Zephyr Haven Health & Rehab Center, Inc. v. Hardin ex rel. Hardin
122 So. 3d 916
| Fla. Dist. Ct. App. | 2013Background
- Plaintiff Edna Hardin signed a conspicuously labeled arbitration agreement upon admission to a nursing facility that required splitting arbitration costs (facility pays first $500; thereafter facility 60% / resident 40%) and each side bears its own attorney’s fees.
- One year later Hardin sued the facility for care-related claims; the Owners moved to compel arbitration and submitted the arbitration agreement.
- At the motion hearing Hardin admitted signing the agreement but argued she could not afford to pay 40% of arbitration costs; she offered invoices from unrelated arbitrations and testimony from her stepson about her strained finances.
- The trial court denied the motion, finding the agreement both financially impossible for Hardin to perform and unconscionable if she were forced to pay 40% of costs.
- On appeal the court reviewed factual findings for substantial evidence and legal conclusions de novo and considered three doctrines: unconscionability, impossibility of performance, and the Green Tree prohibitive-cost defense.
- The appellate court reversed, concluding Hardin failed to prove procedural unconscionability, failed to show impossibility, and did not meet her burden under Green Tree to demonstrate likely prohibitive arbitration costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Unconscionability (procedural & substantive) | Agreement is unconscionable because arbitration costs would be unaffordable (substantive); signing upon admission shows inequality of bargaining power (procedural) | Agreement was clear and not procedurally unconscionable; cost argument addresses substantive unconscionability only | Rejected — Hardin showed only substantive concerns (cost); she failed to prove procedural unconscionability, so unconscionability claim fails |
| Impossibility of performance | Paying 40% of arbitration costs is financially impossible given Hardin’s income and expenses | The risk/costs were foreseeable; Hardin could qualify for publicly funded nursing care and had not shown a change in circumstances making performance impossible | Rejected — evidence did not establish impossibility; alternative funding and lack of materially changed circumstances undermine the defense |
| Green Tree prohibitive-cost defense | Fee-splitting will make arbitration prohibitively expensive and prevent vindication of rights; invoices show high arbitration costs | Plaintiff bears burden to show likelihood of incurring prohibitive costs and must compare expected arbitration costs to litigation; invoices were unrelated and insufficient | Rejected — Hardin failed to show expected costs for this claim or compare to litigation; she did not meet Green Tree burden |
| Attorney-fee/payment-arrangement discovery | Attorney-client privilege bars inquiry into whether counsel would advance arbitration costs | If counsel would advance costs on contingency, plaintiff would not likely personally incur fees; Owners entitled to discover payment arrangement to rebut Green Tree showing | Held for defendants — plaintiff could not hide fee-arrangement evidence; she offered only privilege objections and a conclusory assertion her firm would not advance costs, so she failed to carry burden |
Key Cases Cited
- Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79 (2000) (party challenging arbitration on prohibitive cost grounds bears burden to show likelihood of incurring such costs)
- Bradford v. Rockwell Semiconductor Sys., Inc., 238 F.3d 549 (4th Cir. 2001) (fee-splitting provisions not per se unenforceable; case-by-case inquiry into claimant’s ability to pay and cost differential is required)
- Musnick v. King Motor Co. of Fort Lauderdale, 325 F.3d 1255 (11th Cir. 2003) (applying Bradford test; plaintiff must offer evidence of likely arbitration fees and inability to pay)
- Stewart Agency, Inc. v. Robinson, 855 So.2d 726 (Fla. 4th DCA 2003) (expense-of-arbitration evidence must show arbitration would be more costly than litigation and prevent vindication of rights)
- N. Am. Van Lines v. Collyer, 616 So.2d 177 (Fla. 5th DCA 1993) (courts should not rewrite clear arbitration provisions; unexpected expense does not excuse performance)