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NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
CHARLES DAVIS, ADMINISTRATOR OF : IN THE SUPERIOR COURT OF
THE ESTATE OF DORA RAMEY, : PENNSYLVANIA
DECEASED :
:
v. :
:
1245 CHURCH ROAD OPERATIONS, :
LLC D/B/A HILLCREST CENTER, :
GENESIS PA HOLDINGS LLC., AND :
ALBERT EINSTEIN MEDICAL CENTER :
:
APPEAL OF: 1245 CHURCH ROAD :
OPERATIONS, LLC D/B/A HILLCREST : No. 3539 EDA 2018
CENTER AND GENESIS PA HOLDINGS
LLC.
Appeal from the Order Entered November 20, 2018
in the Court of Common Pleas of Philadelphia County
Civil Division at No(s): No.: 1712 01820
BEFORE: PANELLA, P.J., STRASSBURGER, J.* and COLINS, J.*
MEMORANDUM BY STRASSBURGER, J.: Filed: April 16, 2020
1245 Church Road Operations, LLC, d/b/a Hillcrest Center (Hillcrest)
and Genesis PA Holdings LLC (Genesis) (collectively, Appellants) appeal from
the November 20, 2018 order overruling Appellants’ preliminary objections
in the nature of a petition to transfer the matter to mandatory arbitration.
We vacate the order and remand.
The instant case stems from an action filed by Dora Ramey (Ramey)
against Appellants and Albert Einstein Medical Center (AEMC)1 involving
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1 AEMC is not a party to the instant appeal and did not file a brief.
*Retired Senior Judge assigned to the Superior Court.
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claims of negligence and corporate negligence arising from injuries she
sustained between December 2016 and June 2017, while in the care of
Hillcrest and AEMC.
Prior to her admittance at Hillcrest or AEMC, Ramey lived with her son,
Charles Davis (Davis), and attended an adult daycare center.2 While at the
daycare center in the spring of 2015, Ramey developed pressure sores.
Ramey was admitted to AEMC for diagnosis and treatment of the sores.
Following discharge, AEMC advised Davis that Ramey could not return to his
home and instead must be admitted to a nursing care facility. AEMC
provided Davis with a list of nursing facilities near his home, and Davis
chose Hillcrest.
Upon visiting Hillcrest to begin the admissions process, Davis was
presented with admission paperwork,3 which included a document entitled
“Voluntary Binding Arbitration Agreement” (Arbitration Agreement). The
Arbitration Agreement requires the parties to submit to arbitration all
disputes arising out of Ramey’s stay at Hillcrest. Immediately below the
title, in bold typeface and underlined, the document states: “If this
Agreement is not signed, the Patient will still be allowed to be cared
for in this Center.” Praecipe to Attach Exhibits to Preliminary Objections,
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2 Ramey passed away on August 2, 2018. On November 29, 2018, Davis
filed a praecipe to substitute Davis as administrator of Ramey’s estate.
3 Genesis drafted the admissions paperwork.
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4/2/2018, Exhibit B (Arbitration Agreement at 1). Paragraph 3 is entitled
“Voluntary Agreement” and again states that “[s]igning this Agreement is
voluntary and not a condition of the Patient’s admission into this Center.
The Patient’s ability to be cared for in this Center will not be affected in any
way if this Agreement is not signed.” Id. Immediately following paragraph
3 is paragraph 4, which states that selection of Hillcrest as the patient’s care
facility is voluntary, and advises there are other care facilities available
nearby. Id. Finally, above the signature line, in bold typeface and
capitalized letters, the document states: “THIS AGREEMENT IS
VOLUNTARY AND IS NOT A PRECONDITION TO RECEIVING SERVICES
AT [Hillcrest].” Id. at 4. It also states in three locations that signing this
agreement will result in the waiver of a right to trial by judge or jury,
clarifying that waiver means “giving up” in paragraph 5. Id. at 1, 4.
Prior to Davis’s signing of the Arbitration Agreement, Ramey granted
Davis certain powers pursuant to a written general durable power of
attorney, dated August 27, 1996. Davis presented this power of attorney
during his meeting at Hillcrest. Davis was permitted to take the documents
with him and fax them back once signed. Davis signed, as Ramey’s power
of attorney,4 the Arbitration Agreement, along with the other admission
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4 There is no dispute regarding Davis’s authority to sign the Arbitration
Agreement on behalf of Ramey.
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paperwork, and faxed the completed documents to Hillcrest.5 Ramey was
admitted to Hillcrest on April 7, 2015.
On December 24, 2016, a Stage II pressure wound was discovered on
Ramey’s sacrum. She was transferred from Hillcrest to AEMC for treatment.
She subsequently returned to Hillcrest, where she remained until she was
transferred to Wesley Enhanced Living on June 22, 2017.
On December 14, 2017, Ramey filed a praecipe for writs of summons
against Appellants and AEMC. The writs of summons were issued and
served. On January 12, 2018, Ramey filed a complaint against Appellants
and AEMC, as indicated hereinabove.
On March 29, 2018, Appellants filed preliminary objections, seeking to
transfer the matter to arbitration based upon the Arbitration Agreement.
Ramey filed an answer on April 18, 2018, arguing that the preliminary
objections should be overruled because the Arbitration Agreement was
unenforceable as a contract of adhesion. See Memorandum in Support of
Answer to Preliminary Objections, 4/18/2018, at 3-6.
In support of their objections, Appellants submitted an affidavit from
Gemma Frankhouser, Senior Admissions Director at Hillcrest, and a
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5The admissions paperwork, including the Arbitration Agreement, is signed
but not dated. The only document with a date is the “Representative
Designation” document, dated April 13, 2015, next to Davis’s signature.
Thus, it appears from the record that Davis faxed the paperwork back no
earlier than April 13, 2015.
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videotaped deposition of Davis. In her affidavit, Frankhouser stated that she
remembered Davis, but did not have a specific recollection of her admissions
conversation with him. Based on her review of Ramey’s file, she determined
that she discussed various forms with Davis, including the Arbitration
Agreement, and that both Davis and she signed these forms. Though her
specific recollection was lacking, she stated that her normal practice
regarding the Arbitration Agreement included (1) ensuring that the individual
signing had the authority to do so; (2) explaining the terms of the
Arbitration Agreement, including that it was not required for admission to
Hillcrest; (3) informing the signatory that he could review the Arbitration
Agreement with an attorney; and (4) answering any other questions a
signatory may have. Affidavit of Gemma Frankhouser, 5/21/2018, at 1-2.
In his deposition, Davis stated that he hired an attorney to help him
with the admissions process of placing his mother in a nursing home.
Deposition of Davis, 7/20/2018, at 17. According to Davis, his first
interactions with Hillcrest, via his attorney, were “terrible.” Id. at 14. When
Davis visited Hillcrest, though, his mother was approved for admission that
day. Id. at 16-17. On that day, he believed he met with two women who
presented him with various forms, including the Arbitration Agreement. Id.
at 44-45. He did not remember if anyone explained the forms to him, nor
did he recall filling out the forms. Id. at 19-20, 35-36, 39-41, 43, 48.
According to Davis, he “was in a state of real confusion[,]” “mental
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discombobulation[,]” and “such a fog” that he did not remember, and would
not have cared, if anyone had explained the forms to him. Id. at 20, 46,
48. He stated that he would have signed anything to get his mother
admitted to Hillcrest. Id. at 20-21, 44, 46, 48.
Upon reviewing the forms during his deposition, Davis recalled that he
took the forms home, filled them out, signed them, and faxed them to
Hillcrest upon completion. Id. at 19-20, 35-36, 39-41, 44-45. He stated
that he did not read them before signing, and that he had no time to discuss
the admission process with anyone. Id. at 21, 38, 47.
Davis also stated that he helped his mother with her financial affairs
and took care of his own affairs, including running a business where he rents
homes to tenants via standardized pre-written leases. Id. at 25-34, 49-51.
The trial court heard oral argument on September 6, 2018. On
November 20, 2018, the trial court overruled the preliminary objections.
Trial Court Order, 11/20/2018. This timely filed notice of appeal followed.6
Appellants raise four questions for our consideration on appeal. 7 In
essence, all four questions raise a claim that the trial court erred in
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6 “An order overruling preliminary objections seeking to compel arbitration is
immediately appealable as an interlocutory appeal as of right pursuant to 42
Pa.C.S.[] § 7320(a) and Pa.R.A.P. 311(a)(8).” Petersen v. Kindred
Healthcare, Inc., 155 A.3d 641, 644 n.1 (Pa. Super. 2017).
Both Appellants and the trial court have complied with the mandates of
Pa.R.A.P. 1925.
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overruling Appellants’ preliminary objections and refusing to enforce the
Arbitration Agreement. Appellants’ Brief at 4-5.
“[O]ur review of a claim that the trial court improperly denied
preliminary objections in the nature of a petition to compel arbitration is
limited to determining whether the trial court’s findings are supported by
substantial evidence and whether the trial court abused its discretion in
denying the petition.” Cardinal v. Kindred Healthcare, Inc., 155 A.3d 46,
49–50 (Pa. Super. 2017). “We employ a two-part test to determine whether
the trial court should have compelled arbitration: 1) whether a valid
agreement to arbitrate exists, and 2) whether the dispute is within the scope
of the agreement.” Washburn v. Northern Health Facilities, Inc., 121
A.3d 1008, 1012 (Pa. Super. 2015) (citation omitted).
“When addressing the issue of whether there is a
valid agreement to arbitrate, courts generally should apply ordinary state-
law principles that govern the formation of contracts, but in doing so, must
give due regard to the federal policy favoring arbitration.” Cardinal, 155
A.3d at 53 (citation omitted). “The only exception to a state’s obligation to
7 While Appellants raised four questions in their statement of questions
section of their brief, they divided their argument section into only two
parts, in violation of Pa.R.A.P. 2119(a). However, because Appellants’
questions can be consolidated into one claim that the trial court erred in
overruling the preliminary objections and failing to enforce the Arbitration
Agreement, and the argument section addresses that claim, we do not find
waiver for failure to comply with the Rules of Appellate Procedure.
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enforce an arbitration agreement is provided by the savings clause, which
permits the application of generally applicable state contract law defenses
such as fraud, duress, or unconscionability, to determine whether a valid
contract exists.” Taylor v. Extendicare Health Facilities, Inc., 147 A.3d
490, 509 (Pa. 2016). “Concerning the defense of unconscionability, we have
explained that ‘[u]nconscionability has generally been recognized to include
an absence of meaningful choice on the part of one of the parties
[(procedural unconscionability),] together with contract terms which are
unreasonably favorable to the other party [(substantive
unconscionability)].’” Kohlman v. Grane Healthcare Co., ___ A.3d ___,
2020 WL 611085, at *5 n.8 (Pa. Super. 2020) (quoting Cardinal, 155 A.3d
at 53 (citation omitted)).
In its Pa.R.A.P. 1925(a) opinion, the trial court explained that it
overruled Appellants’ objections because it found the Arbitration Agreement
procedurally and substantively unconscionable, and therefore unenforceable,
based on the manner in which the document was presented, the limitation
on damages, and because the document was a standardized form
“concerning a legal matter outside the ken of the ordinary consumer.” Trial
Court Opinion, 5/2/2019, at 7-11. Specifically, the trial court considered the
evidence presented as follows.
Davis’[s] description of his thought processes when signing the
documents demonstrates that his bargaining power suffered
from lack of experience and sophistication relative to that of the
drafter, [] Genesis []; Davis signed numerous documents he did
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not understand because he believed they were the key to
obtaining care for his mother. [AEMC] had discharged his
mother with the express instruction that she not go home and
that Davis admit her immediately to a nursing home.
Accordingly, his need to find a placement was urgent. He chose
Hillcrest from a list provided by [AEMC] because it was closest to
his home. The [trial c]ourt credit[ed] his testimony that he
believed that if he did not sign all the documents, his mother
would not receive care.
Davis’[s] account of his interaction with Hillcrest is largely
uncontradicted. Frankhouser does not recall meeting with or
instructing Davis about the [Arbitration] Agreement, but asserts
that upon reviewing her records, she “determined” that she must
have done so, in accordance with her customary practice. This
conclusory assertion is unaccompanied by any corroborative
evidence of documents typically generated in a transaction that
is undeniably important to both parties, such as
contemporaneous notes, memoranda, correspondence, email,
computer data or calendar entries[.] She fails to even attach or
identify copies of any material in Ramey’s file that is the basis of
her “determination.” For this reason, [the trial c]ourt [was]
unpersuaded that Frankhouser’s account of her encounter with
Davis is accurate. Instead, the [trial c]ourt credits Davis’[s]
recollection, which is direct, specific and emotional. The [trial
c]ourt finds that the [Arbitration] Agreement is procedurally
unconscionable because it was presented to Davis in a woefully
deficient manner.
***
[The limitation on damages outlined in paragraph 11 of the
Arbitration Agreement] indisputably favors Hillcrest[.] … Nothing
in the boldface notices in the [Arbitration] Agreement about the
signatory’s waiver of a right to a trial by judge or jury alerts the
reader to the additional substantive and important limitation in
paragraph 11 on a signatory’s rights to a full remedy. The [trial]
court finds this [] dispositive and finds that the [Arbitration]
Agreement is substantively unconscionable.
Trial Court Opinion, 5/2/2019, at 8-10.
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Appellants argue that the trial court erred in finding the Arbitration
Agreement unenforceable. According to Appellants, the evidence established
that “the steps taken by [Hillcrest] to obtain [] Davis’s signature were fair
and offered him a definitive choice.” Appellants’ Brief at 32-33. Appellants
further argue that Davis’s choice to sign the Arbitration Agreement without
reading it does not mean that he was not offered the opportunity to do so,
and his taking the documents home and then faxing them, completed and
signed, to Hillcrest, negates any claim that Hillcrest pressured him into
signing the Arbitration Agreement. Id. at 33.
We first review the trial court’s finding of procedural unconscionability.
In finding procedural unconscionability, the trial court credited Davis’s
statements that he believed his mother would not be admitted without
signing the documents and that he was in a fog as he proceeded through the
admissions process. Despite Davis’s erroneous assumption, the record
reveals that the Arbitration Agreement states three times, twice in distinct
typeface, that the agreement to arbitrate is voluntary and that receiving
care at Hillcrest is not contingent upon signing. It was revocable within 30
days of signing, and states that the signatory has a right to have the
agreement reviewed by an attorney. Notably, Davis hired an attorney to
help him with the paperwork for admitting his mother to Hillcrest, and
employed that attorney to speak with Hillcrest about admission prior to his
visiting. While it could be presumed that Davis had some familiarity with
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contract terminology pursuant to his rental business, he also was an
individual who was comfortable seeking legal advice when he deemed it
necessary. As explained by Davis, he “manage[s] things to a point that
where [if he] need[s] some legal advice, [he] go[es] to a lawyer or someone
that has more knowledge than [he.]” Deposition, 7/20/2018, at 17-18.
In the instant case, Davis took the admissions paperwork home with
him, completed it, and faxed it back six days after Ramey was admitted to
Hillcrest. Thus, he had the opportunity to have his attorney review the
documents if he so chose. Notably, in filling out the admissions paperwork,
Davis did not rubber-stamp each document. When given the option to check
yes or no, he answered no to specific items, declining to give permission to
Hillcrest to open Ramey’s personal mail, do her personal laundry, or handle
her personal funds. See Admission Agreement; Resident Fund Accounts.
Thus, it is apparent from the record that he reviewed at least the Admission
Agreement and the Resident Fund Accounts document. Accordingly, we
conclude that his assertion that he did not have time to discuss the
admission paperwork with anyone, or review it himself, is refuted by the
record and not supported by substantial evidence.
Furthermore, our review of the record indicates that this is not a case
of non-disclosure on the part of Appellants, but rather a case where Davis
did not put forth any effort to read or understand the Arbitration Agreement.
Davis’s failure to notice the Arbitration Agreement’s clear statements that it
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did not need to be signed for Ramey to receive care, was due to his choice
to sign it without reading it. His willful failure to read the Arbitration
Agreement does not render it procedurally unconscionable.
“The law of Pennsylvania is clear. One who is about to sign a
contract has a duty to read that contract first.” As this Court has
stated:
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”; it is considered “supine negligence.”
Hinkal v. Pardoe, 133 A.3d 738, 743 (Pa. Super. 2016) (citations omitted).
Accordingly, we conclude that the trial court’s finding that Davis did not have
a meaningful choice in entering into the Arbitration Agreement was not
supported by substantial evidence, and therefore the trial court abused its
discretion in overruling the preliminary objections on the basis of procedural
unconscionability. Cardinal, 155 A.3d at 49–50. See also Wert v.
Manorcare of Carlisle PA, LLC, 124 A.3d 1248, 1260 (Pa. 2015) (Opinion
Announcing the Judgment of the Court) (“[A] similarly situated non-drafting
party could not use her failure to read as a means of disavowing an
otherwise valid arbitration agreement.”).
We next consider the trial court’s finding of substantive
unconscionability, mindful of the following.
In MacPherson [v. Magee Memorial Hosp. for
Convalescence, 128 A.3d 1209 (Pa. Super. 2015) (en banc),]
this Court examined [an] arbitration agreement and concluded
that it was neither procedurally nor substantively
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unconscionable. In reaching that conclusion, we noted the
following terms contained in the agreement: (1) the parties shall
pay [] their own fees and costs, similar to civil litigation practice
in common pleas court; (2) a conspicuous, large, bolded
notification that the parties, by signing, are waiving the right to
a trial before a judge or jury; (3) a notification at the top of the
agreement, in bold typeface and underlined, that it is voluntary,
and if the patient refuses to sign it, “the Patient will still be
allowed to live in, and receive services” at the facility; (4) a
provision that the facility will pay the arbitrators fees and costs;
(5) a statement that there are no caps or limits on
damages other than those already imposed by state law;
and (6) a provision allowing the patient to rescind within thirty
days.
Cardinal, 155 A.3d at 53 (emphasis added).
In the instant case, the Arbitration Agreement contains substantially
similar terms as the ones outlined in MacPherson, save for paragraph 11,
which sets forth the following limitation on damages.
11. Limitation on Damages. The Arbitrator or Arbitration Panel is
authorized to award compensatory and punitive damages to the
extent permitted by the substantive state law for the state in
which [Hillcrest] is located. However, any award (including
compensatory and punitive damages, fees and other costs),
regardless of the nature of the dispute, shall not exceed the
lesser of: (a) 3 times the amount of the prevailing party’s
compensatory damages or (b) any applicable caps on damages
under the state law where [Hillcrest] exists. All disputes
regarding availability of compensatory and punitive damages
under applicable state law shall be decided by the Arbitrator or
Arbitration Panel. If any terms of this Section titled
“Limitation on Damages” is determined to be invalid or
unenforceable for any reason, then the parties’ intent is
that only such terms be severed, and this Agreement’s
remaining terms shall be enforced.
Arbitration Agreement at 2 (emphasis added). The trial court found that this
limitation on damages clause made the Arbitration Agreement substantively
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unconscionable. Trial Court Opinion, 5/2/2019, at 10. What the trial court
ignored, though, is that Genesis included a severability clause at the end of
paragraph 11, as well as a general severability clause in paragraph 17.
Arbitration Agreement at 2-3.
Where the “arbitration provision is separate and distinct from the
damage limitation portion of the agreement, both location-wise and
functionally[, such that] the damage limitation may be stricken from the
agreement without affecting the parties’ agreement to arbitrate[,]” and the
agreement “contains an explicit severability clause[,]” this Court has held
that a limitation on damages clause may be severed, allowing the rest of the
agreement to remain enforceable. Fellerman v. PECO Energy Co., 159
A.3d 22, 29 (Pa. Super. 2017). In the instant case, the limitation on
damages clause is separate and distinct from the provisions governing
arbitration, and the portion of paragraph 11 limiting damages “may be
stricken from the agreement without affecting the parties’ agreement to
arbitrate.” Id. Additionally, Genesis included explicit severability clauses
within paragraphs 11 and 17. Accordingly, the trial court erred in not
severing this portion of the agreement and permitting the remainder of the
agreement to remain enforceable. Id.
Based on the foregoing, we conclude that the trial court’s finding of
unconscionability, rendering the otherwise valid Arbitration Agreement
unenforceable, was not supported by substantial evidence.
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See Cardinal, 155 A.3d at 54 (finding that where the agreement made clear
that the parties were giving up their right to trial the agreement was not
unconscionable). Accordingly, we vacate the order overruling Appellants’
preliminary objections and remand to the trial court.
Order vacated. Case remanded. Jurisdiction relinquished.
Judge Colins joins in this memorandum.
President Judge Panella files a dissenting statement.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/16/20
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