Stonerise Healthcare, LLC v. Oates

• Decision Date: 16 June 2020
• Docket Number: No. 19-0215,19-0215
• Court: West Virginia Supreme Court
• Parties: Stonerise Healthcare, LLC, and Keyser Center, LLC, d/b/a Piney Valley, Defendants Below, Petitioners v. Susan K. Oates, Executrix of the Estate of Donna Wagoner, Deceased, Plaintiff Below, Respondent

Stonerise Healthcare, LLC, and Keyser Center, LLC,d/b/a Piney Valley, Defendants Below, Petitioners v. Susan K. Oates, Executrix of the Estate of

Donna Wagoner, Deceased, Plaintiff Below, Respondent

No. 19-0215

STATE OF WEST VIRGINIA SUPREME COURT OF APPEALS

June 16, 2020

(Mineral County 17-C-76)

MEMORANDUM DECISION

The petitioners herein, Stonerise Healthcare, LLC, and Keyser Center, LLC, d/b/a Piney Valley (collectively, "Stonerise"), by counsel Mark A. Robinson and Justin D. Jack, appeal from an order entered February 8, 2019, by the Circuit Court of Mineral County. In that order, the circuit court denied Stonerise's motion to dismiss and compel arbitration of the claims asserted against it by the respondent herein, Susan K. Oates, Executrix of the Estate of Donna Wagoner, deceased ("Ms. Oates"), who is represented by Colin M. Esgro. On appeal to this Court, Stonerise contends that the parties have a valid and binding arbitration agreement and that the circuit court erred by refusing to enforce the parties' agreement, dismiss this case, and refer the matter to arbitration.

Upon consideration of the parties' briefs¹ and the appendix record, this Court concludes that the circuit court erred by denying Stonerise's motion to dismiss and by not referring the parties' dispute to arbitration as required by their binding arbitration agreement. Accordingly, we reverse the circuit court's order and remand this case with directions to dismiss this matter from the circuit court's docket and to refer the parties to arbitration. Because this case does not present a new or significant issue of law, and for the reasons set forth herein, we find this case satisfies the "limited circumstances" requirement of Rule 21(d) of the West Virginia Rules of Appellate Procedure and is proper for disposition as a memorandum decision.

The facts giving rise to this appeal began in November 2015 when Ms. Oates' mother was admitted to Stonerise's nursing home facility for rehabilitation following a recent illness. As part of the admissions process, Ms. Oates, who completed her mother's paperwork on her behalf as her power of attorney, was presented with an "Arbitration Agreement," which is the document at issue in the instant proceeding. During the proceedings below, a representative of Stonerise testified that she reviewed this document with Ms. Oates before she signed it, and the document, itself, reflects that acceptance of the Arbitration Agreement is voluntary and not required for an individual's admission to or continued residence at Stonerise. Ms. Oates signed the Arbitration Agreement, acknowledging her understanding and acceptance of its terms, and the other documents required for her mother's admission to Stonerise the day after her mother was transported to the facility.

Thereafter, Ms. Oates' mother allegedly suffered injuries while she was a resident of Stonerise, and Ms. Oates filed a wrongful death action against the facility and associated entities on August 9, 2017, in the Circuit Court of Mineral County. In response to the complaint, Stonerise filed a motion to dismiss and compel arbitration contending that, because Ms. Oates had signed the Arbitration Agreement during her mother's admissions process, she was required to resolve any claims relating to her mother's admission to and residence at Stonerise to arbitration. Following a hearing, the circuit court denied Stonerise's motion, finding the subject Arbitration Agreement to be both procedurally and substantively unconscionable. From the circuit court's February 8, 2019 order memorializing this ruling, Stonerise appeals to this Court.

Although the circuit court's order denying Stonerise's motion to dismiss and compel arbitration is an interlocutory ruling, it nevertheless is properly before the Court in its present procedural posture. In this regard, we previously have held that "[a]n order denying a motion to compel arbitration is an interlocutory ruling which is subject to immediate appeal under the collateral order doctrine." Syl. pt. 1, Credit Acceptance Corp. v. Front, 231 W. Va. 518, 745 S.E.2d 556 (2013). Furthermore, "[w]hen an appeal from an order denying a motion to dismiss and to compel arbitration is properly before this Court, our review is de novo." See Syl. pt. 1, W. Va. CVS Pharmacy, LLC v. McDowell Pharmacy, Inc., 238 W. Va. 465, 796 S.E.2d 574 (2017).

The instant appeal asks this Court to determine whether the Arbitration Agreement entered into by the parties during the process of Ms. Oates' mother's nursing home admission is valid and enforceable and, thus, requires Ms. Oates to submit her claims against Stonerise to arbitration for resolution. During the proceedings below, the circuit court was tasked with determining the threshold issues of whether the subject Arbitration Agreement was valid and whether it applied to the claims asserted by Ms. Oates against Stonerise:

"'When a trial court is required to rule upon a motion to compel arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1 - 307 (2006), the authority of the trial court is limited to determining the threshold issues of (1) whether a valid arbitration agreement exists between the parties; and (2) whether the claims averred by the plaintiff fall within the substantive scope of that arbitration agreement.' Syl. Pt. 2, State ex rel. TD Ameritrade, Inc. v. Kaufman, 225 W. Va. 250, 692 S.E.2d 293 (2010)." Syllabus point 4, Ruckdeschel v. Falcon Drilling Co., L.L.C., 225 W. Va. 450, 693 S.E.2d 815 (2010).

Syl. pt. 2, State ex rel. AMFM, LLC v. King, 230 W. Va. 471, 740 S.E.2d 66 (2013). In rendering its rulings, the circuit court found that the parties' Arbitration Agreement was not enforceable because it is both procedurally and substantively unconscionable. See Syl. pt. 1, Brown v. Genesis Healthcare Corp., 229 W. Va. 382, 729 S.E.2d 217 (2012) ("'Under the Federal Arbitration Act, 9 U.S.C. § 2, a written provision to settle by arbitration a controversy arising out of a contract that evidences a transaction affecting interstate commerce is valid, irrevocable, and enforceable, unless the provision is found to be invalid, revocable or unenforceable upon a ground that exists at law or in equity for the revocation of any contract.' Syllabus Point 6, Brown v. Genesis Healthcare Corp., 228 W. Va. 646, 724 S.E.2d 250 (2011)[, vacated in part on other grounds sub nom. Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. 530, 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012) (per curiam)].") ("Brown II").

Generally speaking,

"[t]he doctrine of unconscionability means that, because of an overall and gross imbalance, one-sidedness or lopsidedness in a contract, a court may be justified in refusing to enforce the contract as written. The concept of unconscionability must be applied in a flexible manner, taking into consideration all of the facts and circumstances of a particular case." Syllabus Point 12, Brown v. Genesis Healthcare Corp., 228 W. Va. 646, 724 S.E.2d 250 (2011)[, vacated in part on other grounds sub nom. Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. 530, 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012) (per curiam)].

Syl. pt. 4, Brown II, 229 W. Va. 382, 729 S.E.2d 217. Conducting "[a]n analysis of whether a contract term is unconscionable necessarily involves an inquiry into the circumstances surrounding the execution of the contract and the fairness of the contract as a whole." Syl. pt. 3, Troy Mining Corp. v. Itmann Coal Co., 176 W. Va. 599, 346 S.E.2d 749 (1986). Moreover, "[a] determination of unconscionability must focus on the relative positions of the parties, the adequacy of the bargaining position, the meaningful alternatives available to the plaintiff, and 'the existence of unfair terms in the contract.'" Syl. pt. 4, Art's Flower Shop, Inc. v. Chesapeake & Potomac Tel. Co. of W. Va., Inc., 186 W. Va. 613, 413 S.E.2d670 (1991). Furthermore, "[u]nconscionability is an equitable principle, and the determination of whether a contract or a provision therein is unconscionable should be made by the court." Syl. pt. 1, Troy Mining, 176 W. Va. 599, 346 S.E.2d 749. Thus,

"[i]f a court, as a matter of law, finds a contract or any clause of a contract to be unconscionable, the court may refuse to enforce the contract, enforce the remainder of the contract without the unconscionable clause, or limit the application of any unconscionable clause to avoid any unconscionable result." Syllabus Point 16, Brown v. Genesis Healthcare Corp., 228 W. Va. 646, 724 S.E.2d 250 (2011)[, vacated in part on other grounds sub nom. Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. 530, 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012) (per curiam)].

Syl. pt. 8, Brown II, 229 W. Va. 382, 729 S.E.2d 217.

To determine whether the parties' Arbitration Agreement is valid and enforceable under the facts of this case, we must review the agreement and the circumstances surrounding its execution to ascertain whether it is procedurally and substantively unconscionable as found by the circuit court.

"A contract term is unenforceable if it is both procedurally and substantively unconscionable. However, both need not be present to the same degree. Courts should apply a 'sliding scale' in making this determination: the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the clause is unenforceable, and vice versa." Syllabus Point 20, Brown v. Genesis Healthcare Corp., 228 W. Va. 646, 724 S.E.2d 250 (2011)[, vacated in part on other grounds sub nom. Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. 530, 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012) (per curiam)].

Syl. pt. 9, Brown II, 229 W. Va. 382, 729 S.E.2d 217.

First, we consider procedural unconscionability. In this regard, we previously have held that

"Procedural unconscionability is concerned with inequities, improprieties, or unfairness in the bargaining process and formation of the contract. Procedural

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