MARIA BAIRES, ET AL. VS ICC CONVALESCENT CORP. DBA IMPERIAL CARE CENTER, ET AL.

Tentative Rulings

Case Number: *******0702 Hearing Date: March 3, 2023 Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

DEMURRER AND MOTION TO STRIKE

ICC Convalescent Corp. (“ICC”) filed this Demurrer and Motion to Strike on December 19, 2022. The motion was scheduled to be heard on March 3, 2022. Maria Baires, by and through her successor-in-interest, Gloribel Baires, Gloribel Baires, individually; Mirna Vanegas, individually; and Samuel Baires, individually (collectively “Plaintiffs”) filed their opposition on February 21, 2023. ICC filed its reply on February 24, 2022.

On February 3, 2023, the Court conducted a hearing on a Motion to Compel Arbitration and Stay the Proceedings brough by RG Legacy I LLC dba Golden Rose Care Center & Two Palms Skilled Care LLC dba Two Palms Care Center. After hearing arguments from both parties the Court took the matter under submission. The Court issued a ruling on the Motion to Compel and Stay the Proceedings on March 1, 2023. This ruling continued the hearing to March 16 and requested additional briefing from both parties.

The Court notes that both ICC and Plaintiffs seem to believe that the proceedings are stayed pursuant to the February 3, 2023 hearing. Plaintiffs note in their Opposition that the Demurrer and Motion to Strike should not be heard in accordance with the granting of a stay. (Oppo., pg. 1.) ICC similarly states in their Reply that the hearing should be taken off calendar. (Reply, pg. 1.)

The Court notes that it has not granted a stay of the proceedings, as the motion was continued pending further briefing. In light of the continuance, the Court agrees with the parties that the Demurrer and Motion to Strike should be removed from the calendar.

As such, ICC Convalescent Corp.’s Demurrer and Motion to Strike is off-calendar pending a determination in RG Legacy I LLC dba Golden Rose Care Center & Two Palms Skilled Care LLC dba Two Palms Care Center’s Motion to Compel Arbitration and Stay Proceedings.

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RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

ORDER

ICC Convalescent Corp.’s Demurrer and Motion to Strike came on regularly for hearing on March 3, 2023, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows:

THE DEMURRER AND MOTION TO STRIKE ARE OFF CALENDAR. PENDING A DETERMINATION IN RG LEGACY I LLC DBA GOLDEN ROSE CARE CENTER & TWO PALMS SKILLED CARE LLC DBA TWO PALMS CARE CENTER’S MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS.UNLESS ALL PARTIES WAIVE NOTICE, PLAINTIFF SHALL GIVE NOTICE.

IT IS SO ORDERED.

DATE: March 3, 2023

F.M. TAVELMAN, Judge

Superior Court of California

County of Los Angeles

Case Number: *******0702 Hearing Date: March 1, 2023 Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTIONS TO COMPEL ARBITRATION & STAY MATTER

ALLEGATIONS:

Gloribel Baires (“Gloribel”), individually and as successor-in-interest to and on behalf of Maria Baires (“Decedent”), together with Mirna Vanegas (“Vanegas”) and Samuel Baires (“Samuel”) (collectively, “Plaintiffs”) filed suit against RG Legacy I LLC dba Golden Rose Care Center (“Golden Rose”) & Two Palms Skilled Care LLC dba Two Palms Care Center (“Two Palms,” collectively “Defendants”), alleging that Decedent received substandard care as a resident at Defendants’ facilities. Plaintiff’s also named ICC Convalescent Corp. (“ICC”) as defendants in the suit. While no arbitration agreement exists as between ICC and Plaintiffs, ICC’s existence as a party is relevant for purposes of this motion.

Plaintiffs filed a Complaint on October 3, 2022, alleging three causes of action: (1) Elder Abuse and Neglect (Welf. & Ins. Code 15600 et seq.); (2) Negligence; and (3) Wrongful Death.

HISTORY:

The Court received Motions to Compel Arbitration and Motions for Stay from both golden Rose and Two Palms on December 1, 2022; the oppositions to these motions were filed by Plaintiffs on January 23, 2023; both replies were filed on January 27, 2023.

Defendants motion came on for hearing before the court on February 3, 2023. Plaintiff’s counsel raised concern that facts mentioned by the Court in its tentative ruling tracked to defendant Imperial Care Center (“Imperial”), with whom Plaintiff has no arbitration agreement. The Court acknowledges that its factual references were unclear and issues this final ruling to clarify the basis for the Court’s ruling. Plaintiffs’ counsel also raised concerns regarding CCP 1281.2(c), arguing that allowing Imperial claims to go to trial while submitting those of Golden Rose and Two Palms would produce inconsistent rulings. The Court will address the arguments of the parties in this respect as well.

RELIEF REQUESTED:

Defendants move for an order compelling Plaintiff to submit the entire Complaint to binding arbitration.

Defendants move to stay the proceedings pending the Court’s final ruling on the motion to compel arbitration and pending the results of the binding arbitration between the parties.

ANALYSIS:

Compel Arbitration

I. LEGAL STANDARD

C.C.P. 1281.2 states: “[o]n petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement arbitrate the controversy exists.”

A party seeking to compel arbitration has the initial burden to prove, by a preponderance of the evidence, the existence of a valid and enforceable arbitration agreement. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) If the moving party has met its initial burden, then the burden shifts to respondents to prove the falsity or unenforceability of the arbitration agreement. (Ibid.)

II. MERITS

Defendants argue that the Complaint’s survivor claims are based on Decedent having received subpar care at Defendants’ facilities, and that at the time Decedent was admitted to their facilities, Decedent indicated approval for her daughter, Gloribel, to review and sign the admissions documents. Defendants further argue that Gloribel indicated she was familiar with the documents and thereafter signed them, including the arbitration agreement.

In opposition, Plaintiffs argue that: (1) Vanegas and Samuel did not sign the Arbitration Agreement (“Agreement”) and have not agreed to arbitrate their claims, (2) the agreement is procedurally and substantively unconscionable and therefore unenforceable, (3) Gloribel is not subject to the agreement in her individual capacity, and (4) the presence of nonarbitrable claims by third parties as well as third party defendants, presents the probability of inconsistent rulings on common issues of fact and law, necessitating that the entire action be adjudicated in Superior Court.

Defendants’ Burden to Show Enforceable Arbitration Agreement

The arbitration agreement (“the agreement”) submitted by Defendants is signed by Gloribel as legal representative of Decedent (Exh. A.) The agreement covers claims for medical malpractice and for any other claims arising out of the provision of service by the Facility, admission agreement, or which allege elder abuse or which seek punitive damages. (Id. at pgs. 9-10.) The agreement explains that parties bound are:

“any and all family members who would have a right to bring a claim in state court on behalf of the resident or the resident's estate, a legal representative, including a power of attorney for healthcare and/or financial matters or a court appointed guardian, or any other person whose claim is derived through or on behalf of the resident, including, in addition to those already listed in this definition, any parent, spouse, child, executor, administrator, heir or survivor entitled to bring a wrongful death claim”

This language demonstrates that the agreement applies to Gloribel, Samuel and Vanegas, as family members of Decedent whose claims arise out of Decedent’s claims.

Defendants submit the declaration of Clara Howard (“Howard”) who works in the admissions department of Two Palms. Howard states that on March 18, 2022, she met with Decedent and Gloribel to discuss admissions paperwork. Howard asked Decedent if she wished Gloribel to review and sign the paperwork, to which Decedent responded by nodding her head. (Howard Decl. 5.) Gloribel indicated to Howard that she was familiar with these documents from a previous nursing facility and thereafter signed the documents. (Howard Decl. 6.) Howard states that signature of the arbitration agreement was not a condition of Decedent’s admission to the facility but does not state that Gloribel was informed as such.

Plaintiffs argue in their opposition that Defendants have not met their burden in showing the existence of an arbitration agreement. Plaintiffs state that Defendants must “authenticate the documents on which it relies, establish that there is an actual agreement between the parties at issue, and establish that Plaintiff did not opt out of the agreement. Defendant fails to satisfy the burden placed on it.” (Oppo. p. 3.) However, Plaintiffs offer no explanation as to how Defendants have failed to do any of these requirements. Therefore, Defendants established, by a preponderance of the evidence, the existence of a valid, enforceable arbitration agreement between the parties.

Plaintiffs’ Burden to Show Unenforceability

Plaintiffs’ arguments against the existence of an agreement are that Gloribel did not sign the contract in her individual capacity and that Mirna Vanegas and Samuel Baires are not bound as non-signatories. Both arguments explicitly address Gloribel, Mirna, and Samuel’s wrongful death claims.

C.C.P. 1295 permits patients consenting to arbitration to bind their heirs in wrongful death claims when the agreement manifests an intent to bind. Section 1295 is part of California's Medical Injury Compensation Reform Act (MICRA) which created certain requirements for arbitration agreements of “any dispute as to professional negligence of a health care provider.” (C.C.P. 1295(a).) It defines “professional negligence” as “a negligent act or omission to act by a health care provider in the rendering of professional services, which act or omission is the proximate cause of a personal injury or wrongful death, provided that such services are within the scope of services for which the provider is licensed and which are not within any restriction imposed by the licensing agency or licensed hospital.” (C.C.P. 1295(g)(2).)

In Ruiz v. Podolsky (2010) 50 Cal.4th 838, 849, the California Supreme Court held that Section 1295 permitted patients who consented to arbitration to bind their heirs in actions for wrongful death. (Id. at p. 841.) It concluded that “all wrongful death claimants are bound by arbitration agreements entered into pursuant to section 1295, at least when, as here, the language of the agreement manifests an intent to bind these claimants. (Id.; Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 841-842.) However, this applies only when the wrongful death claim is a result of professional negligence as defined under MICRA.

In wrongful death cases, the heirs are only bound when the underlying wrongful death is based on professional negligence. (Avila, supra, 20 Cal.App.5th at 841-842.) When the primary basis is based on the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, 15600 et seq.), then C.C.P. 1295 does not apply. (Id. at 842.) The arbitration agreement was signed by Gloribel on behalf of the Decedent. Plaintiffs claim that Gloribel did not sign the arbitration agreement in her individual capacity. Regardless, she may still be bound by the agreement as Decedent’s heir. The determining factor is whether the FAC’s wrongful death claim is primarily based on professional negligence or physical elder abuse.

Avila’s holding does not turn on whether the pleading states a claim for professional negligence, but rather whether the “primary basis” for the wrongful death claim sounds in professional negligence or elder abuse. It would be nonsensical for a plaintiff to avoid arbitration by simply alleging claims based upon professional negligence but not stating an express cause of action for professional negligence. The Court of Appeals in Avila instructs that the difference between the two claims rests on whether the pleading alleges a failure to provide medical services, which reads as elder abuse; or the substandard performance of medical services that were provided. (Id. at 843.)

“’As used in the Act, neglect refers not to the substandard performance of medical services but, rather, to the “failure of those responsible for attending to the basic needs and comforts of elderly or dependent adults, regardless of their professional standing, to carry out their custodial obligations.’” (Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771 quoting Delaney v. Baker (1999) 20 Cal.4th 23.)

The Court’s tentative ruling incorporated a number of factual allegations against Imperial rather than those against Golden Rose and Two Palms. The Court seeks to address the correct factual allegations and analyze them under Avila to determine if they primarily sound in negligence or elder abuse.

With respect to Rose Garden, Plaintiff alleges the following facts:

Rose Garden failed to initially start antibiotics due to lack of IV line on April 19, 2022

Rose Garden failed to document, care plan to treat, conduct a root cause analysis, or notify a physician of Decedent’s black eye and head wound on April 28, 2022

Rose Garden failed to document, care plan to treat, conduct a root cause analysis, or notify a physician of a rash Decedent had developed post treatment for lice on May 27, 2022

Rose Garden failed to document, care plan to treat, conduct a root cause analysis, or notify a physician of Decedent’s facial wound on June 3, 2022

On June 6, 2022, Shrey Kanjiya, M.D. saw MARIA BAIRES and documented that she would be on antibiotics for life due to her surgical wound infection

On June 8, 2022 Rose Garden conducted nuerochecks on Decedent but did not document, care plan for, determine the root cause of any falls.

Rose Garden continued to not treat Decedent’s rash as of June 10, 2022

Rose Garden conducted CPR on June 15, 2022 despite Decedent’s do not resuscitate status, resulting in several rib fractures

Rose Garden failed to document, did not care plan to treat, and did not notify the physician of the Decedent’s vomiting or diarrhea on June 16, 2022

Rose Garden also failed to get Decedent out of bed or address Decedent’s lack of appetite and broken dentures

With respect to Two Palms, Plaintiff alleges the following facts:

Two Palms failed to assess Decedent’s risk of developing pressure ulcers, properly create, and implement a care plan to prevent and treat pressure ulcers and properly turn and reposition Decedent, instead allowing pressure to be applied to her bony prominences such as her sacrum area for many hours at a time. As a result of this neglect, Decedent developed a right buttock pressure ulcer and her sacral pressure ulcer worsened.

While at Two Palms Decedent’s dentures and wheelchair were damaged and not fixed which prevented her from eating and moving about.

Two Palms failed to properly treat, monitor, and assess Decedent’s surgical wounds. On April 11, 2022, Decedent left Two Palms to go to see her orthopedic surgeon. From there, she was sent to Sherman Oaks Hospital emergency department and admitted to their telemetry unit for surgical site infection. On April 12, 2022, Sherman Oaks personnel noted that she had an unstageable pressure ulcer with two open areas.

The Court finds that the allegations with respect to Golden Rose primarily sound in professional negligence as opposed to elder abuse. Except for the failure to create care plans, all other statements allege as the substandard performance of medical services provided. Plaintiff alleges that Golden Rose “initially failed” to start antibiotics, indicating that they thereafter did provide them. Plaintiff alleges that Golden Rose treated Decedent for lice but failed to treat a rash which presumably resulted thereafter. Plaintiff alleges that Golden Rose treated Decedent according with a fall but failed to document such a fall. All these allegations indicate that Decedent was receiving medical services, even if they were being performed well under standard. As such, the Court finds the allegations to sound primarily in professional negligence.

The Court similarly finds that the allegations with respect to Two Palms primarily sound in professional negligence as opposed to elder abuse. Plaintiff alleges that Two Palms failed to assess Decedent’s risk for pressure ulcers, but this speaks more to Two Palms negligent provision of medical services rather than its refusal to provide them. The same can be said about Plaintiff’s allegation regarding failure to properly treat Decedent’s surgical wounds properly.

There is one claim common to Imperial, Golden Rose, and Two Palms. Plaintiff alleges that all facilities were understaffed. It is true that under Fenimore v. Regents of University of California (2016) 245 Cal. App. 4th 1339 allegations of deliberate understaffing can be used to support elder abuse claims; however, the Fenimore court indicated that there must be a pattern of understaffing and it must be sufficiently egregious. (Cochrum v. Costa Victoria Healthcare, LLC (2018) 25 Cal.App.5th 1034.) Particularly persuasive for the Fenimore court was the allegation of statutory violation. Plaintiff here alleges that Imperial’s staffing fell below the minimum levels required by Health and Safety Code 1276.5. Plaintiff does not allege such violations with respect to Golden Rose and Two Palms. Instead, Plaintiff points to the Center for Medicare and Medicaid Services (“CMS”) Five-Star Rating System for staffing, in which Golden Rose and Two Palms both received three-star ratings. According to CMS, roughly 70 percent of nursing facilities in each state have a two-star, three-star, or four-star rating. (See CMS “Design for Care Compare Nursing Home Five-Star Quality Rating System: Technical Users’ Guide (2023), p. 5.) The Court does not find that Plaintiff states facts amounting to a sufficiently egregious pattern of understaffing by Golden Rose and Two Palms as to remove it from the applicability of the arbitration agreement to the other plaintiffs.

The Court thus finds that Plaintiffs do not satisfy their burden to show that Plaintiffs’ cause of action for wrongful death has a “primary basis” in elder abuse, rather than professional negligence. The Court finds that the wrongful death cause of action is arbitrable.

Plaintiffs’ Burden to Show Falsity

Plaintiffs argue the agreement is both procedurally and substantively unconscionable and as such cannot enforced. Defendants contend in reply that the agreement is neither procedurally, nor substantively unconscionable. Additionally, Defendants argue that both procedural and substantive unconscionability are required to deny binding arbitration.

Procedural Unconscionability

Plaintiffs argue that the agreement is procedurally unconscionable for failing to adequately warn that the legal representative signing is also signing in their individual capacity. As such, Plaintiffs argue that Gloribel cannot be said to have signed the agreement in her individual capacity. Plaintiffs cite to Lopez v. Bartlett Care Center, LLC (2019) 39 Cal.App.5th 311 where the court found that an agreement which did not contain a warning of signing in individual capacity was unenforceable.

The Court finds that the agreement here is not analogous to agreement in Lopez nor the agreement in Magno v. College Network, Inc. (2016) 1 Cal.App.5th 277. The agreement in Lopez contained absolutely no warning of binding in individual capacity, where the agreement in Magno hid such disclosures on the back page of carbon copy forms. Here the agreement contains the phrase:

“In signing this Agreement, the Legal Representative or Family Member binds both the Resident and themselves individually.”

This phrase is printed in bold typeface and is located directly above the signature of Gloribel on the legal representative signature field. (Exh. A, p. 8.) The Court does not find that this disclosure to be hidden such that it would be oppressive or surprising to the signee. As such, the agreement is not procedurally unconscionable on these grounds.

Plaintiffs similarly argue that the agreement was procedurally unconscionable by virtue of being presented on a “take it or leave it basis.” It is unclear to the Court what Plaintiffs’ argument is here. Plaintiffs claim that the contract was presented on a “take it or leave it” basis because it was only presented for signature after Decedent was admitted. If this were true, then Plaintiffs would need to show that Decedent would have been rejected for failure to sign the agreement. Plaintiffs make no arguments to this effect. Defendants reiterate in their reply that the agreement was not a condition to Decedent’s admission. The Court finds that Plaintiffs have not satisfied their burden in showing the contract was procedurally unconscionable.

Substantive Unconscionability

The agreement provides that arbitration be submitted either to the National Arbitration Forum (“NAF”) or the Judicial Arbitration and Mediation Service (“JAMS”). Plaintiff points out that here the arbitration would necessarily go to JAMS as NAF no longer takes consumer cases. The agreement provides that 10% of the arbitration costs are to be covered by Plaintiffs, and 90% to be covered by Defendants.

Plaintiffs argue the Agreement is procedurally unconscionable by subjecting Plaintiffs to unaffordable arbitration fees. In support of this argument Plaintiffs cite Penilla v. Westmont Corp. (2016) 3 Cal. App. 5th 205 which in turn relies on the ruling in Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77. The court in Gutierrez found that arbitration agreements which require unaffordable fees to initiate the arbitration process could be challenged as unconscionable. Likewise, the Penilla court found that an agreement which required the advance of hefty arbitration fees to be unconscionable. In both cases plaintiffs made a showing that they lacked the financial capacity to upfront these costs.

The Court finds that facts here to be inapposite to those in Penilla and Guiterrez. Plaintiffs submit the declaration of Gloribel as to her income which they estimate to be insufficient to cover her costs in a JAMS arbitration. Defendants argue in reply that the agreement provides that 10% of the arbitration costs are to be covered by Plaintiffs, but it does not require exorbitant upfront fees. Plaintiffs have submitted estimates as to the cost of the entire arbitration, but they make no showing as to the cost to initiate the proceedings. The Court notes that the JAMS Policy on Consumer Arbitrations Pursuant to Pre-Dispute Clauses Minimum Standards of Procedural Fairness states:

“With respect to the cost of the arbitration, when a consumer initiates arbitration against the company, the only fee required to be paid by the consumer is $250, which is approximately equivalent to current Court filing fees. All other costs must be borne by the company, including any remaining JAMS Case Management Fee and all professional fees for the arbitrator's services.”

Absent any showing to the contrary, the court finds that the arbitration agreement is not substantively unconscionable on grounds of presenting prohibitive fees

Lack of Mutuality

Plaintiffs allege that the contract lacks mutuality from a monetary limit on claims that are arbitrable. Plaintiffs once again cite to Lopez where the court found that an arbitration agreement which explicitly exempted claims of collections and eviction from the arbitration process to be unconscionable.

The Court finds the agreement here to be distinguishable from Lopez. Here, there is no explicit exclusion of certain types of claims. Instead, Plaintiffs argue that by requiring a claim to exceed $50,000 to be arbitrable, Defendants are leaving themselves free to pursue collections and evictions actions. Plaintiffs argue that where contract language is uncertain, it should be interpreted most strongly against the party who caused the uncertainty to exist. Defendants argue in reply that the agreement specifically provides that patients signing the agreement do not waive their rights under the Patient’s Bill of Rights and with respect to transfer or discharge.

Plaintiffs are not asking the court to interpret the language of the contract, instead they are asking the Court to interpret the intent behind the language. The Court does not find the language of the contract to be uncertain, instead, it clearly outlines which claims are subject to arbitration and which are not. Both sets of parties are bound to arbitrate claims above $50,000 and both sets of parties are free to pursue judicial remedy of claims below that amount or falling outside the scope of the agreement. As such, the Court finds no lack of mutuality in the agreement.

CCP 1281.2(c)

To ensure that arbitration agreements are enforced according to their terms, the FAA preempts all state laws that apply of their own force to limit those agreements against the parties' will or to withdraw the power to enforce them. (See, e.g., Perry v. Thomas (1987) 482 U.S. 483, 490–491 [FAA preempted California statute that rendered private agreements to arbitrate wage collection claims unenforceable by requiring judicial forum for resolution of those claims]. (Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 385.)

“The FAA itself contains no provision designed to deal with the special practical problems that arise in multiparty contractual disputes when some or all of the contracts at issue include agreements to arbitrate. California has taken the lead in fashioning a legislative response to this problem, by giving courts authority to consolidate or stay arbitration proceedings in these situations in order to minimize the potential for contradictory judgments. See Calif. Civ. Proc. Code Ann. 1281.2(c).” (Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University (1989) 489 U.S. 468, 476 at fn. 5.) Because “[t]here is no federal policy favoring arbitration under a certain set of procedural rules”, the Court of Appeal's construction of the arguably ambiguous generic choice-of-law clause—as incorporating both the state substantive law and state pro-arbitration rules (rather than the FAA)—did not violate the Moses H. Cone principle. (Id. at p. 476.)

Plaintiffs argue that the CCP 1281.2(c) prohibits arbitration of certain claims when there is a possibility of conflicting outcomes with those claims adjudicated by a court. “Section 1281.2(c) grants a trial court discretion to refuse to enforce written arbitration agreements when (1) a party to the agreement also is a party to pending litigation with a third party who did not agree to arbitration; (2) the pending third-party litigation arises out of the same transaction or series of related transactions as the claims subject to arbitration; and (3) the possibility of conflicting rulings on common factual or legal issues exists. A trial court has no discretion to deny arbitration under section 1281.2(c) unless all three of these conditions are satisfied.” (Acquire II, Ltd. v. Colton Real Estate Group (2013) 213 Cal.App.4th 959, 964.)

In both their opposition and the hearing Plaintiff raised concern that allowing claims against Imperial to go to trial while submitting those against Golden Rose and Two Palms to arbitration. In response Defendant’s counsel argued that the arbitration agreement’s language provides for governance by the Federal Arbitration Act. Defendant argues that it is this act that controls and not CCP 1281.2.

In relevant part the agreement with Golden Rose reads:

“Accordingly, this Agreement is to be governed by the Federal Arbitration Act and the procedural rules set forth in the Federal Arbitration Act (9 U.S.C. Sections 1- 16) shall govern any petition to compel arbitration and the selection of an arbitrator.” (Golden Rose Motion, Exh. A., Art. 7.)

“The parties agree that California Code or Civil Procedure l281.2(c) is excluded from this Agreement as the parties mutually desire to have any and all disputes submitted to binding arbitration.” (Golden Rose Motion, Exh. A., Art. 6.) It is clear from this language that the parties agreed to preclude 1281.2(c) from their agreement and have the FAA control.

In relevant part the agreement with Two Palms reads:

“The Federal Arbitration Act ("FAA"), not state law, will control and applies to the arbitration of disagreements between the parties and the parties agree to incorporate such laws into this Agreement. This Agreement will otherwise be governed by the State law where the Facility is located. This shall include local court rules governing discovery, and state law governing state medical liability act(s), if applicable. If it is determined that the FAA does not apply to arbitration under this Agreement, the parties agree to resolve any disagreement through arbitration under control of state law” (Two Palms Motion, Exh A. p.6.)

The Court finds that whether parties intended to contract around 1281.2(c) is dependent upon the language of the agreement. “Under United States Supreme Court jurisprudence, we examine the language of the contract to determine whether the parties intended to apply the FAA to the exclusion of California procedural law and, if any ambiguity exists, to determine whether section 1281.2(c) conflicts with or frustrates the objectives of the FAA.” (Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 383.) “Our opinion does not preclude parties to an arbitration agreement to expressly designate that any arbitration proceeding should move forward under the FAA's procedural provisions rather than under state procedural law.” (Id. at 394.)

The Court read Cronus to mean that parties are free to contract around 1281.2(c) but that the contract must explicitly say so. The Court finds that the Golden Rose arbitration agreement does explicitly contract around 1281.2(c) The Golden Rose agreement specifically says the parties don’t intend to be bound by 1281.2(c).

Conversely, the Two Palms agreement says the FAA controls, but then introduces language that state law will govern in certain areas. This is important as the court in Cronus found that the FAA does not preempt 1281.2(c) because the California law does not defeat the rights granted by Congress and because the FAA has so equivalent provision. Specifically of concern is the lack of reference to whether the FAA or California law applies to the procedural rules.

It is unclear to the Court as to whether the language of the Two Palms agreement intends to contract around 1281.2(c). Several cases speak about this issue but none of their arbitration agreements have language which mirrors that in Two Palms.

In Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110, the court held that a contract which specified claims would be arbitrated by the FAA but did not explicitly reference procedure, intended for FAA procedure to control regardless because the contract made absolutely no mention of California law.

In Los Angeles Unified School Dist. v. Safety National Casualty Corp. (2017) 13 Cal.App.5th 471, the court denied motion to compel and granted stay under 1281.2(c) where an agreement made no explicit mention of the procedural rules.

In Mave Enterprises, Inc. v. Travelers Indemnity Co. (2013) 219 Cal.App.4th 1408, the court found that the FAA’s procedural provisions do not apply to California State Court unless the contract contains a choice of law clause expressly incorporating them.

Here the Two Palms agreement falls somewhere between all of these cases because it states that the FAA controls but then ambiguously introduces factors of California law controlling with specific procedural matters such as discovery.

If the Court does finds that CCP 1281.2 (c) applies, then it has several options. The last paragraph of CCP 1281.2 provides that:

“If the court determines that a party to the arbitration is also a party to litigation in a pending court action or special proceeding with a third party as set forth under subdivision (c), the court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding.”

III. CONCLUSION

The Court is predisposed to grant the motion to compel arbitration but cannot make a final determination due to the outstanding 1281(c) concerns. The Court requests additional briefing from the parties on whether the Two Palms agreement is subject to 1281.2(c). The Court also requests additional briefing as to the impact proceeding with the ICC lawsuit has relative to the arbitration of Golden Rose and Two Palms. The Court is particularly concerned with a potential basis for inconsistent rulings and whether that can be resolved with a stay of the trial or the arbitration while the other issue is resolved.

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Stay

I. LEGAL STANDARD

Once arbitration has been compelled, in whole or in part, a stay of proceedings is mandatory if the issues in the arbitration and the pending action overlap. (C.C.P. 1281.4 (if a court “has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.”))

“The purpose of the statutory stay [under section 1281.4] is to protect the jurisdiction of the arbitrator by preserving the status quo until arbitration is resolved. In the absence of a stay, the continuation of the proceedings in the trial court disrupts the arbitration proceedings and can render them ineffective.” (Federal Ins. Co. v. Superior Court (1998) 60 Cal.App.4th 1370, 1374-1375 (citations omitted).)

II. MERITS

As the Court cannot make a determination on the motion to compel without further briefing, it declines to rule on the motion to stay at this time.

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RULING:

In the event a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

ORDER

Defendants RG Legacy I LLC dba Golden Rose Care Center & Two Palms Skilled Care LLC dba Two Palms Care Center’s Motions to Compel Arbitration and Motions for Stay came on regularly for hearing on February 3, 2023 with appearances/submissions as noted in the minute order for said hearing, and the court to the matter under submission and issues this revised ruling requesting additional briefing.

PARTIES ARE ORDERED TO PROVIDE ADDITIONAL SIMULTANEOUS BRIEFING NO LATER THAN MARCH 16, 2023.

IT IS SO ORDERED.

DATE: March 1, 2023

F.M. TAVELMAN, Judge

Superior Court of California

County of Los Angeles

Case Number: *******0702 Hearing Date: February 3, 2023 Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTIONS TO COMPEL ARBITRATION & STAY MATTER

ALLEGATIONS:

Gloribel Baires (“Gloribel”), individually and as successor-in-interest to and on behalf of Maria Baires (“Decedent”), together with Mirna Vanegas (“Vanegas”) and Samuel Baires (“Samuel”) (collectively, “Plaintiffs”) filed suit against RG Legacy I LLC dba Golden Rose Care Center (“Golden Rose”) & Two Palms Skilled Care LLC dba Two Palms Care Center (“Two Palms,” collectively “Defendants”), alleging that Decedent received substandard care as a resident at Defendants’ facilities.

Plaintiffs filed a Complaint on October 3, 2022, alleging three causes of action: (1) Elder Abuse and Neglect (Welf. & Ins. Code 15600 et seq.); (2) Negligence; and (3) Wrongful Death.

HISTORY:

The Court received Motions to Compel Arbitration and Motions for Stay from both golden Rose and Two Palms on December 1, 2022; the oppositions to these motions were filed by Plaintiffs on January 23, 2023; both replies were filed on January 27, 2023.

RELIEF REQUESTED:

Defendants move for an order compelling Plaintiff to submit the entire Complaint to binding arbitration.

Defendants move to stay the proceedings pending the Court’s final ruling on the motion to compel arbitration, and pending the results of the binding arbitration between the parties.

ANALYSIS:

Compel Arbitration

I. LEGAL STANDARD

C.C.P. 1281.2 states a court shall order a controversy to arbitration when a written agreement to arbitrate exists and a partyrefuses to arbitrate a covered controversy. A party seeking to compel arbitration must show by a preponderance of the evidence the existence of a valid and enforceable arbitration agreement. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) After meeting this initial burden, then the burden shifts to respondents to prove the falsity or unenforceability of the arbitration agreement. (Ibid.)

II. MERITS

Defendants argue that the Complaint’s survivor claims are based on Decedent having received subpar care at Defendants’ facilities, and that at the time Decedent was admitted to their facilities, Decedent indicated approval for her daughter, Gloribel, to review and sign the admissions documents. Defendants further argue that Gloribel indicated she was familiar with the documents and thereafter signed them, including the arbitration agreement.

In opposition, Plaintiffs argue that: (1) Vanegas and Samuel did not sign the Arbitration Agreement (“Agreement”) and have not agreed to arbitrate their claims, (2) the agreement is procedurally and substantively unconscionable and therefore unenforceable, (3) Gloribel is not subject to the agreement in her individual capacity, and (4) the presence of nonarbitrable claims by third parties as well as third party defendants, presents the probability of inconsistent rulings on common issues of fact and law, necessitating that the entire action be adjudicated in Superior Court.

Defendants’ Burden to Show Enforceable Arbitration Agreement

The arbitration agreement (“the agreement”) submitted by Defendants is signed by Gloribel as legal representative of Decedent (Exh. A.) The agreement covers claims for medical malpractice and for any other claims arising out of the provision of service by the Facility, admission agreement, or which allege elder abuse or which seek punitive damages. (Id. at pgs. 9-10.) The agreement explains that parties bound are:

“any and all family members who would have a right to bring a claim in state court on behalf of the resident or the resident's estate, a legal representative, including a power of attorney for healthcare and/or financial matters or a court appointed guardian, or any other person whose claim is derived through or on behalf of the resident, including, in addition to those already listed in this definition, any parent, spouse, child, executor, administrator, heir or survivor entitled to bring a wrongful death claim”

This language demonstrates that the agreement applies to Gloribel, Samuel and Vanegas, as family members of Decedent whose claims arise out of Decedent’s claims.

Defendants submit the declaration of Clara Howard (“Howard”) who works in the admissions department of Two Palms. Howard states that on March 18, 2022, she met with Decedent and Gloribel to discuss admissions paperwork. Howard asked Decedent if she wished Gloribel to review and sign the paperwork, to which Decedent responded by nodding her head. (Howard Decl. 5.) Gloribel indicated to Howard that she was familiar with these documents from a previous nursing facility and thereafter signed the documents. (Howard Decl. 6.) Howard states that signature of the arbitration agreement was not a condition of Decedent’s admission to the facility but does not state that Gloribel was informed as such.

Plaintiffs argue in their opposition that Defendants have not met their burden in showing the existence of an arbitration agreement. Plaintiffs state that Defendants must “authenticate the documents on which it relies, establish that there is an actual agreement between the parties at issue, and establish that Plaintiff did not opt out of the agreement. Defendant fails to satisfy the burden placed on it.” (Oppo. p. 3.) However, Plaintiffs offer no explanation as to how Defendants have failed to do any of these requirements. Therefore, Defendants established, by a preponderance of the evidence, the existence of a valid, enforceable arbitration agreement between the parties.

Plaintiffs’ Burden to Show Unenforceability

Plaintiffs’ arguments against the existence of an agreement are that Gloribel did not sign the contract in her individual capacity and that Mirna Vanegas and Samuel Baires are not bound as non-signatories. Both arguments explicitly address Gloribel, Mirna, and Samuel’s wrongful death claims.

C.C.P. 1295 permits patients consenting to arbitration to bind their heirs in wrongful death claims when the agreement manifests an intent to bind. Section 1295 is part of California's Medical Injury Compensation Reform Act (MICRA) which created certain requirements for arbitration agreements of “any dispute as to professional negligence of a health care provider.” It defines “professional negligence” as “a negligent act or omission to act by a health care provider in the rendering of professional services, which act or omission is the proximate cause of a personal injury or wrongful death, provided that such services are within the scope of services for which the provider is licensed and which are not within any restriction imposed by the licensing agency or licensed hospital.” (C.C.P. 1295(g)(2).)

In Ruiz v. Podolsky (2010) 50 Cal.4th 838, 849, the California Supreme Court held that Section 1295 permitted patients who consented to arbitration to bind their heirs in actions for wrongful death. (Id. at p. 841.) It concluded that “all wrongful death claimants are bound by arbitration agreements entered into pursuant to section 1295, at least when, as here, the language of the agreement manifests an intent to bind these claimants. (Id.; Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 841-842.) However, this applies only when the wrongful death claim is a result of professional negligence as defined under MICRA.

In wrongful death cases, the heirs are only bound when the underlying wrongful death is based on professional negligence. (Avila, supra, 20 Cal.App.5th at 841-842.) When the primary basis is based on the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, 15600 et seq.), then C.C.P. 1295 does not apply. (Id. at 842.) The arbitration agreement was signed by Gloribel on behalf of the Decedent. Plaintiffs claim that Gloribel did not sign the arbitration agreement in her individual capacity. Regardless, she may still be bound by the agreement as Decedent’s heir. The determining factor is whether the FAC’s wrongful death claim is primarily based on professional negligence or physical elder abuse.

Although the Complaint does not state an explicit claim for professional negligence, Avila’s holding does not turn on whether the pleading states a claim for professional negligence, but rather whether the “primary basis” for the wrongful death claim sounds in professional negligence or elder abuse. It would not make sense for a plaintiff to be able to avoid being bound by arbitration by alleging claims for professional negligence, but simply not stating an express cause of action for professional negligence. The Court of Appeals in Avila instructs that the difference between the two claims rests on whether the pleading alleges a failure to provide medical services, which reads as elder abuse; or the substandard performance of medical services that were provided. (Id. at 843.) The Complaint alleges a great deal of wrongdoing by Defendants, however the Court must focus on those facts which specifically relate to treatment of Decedent. The facts alleged regarding Defendants’ treatment of Decedent primarily relate to a series of five falls suffered by Decedent at the facility. Plaintiffs allege that these falls would not have occurred but for Defendants failure to provide a number of measures such as a lower bed, floor mat, and adequate supervision/assistance. Plaintiffs explain at length the measures which Dr. Danny Farahmandian ordered to prevent further falls and allege that the Defendants thereafter failed to adequately implement those measures. Other allegations of Elder Abuse such as failure to monitor bowel movements, failure to monitor pressure ulcer risk, and failure to document other alleged injuries also sound in professional neglect. Although Plaintiffs do allege outright failure to provide medical care, such as the failure to develop treatment plans, there are many more allegations of failure to provide care to an adequate standard.

The Court thus finds that Plaintiff does not satisfy his burden to show that Plaintiffs’ cause of action for wrongful death has a “primary basis” in elder abuse, rather than professional negligence. The Court finds that the wrongful death cause of action is arbitrable.

Plaintiffs’ Burden to Show Falsity

Plaintiffs argue the agreement is both procedurally and substantively unconscionable and as such cannot enforced. Defendants contend in reply that the agreement is neither procedurally, nor substantively unconscionable. Additionally, Defendants argue that both procedural and substantive unconscionability are required to deny binding arbitration.

Procedural Unconscionability

Plaintiffs argue that the agreement is procedurally unconscionable in that it does contain adequate warning that the legal representative signee is also signing in their individual capacity. As such, Plaintiffs argue that Gloribel cannot be said to have signed the agreement in her individual capacity. Plaintiffs cite to Lopez v. Bartlett Care Center, LLC (2019) 39 Cal.App.5th 311 where the court found that an agreement which did not contain a warning of signing in individual capacity was unenforceable.

The Court finds that the agreement here is not analogous to agreement in Lopez nor the agreement in Magno v. College Network, Inc. (2016) 1 Cal.App.5th 277. The agreement in Lopez contained absolutely no warning of binding in individual capacity, where the agreement in Magno hid such disclosures in the back page of carbon copy forms. Here the agreement contains the phrase:

“In signing this Agreement, the Legal Representative or Family Member binds both the Resident and themselves individually.”

This phrase is printed in bold typeface and is located directly above the signature of Gloribel on the legal representative signature field. (Exh. A, p. 8.) The Court does not find that this disclosure to be hidden such that it would be oppressive or surprising to the signee. As such, the agreement is not procedurally unconscionable on these grounds.

Plaintiffs similarly argue that the agreement was procedurally unconscionable by virtue of being presented on a “take it or leave it basis.” It is unclear to the Court what Plaintiffs’ argument is here. Plaintiffs claim that the contract was presented on a “take it or leave it” basis because it was only presented for signature after Decedent was admitted. If this were true, then Plaintiffs would need to show that Decedent would have been rejected for failure to sign the agreement. Plaintiffs make no arguments to this effect. Defendants reiterate in their reply that the agreement was not a condition to Decedent’s admission. The Court finds that Plaintiffs have not satisfied their burden in showing the contract was procedurally unconscionable.

Substantive Unconscionability

The agreement provides that arbitration be submitted either to the National Arbitration Forum (“NAF”) or the Judicial Arbitration and Mediation Service (“JAMS”). Plaintiff points out that here the arbitration would necessarily go to JAMS as NAF no longer takes consumer cases. The agreement provides that 10% of the arbitration costs are to be covered by Plaintiffs, and 90% to be covered by Defendants.

Plaintiffs argue the Agreement is procedurally unconscionable as a result of subjecting Plaintiffs to unaffordable arbitration fees. In support of this argument Plaintiffs cite Penilla v. Westmont Corp. (2016) 3 Cal. App. 5th 205 which in turn relies on the ruling in Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77. The court in Gutierrez found that arbitration agreements which require unaffordable fees to initiate the arbitration process could be challenged as unconscionable. Likewise, the Penilla court found that an agreement which required the advance of hefty arbitration fees to be unconscionable. In both of these cases plaintiffs made a showing that they lacked the financial capacity to upfront these costs.

The Court finds that facts here to be inapposite to those in Penilla and Guiterrez. Plaintiffs submit the declaration of Gloribel as to her income which they estimate to be insufficient to cover her costs in a JAMS arbitration. Defendants argue in reply that the agreement provides that 10% of the arbitration costs are to be covered by Plaintiffs, but it does not require exorbitant upfront fees. Plaintiffs have submitted estimates as to the cost of the entire arbitration, but they make no showing as to the cost to initiate the proceedings. The Court notes that the JAMS Policy on Consumer Arbitrations Pursuant to Pre-Dispute Clauses Minimum Standards of Procedural Fairness states:

“With respect to the cost of the arbitration, when a consumer initiates arbitration against the company, the only fee required to be paid by the consumer is $250, which is approximately equivalent to current Court filing fees. All other costs must be borne by the company, including any remaining JAMS Case Management Fee and all professional fees for the arbitrator's services.”

Absent any showing to the contrary, the court finds that the arbitration agreement is not substantively unconscionable on grounds of presenting prohibitive fees

Lack of Mutuality

Plaintiffs allege that the contract lack mutuality by virtue of the provision of a monetary limit on claims that are arbitrable. Plaintiffs once again cite to Lopez where the court found that an arbitration agreement which explicitly exempted claims of collections and eviction from the arbitration process to be unconscionable.

The Court finds the agreement here to be inapposite to the facts in Lopez. Here, there is no explicit exclusion of certain types of claims. Instead, Plaintiffs argue that by requiring a claim to exceed $50,000 to be arbitrable, Defendants are leaving themselves free to pursue collections and evictions actions. Plaintiffs argue that where contract language is uncertain, it should be interpreted most strongly against the party who caused the uncertainty to exist. Defendants argue in reply that the agreement specifically provides that patients signing the agreement do not waive their rights under the Patient’s Bill of Rights and with respect to transfer or discharge.

Plaintiffs are not asking the court to interpret the language of the contract, instead they are asking the Court to interpret the intent behind the language. The Court does not find the language of the contract to be uncertain, instead, it clearly outlines which claims are subject to arbitration and which are not. Both sets of parties are bound to arbitrate claims above $50,000 and both sets of parties are free to pursue judicial remedy of claims below that amount or falling outside the scope of the agreement. As such, the Court finds no lack of mutuality in the agreement.

CCP 1281.2(c)

Plaintiffs argue that the CCP 1281.2(c) prohibits certain claims from being arbitrable by virtue of presenting the possibility of conflicting outcomes with those claims adjudicated by a court. As the Court has found that all causes of action here are arbitrable, the Court need not consider the CCP 1281.2(c) argument.

III. CONCLUSION

The Court grants the instant motions.

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Stay

I. LEGAL STANDARD

Once arbitration has been compelled, in whole or in part, a stay of proceedings is mandatory if the issues in the arbitration and the pending action overlap. (C.C.P. 1281.4 (if a court “has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.”))

“The purpose of the statutory stay [under section 1281.4] is to protect the jurisdiction of the arbitrator by preserving the status quo until arbitration is resolved. In the absence of a stay, the continuation of the proceedings in the trial court disrupts the arbitration proceedings and can render them ineffective.” (Federal Ins. Co. v. Superior Court (1998) 60 Cal.App.4th 1370, 1374-1375 (citations omitted).)

II. MERITS

As the Court grants the motion to compel arbitration in its entirety, the Court also grants the motion to stay the proceedings pending arbitration.

III. CONCLUSION

The Court grants the instant motion.

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RECOMMENDED RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

ORDER

Defendants RG Legacy I LLC dba Golden Rose Care Center & Two Palms Skilled Care LLC dba Two Palms Care Center’s Motions to Compel Arbitration and Motions for Stay came on regularly for hearing on February 3, 2023 with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows:

THE MOTIONS TO COMPEL ARBITRATION ARE GRANTED.

THE MOTIONS FOR STAY ARE GRANTED.

IT IS SO ORDERED.

DATE: February 3, 2023

F.M. TAVELMAN, Judge

Superior Court of California

County of Los Angeles