293 P.3d 902
N.M. Ct. App.2012Background
- Plaintiff sues as personal representative for wrongful death arising from care at Laurel Meadows/Belen Meadows nursing homes.
- Admission Agreement with Theodore Lendeen contained an arbitration clause and two exemptions for collections and discharge claims.
- Laurel Defendants initially operated Laurel Meadows; Belen Defendants assumed operation and rights under the Agreement in Sept. 2007.
- District court held the Agreement substantively unconscionable under New Mexico law due to one‑sided exemptions favoring defendants.
- Defendants moved to dismiss and compel arbitration; district court denied; Defendants appealed seeking reversal and arbitration.
- Court addresses arbitrability, substantive unconscionability, and severability/savings clause in the context of NM arbitration doctrine.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the arbitration provision substantively unconscionable due to the exemption for collections/discharge claims? | Lendeen is compelled to arbitrate most claims while defendants retain court access for their likely claims. | Exemption for collections/discharge claims renders the clause not unreasonably one‑sided. | Yes; provision is substantively unconscionable. |
| Can the savings/severability clause save the arbitration clause if part is unconscionable? | Severance would not preserve the central arbitration mechanism. | Savings clause could salvage remainder. | No; severance rejected; arbitration provision struck in its entirety. |
| Did the district court have authority to decide arbitrability given a delegation clause? | District court should decide arbitrability unless delegation is clearly evidenced. | Arbitrator should decide arbitrability if delegation is clear. | District court had authority; defendants waived delegation argument. |
Key Cases Cited
- Cordova v. World Finance Corp. of N.M., 146 N.M. 256 (2009-NMSC-021) (one‑sided arbitration provisions are unconscionable)
- Rivera v. Am. Gen. Fin. Servs., Inc., 150 N.M. 398 (2011-NMSC-033) (unconscionability focused on fairness; lender’s ability to pursue likeliest claims in court while borrower must arbitrate)
- Dean Witter Reynolds, Inc. v. Roven, 94 N.M. 273 (1980) (arbitration issues can be threshold questions decided by court; waiver considerations)
- State v. Young, 117 N.M. 688 (Ct. App. 1994) (waiver and preservation principles for appellate review)