Wert v. Manorcare of Carlisle ( 2015 )

[J-24-2015] [MO: Stevens, J.]
IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
EVONNE K. WERT, EXECUTRIX OF THE : No. 62 MAP 2014
ESTATE OF ANNA E. KEPNER, :
DECEASED : Appeal from the order of the Superior Court
: at No. 1746 MDA 2012 dated December
: 19, 2013 Affirming the order of the
v. : Cumberland County Court of Common
: Pleas, Civil Division, at No. 12-165 CIVIL
: dated September 13, 2012.
MANORCARE OF CARLISLE PA, LLC :
D/B/A MANORCARE HEALTH : ARGUED: April 7, 2015
SERVICES-CARLISLE; HCR :
MANORCARE, INC; MANOR CARE, INC.; :
HCR HEALTHCARE, LLC; HCR II :
HEALTHCARE, LLC; HCR III :
HEALTCARE, LLC; HCR IV :
HEALTHCARE, LLC: GGNSC :
GETTYSBURG, LP, D/B/A GOLDEN :
LIVING CENTER-GETTYSBURG; :
GGNSC GETTYSBURG GP, LLC; :
GGNSC HOLDINGS, LLC; GOLDEN :
GATE NATIONAL SENIOR CARE, LLC; :
GGNSC EQUITY HOLDINGS, LLC; :
GGNSC ADMINISTRATIVE SERVICES, :
LLC :
:
:
APPEAL OF: GGNSC GETTYSBURG LP, :
D/B/A GOLDEN LIVING CENTER - :
GETTYSBURG; GGNSC GETTYSBURG :
GP, LLC; GGNSC HOLDINGS, LLC; :
GOLDEN GATE NATIONAL SENIOR :
CARE, LLC; GGNSC EQUITY :
HOLDINGS, LLC AND GGNSC :
ADMINISTRATIVE SERVICES, LLC :
DISSENTING OPINION
MR. JUSTICE EAKIN DECIDED: October 27, 2015
I respectfully dissent, as I cannot agree with the Majority’s conclusion the National
Arbitration Forum (NAF) provision was integral to the arbitration agreement, making the
entire agreement void because of the NAF’s problems in Minnesota. The Majority
invalidates the entire agreement based upon its NAF Code provision, which states
arbitration must be conducted “in accordance with the [NAF] Code of Procedure[.]”
Agreement, at 1. While the NAF may be out of the business of accepting arbitrations,
that Code is still extant, and it is the Code, not the NAF itself, that is incorporated into the
agreement.
Further, the Majority ignores the agreement’s other provisions, which
conspicuously provide, “THE PARTIES UNDERSTAND AND AGREE THAT THIS
CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES[.]” Id., at 2 (emphasis in original). Nowhere does it
suggest the NAF must be the arbitrator. Even if it did, the agreement also includes a
severability provision stating if a court “finds any portion of this agreement unenforceable,
that portion shall not be effective and the remainder of the agreement shall remain
effective[.]” Id., at 1. That remainder certainly includes the above-emphasized — in
bold and capital letters — provision that binding arbitration is a provision and may be
enforced.
Thus, the question is whether the Code or the agreement demands an NAF
arbitrator, and the answer is that neither does — interpreting such a requirement into
them is inappropriate. The Majority’s reliance upon extraneous sources to conclude the
NAF Code provision required an NAF arbitrator to conduct arbitration is misguided. See
Majority Slip Op., at 20-22 (citing NAF Code, Rules 1(A), 2(F), 2(S), 21(A)(1), & 48(B);
Black’s Law Dictionary 52, 1103-04 (10th ed. 2014); 9 U.S.C. § 5); see also, e.g., Steuart
v. McChesney, 444 A.2d 659, 661 (Pa. 1982) (“[W]hen a written contract is clear and
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unequivocal, its meaning must be determined by its contents alone. It speaks for itself
and a meaning cannot be given to it other than that expressed. Where the intention of
the parties is clear, there is no need to resort to extrinsic aids or evidence.” (citation and
internal quotations omitted)).
The fact is the NAF Code provision does not designate any specific arbitrator. This
silence within a contractual provision, as within a statutory provision, does not constitute
an ambiguity per se. See Levy v. Senate of Pa., 65 A.3d 361, 383 (Pa. 2013) (Eakin, J.,
concurring) (“That the statute does not address the specific question before us does not
mean it is ambiguous[.]”). Rather, ambiguity arises only where there are at least two
reasonable interpretations of the subject language. See Warrantech Consumer Prods.
Servs., Inc. v. Reliance Ins. Co., 96 A.3d 346, 354-55 (Pa. 2014) (“A statute is ambiguous
when there are at least two reasonable interpretations of the text under review.” (citation
omitted)).
In my view, the agreement’s reliance on a non-existent Code provision of a
now-dormant organization does not negate the requirement of arbitration. Contrary to
the Majority’s interpretive largess, the provision does not specifically require an NAF
arbitrator to conduct arbitration. As the NAF Code is still in existence, the parties could
have simply hired an arbitrator to apply the NAF Code to their dispute. See NAF Code
Rule 21(A)(1) (“Parties select an [a]rbitrator(s) O [b]y selecting an [a]rbitrator or a panel of
[a]rbitrators on mutually agreeable terms[.]”).
I also must disagree with the muddled holding that “the FAA cannot preserve
NAF-incorporated arbitration agreements unless the parties made the NAF’s availability
non-essential by specifically varying the terms of its procedure.” Majority Slip Op., at 22.
One must be uncertain what is meant by stating “varying the terms of [NAF’s] procedure”
can make NAF’s “availability non-essential[,]” id. (emphasis added); procedure and
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availability are not the same thing, such that varying a procedure may eliminate
availability. In any event, as discussed, availability is not a part, much less an essential
part, of the agreement the parties executed.
Also unconvincing is the reliance on Stewart v. GGNSC-Canonsburg, L.P., 9 A.3d
215 (Pa. Super. 2010). See Majority Slip Op., at 22. Federal appellate decisions
subsequent to Stewart are persuasive and I would therefore overrule Stewart. In
particular, as Chief Judge Easterbrook concluded, “arbitration clauses remain
enforceable if[,] for ‘any’ reason[,] there is ‘a lapse in the naming of an arbitrator[.]’”
Green v. U.S. Cash Advance Ill., LLC, 724 F.3d 787, 791-92 (7th Cir. 2013) (quoting 9
U.S.C. § 5) (holding § 5 may be used to appoint substitute forum because “[t]he identity of
the arbitrator is not so important that the whole contract is vitiated”). Moreover, the Third
Circuit, in a case in which the parties incorporated the NAF Code into their arbitration
agreement, held § 5 “requires a court to address [the] unavailability [of an NAF arbitrator]
by appointing a substitute arbitrator.” Khan v. Dell Inc., 669 F.3d 350, 357 (3d Cir. 2012);
see also Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1222 (11th Cir. 2000)
(“Where the chosen forum is unavailable O or has failed for some reason, § 5 applies and
a substitute arbitrator may be named.”); Wright v. GGNSC Holdings LLC, 808 N.W.2d
114, 120 n.6 (S.D. 2011) (criticizing Stewart because court discerned “no impediment to a
substitute arbitrator applying the same substantive law and using common procedural
rules like those found in the NAF Code”).
Accordingly, I would reverse the Superior Court’s order, and must respectfully
dissent.
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