Herrington v. SSC Seneca Operating Company ( 2021 )

THE STATE OF SOUTH CAROLINA
In The Court of Appeals
Betty Herrington, Respondent,
v.
SSC Seneca Operating Company, LLC, d/b/a Seneca
Health & Rehabilitation Center; SavaSeniorCare, LLC;
SSC Equity Holdings, LLC; SavaSeniorCare
Administrative Services, LLC; SavaSeniorCare
Consulting Services, LLC; Defendants,
Of which SSC Seneca Operating Company, LLC, d/b/a
Seneca Health & Rehabilitation Center; SavaSeniorCare
Administrative Services, LLC; SavaSeniorCare
Consulting Services, LLC; are the Appellants.
Appellate Case No. 2018-002088
Appeal From Oconee County
R. Scott Sprouse, Circuit Court Judge
Opinion No. 5866
Submitted May 3, 2021 – Filed October 6, 2021
REVERSED AND REMANDED
Stephen L. Brown, D. Jay Davis, Jr., and Russell G.
Hines, all of Clement Rivers, LLP, of Charleston, for
Appellants.
Raymond T. Wooten, of Smith Jordan, P.A., of Easley,
for Respondent.
HEWITT, J.: The appellants in this case are a number of related organizations
operating a nationwide chain of senior care facilities. We will refer to them as "the
Sava Group." They appeal a circuit court order declining to compel arbitration and
argue the stated basis for avoiding arbitration—that the parties only agreed to
arbitrate disputes involving precisely $50,000—is erroneous. We agree and reverse.
FACTS
Betty Herrington injured her foot and went to the hospital. She was admitted to one
of the Sava Group's facilities later for further care. After about a month, Herrington
was transferred back to the hospital for the foot to be amputated. In this lawsuit, she
claims the amputation was the result of malpractice and neglect she experienced at
the Sava Group's facility.
One of the many documents Herrington signed when she was admitted to the Sava
Group's facility was a "Dispute Resolution Program," sometimes referred to as a
"DRP." The opening paragraphs state:
The purpose of DRP is to enhance the quality of care that
is provided to our residents, and to resolve any
disagreements about care and other services that we
provide and that may arise.
DRP is valuable to all parties because it offers a
streamlined process to settle disagreements. DRP
increases the likelihood that disagreements can be
resolved more quickly and less expensively than by
litigation and that residents themselves will actually
benefit from faster resolution of disagreements.
Participation in DRP also helps to reduce the cost of
healthcare for everyone.
After the introduction, the agreement provides (in bold, underlined, and uppercase
type) that "[b]y agreeing to have all disagreements resolved through the dispute
resolution program, the parties agree to waive the right to a judge or a jury trial and
to have the dispute resolved through various steps, culminating in a decision by an
arbitrator."
The centerpiece of this case is the agreement's definition of "dispute." The
agreement says a "dispute" is "any claim . . . totaling $50,000 individually or in the
aggregate . . . ." The definition specifies that the agreement does not cover smaller
claims; it says "any such claim or dispute involving solely a monetary claim in an
amount less than $50,000" shall "not be deemed a dispute under this agreement."
At the end—right before the signature block—the agreement provides (in bold and
uppercase type) that:
by agreeing to have all disagreements resolved through the
dispute resolution program, the parties agree to waive the
rights to a judge or a jury trial. The Arbitrator's decision
is final and binding, and cannot be appealed to any state,
or federal court, unless provided for [in] state or federal
law.
The Sava Group moved to compel arbitration based on the agreement. The circuit
court conducted a hearing and took the case under advisement before entering a
written order finding:
The [agreement] applies to disputes and defines a dispute
as "any claim or dispute totaling $50,000 individually or
in the aggregate that would constitute a cause of action
that either party could bring in a court of law[.]"
(emphasis added). Claims for less than $50,000 are
excluded from the definition of a dispute. Therefore, by
its own unambiguous terms, the [agreement] only applies
to claims or disputes of exactly $50,000.
The circuit court did not address Herrington's other arguments questioning whether
the agreement was a valid binding contract. The Sava Group's motions to reconsider,
alter, or amend were denied.
ISSUE
Whether the circuit court erred in interpreting the arbitration agreement as only
applying to claims for exactly $50,000.
STANDARD OF REVIEW
"The question of arbitrability of a claim is an issue for judicial determination unless
the parties provide otherwise." Partain v. Upstate Auto. Grp., 386 S.C. 488, 491,
689 S.E.2d 602, 603 (2010). Our standard of review is de novo. Id. Still, "a circuit
court's factual findings will not be reversed on appeal if any evidence reasonably
supports the findings." Id.LAW/ANALYSIS
This case presents the odd but familiar situation where opposing parties pitch
different interpretations of a writing while also arguing the writing is unambiguous.
The Sava Group argues the agreement as a whole is capable of only one reasonable
interpretation—that the parties agreed to arbitrate any claim or dispute totaling
$50,000 or more. Herrington maintains the circuit court was correct in finding the
agreement only requires arbitration for claims of exactly $50,000 pursuant to the
plain and literal language in the agreement's definition of "dispute."
"[A]rbitration is a matter of contract and a party cannot be required to submit to
arbitration any dispute which he has not agreed to submit." Aiken v. World Fin.
Corp. of S.C., 373 S.C. 144, 149, 644 S.E.2d 705, 708 (2007). "A motion to compel
arbitration made pursuant to an arbitration clause in a written contract should only
be denied where the clause is not susceptible to any interpretation which would cover
the asserted dispute." Zabinski v. Bright Acres Assocs., 346 S.C. 580, 597, 553
S.E.2d 110, 118–19 (2001).
The circuit court rejected the Sava Group's argument that the parties intended the
arbitration clause to apply to all claims for $50,000 or more by reasoning the court
would have to add language to the agreement in order to read the agreement this
way. The court went on to cite Ellis v. Taylor, 316 S.C. 245, 248, 449 S.E.2d 487,
488 (1994), for the rule that "[w]hen the language of a contract is plain and capable
of legal construction, that language alone determines the instrument's force and
effect." The court explained its duty was to enforce the contract (not to rewrite it),
the agreement was drafted by "sophisticated entities," and the agreement did not
require arbitration because Herrington was not claiming "exactly $50,000 in
damages."
This ruling makes sense if one isolates his or her focus to the literal reading of the
agreement's "dispute" definition. Even so, and critically, we are convinced that
interpretation does not hold up when viewing the agreement as a whole. We are
bound to interpret the agreement by looking at the entire agreement from beginning
to end: precedent explains that when construing a contract, "all of its provisions
should be considered, and one may not, by pointing out a single sentence or clause,
create an ambiguity." Yarborough v. Phoenix Mut. Life Ins. Co., 266 S.C. 584, 592,
225 S.E.2d 344, 348 (1976). We do this because "[p]resumably, all portions of a
contract are inserted for a purpose and the contract must be read as a whole, giving
appropriate weight to all provisions." Id. We assume the parties intended a
meaningful agreement, not a nonsensical or absurd one, so we read agreements in a
way that "will give effect to the whole instrument and to each of its various parts and
provisions, if it is reasonable to do so." Id. at 593, 225 S.E.2d at 349.
The agreement begins by stating the parties' desire to "have all disagreements
resolved through the dispute resolution program." In similar fashion, the agreement
closes with a reference to the parties "agreeing to have all disagreements resolved
through the dispute resolution program." The obvious intention is that most disputes
will go through arbitration—claims of lesser value are defined to not even be
"disputes"—and one cannot come away from the agreement without the idea that the
parties intended for the agreement to comprehensively describe how they would
handle all of their disputes and disagreements. Yet, Herrington argues, and the
circuit court found, that the parties only agreed on how they would handle two
classes of claims: claims worth less than $50,000 and claims for exactly $50,000.
We cannot agree. That interpretation results in an idiosyncratic agreement that does
not remotely accomplish its stated purpose. Putting aside the practical question of
how one would enforce a contract binding someone to arbitrate claims with precisely
$50,000 in controversy—could a plaintiff simply plead damages of one cent more
or less and completely avoid arbitration?—the agreement's purpose was directly
advertised as covering all disagreements, not discussing some and ignoring others.
We are convinced the right approach is to read the agreement as comprehensive. We
do not think it is sensible to read it as an agreement that is all donut-hole and no
donut.
We acknowledge Ellis, which states:
When the language of a contract is plain and capable of
legal construction, that language alone determines the
instrument's force and effect. The court's duty is to
enforce the contract made by the parties regardless of its
wisdom or folly, apparent unreasonableness, or the parties'
failure to guard their rights carefully.
316 S.C. at 248, 449 S.E.2d at 488 (citation omitted). Still, we have recognized that
one cannot interpret text without also considering context. See State v. Miles, 421
S.C. 154, 161, 805 S.E.2d 204, 208 (Ct. App. 2017) (quoting Avis Rent A Car Sys.,
Inc. v. Hertz Corp., 782 F.2d 381, 385 (2d Cir. 1986)). And sometimes "[t]here is
no surer way to misread any document than to read it literally." Guiseppi v. Walling,
144 F.2d 608, 624 (2d Cir. 1944) (Hand, J., concurring). We respect Herrington's
argument that it is not for this court to question why the Sava Group would create a
dispute resolution regime that exempts more than it covers. But in the end, we
cannot adopt a construction that pits the agreement against itself and results in a
dispute resolution scheme that is essentially void of any practical effect. See Stevens
Aviation, Inc. v. DynCorp Int'l LLC, 407 S.C. 407, 416–20, 756 S.E.2d 148, 152–54
(2014) (instructing that courts should assume the parties intended to form a binding
contract and an interpretation saving the contract will be favored over another that
voids it or renders terms superfluous).
CONCLUSION
We reverse the circuit court's order and remand for the circuit court to consider
Herrington's remaining arguments opposing arbitration.
REVERSED AND REMANDED.1
LOCKEMY, C.J., and HUFF, J., concur.
1
We decide this case without oral argument pursuant to Rule 215, SCACR.