Ggnsc Holdings, LLC v. Lamb Ex Rel. Williams
2016 Ark. 101
| Ark. | 2016Background
- Five former nursing-home residents (or their representatives) filed a class-action complaint against GGNSC alleging claims arising from admission/agreement matters; GGNSC moved to compel arbitration for five residents (Lamb, Brown, Richey, Robinson, Roche).
- Arbitration clause: mandatory, binding arbitration under the National Arbitration Forum (NAF) Code of Procedure; contract stated arbitration waived jury trial and was governed by the FAA.
- Circuit court initially denied GGNSC’s motions to compel; this court reversed and remanded in Chappel (2014) for the trial court to first address validity of the arbitration agreements before considering contract defenses.
- On remand, the circuit court found three agreements invalid for lack of authority, found Lamb’s and Robinson’s agreements valid but refused to compel arbitration for them on grounds of impossibility of performance (NAF unavailable) and unconscionability (costs/NAF fee schedule).
- On appeal, this court (majority) held: (1) Williams, as guardian of Lamb’s person and estate, had authority to execute the arbitration agreement; (2) the unavailability of NAF does not make the arbitration agreement impossible to perform; and (3) the agreements were not procedurally or substantively unconscionable — reversed and remanded to compel arbitration. Justices Danielson and Wynne dissented.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of guardian’s signature to bind ward to arbitration | Lamb: guardian lacks authority to waive ward’s jury right or enter arbitration not necessary to care | GGNSC: guardian of person and estate has broad authority (statutory duties include prosecuting/defending claims); precedent allows guardian to sign arbitration | Held: Guardian (Williams) had authority to sign; agreement valid |
| Impossibility of performance because NAF unavailable | Lamb: NAF’s unavailability/consent-judgment with Minnesota AG makes arbitration impossible under the contract | GGNSC: impossibility defense fails; arbitration clause survives even if NAF unavailable; parties may use alternate forum/procedures | Held: Impossibility defense rejected; agreement not impossible to perform (relied on Arnold) |
| Procedural unconscionability (form, unequal bargaining power) | Lamb: preprinted nonnegotiable form, disparity in bargaining power, residents unaware of NAF relationship | GGNSC: form explicitly labeled not a condition of admission; agreement warned and certified as explained/read | Held: Procedural unconscionability not shown; signatory certifications and circumstances insufficient |
| Substantive unconscionability / constitutionality due to arbitration costs (NAF fee schedule) | Lamb: cost structure is prohibitive, denies access to justice, violates state constitutional guarantee of redress without purchase | GGNSC: public policy favors arbitration as cost-efficient; fee concerns do not render clause unenforceable | Held: Substantive unconscionability and constitutional challenge rejected; arbitration clause enforceable |
Key Cases Cited
- GGNSC Holdings, LLC v. Chappel, 453 S.W.3d 645 (Ark. 2014) (prior remand ordering threshold validity determination)
- Courtyard Gardens Health & Rehab., LLC v. Arnold, 485 S.W.3d 669 (Ark. 2016) (NAF unavailability does not render same arbitration clause impossible to perform)
- HPD, LLC v. TETRA Techs., Inc., 424 S.W.3d 304 (Ark. 2012) (threshold questions: validity of agreement and arbitrability; court decides validity unless clearly delegated)
- Carmody v. Raymond James Fin. Servs., Inc., 281 S.W.3d 721 (Ark. 2008) (guardian of the estate may bind ward to arbitration for matters within estate duties)
- LegalZoom.com, Inc. v. McIllwain, 429 S.W.3d 261 (Ark. 2013) (procedural vs. substantive unconscionability explained)
- Alltel Corp. v. Sumner, 203 S.W.3d 77 (Ark. 2005) (elements of an enforceable arbitration agreement mirror contract elements)
- Poff v. Brown, 288 S.W.3d 620 (Ark. 2008) (burden to prove unconscionability lies with party asserting it)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (doubts as to arbitrability resolved in favor of arbitration)
- Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681 (1996) (generally applicable contract defenses apply to arbitration clauses)