Wert v. Manorcare of Carlisle Pa, LLC, 62 MAP 2014

• Decision Date: 27 October 2015
• Docket Number: No. 62 MAP 2014,62 MAP 2014
• Citation: 124 A.3d 1248
• Parties: Evonne K. WERT, Executrix of the Estate of Anna E. Kepner, Deceased v. MANORCARE OF CARLISLE PA, LLC d/b/a Manorcare Health Services–Carlisle; HCR Manorcare, Inc; Manor Care, Inc.; HCR Healthcare, LLC; HCR II Healthcare, LLC; HCR III Healthcare, LLC; HCR IV Healthcare, LLC : GGNSC Gettysburg, LP, d/b/a Golden Living Center–Gettysburg; GGNSC Gettysburg GP, LLC; GGNSC Holdings, LLC; Golden Gate National Senior Care, LLC; GGNSC Equity Holdings, LLC; GGNSC Administrative Services, LLC. Appeal of GGNSC Gettysburg LP, d/b/a Golden Living Center–Gettysburg; GGNSC Gettysburg GP, LLC; GGNSC Holdings, LLC; Golden Gate National Senior Care, LLC; GGNSC Equity Holdings, LLC and GGNSC Administrative Services, LLC.
• Court: Pennsylvania Supreme Court

124 A.3d 1248

Evonne K. WERT, Executrix of the Estate of Anna E. Kepner, Deceased

v.MANORCARE OF CARLISLE PA, LLC d/b/a Manorcare Health Services–Carlisle; HCR Manorcare, Inc; Manor Care, Inc.; HCR Healthcare, LLC; HCR II Healthcare, LLC; HCR III Healthcare, LLC; HCR IV Healthcare, LLC : GGNSC Gettysburg, LP, d/b/a Golden Living Center–Gettysburg; GGNSC Gettysburg GP, LLC; GGNSC Holdings, LLC; Golden Gate National Senior Care, LLC; GGNSC Equity Holdings, LLC; GGNSC Administrative Services, LLC.

Appeal of GGNSC Gettysburg LP, d/b/a Golden Living Center–Gettysburg; GGNSC Gettysburg GP, LLC; GGNSC Holdings, LLC; Golden Gate National Senior Care, LLC; GGNSC Equity Holdings, LLC and GGNSC Administrative Services, LLC.

No. 62 MAP 2014

Supreme Court of Pennsylvania.

Argued: April 7, 2015.

Decided: Oct. 27, 2015.

William Michael Buchanan, Esq., Patrick Louis Mechas, Esq., Ira L. Podheiser, Esq., Burns White LLC, for GGNSC Gettysburg, LP; GGNSC Gettysburg GP, LLC; GGNSC Hldgs., LLC; Golden Nat'l Sr. Care, et al.

Michael William Bootler, Esq., Matthew Thomas Corso, Esq., Buchanan Ingersoll & Rooney PC, for Manorcare of Carlisle PA, LLC, d/b/a Manorcare Health Services–Carlisle et al.

Stephen Trzcinski, Esq., Wikes & McHugh, P.A., for Evonne K. Wert, Executrix of the Estate of Anna E. Kepner, Deceased.

Barbara Axelrod, Esq., Beasley Firm, L.L.C. (The), for Pennsylvania Association for Justice.

Iris Y. Gonzales, Esq., for AARP Foundation Litigation.

Sol H. Weiss, Esq., Anapol Schwartz, for American Association for Justice.

OPINION ANNOUNCING THE JUDGMENT OF THE COURT

Justice STEVENS.

Golden Living Center–Gettysburg et al.(“Appellants”) appeal the Superior Court's decision affirming, in relevant part, the trial court's order overruling Appellants' preliminary objections seeking to compel arbitration and reserving for trial the underlying negligence action filed by Evonne K. Wert (“Appellee”), daughter of Anna E. Kepner (“Decedent”) and executrix of Decedent's estate. For the following reasons, we affirm the order of the Superior Court and remand to the trial court for further proceedings consistent with this decision.

The following issues of first impression have been presented before this Court:

(a) Whether the Superior Court's decision in Stewart v. GGNSC–Canonsburg, L.P.,9 A.3d 215 (Pa.Super.2010), holding that the NAF Designation voided an identical Arbitration Agreement, was incorrectly decided and should be reversed, where there is no evidence indicating that the NAF designation was integral to the Agreement?

(b) Whether the Court may ignore undisputed testimonial evidence that the party seeking to void the Agreement did not consider the NAF Designation to be an “integral part” of the Arbitration Agreement (because she did not bother to read the agreement)?

Wert v. ManorCare of Carlisle PA, LLC,626 Pa. 114, 95 A.3d 268, 268–69 (2014)(per curiamorder) (footnote omitted).

I. Background

Decedent resided in Appellants' long-term skilled nursing care facility between March and August, 2010. Due to the alleged abuse and neglect inflicted upon her throughout her stay, Decedent suffered a multitude of injuries and illnesses that eventually resulted in her death. Appellee filed suit claiming Appellants knowingly sacrificed the quality of care given to their residents. Relevant to this appeal, Appellants filed preliminary objections seeking to enforce an arbitration agreement (“Agreement”) which Appellee signed, along with general admission paperwork upon Decedent's admission to the facility.¹Relying on Stewart v. GGNSC–Canonsburg, L.P.,9 A.3d 215 (Pa.Super.2010), on September 13, 2012, the trial court overruled the preliminary objections and found the Agreement unenforceable because the Agreement relied, as part of an essential term, upon the National Arbitration Forum (“NAF”) Code procedures that were void at that time with respect to consumer arbitration disputes. See id.at 217(declining to enforce a nursing home's identical agreement because “the NAF[ ] can no longer accept arbitration cases pursuant to a consent decree it entered with the Attorney General of Minnesota” and the term was non-severable). Appellants appealed, claiming Stewartwas either wrongly decided or, in the alternative, was distinguishable because the NAF provision was not integral to the Agreement at issue herein.

The Superior Court affirmed in an unpublished memorandum opinion on December 19, 2013. See Wert v. ManorCare of Carlisle,93 A.3d 514 (Pa.Super. filed Dec. 19, 2013)(unpublished memorandum). Finding itself bound by Stewart,the Superior Court declined to distinguish the NAF provision as non-integral based upon Appellee's deposition testimony that the NAF provision had nothing to do with her decision to sign the Agreement. Instead, the Superior Court found Appellee's statements showed that she did not consider the importance of the NAF provision. See Wert, supra(unpublished memorandum at 6–7) (“[Appellee]'s testimony does not demonstrate she considered and then rejected the import of the NAF provisions. Rather, read in context, [Appellee]'s testimony was that she believed it was necessary to sign all the documents presented to her in order to obtain treatment and care for her mother.”).²

Judge Fitzgerald filed a concurring statement, wherein he noted that while he agreed the Superior Court was bound by Stewart,he was “troubled” by the implication that adopting NAF procedure indicated “only [the] NAF could administer the arbitration, where the document itself does not identify who shall administer the arbitration.” Wert, supra(Fitzgerald, J., concurring at 2).

Appellants filed a timely petition for allowance of appeal, and on June 24, 2014, we granted allocatur to address the issues as stated supra.The Pennsylvania Association for Justice (“PAJ”), American Association for Justice (“AAJ”), and American Association for Retired Persons (“AARP”) filed amicusbriefs on behalf of Appellee.³

II. Discussion

A. Arguments of the Parties

1. Appellants

Appellants argue that the NAF provision is an ancillary and severable code of procedure based upon the plain text of the Agreement, terms and policy guidelines of the Federal Arbitration Act (“FAA”), and admissions of Appellee. Appellants emphasize that the Agreement's scope broadly favors arbitration, wherein the NAF cannot have been integral because it is “mentioned only once.” Appellants' Brief at 26. Appellants claim that “[w]hat the Agreement's language does reflect is that its primary and overriding purpose is that disputes be arbitrated, period.” Id.at 27 (citing Meskill v. GGNSC Stillwater Greeley LLC,862 F.Supp.2d 966, 975–76 (D.Minn.2012)(permitting the appointment of a substitute arbitrator under the FAA pursuant to a similar agreement)).

Appellants contend while the Agreement selects a set of procedural rules, it lacks “an express statement designating a specific arbitrator.” Id.at 34. Appellants note that although the Superior Court in Stewartfound, as fundamental terms, “(1) that the law governing the arbitration proceedings would be the NAF code, and (2) ... under the NAF Code, the arbitrators would be members of the NAF,” subsequent decisions in other jurisdictions indicate this is incorrect. Id.(quoting Stewart, 9 A.3d at 220). Appellants therefore argue that merely agreeing to a forum's code of procedure does not make the participation of the forum itself essential. Id.(citing Green v. U.S. Cash Advance Illinois, LLC,724 F.3d 787, 789 (7th Cir.2013)(finding “the [arbitration] agreement calls for use of the [NAF's] Code of Procedure, not for the [NAF] itself to conduct the proceedings”)).

Appellants assert the Stewartcourt altered the Code's specification in Rule 1(A) that it “shall be administered solely by the NAF” into a provision that “only [the] NAF was ‘authorized to administ[er] and applythe NAF Code.’ ” Id.at 35 (emphasis in original). Appellants assert that the NAF Code “provides at the very beginning that the parties are always free to agree to other procedures beyond those contained [here]” and simply directs the parties to “select an arbitrator or panel of arbitrators ‘on mutually agreeable terms.’ ” Appellants' Reply Brief at 13 (citing NAF Code Rule 21(A)(1)). Appellants argue that these rules can be administered by any competent arbitrator and that their exclusivity provision is “unenforceable in light of the [NAF's] decision to cease conducting arbitrations.”Id.at 16 (quotation and internal quotation marks omitted).

Appellants claim Appellee distorts and misapplies other NAF Code Rules. For example, Appellants maintain that contrary to Appellee's claim that Rule 48(E) governs unavailability, it “merely allows [the] NAF to turn down arbitrations not properly before that body .... [and] goes on to say that if the parties are ‘denied the opportunity to arbitrate a dispute, controversy or Claim before the [NAF], the Parties may seek legal and other remedies in accord with applicable law.’ ” Id.at 17. Appellants also dispute the ensuing implication that arbitration is no longer an option, noting that in Green,the Seventh Circuit Court of Appeals found that Section five of the FAA fits within the Code's definition of “applicable law.” Id.at 18 (citation omitted).

Appellants accordingly favor the South Dakota Supreme Court's interpretation of the NAF Code in an analogous case, where it explicitly rejected Stewartand found the agreement neither selected a particular adjudicator, specified qualifications or experience, nor chose the NAF as its place of forum. Wright v. GGNSC Holdings LLC,808 N.W.2d 114, 119–20 & n. 6 (S.D.2011). Appellants emphasize that “the NAF[ ] ... does not employ its own arbitrators and merely provides a code of procedure to be followed by neutral arbitrators who may also provide arbitration for numerous other forums.” Appellants' Brief at 36.

Appellants also underscore the Agreement's severability clause, which “indicates that the intention was not to make the [NAF] integral, [but] rather...