Wert v. ManorCare of Carlisle PA, LLC
124 A.3d 1248
| Pa. | 2015Background
- Decedent resided at Golden Living Center-Gettysburg; her daughter Evonne Wert sued for negligence after the resident’s death.
- Wert signed facility admission paperwork including a pre-dispute arbitration agreement incorporating the National Arbitration Forum (NAF) Code of Procedure and invoking the Federal Arbitration Act (FAA).
- By the time the agreement was signed, the NAF had entered a consent decree and ceased administering consumer arbitrations.
- Appellants (the facility) moved to compel arbitration; the trial court denied that motion—following Stewart—finding the NAF designation integral and the agreement unenforceable.
- The Superior Court affirmed; the Pennsylvania Supreme Court granted review to decide whether Stewart was correct and whether Wert’s testimony (that she did not read the agreement) mattered.
- The Pennsylvania Supreme Court affirmed the Superior Court: the NAF provision was integral and non-severable, so arbitration could not be compelled under the contract as written.
Issues
| Issue | Plaintiff's Argument (Wert) | Defendant's Argument (Facility) | Held |
|---|---|---|---|
| Whether the NAF designation in the arbitration agreement is integral | NAF Code language makes NAF the exclusive administrator; unavailability of NAF voids the arbitration agreement | The NAF provision is ancillary: parties intended arbitration generally and the NAF reference is a procedural detail that is severable | Held: NAF designation is integral and non-severable; agreement unenforceable as written |
| Whether Wert’s testimony that she didn’t read the agreement can show the NAF term was non-integral | Her subjective failure to read is irrelevant; contract language controls | Facility: her testimony shows she didn’t consider NAF important, supporting severability | Held: subjective failure to read is irrelevant; courts interpret clear written terms and will not allow non-drafters to disavow terms by ignorance |
| Whether FAA §5 (court appointment of substitute arbitrator) rescues the agreement | §5 cannot supply a substitute forum where parties specified an exclusive forum/administrator | §5 allows courts to appoint a substitute arbitrator and preserve arbitration despite NAF’s unavailability | Held: §5 does not save NAF-incorporated agreements when the contract made the NAF’s availability essential; the Court declined to rewrite the agreement |
| Effect of severability clause and whether court should rewrite agreement | Severability clause insufficient because parties expressly required arbitration “exclusively … in accordance with the NAF Code,” so unavailability defeats the clause | Severability clause shows intent to arbitrate generally and supports appointing alternate arbitrator or applying the NAF Code without NAF | Held: severability clause does not allow courts to reform the agreement; because NAF incorporation was integral, the agreement is unenforceable as written |
Key Cases Cited
- Stewart v. GGNSC-Canonsburg, L.P., 9 A.3d 215 (Pa. Super. 2010) (held NAF-incorporated arbitration clause integral and agreement unenforceable when NAF unavailable)
- Lesko v. Frankford Hosp.-Bucks Cnty., 15 A.3d 337 (Pa. 2011) (contract interpretation: clear written terms govern and parol evidence is excluded)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (recognizing a strong federal policy favoring enforcement of arbitration agreements)
- Green v. U.S. Cash Advance Illinois, LLC, 724 F.3d 787 (7th Cir. 2013) (held §5 could allow appointment of substitute arbitrator despite NAF’s withdrawal)
- Khan v. Dell, Inc., 669 F.3d 360 (3d Cir. 2012) (interpreting §5 to permit court appointment of substitute arbitrator where NAF was unavailable)
- Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. 530 (2012) (explains FAA preemption limits and that courts should enforce arbitration clauses unless displaced by neutral state common-law principles)