Mulligan v. Loft Rehabilitation & Nursing of Canton, LLC , 2023 IL App (4th) 230187 ( 2023 )

2023 IL App (4th) 230187FILED
August 15, 2023
NO. 4-23-0187
Carla Bender
4th District Appellate
IN THE APPELLATE COURT Court, IL
OF ILLINOIS
FOURTH DISTRICT
SANDY MULLIGAN, ) Appeal from the
Plaintiff-Appellee, ) Circuit Court of
v. ) Fulton County
THE LOFT REHABILITATION AND NURSING OF ) No. 21LL04
CANTON, LLC, d/b/a Loft Rehabilitation & Nursing of )
Canton, ) Honorable
Defendant-Appellant. ) Thomas B. Ewing,
) Judge Presiding.
JUSTICE TURNER delivered the judgment of the court, with opinion.
Justices Harris and Steigmann concurred in the judgment and opinion.
OPINION
¶1 On September 9, 2020, plaintiff, Sandy Mulligan, was admitted to a long-term care
nursing care facility owned by defendant, the Loft Rehabilitation and Nursing of Canton, LLC
(Loft). That same day, plaintiff fell and sustained injuries, including a hip fracture, which required
hospitalization. Upon her admission to the Loft, plaintiff had executed the admissions paperwork,
including a contract between her and the facility (Contract). The executed paperwork also included
an arbitration and limitation of liability rider to the Contract (Arbitration Rider). In April 2021,
plaintiff filed a complaint against the Loft for the injuries she suffered while under the Loft’s care.
In June 2022, the Loft filed a motion to stay and compel arbitration pursuant to the terms of the
Arbitration Rider. After an August 2022 hearing, the Fulton County circuit court entered a written
order granting the Loft’s motion to compel arbitration. Plaintiff filed a motion to reconsider
asserting the Arbitration Rider was substantively unconscionable. On February 3, 2023, the court
entered a written order agreeing with plaintiff, granting her motion to reconsider, and denying the
Loft’s motion to compel arbitration.
¶2 Pursuant to Illinois Supreme Court Rule 307(a)(1) (eff. Nov. 1, 2017), the Loft
appeals the circuit court’s February 3, 2023, order granting plaintiff’s motion to reconsider and
denying its motion to compel arbitration. The Loft contends the court erred by (1) failing to enforce
the delegation clause of the Arbitration Rider and, in the alternative, (2) finding the Arbitration
Rider was substantively unconscionable. We reverse and remand with directions.
¶3 I. BACKGROUND
¶4 Since 2018, the Loft’s admission paperwork was electronic, and residents who
completed the paperwork themselves did so on an iPad. Plaintiff had completed her own
admissions paperwork. The appellate record contains both a printed version of the Arbitration
Rider and a version that is a printout of screenshots from an iPad. The two versions are similar but
not identical. The differences in the two versions are noted when necessary for the disposition of
this case.
¶5 The Arbitration Rider referred to the Contract as the “Agreement” and the
Arbitration Rider as the “Rider.” The screenshot of the Arbitration Rider shows plaintiff could
accept or decline it. On the printout version, plaintiff’s signature is affixed to the Arbitration Rider.
Paragraph two of the Arbitration Rider expressly provided the resident and the facility shall submit
to arbitration the following disputes:
“(a) all claims or controversies arising out of or in any way relating to the
Agreement***;
(b) the Resident’s stay at the Facility ***;
(c) the services rendered for any condition, and any dispute arising out of
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the diagnosis, treatment, or care of the Resident;
(d) disputes involving amounts in controversy greater than $150,000; or
(e) disputes regarding interpretation of this Rider[.]”
Moreover, the Arbitration Rider stated it would be governed by and interpreted under the United
States Arbitration Act (9 U.S.C. § 1 et seq. (2018)). As to fees and costs, the Arbitration Rider
provided the following:
“7. Facility will be responsible for payment of the arbitrator’s fees and costs
associated with the arbitration.
8. Facility will pay up to $5,000 of the Resident’s attorneys’ fees and/or
costs associated with the arbitration.
9. Facility will bear its own attorneys’ fees and costs associated with the
arbitration.”
Additionally, if arbitration is not allowed by law and the dispute is brought in court, the Arbitration
Rider provided, “Facility will be responsible for the Resident and/or Responsible Party’s court
costs and up to $5,000 of the Resident and/or Responsible Party’s attorneys’ fees. Facility will
bear its own costs and attorneys’ fees.” Last, the Arbitration Rider had a severability clause, which
stated the following: “In the event a court having jurisdiction finds any portion of this Rider
unenforceable, that portion shall not be effective and the remainder of the Rider shall remain
effective.”
¶6 In April 2021, plaintiff filed a complaint against the Loft seeking to recover
damages for her alleged injuries from the fall and asserting the Loft breached its duty of care in 18
different ways, including violating federal regulations and the Nursing Home Care Act (Care Act)
(210 ILCS 45/1-101 et seq. (West 2020)).
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¶7 In June 2022, the Loft filed a motion to stay and compel arbitration pursuant to the
terms of the Arbitration Rider. The Loft attached a copy of the printed Contract and the Arbitration
Rider. It also included a supporting affidavit by Tim Wiley, the Loft’s regional director of
operations. With the motion, the Loft also filed a supporting memorandum.
¶8 The deposition of Mary Andrews, the Loft’s social services director, was taken on
August 31, 2021. Andrews’s relevant testimony is discussed in the analysis section.
¶9 Plaintiff filed a response to the Loft’s motion to compel arbitration asserting the
motion should be denied because (1) the Loft violated federal nursing home regulations (42 C.F.R.
§ 483.70(n) (2019)), (2) plaintiff lacked the mental capacity to sign the Arbitration Rider, (3) the
Arbitration Rider is procedurally unconscionable, and (4) the Arbitration Rider is substantively
unconscionable. Plaintiff attached her own affidavit noting the prescribed medication she had
taken the morning of September 9, 2020. She also attached the transcript of Andrews’s deposition
and the affidavit of Dr. David Seignious, who averred it was unlikely plaintiff had sufficient ability
or capacity to understand and agree to the Contract and Arbitration Rider.
¶ 10 The Loft filed a reply, which attached, inter alia, the affidavit of Dr. Steven
Selznick. Based on his review of the materials provided, Dr. Selznick opined to a reasonable degree
of medical probability plaintiff was not mentally incapacitated. He stated she had the mental
capacity to understand the admissions process; understand the terms of the consents,
authorizations, and agreements presented to her; and enter into contracts on her own behalf on
September 9, 2020. The Loft also attached to the reply screenshots of the admission documents
from an iPad.
¶ 11 On August 4, 2022, the circuit court held a hearing on the Loft’s motion to compel
arbitration. On September 7, 2022, the court entered its written order granting the Loft’s motion
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to stay and compel arbitration. The court found plaintiff failed to demonstrate her mental
incapacity, compliance with the federal regulations did not determine whether the Arbitration
Rider was enforceable or not, and the unconscionability claims should be determined by the
arbitrator pursuant to the Arbitration Rider’s delegation clause.
¶ 12 On October 3, 2022, plaintiff filed a motion to reconsider, citing Calusinski v.
Alden-Poplar Creek Rehabilitation & Health Care Center, Inc., 2022 IL App (1st) 220508, ¶¶ 10,
16, in which the reviewing court found the arbitration agreement was substantively unconscionable
and thus unenforceable because it waived the plaintiff’s right to attorney fees under the Care Act
without adequate consideration from the nursing home defendants. The Loft filed a response,
distinguishing the agreement in Calusinski and attaching the arbitration agreement that was at issue
in Carter v. SSC Odin Operating Co., 2012 IL 113204, ¶ 27, 976 N.E.2d 344, where the supreme
court concluded the nursing home resident’s promise to arbitrate, even if not met with a reciprocal
promise to arbitrate by the defendant, was supported by consideration. Plaintiff filed a reply
addressing the caselaw cited by the Loft. Last, the Loft filed as persuasive authority this court’s
unpublished decision in Long v. Loft Rehabilitation & Nursing of Canton, LLC, 2022 IL App (4th)
220649-U. There, we found defendant could enforce the arbitration agreement and then concluded
“all remaining issues relating to the validity, enforceability, and scope of the agreement, including
unconscionability, are subject to arbitration” pursuant to the delegation clause. Long, 2022 IL App
(4th) 220649-U, ¶¶ 37, 47.
¶ 13 In January 2023, the circuit court held a hearing on plaintiff’s motion to reconsider.
On February 3, 2023, the court entered a written order granting plaintiff’s motion to reconsider
and denying the Loft’s motion to compel arbitration. The court found the Arbitration Rider was
substantively unconscionable. It noted the Arbitration Rider limited the payment of plaintiff’s
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attorney fees and/or costs to $5000 in contravention of section 3-602 of the Care Act (210 ILCS
45/3-602 (West 2020)). The court further found the Loft’s obligation to pay plaintiff’s attorney
fees and/or costs up to $5000 was not sufficient consideration for plaintiff’s waiver of costs and
attorney fees because plaintiff could easily incur much more than that amount in attorney fees
alone.
¶ 14 As to the other issues, the circuit court found it need not address procedural
unconscionability, except to note the following. With its original order, the court had been
persuaded by defendant’s argument the presumption of mental capacity to enter into a contract for
admission to a long-term facility under section 2-202(a) of the Care Act (210 ILCS 45/2-202(a)
(West 2020)) applied to the Arbitration Rider and the presumption could only be overcome if
plaintiff had been adjudicated a “[p]erson with a disability” within the meaning of section 11a-2
of the Probate Act of 1975 (755 ILCS 5/11a-2 (West 2020)), or unless a petition for such an
adjudication was pending in an Illinois circuit court. The court pointed out it had made its finding
on mental capacity before the December 22, 2022, opinion in Sanders v. Oakbrook Healthcare
Centre, Ltd., 2022 IL App (1st) 221347. As such, any question regarding plaintiff’s mental
capacity would require a summary determination by the court in accordance with section 2(a) of
the Uniform Arbitration Act (710 ILCS 5/2(a) (West 2020)). However, given the reconsideration
of its decision pursuant to Calusinski, the court found the summary determination was not
necessary.
¶ 15 On March 1, 2023, defendant filed a timely notice of appeal in sufficient
compliance with Illinois Supreme Court Rule 303 (eff. July 1, 2017). Accordingly, this court has
jurisdiction under Illinois Supreme Court Rule 307(a)(1) (eff. Nov. 1, 2017). See Salsitz v. Kreiss,
198 Ill. 2d 1, 11, 761 N.E.2d 724, 730 (2001) (noting a circuit court’s order compelling arbitration
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is injunctive in nature and thus subject to interlocutory appeal under Rule 307(a)(1)).
¶ 16 II. ANALYSIS
¶ 17 The Loft challenges the circuit court’s denial of its motion to stay and compel
arbitration. The parties agree the appropriate standard of review is de novo. When the circuit court
has not held an evidentiary hearing on a motion to compel arbitration, we review the court’s ruling
de novo. Watkins v. Mellen, 2016 IL App (3d) 140570, ¶ 12, 54 N.E.3d 879. Moreover, a review
of a determination of whether a contract or a portion of a contract is unconscionable is de novo.
Kinkel v. Cingular Wireless, LLC, 223 Ill. 2d 1, 22, 857 N.E.2d 250, 264 (2006).
¶ 18 In its appellant brief, the Loft asserts the circuit court erred by denying its motion
to compel arbitration because the Arbitration Rider has a delegation clause or, alternatively, the
Arbitration Rider was not substantively unconscionable. Plaintiff contends the Arbitration Rider
is both substantively and procedurally unconscionable. She further argues, if this court finds the
Arbitration Rider was not unconscionable, then we should remand the matter for a summary
determination on whether she had the mental capacity to enter into the Arbitration Rider, as the
circuit court noted in its order on plaintiff’s motion to reconsider.
¶ 19 We begin by examining the proper order for addressing the parties’ issues on
appeal. “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). If a contract does exist, “then an
arbitration clause may delegate all other issues, including defenses, to the arbitrator.” K.F.C., 29
F.4th at 837. Mental capacity goes to contract formation and is a threshold issue. See Spahr v.
Secco, 330 F.3d 1266, 1273 (10th Cir. 2003) (finding the plaintiff’s claim he lacked the mental
capacity to enter into an enforceable contract concerned the making of the agreement). If plaintiff
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lacked the mental capacity to enter into a contract, then it is unnecessary to determine whether a
delegation clause exists and/or the contract is unconscionable. As such, we first address the issue
of plaintiff’s mental capacity.
¶ 20 A. Mental Capacity
¶ 21 Plaintiff contends she is entitled to remand for a summary disposition on the issue
of her mental capacity based on the recent decision of Sanders, 2022 IL App (1st) 221347. The
Loft disagrees.
¶ 22 In its initial order, the circuit court found the following:
“After reviewing both affidavits as well as the other affidavits submitted by the
parties, this Court finds that the Plaintiff has failed to overcome the presumption of
mental capacity to enter into a contract for admission to a long term facility under
Section 202(a) of the [Care Act].”
At the hearing on the motion to reconsider, plaintiff challenged the court’s finding about her mental
capacity asserting the presumption in section 2-202(a) of the Care Act (210 ILCS 45/2-202(a)
(West 2020)) was the same as the common law one and she had presented ample evidence to
overcome the presumption of capacity. The Loft objected, noting plaintiff had not raised the issue
in her motion to reconsider. In its February 2023 order on plaintiff’s motion to reconsider, the
court did not rule on the Loft’s objection to plaintiff’s challenge to the court’s finding of mental
capacity. The court did state it had been persuaded in rendering its original finding of mental
capacity by the Loft’s argument the presumption of capacity in section 2-202(a) of the Care Act
(210 ILCS 45/2-202(a) (West 2020)) could only be rebutted if one of the two exceptions set forth
in that section applied. It further found, based on Sanders, any question regarding plaintiff’s mental
capacity would require a summary determination by it in accordance with section 2 of the Uniform
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Arbitration Act (710 ILCS 5/2(a) (West 2020)).
¶ 23 The problem with the circuit court’s finding in ruling on the motion to reconsider
is the Loft never made the argument regarding the rebuttal of the presumption of capacity and the
court found, as noted above, plaintiff did not overcome the presumption of capacity based on the
supporting materials. In its initial order, the court made no mention of the two exceptions to the
presumption of capacity in section 2-202(a). Thus, we do not find the court made an error of law
in its initial finding plaintiff failed to overcome the presumption of capacity.
¶ 24 As to the Sanders decision, the circuit court in that case had denied the defendants’
motion to dismiss and compel arbitration but found a genuine issue of fact existed as to whether
the plaintiff lacked the capacity to enter into the admission contract containing the arbitration
provision. Sanders, 2022 IL App (1st) 221347, ¶ 15. However, in this case, the court heard oral
arguments, considered the parties’ supporting materials in light of the presumption in section
2-202(a), and made the factual determination plaintiff failed to overcome the presumption of
mental capacity. Moreover, neither party requested to present evidence at the court’s August 2022
hearing. “ ‘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, 79
N.E.3d 826 (quoting Tokar v. Crestwood Imports, Inc., 177 Ill. App. 3d 422, 434, 532 N.E.2d 382,
390 (1988)). Since the circuit court did not appear to apply the law incorrectly in its original order
and the parties chose not to present evidence at the August 2022 hearing on the Loft’s motion to
compel arbitration, we find plaintiff is not entitled to an evidentiary hearing on the issue of her
mental capacity, and the circuit court’s finding of mental capacity stands.
¶ 25 B. Delegation Clause
¶ 26 Since the circuit court’s finding plaintiff had the mental capacity to enter into a
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contract stands, we address the Loft’s arguments. The Loft first asserts the Arbitration Rider’s
delegation clause assigns the question of unconscionability to the arbitrator. Plaintiff agrees a
delegation clause exists but contends unconscionability is a matter for the circuit court and not the
arbitrator.
¶ 27 Contrary to the parties’ assertion, we find the Arbitration Rider does not contain a
delegation provision. “The question whether the parties have submitted a particular dispute to
arbitration, i.e., the question of arbitrability, is an issue for judicial determination [u]nless the
parties clearly and unmistakably provide otherwise.” (Emphasis and internal quotation marks
omitted.) Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002). In support of its
argument the Arbitration Rider contains a delegation clause, the Loft cited several cases, some of
which set forth the actual language of the arbitration agreement’s delegation clause. In one case,
the parties’ agreement stated as follows:
“[T]he Arbitrator, and not any federal, state, or local court or agency, shall have
exclusive authority to resolve any dispute relating to the interpretation,
applicability, enforceability or formation of this Agreement including, but not
limited to any claim that all or any part of this Agreement is void or voidable.”
(Internal quotation marks omitted.) Rent-A-Center, West, Inc. v. Jackson, 561 U.S.
63, 66 (2010).
In the other case, the delegation clause stated the following:
“ ‘The arbitrator shall have the sole authority to rule on his/her own jurisdiction,
including any challenges or objections with respect to the existence, applicability,
scope, enforceability, construction, validity and interpretation of this Policy and
any agreement to arbitrate a Covered Dispute.’ ” Kubala v. Supreme Production
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Services, Inc., 830 F.3d 199, 204 (5th Cir. 2016).
Last, in a recent unpublished decision by this court, the delegation clause was in a separate
paragraph entitled “ ‘Arbitrator’s Authority’ ” and stated the following:
“ ‘The arbitrator has the sole jurisdiction to resolve all disputes among the
parties, including wrongful death claims and any disputes about the signing,
validity, enforceability, scope, applicability, interpretation, severability, and
waiver of this Agreement or competency of the parties.’ ” (Emphasis in original.)
Long, 2022 IL App (4th) 220649-U, ¶ 9.
¶ 28 In this case, the Arbitration Rider only provides disputes regarding the
interpretation of the Arbitration Rider shall be submitted to arbitration. Unlike the agreements in
the cases cited by the Loft, the Arbitration Rider does not expressly state the enforceability,
applicability, or validity of the Arbitration Rider is to be decided by the arbitrator. Under its own
definitions, the Arbitration Rider’s language “all claims or controversies arising out of or in any
way relating to the Agreement” noted by the Loft refers to the Contract and not the Arbitration
Rider itself. Here, the clear and unmistakable language delegating the determination of
enforceability or the matter of unconscionability of the Arbitration Rider to the arbitrator is
lacking. Given the Arbitration Rider’s clear language, the issue of delegation is not a matter of
statutory construction for the arbitrator, as suggested by the Loft. Accordingly, we find the
Arbitration Rider did not contain a clear and unmistakable clause delegating any matters generally
for a court to decide to the arbitrator and the circuit court had the authority to determine
unconscionability. As such, we need not address plaintiff’s argument unconscionability cannot be
delegated to an arbitrator.
¶ 29 C. Substantive Unconscionability
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¶ 30 The Loft contends, if a delegation clause does not exist, then the circuit court erred
by finding the Arbitration Rider was unenforceable because it was substantively unconscionable.
An arbitration agreement may be invalidated by a state law contract defense of general
applicability, such as fraud, duress, or unconscionability. Carter, 2012 IL 113204, ¶ 18. Plaintiff
asserts Calusinski is directly on point and the court properly found the Arbitration Rider was
substantively unconscionable.
¶ 31 Our supreme court has defined substantive unconscionability as follows:
“ ‘Substantive unconscionability concerns the actual terms of the contract
and examines the relative fairness of the obligations assumed. [Citation.] Indicative
of substantive unconscionability are contract terms so one-sided as to oppress or
unfairly surprise an innocent party, an overall imbalance in the obligations and
rights imposed by the bargain, and significant cost-price disparity.’ ” Kinkel, 223
Ill. 2d at 28 (quoting Maxwell v. Fidelity Financial Services, Inc., 907 P.2d 51, 58
(Ariz. 1995)).
Here, the circuit court agreed with plaintiff the Arbitration Rider was so one-sided as to be
oppressive because it limited her recovery of attorney fees and/or costs to $5000 in violation of
section 3-602 of the Care Act (210 ILCS 45/3-602 (West 2020)). The court found the payment of
up to $5000 in attorney fees was insufficient consideration for the waiver of her statutory right to
recover fees. We note the Arbitration Rider has express terms addressing the payment of attorney
fees, and thus this case is distinguishable from our decision in Mason v. St. Vincent’s Home, Inc.,
2022 IL App (4th) 210458, ¶ 47, 199 N.E.3d 346, where we declined to address the waiver of
attorney fees under the Care Act and found the matter was for an arbitrator to initially decide
because interpretation of the arbitration clause was necessary.
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¶ 32 As to the Arbitration Rider in this case, we begin our analysis by noting the facts
of this case are distinguishable from Calusinski, 2022 IL App (1st) 220508, ¶ 16, where the
reviewing court concluded an arbitration agreement was substantively unconscionable and
unenforceable because it waived the plaintiff’s right to attorney fees under the Care Act without
adequate consideration by the defendants. There, the arbitration agreement provided the plaintiff
“ ‘waive[d] any and all costs and attorney’s fees under the Illinois Nursing Home Care Act.’ ”
Calusinski, 2022 IL App (1st) 220508, ¶ 13. Thus, the agreement banned the award of statutory
attorney fees in violation of Illinois law. Calusinski, 2022 IL App (1st) 220508, ¶ 13. The
reviewing court explained the defendants did not give sufficient consideration for the waiver of
statutory fees because the agreement permitted the defendants to litigate claims against the plaintiff
for nonpayment in a court of law but did not allow the plaintiff to litigate any claims against the
defendants in court, including a total ban on class action suits. Calusinski, 2022 IL App (1st)
220508, ¶ 14. Moreover, the agreement gave only the defendants the right to choose a substitute
mediator and/or arbitrator in the event the primary mediator was unavailable or rejected the parties’
mediation. Calusinski, 2022 IL App (1st) 220508, ¶ 14. Finally, the agreement stated the
following:
“defendants would pay ‘up to a maximum of $2,000’ for the ‘mediator and/or
arbitrator’s fees and other reasonable costs associated with mediation and
arbitration’ but that any additional costs for mediation and/or arbitration were to be
‘borne equally by the parties’ and that each party was ‘responsible for their own
attorney fees and costs.’ ” Calusinski, 2022 IL App (1st) 220508, ¶ 14.
The reviewing court noted it was not guaranteed the defendants would have to pay the entire $2000
for mediation/arbitration costs and the plaintiff could easily incur more than that amount in
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attorney fees alone. Calusinski, 2022 IL App (1st) 220508, ¶ 14.
¶ 33 In this case, the Arbitration Rider provides the Loft is to pay up to $5000 of
plaintiff’s attorney fees and/or costs associated with the arbitration. Under the Care Act, plaintiff
would only be entitled to attorney fees if she prevailed in a claim against the Loft. See Carter,
2012 IL 113204, ¶ 26. However, under the aforementioned provision of the Arbitration Rider,
plaintiff is entitled to a portion of her attorney fees even if the Loft prevails. As such, the
contractual attorney fees provision supplements the statutory fee provision, constituting a benefit
to plaintiff and a detriment to the Loft. See Carter, 2012 IL 113204, ¶ 26. Moreover, the
Arbitration Rider provides the Loft will pay for the arbitrator’s fees and costs associated with the
arbitration and the resident can select the location of the arbitration, both of which are also a benefit
to plaintiff and a detriment to the Loft. See Carter, 2012 IL 113204, ¶ 26. Additionally, the Loft
waived its own ability to recover attorney fees if it prevailed on a claim.
¶ 34 In Carter, 2012 IL 113204, ¶ 19, the supreme court addressed the invalidation of
an arbitration agreement based on the state law contract defense of lack of mutuality of obligation.
It explained the principles of contract law do not require the values the contracting parties
exchanged be equivalent. Carter, 2012 IL 113204, ¶ 24. The supreme court quoted the following
language: “ ‘state courts have concluded that an arbitration clause need not be supported by
equivalent obligations.’ ” Carter, 2012 IL 113204, ¶ 24 (quoting Harris v. Green Tree Financial
Corp., 183 F.3d 173, 180 (3d Cir. 1999)). It further noted we will not inquire into the adequacy of
the consideration to support a contract. Carter, 2012 IL 113204, ¶ 24. “ ‘[A]dequacy of the
consideration is within the exclusive dominion of the parties where they contract freely and
without fraud.’ ” Carter, 2012 IL 113204, ¶ 24 (quoting Ryan v. Hamilton, 205 Ill. 191, 198, 68
N.E. 781, 782 (1903)). With contract provisions similar to the ones at issue in this case, including
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the promise to pay $5000 in attorney fees, the supreme court concluded the plaintiff’s promise to
arbitrate, even if not met with a reciprocal promise to arbitrate by the defendant, was supported by
consideration.
¶ 35 No evidence of fraud was presented in this case, and plaintiff had the ability to
decline to enter into the Arbitration Rider. In fact, the Arbitration Rider in bold print and above
the signature line stated the following: “The undersigned acknowledges that he or she has been
encouraged to discuss this [Arbitration Rider] with an attorney.” Moreover, unlike in Carter, the
Arbitration Rider was reciprocal, requiring the Loft to also arbitrate the enumerated claims. Thus,
the supreme court’s decision in Carter supports a finding of adequate consideration for the waiver
of attorney fees over $5000.
¶ 36 Additionally, this case is distinguishable from Turner v. Concord Nursing &
Rehabilitation Center, LLC, 2023 IL App (1st) 221721, cited by plaintiff on appeal. There, the
arbitration rider provided the plaintiff “ ‘shall not be entitled to Statutory Attorney Fees, including
those delineated in the Illinois Nursing Home Care Act’ ” and limited the plaintiff’s damages to
$250,000. Turner, 2023 IL App (1st) 221721, ¶ 28. Moreover, only the plaintiff waived his rights
to statutory attorney fees. Turner, 2023 IL App (1st) 221721, ¶ 30. The agreement did provide the
defendant would pay up to $3000 of the plaintiff’s arbitration or mediation costs and out-of-pocket
expenses for a claim brought against the defendant, regardless of the outcome. Turner, 2023 IL
App (1st) 221721, ¶ 41. Nonetheless, the court concluded, “[b]ecause of the limitation on damages
and that only [the plaintiff] waived his right to attorney’s fees, the agreement was not supported
by adequate consideration.” Turner, 2023 IL App (1st) 221721, ¶ 42.
¶ 37 In this case, the Arbitration Rider did not limit the amount of damages plaintiff
could be awarded, and the Loft was to pay its own attorney fees and costs and be responsible for
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all of the arbitrator’s fees and costs. As such, the bases for finding a lack of consideration in Turner
are not present here. Moreover, the terms of the Arbitration Rider are not clearly one-sided like
those in Turner.
¶ 38 Accordingly, we find sufficient consideration was given for the waiver of attorney
fees greater than $5000 for a successful claim of a violation of the Care Act. As such, we find the
circuit court erred by finding the Arbitration Rider was substantively unconscionable.
¶ 39 D. Procedural Unconscionability
¶ 40 Plaintiff contends the circuit court’s judgment should be affirmed because the
Arbitration Rider was procedurally unconscionable. The Loft disagrees. In its order on the motion
to reconsider, the circuit court suggested, if it had not found the Arbitration Rider substantively
unconscionable, it would have held a summary disposition on mental capacity and procedural
unconscionability. We again note plaintiff never requested an evidentiary hearing on those issues,
and as such, she cannot now complain of error for failing to have an evidentiary hearing. See
Meeks, 2017 IL App (2d) 160655, ¶ 14. Thus, we do not find remand on the issue of procedural
unconscionability appropriate and address the issue on the merits.
¶ 41 Our supreme court has defined procedural unconscionability as follows:
“ ‘Procedural unconscionability consists of some impropriety during the process of
forming the contract depriving a party of a meaningful choice. [Citations.] Factors
to be considered are all the circumstances surrounding the transaction including the
manner in which the contract was entered into, whether each party had a reasonable
opportunity to understand the terms of the contract, and whether important terms
were hidden in a maze of fine print; both the conspicuousness of the clause and the
negotiations relating to it are important, albeit not conclusive factors in determining
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the issue of unconscionability. [Citation.] To be a part of the bargain, a provision
limiting the defendant’s liability must, unless incorporated into the contract through
prior course of dealings or trade usage, have been bargained for, brought to the
purchaser’s attention or be conspicuous. *** Nor does the mere fact that both
parties are businessmen justify the utilization of unfair surprise to the detriment of
one of the parties ***. [Citation.] This requirement that the seller obtain the
knowing assent of the buyer “does not detract from the freedom to contract, unless
that phrase denotes the freedom to impose the onerous terms of one’s carefully
drawn printed document on an unsuspecting contractual partner. Rather, freedom
to contract is enhanced by a requirement that both parties be aware of the burdens
they are assuming. The notion of free will has little meaning as applied to one who
is ignorant of the consequences of his acts.” [Citations.]’ ” Kinkel, 223 Ill. 2d at
23-24 (quoting Frank’s Maintenance & Engineering, Inc. v. C.A. Roberts Co., 86
Ill. App. 3d 980, 989-90, 408 N.E.2d 403, 410 (1980)).
¶ 42 In her response to the motion to compel, plaintiff alleged the Arbitration Rider was
procedurally unconscionable because no one from the Loft ever explained to her (1) what
arbitration was, (2) the terms of the Arbitration Rider, and (3) the rights she would be giving up
by signing the Arbitration Rider. Moreover, no one explained to her the Arbitration Rider was
voluntary and not a condition of her admission to the Loft’s facility. Plaintiff also noted the lack
of training for the Loft’s employee, Andrews, who explained the admission documents to plaintiff.
¶ 43 In support of her argument, plaintiff again cites Turner, 2023 IL App (1st) 221721,
¶ 25, where the reviewing court found the arbitration agreement between a nursing home and a
resident was procedurally unconscionable. In reaching that conclusion, the court noted the
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following reasons for its conclusion: the bulk and detail of the admissions packet (120 pages), the
“pretense of attorney review,” the resident’s general health and mental agility at the time of his
readmission to the facility, and the nature of the arbitration rider as an adhesion contract. Turner,
2023 IL App (1st) 221721, ¶ 25. At the time the resident signed the admissions contract, his niece
described the resident as confused and having difficulty reading, comprehending, and speaking.
Turner, 2023 IL App (1st) 221721, ¶ 22. Additionally, the arbitration rider stated, “ ‘the arbitration
agreement is not a condition to the admission,’ ” but also noted the arbitration agreement was “ ‘an
integral part of the Resident’s underlying admission and/or continued residency.’ ” Turner, 2023
IL App (1st) 221721, ¶ 23.
¶ 44 In this case, no evidence was presented plaintiff was actually suffering from
confusion or had difficulty reading or comprehending things. Dr. Seignious’s opinion was based,
in part, on the potential side effects of the medications plaintiff was taking on September 9, 2020.
He did not identify any medical conditions plaintiff had that would cause confusion or difficulty
with reading and/or comprehension. He also only reviewed plaintiff’s medical records.
¶ 45 As to the admissions documents in this case, they were only around 40 pages
printed, and plaintiff viewed and signed them on an iPad. The version on the iPad is not identical
to the printed version in the record on appeal, and an iPad provides the ability to change the size
of the font. On the iPad version contained in the record on appeal, the font is much bigger and
easier to read. The iPad version also has an area where the resident can choose to accept or decline
the Arbitration Rider. Moreover, Andrews’s deposition testimony indicated residents did not have
to immediately sign the forms and were free to take as long as he or she would like to complete
the forms. As such, plaintiff could take extra time to review the document if she so chose, including
time to consult an attorney. Additionally, in her deposition, Andrews stated she always encourages
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residents to consult with an attorney about the Arbitration Rider. Thus, we disagree with plaintiff
the provision indicating the resident was encouraged to discuss the Arbitration Rider with an
attorney is disingenuous in this case.
¶ 46 Further, the language of the Arbitration Rider in no way indicates it is an integral
part of plaintiff’s admission to the Loft’s facility. The agreement does not contain language like
the one in Turner. Here, the electronic program on the iPad provided plaintiff with the option of
declining the Arbitration Rider. Accordingly, we find the circumstances constituting procedural
unconscionability in Turner are distinguishable from the circumstances in this case.
¶ 47 Plaintiff also contends the Loft did not have anyone explain (1) what arbitration
was, (2) the terms of the Arbitration Rider, and (3) the rights she would be giving up by signing.
However, in cases where consumers sign contracts, courts generally hold the consumer is charged
with knowledge of and assent to the terms and conditions of the contract he or she signed. Zuniga
v. Major League Baseball, 2021 IL App (1st) 201264, ¶ 28, 196 N.E.3d 12 (citing Melena v.
Anheuser-Busch, Inc., 219 Ill. 2d 135, 150, 847 N.E.2d 99, 108 (2006)). In Kinkel, 223 Ill. 2d at
26, the arbitration provision was contained in the fine print of the terms and conditions on the back
of a preprinted cellular service agreement filled with text, and the supreme court held it was not
procedurally unconscionable because the plaintiff had signed the contract, initialed an
acknowledgement on it she had read the terms and conditions, and had them in her possession to
read if she had chosen to do so.
¶ 48 Here, the Arbitration Rider stated, in pertinent part:
“The undersigned acknowledges that he or she has been encouraged to discuss this
Rider with an attorney.
By signing below you acknowledge that you have reviewed this Rider and
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understand it.” (Emphasis omitted.)
Plaintiff signed the agreement. She cites no case law or statute that supports her assertion a
representative of the Loft had to explain what arbitration is, the terms of the Arbitration Rider, and
the rights she was giving up by signing the agreement. In her deposition, Andrews stated she was
available to answer questions, and she would seek assistance if she did not know the answer. Given
Andrews would seek help if needed to answer questions and the Arbitration Rider encouraged the
resident to seek legal counsel, we fail to see how Andrews’s lack of knowledge about arbitration
supported a finding of procedural unconscionability.
¶ 49 In this case, the Arbitration Rider was clearly labeled, and the resident had to accept
or decline it separately from the Contract. Moreover, the language of the Arbitration Rider was
straightforward and made clear both parties were waiving their rights to a jury trial. No evidence
was presented plaintiff was rushed through the admissions paperwork. Also, the circumstances
surrounding the signing of the Arbitration Rider do not suggest coercion or deception.
Accordingly, we do not find the Arbitration Rider and surrounding circumstances constitute
procedural unconscionability.
¶ 50 Since we have found the Arbitration Rider was valid and not unconscionable, the
circuit court’s original order granting the Loft’s motion to compel arbitration was proper.
However, that order must be amended to reflect unconscionability is not a matter for the arbitrator
since it was a matter for the court in this case.
¶ 51 III. CONCLUSION
¶ 52 For the reasons stated, we reverse the Fulton County circuit court’s February 3,
2023, order granting plaintiff’s motion to reconsider. We remand the cause and direct the court to
amend its September 7, 2022, order by striking the language “and any issues concerning
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unconscionability of the arbitration agreement” from the top of page six.
¶ 53 Reversed and remanded with directions.
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Mulligan v. Loft Rehabilitation & Nursing of Canton, LLC, 2023 IL App (4th) 230187Decision Under Review: Appeal from the Circuit Court of Fulton County, No. 21-LL-04;
the Hon. Thomas B. Ewing, Judge, presiding.
Attorneys Donna J. Fudge, of Fudge Broadwater, P.A., of St. Petersburg,
for Florida, for appellant.
Appellant:
Attorneys Patricia L. Gifford and William Steinman, of Law Offices of
for Steven J. Malman & Associates P.C., of Champaign, and Leslie J.
Appellee: Rosen, of Leslie J. Rosen Attorney at Law, P.C., of Chicago, for
appellee.
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