Figueroa v. THI of New Mexico
306 P.3d 480
N.M. Ct. App.2012Background
- THI operates Casa Arena Blanca nursing home in Alamogordo, NM; Ms. Urbina signed admissions papers for Ms. Figueroa, including an arbitration clause.
- Arbitration clause states arbitration is a precondition for medical treatment/admission and defines broad “Disputes” subject to arbitration, with specific exemptions.
- Ms. Figueroa resided Sept 2, 2008–Jan 18, 2009; she died; her son Didier, as successor, sued for wrongful death, personal injuries, negligence, and related claims.
- District court held the arbitration clause substantively unconscionable under Cordova v. World Finance Corp. of NM and invalidated it; case stayed.
- Defendant appealed arguing FAA preempts NM unconscionability analysis; the court affirmed that NM unconscionability analysis applies and the clause is substantively unconscionable.
- Court addressed severability of the arbitration provision and concluded the savings clause cannot save the remaining unconscionable terms; Cordova not retroactive here; judgment affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is NM unconscionability analysis preempted by the FAA? | NM law applies to validity of the contract. | FAA preempts state unconscionability analysis that invalidates arbitration. | Not preempted; NM unconscionability analysis applies. |
| Is the arbitration clause substantively unconscionable due to one-sided exemptions? | Terms favor nursing home; exemptions insufficient. | Exemptions and bilateral aspects render it not wholly one-sided. | Yes, substantively unconscionable; one-sided in favor of Defendant. |
| Can the savings clause sever the unconscionable terms and leave arbitration intact? | Severance should save the rest of the agreement. | Savings clause allows severance. | No severance; entire arbitration clause deemed unconscionable. |
| Is Cordova retroactive or retroactive as applied to this case? | Cordova applied; no retroactive issue to bar enforcing the rule. |
Key Cases Cited
- Cordova v. World Finance Corp. of New Mexico, 146 N.M. 256, 208 P.3d 901 (2009-NMSC-021) (substantively unconscionable one-sided arbitration terms)
- Rivera v. American Gen. Fin. Servs., Inc., 149 N.M. 66, 243 P.3d 1148 (2011-NMSC-033) (unconscionability analysis applied to bilateral arbitration terms)
- Concepcion v. AT&T Mobility LLC, 563 U.S. 333 (2011) (class action waiver rule preempted in Discover Bank context (FAA))
- Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681 (1996) (arbitration note requirements not preempted by FAA when not targeted to arbitration)
- Fiser v. Dell Computer Corp., 144 N.M. 464, 188 P.3d 1215 (2008-NMSC-046) (statutory class-action waiver may be unconscionable; not preempted by FAA)
- Cordova v. World Finance Corp. of NM (related citation), 146 N.M. 256, 208 P.3d 901 (2009-NMSC-021) (unconscionability applies to contracts generally; not a special arbitration rule)