Hochbaum Ex Rel. Hochbaum v. Palm Garden of Winter Haven, LLC
201 So. 3d 218
| Fla. Dist. Ct. App. | 2016Background
- Plaintiff Joann Hochbaum, as attorney-in-fact for her deceased husband Donald, sued multiple nursing-home–related defendants for negligence, breach of fiduciary duty, and violations of the Adult Protective Services Act (Fla. Stat. ch. 415), including a claim under section 415.1111 for exploitation of a vulnerable adult.
- Defendants moved to compel arbitration, relying on three arbitration agreements signed by Hochbaum in 2013–2014 containing a clause that "each party shall be responsible for their own attorneys' fees."
- Trial court granted the motion to compel arbitration after finding Hochbaum had not shown unconscionability, but it did not resolve Hochbaum’s public-policy challenge to the attorneys’ fees provision.
- Hochbaum argued the fees clause defeats the remedial purpose of section 415.1111 by precluding the statutory prevailing-party attorney’s fees recovery and is therefore void as against public policy.
- The Second District analyzed whether the fees provision violated public policy and, if so, whether it is severable from the arbitration agreements.
- Court concluded the attorneys’ fees provision does violate public policy but is severable because it does not go to the essence of the arbitration agreements; affirmed compelled arbitration and remanded to strike the fees clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration agreements are unenforceable as against public policy because they require each party to bear their own attorneys' fees, undermining section 415.1111 | Fees clause eliminates Hochbaum's statutory right to recover prevailing-party attorney's fees, defeating the remedial purpose of the Act | Arbitrator should decide public-policy challenges or the clause is permissible allocation of costs | Court: fees clause violates public policy because it defeats statutory fee remedy; court, not arbitrator, decides public-policy issue |
| Whether the offending attorneys' fees provision is severable from the arbitration agreements | Severance not proper because agreements lack severability clause and severance would rewrite contracts | Provision may be severed to preserve parties' agreement to arbitrate | Court: provision is severable — it does not go to the essence of the agreements; strike fees clause and compel arbitration |
Key Cases Cited
- Shotts v. OP Winter Haven, Inc., 86 So. 3d 456 (Fla. 2011) (court, not arbitrator, decides if arbitration agreement violates public policy; arbitration provisions that substantially diminish statutory remedies violate public policy)
- Flyer Printing Co. v. Hills, 805 So. 2d 829 (Fla. 2d DCA 2001) (arbitration provision allocating arbitration costs equally may violate public policy by defeating statutory fee remedies)
- Gessa v. Manor Care of Fla., Inc., 86 So. 3d 484 (Fla. 2011) (limitations on damages in arbitration that go to the financial heart of the agreement are not severable)
- Estate of Deresh v. FS Tenant Pool III Trust, 95 So. 3d 296 (Fla. 4th DCA 2012) (offending limitation-of-remedies provision that does not go to essence of arbitration agreement may be severed)
- Bland ex rel. Coker v. Health Care & Ret. Corp. of Am., 927 So. 2d 252 (Fla. 2d DCA 2006) (distinguishes unconscionability inquiry from public-policy inquiry in arbitration challenges)