Claude v. Fundamental Long Term Care

This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date. 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 [4] 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. [5] 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