Crossman v. Life Care Centers of America, Inc.
738 S.E.2d 737
N.C. Ct. App.2013Background
- Ms. Crossman, as administrator of her husband Lionel Crossman’s estate, sued Life Care facilities for wrongful death for care given July 2007–March 2009.
- Mr. Crossman signed a voluntary arbitration agreement in 2004 upon entering Life Care, designating AAA arbitration by three AAA-arbitrator panel; Ms. Crossman did not sign.
- Defendants sought to compel arbitration based on the 2004 agreement; the trial court halted merits discovery pending arbitration.
- The trial court later denied arbitration enforcement, finding the agreement unenforceable as impossible to perform due to its terms and because decedent-signatory arbitration cannot bind a wrongful death beneficiary.
- Appellate briefing centered on whether the AAA Healthcare Policy Statement (effective 2003) rendered the agreement unenforceable, and whether exceptions or severability could save it.
- The appellate court affirmed the trial court, concluding the agreement is unenforceable as impossible to perform because it required AAA arbitrators and AAA administration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of the arbitration agreement under AAA policy | Crossman argues the agreement cannot be enforced due to the AAA policy and impossibility to perform | Defendants contend the agreement can be enforced notwithstanding the policy | Unenforceable; impossible to perform due to AAA-arbitrator requirement. |
| Binding effect of decedent’s arbitration assent on a wrongful death beneficiary | Crossman as beneficiary should not be bound by Mr. Crossman’s assent | Defendant argues beneficiary is bound by decedent’s assent | Not addressed because the agreement is unenforceable on other grounds. |
| Applicability of N.C. Gen. Stat. § 1-569.11 saving arbitration | Section saves agreed method if it fails; potential remedy | Statute not applicable; issue is unavailability of AAA-mandated pool | Not applicable; statute addresses method failure, not unavailability of AAA pool. |
| Effect of severability clause on enforceability | Severability could save enforceable parts | Severability would require rewriting the clause | Severability cannot save the agreement; impossible-to-perform provision stands. |
Key Cases Cited
- HCW Ret. & Fin. Servs., LLC v. HCW Employee Benefit Servs., LLC, 731 S.E.2d 181 (N.C. App. 2012) (intermediate appellate review of arbitration denial; strong public-policy considerations emphasize contract law principles in arbitration)
- Tillman v. Commercial Credit Loans, Inc., 655 S.E.2d 362 (N.C. 2008) (conclusions of law de novo on appeal from trial court findings of fact)
- Lumbee River Elec. Membership Corp. v. City of Fayetteville, 309 N.C. 726 (N.C. 1983) (standards for review of arbitration and contract terms)
- Carolina Power & Light Co. v. City of Asheville, 597 S.E.2d 717 (N.C. 2004) (contract enforceability and contract-law equivalence with other contracts)
- Westmoreland v. High Point Healthcare Inc., 721 S.E.2d 712 (N.C. App. 2012) (pre-dispute arbitration agreement; AAA policy does not automatically preclude arbitration)
- Blue Cross Blue Shield of Ala. v. Rigas, 923 So.2d 1077 (Ala. 2005) (policy statements on administrative proceeding; relevance to arbitration feasibility)