599 S.W.3d 363
Ark. Ct. App.2020Background
- Mary Elizabeth Pelton was admitted to Lake Hamilton Health and Rehab in January 2014 and died in September 2016; her daughter D’Ann Pelton Alexander signed admission and arbitration agreements as Mary’s attorney-in-fact.
- The arbitration agreement required binding arbitration for any claim involving an amount in controversy of $30,000 or more, waiving the right to a court/jury for such claims.
- In December 2017 D’Ann, as special administrator of Mary’s estate, sued Lake Hamilton for negligence and medical malpractice arising from alleged mistreatment and injuries.
- D’Ann moved for a declaratory judgment that the arbitration agreement was invalid for lack of mutuality of obligations; Lake Hamilton moved to compel arbitration.
- The Garland County Circuit Court denied the motion to compel, finding the arbitration clause lacked mutuality; the Court of Appeals reviewed the denial de novo and affirmed, holding the clause unenforceable under Arkansas law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration agreement is a valid, mutual contract or lacks mutuality of obligations | The $30,000 threshold is crafted to force resident claims (typically >$30k) into arbitration while permitting the nursing home to litigate its likely claims (typically < $30k); thus it is not mutual | The monetary threshold applies equally to both parties; there are situations where the nursing home could have claims > $30k and residents could have claims < $30k, so obligations are mutual | Agreement lacks mutuality of obligations, is invalid and unenforceable; denial of motion to compel arbitration affirmed |
Key Cases Cited
- Robinson Nursing & Rehab. Ctr., LLC v. Phillips, 586 S.W.3d 624 (Ark. 2019) (Ark. Supreme Court holds $30,000-threshold arbitration agreements lack mutuality and are unenforceable)
- Hickory Heights Health & Rehab, LLC v. Adams, 566 S.W.3d 134 (Ark. Ct. App. 2018) (Court of Appeals held same-form $30,000 arbitration agreement lacked mutuality)
- Regional Care of Jacksonville, LLC v. Henry, 444 S.W.3d 356 (Ark. 2014) (Ark. Supreme Court recognizing lack of mutuality where arbitration shields facility while reserving court access for facility)
- E-Z Cash, 60 S.W.3d 436 (Ark. 2001) (Supreme Court precedent addressing mutuality concerns in arbitration/contract contexts)