2022 IL App (1st) 220508
Ill. App. Ct.2022Background
- Margaret Hostetler resided at Alden-Poplar Creek nursing home; her son Paul Calusinski (acting under power of attorney, later independent administrator) signed admission documents including a stand-alone arbitration agreement.
- The arbitration agreement required plaintiff to resolve claims arising from Hostetler’s care by mediation/arbitration, barred class actions, and expressly waived any attorney fees under the Illinois Nursing Home Care Act; defendants could sue for nonpayment in court.
- Hostetler developed an unstageable pressure sore, required debridement, and died; Calusinski sued for wrongful death and survival alleging negligent care.
- Defendants moved to compel arbitration; the trial court initially granted that motion, then allowed additional discovery and granted plaintiff’s motion to reconsider, finding the arbitration agreement substantively unconscionable.
- The trial court concluded the waiver of statutorily mandated attorney fees lacked adequate consideration, refused to sever the offending provision, and denied the motion to compel arbitration. Defendants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether arbitration agreement is enforceable where it waives statutory attorney fees | Calusinski: waiver of Nursing Home Care Act attorney fees is invalid and agreement is unconscionable | Alden: agreement is valid and enforceable; waiver should be resolved in arbitration | Court: unenforceable — waiver of statutory fees lacked adequate consideration; substantively unconscionable |
| Who decides enforceability (court vs arbitrator) | Calusinski: court may decide validity when party specifically challenges the arbitration agreement | Alden: arbitrator should decide arbitrability and ancillary issues | Court: when validity of arbitration agreement is specifically challenged, court must decide before compelling arbitration |
| Severability of offending provision | Calusinski: court may refuse severance and invalidate agreement | Alden: any severability question should be for arbitrator | Court: trial court did not abuse discretion in refusing to sever; defendants forfeited argument by not adequately developing it on appeal |
Key Cases Cited
- Kinkel v. Cingular Wireless, LLC, 223 Ill. 2d 1 (2006) (defines substantive unconscionability as terms so one-sided they oppress or unfairly surprise and create overall imbalance)
- Hubbert v. Dell Corp., 359 Ill. App. 3d 976 (2005) (an unconscionable arbitration agreement is unenforceable)
- McInerney v. Charter Golf, Inc., 176 Ill. 2d 482 (1997) (consideration exists where a promise or act is bargained-for exchange)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (when a party specifically challenges the validity of an arbitration agreement, courts must resolve that challenge before compelling arbitration)
- Carbajal v. H&R Block Tax Services, Inc., 372 F.3d 903 (7th Cir. 2004) (distinguishes arbitrability of ancillary arbitration-clause provisions from challenges to an entire arbitration agreement)