitration based upon the arbitration agreement. The trial court conducted an evidentiary hearing and found a binding arbitration agreement existed between the parties where Lawrence executed the agreement on behalf of Josephine but did not exercise his option to cancel it. The Romanos appeal the order compelling arbitration.

In ruling on a motion to compel arbitration, the trial court is limited to three inquiries: "(1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived." Seifert v. U.S. Home Corp., 750 So.2d 633, 636 (Fla.1999) (citing Terminix Int'l Co. v. Ponzio, 693 So.2d 104, 106 (Fla. 5th DCA 1997)). The Romanos' argument focuses on the first inquiry, namely whether the parties entered into a valid arbitration agreement. Among their several arguments, they contend that the arbitration agreement is unenforceable because it is in violation of the remedial purpose set forth in the statute and does not provide adequate mechanisms for vindicating appellant's statutory rights.

To decline to enforce a contract as unconscionable, the contract must be both procedurally unconscionable and substantively unconscionable. See Powertel, Inc. v. Bexley, 743 So.2d 570, 574 (Fla. 1st DCA 1999) (citation omitted); Kohl v. Bay Colony Club Condo., Inc., 398 So.2d 865, 867 (Fla. 4th DCA 1981). Procedural unconscionability refers to the individualized circumstances under which the contract is entered, while substantive unconscionability deals with the unreasonableness and unfairness of the contractual terms themselves. See Kohl, 398 So.2d at 868. As we noted in Kohl,

Most courts take a "balancing approach" to the unconscionability question, and to tip the scales in favor of unconsicionability, most courts seem to require a certain quantum of procedural plus a certain quantum of substantive unconscionability.

Id. at 868 (quoting Johnson v. Mobil Oil Corp., 415 F.Supp. 264, 268 (E.D.Mich. 1976)). The amount of either may vary. In Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83, 99 Cal.Rptr.2d 745, 6 P.3d 669 (2000), the court explained:

"The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability." (Stirlen v. Supercuts, Inc., supra, 51 Cal.App.4th at p. 1533, 60 Cal.Rptr.2d 138 (Stirlen).) But they need not be present in the same degree. "Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves." (15 Williston on Contracts (3d ed. 1972) § 1763A, pp. 226-227; see also A & M Produce Co., supra, 135 Cal.App.3d at p. 487, 186 Cal.Rptr. 114.) In other words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.

Id. at 690; see also Burch v. Second Judicial Dist. Court of State ex rel. County of Washoe, 49 P.3d 647 (Nev.2002). Because the arbitration contract in this case is substantively unconscionable to a great...