Schuster v. Prestige Senior Mgmt., L.L.C.

• Decision Date: 28 April 2016
• Docket Number: No. 33242–0–III.,33242–0–III.
• Citation: 193 Wash.App. 616,376 P.3d 412
• Court: Washington Court of Appeals
• Parties: Gordon SCHUSTER, on behalf of himself, individually and on behalf of the Estate of Ronald Schuster, Diana Yeckel, individually, and Pat Schuster, individually, Respondent, v. PRESTIGE SENIOR MANAGEMENT, L.L.C., an Oregon Limited Liability Company, d.b.a. Blossom Creek Senior Alzheimer Community; Senior Resource Group, Inc., a Washington Corporation; LSRF Husky Ops Holdings, L.L.C., a foreign Limited Liability Company; Prestige Care, Inc., a Washington Corporation, d.b.a. Blossom Creek Senior Alzheimer Community; Prestige Senior Living, L.L.C., an Oregon Limited Liability Company, d.b.a. Blossom Creek Senior Alzheimer Community; Wenatchee Senior Care, L.L.C., formerly a Washington Limited Liability Company, formerly d.b.a. Blossom Creek Senior Alzheimer Community; Karl W. Lambert, A.R.N.P., an individual; Redimedi Housecall, P.L.L.C., a Washington Professional Limited Liability Company; Redimedi Clinic & Housecall, P.L.L.C., a Washington Professional Limited Liability Company; John Doe 1, M.D., an individual; John Doe 2, an individual; John Doe 3, an individual; and John Doe 4, an individual, Defendants, LSREF Golden Ops 14 (WA), L.L.C., A Delaware Limited Liability Company, d.b.a. Blossom Creek Senior Alzheimer Community; Lavida Communities, Inc. a Delaware Corporation; SRG Servco Operating, L.L.C., a Delaware Limited Liability Company; SRG Servco Operating L.L.C. acting through a separate series SRG Lavida Ops NW Series, an entity of unknown origin, Appellants.

193 Wash.App. 616

376 P.3d 412

Gordon SCHUSTER, on behalf of himself, individually and on behalf of the Estate of Ronald Schuster, Diana Yeckel, individually, and Pat Schuster, individually, Respondent

v. PRESTIGE SENIOR MANAGEMENT, L.L.C., an Oregon Limited Liability Company, d.b.a. Blossom Creek Senior Alzheimer Community; Senior Resource Group, Inc., a Washington Corporation; LSRF Husky Ops Holdings, L.L.C., a foreign Limited Liability Company; Prestige Care, Inc., a Washington Corporation, d.b.a. Blossom Creek Senior Alzheimer Community; Prestige Senior Living, L.L.C., an Oregon Limited Liability Company, d.b.a. Blossom Creek Senior Alzheimer Community; Wenatchee Senior Care, L.L.C., formerly a Washington Limited Liability Company, formerly d.b.a. Blossom Creek Senior Alzheimer Community; Karl W. Lambert, A.R.N.P., an individual; Redimedi Housecall, P.L.L.C., a Washington Professional Limited Liability Company; Redimedi Clinic & Housecall, P.L.L.C., a Washington Professional Limited Liability Company; John Doe 1, M.D., an individual; John Doe 2, an individual; John Doe 3, an individual; and John Doe 4, an individual, DefendantsLSREF Golden Ops 14 (WA), L.L.C., A Delaware Limited Liability Company, d.b.a. Blossom Creek Senior Alzheimer Community; Lavida Communities, Inc. a Delaware Corporation; SRG Servco Operating, L.L.C., a Delaware Limited Liability Company; SRG Servco Operating L.L.C. acting through a separate series SRG Lavida Ops NW Series, an entity of unknown origin, Appellants.

No. 33242–0–III.

Court of Appeals of Washington, Division 3.

April 28, 2016.

David J. Corey, Floyd Pflueger & Ringer PS, Seattle, WA, for Defendants.

Andrew Gordon Yates, Lane Powell PC, Seattle, WA, for Appellant/Cross–Respondent.

Dale Melvin Foreman, Tyler D. Hotchkiss, Daniel J. Appel, Foreman Appel Hotchkiss & Zimmerman PLLC, Wenatchee, WA, for Respondent/Cross–Appellant.

FEARING, C.J.

Put more succinctly, at some point a party seeking to enforce an arbitration agreement must use it or lose it. Nino v. Jewelry Exch., Inc., 609 F.3d 191, 212 n. 10 (3rd Cir.2010).

¶ 2 We address under what circumstances a party waives the right to compel arbitration, pursuant to contract, by engaging in court litigation. In answering this question, we apply federal law. The trial court held that appellants waived this right by lengthy litigation conduct. We agree and affirm the trial court's denial of the defense's motion to compel arbitration.

FACTS

¶ 3 We first introduce the parties. The lawsuit stems from the treatment and care of an elderly gentleman, Ronald Schuster, now deceased, at Blossom Creek Senior Alzheimer Community (Blossom Creek). Plaintiffs Pat Schuster, Gordon Schuster, and Diana Yeckel are respectively the widow, son, and daughter of Ronald Schuster. Gordon Schuster serves as personal representative of his father's estate.

¶ 4 The four named defendants, LSREF Golden Ops 14 (WA) LLC (LSREF), La Vida Communities Inc. (La Vida), SRG Servco as SRG La Vida Ops NW Series (SRG), and Servco Operating LLC (Servco), owned or managed Blossom Creek while Ronald Schuster resided at the community. We refer to the four companies collectively as the Blossom Creek entities or entities. Defendant Karl Lambert was Ronald Schuster's primary care provider while Schuster resided at Blossom Creek. Defendants Redimedi Clinic & Housecall PLLC and Omnicare Inc. are alleged to be related to Lambert. Blossom Creek Senior Alzheimer Community, Wenatchee Senior Care LLC, and Husky Ops Holdings LLC are named defendants, but not participants in the litigation.

¶ 5 In March 2009, Ronald Schuster entered Blossom Creek Senior Alzheimer Community, located in Wenatchee, Washington. On April 15, 2009, Gordon Schuster, as power of attorney for his father, signed an agreement with LSREF regarding the care of his father at Blossom Creek. The agreement contained an optional provision for mandatory arbitration:

Arbitration

BOTH PARTIES UNDERSTAND THAT AGREEING TO ARBITRATION IS NOT A CONDITION OF YOUR ADMISSION TO THE COMMUNITY. By initialing the line at the end of this paragraph, however, you agree that any and all claims and disputes arising from or related to this Agreement or to your residency, care or services at the Community, whether made against us or any other individual or entity, shall be resolved by submission to neutral, binding arbitration in accordance with the Federal Arbitration Act; except that any claim or dispute involving unlawful detainer proceedings (eviction) or any claims that are brought in small claims court shall not be subject to arbitration unless all parties involved agree to arbitrate such proceedings. Both parties give up their constitutional rights to have any such dispute decided in a court of law before a jury, and instead accept the use of arbitration. Arbitrations shall be administered by the National Arbitration Forum under the Code of Procedure then in effect. Arbitrations shall be conducted by a single arbitrator agreed to by the parties, or if the parties cannot agree upon an arbitrator, before an arbitrator assigned by the National Arbitration Forum. Arbitrations will be held at an agreed upon location, or in the absence of such agreement, at the Community. The dispute will be governed by the laws of Washington. The arbitrator's fee shall be shared equally by the parties. Any award by the arbitrator may be entered as a judgment in any court having jurisdiction. In reaching a decision, the arbitrator shall prepare findings of fact and conclusions of law. Each party shall bear its own costs and fees in connection with the arbitration. This arbitration clause binds all parties to this Agreement and their spouse, heirs, representatives, executors, administrators, successors, and assigns, as applicable. After termination of this Agreement, this arbitration clause shall remain in effect for the resolution of all claims and disputes that are unresolved as of that date.

_______________(Resident's initials)

Clerk's Papers (CP) at 634 (some emphasis in original). Gordon Schuster placed initials at the end of the arbitration clause. The initials appear to be his individual initials rather than his father's initials, and Gordon did not specify that he signed as power of attorney for his father.

¶ 6 The arbitration clause in Ronald Schuster's care agreement appointed National Arbitration Forum to administer any arbitration proceeding. In July 2009, the Hennepin County District Court, in Minnesota, entered a consent judgment in a suit brought by the Minnesota Attorney General against National Arbitration Forum. Under the judgment, National Arbitration Forum agreed to cease administering arbitration proceedings involving consumers, including patients or residents of an assisted living facility. In the Minnesota suit, the state attorney general accused National Arbitration Forum of violating state consumer fraud, deceptive trade practices, and false advertising laws by hiding financial ties to collection agencies and credit card companies that placed arbitration clauses in consumer contracts and used its arbitration services.

¶ 7 According to Gordon Schuster, on February 27, 2010, he visited his father at Blossom Creek and found his father overmedicated, emaciated, hungry, and thirsty. An ambulance took Ronald Schuster from Blossom Creek. He died on May 21, 2010. We know nothing of the events in Gordon Schuster's life between February 27 and May 21.

¶ 8 On August 17, 2010, the Schuster family informed Blossom Creek entities that the family intended to file suit for damages arising from alleged negligent care of Ronald Schuster. From August 2010 to November 2011, the Schuster family and the Blossom Creek entities frequently communicated about the Schusters' claims.

¶ 9 The facts succeeding the commencement of litigation loom more important on appeal than the facts preceding the filing of suit. On February 5, 2013, the Schuster family filed their first complaint. The family named LSREF Golden Ops 14 LLC as a defendant but did not name other Blossom Creek entities. On April 2, 2013, LSREF filed an answer to the complaint. The answer did not list arbitration as a defense or mention the need to arbitrate the claims asserted by the Schuster family. On April 30, 2013, the Schuster family filed their first amended complaint, which added the remainder of the Blossom Creek entities as defendants. The family filed a second amended complaint on May 17, 2013.

¶ 10 The parties exchanged written discovery requests. On August 20, 2013, the Schuster family moved to compel discovery of interrogatories and requests for production from the Blossom Creek entities. On August 26, LSREF responded to the Schusters' interrogatories and requests for production. On September 11, La Vida and SRG responded to the family's interrogatories and requests for production. On September 12, 2013, the Blossom Creek entities filed a brief in opposition to the Schuster family's motion to compel. The brief claimed that all relevant entities had responded to discovery requests. The brief did not mention the care agreement arbitration clause or suggest a need to arbitrate rather than litigate in court. The Schuster family struck its pending motion to compel.

¶ 11 On October 14, 2013, the Schuster family filed a second motion to compel discovery. The motion complained that the Blossom Creek entities' August and September responses failed to fully answer the discovery requests. Among other purported shortcomings in the responses, the Blossom Creek entities omitted a privilege log for documents over which they claimed the attorney-client privilege, and the entities withheld names and addresses of former employees. The Blossom Creek entities responded to the motion to compel on October 25. On January 10, 2013, the trial court granted, in part, the second motion to compel. The order compelling discovery imposed sanctions on the Blossom Creek entities, which the entities later paid. The entities...