Christman, S. v. Manor Care ( 2016 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
SANDRA A. CHRISTMAN, IN THE SUPERIOR COURT OF
ADMINISTRATRIX OF THE ESTATE OF PENNSYLVANIA
ESTER I. STRAUSE, DECEASED,
Appellee
v.
MANOR CARE OF WEST READING PA,
LLC, D/B/A MANORCARE HEALTH
SERVICES – WEST READING NORTH,
AND MANORCARE HEALTH SERVICES,
INC. AND HCR MANORCARE, INC. AND
MANORCARE INC. AND HCR
HEALTHCARE, LLC, AND HCR II
HEALTHCARE, LIC, AND HCR III
HEALTHCARE, LLC, AND HCR IV
HEALTHCARE, LLC,
Appellant No. 1226 MDA 2013
Appeal from the Order June 13, 2013
In the Court of Common Pleas of Berks County
Civil Division at No(s): 12-4389
BEFORE: BOWES, MUNDY, and JENKINS, JJ.
MEMORANDUM BY BOWES, J.: FILED JANUARY 05, 2016
Manor Care of West Reading, PA, LLC, d/b/a Manorcare Health
Services – West Reading North, together with the other Manorcare and HCR
entities (collectively “Manor Care”), appeals from the June 13, 2013 order
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overruling its preliminary objections seeking to compel arbitration of this
wrongful death and survival action. We affirm.1
Ester Strause2 was admitted to Manor Care on or about March 6, 2010,
with a history of dementia, colon cancer status post-colectomy, gout, atrial
fibrillation, and hypertension. She died on April 27, 2010. The
Administratrix of her Estate, Sandra A. Christman, commenced this lawsuit
against Manor Care by filing a complaint sounding in negligence and
negligence per se. She alleged that, as a result of Manor Care’s inadequate
care and treatment, including a lack of food, water, and medicine, Ms.
Strause developed pressure ulcers, urinary tract infections, renal failure, C-
difficile infection, malnutrition, and dehydration. These conditions ultimately
caused her death. Manor Care filed preliminary objections seeking, inter
alia, to enforce an arbitration agreement (“Agreement”) signed by Ms.
Christman in her capacity as attorney-in-fact for her mother, Ms. Strause,
upon her March 6, 2010 admission to Manor Care. The trial court overruled
that objection and Manor Care appealed.
At issue is the enforceability of the Agreement. It expressly stated
that it was voluntary, that signing it was not a prerequisite to admission, and
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1
This case was held pending the filing of other decisions involving the same
issues.
2
In the certified record, the Decedent is referred to as both Ester Strause
and Esther Strause.
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that it could be rescinded within thirty days of admission. It provided that
all disputes regarding Ms. Strause’s stay were to be submitted to binding
arbitration governed by the Federal Arbitration Act (“FAA”) and administered
by the National Arbitration Forum (“NAF”), and that the federal rules of civil
procedure and evidence were to apply to the proceeding. The Agreement
also provided that if NAF was unable or unwilling to serve as the
administrator of the arbitration proceeding, or if the parties mutually agreed
in writing not to use NAF, the parties could agree either to use another
independent administrator or to dispense with an administrator entirely.3 If
any of the Agreement’s provisions were deemed invalid, those provisions
would be severable from the remainder of the Agreement.
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3
In Wert v. Manorcare of Carlisle PA LLC, ___ A.3d ___, 2015 WL
6499141 (Pa. October 27, 2015) (plurality), our Supreme Court declined to
overturn Stewart v. GGNSC-Canonsburg, L.P., 9 A.3d 215 (Pa.Super.
2010), in which this Court held that an arbitration agreement designating
the NAF and its procedures as the exclusive forum for arbitration was
integral to the agreement and unenforceable due to the unavailability of the
NAF. The arbitration clause herein, in contrast to the clauses in Wert and
Stewart, does not designate the NAF as the exclusive forum or its rules as
the exclusive procedures for arbitration. In MacPherson v. Magee Mem.
Hosp. for Convalescence, __A.3d.__, 2015 WL 7571937, at *11
(Pa.Super. 2015) (en banc), a clause virtually identical to the one herein was
found to be “glaringly distinct” from the one in Wert due to the lack of NAF
exclusivity. The MacPherson Court held “that the non-exclusive forum-
selection clause herein is not an integral part of the Agreement, and the
Agreement does not fail because of the unavailability of the NAF.” Id. at
*12.
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Discovery regarding the execution of the Agreement revealed that it
was presented to Ms. Christman by Lana Fick, Manor Care’s director of
activities. Ms. Fick was deposed, and she testified that she routinely read
the Agreement with families, explained the difference between arbitration
and judicial proceedings, and reviewed a pamphlet regarding arbitration. In
her deposition, Ms. Christman testified that she read only a portion of the
Agreement and acknowledged that she asked a question regarding a jury
trial. She maintained that she signed the Agreement without a full
understanding of its implications.
The trial court ruled that the Agreement was substantively
unconscionable because it violated public policy and the jury trial waiver by
Ms. Christman was unknowing. Furthermore, the trial court held that the
provision requiring that arbitration be administered by the National
Arbitration Forum (“NAF”) was integral to the Agreement, and its failure
invalidated the entire Agreement. Moreover, the court found the lack of a
termination date and the intent to bind parties as well as parent companies
and affiliates for subsequent admissions to be unconscionable. Hence, the
trial court denied the preliminary objection in the nature of a motion to
compel arbitration on June 13, 2013.
Manor Care timely appealed on July 11, 2013. On August 12, 2013,
this Court decided Pisano v. Extendicare Homes, Inc., 77 A.3d 651(Pa.Super. 2013), in which we held that wrongful death beneficiaries were
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not bound by an arbitration agreement signed either by the decedent or his
legal representative. On September 18, 2013, Manor Care filed its Pa.R.A.P.
1925(b) concise statement of issues complained of on appeal, in which it
challenged not only the trial court’s finding that the arbitration agreement
was unenforceable, but also disputed the application of Pisano on the
instant facts. It also alleged that the failure to send the survival action to
arbitration ran afoul of the Federal Arbitration Act (“FAA”) and was thus pre-
empted. In its Pa.R.A.P. 1925(a) opinion, the trial court declined to address
Pisano, the FAA, or preemption, since these issues were not factors in its
decision.
Manor Care argues that the trial court erred in numerous respects in
refusing to compel arbitration of Administratrix’s claims:
1. Whether the Court erred in finding that Sandra A. Christman,
Power of Attorney for Esther Strause, did not knowingly and
voluntarily waive the right to trial by jury?
2. Whether the Court erred in finding that the ADR Agreement
was unenforceable due to unconscionability?
3. Whether the Court erred in finding that the unavailability of
the National Arbitration Forum (“NAF”) to administer any
arbitration proceedings rendered the ADR Agreement
unenforceable?
4. Whether the Court erred in finding that, as a matter of law,
Plaintiff’s wrongful death claims could not be arbitrated?
5. Whether the trial court erred in refusing to enforce arbitration
of Plaintiff’s survival claims or other non-wrongful death
beneficiary claims? See, e.g. Pisano v. Extendicare Homes,
Inc., No. 1185 WDA 2012 (Pa.Super. August 12, 2013)
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(Holding only that claims of wrongful death beneficiaries are
not subject to arbitration).
6. Whether the trial court, in refusing to enforce the ADR
Agreement, violated the provisions of the Federal Arbitration
Act (“FAA”) and U.S. Supreme Court’s precedent interpreting
the FAA, which strongly favors the arbitration of disputes?
7. Whether the trial court, in refusing to enforce the ADR
Agreement, violated the long-standing public policy of the
Commonwealth of Pennsylvania favoring the arbitration of
disputes?
8. Whether the trial court erred in finding the ADR Agreement
violates public policy because pre-dispute arbitration
agreements are not appropriate where there are multiple
defendants?
9. Whether the trial [court] erred in finding that the ADR
Agreement was unenforceable because it did not provide for a
termination date or a terminating event?
Appellants’ brief at 5-6.
We examine a claim that the trial court improperly overruled a
preliminary objection in the nature of a motion to compel arbitration for an
abuse of discretion and to determine whether the trial court's findings are
supported by substantial evidence. Pittsburgh Logistics Systems, Inc. v.
Professional Transportation and Logistics, Inc., 803 A.2d 776, 779
(Pa.Super. 2002). In doing so, we employ a two-part test to ascertain
whether the trial court should have compelled arbitration. The first element
is whether a valid agreement to arbitrate exists. The second inquiry is
whether the dispute is within the scope of the agreement. Pisano, supra at
654; see also Elwyn v. DeLuca, 48 A.3d 457, 461 (Pa.Super. 2012)
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(quoting Smay v. E.R. Stuebner, Inc., 864 A.2d 1266, 1270 (Pa.Super.
2004)). Since arbitration is a matter of contract interpretation and the
construction of contracts is a question of law, our review is plenary.
Midomo Co., Inc. v. Presbyterian Hous. Dev. Co., 739 A.2d 180, 186-87
(Pa.Super. 1999).
The trial court held, and we agree, that Ms. Christman signed the
Agreement solely on behalf of Ms. Strause and pursuant to a power of
attorney, and that Ms. Christman did not individually bind herself to arbitrate
any wrongful death claims that might arise.4 Thus, Pisano is controlling.
Under that decision, the decedent’s agreement to arbitrate, if otherwise
enforceable, binds only her estate in a survival action, and the wrongful
death claims cannot be compelled to arbitration.
The result in Pisano was that both the wrongful death and survival
action remained in court. Post-Pisano, litigants argued that Pisano
conclusively determined that, if the wrongful death action is non-arbitrable
but the survival action is arbitrable, then the two actions must be
consolidated in court. However, the consolidation issue was not before this
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4
Ms. Christman also argued that she was not a wrongful death beneficiary
when she signed the Agreement because her mother was still alive. She
could not, therefore, have given up rights that she did not yet possess. In
support thereof, she maintained that the wrongful death action is a statutory
creation, and that the action only comes into being upon the death of the
decedent. 42 Pa.C.S. § 8301. We need not address this contention in light
of our ruling herein.
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Court in Pisano. The defendant in Pisano acquiesced in the consolidation
of the actions in the trial court pursuant to Pa.R.C.P. 213(e), by not
challenging it on appeal.
Manor Care’s fourth, fifth, sixth, and seventh issues deal with the
unanswered question in Pisano: the propriety of applying state law
requiring consolidation of wrongful death and survival actions as the basis
for retaining both the wrongful death and survival action in court rather than
severing the survival case and ordering the latter to arbitration. Manor Care
contends that the Agreement was enforceable, and that the trial court
should have severed the wrongful death and survival claims, sending the
latter to arbitration. Furthermore, reliance upon Pa.R.C.P. 213(e) to deny
arbitration of the survival action, according to Manor Care, frustrates
enforcement of the FAA. Manor Care argues that Pa.R.C.P. 213 cannot
operate to invalidate an otherwise valid arbitration agreement that is
governed by the FAA. Thus, it maintains that state law is pre-empted by the
federal statute.
In support of its position, Manor Care relies upon Moscatiello v.
J.B.B. Hilliard, 939 A.2d 325 (Pa. 2007), where the issue was whether
Pennsylvania’s arbitration rule requiring that appeals be filed within thirty
days was pre-empted by the FAA’s ninety-day appeal period. Our High
Court found no preemption, and held that “state rules governing the conduct
of arbitration will not run afoul of the FAA as long as the state procedural
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rule does not undermine the FAA's goal, to encourage arbitration.” Id. at
327. Since the thirty-day time limit found in the Pennsylvania statute did
not undermine the goal of the FAA, the FAA did not pre-empt state
arbitration rules.
We rejected Manor Care’s precise position in Taylor v. Extendicare
Health Facilities, Inc., 113 A.3d 317 (Pa.Super. 2015), allocatur granted
122 A.3d 1036 (Pa. Sept. 23, 2015). Therein, as in the instant case, there
were wrongful death beneficiaries who did not agree to arbitrate. Pa.R.C.P.
213(e)5 and 42 Pa.C.S. § 8301(a),6 the wrongful death statute, require
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5
Pa.R.C.P. 213(e) provides that
(e) A cause of action for the wrongful death of a decedent and a
cause of action for the injuries of the decedent which survives
his or her death may be enforced in one action, but if
independent actions are commenced they shall be consolidated
for trial.
Pa.R.C.P. 213(e). The implementation of this imperative is outlined in the
three subsections of Pa.R.C.P. 213(e). Consolidation is so important that if
only a wrongful death or survival action is filed, the first action may be
stayed until the second action is either commenced and consolidated or
time-barred. See Pa.R.C.P. 213(e)(3).
6
The legislature acknowledged the overlap in the wrongful death and
survival actions and the potential for duplicate recovery, and mandated
consolidation of the actions:
(a) General rule.--An action may be brought, under procedures
prescribed by general rules, to recover damages for the death
of an individual caused by the wrongful act or neglect or
unlawful violence or negligence of another if no recovery for
(Footnote Continued Next Page)
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consolidation of wrongful death and survival actions due to the potential for
duplicate recovery. For instance, a decedent’s lost income, which is
recoverable in a survival action, is often the source of the loss of support to
the wrongful death beneficiaries.7 Similarly, hospital, nursing, and medical
expenses are recoverable under either the wrongful death or survival act.
See Skoda v. West Penn Power Co., 191 A.2d 822 (Pa. 1963).
Consolidation of wrongful death and survival actions ensures that the
findings are consistent and the damages are not duplicative.
We concluded further in Taylor, based on our holding in Pisano,
supra, that since the wrongful death beneficiaries did not agree to arbitrate,
they could not be compelled to arbitrate. See Pisano, supra, at 661-62(“compelling arbitration upon individuals who did not waive their right to a
jury trial” infringes upon a constitutional right conferred in Pa. Const. art. 1,
§ 6); see also Bruckshaw v. Frankford Hospital of City of
Philadelphia, 58 A.3d 102, 108-109 (Pa. 2012) (recognizing constitutional
_______________________
(Footnote Continued)
the same damages claimed in the wrongful death
action was obtained by the injured individual during his
lifetime and any prior actions for the same injuries are
consolidated with the wrongful death claim so as to
avoid a duplicate recovery.
42 Pa.C.S. § 8301(a) (emphasis added).
7
Lost earnings includes loss of retirement and social security income. See
Thompson v. City of Philadelphia, 294 A.2d 826 (Pa.Super. 1972).
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right to jury trial in both civil and criminal cases). We added in Pisano that
denying wrongful death beneficiaries their right to a jury trial “would amount
to this Court placing contract law above that of both the United States and
Pennsylvania Constitutions.” Pisano, supra at 660-61. Hence, by default,
consolidation in Taylor could take place only in the judicial forum.
We found in Taylor, supra, that Pa.R.C.P. 213(e) and the wrongful
death statute are not in conflict with the FAA and are not obstacles to
Congressional objectives. Neither the rule nor the statute prohibits the
arbitration of wrongful death and survival claims. The rule and statute are
neutral regarding arbitration generally, and the arbitration of wrongful death
and survival actions specifically. They are not anti-arbitration as was the
statute held pre-empted in Allied-Bruce Terminix Cos. v. Dobson, 513
U.S. 265 (1995) (Alabama statute making written, predispute arbitration
agreements invalid and unenforceable) or the West Virginia policy in
Marmet Health Care Ctr., Inc. v. Brown, 132 S.Ct. 1201 (2012) (a
blanket prohibition of arbitration in nursing home cases involving personal
injury or wrongful death).
The rule and statute likewise do not invalidate arbitration agreements
under state law contract principles applicable only to arbitration. See
Doctor's Assocs. v. Casarotto, 517 U.S. 681, 686-87 (1996) (Montana
statute that rendered arbitration agreements unenforceable unless they
contained bold notice conflicted with the FAA because such a notice
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requirement was not applicable to contracts generally). Rule 213(e) applies
to all wrongful death and survival actions regardless of whether an
arbitration agreement is present. Notably, there is nothing in either the
statute or rule that precludes wrongful death and survival actions from
proceeding together in arbitration when all of the parties, i.e., wrongful
death beneficiaries, the decedent, and other defendants, agree to arbitrate.8
As we concluded in Taylor, supra, the wrongful death statute and Rule
213(e) are designed to promote judicial efficiency and avoid conflicting
rulings on common issues of law and fact. They are even-handed and not
calculated to undermine arbitration agreements, and thus, do not present
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8
In the situation where the decedent or his representative has agreed to
arbitrate, and there are no wrongful death beneficiaries, a wrongful death
action may be brought by the personal representative pursuant to 42
Pa.C.S. § 8301(d). That was the case in MacPherson v. The Magee
Memorial Hospital for Convalescence, __A.3d.__, 2015 WL 7571937(Pa.Super. 2015) (en banc). MacPherson, the brother of the decedent, did
not fall within the group of beneficiaries designated by the wrongful death
statute, and he did not identify any individuals who would be entitled to
recover damages under that provision. As the personal representative of his
brother’s estate, he commenced a wrongful death action solely for the
benefit of the estate pursuant to subsection (d). This Court held in
MacPherson that a limited claim by a personal representative pursuant to §
8301(d) is derivative of and defined by the decedent's rights and the
personal representative proceeding under this subsection is bound by
otherwise enforceable arbitration agreements signed by the decedent. In
contrast, an action for wrongful death benefits commenced by the personal
representative on behalf of relatives designated in § 8301(b) belongs to the
designated relatives and exists only for their benefit. Pisano v.
Extendicare Homes, Inc., 77 A.3d 651 (Pa.Super. 2013). We held that
Pisano was applicable only to wrongful death claims brought on behalf of
the beneficiaries designated in 42 Pa.C.S. § 8301(b).
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the type of conflict between federal and state law that results in federal
preemption.
Herein, as in Taylor, there are wrongful death beneficiaries who did
not agree to arbitrate. Since our wrongful death statute and Rule 213(e)
mandate the consolidation of wrongful death and survival claims, and the
wrongful death beneficiaries cannot be compelled to arbitration, the judicial
forum is the only option. Taylor is controlling herein and supplies an
alternative basis for affirming the trial court’s order overruling the
preliminary objections seeking to compel arbitration. As we may affirm on
any basis supported by the record, see Braun v. Wal-Mart Stores, Inc.,
24 A.3d 875, 892 (Pa.Super. 2011) (citing Donnelly v. Bauer, 720 A.2d
447, 454 (Pa. 1998), we need not address Manor Care’s claims that the trial
court erred in finding the arbitration agreement to be substantively
unconscionable or void due to the failure of the NAF provision.9
Order affirmed.
Judge Mundy files a Concurring Statement.
Judge Jenkins files a Concurring Memorandum.
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9
In MacPherson v. The Magee Memorial Hospital for Convalescence,
__A.3d.__, 2015 WL 7571937 (Pa.Super. 2015) (en banc), this Court held
that a virtually identical arbitration agreement was not substantively or
procedurally unconscionable or void due to the failure of the NAF arbitration
provision.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/5/2016
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