Claude v. Fundamental Long Term Care

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1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 VIRGIL CLAUDE,
3 Plaintiff-Appellee,
4 v. NO. 31,345
5 FUNDAMENTAL LONG TERM CARE
6 d/b/a SPECIALTY HOSPITAL OF
7 ALBUQUERQUE,
8 Defendant-Appellant.
9 APPEAL FROM THE DISTRICT COURT OF McKINLEY COUNTY
10 Robert A. Aragon, District Judge
11 Adam D. Rafkin, P.C.
12 Adam D. Rafkin
13 Ruidoso, NM
14 for Appellee
15 Proctor & Associates, P.C.
16 Lori D. Proctor
17 Houston, TX
18 for Appellant
19 MEMORANDUM OPINION
1 HANISEE, Judge.
2 This case requires us to examine an arbitration agreement that a nursing home
3 requires patients to sign as a condition of admission to the home. Defendant,
4 Fundamental Long Term Care, appeals the district court’s denial of its motion to
5 compel arbitration, pursuant to the terms of an arbitration agreement (the Agreement)
6 entered into with Plaintiff’s mother, Yvonne Claude. The district court denied the
7 motion after argument regarding the substantive and procedural conscionability of the
8 Agreement and Yvonne Claude’s authority to enter into the Agreement on behalf of
9 Plaintiff. We affirm the ruling of the district court in favor of Plaintiff.
10 BACKGROUND
11 This appeal arises from a negligence lawsuit filed by Plaintiff alleging deficient
12 care in Defendant’s nursing home where Plaintiff sustained injuries. This Court
13 recently addressed the substantive unconscionability of language identical to the
14 language contained in the Agreement at issue in this case. See Figueroa v. THI of
15 N.M. at Casa Arena Blanca LLC, 2012-NMCA-___, ___ P.3d ___, (No. 30,477, July
16 18, 2012), cert. denied, 2012-NMCERT-___, ___ P.3d ___ (No. 33,762, Oct. 3,
17 2012). As a result of the Figueroa decision and the parties’ familiarity with the
18 factual and procedural background in this case, we shall not provide further detail of
19 the background at this time. We shall refer to any relevant background information
2
1 as may be necessary with each issue discussed below.
2 STANDARD OF REVIEW
3 We review de novo a district court’s order denying a motion to compel
4 arbitration. Felts v. CLK Mgmt, Inc., 2011-NMCA-062, ¶ 14, 149 N.M. 681, 254 P.3d
5 124, cert. granted, 2011-NMCERT-006, 150 N.M. 764, 266 P.3d 633; Strausberg v.
6 Laurel Healthcare Providers, LLC, 2012-NMCA-006, ¶ 6, 269 P.3d 914, cert.
7 granted, 2012-NMCERT-___, ___ P.3d ___ (No. 33,331, Jan. 6, 2012). The question
8 of whether a contract provision is unconscionable is a matter of law that we also
9 review de novo. Strausberg, 2012-NMCA-006, ¶ 6. The party attempting to compel
10 arbitration carries the burden of demonstrating that the arbitration agreement is valid.
11 Id. ¶ 1; Corum v. Roswell Senior Living, LLC, 2010-NMCA-105, ¶ 3, 149 N.M. 287,
12 248 P.3d 329.
13 DISCUSSION
14 Defendants contend that evidence from the record makes plain that the
15 Agreement was neither procedurally nor substantively unconscionable. As was the
16 case in Figueroa, Defendants additionally assert that the Federal Arbitration Act
17 (FAA), 9 U.S.C. §§ 1-16 (2012), preempts our state law that applies an
18 unconscionability analysis to the terms of arbitration agreements. And in
19 supplemental briefing pursuant to this Court’s sua sponte order that the parties address
3
1 the effect of Figueroa in this case, Defendants additionally maintain that Figueroa
2 itself is preempted by the FAA. Specifically, they maintain that the “most likely
3 claims” rule addressed in Figueroa is insufficient to circumvent application of the
4 FAA because it is not a generally applicable contract defense, and was not raised in
5 district court. On the merits, Defendants focus their analysis on the Agreement’s
6 procedural conscionability, and the authority of Plaintiff’s mother to sign the
7 Agreement on Plaintiff’s behalf. But the record does not contain any evidence or
8 argument regarding substantive unconscionability that supplements or materially
9 changes what was presented to this Court in the Figueroa case.
10 In Figueroa, we addressed the defendant’s argument regarding FAA
11 preemption and concluded that “our unconscionability analysis does not stand as an
12 obstacle to the accomplishment and execution of the full purposes and objectives of
13 the FAA.” 2012-NMCA-___, ¶ 21 (alterations, internal quotation marks, and citation
14 omitted). After conducting an analysis of the substantive conscionability of the
15 language of the agreement at issue, we concluded in Figueroa that the terms of the
16 agreement were unfairly and unreasonably one-sided and thereby, substantively
17 unconscionable. Id. ¶ 23. In this case, the district court denied Defendant’s motion
18 to compel arbitration as “not well-taken.” Nonetheless, our decision in Figueroa
19 makes clear that the identical language present in the Agreement now at issue is
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1 substantively unconscionable, and thus the district court was legally correct in denying
2 Defendant’s motion to compel. See Glaser v. LeBus, 2012-NMSC-012, ¶ 12, 276 P.3d
3 959; see also Maralex Res., Inc. v. Gilbreath, 2003-NMSC-023, ¶ 13, 134 N.M. 308,
4 76 P.3d 626 (“[A]n appellate court will affirm the district court if it is right for any
5 reason and if affirmance is not unfair to the appellant.” (internal quotation marks and
6 citation omitted)). While Defendant additionally maintains in its supplemental
7 briefing that application of Figueroa would be unfair, we see no argument that could
8 exempt an identically worded Agreement to that analysis in Figueroa and found to be
9 substantially unconscionable, even were further opportunity provided Defendant. We
10 likewise see no basis for this Court to deviate from our decision in Figueroa even if
11 the district court may have relied upon a different basis when it denied Defendant’s
12 motion to compel arbitration.
13 CONCLUSION
14 Consistent with Figueroa, we conclude the arbitration provision in the
15 Agreement is unenforceable because it is substantively unconscionable. Therefore,
16 we need not address Defendant’s remaining contentions regarding the procedural
17 conscionability of the Agreement or the authority of Plaintiff’s mother to enter into
18 the Agreement on behalf of Plaintiff. For the foregoing reasons, we affirm the
19 decision of the district court.
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1 IT IS SO ORDERED.
2 __________________________________
3 J. MILES HANISEE, Judge
4 WE CONCUR:
5 _____________________________
6 MICHAEL E. VIGIL, Judge
7 _____________________________
8 LINDA M. VANZI, Judge
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