Abram v. Paloma Blanca Health Care

Opinion

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1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

2 CORDELIA ABRAM, Deceased, 3 by the Personal Representative for 4 the Wrongful Death Estate, 5 MAE ROSE LOPEZ,

6 Plaintiff-Appellee, 7 v. No. 31,850

8 PALOMA BLANCA HEALTH CARE 9 ASSOCIATES, L.L.C. d/b/a PALOMA 10 BLANCA HEALTH and REHABILITATION, 11 L.L.C., ALPHA HEALTH CARE INVESTORS, 12 PROPERTIES, L.L.C., OMEGA HEALTHCARE 13 INVESTORS, INC., SHORELINE HEALTHCARE 14 MANAGEMENT, L.L.C., CENTENNIAL 15 HEALTHCARE MANAGEMENT CORPORATION,

16 Defendants, 17 and

18 SKILLED HEALTHCARE GROUP, INC., 19 SKILLED HEALTHCARE, L.L.C., CANYON 20 TRANSITIONAL HEALTHCARE and 21 REHABILITATION CENTER, L.L.C., and 22 ADMINISTRATOR, ANMARIE DVORAK,

23 Defendants-Appellants.

1 APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY 2 C. Shannon Bacon, District Judge

3 Harvey and Foote Law Firm 4 Dusti D. Harvey 5 Jennifer J. Foote 6 Albuquerque, NM

7 for Appellee

8 Rodey, Dickason, Sloan, Akin & Robb, P.A. 9 W. Robert Lasater, Jr. 10 Sandra L. Beerle 11 Jocelyn Drennan 12 Albuquerque, NM

13 for Appellants

14 MEMORANDUM OPINION 15 WECHSLER, Judge. 16 {1} In our memorandum opinion in this case filed June 17, 2013, this Court 17 affirmed the district court’s denial of the motion to compel arbitration of Defendants 18 Skilled Healthcare Group, Inc., Skilled Healthcare, L.L.C., Canyon Transitional 19 Healthcare and Rehabilitation Center, L.L.C., and Administrator, AnMarie Dvorak. 20 Abram v. Paloma Blanca Health Care Assocs., L.L.C., No. 31,850, mem. op. ¶ 13 21 (N.M. Ct. App. June 17, 2013) (non-precedential). This Court affirmed the district 22 court, which had ruled that the arbitration agreement at issue in this case, which

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1 “required arbitration of all claims except those of ‘collections or discharge of 2 residents,’” was substantively unconscionable. Id. ¶¶ 1, 5 (citation omitted). We 3 relied on our Supreme Court cases of Rivera v. American General Financial Services, 4 Inc., 2011-NMSC-033, 150 N.M. 398, 259 P.3d 803, and Cordova v. World Financial 5 Corp. of New Mexico, 2009-NMSC-021, 146 N.M. 256, 208 P.3d 901, and our recent 6 cases that interpreted arbitration agreements that “contained the same or similar 7 arbitration provisions as presented in this case[.]” Abram, No. 31,850, mem. op. ¶ 5; 8 Ruppelt v. Laurel Healthcare Providers, L.L.C., 2013-NMCA-014, 293 P.3d 902, cert. 9 denied, Ruppelt v. Belen Meadows, 2013-NMCERT-012, 299 P.3d 422; Bargman v. 10 Skilled Healthcare Grp., Inc., 2013-NMCA-006, 292 P.3d 1, cert. granted, 2013- 11 NMCERT-012, 299 P.3d 423; Figueroa v. THI of N.M., 2013-NMCA-077, 306 P.3d 12 480, cert. denied, 2012-NMCERT-010, 297 P.3d 332. 13 {2} Our Supreme Court granted certiorari in this case. It subsequently decided 14 Strausberg v. Laurel Healthcare Providers, L.L.C., 2013-NMSC-032, 304 P.3d 409 15 (Strausberg II), reversing this Court’s opinion in Strausberg v. Laurel Healthcare 16 Providers, L.L.C., 2012-NMCA-006, 269 P.3d 914 (Strausberg I), and holding that 17 the party asserting unconscionability as an affirmative defense has the burden of 18 proving that the contract should not be enforced based on unconscionability. 19 Strausberg II, 2013-NMSC-032, ¶ 48. Our Supreme Court then remanded this case

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1 “for consideration in light of” its opinion in Strausberg II. Abram, No. 34,249, order 2 ¶ 4 (N.M. Sup. Ct. Oct. 25, 2013). On remand, this Court requested supplemental 3 briefing “addressing the impact of” Strausberg II to this case. Abram, No. 31,850, 4 order ¶ 2 (N.M. Ct. App. Oct. 29, 2013). 5 {3} This Court does not believe that the Strausberg II case has any impact on this 6 case because Strausberg I was not a factor in the decision in this case of either the 7 district court or this Court. 8 {4} Strausberg I was decided three days before the district court held its hearing on 9 Defendant’s motion to compel arbitration. In announcing its ruling, the district court 10 acknowledged Strausberg I but reached a legal conclusion based on the language of 11 the arbitration agreement and on the prior Supreme Court cases of Rivera and 12 Cordova. Indeed, as discussed in our June 17, 2013 memorandum opinion, this Court 13 has subsequently interpreted Rivera and Cordova to conclude that the same or similar 14 arbitration provisions as at issue in this case were substantively unconscionable 15 “because they excluded from arbitration the claims most likely to be brought by the 16 health care facility while requiring arbitration of the claims most likely to be brought 17 by residents.” Abram, No. 31,850, mem. op. ¶ 5. 18 {5} This conclusion did not depend on Strausberg I. In Ruppelt and Figueroa , this 19 Court, as did the district court in this case, decided that the arbitration agreements that

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1 were before the Court were substantively unconscionable under the standards of 2 Cordova and Rivera as a matter of law. Ruppelt, 2013-NMCA-014, ¶¶ 16, 18; 3 Figueroa, 2013-NMCA-077, ¶ 30. 4 {6} In Strausberg I, this Court held that “when a nursing home relies upon an 5 arbitration agreement signed by a patient as a condition for admission to the nursing 6 home, and the patient contends that the arbitration agreement is unconscionable, the 7 nursing home has the burden of proving that the arbitration agreement is not 8 unconscionable.” 2012-NMCA-006, ¶ 20. In reversing, our Supreme Court 9 reaffirmed that “the party alleging unconscionability . . . bears the burden of proof 10 because unconscionability is an affirmative contract defense, and under settled 11 principles of New Mexico contract law, the party alleging an affirmative contract 12 defense has the burden to prove that the contract is unenforceable on that basis.” 13 Strausberg II, 2013-NMSC-032, ¶ 39. 14 {7} Defendants argue that at least implicitly the district court and this Court relied 15 upon Strausberg I in this case. In part, they make their argument based on this 16 Court’s statements concerning Defendants’ failure to offer evidence to rebut the 17 unreasonableness or unfairness of the facially bilateral exceptions to the arbitration 18 agreement. However, Defendants’ obligation arose from the language of the 19 arbitration agreement that was undisputedly before the district court. As we have

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1 discussed, the district court reached its legal conclusion as to the import of the 2 exceptions from the language of the agreement. 3 {8} In their supplemental brief, Defendants also question whether the district court 4 could have determined the bilateral collection exception to be substantively 5 unconscionable but for Strausberg I and request that this Court remand to the district 6 court to present evidence concerning the exception. In our memorandum opinion, we 7 declined to remand for an evidentiary hearing as to “whether there is a reasonable 8 basis for the exclusions from the arbitration agreement.” Abram, No. 31,850, mem. 9 op. ¶ 11. We distinguished Bargman, in which we issued such a remand when the 10 defendant made such a specific request in its appellate briefing. Abram, No. 31,850, 11 mem. op. ¶ 11. In Bargman, we remanded because, when the case was in district 12 court, “Rivera, Figueroa, and Ruppelt had not been decided and the burden of proof 13 was not all that clearly determined, and also because it is unclear that the district court 14 would have considered evidence[.]” Bargman, 2013-NMCA-006, ¶¶ 23, 24. In our 15 memorandum opinion, we determined that this case was different because Defendants 16 requested on appeal that we reverse the district court and remand “for further 17 proceedings under the correct approach.” Abram, No. 31,850, mem. op. ¶ 11 (internal 18 quotation marks omitted). Defendants did not request an evidentiary hearing or seek 19 to present evidence to the district court, even in light of Strausberg I that had recently

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1 been decided. Abram, No. 31,850, mem. op. ¶ 11. Moreover, we determined in our 2 memorandum opinion, that Rivera had been essential to the district court’s decision. 3 In their supplemental brief, Defendants argue that their request for “further 4 proceedings” on appeal was comparable to the request in Bargman for a remand for 5 an evidentiary hearing. We do not agree. Defendants’ requested relief was reversal. 6 They did not, as in Bargman, specifically request to develop an evidentiary record. 7 {9} Nor is this case in the same posture as Bargman with respect to existing 8 precedent. As we discussed in our memorandum opinion, Rivera, essential to the 9 district court’s analysis and decision, was argued extensively to the district court. In 10 addition, although the burden of proof was in flux, as indicated by the Strausberg I 11 and Strausberg II opinions, as we have discussed, the burden of proof was not a factor 12 in the district court’s decision. Based on the history of this case, we decline 13 Defendants’ request to remand at this time. 14 CONCLUSION 15 {10} We affirm the decision of the district court denying Defendants’ motion to 16 compel arbitration. 17 {11} IT IS SO ORDERED.

18 ________________________________ 19 JAMES J. WECHSLER, Judge

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1 WE CONCUR:

2 ___________________________________ 3 RODERICK T. KENNEDY, Chief Judge

4 ___________________________________ 5 MICHAEL E. VIGIL, Judge