2023 IL App (4th) 230509
Ill. App. Ct.2023Background
- Naomi Nord was admitted to Manor Court on October 10, 2016; she died (and was discharged) on December 15, 2018.
- Thomas Nord, Naomi’s son and health-care power of attorney, signed a Residency Agreement and an attached Arbitration Agreement on Naomi’s behalf at admission.
- The Residency Agreement states: “The term of the contract shall commence on the day the Resident enters the Facility and terminate the day the Resident is discharged.”
- The Arbitration Agreement (an addendum) required AAA arbitration, a three-arbitrator panel, and a $1,500 retainer plus ongoing advances of arbitrators’ fees and costs; it also waived jury trial and allowed recovery of arbitrators’ fees to the prevailing party.
- Manor Court moved to dismiss and compel arbitration for certain counts; the trial court denied the motion, finding the arbitration agreement unconscionable due to its fee provisions.
- On appeal the Fourth District affirmed, holding the residency contract (including the arbitration provision) terminated upon Naomi’s death, so no contractual forum for arbitration existed when Thomas sued.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does resident's death (discharge) terminate the residency contract and its arbitration clause? | Death/discharge terminates the entire contract, so arbitration ended on Dec. 15, 2018. | Arbitration provision survives because it is a separate addendum and should govern pre-death claims. | Held: Contract (including arbitration addendum) terminated on death; arbitration unavailable. |
| Is there a valid delegation clause delegating arbitrability to the arbitrator? | (Implicit) No valid delegation applies because contract ended at death. | Delegation clause in arbitration provision governs arbitrability. | Held: No delegation applied because the entire contract terminated at death—no arbitration agreement remained to delegate. |
| Is the arbitration agreement procedurally or substantively unconscionable (fee-shifting / costs)? | Agreement is procedurally unconscionable (unequal bargaining, boilerplate) and substantively unconscionable (large costs, waiver of statutory rights, jury trial, appeals). | The agreement is voluntary and enforceable under federal law; fees are part of forum selection. | Held: Court affirmed denial based on termination-on-death; trial court also found fee terms unconscionable. |
| Should federal labor/collective-bargaining principles (survival of dispute-resolution clauses) control? | N/A | Cites federal cases holding dispute-resolution may survive termination. | Held: Federal labor-law authorities inapplicable; state contract principles govern ordinary service contracts. |
Key Cases Cited
- Clanton v. Oakbrook Healthcare Centre, Ltd., 207 N.E.3d 1139 (2022) (appellate decision interpreting termination-on-death clause to end arbitration forum)
- Mason v. St. Vincent’s Home, Inc., 199 N.E.3d 346 (2022) (contrasting appellate decision holding arbitration could cover pre-death claims)
- Gallagher v. Lenart, 948 N.E.2d 39 (2007) (contract interpretation: give plain, ordinary meaning to clear language)
- Kinkel v. Cingular Wireless, LLC, 857 N.E.2d 250 (2006) (arbitration is contractual and governed by ordinary state-law contract principles)
- Melena v. Anheuser-Busch, Inc., 847 N.E.2d 99 (2006) (pleadings and supporting documents viewed in favor of nonmoving party on §2-619 motions)