Estate of Deresh ex rel. Schneider v. FS Tenant Pool III Trust

95 So. 3d 296, 2012 WL 2813819, 2012 Fla. App. LEXIS 11284
CourtDistrict Court of Appeal of Florida
DecidedJuly 11, 2012
DocketNo. 4D10-749
StatusPublished
Cited by3 cases

This text of 95 So. 3d 296 (Estate of Deresh ex rel. Schneider v. FS Tenant Pool III Trust) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Estate of Deresh ex rel. Schneider v. FS Tenant Pool III Trust, 95 So. 3d 296, 2012 WL 2813819, 2012 Fla. App. LEXIS 11284 (Fla. Ct. App. 2012).

Opinion

GROSS, J.

The Estate of Frances Deresh timely appeals a non-final order compelling it to arbitrate its claims against the various defendants in this wrongful death action. [298]*298We affirm the order compelling arbitration but remand to the circuit court with instructions to sever the punitive damages limitation from the arbitration agreement.

The estate sued various defendants involved with a nursing home facility. The estate made the following claims: (1) nonlethal negligence, in that Deresh was the victim of a sexual assault, developed skin problems (rash and ulcer), and fell in her bathroom; (2) lethal negligence, in that the non-lethal negligence ultimately caused Deresh’s death; (3) wrongful death, a claim pursued on behalf of Deresh’s surviving children; (4) breach of fiduciary duty; (5) the corporate defendants’ violations of section 415.1111, Florida Statutes (2008), exploitation of a -vulnerable adult; and (6) the individual defendants’ violations of the same statute.

Around the time Deresh was admitted to the facility, she and the facility entered into an arbitration agreement. The agreement required the arbitration of certain claims:

1. AGREEMENT TO ARBITRATE. Should a dispute arise between the Parties, they desire to avoid costly and time-consuming litigation. Resident and Five Star agree that any claims, controversies, or disputes arising between them involving a potential monetary amount in excess of $25,000 shall be resolved exclusively by binding arbitration.

The arbitration was to be conducted by either one or three arbitrators, the number to be selected by Deresh; the members “shall be chosen by the American Arbitration Association (‘AAA’) or by mutual agreement between the parties”; and the panel “shall follow the current Commercial Arbitration Rules of the AAA.”

On remedies, the agreement provided: The Panel shall have the authority to grant equitable relief that could be ordered by a court. The Panel shall have authority to award economic damages and non-economic damages (including, damages for pain and suffering and mental anguish); but shall have no authority to award punitive or exemplary damages.

Finally, the arbitration agreement contained an express severability clause.

7. SEVERABILITY. If any provision of this Agreement is declared to be unlawful, invalid or unenforceable for any reason, then notwithstanding such unlawfulness, invalidity or unenforceability, the remaining terms and provisions of this Agreement shall remain in full force and effect.

The defendants moved to compel arbitration. After a hearing, the circuit court compelled arbitration and stayed the proceedings.

The estate first argues that the circuit court erred because the defendants “made no effort whatsoever to meet its burden of establishing that” the case involved “a potential monetary amount in excess of $25,000.” The estate did not notify the court that it was seeking less than $25,000 in damages. “Potential” means “1. Possible, as opposed to actual ... 2. capable of being or becoming.” The Random House Dictionary of the English Language 1125 (1967). The nature and quantity of the estate’s causes of action involve the “potential” of damages in excess of $25,000 anywhere on this planet that recognizes similar claims. Because the claims in this case fell within the scope of disputes subject to the arbitration agreement, the trial court did not err in granting the defendants’ motion to compel arbitration.

The estate next contends that two recent decisions of the Florida Supreme [299]*299Court (1) compel the conclusion that the arbitration agreement’s limitation on punitive damages is contrary to public policy and (2) require invalidation of the entire arbitration agreement. See Shotts v. OP Winter Haven, Inc., 86 So.3d 456 (Fla.2011); Gessa v. Manor Care of Fla., Inc., 86 So.3d 484 (Fla.2011). While we agree with the first part of that argument, we conclude that the punitive damages limitation is severable from the rest of the arbitration agreement.

We review a trial court’s order compelling arbitration de novo. See Powertel, Inc. v. Bexley, 743 So.2d 570, 573 (Fla. 1st DCA 1999). “[TJhere are three elements for courts to consider in ruling on a motion to compel arbitration of a given dispute: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration has been waived.” Seifert v. U.S. Home Corp., 750 So.2d 633, 636 (Fla.1999). The effect of the punitive damages limitation involves the first element — whether the parties’ arbitration agreement is valid.

Neither Shotts nor Gessa compels the conclusion that the punitive damages limitation cannot be severed from the arbitration agreement.

In Shotts, the estate of a nursing home resident sued the home alleging negligence and breach of fiduciary duties. 86 So.3d at 460. The home moved to compel arbitration based on an agreement the resident had signed upon admission. Id. at 458. The Supreme Court described the pertinent provisions of the agreement: “The agreement contained the following ‘limitations of remedies’ provisions: (i) the arbitration will be conducted in accordance with the American Health Lawyers Association (AHLA) rules; and (ii) the arbitrators will have no authority to award punitive damages. The agreement also stated that its terms were severable.” Id. The trial court granted the motion to compel arbitration. Id. The district court affirmed, and the Supreme Court granted discretionary review. Id.

There were three issues in the Supreme Court, two of which are relevant here: “(2) whether the limitations of remedies provisions violate public policy; and (3) whether the limitations of remedies provisions are severable.” Id.

On the first of these issues, the Supreme Court held that the limitation-of-remedies provisions violated public policy. Id. at 471-75. The Court reasoned that the limitation-of-remedies provisions “directly un-derminted] specific statutory remedies created by the Legislature,” sections 400.022 and 400.023, Florida Statutes (2003), which were designed to provide nursing home residents with remedies against abuse at the hands of their nursing homes. Id. at 474. The resident’s bill of rights articulated in section 400.022 was backed up by the remedies, including punitive damages, in section 400.023. See § 400.023(1) (“The action may be brought in any court of competent jurisdiction to enforce such rights and to recover actual and punitive damages for any violation of the rights of a resident or for negligence.”).

Having determined that the two limitation-of-remedies provisions were invalid, the Supreme Court next addressed whether they were severable from the rest of the arbitration agreement. Shotts, 86 So.3d at 475-78. Without discussing the limitation on punitive damages, the Supreme Court’s analysis focused solely on the AHLA-rules provision, which provided that the arbitrator could not award “consequential, exemplary, incidental, punitive or special damages” unless the arbitrator determined that there was “clear and convincing evidence” “of conduct evincing an intentional [300]*300or reckless disregard for the rights of another party, or fraud, actual or presumed.” Id. at 476-77.

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Cite This Page — Counsel Stack

Bluebook (online)
95 So. 3d 296, 2012 WL 2813819, 2012 Fla. App. LEXIS 11284, Counsel Stack Legal Research, https://law.counselstack.com/opinion/estate-of-deresh-ex-rel-schneider-v-fs-tenant-pool-iii-trust-fladistctapp-2012.