Glomb, M. v. St. Barnabas Nursing Home v. Glomb ( 2020 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
MARIE K. GLOMB, AS : IN THE SUPERIOR COURT OF
ADMINISTRATRIX C.T.A. OF THE : PENNSYLVANIA
ESTATE OF EVELYN C. SOFRANKO :
AKA EVA C. SOFRANKO, DECEASED :
:
Appellant :
:
:
v. : No. 1724 WDA 2018
:
:
ST. BARNABAS NURSING HOME, :
INC. D/B/A ST. BARNABAS NURSING :
HOME :
:
Appeal from the Judgment Entered December 4, 2018
In the Court of Common Pleas of Allegheny County Civil Division at
No(s): GD 14-11106
BEFORE: KUNSELMAN, J., KING, J., and COLINS, J.*
MEMORANDUM BY COLINS, J.: FILED SEPTEMBER 10, 2020
Appellant, Marie Glomb (Plaintiff), as Administratrix C.T.A. of the Estate
of Evelyn C. Sofranko (Ms. Sofranko), appeals from the judgment entered by
the Court of Common Pleas of Allegheny County (trial court) against Plaintiff
and in favor of St. Barnabas Nursing Home, Inc. d/b/a St. Barnabas Nursing
Home (Nursing Home) following arbitration. We affirm.
Ms. Sofranko was a resident at the Nursing Home from December 21,
2011 until November 5, 2013. Complaint ¶1; Answer ¶1. Upon admission to
the Nursing Home, Ms. Sofranko’s son, Thomas Sofranko, as Power of
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* Retired Senior Judge assigned to the Superior Court.
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Attorney, signed an arbitration agreement (the Arbitration Agreement) on her
behalf. Arbitration Agreement, 12/21/11. Ms. Sofranko died on November
16, 2013. Complaint ¶69; Counterclaim ¶6.
On March 19, 2015, Plaintiff filed a Survival and Wrongful Death action
against the Nursing Home and other defendants alleging that Ms. Sofranko
sustained numerous injuries while a resident at the Nursing Home, the Nursing
Home was negligent in the care it rendered to Ms. Sofranko, and that the
Nursing Home’s negligence caused her death.1 Complaint ¶ 86-92. On May
7, 2015, preliminary objections to Plaintiff’s complaint were filed, seeking, in
part, to enforce the Arbitration Agreement. Preliminary Objections, ¶¶14-16.
On July 21, 2015, the Nursing Home filed an Answer, raising as New Matter
that the claims should be adjudicated in arbitration based on the Arbitration
Agreement. Answer, 7/21/15. On November 21, 2016, a “Motion to Compel
Arbitration of Survival Act Claim and Stay of Remaining Claims” was filed on
behalf of the Nursing Home. Motion to Compel, 11/21/16. The parties
engaged in brief discovery and filed briefs to the trial court regarding the
motion. On May 2, 2017, the trial court held a hearing for arguments on the
motion.
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1 Plaintiff also named St. Barnabas Health System, Inc., St. Barnabas Clinical
Services, Inc., and St. Barnabas Communities Inc. as defendants in her
complaint. However, St. Barnabus Health Systems, Inc. and St. Barnabas
Communities Inc. were dismissed from the action by stipulation of the parties.
See Stipulation, 7/10/15. St. Barnabas Clinical Services, Inc., the other
remaining defendant, is not a party to this appeal.
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On May 24, 2017, the trial court issued an Order, which granted in part,
the motion to compel arbitration, and ordered that Plaintiff’s Survival Act
claims against the Nursing Home be submitted to arbitration. Trial Court
Order, 5/24/17.2 The Survival claims between Plaintiff and the Nursing Home
proceeded to an arbitration trial and, thereafter, the arbitrator found in favor
of the Nursing Home. On November 30, 2018, Plaintiff filed a motion to
confirm the arbitration award. That same day, the trial court entered an order
granting the motion. Trial Court Order, 11/30/18. On December 4, 2018,
judgment was entered for the Nursing Home and against Plaintiff. On
December 6, 2018, Plaintiff filed a notice of appeal.
Plaintiff raises the following issues on appeal:
1. Should [Plaintiff’s] claims be resolved in a court of law?
2. Is [the Nursing Home’s] Arbitration Agreement an
unconscionable contract of adhesion and thus enforceable?
3. Did [the Nursing Home] breach its duty of good faith and
fair dealing, thereby rendering the Arbitration Agreement
void and unenforceable?
Plaintiff’s Brief at 3 (answers omitted).3 Our review is de novo and
plenary. Mitch v. XTO Energy, Inc., 212 A.3d 1135, 1138 (Pa. Super. 2019)
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2 The order denied the motion as to the Survival claim against St. Barnabas
Clinical Services and denied a motion to stay the Wrongful Death claims
against St. Barnabas Clinical Services and the Nursing Home. See Trial Court
Order, 5/24/17. These claims remain pending before the trial court.
3The trial court did not order Appellant to file a Pa.R.A.P. 1925(b) statement
of matters complained of on appeal.
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(“It is settled that because contract interpretation is a question of law, our
review of the trial court's decision is de novo and our scope of review
plenary”); Cardinal v. Kindred Healthcare, Inc., 155 A.3d 46, 50 (Pa.
Super. 2017) (“Arbitration agreements are matters of contract”).
Plaintiff’s first issue is not a separate issue. Plaintiff’s only arguments
that the Survival Act claims against the Nursing Home should have been tried
in a court of law, not arbitration, are based on her claims in her second and
third issues that the Arbitration Agreement is unconscionable and that a
provision of the Arbitration Agreement renders it void. There is no dispute
that Ms. Sofranko’s son signed the Arbitration Agreement on her behalf under
a Power of Attorney and that he had authority to sign the Arbitration
Agreement on her behalf.
Both Pennsylvania and federal law impose a strong public
policy in favor of enforcing arbitration agreements.
Accordingly, if a valid agreement to arbitrate exists and the
dispute falls within the scope of the arbitration agreement,
the dispute must be submitted to arbitration.
In re Estate of Atkinson, __A.3d__, 2020 WL 1671587 *4 (Pa. Super. filed
Apr. 6, 2020) (citations omitted). “The only exception to a state’s obligation
to enforce an arbitration agreement is provided by the savings clause [of the
Federal Arbitration Act, 9 USC §2], which permits the application of generally
applicable state contract law defenses such as fraud, duress, or
unconscionability, to determine where a valid contract exists.” Taylor v.
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Extendicare Health Facilities, Inc., 147 A.3d 490, 509 (Pa. 2016) (citations
omitted).
This Court has explained that the defense of unconscionability has
typically been construed to include procedural unconscionability, “an absence
of meaningful choice on the part of one of the parties,” as well as substantive
unconscionability, “contract terms which are unreasonably favorable to the
other party.” Kohlman v. Grane Healthcare Co., 228 A.3d 920, 926 n.8
(Pa. Super. 2020) (citation omitted). In order for a contract to be held
unconscionable, both procedural and substantive unconscionability must be
demonstrated. E.g., Cardinal, 155 A.3d at 53; Huegel v. Mifflin Constr.
Co., 796 A.2d 350, 357-58 (Pa. Super. 2002). Plaintiff bears the burden of
establishing both the procedural and substantive unconscionability. Cardinal,
155 A.3d at 53; MacPherson v. Magee Memorial Hosp. For
Convalescence, 128 A.3d 1209, 1221 (Pa. Super. 2015); Salley v. Option
One Mortg. Corp., 925 A.2d 115, 119-20 (Pa. 2007).
Plaintiff first argues that the Arbitration Agreement is procedurally
unconscionable because as a “standardized, three page, single-spaced, fine
print template arbitration agreement,” it “is a textbook contract of adhesion.”
Appellant’s Brief at 18. Additionally, Plaintiff argues that the circumstances
surrounding the signing of the Agreement compel a finding of procedural
unconscionability.
Procedural unconscionability has been described as the lack of
meaningful choice in the acceptance of contract provisions. Salley, 925 A.2d
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at 119. “An adhesion contract is a ‘standard-form contract prepared by one
party, to be signed by the party in a weaker position, usu[ally] a consumer,
who adheres to the contract with little choice about the terms.’” Chepkevich
v. Hidden Valley Resort, L.P., 2 A.3d 1174, 1190 (Pa. 2010) (quoting
Black's Law Dictionary (8th Ed. 2004).
The Arbitration Agreement here states, “ARBITRATION AGREEMENT”
and “READ CAREFULLY—THIS DOCUMENT AFFECTS YOUR LEGAL
RIGHTS,” in bold, at the top of the first page of the Arbitration Agreement.
Arbitration Agreement 12/21/11, at 1. On page 2, in bold, at the bottom of
the page, it further states:
The parties to this Arbitration Agreement understand
and acknowledge (1) each party has the right to seek
legal counsel before signing this Arbitration
Agreement, (2) the execution of this Arbitration
Agreement is not a precondition to the furnishing of
services to the Resident by the [the Nursing Home],
(3) this Arbitration Agreement may be rescinded by
written notice to the [the Nursing Home] from the
Resident or the Resident’s Authorized Representative
within 30 days of signature, and (4) the parties
signing below have received a copy of the Arbitration
Agreement.
Id. at 2 (italics added).
The Arbitration Agreement also contains the following, in bold and
capital letters in paragraph 8 (the next to last paragraph) on page 2:
THE PARTIES UNDERSTAND AND AGREE THAT BY
ENTERING THIS ARBITRATION AGREEMENT THEY
ARE GIVING UP AND WAIVING THEIR
CONSTITUTIONAL RIGHTS TO HAVE CLAIMS DECIDED
IN A COURT OF LAW BEFORE A JUDGE AND A JURY.
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See Arbitration Agreement 12/21/11, at 2. The Arbitration Agreement
provides that the Nursing Home will pay for “filing, commencement or
administration” of the arbitration, and that any other fees or costs “shall be
borne according to the applicable arbitration rules or substantive law.” Id. at
1. The signature line is on the third and final page of the document. Id. at
3. Directly above the signature line, the Arbitration Agreement states, “The
Resident and/or Resident’s Authorized Representative (has/has not) consulted
with an attorney and voluntarily discloses that attorney’s name as [].” Id.
The words “has not” were circled. Id. Thomas A. Sofranko’s signature
appears on the line above “Signature of Resident’s Authorized Representative”
along with the date 12/21/11. Id. Thomas A. Sofranko’s name is printed
below and there is a check mark next to the space indicated for “power of
attorney.” Id.
In MacPherson, this Court found a similar arbitration agreement not
unconscionable where,
in preparing for arbitration, the Agreement provides that the
parties pay their own fees and costs . . . contains a
conspicuous, large, bolded notification that the parties, by
signing, are waiving the right to a trial before a judge or jury
. . . at the top of the agreement in bold typeface and
underlined, the Agreement states that it is voluntary, and if
the patient refused to sign it, “the Patient will still be allowed
to live in, and receive services at [the nursing home].” Also,
the agreement provides that [the nursing home] will pay the
arbitrators’ fees and costs, and that there are no caps or
limits on damages other than those already imposed by
state law. Lastly, the Agreement contains a provision
allowing the patient to rescind within 30 days. Our review
compels our conclusion that the Agreement should not be
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invalidated on the basis of procedural or substantive
unconscionability.
MacPherson, 128 A.3d at 1221-22 (citations to record omitted). In
Cardinal, this Court similarly relied on the following to find that the arbitration
agreement was not procedurally or substantively unconscionable:
[T]he arbitration agreement signed by the Decedent
contains a capitalized, bold-faced notification at the very top
of the agreement stating: “this agreement is not a condition
of admission to or continued residence in the facility.” Also
highlighted in boldface, underlined, capital letters on the
first page of the agreement is a statement that: [“]the
parties understand . . . that by entering into this agreement
they are giving up their constitutional right to have their
disputes decided by a court of law or to appeal any decision
or award.[”] The agreement states the parties will each
bear their own fees and costs, that [the nursing home] shall
pay the arbitrators fees and costs, and that the monetary
relief available via arbitration is the same as that which
would be available in a court of law. Finally, the agreement
states as follows: [“t]he resident understands that he or she
has the right to seek the advice of legal counsel and to
consult with a Facility representative concerning this
Agreement; that his or her signing of this Agreement is not
a condition of admission to or continued residence in the
Facility; that he or she may revoke this Agreement by
sending written notice to the Facility within (30) days of
signing it.[”]
Cardinal, 155 A.3d at 53-54 (some quotation marks, citations to record and
emphasis omitted).
The Arbitration Agreement here contained all of the provisions and
features of the arbitration agreements enforced in MacPherson and
Cardinal. At the top of the first page, in bold, capitalized typeface, the
Arbitration Agreement states that it affects the signee’s legal rights. See
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Arbitration Agreement at 1. The Arbitration Agreement also contains another
conspicuous, large, bolded notification that by signing, the parties agree to
waive their right to a trial before a judge or jury. Id. at 2. The document
states that signing is not a precondition of services. Id. at 2. The Arbitration
Agreement states that the Nursing Home will pay the arbitrators' fees and
costs, and that there are no award caps or damage limitations beyond those
already imposed by law. Id. at 1-2. The Arbitration Agreement also provides
a 30–day period during which the signer has an opportunity to rescind the
agreement to arbitrate. Id. at 2. The Arbitration Agreement, therefore, is
not procedurally unconscionable under Pennsylvania law. See Cardinal 155
A.3d at 54 (holding substantially similar arbitration agreement not
unconscionable); See MacPherson, 128 A.3d at 1222 (same).
Plaintiff next argues that the Arbitration Agreement is procedurally
unconscionable because the circumstances surrounding the signing of the
arbitration agreement were unfair. Plaintiff argues that Mr. Sofranko was not
aware that signing any of the admission documents was optional, including
the Arbitration Agreement. Appellant’s Brief at 21.
It is “well established that, in the absence of fraud, the failure to read a
contract before signing it is ‘an unavailing excuse or defense and cannot justify
an avoidance, modification or nullification of the contract.’” Fellerman v.
PECO Energy Co., 159 A.3d 22, 28 (Pa. Super. 2017) (citation omitted).
Plaintiff’s argument fails because Mr. Sofranko is responsible for reading the
Arbitration Agreement, which states that “the execution of this Arbitration
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Agreement is not a precondition to the furnishing of services to the Resident”
by the Nursing Home. Arbitration Agreement at 2.
Plaintiff’s argument that the Arbitration Agreement is substantively
unconscionable also fails. A contract is substantively unconscionable if it is
unreasonably favorable to the drafter. Salley, 925 A.2d at 119.
In interpreting the terms of a contract, the cardinal rule
followed by courts is to ascertain the intent of the
contracting parties. If the contractual terms are clear and
unambiguous on their face, then such terms are deemed to
be the best reflection of the intent of the parties.
Commonwealth by Shapiro v. UPMC, 208 A.3d 898, 909 (Pa. 2019)
(citation omitted). Plaintiff contends that the Arbitration Agreement
unreasonably favors the Nursing Home because a provision concerning the
Medical Care Availability and Reduction of Error Act (MCARE) allows the
Nursing Home to unilaterally reject the arbitrator’s decision and acts as an
unlawful cap on damages.
The MCARE provision at issue states,
This Arbitration Agreement shall be construed in accordance
with the Pennsylvania Uniform Arbitration Act and the
Federal Arbitration Act. The provisions of the Pennsylvania
Medical Care Availability and Reduction of Error Act (Mcare)
and any amendments to that law shall be applicable to this
Arbitration Agreement and the arbitration proceedings. If
any claim subject to arbitration under this Arbitration
Agreement is submitted by [the Nursing Home] to the
Pennsylvania Medical Care Availability and Reduction of
Error (Mcare) Fund and Mcare objects to the claim being
heard in arbitration or otherwise refuses to
participate if the claim is arbitrated, then [the Nursing
Home] (at its election) may decide that this Arbitration
Agreement is void and not enforceable as to that claim.
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Arbitration Agreement at 2 (emphasis added). Plaintiff argues that this
provision allows the Nursing Home to void the Arbitration Agreement if it
received unfavorable rulings prior to arbitration or an unfavorable award after
arbitration.
Plaintiff compares the MCARE provision in this case to the provision in
Zak v. Prudential Prop. & Cas. Ins. Co., 713 A.2d 681 (Pa. Super. 1998).
In Zak, this Court found a clause in an insurance contract void as it violated
public policy and unreasonably favored the insurance company. The clause
stated,
a decision agreed to by two arbitrators will be binding if the
award does not exceed the limits required under the
Financial Responsibility Law of Pennsylvania. If an
arbitration award exceeds these limits, either party has a
right to trial on all issues in a court of competent jurisdiction.
This right must be exercised within thirty days of the award.
Id. at 683. This Court found the clause “completely unconscionable”
because,
it allows the insurer to obtain a trial when the claimant or
insured obtains an arbitration award of any significant
amount but binds the claimant or insured to the amount of
the arbitration award when the claimant or insured is
awarded nothing or a miniscule amount.
Id. at 684.
The MCARE Act creates a special fund “used to pay claims against
participating health care providers for losses or damages awarded in medical
professional liability actions against them in excess of the basic insurance
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coverage[.]” 40 P.S. § 1303.712. The Nursing Home is required to “promptly
notify” MCARE of a claim as required under 40 P.S. § 1303.714(a)-(b) or the
Nursing Home would be “solely responsible for the payment of the entire
award[.]” Id.
Contrary to Plaintiff’s assertions, the MCARE provision in the Arbitration
Agreement does not permit the Nursing Home to void the Arbitration
Agreement if it is dissatisfied with the arbitration proceeding. Rather the
Arbitration Agreement provides that “if any claim . . . is submitted by [the
Nursing Home] to . . . MCARE and MCARE objects to the claim being heard
in arbitration or otherwise refuses to participate if the claim is arbitrated,
then” the Nursing Home can void the Arbitration Agreement. Arbitration
Agreement at 2 (emphasis added). Both scenarios thus plainly call for a
decision from MCARE before arbitration begins in order for the Nursing Home
to void the Arbitration Agreement. This clause is, therefore, not unreasonably
favorable to the Nursing Home. Upon review of the Arbitration Agreement
and consideration of the Federal policy favoring arbitration, we conclude that
the Arbitration Agreement is neither procedurally or substantively
unconscionable.
Plaintiff also argues that the Arbitration Agreement is unenforceable
because the Nursing Home breached its duty of good faith and fair dealing by
including a clause stating the National Arbitration Forum (NAF) will govern the
arbitration two years after the NAF agreed to cease all consumer arbitrations.
Plaintiff’s Brief at 29.
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The Arbitration Agreement states,
Any arbitration under this Arbitration Agreement will be
governed by the National Arbitration Forum code of
Procedure, which is incorporated into this Arbitration
Agreement, except if modified by the terms of this
Arbitration Agreement, or, if the National Arbitration Forum
Code of Procedure cannot be used, then the arbitration will
be conducted pursuant to the Pennsylvania Uniform
Arbitration Act.
Arbitration Agreement at 1. The Arbitration Agreement also contains a
severability clause, which states, “[t]he provisions of this Arbitration
Agreement are severable.” Id.
In MacPherson, an almost identical clause was at issue, “the Panel
shall apply NAF’s code of Procedure . . . unless otherwise stated in this
agreement.” MacPherson, 128 A.3d at 1225. The agreement also stated
that “[d]iscovery shall be governed by NAF’s Code of Procedure.” Id. This
Court concluded that the provisions specifying the use of the NAF Code were
not “integral parts of the Agreement and do not render the Agreement invalid”
and rejected the appellant’s contention that inclusion of the provisions
rendered the arbitration agreement unenforceable. MacPherson, 128 A.2d
at 1225. This Court held that,
[in] the instant absence of an exclusive forum-selection
clause, we hold that the provisions relating to the use of the
[NAF] 2006 Code are not integral to the agreement.
Moreover, because the provisions referring to the use of the
[NAF] 2006 Code are not integral to the Agreement . . . they
can be severed under the severance provision[.]
Id. at 1225.
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The Arbitration Agreement here is indistinguishable from the agreement
that this Court held was valid and enforceable in MacPherson. The
Arbitration Agreement does not provide for an exclusive forum-selection
clause. The Arbitration Agreement provides for the arbitration to be governed
by the NAF Code of Procedures, “except if modified by the terms of this
Arbitration Agreement, or, if the National Arbitration Forum Code of Procedure
cannot be used, then the arbitration will be conducted pursuant to the
Pennsylvania Uniform Arbitration Act.” Arbitration Agreement at 1.
Additionally, the Arbitration Agreement contains a severability clause and the
NAF provision can be severed. Id. at 2. Therefore, its inclusion did not
invalidate the Arbitration Agreement. See MacPherson, 128 A.3d at 1225.
Accordingly, we affirm the judgment.
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/10/2020
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