Personal injuries which led to death

Mississippi Reports

LADNER v. ESTATE OF LAMBERT, 2005-CA-02223-COA (Miss. 12-12-2006) COVENANT HEALTH & REHABILITATION OF APPELLANTS PICAYUNE, LP; COVENANT DOVE, INC.; PICAYUNE PARTNERS, INC.; BOND, JOHNSON & BOND, INC., N/K/A COVENANT DOVE, INC.; AND KERI H. LADNER, APPELLANTS v. THE ESTATE OF MARY FRANCES LAMBERT, BY APPELLEE AND THROUGH JOSEPH LAMBERT, INDIVIDUALLY AND AS PERSONAL REPRESENTATIVE OF THE ESTATE OF MARY FRANCES LAMBERT AND ON BEHALF OF AND FOR THE USE AND BENEFIT OF THE WRONGFUL DEATH BENEFICIARIES OF MARY FRANCES LAMBERT, APPELLEE. No. 2005-CA-02223-COA. Court of Appeals of Mississippi. DECEMBER 12, 2006. Petition for Rehearing filed December 22, 2006.

TRIAL JUDGE: HON. R. I. PRICHARD, III, COURT FROM WHICH APPEALED:PEARL RIVER COUNTY CIRCUIT COURT. DATE OF JUDGEMENT: 10/24/2005.

DISPOSITION: AFFIRMED IN PART, REVERSED IN PART, AND REMANDED — 12/12/2006 MOTION FOR REHEARING FILED: MANDATE ISSUED:

ATTORNEYS FOR APPELLANTS: PAUL HOBART KIMBLE JOHN L. MAXEY.

ATTORNEY FOR APPELLEE: F. M. TURNER, III NATURE OF THE CASE: CIVIL — WRONGFUL DEATH TRIAL COURT DISPOSITION:PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT GRANTED AND ARBITRATION AGREEMENT DECLARED UNCONSCIONABLE AND UNENFORCEABLE.

BEFORE LEE, P.J., IRVING AND ISHEE, JJ.

IRVING, J., FOR THE COURT:

¶ 1. Joseph Lambert filed a wrongful death action
against Picayune Convalescent Center (the Center), alleging
that his mother, Mary Frances Lambert, suffered personal
injuries which led to her death while she was a resident at
the Center. The Pearl River County Circuit Court granted
partial summary judgment and declared the arbitration
agreement unconscionable and unenforceable. Aggrieved, the
Center appeals and asserts that the circuit court erred in
relying on Pitts v. Watkins, 905 So.2d 553 (Miss. 2005),
rather than Vicksburg Partners, L.P. v. Stephens, 911 So.2d
507 (Miss. 2005), to find the arbitration agreement
substantively unconscionable and unenforceable.

¶ 2. Finding error, we affirm in part and reverse
and remand in part.

FACTS

¶ 3. On July 23, 2003, Mary died while a resident at
the Picayune Convalescent Center. She had been a resident
on two separate occasions with admissions on December 7,
2001, and November 29, 2002. At the time of her admission
on November 29, 2002, Mary was eighty-six years old and had
a seventh grade education. On both occasions, Mary was
assessed by the nursing staff, who determined that her
memory and cognitive skills were impaired. In addition,
Mary’s vision was impaired to the extent that she could
read only large print.

¶ 4. Mary also suffered from several chronic
conditions which prevented her from making informed
decisions about her medical care and treatment, business
affairs, and legal rights. Therefore, Joseph, who had
handled his mother’s business affairs for several years,
signed the admission agreement as her “responsible party.”
Mary’s signature also appears on the admission agreement;
however, Joseph contends in an affidavit that his mother
was never asked to sign the agreement in his presence, and
due to her limited education, she would have been unable to
read and understand the agreement had it been presented to
her. The admission agreement contained an arbitration
agreement and other provisions which limited Mary’s rights
and remedies.

¶ 5. Following Mary’s death, Joseph brought a
wrongful death action, individually, and as the personal
representative of Mary’s estate, alleging that Mary
suffered personal injuries, resulting in her death while a
resident at the Center. The Center responded by requesting
that the court stay the proceedings and compel arbitration.

ANALYSIS AND DISCUSSION OF THE ISSUES

¶ 6. We apply a de novo standard of review from a
lower court’s denial of summary judgment. Citifinancial
Retail Servs. v. Hooks, 922 So.2d 775, 779 (¶ 16)
(Miss. 2006). Summary judgment is proper only if “the
pleadings, depositions, answers to interrogatories and
admissions on file, together with affidavits, if any, show
that there is no genuine issue of material fact. . . .” Id.
at 779 (¶ 17) (citing M.R.C.P. 56(c)). The party
opposing summary judgment must set forth specific facts to
establish that there is a genuine issue of material fact
for trial. Miller v. Meeks, 762 So.2d 302, 304 (¶ 3)
(Miss. 2000).

¶ 7. The Center contends that its admission
agreement is enforceable because admission agreements, when
taken in the aggregate, affect interstate commerce, thus
bringing such contracts within the scope of the Federal
Arbitration Act (FAA). The FAA provides, “a written
provision in any . . . contract evidencing a transaction
involving commerce to settle by arbitration a controversy
thereafter arising out of such contract or transaction . .
. shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the
revocation of any contract.” 9 U.S.C. § 2 (2000). We
agree that the FAA applies, because the arbitration
provision is part of an admission agreement “evidencing in
the aggregate economic activity affecting interstate
commerce.” Stephens, 911 So.2d at 515 (¶ 18).
However, the fact that the FAA applies does not ipso facto
mean that the arbitration provision is enforceable. We
therefore examine the provision.

¶ 8. The challenged arbitration provision is one of
several provisions of the admission agreement. Therefore,
for the sake of clarity, we discuss the arbitration
provision and the admission agreement separately.

1. The Arbitration Provision

¶ 9. Section F of the admission agreement, entitled
“Arbitration,” provides as follows:

The Resident and Responsibility Party agree that any and
all claims, disputes and/or controversies between them and
the Facility or its Owners, officers, directors or
employees shall be resolved by binding arbitration
administered by the American Arbitration Association and
its rules and procedures. The Arbitration shall be heard
and decided by one qualified Arbitrator selected by mutual
agreement of the Parties. Failing such agreement, each
Party shall select one qualified Arbitrator and the two
selected shall select a third. The Parties agree that the
decision of the Arbitrator(s) shall be final. The Parties
further agree that the Arbitrators shall have all
authority necessary to render a final, binding decision of
all claims and/or controversies and shall have all
requisite powers and obligations. If the agreed method of
selecting an Arbitrator(s) fails for any reason or the
Arbitrator(s) appointed fails or is unable to act or the
successor(s) has not been duly appointed, the appropriate
circuit court, on application of a party, shall appoint
one Arbitrator to arbitrate the issue. An Arbitrator so
appointed shall have all the powers of the one named in
this Agreement. All Parties here to agree to arbitration
for their individual respective anticipated benefit of
reduced costs of pursuing a timely resolution of a claim,
dispute or controversy, should one arise. The Parties
agree to share equally the costs of such arbitration
regardless of the outcome. Consistent with the terms and
conditions of this Agreement, the Parties agree that the
Arbitrator(s) may not award punitive damages and actual
damages awarded, if any, shall be awarded pursuant to
Section E7.

¶ 10. In East Ford, Inc. v. Taylor, 826 So.2d 709,
713 (¶ 9) (Miss. 2002), the Mississippi Supreme
Court held that courts should conduct a two-pronged
analysis when determining whether to enforce an arbitration
agreement. “The first prong has two considerations: (1)
whether there is a valid arbitration agreement and (2)
whether the parties’ dispute is within the scope of the
agreement.” Id. “Under the second prong, applicable
contract defenses available under state contract law such
as fraud, duress, and unconscionability may be asserted to
invalidate the arbitration agreement without offending the
Federal Arbitration Act.” Id. at (¶ 10).

¶ 11. Mississippi courts have consistently
recognized the existence of a “liberal federal policy
favoring arbitration agreements.” Terminix Int’l, Inc. v.
Rice, 904 So.2d 1051, 1054-55 (¶ 7) (Miss. 2004)
(quoting Russell v. Performance Toyota, Inc., 826 So.2d 719,
722 (¶ 6) (Miss. 2002)). The Mississippi Supreme
Court concluded in Pass Termite and Pest Control, Inc. v.
Walker, 904 So.2d 1030, 1032-33 (¶ 7) (Miss. 2004)
(citing Russell, 826 So.2d at 722 (¶ 6)), that
arbitration is favored and firmly embedded in our federal
and state laws.

¶ 12. This Court recognizes the federal and state
policy favoring arbitration; however, pursuant to the first
prong of East Ford, we must determine whether Joseph and
Mary entered into a valid arbitration agreement and whether
their dispute comes within the scope of the agreement . The
FAA mandates that courts “stay the trial of the action
until arbitration has been had in accordance with the terms
of the parties’ agreement” when the parties have entered
into a valid arbitration agreement. 9 U.S.C. § 3.

¶ 13. Joseph contends that there is no basis to
argue that an arbitration agreement ever came into
existence. He argues that Mary would not have been able to
read nor understand the meaning and effect of the admission
agreement had it been presented to her. In addition, Joseph
contends that, as Mary’s health care surrogate, he had
authority to make decisions related to her health care, but
he did not have authority to waive Mary’s constitutional
right to a jury trial or her right to collect full legal
redress for her damages.

¶ 14. We agree with the trial judge’s finding that
Joseph, as Mary’s health care surrogate, had the authority
to make health care decisions pursuant to Mississippi Code
Annotated section 41-41211(2) (Rev. 2005). However, we find
that the circuit judge erred in finding that health care
decisions include signing arbitration agreements. The
decision to arbitrate is neither explicitly authorized nor
implied within section 41-41-203(h), which defines a health
care decision as:

a decision made by an individual or the individual’s
agent, guardian, or surrogate, regarding the individual’s
health care, including: (i) selection and discharge of
healthcare providers and institutions; (ii) [a]pproval or
disapproval of diagnostic tests, surgical procedures,
programs of medication, and orders not to resuscitate; and
(iii) [d]irections to provide, withhold or withdraw
artificial nutrition and hydration and all other forms of
health care.

Furthermore, we find that a genuine issue of material fact
exists as to whether Mary actually signed the admission
agreement and, if she did, whether she did so knowingly and
intelligently.

¶ 15. “It is fundamental in our jurisprudence that
questions of fact are for the jury; questions of law are
for the court.” Fox v. Smith, 594 So.2d 596, 603 (Miss.
1992) (quoting Cantrell v. Lusk, 113 Miss. 137, 144, 73 So.
885, 886 (1916)). Thus, we reverse and remand the circuit
judge’s finding that Joseph had the authority to bind Mary
to the arbitration agreement, and we order that the issue
of whether Mary signed the admission agreement and if so,
whether she was competent to do so, be presented to a jury
for determination.

¶ 16. Joseph also argues that the arbitration
provision is substantively unconscionable and therefore
unenforceable. Unconscionability is defined as “an absence
of meaningful choice on the part of one of the parties,
together with contract terms which are unreasonably
favorable to the other party.” Entergy Miss., Inc. v.
Burdette Gin Co., 726 So.2d 1202, 1207 (¶ 11) (Miss.
1998). “[T]he party seeking to uphold the provision must
show that the provision bears some reasonable relationship
to the risks and needs of the business.” Id.

¶ 17. Substantive unconscionability is found to
exist when the terms of an arbitration agreement are shown
to be oppressive. East Ford, 826 So.2d at 714 (¶
13). As previously mentioned, the Center relies upon
Stephens to support its argument that the arbitration
provision is enforceable. In Stephens, the court considered
the same arbitration provision as the one before us and
found it conscionable, except the provision prohibiting the
award of punitive damages. The court stated that the
arbitration clause “provides Stephens with a fair process
in which to pursue her claims. Moreover, it is typical of
arbitration clauses endorsed by the FAA and is conscionable
because it bears ‘some reasonable relationship to the risks
and needs of the business.'” Stephens, 911 So.2d at 521
(¶ 37) (quoting Burdette Gin, 726 So.2d at 1207
(¶ 11)). In Terre Haute Cooperage v. Branscome, 203
Miss. 493, 503, 35 So.2d 537, 541 (1948), the Mississippi
Supreme Court stated that “[a]n ‘unconscionable contract is
one such as no man in his senses and not under a delusion
would make on the one hand, and as no honest and fair man
would accept on the other.'”

¶ 18. We cannot say that no one in his right mind
would ever agree to arbitrate issues which may arise out of
the provision of health care service to him. More
importantly, as we have already stated, the Mississippi
Supreme Court, in Stephens, found conscionable, save the
punitive damages provision, the exact arbitration provision
before us. Therefore, we are duty-bound to follow this
precedent and find that the arbitration agreement, except
the provision prohibiting the awarding of punitive damages,
is enforceable, subject to a jury’s finding that Mary
knowingly, willingly, and consciously signed the admission
agreement containing the provision to arbitrate.

2. The Admission Agreement

¶ 19. The admission agreement contains Joseph’s
signature and what purports to be Mary’s signature. As
stated the admission agreement contains the arbitration
provision, but it also contains other provisions which the
trial judge found unconscionable. We next examine those
provisions.

¶ 20. In Stephens, the court held that “the doctrine
of substantive unconscionability invalidates oppressive
terms . . . such as terms which violate the reasonable
expectations of parties. . . .” Id. at 523. The trial judge
found that sections C.5, C.8, D.4, E.5, E.6, E.7, E.8,
E.12, E.13, and E.16 of the admission agreement are
substantively unconscionable.

¶ 21. During oral argument, the attorney for the
Center conceded that the sections are unconscionable.
Therefore, we will not burden this record by setting forth
in detail each of the sections, nor will we scrutinize the
provisions for conscionableness. Rather, based on counsel’s
affirmation, we find that the enumerated sections are
unconscionable and that the circuit judge did not err in
striking these sections from the admission agreement. After
striking the unconscionable sections, the trial judge,
relying upon the provisions of Mississippi Code Annotated
section 75-2-302 (1) (Rev. 2002), ruled that the remaining
provisions of the admission agreement were enforceable. The
stated code section provides:

(1) If the court as a matter of law finds the contract or
any clause of the contract to have been unconscionable at
the time it was made the court may refuse to enforce the
contract, or it may enforce the remainder of the contract
without the unconscionable clause, or it may so limit the
application of any unconscionable clause as to avoid any
unconscionable result.

¶ 22. The code section upon which the trial judge
relied is a provision of the Uniform Commercial Code on
sales that applies to contracts in goods. Miss. Code. Ann.
§ 75-2-102 (Rev. 2002). While we find no fault in
the trial court’s finding, we do question his reliance on
section 75-2-302 (1), because the stated code section
applies to the sale of goods, and the admission agreement
is not a contract for the sale of goods. Nevertheless, the
admission agreement contains a saving clause which states,
“in the event any provision of this [a]greement is held to
be unenforceable for any reason, the unenforceability
thereof shall not affect the remainder of this agreement,
which shall remain in full force and effect and [shall be]
enforceable in accordance with its terms.” In Stephens, the
court noted that a saving clause, “explicitly acknowledges
the preferred remedy of striking unenforceable provisions as
opposed to the draconian remedy of striking the entire
agreed upon and otherwise valid contractual arrangements.”
Stephens, 911 So.2d at 524 (¶ 45). Therefore, in
accordance with the saving clause of the admission
agreement, we affirm the decision of the trial court
enforcing the remainder of the admission agreement.

CONCLUSION

¶ 23. This Court affirms the circuit judge’s finding
that sections of the admission agreement are unconscionable
and unenforceable. However, we reverse and remand for a
determination of whether Mary signed the admission
agreement and if so, whether she did so knowingly and
intelligently. If the jury determines that Mary signed the
agreement and that she was mentally competent when she did
so, the trial must be stayed pending arbitration. The trial
judge shall order that the dispute be submitted to
arbitration, and that the arbitration provision shall be
enforceable, except for the clause prohibiting the award of
punitive damages. Likewise, the admission agreement shall
be enforceable except as to the unconscionable sections
enumerated in this opinion.

¶ 24. THE JUDGMENT OF THE CIRCUIT COURT OF PEARL
RIVER COUNTY IS AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS
OPINION. ALL COSTS OF THIS APPEAL ARE ASSESSED ONE-HALF TO
THE APPELLANTS AND ONE-HALF TO THE APPELLEE.

KING, C.J., LEE AND MYERS, P.JJ., SOUTHWICK, CHANDLER,
BARNES, ISHEE AND ROBERTS, JJ., CONCUR. GRIFFIS, J.,
DISSENTS WITHOUT SEPARATE WRITTEN OPINION.