566 S.W.3d 134
Ark. Ct. App.2018Background
- Ida Adams, a nursing-home resident at Hickory Heights; her son and guardian, Lemarion Adams, sued on her behalf alleging negligence, medical malpractice, breach of contract, and ADTPA violations.
- At admission, Lemarion signed an arbitration addendum stating disputes over $30,000 shall be resolved exclusively by binding arbitration and that parties waive jury trial.
- Hickory Heights moved to compel arbitration and stay proceedings; Lemarion opposed, arguing lack of mutuality and unconscionability.
- Circuit court denied the motion to compel arbitration without a written opinion; Hickory Heights appealed.
- The dispositive legal question became whether the arbitration clause imposed mutual obligations or instead allowed the facility to litigate likely claims while forcing residents into arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid arbitration agreement exists (mutuality of obligation) | Agreement lacks mutuality because Hickory Heights can still sue in court for billing/collection matters while residents must arbitrate tort claims | Agreement applies to any dispute over $30,000 and does not expressly exempt Hickory Heights; thus it mutually binds parties | Court held agreement lacked mutuality and was not a valid arbitration agreement |
| Whether unconscionability defeats enforcement | Lemarion argued unconscionability (procedural/substantive) | Hickory Heights argued clause was enforceable and not unconscionable | Court did not reach unconscionability because lack of mutuality was dispositive |
Key Cases Cited
- Asset Acceptance, LLC v. Newby, 437 S.W.3d 119 (Ark. 2014) (standard when trial court denies motion to compel arbitration without stating basis)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (FAA intent to overcome judicial resistance to arbitration)
- Preston v. Ferrer, 552 U.S. 346 (U.S. 2008) (federal policy favoring arbitration)
- Southland Corp. v. Keating, 465 U.S. 1 (U.S. 1984) (FAA preemption and national policy favoring arbitration)
- Alltel Corp. v. Sumner, 203 S.W.3d 77 (Ark. 2005) (threshold inquiry: existence of valid agreement with assent and notice)
- Bank of the Ozarks, Inc. v. Walker, 434 S.W.3d 357 (Ark. 2014) (essential elements of enforceable arbitration agreement include mutual obligation)
- The Money Place, LLC v. Barnes, 78 S.W.3d 714 (Ark. 2002) (mutuality requires obligations on each party)
- E-Z Cash Advance, Inc. v. Harris, 60 S.W.3d 436 (Ark. 2001) (arbitration clause lacked mutuality where business could litigate the only claims it would likely have)
- Regional Care of Jacksonville, LLC v. Henry, 444 S.W.3d 356 (Ark. 2014) (arbitration clause lacking mutuality where facility reserved court remedies for billing/collection disputes)