NO. 5-07-0392
N O T IC E
Decisio n filed 04/04/08. The text of
IN THE
this dec ision m ay b e changed or
corrected prior to the filing of a
APPELLATE COURT OF ILLINOIS
P e t i ti o n for Re hea ring or th e
disposition of the same.
FIFTH DISTRICT
________________________________________________________________________
SUE CARTER, Special Administrator of the
) Appeal from the
Estate of Joyce Gott, Deceased, ) Circuit Court of
) Marion County.
Plaintiff-Appellee, )
)
v. ) No. 06-L-75
)
SSC ODIN OPERATING COMPANY, LLC, )
d/b/a Odin Healthcare Center, ) Honorable
) David L. Sauer,
Defendant-Appellant. ) Judge, presiding.
________________________________________________________________________
JUSTICE SPOMER delivered the opinion of the court:
The defendant, SSC Odin Operating Company, LLC, doing business as Odin
Healthcare Center, appeals an order of the circuit court of Marion County denying the
defendant's motion to compel arbitration in the present lawsuit brought by the plaintiff, Sue
Carter, as the special administrator of the estate of Joyce Gott, deceased. For the reasons
that follow, we affirm the order of the circuit court.
BACKGROUND
The facts necessary to our disposition of this appeal are undisputed by the parties and
are as follows. The plaintiff, Sue Carter, is the special administrator of the estate of Joyce
Gott, deceased. Joyce was a resident of the defendant's facility, Odin Healthcare Center
(Odin), in Odin, Illinois, from May 20, 2005, until July 29, 2005, and again from January
12, 2006, until her death on January 31, 2006. At the outset of Joyce's first stay at Odin, the
plaintiff, acting not on her own behalf, but as Joyce's legal representative, executed a written
"Health Care Arbitration Agreement" with the defendant; at the outset of Joyce's second stay
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at Odin, Joyce executed a second written "Health Care Arbitration Agreement" with the
defendant, the terms of which are identical to those of the first agreement. In pertinent part,
the two "Health Care Arbitration Agreements" (the agreements) require that all disputes
between Joyce and the defendant related to Joyce's care at Odin be submitted to binding
arbitration. By their own terms, however, the agreements do not apply "to any dispute where
the amount in controversy is less than two hundred thousand ($200,000.00) dollars." Within
the agreements, Joyce and the defendant expressly agree that the agreements will be
governed by the Federal Arbitration Act (9 U.S.C. §1 et seq. (2000)).
Following Joyce's January 31, 2006, death, the plaintiff filed, on November 22, 2006,
the instant two-count lawsuit, alleging in count I a statutory survival action pursuant to the
Probate Act of 1975 (755 ILCS 5/27-6 (West 2006)) and the Nursing Home Care Act (210
ILCS 45/1-101 et seq. (West 2006)) (the survival action) and in count II a statutory action
under the Wrongful Death Act (740 ILCS 180/0.10 et seq. (West 2006)) (the wrongful death
action). In both counts, the plaintiff alleged that the defendant had failed to provide
adequate and properly supervised care as needed by Joyce. In the survival action count, the
plaintiff alleged that the defendant's acts and/or omissions resulted in Joyce suffering pain
and suffering, emotional distress, and mental anguish between January 12, 2006, and
January 31, 2006. In the wrongful death action count, the plaintiff alleged that the
defendant's acts and/or omissions resulted in Joyce's death and therefore the loss of Joyce's
companionship and society for her heirs.
On December 26, 2006, the defendant filed an answer to the plaintiff's complaint,
denying in pertinent part the allegations therein and asserting a number of affirmative
defenses, including the defense that both counts of the lawsuit were precluded by the
agreements, which required the disputes contained therein to be resolved by binding
arbitration. On January 11, 2007, the plaintiff filed a reply to the affirmative defenses,
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denying them, and filed a motion to strike a number of the defenses, which are not relevant
to this appeal. On March 5, 2007, the defendant filed a motion to compel arbitration, a
memorandum of law in support of that motion, a copy of each of the agreements, and an
affidavit of an employee of the defendant that sets forth facts that the defendant alleges
establish that the agreements involve interstate commerce within the meaning of the Federal
Arbitration Act. On April 19, 2007, the plaintiff filed a memorandum of law in opposition
to the motion to compel arbitration. In that memorandum and in a supplemental
memorandum filed by the plaintiff on June 20, 2007, the plaintiff argued, inter alia, that (1)
a violation of public policy is a legitimate generally applicable defense to all contracts in
Illinois, (2) legitimate generally applicable state defenses to all contracts are not preempted
by the Federal Arbitration Act, and (3) the agreements are in violation of this state's public
policy, as set forth in sections 3-606 and 3-607 of the Nursing Home Care Act (210 ILCS
45/3-606, 3-607 (West 2006)), and so are void.
On June 20, 2007, the trial judge entered an order denying the defendant's motion to
compel arbitration. With regard to the wrongful death action, the judge reasoned that
although Joyce was bound by the agreements with regard to her own claims, a plaintiff
bringing a wrongful death claim on behalf of an estate was not bound by the agreements.
With regard to the survival action, the judge concluded that the agreements were not
enforceable because they were "in direct violation of emphatically stated public policy and
for lack of mutuality" and because, with regard to interstate commerce, "in the aggregate the
economic activity does not represent general practice subject to federal control." A timely
notice of interlocutory appeal was filed by the defendant, and this appeal followed.
STANDARD OF REVIEW
An order to compel arbitration is injunctive in nature and is appealable under
Supreme Court Rule 307(a)(1) (188 Ill. 2d R. 307(a)(1)). Peach v. CIM Insurance Corp.,
3
352 Ill. App. 3d 691, 694 (2004) (citing Salsitz v. Kreiss, 198 Ill. 2d 1, 11 (2001)).
Generally, the standard employed in reviewing an interlocutory order granting or denying
a motion to compel arbitration is whether the circuit court abused its discretion. Peach, 352
Ill. App. 3d at 694. However, in an appeal from the denial of a motion to compel arbitration
without an evidentiary hearing, the standard of review is de novo. Ragan v. AT&T Corp.,
355 Ill. App. 3d 1143, 1147 (2005). In the case at bar, there was no evidentiary hearing.
Accordingly, we shall review de novo the trial judge's ruling. This court may affirm the
judgment of a trial court on any basis warranted by the record. Evans v. Lima Lima Flight
Team, Inc., 373 Ill. App. 3d 407, 418 (2007).
DISCUSSION
On appeal, the defendant contends the trial court erred because (1) the Federal
Arbitration Act is preemptive, (2) the agreements involved interstate commerce, (3) the
agreements are supported by mutual promises, and (4) the agreements require the arbitration
of the wrongful death action. To understand the defendant's preemption argument, we must
examine both what the defendant does contend on appeal and what the defendant does not
contend on appeal. We begin with the latter. Nowhere in its opening brief or reply brief,
and at no time during oral argument, has the defendant contended that a violation of public
policy is not a legitimate generally applicable defense to all contracts in Illinois.
Accordingly, the defendant has waived the consideration of any argument on that issue. See
210 Ill. 2d R. 341(h)(7) (the argument section of the opening brief of the appellant must
include, inter alia, "the contentions of the appellant and the reasons therefor, with citation
of the authorities and the pages of the record relied on"; points not argued in the opening
brief "are waived and shall not be raised in the reply brief, in oral argument, or on petition
for rehearing"); Southwestern Illinois Development Authority v. Vollman, 235 Ill. App. 3d
32, 38 (1992) (a reviewing court is entitled to have the issues clearly defined; it may deem
4
waived issues not sufficiently or properly presented). Moreover, even if the defendant had
not waived this issue, there is voluminous case law in Illinois holding that a violation of
public policy can be a legitimate generally applicable defense to all contracts in Illinois.
E.g., O'Hara v. Ahlgren, Blumenfeld & Kempster, 127 Ill. 2d 333, 341-42 (1989); Kleinwort
Benson North America, Inc. v. Quantum Financial Services, Inc., 181 Ill. 2d 214, 226-27
(1998). Likewise, nowhere in its opening brief or reply brief, and at no time during oral
argument, has the defendant contended that the protections found in sections 3-606 and 3-
607 of the Nursing Home Care Act (210 ILCS 45/3-606, 3-607 (West 2006))–which, we
note, were first implemented in 1980, long before arbitration agreements were as prevalent
as they are today–are not "emphatically stated public policy." Accordingly, the defendant
has waived the consideration of any argument on that issue. See 210 Ill. 2d R. 341(h)(7)
(the argument section of the opening brief of the appellant must include, inter alia, "the
contentions of the appellant and the reasons therefor, with citation of the authorities and the
pages of the record relied on"; points not argued in the opening brief "are waived and shall
not be raised in the reply brief, in oral argument, or on petition for rehearing"); Southwestern
Illinois Development Authority v. Vollman, 235 Ill. App. 3d 32, 38 (1992) (a reviewing court
is entitled to have the issues clearly defined; it may deem waived issues not sufficiently or
properly presented).
We turn now to the preemption issue the defendant has sufficiently and properly
presented on appeal. Notwithstanding the facts that a violation of public policy can be a
legitimate generally applicable defense to all contracts in Illinois and that the protections
found in sections 3-606 and 3-607 of the Nursing Home Care Act (210 ILCS 45/3-606, 3-
607 (West 2006)) represent "emphatically stated public policy" that has existed in this state
for nearly 30 years, the defendant contends that in this particular case the state law contract
defense of a violation of public policy is preempted by the Federal Arbitration Act because
5
the public policy expressed in sections 3-606 and 3-607 is not applicable to all contracts but
is used to "specifically target arbitration agreements." In support of this argument, the
defendant points to the pronouncement of the United States Supreme Court in Doctor's
Associates, Inc. v. Casarotto, 517 U.S. 681, 685, 134 L. Ed. 2d 902, 907, 116 S. Ct. 1652,
1655 (1996) (quoting Perry v. Thomas, 482 U.S. 483, 492 n.9, 96 L. Ed. 2d 426, 437 n.9,
107 S. Ct. 2520, 2527 n.9 (1987) (emphasis in original)), that state law is applicable and is
not preempted by the Federal Arbitration Act " 'if that law arose to govern issues concerning
the validity, revocability, and enforceability of contracts generally,' " but that a " 'state-law
principle that takes its meaning precisely from the fact that a contract to arbitrate is at issue
does not comport with' " the text of the Federal Arbitration Act.
To understand the nexus between the rule stated in Casarotto and Thomas, which this
court agrees is absolutely correct, and sections 3-606 and 3-607 of the Nursing Home Care
Act, we must examine the latter sections in detail. Section 3-606 states, in its entirety, the
following:
"Any waiver by a resident or his legal representative of the right to commence
an action under Sections 3-601 through 3-607, whether oral or in writing, shall be
null and void, and without legal force or effect." 210 ILCS 45/3-606 (West 2006).
Section 3-607 states, in its entirety, the following:
"Any party to an action brought under Sections 3-601 through 3-607 shall be
entitled to a trial by jury and any waiver of the right to a trial by a jury, whether oral
or in writing, prior to the commencement of an action, shall be null and void, and
without legal force or effect." 210 ILCS 45/3-607 (West 2006).
Although the defendant attempts to invoke the rule in Casarotto and Thomas by claiming
that the above-quoted language of sections 3-606 and 3-607 is used to "specifically target
arbitration agreements," we do not agree with such a narrow reading of the language. First,
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neither section 3-606 nor section 3-607 mentions arbitration agreements at all, nor by their
terms are they limited to those agreements. The sections, by their explicit terms, apply
equally to all contracts attempting to restrict the right of nursing home residents to
"commence an action" pursuant to the Nursing Home Care Act or to waive the right to a trial
by a jury in an action commenced pursuant to the Nursing Home Care Act, regardless of
whether the contract involves arbitration. Accordingly, a contract that never mentions
arbitration but instead requires a bench trial, or some other form of alternative dispute
resolution, rather than a trial by a jury, would be voided by the sections to the same extent
as a contract containing an arbitration agreement. Second, to the extent that the sections may
void agreements calling for arbitration, this is an incidental, tangential effect of the sections,
not their primary purpose, and so the sections can hardly be said to "specifically target
arbitration agreements." To the contrary, the sections apply to all contracts involving
nursing home residents, not merely to contracts invoking arbitration. Accordingly, the rule
stated in Casarotto and Thomas that state law is applicable and is not preempted by the
Federal Arbitration Act if that law arose to govern issues concerning the validity,
revocability, and enforceability of contracts generally (see Doctor's Associates, Inc. v.
Casarotto, 517 U.S. 681, 685, 134 L. Ed. 2d 902, 907, 116 S. Ct. 1652, 1655 (1996)
(quoting Perry v. Thomas, 482 U.S. 483, 492 n.9, 96 L. Ed. 2d 426, 437 n.9, 107 S. Ct.
2520, 2527 n.9 (1987)) supports the position of the plaintiff, not of the defendant. Although
it is certainly true that if the Nursing Home Care Act expressly directed its prohibitions only
at arbitration agreements it would, as the defendant contends, run afoul of the Federal
Arbitration Act, the Nursing Home Care Act does no such thing. Applying the Casarotto
and Thomas rule to the facts in this case, we conclude that because the public policy
expressed in sections 3-606 and 3-607 concerns the validity, revocability, and enforceability
of contracts generally and does not specifically target arbitration agreements, it presents a
7
legitimate state law contract defense of a violation of public policy to the agreements and
so voids the agreements. See also Kinkel v. Cingular Wireless LLC, 223 Ill. 2d 1, 15-19
(2006).
Although the trial judge limited his preemption analysis to the survival action,
denying the defendant's motion on the wrongful death action on different grounds, we
conclude that the foregoing analysis applies equally to both counts of the plaintiff's
complaint and precludes the enforcement of the agreements with regard to the plaintiff's
entire complaint. Accordingly, our conclusion that the trial judge did not err when he found
that the Federal Arbitration Act did not preempt the generally applicable state law contract
defense of public policy, and thus that the agreements were void as against the public policy
of this state, renders it unnecessary for us to consider the defendant's arguments with regard
to the alternative bases on which the trial court denied the defendant's motion: a lack of
mutuality, a lack of interstate commerce, and no requirement that a plaintiff bringing a
wrongful death claim on behalf of an estate proceed according to the agreements. See Evans
v. Lima Lima Flight Team, Inc., 373 Ill. App. 3d 407, 418 (2007) (the appellate court may
affirm the judgment of a trial court on any basis warranted by the record).
CONCLUSION
For the foregoing reasons, the circuit court's order denying the defendant's motion to
compel arbitration is affirmed.
Affirmed.
STEWART, P.J., and GOLDENHERSH, J., concur.
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NO. 5-07-0392
IN THE
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
___________________________________________________________________________________
SUE CARTER, Special Administrator of the
) Appeal from the
Estate of Joyce Gott, Deceased, ) Circuit Court of
) Marion County.
Plaintiff-Appellee, )
)
v. ) No. 06-L-75
)
SSC ODIN OPERATING COMPANY, LLC, )
d/b/a Odin Healthcare Center, ) Honorable
) David L. Sauer,
Defendant-Appellant. ) Judge, presiding.
___________________________________________________________________________________
Opinion Filed: April 4, 2008
___________________________________________________________________________________
Justices: Honorable Stephen L. Spomer, J.
Honorable Bruce D. Stewart, P.J.,
Honorable Richard P. Goldenhersh, J.,
Concur
___________________________________________________________________________________
Attorney W. Jeffrey Muskopf, Lashly & Baer, P.C., 714 Locust Street, St. Louis, MO
for 63101-1699
Appellant
___________________________________________________________________________________
Attorney Staci M. Yandle, The Law Offices of Staci M. Yandle, LLC, 7012 West Main
for Street, Belleville, IL 62223
Appellee
___________________________________________________________________________________