Haydon v. Elegance at Dublin ( 2023 )

Filed 12/19/23
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
SALLY ANN HAYDON,
Plaintiff and Respondent,
A168767
v.
ELEGANCE AT DUBLIN et al., (Alameda County
Super. Ct. No. 23CV029215)
Defendants and Appellants.
Defendants Elegance at Dublin, Elegance Living, LLC, Elegance Living
Employer, LLC, Capital Health Group, LLC, Marissa Espinoza, and Amador
Valley I, LLC (collectively, defendants) appeal from an order denying their
motion to compel arbitration of a lawsuit filed by Sally Ann Haydon, a former
resident at the Elegance at Dublin residential care facility for the elderly
(facility).1 Defendants contend the trial court erred by concluding the parties’
arbitration agreement was unconscionable and by failing to sever any
unconscionable provisions and enforce the rest of the agreement. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Haydon is 74 years old and has dementia. She lived at the facility for a
few days from December 29, 2022 until January 1, 2023.
1 Defendant Amador Valley I, LLC joins the opening brief filed by the
other defendants. We also grant Amador’s joinder in the other defendants’
reply brief.
The Arbitration Clause
Before moving to the facility, Haydon signed a Residence and Care
Agreement (agreement) that included an arbitration clause. The clause was
in the middle of a document over 40 pages long, which included the
agreement, several appendices, and other materials. The arbitration clause
was the last of over 20 unrelated “miscellaneous” provisions at the end of the
agreement. The clause had its own signature block, immediately followed by
a signature block for the agreement as a whole. Neither signature block was
clearly identified or set off from the dense surrounding text. And both
signature blocks — along with several others interspersed throughout the
document — included multiple signature lines (for example, for two
residents, a resident representative, and/or a facility representative).
The arbitration clause provided in pertinent part that, “[b]y signing
below, you agree that any and all claims and disputes arising from or related
to this [a]greement or to your residency, care or services at the [facility] . . .
shall be resolved by submission to neutral, binding arbitration in accordance
with the Federal Arbitration Act . . . .” “The arbitration shall be
administered by the Judicial Arbitration and Mediation Services
(‘JAMS’) . . . .” The arbitration provision required the parties to bear their
own costs and fees and prohibited them from disclosing “the existence,
content, or results of the arbitration without the prior written consent of the
parties . . . .” In bold text, the arbitration clause explained that residents
could withdraw from the clause by giving written notice within 30 days of
signing the agreement, and cautioned that “[b]y signing below, you warrant
that this paragraph has been explained to you, that you understand its
significance, that you voluntarily agree to be bound by it, and that you
2
understand that agreeing to arbitration is not a condition of admission to the
[facility].”
The Proceedings Below
In March 2023, Haydon sued defendants under the Elder Abuse and
Dependent Adult Civil Protection Act (Welf. & Inst. Code, § 15600 et seq.;
Elder Abuse Act) and for negligence, assault, and battery. The gravamen of
the complaint was that Haydon was sexually assaulted by a caregiver the
morning of her last day at the facility and that defendants failed to provide
for her safety.
Defendants moved to compel arbitration. They argued that the
arbitration provision applied to Haydon’s claims, and each of the defendants
was entitled to enforce it. Defendants urged that the arbitration provision
was not unconscionable and, in the alternative, that the trial court could and
should sever any unconscionable clause from the provision and enforce the
remainder. They filed a copy of the agreement but offered no evidence of the
circumstances surrounding its execution.
In opposition, Haydon claimed she lacked capacity to agree to
arbitration and that the arbitration provision was unconscionable. In a
supporting declaration, Haydon’s daughter explained that she communicated
with the facility on her mother’s behalf throughout the admission process and
gave notice in October 2022 that her mother had “cognitive disorder and
asphasia [sic],” a loss of ability to understand or express speech. According to
Haydon’s daughter, the facility salesperson “adamantly pushed” to finalize
Haydon’s admission before he left the facility to take another job and “made
it clear that if [Haydon] signed up with him,” she would get “a better rate.”
This was important because Haydon lived on a fixed income and had no
retirement savings. Haydon’s daughter claimed the salesperson emailed the
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agreement “on 11/22/23” (date is erroneous as Haydon apparently signed the
agreement on November 20, 2022) and asked her “multiple times when
[Haydon] could get it back to him.” He “expressed . . . that he was in a time
crunch to get all the paperwork done before his last day so [Haydon] could get
the rate she could afford.” Haydon’s daughter stated that “[n]o one from the
facility explained the . . . [a]greement, including the arbitration clause,” to
Haydon, and no one from the facility was with Haydon when she signed it.
Meanwhile, Haydon “was declining in her abilities” and “could no longer
drive.” She “felt incredible pressure and duress to sign all of the documents
by [the salesperson’s] deadline.”
In reply, defendants offered a declaration by the salesperson who
interacted with Haydon’s daughter. He denied saying the discount would be
withdrawn if Haydon did not sign the agreement before the end of his
employment. The salesperson claimed Haydon “had approximately two
weeks” to review the agreement before she signed and returned it.
The trial court issued a tentative ruling denying defendants’ motion on
the grounds that the arbitration provision was unconscionable. The court
found a “high degree of procedural unconscionability” because Haydon “was
presented with a 44-page prolix [a]greement to sign under time pressure,”
and the agreement was “formatted and drafted in a difficult-to-understand
manner.” The tentative ruling credited the testimony via declaration of
Haydon’s daughter over that of the salesperson, reasoning that the assertion
that Haydon had two weeks to review the documents was not credible
because the salesperson failed to “provide the specific dates on which he
provided the [a]greement to [Haydon] and when and how” the executed
agreement was returned to him. The court also found the agreement and
arbitration clause were “set in what appear[ed] to be small 8 or 10-point
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single-spaced text” and the multiple signature blocks were “confusing.” The
court found that “[t]he odd manner in which [Haydon] signed the main
signature block implie[d] that she was in fact confused by this.” The court
also found a “high degree of substantive unconscionability” based on three
components of the arbitration provision and the applicable JAMS rules. It
concluded the arbitration provision could not be enforced due to
unconscionability and declined to address the other issues raised by the
parties.
After issuing its tentative ruling, the trial court continued the hearing
on defendants’ motion. On the day before the hearing, in the afternoon or
evening, defendants’ counsel filed a supplemental declaration attaching what
he claimed were emails between Haydon’s daughter and the salesperson.
Counsel argued the emails contradicted statements made by Haydon’s
daughter and established the agreement was provided “more than two weeks
before it was signed and more than three weeks before it was returned.” At
the hearing, Haydon’s counsel objected to the late-filed declaration, claiming
defendants had refused to provide discovery concerning the execution of the
arbitration clause and wanted “a second bite at the apple” after receiving the
court’s tentative ruling. After argument from both sides, the trial court
decided not to consider the declaration, explaining that defendants should not
“benefit” because the court “for its own reasons continued the hearing by [a]
week.” The court then heard argument on the merits of defendants’ motion,
adopted the tentative ruling, and issued an order denying the motion that
same day. Defendants did not request a statement of decision.
This timely appeal followed. We expedited the appeal pursuant to Code
of Civil Procedure section 1294.4 and California Rules of Court, rule 8.710 et
seq.
5
DISCUSSION
Defendants challenge the trial court’s order on several grounds, which
we address in turn.
I. Delegation Provision
Defendants argue the trial court erred by failing to address their
argument that a delegation provision required the arbitrator to determine
unconscionability.
This argument is forfeited because defendants did not raise it in their
motion to compel arbitration. (See Mendoza v. Trans Valley Transport (2022)
75 Cal.App.5th 748, 770 [argument regarding delegation provision forfeited
where first raised in reply].) Instead, in their motion defendants asked the
trial court to determine that the arbitration provision was not
unconscionable. (Id. at pp. 770–771.) In her opposition, Haydon noted it
would be improper to raise the delegation provision in reply and argued it
was unenforceable in any case. Only then did defendants claim the provision
required the arbitrator to decide unconscionability. And in their reply, they
provided no reasoned argument to support this assertion, merely responding
to Haydon’s claim that the provision was unenforceable. (Id. at p. 770.) They
take the same approach on appeal.
We therefore decline to consider this issue on the merits. (See Williams
v. West Coast Hospitals, Inc. (2022) 86 Cal.App.5th 1054, 1072–1073 [failure
to preserve argument concerning delegation provision in the trial court was
compounded by failure to provide reasoned argument on appeal].)
II. Unconscionability
Unconscionability has both a procedural and a substantive element.
(OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125 (OTO).) Procedural
unconscionability “ ‘addresses the circumstances of contract negotiation and
6
formation, focusing on oppression or surprise due to unequal bargaining
power.’ ” (Ibid.) “ ‘Substantive unconscionability pertains to the fairness of
an agreement’s actual terms and to assessments of whether they are overly
harsh or one-sided.’ ” (Ibid.) Both elements must be proven, but they are
evaluated on a sliding scale: “the more substantively oppressive the contract
term, the less evidence of procedural unconscionability is required” to find it
unenforceable, “and vice versa.” (Armendariz v. Foundation Health
Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 (Armendariz).)
On appeal, “[w]e review the trial court’s findings of disputed fact for
substantial evidence; we review its finding of unconscionability based on
those facts de novo.” (Gostev v. Skillz Platform, Inc. (2023) 88 Cal.App.5th
1035, 1047.) If material facts are in dispute, we presume the court found
every fact and drew every permissible inference necessary to support its
order. (Carlson v. Home Team Pest Defense, Inc. (2015) 239 Cal.App.4th 619,
630.)
Defendants claim the arbitration provision was neither procedurally
nor substantively unconscionable.
A. Procedural Unconscionability
Defendants insist the arbitration clause was not procedurally
unconscionable because there was no evidence of oppression or surprise and
the clause was not adhesive. In assessing procedural unconscionability,
courts ask “whether circumstances of the contract’s formation created such
oppression or surprise that closer scrutiny of its overall fairness is required.”
(OTO, supra, 8 Cal.5th at p. 126.) Oppression occurs “ ‘ “ ‘where a contract
involves lack of negotiation and meaningful choice’ ” ’ ” and surprise involves
the extent to which “ ‘ “ ‘the allegedly unconscionable provision is hidden
within a prolix printed form.’ ” ’ ” (Ibid.)
7
Here, the trial court found “a high degree of procedural
unconscionability” based on both oppression and surprise. This conclusion is
well-supported by the agreement itself and the declaration of Haydon’s
daughter, which the court credited.2
Haydon’s daughter explained that her mother was under enormous
pressure to sign the agreement and arbitration provision because her
condition was declining, she had limited financial resources, and the facility
was offering a discount contingent on her signing up quickly. A similar type
of oppression was discussed in Dougherty v. Roseville Heritage Partners
(2020) 47 Cal.App.5th 93, 97, 100 (Dougherty), which deemed unconscionable
an arbitration agreement contained within admissions documents to an elder
residential care facility. While in Dougherty the prospective resident needed
to find a facility that day (id. at pp. 103–104), here, the evidence supports the
court’s conclusion that a similarly vulnerable Haydon was subjected to a
financial “pressure tactic” that was oppressive.
The trial court’s finding of surprise is also supported by substantial
evidence. Haydon was presented with a long, dense agreement interspersed
with several confusing signature blocks — some of which she filled out
incorrectly. As in Dougherty, the arbitration provision was “buried within the
packet” Haydon was pressured to sign. (Dougherty, supra, 47 Cal.App.5th at
p. 104.) And worse, the provision was not presented in a separate document
(id. at p. 100) or even in a separate section, but as the last of over 20
unrelated “miscellaneous” provisions spanning several pages at the end of the
agreement. These circumstances reflect a high degree of surprise. And
2 While the court also drew a negative inference based on the lack of
detail provided by the salesperson in his declaration, this was unnecessary to
its ruling. And the court’s order did not include or depend on a finding that
the salesperson emailed the agreement on a particular date.
8
defendants’ failure to alert Haydon to relevant provisions of the JAMS rules,
such as the discovery limitations discussed below, is another factor
supporting the trial court’s finding of unconscionability based on surprise.
(Id. at p. 104.)
Defendants contend the arbitration clause is not procedurally
unconscionable because it was not adhesive given the disclaimer that it was
not a condition of admission and the 30-day opt-out provision. As defendants
acknowledge, adhesion is not a prerequisite to procedural unconscionability.
(Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1410.) Even where an
arbitration provision allows a party to opt out, there may be procedural
unconscionability if there is not “an authentic informed choice” to make that
decision. (See Gentry v. Superior Court (2007) 42 Cal.4th 443, 470–472,
fn. 10, abrogated on other grounds as stated in Iskanian v. CLS
Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 359–360.) Here, we
presume the trial court found Haydon did not have an authentic informed
choice to reject the arbitration clause given its confusing presentation, the
failure of anyone at the facility to explain the clause or the opt-out procedure
to her, and the temporal and financial pressure she experienced in her
vulnerable state.
Finally, defendants contend the trial court abused its discretion by
failing to consider the supplemental declaration they filed after the court
issued a tentative ruling and on the eve of the continued hearing on their
motion. We disagree. A court has broad discretion to accept or reject late-
filed papers, and the general rule is that new evidence is not permitted even
on reply. (Jack v. Ring LLC (2023) 91 Cal.App.5th 1186, 1210.) Here, the
court considered defendants’ reply evidence, and did not abuse its discretion
when it drew the line at additional new evidence offered well past both the
9
reply deadline and the original hearing date. (Ibid. [no abuse of discretion
where court denied request to supplement the record filed the day motion to
compel arbitration was heard].)3
In sum, the circumstances surrounding Haydon’s execution of the
arbitration provision reflect a high degree of procedural unconscionability.
“Under the sliding scale approach, only a low level of substantive
unconscionability is therefore required to render the arbitration agreement
unenforceable.” (Dougherty, supra, 47 Cal.App.5th at p. 104.)
B. Substantive Unconscionability
The trial court found the arbitration clause and applicable JAMS rules
had three substantively unconscionable components. Defendants disagree on
all points.
Substantive unconscionability arises when a contract imposes unduly
harsh or one-sided results. (Armendariz, supra, 24 Cal.4th at p. 114.)
Mutuality is the paramount consideration. (Gostev v. Skillz Platform, Inc.,
supra, 88 Cal.App.5th at p. 1056.) Beyond that, “courts often look to whether
the agreement meets a minimum level of fairness based on the factors set
forth in Armendariz.” (Davis v. Kozak (2020) 53 Cal.App.5th 897, 910
(Davis).) These include whether the agreement provides for adequate
3 To the extent the trial court erred by failing to document its ruling in
the “minutes or order” (Cal. Rules of Court, rule 3.1300(d)), defendants were
not prejudiced. (See Century Surety Co. v. Polisso (2006) 139 Cal.App.4th
922, 963.) The court heard and considered argument about the new evidence
and made its ruling and its reasoning clear, as reflected in the reporter’s
transcript.
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discovery and imposes unreasonable costs as a condition of access to the
arbitration forum. (See Armendariz, supra, 24 Cal.4th at p. 102.)4
The trial court found a confidentiality provision barring the parties
from “ ‘disclos[ing] the existence, content, or results of the arbitration’ ” was
unconscionable. We agree. Another division of this court has explained that
such a clause would restrict the plaintiff from gathering information
informally, increasing his or her costs unnecessarily and “defeat[ing] the
purpose of using arbitration as a simpler, more time-effective forum for
resolving disputes.” (Ramos v. Superior Court (2018) 28 Cal.App.5th 1042,
1066.) And requiring an elder abuse action like this one to be “kept secret”
unreasonably favors defendants to the detriment of those “seeking to
vindicate unwaivable statutory rights and may discourage potential
plaintiffs” from bringing such cases. (Id. at pp. 1066–1067 [addressing
employment discrimination action]; cf. Murrey v. Superior Court (2023) 87
Cal.App.5th 1223, 1255 (Murrey) [addressing sexual harassment action].)
These concerns are not addressed in the cases cited by defendants, which
considered narrower provisions requiring only the proceedings themselves to
remain confidential. (See Woodside Homes of Cal., Inc. v. Superior Court
(2003) 107 Cal.App.4th 723, 731; Sanchez v. Carmax Auto Superstores
California, LLC (2014) 224 Cal.App.4th 398, 408.)
Defendants protest that authorities disapproving confidential
arbitration in the employment context express concern with a “ ‘ “repeat
4 In Armendariz, our high court adopted minimum requirements for
arbitration agreements that impair the exercise of unwaivable statutory
rights enacted for a public purpose. (Armendariz, supra, 24 Cal.4th at
pp. 99–101.) Haydon’s claim under the Elder Abuse Act involves statutory
rights of this nature, which defendants appear to concede. (See Dougherty,
supra, 47 Cal.App.5th at p. 106; Bickel v. Sunrise Assisted Living (2012) 206
Cal.App.4th 1, 12.)
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player” effect’ ” not present in our case. (Murrey, supra, 87 Cal.App.5th at
p. 1254.) We are not persuaded. While defendants attempt to dismiss
Haydon’s alleged abuse as an isolated incident, the Legislature has
recognized that elders are particularly vulnerable to abuse by caretakers.
(Welf. & Inst. Code, § 15600, subds. (b), (d).) There is an obvious risk that
such abuse could occur at an elder residential care facility (see Dougherty,
supra, 47 Cal.App.5th at p. 106) and that it could reoccur if kept secret. As in
the employment context, confidential arbitration of claims like Haydon’s
“ ‘ “tilt[s] the scales of justice” ’ ” against potential victims of abuse “ ‘ “by
denying [them] access to any information about other claims” ’ ” against the
facility. (Murrey, supra, 87 Cal.App.5th at p. 1254.) Such a requirement is at
odds with the Legislature’s declaration that “confidential settlement
agreements are disfavored” in actions involving violations of the Elder Abuse
Act. (Code Civ. Proc., § 2017.310, subd. (a).) The confidentiality provision is
unconscionable to a high degree.
The trial court also found unconscionable the limitations on discovery
under the applicable JAMS rules, and we presume it made the findings
required to support that conclusion. “In striking the appropriate balance
between the desired simplicity of limited discovery and [plaintiffs’] statutory
rights, courts assess the amount of default discovery permitted under the
arbitration agreement, the standard for obtaining additional discovery, and
whether the plaintiffs have demonstrated that the discovery limitations will
prevent them from adequately arbitrating their statutory claims.” (Davis,
supra, 53 Cal.App.5th at pp. 910–911.) The JAMS rules provide for only a
single deposition absent a determination by the arbitrator that additional
depositions are necessary and do not provide for interrogatories or requests
12
for admission.5 Particularly when combined with the confidentiality
provision, these restrictions “run the risk of frustrating plaintiffs’ statutory
rights under the [Elder Abuse] Act,” which requires plaintiffs to prove their
claims by clear and convincing evidence. (Dougherty, supra, 47 Cal.App.5th
at p. 106; see also Baxter v. Genworth North America Corp. (2017) 16
Cal.App.5th 713, 724–730 [restrictions on informal discovery and low default
discovery provisions were unconscionable].) While courts have approved
discovery restrictions akin to these in other contexts, the heightened
standard of proof for elder abuse claims and the obstruction of informal
discovery tip the balance here.
Finally, the trial court found unconscionable the requirement that
parties bear their own costs and fees in connection with the arbitration, and
this finding is supported by substantial evidence. In consumer cases,
arbitration provisions that impose fees and costs that “in fact would be
unaffordable or would have a substantial deterrent effect” in the plaintiff’s
case are unconscionable.6 (Sanchez v. Valencia Holding Co., LLC (2015) 61
Cal.4th 899, 920.) The trial court found that “JAMS charges up to $10,000.00
per day for a single-arbitrator arbitration” and this would be unaffordable for
Haydon, who “is on Social Security and has no retirement funds.”
Defendants contend that although the arbitration provision “requires the
parties to split arbitration fees, in reality Ms. Haydon would only pay a $250
5 We take judicial notice of Rule 17 of the JAMS Comprehensive
Arbitration Rules & Procedures, effective June 1, 2021. Although no party
filed a request for judicial notice of this rule, both sides raised it to the trial
court and there appears to be no dispute concerning its content or its
application here. We afforded the parties an opportunity to present
information relevant to this issue during oral argument.
6 We assume without deciding that this standard applies here.
13
filing fee” per the fee schedule posted to the JAMS web site. But they did not
make this claim below and have therefore forfeited it. Moreover, the trial
court relied on uncontradicted evidence that JAMS recently billed large
amounts to an elder abuse plaintiff in a similar case. We decline to take
judicial notice of supposedly contrary facts (which defendants have not
requested) based on web pages that were not before the trial court. (See
Brosterhous v. State Bar (1995) 12 Cal.4th 315, 325–326.)
The unconscionable provisions identified by the trial court are enough
to make the arbitration clause unenforceable under the sliding scale
approach.
C. Severability
Defendants contend the trial court erred by failing to address whether
any unconscionable components could be severed from the arbitration
provision and by failing to sever such components. When unconscionability is
shown, the trial court has discretion to “refuse to enforce the contract, or it
may enforce the remainder of the contract without the unconscionable clause,
or it may so limit the application of any unconscionable clause as to avoid any
unconscionable result.” (Civ. Code, § 1670.5, subd. (a).) We review the trial
court’s decision for abuse of discretion. (Armendariz, supra, 24 Cal.4th at
p. 124.)
Armendariz observed that where an “arbitration agreement contains
more than one unlawful provision,” this may “indicate a systematic effort to
impose arbitration . . . as an inferior forum that works to the [drafting
party’s] advantage” and may justify a finding “that the arbitration agreement
is permeated by an unlawful purpose.” (Armendariz, supra, 24 Cal.4th at
p. 124.) We presume the trial court found the provision here was permeated
by unconscionability, and we see no abuse of discretion in that finding. (See
14
Davis, supra, 53 Cal.App.5th at p. 918; Dougherty, supra, 47 Cal.App.5th at
p. 107.) Defendants cite no authority showing that the provision’s
severability clause somehow divested the court of its discretion in this regard.
Finally, while defendants now say they are willing to pay Haydon’s
arbitration fees, this “does not change the fact that the arbitration agreement
as written is unconscionable and contrary to public policy.” (Armendariz,
supra, 24 Cal.4th at p. 125.) The trial court was not required to enforce an
agreement “permeated by unconscionability” by accepting defendants’ after-
the-fact offer to modify it. (Id. at p. 126.)
In sum, the trial court appropriately determined that the arbitration
provision was unenforceable due to unconscionability. We therefore need not
reach Haydon’s alternative arguments in support of the trial court’s order.
DISPOSITION
The order denying defendants’ motion to compel arbitration is affirmed.
Haydon is entitled to costs on appeal. (Cal. Rules of Court, rule 8.278(a)(2).)
15
_________________________
Petrou, J.
WE CONCUR:
_________________________
Fujisaki, Acting P.J.
_________________________
Rodríguez, J.
A168767/Haydon v. Elegance At Dublin, et al.
16
Trial Court: Alameda County Superior Court
Trial Judge: Hon. Julia Spain
Counsel: Stebner Gertler Guadagni & Kawamoto, Katheryn Stebner,
Karman Guadagni, Deena Zacharin, and Kelsey Craven;
Needham Kepner & Fish, Kirsten Fish, for Plaintiff and
Respondent.
Hanson Bridgett, Lori Ferguson, Stefan Chacon, Patrick
Burns, and Madeline Anguiano, for Defendants and
Appellants Elegance At Dublin et. al.
Perry, Johnson, Anderson, Miller & Moskowitz, David
Beach and Sarah Jane Truong for Joinder Defendant and
Appellants Amador Valley I, LLC.
17