Testa ex rel. Testa v. Emeritus Corp.
| Decision Date | 04 September 2015 |
| Docket Number | No. 15 C 02449,15 C 02449 |
| Parties | JOSEPH TESTA, on behalf of SAMUEL J. TESTA Plaintiff, v. EMERITUS CORPORATION, d/b/a EMERITUS AT ORLAND PARK, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Plaintiff Joseph Testa brings this personal-injury action on behalf of his father, Samuel Testa, to recover monetary damages for harms Samuel allegedly suffered during his stay at Emeritus at Orland Park, an assisted living facility operated by Defendant Emeritus Corporation. The lawsuit was originally filed in the Circuit Court of Cook County, but Emeritus properly removed it. R. 1, Not. Removal.1 Emeritus believes that the claims in the action are subject to arbitration,which it moves to compel as well as to stay judicial proceedings. R. 8, Def.'s Mot. For the reasons explained below, although some of the parties' arguments are rejected, the Court needs supplemental briefing before definitively deciding Emeritus's motion.
The relevant facts are not in dispute. Samuel Testa was admitted to Emeritus at Orland Park (the Opinion refers to both the facility itself and the company as "Emeritus") on October 25, 2012. Compl. ¶ 5. On November 1, 2012, exercising a power of attorney for his father, Joseph Testa executed an "Assisted Living Establishment Contract" governing the terms of Samuel's residence at Emeritus. See R. 8, Exh. 2, Establishment Contract. Three weeks later, on November 22, Joseph signed, as Samuel's "Authorized Representative," another agreement with Emeritus. R. 8, Exh. 1, Arbitration Agreement. The agreement is entitled, "Agreement to Resolve Disputes by Binding Arbitration,2 and it states in relevant part that:
any action, dispute, claim or controversy of any kind, whether in contract or in tort, statutory or common law, personal injury, property damage, legal or equitable or otherwise, arising out of the provision of assisted living services, healthcare services, or any other goods or services provided under the terms of any agreement between the Parties, including disputes involving the scope of this Arbitration Agreement, or any other dispute involving acts or omissions that cause damage or injury to eitherParty, except for matters involving evictions, shall be resolved exclusively by binding arbitration and not by lawsuit or resort to the judicial process, except to the extent that applicable law provides for judicial review of arbitration proceedings.
R. 8, Exh. 1, Arbitration Agreement at 1 (emphasis in original). The Arbitration Agreement further provides that "[a]dmission to [Emeritus] is not contingent upon signing this Agreement." Id. at 2. No representative of Emeritus evidently signed the Agreement. See id. ().
Before Joseph signed either the Establishment Contract or the Arbitration Agreement on his father's behalf, Samuel had given Joseph two powers of attorney: an Illinois Statutory Short Form Power of Attorney for Health Care ("Illinois POA") dated June 2010, R. 12, Exh. B Illinois POA, and a durable power of attorney entered into under Arizona state law and dated March 2001 ("Arizona POA"), R. 12, Exh. A, Arizona POA. The purpose of the Illinois POA, according to its own terms in a prefatory notice, is to give Joseph "broad powers to make health care decisions, including ... to require, consent to or withdraw any type of personal care or medical treatment for any physical or mental condition and to admit [Samuel] to or discharge [him] from any hospital, home or other institution." Illinois POA at 1. Consistent with this purpose, Section 1 of the Illinois POA gives Joseph the authority to make "personal care, medical treatment, hospitalization, and health care" decisions. Id. The Illinois POA also specifies that it "is intended to be as broad as possible so that [Joseph] will have authority to make any decision [Samuel] could make to obtain or terminate any type of health care." Id. at 2. It then goes on to list excerpts from the Illinois Power of Attorney for Health Care Law, including aprovision that, relevant here, reads, "The agent may sign and deliver all instruments, negotiate and enter into all agreements and do all other acts reasonably necessary to implement the exercise of the powers granted to the agent." Id. at 5 ().
The Arizona POA has two operative articles, granting powers over "asset control" and "health care decisions." Article 1 states broadly that Joseph "shall have full power and authority to do any and all acts for [Samuel's] benefit which [Samuel] might do if [he] were present." Arizona POA at 2. Several examples of such acts are then listed, "by way of illustration but not by way of limitation," including "to ask, demand, sue for ... sums of money," "to sell, assign, and transfer stocks" and other securities, "to borrow money," "to manage real property," and "to make and verify income tax returns." Id. at 2-3. One other expressly listed act is "to retain counsel on [Samuel's] behalf, to appear for [him] in all actions and proceedings to which [he] may be party in the courts of Arizona or elsewhere, to commence actions and proceedings in [his] name and to sign and verify [his] name on all complaints, petitions, answers and other pleadings of every description." Id. at 3.
In January 2015, Joseph filed suit on behalf of Samuel in Cook County Circuit Court, alleging that Samuel—who left Emeritus in March 2014—had suffered physical injuries, including fractured bones, as a result of Emeritus's negligence during his stay. Compl. ¶¶ 8-19, 23-27. Emeritus properly removed theaction to this Court in March 2015, Not. Removal, and now moves to compel arbitration and stay judicial proceedings under the arbitration agreement that Joseph signed on November 22, 2013. Def.'s Mot.
Under the Federal Arbitration Act, if the parties have an arbitration agreement and the asserted claims in a lawsuit are within its scope, a motion to compel arbitration must be granted. 9 U.S.C. §§ 3-4; Sharif v. Wellness Int'l Network, Ltd., 376 F.3d 720, 726 (7th Cir. 2004) (citing Kiefer Specialty Flooring, Inc. v. Tarkett, Inc., 174 F.3d 907, 909 (7th Cir. 1999)). The Act "establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). Accordingly, Section 3 of the Act requires granting a motion to stay a lawsuit where "the issue involved in such suit ... is referable to arbitration" under a written agreement. 9 U.S.C. § 3. And Section 4 requires that the court order the parties to proceed in arbitration if there is an agreement to arbitrate. 9 U.S.C. § 4.
"Although it is often said that there is a federal policy in favor of arbitration, federal law places arbitration clauses on equal footing with other contracts, not above them." Janiga v. Questar Capital Corp., 615 F.3d 735, 740 (7th Cir. 2010) (citing Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68 (2010)). "Any 'preference' for arbitration is reserved for the interpretation of the scope of a valid arbitration clause." Id. at 740 (citing AT & T Techs., Inc. v. CommunicationsWorkers of Am., 475 U.S. 643, 649-50 (1986)). Before staying judicial proceedings and compelling arbitration, it is generally for the court to decide whether a contract containing an arbitration clause exists at all. See Granite Rock Co. v. Int'l Brotherhood of Teamsters, 561 U.S. 287, 296 (2010). Whether a binding arbitration agreement exists is determined under principles of state contract law. Janiga, 615 F.3d at 742 (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 934 (1995)).
Joseph Testa does not dispute that his father Samuel's personal-injury claim falls within the scope of the Arbitration Agreement that Joseph signed on Samuel's behalf. Instead, Joseph offers three theories for why the Agreement was invalid to start with: lack of consideration, lack of mutual assent, and because Joseph never had the authority to bind Samuel to arbitration under the POAs. The first two of these arguments are meritless under Illinois law. As for the third, concerning the scope of Joseph's authority, the Court must reserve judgment pending further briefing from the parties.
Under Illinois law, "[w]here there is no other consideration for a contract, the mutual promises of the parties" is ordinarily sufficient to "constitute the consideration." Carter v. SSC Odin Operating Co., 976 N.E.2d 344, 351 (Ill. 2012) (quoting Armstrong Paint & Varnish Works v. Continental Can Co., 133 N.E. 711, 714 (Ill. 1921)); accord Bishop v. We Care Hair Dev. Corp., 738 N.E.2d 610, 623 (Ill.App. Ct. 2000). Notwithstanding this principle, Joseph contends that the Arbitration Agreement should not be given effect because the company's end of the bargain was, according to Joseph, illusory: specifically, the exception the Agreement makes for "matters involving evictions" is a "loophole that allows [Emeritus] to avoid arbitration for virtually all claims ... rendering its 'promise' to arbitrate meaningless." Pl.'s Resp. Br. at 8-9. Joseph points to the Establishment Contract, which outlines several grounds for which Emeritus could properly terminate Samuel's residence at its facility, including non-payment of fees, failure to comply with other contractual terms, and Emeritus's reasonable belief that its facility is inappropriate for him. Establishment Contract at 11-12. Because the Establishment Contract gives Emeritus such broad grounds to terminate its relationship with Samuel, the argument goes, an exception for eviction disputes in the arbitration agreement is ...
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