ANNE OBOLENSKY v. CHATSWORTH AT WELLINGTON GREEN d/b/a NUVISTA LIVING, ETC. , 240 So. 3d 6 ( 2018 )

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
ANNE OBOLENSKY,
Appellant,
v.
CHATSWORTH AT WELLINGTON GREEN, LLC d/b/a NUVISTA
LIVING AT WELLINGTON GREEN,
Appellee.
No. 4D16-3143
[February 28, 2018]
Appeal of a non-final order from the Circuit Court for the Fifteenth
Judicial Circuit, Palm Beach County; Thomas H. Barkdull, III, Judge; L.T.
Case No. 502015CA011204AB.
Richard D. Schuler of Schuler, Halvorson, Weisser, Zoeller & Overbeck,
P.A., West Palm Beach, Esther A. Zaretsky, West Palm Beach, and Nichole
J. Segal of Burlington & Rockenbach, P.A., West Palm Beach, for
appellant.
Rolando A. Diaz and Adilia C. Hedges of Diaz Law Group, Coral Gables,
and Dinah Stein of Hicks, Porter, Ebenfeld & Stein, P.A., Miami, for
appellee.
FORST, J.
Appellant Anne Obolensky, a nursing home resident who is suing the
appellee nursing home for negligence, appeals a non-final order compelling
arbitration. Relying upon two Florida Supreme Court opinions that were
issued on the same day, Gessa v. Manor Care of Fla., Inc., 86 So. 3d 484(Fla. 2011) and Shotts v. OP Winter Haven, Inc., 86 So. 3d 456 (Fla. 2011),
Obolensky argues the arbitration agreement in her contract with the
nursing home cannot be saved by the severance of certain invalid
provisions that are also part of the nursing home contract. In so doing,
she gives too broad a reading to those supreme court opinions.
Accordingly, as set forth below, we conclude that the trial court did not err
in its non-final order compelling arbitration.
Background
Upon admission to the nursing home, Obolensky signed “Admission
and Alternative Dispute Resolution Agreements.” The “Admission
Agreement” dealt with issues such as “Consent to Treatment,” “Financial
Agreements,” “Confidentiality of Your Medical Information,” and “Center
Rules and Grievance Procedure.” It also included an “Arbitration &
Limitation of Liability Agreement,” which contains a severability clause
stating that “Should any of sub-section A, B, or C provided below, or any
part thereof, be deemed invalid, the validity of the remaining sub-sections,
or parts thereof, will not be affected.” The three sub-sections are as
follows: (A) “Arbitration Provision”; (B) “Limitation of Liability Provision”;
and (C) “Benefits of Arbitration and Limitation of Liability Provisions.”
The Arbitration Provision includes a limitation on discovery (providing
that only experts may be deposed), a waiver of the right to appeal the
arbitrator’s decision, and a waiver of any right to recover attorney’s fees
and costs. Sub-section A also expressly incorporates sub-section B, the
Limitation of Liability Provision.
Sub-section B provides that the purpose of the provision is to limit each
party’s liability in relation to the agreement. There is no cap on economic
damages, but non-economic damages are capped at $250,000, and
punitive damages are not allowed.
Sub-section C explains the purpose or benefits of sub-sections A and B
and states in part:
The parties’ decision to select arbitration is supported by the
potential cost-effectiveness and time-savings offered by
selecting arbitration, which may avoid the expense and delay
of judicial resolution in the court system. The parties’ decision
to select arbitration and to agree to a limitation of liability also
are supported by the potential benefit of preserving the
availability, viability and insurability of a long term care
company for the elderly and disable[d] in Florida, by limiting
such long term care company’s exposure to liability. With this
Agreement, the Community is better able to offer its services
and accommodations at a rate that is more affordable to you.
In terms of the time-savings offered by selecting arbitration,
selecting a quick method of resolution is potentially to your
advantage.
After Obolensky filed a negligence claim against the nursing home, the
latter moved to compel arbitration. Citing Gessa, Obolensky opposed the
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motion. She argued that the arbitration agreement is unenforceable,
because two of the limitation of liability provisions in sub-section B violate
public policy and are not severable, as they go to the essence of the parties’
agreement. The trial court found Gessa distinguishable because there was
no severability clause in that case. The court granted the motion to compel
arbitration with the understanding that the arbitrator would not be
deciding the viability of the limitations on liability, as the Florida Supreme
Court had already determined that liability limitations were invalid. This
non-final order compelling arbitration is the subject of the instant appeal.
Analysis
“[T]he standard of review applicable to the trial court’s construction of
the arbitration provision, and to its application of the law to the facts
found, is de novo.” Alterra Healthcare Corp. v. Bryant, 937 So. 2d 263, 266
(Fla. 4th DCA 2006) (quoting Fonte v. AT & T Wireless Servs., Inc., 903 So.
2d 1019, 1023 (Fla. 4th DCA 2005)). Similarly, we review de novo the
question of whether the trial court erred in ruling that the illegal provisions
in the arbitration agreement were severable. Shotts, 86 So. 3d at 475.
“Arbitration is a preferred method of dispute resolution, so any doubt
regarding the scope of an arbitration clause should be resolved in favor of
arbitration.” BallenIsles Country Club, Inc. v. Dexter Realty, 24 So. 3d 649,
652 (Fla. 4th DCA 2009); see also Stolt-Nielsen S.A. v. AnimalFeeds Int’l
Corp., 559 U.S. 662, 683 (2010) (“By agreeing to arbitrate . . . [a party]
trades the procedures and opportunity for review of the courtroom for the
simplicity, informality, and expedition of arbitration.” (alterations in
original) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614, 628 (1985))); Franzen v. Magler, 744 So. 2d 1029, 1031 n.3
(Fla. 4th DCA 1997) (“The legislature has concluded that voluntary
arbitration and predictability of outcome are in the public interest . . . .”).
There is no dispute in this case that the limitations of liability
provisions in the agreement, which cap non-economic damages and
prohibit punitive damages, are unenforceable. See Gessa, 86 So. 3d at
492; Alterra, 937 So. 2d at 266; Lacey v. Healthcare & Ret. Corp. of Am.,
918 So. 2d 333, 334 (Fla. 4th DCA 2005). Nonetheless, Shotts and Gessa
do not dictate that the unenforceable limited liability provisions cannot be
severed from the valid provisions of the arbitration agreement.
A. Shotts is distinguishable
The Florida Supreme Court in Shotts found that an arbitration
agreement could not be saved by a severability clause because the
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agreement required arbitration in accordance with the American Health
Lawyers Association (AHLA) rules and prohibited the award of punitive
damages. 86 So. 3d at 478. The AHLA rules in effect at that time changed
the plaintiff’s burden of proof for certain damages from preponderance of
the evidence to clear and convincing evidence. Id. The supreme court
agreed with the majority of district courts that the limitations of remedies
provisions, which restricted rights afforded by the legislature to nursing
home residents, violate public policy. Id. at 474. Addressing whether the
arbitration agreement could be saved in the absence of the limitations of
remedies provisions, the court explained the test for severability:
As to when an illegal portion of a bilateral contract may or may
not be eliminated leaving the remainder of the contract in force
and effect, the authorities hold generally that a contract
should be treated as entire when, by a consideration of its
terms, nature, and purpose, each and all of its parts appear
to be interdependent and common to one another and to the
consideration. Stated differently, a contract is indivisible
where the entire fulfillment of the contract is contemplated by
the parties as the basis of the arrangement. On the other
hand, a bilateral contract is severable where the illegal portion
of the contract does not go to its essence, and where, with the
illegal portion eliminated, there still remains of the contract
valid legal promises on one side which are wholly supported
by valid legal promises on the other.
Whether a contract is entire or divisible depends upon the
intention of the parties. And this is a matter which may be
determined by a fair construction of the terms and provisions
of the contract itself, and by the subject matter to which it has
reference.
Id. at 475 (quoting Local No. 234 v. Henley & Beckwith, Inc., 66 So. 2d 818,
821-22 (Fla. 1953)).
Although there was a severability clause, the supreme court decided it
could not sever a provision providing for AHLA arbitration procedures
because “[i]f the provision were to be severed, the trial court would be
forced to rewrite the [arbitration] agreement and to add an entirely new set
of procedural rules and burdens and standards, a job that the trial court
is not tasked to do.” Shotts, 86 So. 3d at 478. The court’s discussion of
severability only focused on the AHLA procedures, though noting that
other courts had addressed severability when the offending provision
precluded punitive damages. Id. at 475-76.
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In the instant case, the severance of any illegal arbitration provisions
would not entail any rewriting of the arbitration agreement. Instead, as
the parties agreed, “the Florida State Statutes concerning arbitration
[would] govern the procedure,” like section 682.08(2), Florida Statutes
(2016) (governing the deposition of witnesses), and the arbitrator would
continue to apply the Florida Rules of Evidence and the Florida Rules of
Civil Procedure during proceedings. The “essence” of the Arbitration
Provision would survive and, as distinguished from Shotts, there would be
no need to create substitute procedures. Thus, the disposition of the
instant case is not controlled by Shotts.
B. Gessa is distinguishable
Obolensky’s reliance on Gessa is similarly misplaced. The Gessa
agreement was worded and structured similarly to the contract in this
case: Part A, “Arbitration Provisions” and Part B, “Limitation of Liability
Provision[s].” 86 So. 3d at 486, 488-89. The agreement had the same
restriction on depositions, waiver of attorney’s fees and costs, and the
arbitration provisions in Part A incorporated the liability limitations in Part
B. Id. at 488. The court found unenforceable the same limitation of
liability provisions at issue in this case.
There was no severability clause in the Gessa arbitration agreement.
The court nevertheless addressed whether the invalid provisions in Gessa
could be severed pursuant to the standard of severability established in
Shotts/Local No. 234. Gessa, 86 So. 3d at 490. Applying the standard,
the court determined that the restrictions on non-economic damages and
prohibition of punitive damages were intended to make the extent of
liability “reasonably foreseeable” and went to “the essence” of the
agreement. Id. at 490. The court concluded that these “two provisions
constitute the financial heart of the agreement” and, if severed, the trial
court would be hard pressed to determine that what remained was a valid
contract supported by valid legal promises on both sides. Id. at 490-91
(citing Shotts, 86 So. 3d at 459).
In the instant case, there are severability clauses; therefore, the
supreme court’s reasoning in Gessa need not extend to the instant case.
See Estate of Deresh ex rel. Schneider v. FS Tenant Pool III Tr., 95 So. 3d
296, 301 (Fla. 4th DCA 2012) (holding in part that Gessa did not apply
because, unlike in Gessa, there was a severability clause in the arbitration
agreement that was on review on appeal); see also VoiceStream Wireless
Corp. v. U.S. Commc’ns, Inc., 912 So. 2d 34, 38 (Fla. 4th DCA 2005)
(“Despite the presence of these two [illegal] provisions in the dealer
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agreement, we conclude that where the contract contains a severability
clause, their presence does not require a holding that the arbitration
agreement is similarly unenforceable.”); Fonte, 903 So. 2d at 1024(similar).
The Arbitration & Limitation of Liability Agreement begins with an
express severability clause: “Should any of sub-section A, B, or C provided
below, or any part thereof, be deemed invalid, the validity of the remaining
sub-sections, or parts thereof, will not be affected.” Thus, if sub-section
B Limitation of Liability Provision is deemed invalid, sub-section A
Arbitration Provision “will not be affected.” 1 This express severability
clause is a material distinction from Gessa that strongly indicates—by the
clause’s plain terms—that the limited liability provisions were not the
essence of the arbitration agreement between the parties. If they were, the
parties would not have agreed to the severability clause for the Arbitration
& Limitation of Liability Agreement, which states in the “Arbitration
Provision,” in bold type, “The parties to the Agreement further understand
that a jury will not decide their case.”
C. The Limitation of Liability Provision is neither the “financial
heart” of the Admission and Alternative Dispute Resolution
Agreements nor the “true essence” of the Arbitration &
Limitation of Liability Agreement
Obolensky relies upon language in both Shotts and Gessa to argue that,
severability clause notwithstanding, the removal of provisions that are the
“financial heart of the agreement” but (arguably) violate public policy,
would “gut” the essence of the parties’ agreement and thus render the
entire agreement invalid. This argument fails.
The Admission Agreement provided for the rights and responsibilities
of the parties relating to the resident’s stay at the nursing home, including
the room and board rate. These terms remain in force.
1 The acceptance of severability in this agreement is further illustrated by the
Limitation of Liability Provision, which provides, “[s]hould sub-sections [2.] a, b,
c, and/or d . . . be deemed invalid[,] the validity of the remaining sub-sections
will not be affected.” Sub-sections b and d were, respectively, the $250,000 cap
on non-economic damages and waiver of punitive damages—the provisions
deemed to be invalid by the trial court. Thus, the parties contemplated not only
the arbitration provisions surviving invalid liability limitations, but also the valid,
remaining liability provisions themselves.
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Even setting aside the Admission Agreement, and looking only to the
Arbitration & Limitation of Liability Agreement, it is clear that “the true
essence” of the Admission and Alternative Dispute Resolution Agreements
was, as its name suggests, arbitration, and its financial heart was the
reduced costs and time-saving benefits accompanying arbitration. 2 In
fact, under the subheading “Benefits of Arbitration & Limitation of Liability
Provisions” is the statement that “[t]he parties’ decision to select
arbitration is supported by the potential cost-effectiveness and time-
savings offered by selecting arbitration, which may avoid the expense and
delay of judicial resolution in the court system.” To ensure the viability of
this clause, the parties agreed to severability should any provision be later
deemed invalid. 3 Applying Shotts and Gessa in a manner to negate the
arbitration provisions would ignore the fact that this agreement had a
severability clause that was intended to be used in a situation as was
presented here; by effectuating the severability clause, the parties were
able to retain the “essence” of the agreement at issue.
Conclusion
When enforcing an agreement to arbitrate, courts must “give effect to
the contractual rights and expectations of the parties.” Volt Info. Scis., Inc.
v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989); see
also Michael Pillow, Liberty over Death: Seeking Due Process Dimensions
for Freedom of Contract, 8 FLA. A&M U.L. REV. 39, 52 (2012) (“Parties
should be able to negotiate and sign contracts . . . knowing that courts will
likely enforce their terms with only limited exceptions.”). The trial court’s
order compelling arbitration effectuates the intention of the parties at the
time the agreement was signed and, accordingly, we affirm.
Affirmed.
WARNER and MAY, JJ., concur.
* * *
2 We previously noted the same when viewing a similar agreement: “The primary
thrust of the [arbitration] agreement is ‘to avoid costly and time-consuming
litigation.’” Deresh, 95 So. 3d at 301.
3 We note that the one party that is negatively affected by the invalidation of the
limitation of liability sub-provisions, the nursing home, is the party that is
seeking to enforce the valid portions of the Arbitration & Limitation of Liability
Agreement provisions.
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Not final until disposition of timely filed motion for rehearing.
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