Clanton v. Oakbrook Healthcare Centre, Ltd. , 2023 IL 129067 ( 2023 )

2023 IL 129067IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
(Docket No. 129067)
NANCY CLANTON, as Independent Administrator of the Estate of Laurel J. Jansen,
Deceased, Appellee v. OAKBROOK HEALTHCARE CENTRE, LTD., et al., Appellants.
Opinion filed September 21, 2023.
JUSTICE O’BRIEN delivered the judgment of the court, with opinion.
Chief Justice Theis and Justices Neville, Overstreet, Cunningham, and
Rochford concurred in the judgment and opinion.
Justice Holder White took no part in the decision.
OPINION
¶1 Plaintiff, Nancy Clanton, as the independent administrator of the estate of the
decedent, Laurel Jansen, brought an action against defendants, Oakbrook
Healthcare Centre, Ltd., Lancaster, Ltd., and May Flor Andora, R.N. The complaint
alleged that Jansen was negligently cared for in a nursing facility, suffered injuries
as a result, and subsequently died from her injuries. Defendants filed a motion to
compel arbitration pursuant to the contract for admission to the nursing facility. The
Cook County circuit court denied the motion to compel, and the First District
affirmed. 2022 IL App (1st) 210984.
¶2 On appeal to this court, defendants contend that the denial by the trial court of
their motion to compel arbitration under the nursing facility contract was erroneous.
For the reasons that follow, we affirm the judgment of the appellate court affirming
the denial of defendants’ motion to compel arbitration.
¶3 BACKGROUND
¶4 Plaintiff’s complaint alleges that Jansen was a resident at a skilled nursing
facility operated by Oakbrook Healthcare, commonly known as Oak Brook Care,
from July 19, 2019, through September 17, 2019. On August 9, 2019, Debbie
Kotalik, as Jansen’s power of attorney (POA) for healthcare, signed a “Contract
Between Resident and Facility” with Oakbrook Healthcare for Jansen’s admission
and residency at the nursing facility.
¶5 Relevant to this action, the contract provides:
“E. Dispute Resolution/Punitive Damages
1. Civil Disputes Subject To This Paragraph. Resident and Facility agree
that all civil claims arising in any way out of this Agreement, other than
claims by Facility to collect unpaid bills for services rendered, or to
involuntarily discharge Resident, shall be resolved exclusively through
mandatory mediation, and, if such mediation does not resolve the dispute,
through binding arbitration using the commercial mediation and arbitration
rules and procedures of JAMS/Endispute in its Chicago, Illinois office.
2. Punitive/Treble Damages Waived. Resident and Facility also agree
that both Resident and Facility shall seek only actual damages in any such
mediation or arbitration, and that neither of them will pursue any claim for
punitive damages, treble damages or any other type of damages the purpose
of which are to punish one party in an amount greater than the actual
damages allegedly caused by the other party.
-2-
F. Term and Termination
***
1. If the resident is compelled by a change in physical or mental health
to leave the facility, this Contract shall terminate on 7 days’ notice or
immediately upon the resident’s death. The resident may terminate the
Contract on 30 days’ notice to the facility.”
¶6 According to the complaint, Jansen suffered several falls while a resident at
Oak Brook Care, resulting in injuries that contributed to or caused Jansen’s death.
After Jansen’s death, plaintiff filed a complaint against defendants. The complaint
pleads four counts against Oakbrook Healthcare. Count I alleges violations of the
Nursing Home Care Act (210 ILCS 45/1-101 et seq. (West 2018)). Count II alleges
a common-law negligence claim, and count III alleges wrongful death. Count VIII
asserts a res ipsa loquitur negligence claim. The complaint also alleges negligence
and wrongful death claims against Lancaster (counts IV and V) and Andora (counts
VI and VII). Counts I, II, IV, VI, and VIII are brought pursuant to the Survival Act
(755 ILCS 5/27-6 (West 2018)), while counts III, V, and VII are brought pursuant
to the Wrongful Death Act (740 ILCS 180/0.01 et seq. (West 2018)).
¶7 Defendants filed a motion to compel mediation and/or arbitration of counts I,
II, VI, and VIII pursuant to section E of the contract (hereinafter the arbitration
clause), to dismiss those counts with prejudice, and to stay the remaining counts.
In response, plaintiff contended that defendants had waived their right to mediate
and/or arbitrate by participating in litigation for nearly a year, that the arbitration
clause was procedurally and substantively unconscionable, and that Kotalik, as
Jansen’s POA for healthcare, lacked the authority to execute an arbitration clause
on Jansen’s behalf.
¶8 The trial court denied defendants’ motion. The trial court concluded that
defendants did not waive their right to enforce the arbitration clause and the
arbitration clause was not procedurally unconscionable. However, the trial court
held that the provision in section E(2) of the nursing facility contract was
substantively unconscionable because it waived plaintiff’s entitlement to punitive
or treble damages, effectively limiting plaintiff’s ability to recover attorney fees.
The trial court declined to exercise its discretion to sever the limitation on damages
-3-
from the rest of the dispute resolution provision of section E and found that the
entire dispute resolution provision was unenforceable.
¶9 Defendants filed an interlocutory appeal pursuant to Illinois Supreme Court
Rule 307(a)(1) (eff. Nov. 1, 2017). Defendants argued that the trial court erred in
finding the contract substantively unconscionable and, if a portion of the contract
was unconscionable, the trial court erred in not severing that portion. In response,
plaintiff argued that defendants waived the ability to rely on the arbitration clause
in the contract and the trial court correctly concluded that the arbitration clause was
substantively unconscionable. Plaintiff also argued a number of other grounds upon
which the appellate court could affirm the denial of defendants’ motion, including
that the arbitration clause was procedurally unconscionable, Kotalik lacked
authority to enter into the arbitration clause on Jansen’s behalf, and the arbitration
clause terminated and was ineffective upon Jansen’s death pursuant to section F(1)
of the contract. The last ground was not raised in the trial court.
¶ 10 The appellate court agreed with the trial court that defendants’ litigation
conduct did not amount to a waiver of their right to invoke the arbitration clause.
2022 IL App (1st) 210984, ¶ 51. It also concluded that it was not precluded from
considering plaintiff’s argument that the arbitration clause terminated upon
Jansen’s death since an appellee may raise an issue not presented to the trial court
to sustain a judgment, as long as the factual basis for the issue was before the trial
court. Id. ¶ 54. Interpreting the plain language of the contract, the court found that
section F(1) of the contract, the termination-on-death provision, applied and that
the contract, including the arbitration clause, was no longer enforceable at the time
the action was commenced. Id. ¶ 58. It rejected defendants’ argument that the entire
contract did not terminate upon the death of a resident, finding that conclusion
would require the court to read limitations or exceptions into the contract. Id. ¶ 60.
¶ 11 The appellate court rejected defendants’ reliance on the Fourth District’s
opinion in Mason v. St. Vincent’s Home, Inc., 2022 IL App (4th) 210458, and
recognized the conflict. 2022 IL App (1st) 210984, ¶ 63. In Mason, the Fourth
District construed a nursing facility contract similar to the contract at issue in this
case—containing both a broad arbitration clause and a termination-on-death clause.
Relying on Carter v. SSC Odin Operating Co., 2012 IL 113204, the Fourth District
concluded that the arbitration clause was valid, even in light of the termination-on-
-4-
death clause, on the basis that Survival Act claims accrue prior to the decedent’s
death, so the arbitration provision was valid when the cause of action accrued. 2022
IL App (1st) 210984, ¶¶ 66-67. The appellate court below disagreed with the
reasoning of Mason, distinguishing Carter on the facts because this court in Carter
did not have reason to construe the effect of a termination-on-death clause. Id. ¶ 68.
More importantly, the court found that the Mason court’s approach did not give
effect to the termination clause’s plain and unequivocal language and essentially
created an exception to the termination clause. Id. ¶ 69. The court concluded that
the contract terminated upon Jansen’s death, at which time the arbitration clause
was no longer enforceable, and affirmed the trial court’s denial of the motion to
compel mediation and/or arbitration of counts I, II, VI, and VIII. Id. ¶¶ 74-75. The
court also affirmed the denial of defendants’ request to stay the remaining counts.
The matter was remanded for further proceedings in accordance with the appellate
court’s decision. Id. ¶ 82.
¶ 12 This court granted defendants’ petition for leave to appeal. Ill. S. Ct. R. 315(a)
(eff. Oct. 1, 2021).
¶ 13 ANALYSIS
¶ 14 Defendants argue that the negligence and Nursing Home Care Act claims are
brought under the Survival Act and are assets of the decedent’s estate that accrued
prior to death, so they should be arbitrated under the contract’s arbitration clause.
Defendants contend that the termination-on-death clause in the contract does not
change the result since the cause had already accrued prior to decedent’s death.
¶ 15 Plaintiff argues that the entire contract did not survive decedent’s death and
defendants have no contract to enforce, because the parties agreed it terminated
upon death. Since the termination-on-death clause was triggered before the claim
was brought, arbitration as a forum under the contract was not available, and the
only available forum was the court. If the nursing facility had intended to exclude
the arbitration clause from the termination clause, it should have stated as much in
the contract.
¶ 16 Defendants rely primarily upon our decision in Carter, contending that Carter
establishes that claims brought under the Survival Act are always assets of the
-5-
decedent’s estate that accrue prior to death and, as such, are subject to arbitration
clauses in effect at the time the actions giving rise to the claims occurred. Plaintiff
argues that Carter did not involve a termination-on-death clause and the only thing
decided in Carter was that the contractual arbitration provision did not apply to the
wrongful death claim, since that claim accrued to the beneficiaries after a resident’s
death. Thus, we begin our analysis by examining our opinion in Carter.
¶ 17 I. Carter v. SSC Odin Operating Co.
¶ 18 In Carter, the special administrator of a decedent’s estate filed a complaint
against a nursing home, asserting claims of negligence and wrongful death. Carter,
2012 IL 113204, ¶ 4. The nursing home filed a motion to compel arbitration
pursuant to arbitration agreements executed at the time of the decedent’s admission
to the nursing home. Id. Upon review of the denial of the motion to compel, this
court addressed plaintiff’s argument that the wrongful death claim was not subject
to arbitration since plaintiff was not a party to the arbitration agreements; rather,
one of the arbitration agreements was signed by the decedent, and the other was
signed by the plaintiff as the decedent’s legal representative. Id. ¶ 30. To better
explain a wrongful death action, this court contrasted wrongful death actions with
survival actions. Id. ¶ 34. While a wrongful death action is a new cause of action
that does not accrue until death, “the Survival Act simply allows a representative
of the decedent to maintain those statutory or common law actions that had already
accrued to the decedent prior to death.” Id. (citing Wyness v. Armstrong World
Industries, Inc., 131 Ill. 2d 403, 410-12 (1989)); see 755 ILCS 5/27-6 (West 2018)
(“In addition to the actions which survive by the common law, the following also
survive: actions of replevin, actions to recover damages for an injury to the person
***.”).
“ ‘A survival action allows for recovery of damages for injury sustained by the
deceased up to the time of death; a wrongful death action covers the time after
death and addresses the injury suffered by the next of kin due to the loss of the
deceased rather than the injuries personally suffered by the deceased prior to
death.’ ” Carter, 2012 IL 113204, ¶ 34 (quoting Wyness, 131 Ill. 2d at 410).
¶ 19 We held in Carter that, although the Wrongful Death Act describes a wrongful-
death action as an “asset of the deceased estate” (740 ILCS 180/2.1 (West 2018)),
-6-
it is not a “true asset of the deceased’s estate” that the decedent could limit via an
arbitration agreement. Carter, 2012 IL 113204, ¶¶ 42, 46. The “asset” label in
section 2.1 of the Wrongful Death Act was one of purpose: it was “intended to
facilitate the filing and prosecution of a wrongful-death claim,” not “to allow the
deceased to control the forum and manner in which a wrongful-death claim—in
which the deceased has no interest—is determined.” Id. ¶ 44. Applying “common
law principles governing all contracts,” this court concluded that the plaintiff was
not bound by the decedent’s agreement to arbitrate the wrongful death claim. Id.
¶¶ 46, 60. As for the claim alleging a violation of the Nursing Home Care Act,
which was brought pursuant to the Survival Act, “[the] plaintiff is bound to arbitrate
that claim, which had already accrued to [the decedent] prior to death and which is
brought for the benefit of [the decedent’s] estate.” Id. ¶ 57.
¶ 20 Extrapolating from this reasoning from Carter, defendants contend that,
because the Survival Act claims accrued at a time when the contract was still in
effect (prior to Jansen’s death), the arbitration clause was still in effect at that point
in time. Because the termination-on-death provision had not yet been triggered, the
survival claims were subject to arbitration. This is the interpretation adopted by the
Fourth District in Mason.
¶ 21 In Mason, the plaintiff, the decedent’s son, had signed a nursing home contract
for services on the decedent’s behalf. Mason, 2022 IL App (4th) 210458, ¶ 1. After
the decedent’s death, the plaintiff brought suit for injuries suffered by the decedent
against the nursing home defendants. The trial court stayed the claims brought
pursuant to the Wrongful Death Act and compelled arbitration of the negligence
and Nursing Home Care Act claims pursuant to the arbitration clause in the
contract. Id. The Fourth District affirmed. Id. ¶ 2.
¶ 22 The arbitration clause in the Mason nursing home contract provided, in relevant
part, that
“ ‘any action, dispute, claim, or controversy related to the quality of health care
services provided pursuant to this Contract (e.g., whether in contract or in tort,
statutory or common law, legal or equitable, or otherwise) now existing or
hereafter arising between Resident and St. Vincent’s, any past, present or future
incidents, omissions, acts, errors, practices or occurrence causing injury to
either party whereby the other party or its agents, employees or representatives
-7-
may be liable, in whole or in part, or any other aspect of the past, present, or
future relationships between the parties shall be resolved by binding arbitration
administered by an arbitrator approved by Resident and St. Vincent’s.’ ” Id.
¶ 21.
¶ 23 The contract at issue in Mason also provided: “ ‘In the event of Resident’s
death, this Contract terminates automatically.’ ” Id. ¶ 4. In interpreting the contract,
the Mason court concluded that, even with the termination-on-death clause, the
contractual arbitration clause was valid when the cause of action accrued. Id. ¶ 45.
The termination clause was not triggered at the time the alleged negligence
occurred, since those actions occurred prior to the decedent’s death. In reaching this
conclusion, the Mason court correctly noted Carter’s holding that the Survival Act
allowed a decedent’s representative to maintain statutory or common-law actions
that had accrued prior to the decedent’s death. Id. ¶ 44 (citing Carter, 2012 IL
113204, ¶ 34). The Mason court then acknowledged that Carter did not involve a
termination-on-death clause but concluded that such a clause would not change the
result. Id. The Mason court stated that “[t]he language of the arbitration clause does
not suggest it is inapplicable to claims that accrued before the resident’s death but
were brought after the resident’s death.” Id. ¶ 45.
¶ 24 Plaintiff contends that Carter is inapposite because Carter did not interpret a
contract that contained a termination-on-death clause. Carter did not implicitly
hold that the arbitration of claims under the Survival Act was governed by a
contract that existed prior to the decedent’s death even in the face of a termination-
on-death clause. Plaintiff further argues that the Fourth District in Mason
improperly expanded the holding in Carter. The Mason court’s analysis was
incorrect because it added language not contained in the agreement: despite the
clear and unequivocal language of the termination-on-death clause that the contract
“shall terminate ‘immediately upon the resident’s death,’ ” Mason added an
exception not contained in the termination-on-death clause.
¶ 25 We agree with plaintiff that Carter is not definitive regarding the current issue
before this court. As the appellate court below concluded, Carter decided whether
survival and wrongful death actions were arbitrable under the agreement in that
case, i.e., the proper party plaintiffs for the different claims and the proper forums
under the applicable contract. Carter did not address the application of a
-8-
termination-on-death clause. To the extent that Mason holds that all claims brought
pursuant to the Survival Act, but brought after the decedent’s death, are subject to
arbitration despite a termination-on-death clause, it is overruled. Rather, the
question of whether defendants have a right to arbitrate any claims under the terms
of the admission contract is essentially a straightforward question of contract
interpretation. Thus, we will look to the provisions of the contract, in light of our
well-established rules of contract interpretation.
¶ 26 II. Interpretation of the Contract
¶ 27 Plaintiff argues that the appellate court properly concluded that the clear and
unambiguous language of the contract dictates that the termination-on-death clause
terminated the entire agreement, including the arbitration provision, when Jansen
died. Without an enforceable arbitration provision, defendants have no grounds to
demand the arbitration forum. If defendants had intended the arbitration clause to
survive the resident’s death despite the termination-on-death clause, the burden was
on them, as the proponents of the contract, to explicitly state that exception.
¶ 28 Defendants respond that Jansen’s death terminated defendants’ contractual duty
to provide personal services to Jansen but that the provisions of the contract (i.e.,
“all civil claims arising in any way out of this Agreement”) make it clear that
defendants did not intend to terminate the arbitration provision upon Jansen’s death.
¶ 29 While public policy favors arbitration as a method of dispute resolution, an
agreement to arbitrate is nevertheless a matter of contract. United Cable Television
Corp. v. Northwest Illinois Cable Corp., 128 Ill. 2d 301, 306 (1989). “The parties
to an agreement are bound to arbitrate only those issues which by clear language
and their intentions expressed in the language show they have agreed to arbitrate.”
Rauh v. Rockford Products Corp., 143 Ill. 2d 377, 387 (1991). “[A]rbitration
agreements cannot be extended by construction or implication.” Id.¶ 30 The terms of an agreement to arbitrate are determined using ordinary contract
principles. Bess v. DirecTV, Inc., 381 Ill. App. 3d 229, 234 (2008). As with all
contracts, the primary objective is to determine and give effect to the intent of the
parties at the time they entered into the contract. Thompson v. Gordon, 241 Ill. 2d
428, 441 (2011) (citing Gallagher v. Lenart, 226 Ill. 2d 208, 232 (2007)). The first
-9-
place a court looks to determine the parties’ intent is the language of the contract,
considering the whole contract, not just a provision in isolation. Id. “In the absence
of an ambiguity, the intention of the parties at the time the contract was entered into
must be ascertained by the language utilized in the contract itself, not by the
construction placed upon it by the parties.” Lenzi v. Morkin, 103 Ill. 2d 290, 293
(1984).
¶ 31 In this case, the order denying the motion to compel arbitration, where there
was no evidentiary hearing or findings of fact, raises purely legal issues that are
reviewed de novo. Carter, 2012 IL 113204, ¶ 14; In re Marriage of Dynako, 2021
IL 126835, ¶ 15 (“Contract interpretation is also a question of law, so our review
proceeds de novo.”).
¶ 32 Generally, a contract survives the death of a party. In re Estate of Bajonski, 129
Ill. App. 3d 361, 366-67 (1984). There are exceptions, however, such as when the
contract requires the continued existence of a particular person or thing for its
performance. Id. at 367; see also People ex rel. Palmer v. Peoria Life Insurance
Co., 376 Ill. 517, 521 (1941) (“In contracts which require the continued existence
of the particular person or thing, the destruction or death of that person or thing will
terminate the agreement.”). Defendants contend that, although their obligation to
provide personal services to Jansen under the contract terminated upon Jansen’s
death, the dispute resolution provision of the same contract remained enforceable
after Jansen’s death. Defendants contend that this is the construction of the
admission contract that “ ‘harmonizes all the various parts so that no provision is
deemed conflicting with, or repugnant to, or neutralizing of any other.’ ” Zannis v.
Lake Shore Radiologists, Ltd., 73 Ill. App. 3d 901, 906 (1979) (quoting Coney v.
Rockford Life Insurance Co., 67 Ill. App. 2d 395, 399 (1966)).
¶ 33 Here, the parties contracted to use arbitration as the forum. Since the contract
language is unambiguous, we have no need to look to extrinsic evidence to interpret
the parties’ intent. See Thompson, 241 Ill. 2d at 441 (clear and unambiguous words
in a contract are to be given their plain and ordinary meaning and a court only looks
to extrinsic evidence if the contract language is ambiguous); see also Air Safety,
Inc. v. Teachers Realty Corp., 185 Ill. 2d 457, 462 (1999) (that a written agreement
speaks for itself and the intent of the parties thereto is determined from the language
used is known as the “four corners” rule). A contract is not rendered ambiguous
- 10 -
just because the parties disagree regarding its meaning. Central Illinois Light Co.
v. Home Insurance Co., 213 Ill. 2d 141, 153 (2004). Rather, it is rendered
ambiguous when the contract language “is susceptible to more than one meaning
or is obscure in meaning.” Wolff v. Bethany North Suburban Group, 2021 IL App
(1st) 191858, ¶ 37.
¶ 34 Pursuant to the plain language of the contract, the parties contracted to use
arbitration as the forum but only up until the point of the resident’s death. By the
express terms of the contract, once the resident died, the contract ceased to exist,
including the forum provision. We find that this interpretation of the contract
harmonizes and gives effect to all provisions of the contract and does not render
any language superfluous. The contract in this case is unambiguous and does not
contain an exception to the arbitration clause; it must be read as written. See
Thompson, 241 Ill. 2d at 449 (a court may not alter, modify, or add new terms to a
contract (citing Gallagher v. Lenart, 367 Ill. App. 3d 293, 301 (2006))). To the
extent that Mason holds differently as a matter of contract interpretation, it is also
overruled on this basis.
¶ 35 As further support for this conclusion, as plaintiff argues, defendants were the
proponents of the contract. Thus, if defendants had wanted to exclude the
arbitration clause from the termination-on-death clause, they were in a position to
draft it that way. See, e.g., Regional Care of Jacksonville, LLC v. Henry, 2014 Ark.
361, at 4, 444 S.W.3d 356, 358 (“ ‘This Arbitration provision shall remain in full
force and effect notwithstanding the termination, cancellation, or natural expiration
of this Admission Agreement and/or the death of Resident.’ ”). Or, as stated by the
appellate court below:
“the drafters of the contract could quite easily have used other language to
indicate the more limited interpretation of the termination provision that
defendants now seek. Rather than broadly stating that ‘this Contract’ (i.e., the
whole contract) would terminate upon the resident’s death, the drafters could
have specified which provisions would remain in effect. For instance, the
contract could have stated that the death of a resident extinguished obligations
for future performance of services, but did not extinguish the parties’ agreement
to arbitrate claims that accrued during a resident’s lifetime. Or the termination
provision could have simply included a carve-out to preserve the arbitration
- 11 -
provision, for example, by stating that ‘this Contract, other than the arbitration
agreement in Section E, shall terminate’ upon the resident’s death. While we
cannot know why the drafters inserted such a broad termination provision,
defendants cannot avoid the effect of the plain meaning of its language.”
(Emphasis omitted.) 2022 IL App (1st) 210984, ¶ 61.
¶ 36 Since we find that the arbitration clause is unenforceable as a matter of contract
law, we do not need to address plaintiff’s alternative argument that the arbitration
clause is unenforceable because Kotalik was only Jansen’s healthcare POA and
could not bind Jansen to arbitration unless such agreement was a prerequisite to
admission.
¶ 37 CONCLUSION
¶ 38 In this case, applying well-established rules of contract interpretation, we
conclude that the contract, including the arbitration clause, terminated upon
Jansen’s death. Thus, when this action was brought after Jansen’s death, arbitration
as a contractual forum was no longer an available option, even for alleged negligent
conduct that occurred prior to Jansen’s death. Accordingly, we affirm the judgment
of the appellate court, which affirmed the judgment of the trial court denying
defendants’ motion to compel mediation and/or arbitration of counts I, II, VI, and
VIII of the complaint, to dismiss those counts, and to stay counts III, IV, V, and
VII of the complaint.
¶ 39 Judgments affirmed.
¶ 40 Cause remanded.
¶ 41 JUSTICE HOLDER WHITE took no part in the consideration or decision of
this case.
- 12 -