2024 IL App (1st) 240534
Ill. App. Ct.2024Background
- Joan Hwang, a 90-year-old resident of Aspired Living, an assisted living facility, was injured when an employee knocked her down in 2023.
- Hwang sued Aspired Living and the employee for negligence, premises liability, and Nursing Home Care Act violations in Illinois state court.
- Aspired Living sought to compel arbitration based on an arbitration agreement Hwang signed upon admission, which was part of a lengthy adhesion contract.
- The arbitration agreement required residents to arbitrate most claims but allowed Aspired to litigate its most likely claims (e.g., rent disputes) in court, capped damages at $250,000, prohibited punitive damages, and imposed strict confidentiality.
- The trial court denied the motion to compel arbitration, finding the agreement lacked consideration and was both procedurally and substantively unconscionable.
- Aspired appealed, challenging the trial court's findings, particularly on substantive unconscionability and the possibility of severing offending provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Substantive unconscionability of arbitration | Arbitration agreement is one-sided, limits remedies, enforces confidentiality, and strongly favors facility | Agreement is mutually binding and supported by consideration; no unconscionability | Agreement is substantively unconscionable, thus unenforceable |
| Procedural unconscionability | Voluminous, pre-printed contract; no real opportunity for review or negotiation | No procedural unfairness; plaintiff had ability to consult an attorney | Not addressed (substantive unconscionability dispositive) |
| Severability of unconscionable terms | Unconscionable provisions pervade the agreement, cannot be severed | Court should sever any offending provisions and enforce remainder | Too many unconscionable provisions; cannot sever, agreement unenforceable |
| Consideration | No additional consideration for waiver of statutory rights | Supported by mutual promises; consideration present | Consideration and unconscionability are separate; unconscionability is determinative |
Key Cases Cited
- Kinkel v. Cingular Wireless, LLC, 223 Ill. 2d 1 (2006) (sets out Illinois law on procedural and substantive unconscionability)
- Razor v. Hyundai Motor America, 222 Ill. 2d 75 (2006) (factors supporting unconscionability, esp. preprinted, non-negotiable contracts)
- Vassilkovska v. Woodfield Nissan, Inc., 358 Ill. App. 3d 20 (2005) (illusory mutuality renders arbitration provision unconscionable)
- Gallagher v. Lenart, 226 Ill. 2d 208 (2007) (distinction between consideration and unconscionability in contract law)
- Bain v. Airoom, LLC, 2022 IL App (1st) 211001 (application of unconscionability analysis to arbitration agreements)
- Hartz v. Brehm Preparatory School, Inc., 2021 IL App (5th) 190327 (contract can be supported by consideration but still unconscionable)