Dougherty v. Roseville Heritage Partners (Mar. 30, 2020, C087224) __ Cal.App.5th __ [2020 WL 1501701]
Lori Dougherty’s demented father was removed from multiple care facilities and hospitalized. On the day he was released from the hospital, she contracted with Somerford Place, a residential care facility, to care for him. Dougherty had quickly toured Somerford and signed the admissions documents. A stand-alone arbitration agreement was included on pages 43 through 45 of a 70-page stack of admissions documents that Somerford was required by law to have Dougherty execute. After Dougherty’s father died, she and her sister sued Somerford alleging elder abuse and wrongful death. The trial court denied Somerford’s motion to compel arbitration, ruling that the arbitration agreement was both procedurally and substantively unconscionable. The court also declined to sever the unconscionable provisions and instead declared the entire arbitration agreement void. Somerford appealed.
The Court of Appeal affirmed. The court held the arbitration agreement procedurally unconscionable because Dougherty lacked meaningful choice, was insufficiently aware of the arbitration agreement and its limitations (due to its placement), and failed to provide Dougherty with copy of pertinent commercial arbitration rules. The court deemed these defects to reflect a high degree of procedural unconscionability, requiring a low level of substantive unconscionability to void the agreement.
Next, the court held that the agreement was substantively unconscionable, primarily because it contained discovery limitations that unreasonably favored Somerford, such as prohibiting depositions unless the arbitrator found good cause. The court reasoned that, because Dougherty’s elder abuse claim required her to prove malicious intent (to recover heightened remedies), restricted discovery frustrated her statutory rights. Additionally, the agreement purported to eliminate punitive damages and attorney fees, which are available under the elder abuse statute. Finally, the agreement required Dougherty to waive a jury trial for disputes not covered by the agreement, in violation of California law.
Finally, the court held that trial court did not abuse its discretion in voiding the entire arbitration agreement—rather than striking only the offending provisions—because the agreement was highly unconscionable.
Prepared by H. Thomas Watson and Peder K. Batalden, Horvitz & Levy, LLP
California Society for Healthcare Attorneys
1215 K Street, Suite 800
Sacramento, CA 95814
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