Wednesday, November 11, 2009

Order Compelling Arbitration Affirmed Even Though AAA Will Not Arbitrate Dispute - Failed To Show Agreement Was Procedurally and Substantively Unconscionable

In Estate of Perez v. Life Care Centers of America, Inc. (5D08-4287), the Fifth District affirmed the trial court's order compelling arbitration.

In this case, "The personal representative contends that the arbitration agreement entered into between Ms. Perez and Life Care is unenforceable as it is unconscionable, and because the designated arbitrator, the American Arbitration Association (“AAA”) no longer accepts the administration of health care claims involving pre-dispute arbitration agreements."
To invalidate an arbitration agreement under Florida law, a court must find that the contract is both procedurally and substantively unconscionable...To determine whether a contract is procedurally unconscionable, a court must look to the manner in which the contract was entered into and consider factors such as “whether the complaining party had a realistic opportunity to bargain regarding the terms of the contract or whether the terms were merely presented on a ‘take-it-or-leave-it’ basis; and whether he or she had a reasonable opportunity to understand the terms of the contract.” A party to a contract is not “permitted to avoid the consequences of a contract freely entered into simply because he or she elected not to read and understand its terms before executing it, or because, in retrospect, the bargain turns out to be disadvantageous.
In the present case, the personal representative makes a convincing argument that the arbitration agreement is procedurally unconscionable, given the circumstances surrounding its execution. However, no argument is made regarding the agreement’s substantive unconscionability and consequently, the unconscionability argument must fail.
Because the agreement between Ms. Perez and Life Care was entered into pre-dispute, AAA will not administer the arbitration. While the personal representative contends that the refusal of AAA to administer the arbitration is fatal to the arbitration agreement, that argument was recently rejected in New Port Richey Medical Investors, LLC v. Stern ex rel Petscher, 14 So. 3d 1084 (Fla. 2d DCA 2009). We fully agree with that opinion
For these reasons, we affirm the circuit court’s order compelling arbitration.  Upon motion of either party, the trial court is authorized to appoint one or more arbitrators or an umpire as provided by section 682.04, Florida Statutes (2008).
The New Port Richey Medical Investors, LLC v. Stern ex rel Petscher, 14 So. 3d 1084 (Fla. 2d DCA 2009) decision was previously discussed on this blog here.


Post a Comment