Mikoff v. Unlimited Development, Inc. , 2024 IL App (4th) 230513 ( 2024 )

2024 IL App (4th) 230513FILED
February 1, 2024
NO. 4-23-0513 Carla Bender
4 th District Appellate
IN THE APPELLATE COURT Court, IL
OF ILLINOIS
FOURTH DISTRICT
LUANN MIKOFF, Special Administrator of the Estate of ) Appeal from the
Bonnie Stone, Deceased, ) Circuit Court of
Plaintiff-Appellant, ) Jersey County.
v. ) No. 22LA11
UNLIMITED DEVELOPMENT, INC., and )
JERSEYVILLE MANOR, ) Honorable
Defendants-Appellees. ) Allison Lorton,
) Judge Presiding.
JUSTICE DOHERTY delivered the judgment of the court, with opinion.
Justice Harris specially concurred, with opinion.
Presiding Justice Turner concurred in part and dissented in part, with opinion.
OPINION
¶1 In July 2022, plaintiff Luann Mikoff, as special administrator of the estate of her
late mother Bonnie Stone (decedent), filed a complaint against defendants, Unlimited
Development, Inc., and Jerseyville Manor, a skilled nursing facility (Facility), alleging that
defendants were responsible for decedent’s premature death from COVID-19 contracted while
under their care. In September 2022, defendants filed a motion to stay the proceedings and compel
arbitration pursuant to the terms of the parties’ arbitration agreement. In January 2023, the Jersey
County circuit court entered a written order granting defendants’ motion to compel arbitration.
Plaintiff’s motion to vacate and set aside that order was denied in May 2023.
¶2 Plaintiff now appeals, contending (1) this court has jurisdiction of her appeal,
(2) the circuit court erred by not holding an evidentiary hearing, (3) the arbitration agreement was
not enforceable once the decedent passed away, (4) the arbitration agreement’s language is vague
and ambiguous, (5) the court applied the wrong version of federal nursing home regulations,
(6) only parties to the arbitration agreement may be bound by it, (7) the arbitration agreement was
procedurally unconscionable, and (8) the arbitration agreement was substantively unconscionable.
¶3 For the reasons stated below, we affirm the circuit court’s referral of decedent’s
claims under the Survival Act (755 ILCS 5/27-6 (West 2022)) to arbitration, but we reverse the
referral of the Wrongful Death Act (740 ILCS 180/0.01 et seq. (West 2022)) claims to arbitration
and remand for further proceedings as to those claims.
¶4 I. BACKGROUND
¶5 On September 7, 2019, decedent was admitted to the Facility, which was owned
and/or operated by defendant, Unlimited Development, Inc. Plaintiff was decedent’s agent under
both medical and financial powers of attorney, and she signed the documents in her representative
capacity. The documents included both an admissions contract and arbitration agreement; the latter
began by stating:
“Without limiting any rights set forth in other provisions of this
AGREEMENT, any and all disputes arising hereunder shall be submitted to binding
arbitration and not to a court for determination. Arbitration shall commence after
written notice is given from either party to the other, such arbitration shall be
accomplished expeditiously in the county and state where the property which is the
subject of this AGREEMENT is located, and shall be conducted in accordance with
the rules of the American Arbitration Association (‘AAA’).”
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Elsewhere, the arbitration agreement further stated:
“Notwithstanding the parties[’] intent to submit any controversy or claim
arising out of or relating to this AGREEMENT or any other document signed or
initialed in connection with this AGREEMENT to arbitration, in the event that a
court of competent jurisdiction shall determine or a relevant law shall provide that
a particular dispute is not subject to the arbitration provisions of this Section, then
the parties agree to the following provisions: ***.”
The admission contract plaintiff signed along with the arbitration agreement provided, in pertinent
part, the following: “The term of the contract shall commence on the day the Resident enters the
Facility and terminate the day the Resident is discharged, subject however to the following
provisions ***.”
¶6 On August 9, 2020, the 91-year-old decedent was hospitalized with COVID-19;
she died on August 17, 2020. In July 2022, plaintiff filed a complaint against defendants, seeking
to recover for decedent’s death. In the complaint’s introduction, plaintiff stated she was bringing
her cause of action in accordance with the Wrongful Death Act (id.) and the Survival Act (755
ILCS 5/27-6 (West 2022)). Plaintiff asserted four separate counts asserting claims of negligence
and willful and wanton misconduct, two against each defendant. The counts contended defendants
owed a duty to the decedent based on the Nursing Home Care Act (210 ILCS 45/1-101 et seq.
(West 2020)) and the Illinois Administrative Code.
¶7 In September 2022, defendants filed a motion to compel arbitration and stay the
proceedings, based on the terms of the arbitration agreement. Defendants attached a copy of the
admission contract, the arbitration agreement, a portion of the decedent’s medical power of
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attorney, and plaintiff’s complaint. The motion also included a supporting affidavit executed by
Dana Bainter, the Facility’s administrator, and a supporting memorandum.
¶8 Plaintiff argued in response that the motion should be denied because (1) execution
of the arbitration agreement cannot be made part of the signing of the admissions document, (2) the
arbitration agreement is overly vague and ambiguous, (3) a healthcare power of attorney does not
grant authority to execute an agreement to arbitrate, and (4) defendants failed to establish the
arbitration agreement was substantively and procedurally conscionable. In the alternative, plaintiff
requested defendants’ motion be deferred until the completion of discovery. Plaintiff also
submitted a supplemental filing in opposition to arbitration, which is not included in the record on
appeal.
¶9 Defendants filed a reply, which attached, inter alia, the decedent’s complete
medical power of attorney and her financial power of attorney, both of which named plaintiff as
decedent’s agent.
¶ 10 On January 19, 2023, the circuit court held a hearing on defendants’ motion to
compel arbitration. Neither party presented testimony, but defendants’ counsel noted the
documents attached to their pleadings. On January 24, 2023, the court entered its written order
granting defendants’ motion to compel arbitration and stay the proceedings. The order required
plaintiff to arbitrate any and all claims against the defendants and stayed the proceedings during
the pendency of arbitration. Specifically, the court found an arbitration agreement can be part of a
nursing home admission contract, and matters involving scope or interpretation of the arbitration
agreement have been delegated to the arbitrator.
¶ 11 On February 22, 2023, plaintiff filed a motion to vacate and set aside the order
staying the proceedings and referring all claims to arbitration. Plaintiff asserted that the circuit
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court’s order was erroneous for the following reasons: (1) the arbitration agreement was
procedurally and substantively unconscionable, (2) the healthcare power of attorney did not give
plaintiff the power to waive the decedent’s right to a jury trial, (3) the arbitration agreement
violates a federal nursing home regulation (42 C.F.R. § 483.70 (2016)), (4) the arbitration
agreement was impermissibly overbroad in its attempt to limit the court’s authority to interpret the
same, and (5) the arbitration agreement was vague and ambiguous and its terms must be strictly
construed against defendants. Plaintiff also pointed out that paragraph A of the admission contract
stated it terminated on the date the resident is discharged from the facility, which she argued was
decedent’s date of death (August 17, 2020). Plaintiff argued that the termination of the admission
contract would also end the enforceability of the arbitration agreement. Defendants filed a response
to plaintiff’s motion to vacate. Plaintiff replied to defendants’ arguments, and defendants again
responded.
¶ 12 On May 12, 2023, the circuit court held a hearing on plaintiff’s motion to vacate,
after which the court found the arbitration agreement was properly formed and an evidentiary
hearing was not required. The court then entered a written order denying plaintiff’s motion.
¶ 13 On June 8, 2023, plaintiff filed a notice of appeal from both the January 24, 2023,
and May 12, 2023, orders. Our jurisdiction of the appeal is addressed in the analysis section.
¶ 14 The resolution of this case requires us to address several different issues. Aside
from defendants’ motion to dismiss the appeal and some preliminary matters, the main issues for
resolution here are as follows: (1) whether, under Illinois law, has a contract for arbitration of
plaintiff’s claims been formed; and (2) if so, under federal law, who resolves questions about the
expiration, interpretation, and application of the arbitration agreement, the circuit court or the
arbitrator?
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¶ 15 II. ANALYSIS
¶ 16 A. Motion to Dismiss the Appeal
¶ 17 Defendants filed a motion to dismiss plaintiff’s appeal, asserting that (1) plaintiff
failed to comply with Illinois Supreme Court Rule 307 (eff. Nov. 1, 2017) and (2) this court lacks
jurisdiction to address the appeal. Plaintiff filed an objection. We took the motion with the case.
¶ 18 Under Rule 307(a), “the appeal must be perfected within 30 days from the entry of
the interlocutory order,” and an Illinois Supreme Court Rule 328 (eff. July 1, 2017) supporting
record “must be filed in the Appellate Court within the same 30 days unless the time for filing the
Rule 328 supporting record is extended by the Appellate Court or any judge thereof.” Ill. S. Ct. R.
307(a) (Nov. 1, 2017); see 5 ILCS 70/1.11 (West 2022) (due date cannot fall on a Saturday,
Sunday, or legal holiday). Thus, the supporting record should have been filed on or before Monday,
June 12, 2023. On June 15, 2023, plaintiff filed a motion for an extension of time to file the
supporting record, which this court granted, allowing plaintiff until August 4, 2023, to file the
supporting record. Plaintiff filed the supporting record on July 21, 2023.
¶ 19 While our supreme court has stated its rules are not suggestions and must be
followed, both the supreme court and this court have exercised discretion in determining whether
an appeal should be dismissed for noncompliance with its rules that are not jurisdictional. See
Ittersagen v. Advocate Health & Hospitals Corp., 2021 IL 126507, ¶¶ 36-37 (declining to strike
the appellant’s brief for noncompliance with Illinois Supreme Court Rule 341(h) (eff. Oct. 1, 2020)
because it did not hinder the court’s review); Niewold v. Fry, 306 Ill. App. 3d 735, 737 (1999)
(noting that “[i]t is within this court’s discretion to strike the plaintiffs’ brief and dismiss the appeal
for failure to comply with Rule 341”). Defendants do not cite any authority indicating the timely
filing of a Rule 328 supporting record is a jurisdictional requirement; the only authority they cite
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is a 1976 special concurrence finding that Rule 307’s language that “ ‘the record must be filed’
within the designated time is necessarily mandatory,” based on “[t]he former practice prior to
January 1, 1964.” Block & Co. v. Storm Printing Co., 40 Ill. App. 3d 92, 98 (1976) (Goldberg,
P.J., specially concurring). Here, plaintiff filed a request for an extension three days after the
expiration of the 30-day period. Plaintiff then filed the record within the extended time period.
Plaintiff’s three-day delay in requesting an extension of time to file the supporting record did not
hinder our review of the appeal, and, thus, we find plaintiff’s noncompliance with Rule 307’s time
period for filing the supporting record does not warrant dismissal of her appeal.
¶ 20 Defendants also contend this court lacks jurisdiction over plaintiff’s appeal because
more than 30 days passed between the circuit court’s January 24, 2023, order and the filing of
plaintiff’s notice of appeal; they further assert that the May 12, 2023, order was not an appealable
order. Plaintiff disagrees, contending the appeal is possible under either Illinois Supreme Court
Rule 307(a)(1) (eff. Nov. 1, 2017) or Illinois Supreme Court Rule 303 (eff. July 1, 2017).
¶ 21 “An appellate court is under a duty to consider its jurisdiction and to dismiss an
appeal if jurisdiction is lacking.” Craine v. Bill Kay’s Downers Grove Nissan, 354 Ill. App. 3d
1023, 1024 (2005). Accordingly, this court must determine the question of its jurisdiction prior to
deciding the appeal’s merits. Id. We begin by examining Rule 307(a)(1).
¶ 22 Rule 307(a)(1) provides that an appeal may be taken to this court from an
interlocutory order “granting, modifying, refusing, dissolving, or refusing to dissolve or modify
an injunction.” Ill. S. Ct. R. 307(a)(1) (eff. Nov. 1, 2017). The rule has been interpreted as follows:
“Rule 307(a)(1) permits interlocutory appeals from four types of orders:
(1) orders that deny (i.e., refuse) injunctions; (2) orders that create (i.e., grant)
injunctions; (3) orders that change the effects of (i.e., modify or dissolve) existing
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injunctions; and (4) orders that perpetuate the effects of (i.e., refuse to modify or to
dissolve) existing injunctions.” Craine, 354 Ill. App. 3d at 1025.
Under Illinois law, an order compelling arbitration is considered an injunctive order and thus an
appealable interlocutory order under category (2) of Rule 307(a)(1). Id. Consequently, the denial
of a motion for reconsideration of an order compelling arbitration falls under category (4) as an
order that refuses to dissolve an injunction. An order refusing to compel arbitration falls under
category (1) as an order that denies an injunction. However, an order denying reconsideration of a
refusal to compel arbitration cannot fall under category (3) or (4) because there is no preexisting
injunction in place. Id. at 1026. In Craine, the Second District of the Appellate Court faced the
question of whether such an order effectively denies an injunction and thus is appealable under
category (2). Id. The court concluded that the order was not appealable. Id. at 1028.
¶ 23 Defendants assert the Craine decision should not be followed because it runs afoul
of the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq. (2024)). In Kindred Nursing Centers
Ltd. Partnership v. Clark, 581 U.S. 246, 251 (2017), the United States Supreme Court reaffirmed
that the FAA preempts “any state rule discriminating on its face against arbitration,” as well as
rules that covertly accomplish the same objective. However, the Craine decision does not
discriminate against arbitration either facially or covertly because its reasoning did not depend on
the fact that the injunctive relief being sought was an order compelling arbitration. Craine, 354 Ill.
App. 3d at 1028 (addressing “the imminent burdens of an injunction”); see id. at 1026-27
(examining Baird & Warner, Inc. v. Gary-Wheaton Bank, 122 Ill. App. 3d 136 (1984), a case
involving mortgages rather than arbitration). As such, we find that Craine is arbitration neutral
and does not run afoul of the FAA.
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¶ 24 In this case, the circuit court’s January 24, 2023, order was an injunctive order
because it granted defendants’ motion to compel arbitration and stay the proceedings. Thereafter,
the court’s May 12, 2023, order refused to dissolve an existing injunction by denying plaintiff’s
motion to vacate the January 24, 2023, order. As such, both orders were appealable under Rule
307(a)(1). Craine, 354 Ill. App. 3d at 1025. Plaintiff’s notice of appeal was filed on June 8, 2023,
which was within the 30-day period for filing an appeal under Rule 307(a) for the May 12, 2023,
order. Accordingly, we have jurisdiction over the appeal from the court’s May 12, 2023, order and
deny defendants’ motion to dismiss plaintiff’s appeal. Because we have jurisdiction under Rule
307(a), we need not address plaintiff’s alternative argument under Rule 303.
¶ 25 B. Preliminary Matters
¶ 26 Before reaching the merits of the issues presented, we must address two preliminary
matters: (1) whether the circuit court erred by not conducting an evidentiary hearing and (2) the
appropriate standard of review.
¶ 27 1. Evidentiary Hearing
¶ 28 Plaintiff argues that the circuit court erred by failing to conduct an evidentiary
hearing before referring this case to arbitration. Plaintiff suggests that an evidentiary hearing is
required by section 2(a) of the Uniform Arbitration Act (710 ILCS 5/2(a) (West 2022)), but that
section simply states that the court should “proceed summarily” if there is a dispute about the
existence of an agreement to arbitrate. Plaintiff also cites section 2 of the FAA (9 U.S.C. § 2(2024)) and federal regulations (42 C.F.R. § 483.70 (2016)), but she fails to identify what language
in these provisions provides for an evidentiary hearing.
¶ 29 In this case, the circuit court held a hearing on January 19, 2023, and no party at
the hearing sought to present additional evidence. All parties had the opportunity to attach
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supporting documents to their proceedings, but only defendants did so. After considering the
parties’ arguments and defendants’ supporting material, the court made a summary determination.
As such, we do not find plaintiff’s citation to Herns v. Symphony Jackson Square LLC, 2021 IL
App (1st) 201064, ¶ 30, persuasive because the court there “failed to make a substantive
determination of any of [the factual and legal] issues when it entered its order.” Moreover, we note
that “ ‘[a] party cannot sit idly by while the trial court undertakes a course of action and then allege
error in that regard.’ ” Meeks v. Great America, LLC, 2017 IL App (2d) 160655, ¶ 14 (quoting
Tokar v. Crestwood Imports, Inc., 177 Ill. App. 3d 422, 434 (1988)). Plaintiff did just that by
failing to attempt to present any evidence in support of her position. We find no abuse of discretion
in regard to how the hearing was conducted.
¶ 30 2. Standard of Review
¶ 31 Where, as here, there was no evidentiary hearing below and the motion to compel
arbitration was decided on the basis of the parties’ written submissions, the appropriate standard
of review is de novo. Mulligan v. Loft Rehabilitation & Nursing of Canton, LLC, 2023 IL App
(4th) 230187, ¶ 17.
¶ 32 C. Application of the FAA in Illinois Courts
¶ 33 Resolution of this case requires us to apply both Illinois law and federal law to
different aspects of the analysis. The applicable federal law is the FAA, which was enacted by
Congress “in response to judicial hostility to arbitration.” Viking River Cruises, Inc., v. Moriana,
596 U.S. ___, ___, 142 S. Ct. 1906, 1917 (2022). “The basic purpose of the FAA is to overcome
the historical reluctance of courts to enforce agreements to arbitrate.” Carter v. SSC Odin
Operating Co., 237 Ill. 2d 30, 41 (2010) (Carter I). Section 2 of the FAA provides as follows:
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“A written provision in any maritime transaction or a contract evidencing a
transaction involving commerce to settle by arbitration a controversy thereafter
arising out of such contract or transaction, or the refusal to perform the whole or
any part thereof, or an agreement in writing to submit to arbitration an existing
controversy arising out of such a contract, transaction, or refusal, shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity
for the revocation of any contract ***.” 9 U.S.C. § 2.
It has long been established that “the FAA applies in state as well as federal court and preempts
conflicting state laws.” Carter I, 237 Ill. 2d at 41 (citing Southland Corp. v. Keating, 465 U.S. 1,
16 (1984)).
¶ 34 “The division of labor between courts and arbitrators is a perennial question in cases
involving arbitration clauses.” Janiga v. Questar Capital Corp., 615 F.3d 735, 741 (7th Cir. 2010).
This is especially challenging when the arbitration clause contains a delegation clause, which is
“an agreement to arbitrate threshold issues concerning the arbitration agreement.” Rent-A-Center,
West, Inc. v. Jackson, 561 U.S. 63, 68 (2010). The United States Supreme Court has recognized
“parties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the parties
have agreed to arbitrate or whether their agreement covers a particular controversy.” Id. at 68-69.
Unless the party opposing arbitration specifically challenges the delegation clause, the court must
treat it as valid and enforce it, leaving any challenge to the validity of the arbitration agreement as
a whole for the arbitrator. Id. at 72. Similarly, “a challenge to the validity of the contract as a
whole, and not specifically to the arbitration clause, must go to the arbitrator.” Buckeye Check
Cashing, Inc. v. Cardegna, 546 U.S. 440, 449 (2006).
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¶ 35 That is not to say that there is no role for a court to play when it is asked to enforce
an arbitration agreement. “Even the most sweeping delegation cannot send the contract-formation
issue to the arbitrator, because, until the court rules that a contract exists, there is simply no
agreement to arbitrate.” K.F.C. v. Snap Inc., 29 F.4th 835, 837 (7th Cir. 2022); see Granite Rock
Co. v. International Brotherhood of Teamsters, 561 U.S. 287, 296 (2010) (noting that “where the
dispute at issue concerns contract formation, the dispute is generally for courts to decide”). The
United States Supreme Court has stated, “The issue of the contract’s validity is different from the
issue whether any agreement between the alleged obligor and obligee was ever concluded.”
Buckeye, 546 U.S. at 444 n.1 (noting that whether the contract was ever signed, or whether the
signor had the authority and mental capacity to assent, were contract formation issues that could
be addressed by the court).
¶ 36 Consequently, based on the foregoing, we must decide (1) under Illinois law,
whether a contract for arbitration was formed and, if so, (2) under the FAA, whether federal law
requires that the arbitrator address any other disputes between the parties.
¶ 37 1. Formation of an Arbitration Agreement
¶ 38 Where, as here, a party challenges the formation of an arbitration agreement, it is a
question going “to the making of the agreement to arbitrate” and may be adjudicated by the court.
Id. at 445. This is entirely consistent with what the United States Supreme Court has identified as
“the ‘first principle’ of [its] FAA jurisprudence: that ‘[a]rbitration is strictly “a matter of
consent.” ’ ” Moriana, 596 U.S. at ___, 142 S. Ct. at 1918 (quoting Granite Rock, 561 U.S. at 299,
quoting Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University,
489 U.S. 468, 479 (1989)). Defendants here concede that the circuit court was entitled to examine
questions of contract formation.
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¶ 39 As noted above, the question of whether the parties formed a contract for arbitration
is one to be determined according to Illinois law. The analysis may differ, however, depending on
which type of claim is being examined. Consequently, our contract formation analysis looks
separately at the question of whether there was a valid contract formed for arbitration of the
decedent’s claims brought under the Survival Act, as opposed to the claims of the next of kin under
the Wrongful Death Act.
¶ 40 a. Decedent’s Claims Under the Survival Act
¶ 41 With respect to the issues of contract formation, plaintiff argues that decedent’s
medical power of attorney did not vest her with the authority to agree to enter into a contract for
arbitration on decedent’s behalf. However, plaintiff completely ignores the fact she was also the
decedent’s financial power of attorney, and defendants submitted both powers of attorney in
support of their motion to compel arbitration. Thus, even if plaintiff was not authorized to agree
to arbitration as the decedent’s agent under the medical power of attorney, she may have been
authorized under the financial power of attorney.
¶ 42 Plaintiff has completely failed to address her authority under the financial power of
attorney as a basis for execution of the agreement to arbitrate. Indeed, at oral argument, counsel
suggested that no such document was part of the record or argued below; both statements are flatly
incorrect.
“A reviewing court is entitled to have issues clearly defined with pertinent authority
cited and cohesive arguments presented [citation], and it is not a repository into
which an appellant may foist the burden of argument and research [citation]; it is
neither the function nor the obligation of this court to act as an advocate or search
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the record for error.” (Internal quotation marks omitted.) Enbridge Pipeline
(Illinois), L.L.C. v. Murfin, 2020 IL App (5th) 160007, ¶ 72.
¶ 43 Accordingly, as to decedent’s direct claims made under the Survival Act, plaintiff
has failed to show she was not authorized to sign the arbitration agreement. As such, the circuit
court’s determination that “an agreement to arbitrate was properly formed” was not erroneous.
¶ 44 b. Wrongful Death Claims
¶ 45 Plaintiff argues that the circuit court could not refer the wrongful death claims to
arbitration because “neither a resident [n]or his agent has the authority to bind heirs asserting a
wrongful death claim,” citing Carter v. SSC Odin Operating Co., 2012 IL 113204 (Carter II).
¶ 46 Though lengthy, plaintiff’s complaint is exceedingly confusing as to what claims
are being brought. For example, each claim asserts in its final paragraph that it is brought pursuant
to the Nursing Home Care Act (210 ILCS 45/1-101 et seq. (West 2022)). Just as clearly, however,
the introductory declaration of the complaint states that it is brought “in accordance with the
Illinois Wrongful Death Act (740 ILCS 180.01) and Survival Act (755 ILCS 5/27-6).” The prayer
in each count also requests “all elements of damages permitted under 740 ILCS 180.01,” i.e., the
Wrongful Death Act. If the motion before the circuit court had been one directed at the sufficiency
of the pleadings, sorting out these errors would be in order. In the instant context, however, the
initial question is simply whether plaintiff’s complaint represents an attempt to bring a claim under
the Wrongful Death Act; though her complaint may be defective in form, plaintiff’s intention to
bring such a claim is clear.
¶ 47 The real parties in interest in a wrongful death claim are the decedent’s next of kin.
Glenn v. Johnson, 198 Ill. 2d 575, 583 (2002). There are references to decedent’s “family” in
plaintiff’s complaint, but the next of kin are not specifically identified. However, defendants
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concede that plaintiff is decedent’s daughter, so at least her status as one of decedent’s next of kin
is known. While it is true that plaintiff signed the admission and arbitration agreements, she did so
only in a representative capacity for decedent. Thus, there is nothing in the record to show that any
arbitration agreement was ever formed between defendants and decedent’s next of kin in an
individual capacity.
¶ 48 The supreme court’s decision in Carter II controls the determination of whether the
wrongful death claims must be sent to arbitration. In a case with facts similar to those at issue here,
the supreme court held that wrongful death claims arising out of the death of a nursing home
resident were not subject to an arbitration agreement to which the wrongful death beneficiaries
were not parties:
“For purposes of count I of the complaint, which alleges a violation of the
Nursing Home Care Act by defendant pursuant to our survival statute, plaintiff is
bound to arbitrate that claim, which had already accrued to Gott prior to death and
which is brought for the benefit of Gott’s estate. For purposes of count II, the
wrongful-death action, plaintiff is not acting in Gott’s stead. As already discussed,
a wrongful-death action does not accrue until death and is not brought for the
benefit of the decedent’s estate, but for the next of kin who are the true parties in
interest. Plaintiff, as Gott’s personal representative in the wrongful-death action, is
merely a nominal party, effectively filing suit as a statutory trustee on behalf of the
next of kin. [Citation.] Plaintiff is not prosecuting the wrongful-death claim on
behalf of Gott, and thus plaintiff is not bound by Gott’s agreement to arbitrate for
purposes of this cause of action.” Carter II, 2012 IL 113204, ¶ 57.
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¶ 49 The supreme court’s decision in Carter II was made after full consideration of the
application of the FAA. The conclusion that the beneficiaries could not be bound by an agreement
to which they were not parties is consistent with the “first principle” of FAA jurisprudence: that
arbitration is strictly a matter of consent. Moriana, 596 U.S. at ___, 142 S. Ct. at 1918. In any
event, the supreme court’s decision in Carter II binds us here and requires that we reverse the
circuit court’s order sending the wrongful death claims to arbitration.
¶ 50 2. Referral of Survival Act Claims to Arbitration
¶ 51 Despite the formation of an arbitration agreement between the parties that would
apply to the Survival Act claims, plaintiff advances a number of arguments against referral of those
claims to arbitration: (1) the existence of a federal regulation that came into effect after the signing
of the agreement, (2) state law contract defenses she contends must be resolved by the circuit court,
and (3) the application of the contract’s termination on “discharge” language, which she contends
was triggered by the decedent’s death and thus defeats the arbitration agreement. There can be no
doubt that courts are perfectly capable of addressing and resolving issues such as these, but the
question is whether the parties have contractually agreed that they would be resolved by the
arbitrator, and not by a court. In this context, the delegation clause in the parties’ agreement is of
critical importance.
¶ 52 A delegation clause is a provision in an arbitration agreement that clearly and
unmistakably gives the arbitrator the exclusive authority to resolve any dispute about the validity
and enforceability of the arbitration agreement. Rent-A-Center, 561 U.S. at 66, 68. Here, the
contract recites the parties’ agreement that “any disputes arising hereunder shall be submitted to
binding arbitration and not to a court.” The agreement further provides that the arbitration “shall
be conducted in accordance with the rules of the American Arbitration Association (‘AAA’).” The
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AAA’s rules provide that the arbitrator “shall have the power to determine the existence or validity
of a contract of which an arbitration clause forms a part” and that “an arbitration clause shall be
treated as an agreement independent of the other terms of the contract.” Consumer Arbitration
Rules, Am. Arbitration Ass’n, at 17 (eff. Sept. 1, 2014),
https://adr.org/sites/default/files/Consumer%20Rules.pdf [https://perma.cc/43K2-39PH];
Commercial Arbitration Rules and Mediation Procedures, Am. Arbitration Ass’n, at 13 (eff. Oct.
1, 2013), https://adr.org/sites/default/files/Commercial%20Rules.pdf [https://perma.cc/UXK5-
LCJU].
¶ 53 As discussed above, it is clear that an agreement to arbitrate has been formed.
Consequently, all of the issues raised by plaintiff—including the question of whether the
decedent’s death constitutes a “discharge” terminating the agreement—are issues the parties have
already agreed will be decided by the arbitrator. “When the parties’ contract delegates the
arbitrability question to an arbitrator, the courts must respect the parties’ decision as embodied in
the contract.” Henry Schein, Inc., v. Archer & White Sales, Inc., 586 U.S. ____, ____, 139 S. Ct.
524, 528 (2019). This is true even if the court considers the dispute being referred to arbitration as
“wholly groundless,” as this “confuses the question of who decides arbitrability with the separate
question of who prevails on arbitrability.” Id. at ___, 139 S. Ct. at 531.
¶ 54 Were we simply construing the parties’ agreement under Illinois contract law, we
would not be troubled by the fact that the arbitration agreement was on a document separate from
the admission agreement to which it relates; we would apply the established rule that “instruments
executed at the same time, by the same parties, for the same purpose, and in the course of the same
transaction are regarded as one contract and will be construed together.” Gallagher v. Lenart, 226
Ill. 2d 208, 233 (2007). “[A]s a matter of substantive federal arbitration law” under the FAA,
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however, “an arbitration provision is severable from” the arbitration clause itself. Buckeye, 546
U.S. at 445. This “arbitration law applies in state as well as federal courts,” meaning that “unless
the challenge is to the arbitration clause itself, the issue of the contract’s validity is considered by
the arbitrator in the first instance.” Id. at 445-46. Consequently, while the parties disagree about
whether the admission agreement has terminated as a result of the decedent’s death, there is no
argument that the arbitration agreement terminated as a result of a provision specific to it. Because
plaintiff asserts the termination of the agreement as a whole, and not of the arbitration agreement
in particular, the dispute is one the arbitrator must address.
¶ 55 Plaintiff’s reliance on Clanton v. Oakbrook Healthcare Centre, Ltd., 2023 IL
129067, for the opposite conclusion is entirely understandable. However, Clanton only
superficially appears to have addressed the issues presented here. In Clanton, the contract provided
that it terminated “ ‘immediately upon the resident’s death.’ ” Id. ¶ 5. The contract here, however,
terminates on “discharge.” Whether death constitutes a “discharge” that triggers termination of the
contract is a question of contract interpretation, and “matters of contract interpretation are for an
arbitrator to decide initially.” Kinkel v. Cingular Wireless, LLC, 357 Ill. App. 3d 556, 562 (2005).
It is also unclear whether the arbitration agreement at issue in Clanton had a delegation clause.
¶ 56 More fundamentally, Clanton never addressed—and was not asked to address1 —
the impact of the FAA. Here, on the other hand, the preclusive effect of the FAA constitutes the
1 The parties in Clanton did not mention the FAA as part of their case on appeal. See Brief of Appellants, at
10-11, Clanton, 2023 IL 129067 (No. 129067), https://ilcourtsaudio.blob.core.windows.net/antilles-
resources/resources/4a056dea-abcd-4573-a60b-234b9feb3852/129067_ATB.pdf [https://perma.cc/WV4Q-V3KP]
(referencing only “the strong federal policy favoring the use and enforceability of arbitration agreements”); Brief of
Appellee, Clanton, 2023 IL 129067 (No. 129067), https://ilcourtsaudio.blob.core.windows.net/antilles-
resources/resources/bae893b0-85e8-4166-a994-7e279b463cb3/129067_AEB.pdf [ https://perma.cc/8VBJ-DRFG ]
(making no reference to federal law); Reply Brief of Appellants, Clanton, 2023 IL 129067 (No. 129067),
https://ilcourtsaudio.blob.core.windows.net/antilles-resources/resources/8518b1ae-6d46-4517-965d-
c82239db3009/129067_RPB.pdf [https://perma.cc/9GJC-HLK4] (same).
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heart of defendants’ position on appeal. We are mindful that this court has a duty to apply the
supreme court’s precedent to the facts of the case before us; when the supreme court has declared
the law on any point, it alone can overrule and modify its previous opinion. Yakich v. Aulds, 2019
IL 123667, ¶ 13. It is also true, however, that “ ‘[a] judicial opinion is a response to the issues
before the court *** [and] must be read in the light of the issues that were before the court for
determination.’ ” MB Financial Bank, N.A. v. Brophy, 2023 IL 128252, ¶ 27 (quoting Nix v. Smith,
32 Ill. 2d 465, 470 (1965)). Because Clanton does not address application of the FAA to the issues
presented in that case, our FAA analysis addresses matters that the supreme court was never asked
to consider. As explained above, the FAA analysis is crucial to the outcome of this case.
¶ 57 Similarly, in Nord v. Residential Alternatives of Illinois, Inc., 2023 IL App (4th)
220669, this court interpreted essentially identical language in an arbitration agreement and
concluded that the patient’s death triggered the termination on “discharge” provision and
effectively ended the arbitration agreement. One could validly distinguish Nord from this case by
noting that the question of whether there had been a “discharge” was conceded there, while here
it is not. While a plausible distinction, it does not go far enough, as it fails to account for more
fundamental differences between the analysis in Nord and the one we have undertaken here. The
court in Nord never addressed any of the applicable United States Supreme Court precedent
establishing that, under the federal law applicable here, it is our duty to defer all other matters to
the arbitrator once we find that an arbitration agreement has been validly formed. See Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985) (courts must examine
the question of arbitrability by applying the “ ‘federal substantive law of arbitrability, applicable
to any arbitration agreement within the coverage of the Act,’ ” (quoting Moses H. Cone Memorial
Hospital v. Mercury Construction Corp., 460 U.S. 1, 24 (1983))). The question of whether the
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decedent’s death constitutes a “discharge” that terminates the contract is one squarely within the
delegation clause, so it must be answered by the arbitrator.
¶ 58 Plaintiff argues that the FAA does not preempt state law contract defenses, citing
Carter II, 2012 IL 113204, and Calusinski v. Alden-Poplar Creek Rehabilitation & Health Care
Center, Inc., 2022 IL App (1st) 220508. These cases do not support plaintiff’s argument. In Carter
II, the supreme court addressed not a defense to contract formation, but the separate question of
whether the parties had formed an agreement to arbitrate at all; as explained above, this is an issue
for the court to decide. See Buckeye, 546 U.S. at 444 n.1. Here, on the other hand, the formation
of the arbitration agreement is established. In Calusinski, 2022 IL App (1st) 220508, ¶ 15-17, the
defense of unconscionability was raised against the arbitration agreement specifically, not against
the contract as a whole, and the court had the authority to conclude that the arbitration agreement
was unconscionable. See Buckeye, 546 U.S. at 448-49 (explaining the “separate enforceability of
arbitration provisions”). Moreover, the arbitration agreement in Calusinski did not include a
separate delegation provision (see Calusinski, 2022 IL App (1st) 220508, ¶ 4); otherwise, even this
challenge would have been referred to the arbitrator under the delegation provision. Here, plaintiff
is challenging the contract as a whole, not the arbitration agreement or the delegation provision.
¶ 59 In short, because plaintiff has not “challenged the delegation provision
specifically,” we are obligated to give it and the arbitration agreement full effect. See Rent-A-
Center, 561 U.S. at 72 (finding the court must treat the delegation provision as valid and enforce
it unless the party opposing arbitration challenged the delegation provision specifically).
¶ 60 III. CONCLUSION
¶ 61 For the reasons stated, we affirm the Jersey County circuit court’s May 12, 2023,
order denying plaintiff’s motion to vacate and set aside the court’s January 24, 2023, order
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compelling arbitration of the claims brought pursuant to the Survival Act. We reverse the court’s
order insofar as it compelled the arbitration of the Wrongful Death Act claims and remand as to
those claims. On remand, the circuit court retains discretion to either proceed to litigation of the
Wrongful Death Act claims or stay those proceedings pending the outcome of the arbitration of
the Survival Act claims. See Moses H. Cone, 460 U.S. at 20 n.23.
¶ 62 Affirmed in part and reversed in part.
¶ 63 Cause remanded with directions.
¶ 64 JUSTICE HARRIS, specially concurring:
¶ 65 I agree with the majority analysis and disposition. I write separately to address my
concurrence in Nord v. Residential Alternatives of Illinois, Inc., 2023 IL App (4th) 220669. As has
already been discussed, this court in Nord addressed similar circumstances and claims on appeal
but reached a different result. In Nord, we found that upon the resident’s discharge, the
residential contract, including the arbitration provision and delegation clause, ceased to exist. Id.
¶ 48. Based on a finding that the entire contract, including the arbitration provision, was
terminated, we concluded the circuit court had correctly denied the defendants’ motion to compel
arbitration.
¶ 66 However, after further consideration, I am persuaded by defendants’ argument in
this case that after a court has determined that an arbitration agreement, such as the agreement here
and the one in Nord, was formed, any other issue relating to the existence or enforceability of the
arbitration agreement is reserved for the arbitrator to decide. This is owing to the preclusive effect
of the agreement’s delegation clause on a court’s authority to decide. Under the
circumstances here, like in Nord, the FAA and United States Supreme Court precedent compels
the conclusion that if a valid delegation clause exists, issues regarding arbitrability are reserved
for the arbitrator, not the court. Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. ___,
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___, 139 S. Ct. 524, 529 (2019). The existence of an unchallenged delegation clause in this case
means the question whether the resident’s death constituted a “discharge” was to be answered by
the arbitrator.
¶ 67 PRESIDING JUSTICE TURNER, concurring in part and dissenting in part:
¶ 68 I would affirm the circuit court’s judgment in toto. The matter of what parties and
claims are bound by the arbitration agreement is a question of arbitrability and is not related to the
formation of the arbitration agreement itself. Here, we have a valid nursing home admission
contract with an addendum containing an arbitration agreement. Plaintiff does not dispute the
arbitration agreement contains a broad delegation clause. As such, all matters of arbitrability,
including what claims are bound by the arbitration agreement (scope/enforceability), are questions
for the arbitrator to decide.
¶ 69 As the majority explains, even with a delegation clause, the circuit court determines
whether the arbitration agreement was formed. Supra ¶ 35. Despite the circuit court finding an
agreement to arbitrate was properly formed and delegating to the arbitrator the other contentions
raised by plaintiff in response to defendants’ motion to compel arbitration, plaintiff, the appellant,
simply realleges her same arguments she raised in the circuit court on appeal and does not develop
any arguments as to why those issues should be decided by a court and not the arbitrator.
Defendants contend the court properly found an arbitration agreement was formed, given the
decedent’s powers of attorney, and then asserted all of plaintiff’s other issues were matters for the
arbitrator under the delegation clause. Plaintiff did not respond to defendants’ aforementioned
contention. As such, plaintiff never argued on appeal her wrongful death claims could be
considered by the court because those claims were matters of contract formation and not
arbitrability. On page 25 of her brief, plaintiff asserts, even with “an enforceable arbitration
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agreement,” that agreement could not be “enforced” against those who did not sign the agreement,
which is an arbitrability challenge. See Attix v. Carrington Mortgage Services, LLC, 35 F.4th
1284, 1295 (11th Cir. 2022) (stating questions of arbitrability include enforceability, scope, or
applicability of the parties’ arbitration agreement). The majority should not have crafted a contract
formation argument for plaintiff, who was the appellant and had the burden of presenting
developed arguments to this court. This court is “entitled to have the issues on appeal clearly
defined with pertinent authority cited and a cohesive legal argument presented.” (Emphases added
and internal quotation marks omitted.) Walters v. Rodriguez, 2011 IL App (1st) 103488, ¶ 5, 960
N.E.2d 1226. Regardless, the majority’s analysis is flawed.
¶ 70 In finding it could address the arbitrability of plaintiff’s wrongful death claims
because that issue was one of contract formation, the majority finds our supreme court’s decision
in Carter II, 2012 IL 113204, is controlling. There, the supreme court addressed two challenges to
the arbitrability of the plaintiff’s claims. See Carter II, 2012 IL 113204, ¶ 1. However, no contract
formation issues related to the two arbitration agreements were before the supreme court. See
Carter II, 2012 IL 113204, ¶ 1. Specifically, contract formation involves an offer, an acceptance,
and consideration (Melena v. Anheuser-Busch, Inc., 219 Ill. 2d 135, 151, 847 N.E.2d 99, 109
(2006)), and no challenges to those elements were raised against the two arbitration agreements in
Carter II. The arbitrability challenges were properly before the court because the arbitration
agreement in that case did not contain a delegation clause. Carter II, 2012 IL 113204, ¶ 5. Without
a delegation clause in an arbitration agreement, “gateway matters of arbitrability” are for the court
to determine. Savers Property & Casualty Insurance Co. v. National Union Fire Insurance Co. of
Pittsburg, PA, 748 F.3d 708, 722 (6th Cir. 2014). Thus, the issue before the supreme court in
Carter II was whether the plaintiff’s wrongful death claims were bound by the two existing
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arbitration agreements or, stated differently, whether the two arbitration agreements applied to or
were enforceable against the plaintiff’s wrongful death claims. See Carter II, 2012 IL 113204,
¶ 56. While the supreme court examined who were the parties to the two arbitration agreements in
answering that question in the negative (Carter II, 2012 IL 113204, ¶ 56), the supreme court did
not in any way indicate the question presented was one of contract formation and not a matter of
arbitrability. I note the Carter II analysis frequently refers to whether the plaintiff was “bound” by
the agreements to arbitrate, indicating an issue of enforceability/applicability of the existing
arbitration agreements. See Carter II, 2012 IL 113204, ¶¶ 54, 56-57. The Carter II decision may
control the issue of whether the arbitration agreement in this case is enforceable against plaintiff’s
purported wrongful death claims, but that decision is for the arbitrator, given the delegation clause
in the arbitration agreement.
¶ 71 The majority’s jumping to the merits of the arbitrability issue, despite a valid
delegation clause, was expressly rejected by the United State Supreme Court in Henry Schein, Inc.,
586 U.S. at ____, 139 S. Ct. at 530. There, the Supreme Court addressed the propriety of some
courts deciding the arbitrability question themselves, where the argument “the arbitration
agreement applies to the particular dispute [was] ‘wholly groundless.’ ” Henry Schein, Inc., 586
U.S. at ____, 139 S. Ct. at 527-28. In rejecting that approach, the Supreme Court noted, “Just as a
court may not decide a merits question that the parties have delegated to an arbitrator, a court may
not decide an arbitrability question that the parties have delegated to an arbitrator.” Henry Schein,
Inc., 586 U.S. at ____, 139 S. Ct. at 530. Here, the majority precisely does what the United States
Supreme Court has enjoined.
¶ 72 Here, plaintiff does not develop any argument disputing the circuit court’s finding
the arbitration agreement’s applicability to her wrongful death claims was a question of
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arbitrability delegated to the arbitrator. Accordingly, I would affirm the circuit court’s finding the
question of whether the wrongful death claims were bound by the arbitration agreement was one
for the arbitrator.
¶ 73 Likewise, I note my disagreement with this court’s recent analysis in Nord, 2023
IL App (4th) 220669. There, in direct contravention of Henry Schein, Inc., the analysis entirely
ignored the appellant’s argument the circuit court erred by failing to enforce a delegation clause in
the arbitration agreement. Instead, this court only addressed the merits of one of the arbitrability
arguments. Nord, 2023 IL App (4th) 220669, ¶¶ 25-26. Moreover, regardless of the existence of a
delegation clause in Nord, a challenge to the validity of the contract as a whole, such as seeking to
enforce a termination upon death clause in the nursing home admission contract, is a matter for
the arbitrator and not the court. See Buckeye, 546 U.S. at 445-46 (noting unless the challenge is
specifically to the arbitration provision, the issue of the contract’s validity is considered by the
arbitrator). As such, the effect of the termination-upon-death clause in the admission contract on
the arbitration agreement in Nord was a matter for the arbitrator.
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Mikoff v. Unlimited Development, Inc., 2024 IL App (4th) 230513Decision Under Review: Appeal from the Circuit Court of Jersey County, No. 22-LA-11;
the Hon. Allison Lorton, Judge, presiding.
Attorneys Lanny Darr, of Darr Law Offices, Ltd., of Alton, for appellant.
for
Appellant:
Attorneys Donna J. Fudge, of Fudge Broadwater, P.A., of St. Petersburg,
for Florida, for appellees.
Appellee:
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