CANEAS (as to SPRING LAKE SC Case No. SC13

THE SUPREME COURT OF FLORIDA
SPRING LAKE NC, LLC; SBK CAPITAL, LLC;
O
CLEAR CHOICE HEALTH CARE, LLC;
Y
SAMUEL B. KELLETT; JEFFREY E.
CLEVELAND; DEBORAH P. KENNEDY;
GEOFFREY R. FRASER; and JASON
CANEAS (as to SPRING LAKE
SC Case No. SC13REHABILITATION CENTER),
L.T. Case No. 2D12-2140
T.C. Case No. 11-CA-4781
Respondents/Appellants,
V.
THE ESTATE OF JESSIE V. HOLLOWAY,
by and through TONY HOLLOWAY, Personal
Representative,
Petitioner/Appellee.
/
PETITIONER'S JURISDICTIONAL BRIEF
Isaac R. Ruiz-Carus, Esquire
Florida Bar No. 0017004
WILKES & McHUGH, P.A.
One N. Dale Mabry Hwy., Ste. 800
Tampa, Florida 33609
813-873-0026//813-286-8820 Fax
Attorneys for Petitioner/Appellee
[email protected]
[email protected]
[email protected]
TABLEOFCONTENTS
TABLE OF AUTHORITIES ...............................................................................iii-iv
INTRODUCTION......................................................................................................1
STATEMENT OF THE CASE AND FACTS...........................................................2
SUMMARY OF THE ARGUMENT ........................................................................3
ARGUMENT .............................................................................................................4
The District Court's Opinion Directly Conflicts with this Court's
Established Precedent on Contract Formation, and this Departure
Poses a Risk to Florida's Nursing Home Residents..............................4
CONCSLUION.......................................................................................................10
CECRTIFIACT
E OF S ERVI E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CERTIFICATE OF FONT COMPLIANCE .......................................................... 11
11
TABLE OF AUTHORITIES
Farnum v. Silvano,
27 Mass.App.Ct. 536 (1989)............................................................................7
Hogan v. Supreme Camp ofAmerican Woodmen,
1 So.2d 256 (1941)...........................................................................................9
Holloway v. Gutman,
707 So.2d 356, 357 (Fla. 5th DCA 1998)................................................. 7, 10
Hopkins v. Leon County,
74 So. 305, 309 (Fla. 1917) ....................................................................... 9-10
Hovey v. Hobson,
53 Me. 451 (1866).......................................................................................6-7
In re Annicott Excellence, LLC,
259 B.R. 782, 790 (Bkrtcy.M.D.Fla. 2001)................................................ fn.1
Leopold v. Kimball Hill Homes Florida, Inc.,
842 So.2d 133 (Fla. 2d DCA 2003)............................................................. 8-9
Manorcare Health Services, Inc. v. Stiehl,
22 So.3d 96, 101(Fla. 2d DCA 2009)..............................................................5
Ricketts v. Pennsylvania R. Co.,
153 F.2d 757, 760-61 (2d Cir. 1946)...............................................................8
Sam Rodgers Properties, Inc. v. Chmura,
61 So.3d 432 (Fla.2d DCA 2011)....................................................................9
Schwartz berg v. Knobloch,
98 So.3d 173, 180 (Fla. 2d DCA)....................................................................5
Strong & Trowbridge Co. v. H. Baars & Co.,
54 So. 92, 93-94 (Fla. 1910)..................................................................4, 9-10
Sun Bank of Tampa Bay v. Bryan,
527 So.2d 290 (Fla. 2d DCA 1988).................................................................7
111
Webster Lumber Co. v. Lincoln,
115 So. 498, 502 (Fla. 1927)......................................................................fn.1
OTHER AUTHORITIES
FL Jur.2d Contracts §17(2013)............................................................................. fn.1
Fla. Stat. §400.0061 (2000)........................................................................................5
Restatement (Second) of Contracts §15.....................................................................7
1V
INTRODUCTION
This is the case of a 92-year-old nursing home resident with a fourth grade
education. She mad memory problems and was increasingly confused. The nursing
home had her sign an arbitration agreement, and, as the district court found below,
the contracts were so complex that she could not have possibly understood what
she was signing. The trial court found that on the basis of these facts that the
arbitration agreement signed by Ms. Holloway was unenforceable as there was no
"meeting of the minds." Departing from hundreds of years of the law of contracts,
the district court chose to reverse the trial court and enforce the arbitration
agreement finding that without such enforcement "[o]ur modern economy simply
could not function." (Op., p.4).
The Petitioner now asks this Court exercise jurisdiction under article V,
section 3(b)(3) of the Florida Constitution, and review the district court's opinion
because it conflicts with and misapplies the Court's precedent regarding meeting of
the minds and contract formation. The district court articulated a new, "modern"
test for mutuality of assent that it purely objective. The application of this test to
enfeebled nursing home residents with diminished mental capacities, but also with
a special set of statutory rights, results in their treatment as the same as merchants
or sophisticated consumers. This cannot be the state of the law. This Court should
1
accept jurisdiction to resolve the conflict with its precedent and address this issue
facing hundreds, if not thousands, of nursing home residents in the State.
STATEMENT OF THE CASE AND FACTS
Ms. Holloway was, as noted above, 92 years old with memory problems and
increased confusion on her admission to Spring Lake Rehabilitation Center, a
nursing home. She had been a farm worker who could "read and write some," but
could not spell well and had to sound out words.
Hospital paperwork completed just before her admission to the nursing
home revealed that Ms. Holloway was admitted for increased confusion and
decreased functional status. Nursing home records contemporaneous with the
signing of the arbitration agreement state that she had memory problems and had
some difficulty with new situations. In fact, one of her sons held a power of
attorney for her and handled matters on her behalf.
On the day of her admission, August 27, 2010, Ms. Holloway herself, not
her attorney-in-fact, was presented with and signed an arbitration agreement,
which provided that all disputes between the parties would be settled by binding
arbitration. Ms. Holloway's Estate filed suit against the nursing home for
negligence and violation of Ms. Holloway's nursing home residents' rights. In
response, the nursing home moved to compel arbitration.
2
A hearing on the nursing home's motion was held before the trial court on
February 29, 2012. The trial court denied the motion to compel arbitration finding
that, "I don't think there was a meeting of the minds and that she would have
knowingly and freely and voluntarily consented to arbitration even though it says
so in the way she signed it, but I think she would have just signed whatever they
put in front of her under the circumstances."
The Second District reversed and ordered the suit to proceed with
arbitration. The court did find that the trial court "correctly assessed Ms.
Holloway's ability to understand these documents." However, the court found that:
"For better or worse, her limited abilities are not a basis to prevent the
enforceability of this contract." The court acknowledged that there wasn't a literal
"meeting of the minds" in this case, yet the court held that, "[o]ur modern
economy simply could not function if a 'meeting of the minds' required
individualized understanding of all aspects of the typical standardized contract that
is now signed without any expectation that the terms will actually be negotiated
between the parties."
SUMMARY OF THE ARGUMENT
The district court's opinion adopts a new test for mutuality of assent in
contracts involving nursing home residents. It is a purely objective test. The test is
3
in direct conflict with a long-line of precedent from this Court beginning with
Strong & Trowbridge Co. v. H. Baars & Co., 54 So. 92, 93-94
(Fla. 1910). In deciding on a new test, the district court described the existing test
as "archaic."
The effect of the district court's test is to enforce arbitration agreements
against nursing home residents with limited education, confusion, and decreased
mental capacity. In fact, in this case, the district court expressly agreed with the
trial court that the nursing home resident could not have possibly understood the
agreement she was presented to sign. But unlike the trial court which applied this
Court's precedent in not enforcing the arbitration agreement, the district court
chose to depart from the precedent and enforce it. The district court went as far as
to maintain that the modern economy required enforcement of contracts such as
these.
This Court should accept jurisdiction to address the conflict with its
precedent and to address the issue of great public importance affecting the nursing
home residents of this State.
ARGUMENT
The District Court's Opinion Directly Conflicts with this Court's Established
Precedent on Contract Formation, and this Departure Poses a Risk to
Florida's Nursing Home Residents
The Florida legislature carefully drafted the Nursing Home Residents'
4
Rights Act because it found that "the rights, health, safety and welfare of residents
are not ensured. . .by the good faith of owners or operators of long term care
facilities." Fla. Stat. §400.0061 (2000).
In fact, as Florida courts have recently noted with more frequency, nursing
homes are sophisticated companies backed by large investment groups with
superior knowledge, drafting contracts which benefit them and their
twin goals of limiting liability and preventing public disclosure. See Schwartz berg
v. Knobloch, 98 So.3d 173, 180 (Fla. 2d DCA)("The era of the locally owned,
'mom and pop' nursing facility is gone."); Manorcare Health Services, Inc. v.
Stiehl, 22 So.3d 96, 101 (Fla. 2d DCA 2009)(Altenbernd, J., concurring
opinion)("It is only human that the nursing home facilities have tended to create
arbitration agreements that favor the nursing homes").
This is the case of a 92-year-old nursing home resident with a fourth grade
education, increased confusion and deteriorating mental condition. The nursing
home presented her with a complex arbitration agreement to sign, which benefitted
their interests. The trial court and the district court agreed that she could not have
possibly understood the contract she was presented. Yet, rather than not enforce
the arbitration agreement, the district court reversed, departing from literally
centuries of contract law in the process, and enforced it. The district court reasoned
5
that the modern economy itself depends on contracts such as these being enforced
using a new, objective standard for mutuality of assent.
Not only is the district court's opinion in direct conflict with this Court's
prior precedent on contract formation and with the policy goals of the Nursing
Home Residents' Rights Act itself, but also it is a sad commentary on the state of
our law if the modern economy depends on enforcing contracts of enfeebled, senile
nursing home residents incapable of understanding contracts presented to them.
The residents signing these contracts are not merchants. Their conduct is not
governed by the uniform commercial code. They are not general consumers. They
do not fit neatly within a reasonable person standard. They are nursing home
residents. Oftentimes, they are just like Ms. Holloway in the instant case, of
advanced age, limited education, diminished mental faculties, confused,
and incapable of understanding the contracts which they are presented. The
standard used to evaluate nursing home arbitration agreements cannot be a purely
objective test, which treats nursing home residents as if they were merchants, or
sophisticated consumers. The district court's opinion fails to distinguish between
an enfeebled nursing home resident with a special set of statutory rights and
anyone entering into a consumer services contract.
The law has for hundreds of years recognized that the transactions of the
mentally infirm or senile were suspect. Under older authority, these contracts were
6
void. Hovey v. Hobson, 53 Me. 451 (1866). The modern view, as expressed in the
Restatement (Second) of Contracts, is that the contract of a party that lacks the
ability to understand the transaction by reason of a mental illness or defect, and
which the other party has reason to know of this condition is voidable. §15. Case
law has found that senility or other diseases of the elderly can be a ground for
voidability. See Farnum v. Silvano, 27 Mass.App.Ct. 536 (1989).
This body of law regarding the capacity to give intelligent assent found
expression in the test under Florida law for a "meeting of the minds" or "mutuality
of assent." As expressed by this Court: "In the making of a valid contract, the
parties must not only be capable of an intelligent assent, but they must
actually give their assent; and the assent must be precisely the same thing, and at
the same time." Strong & Trowbridge Co. v. H. Baars & Co., 54 So. 92, 93-94
(Fla. 1910). The test is hardly obsolete or archaic. As recently as 1998, the test was
used by the Fifth District Court of Appeal in Holloway v. Gutman, 707 So.2d 356,
357 (Fla. 5th DCA 1998). The Second District itself quoted from Strong &
Trowbridge Co. in reaching its holding in 1988 in Sun Bank of Tampa Bay v.
Bryan, 527 So.2d 290 (Fla. 2d DCA 1988).'
The test has been cited almost universally by the courts in Florida-Federal and
State. See e.g., In re Annicott Excellence, LLC, 259 B.R. 782, 790
(Bkrtcy.M.D.Fla. 2001); Webster Lumber Co. v. Lincoln, 115 So. 498, 502 (Fla.
1927) ("Until all understand alike, there can be no assent, and therefore no
contract."; FL Jur.2d Contracts §17(2013)
7
Notwithstanding this long-line of precedent, and in direct conflict therewith,
the Second District, however, chose to find Ms. Holloway's mental capacity
irrelevant, and instead adopted a completely objective standard of mutuality of
assent. (Op., p. 4). While not expressed in the Second District's Opinion, the
objectivists' credo is that objective manifestations of intent should be viewed from
the vantage point of a reasonable person in the position of the other party. See
Ricketts v. Pennsylvania R. Co., 153 F.2d 757, 760-61 (2d Cir. 1946)(Frank, J.,
concurring opinion).2 The District Court thus emphasized, in spite of the foregoing,
that the phrase "meeting of the minds" is archaic and that instead the phrase
"mutuality of assent" should be used. (Op., p. 4).
The Second District's decision is in conflict with the above-cited body of
law from this Court and the other Districts by utilizing a wholly objective standard
of mutuality of assent, by failing to consider that the "parties must be capable of
intelligent assent," and by failing to temper the objective test with more subjective
elements as has been the modern trend.
Florida courts have continued to use the phrase "meeting of the minds." See
e.g. Leopold v. Kimball Hill Homes Florida, Inc., 842 So.2d 133 (Fla. 2d DCA
2 Even under a purely objective test, it appears there was no mutual assent. A
reasonable person in the position of the nursing home, that is, with full knowledge
of Ms. Holloway's advanced age and concomitant mental shortcomings coupled
with a nursing home facility's duties to encourage and assist a resident in the
exercise of their rights would hardly take her manifestation of assent seriously, or
even ask her to assent in the first place.
8
2003); Sam Rodgers Properties, Inc. v. Chmura, 61 So.3d 432 (Fla.2d DCA 2011).
However, whether a court uses "meeting of the minds" or "mutuality of assent," the
test is not applied in a wholly objective sense. As noted above, this Court's test in
Strong & Trowbridge Co. v. H. Baars & Co., 54 So. 92, 93-94 (Fla. 1910),
continues to control and requires that "the parties be capable of intelligent
assent"--an element removed by the Second District's opinion. The Strong &
Trowbridge Co. test, by its very terms, requires a partially subjective analysis of
the facts of a given case. Thus, the Second District's adoption of purely objective
test is in direct conflict with this Court's well-established precedent.
In the instant case, the very facts described by the Second District's Opinion
reveal that Ms. Holloway was not capable of intelligent assent. Accordingly, there
was no "mutuality of assent" or "meeting of the minds" as to the agreement.
The Estate is concerned not only about the impact that the district court's
opinion has on its case, but also on the countless nursing home residents affected
by the Court's new application of a wholly objective standard of mutuality of
assent.
This new wholly objective standard of mutuality of assent is in direct
conflict with the earlier expression by this Court of the Strong & Trowbridge Co.
test for mutuality of assent. It also conflicts with Hogan v. Supreme Camp of
American Woodmen, 1 So.2d 256 (1941) and Hopkins v. Leon County, 74 So. 305,
9
309 (Fla. 1917)("We fully approve of the principles of law enunciated in Strong &
Trowbridge Co.").
Moreover, the wholly objective standard is in direct conflict with the
opinions of other districts on this same issue. See, e.g., Holloway v. Gutman, 707
So.2d 356, 357 (Fla. 5th DCA 1998). Thus, the question presented in this case is
not only one of direct conflict, but also one of great public importance.
CONCLUSION
Enfeebled nursing home residents with limited education, confusion, and
deteriorating mental condition cannot be treated the same as merchants or
sophisticated consumers. The district's opinion below does just that. The district
court's opinion departs from this Court's well-established precedent for mutuality
of assent as laid out in Strong & Trowbridge Co. v. H. Baars & Co., 54 So. 92, 9394 (Fla. 1910). Instead of following precedent, the district court chose to lay-out a
new, purely objective "modern" test for mutuality of assent. Under this decision,
hundreds, if not thousands, of nursing home residents in this State will be forced to
arbitration without even a basic understanding of what it is, or what they signed.
The Petitioner respectfully requests that this Court exercise its jurisdiction to
address the conflict with its precedent and to deal with this question of great public
importance.
10
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above has been
sent by electronic mail to the Court and to Melissa M. Burghardt, Esq., Bruce
Peisner, Esq. and Brian Bursa, Esq., Lewis Brisbois Bisgaard & Smith, LLP,
3812 Coconut Palm Drive, Suite 200 Tampa, FL 33619, at [email protected],
[email protected], on this 10th day of April, 2013.
Ísaac R. Rul-Carus, Esquire
Florida Bar No. 0017004
WILKES & McHUGH, P.A.
One N. Dale Mabry Hwy., Ste. 800
Tampa, Florida 33609
813-873-0026//813-286-8820 Fax
Attorneys for Appellee
[email protected]
[email protected]
[email protected]
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that the foregoing complies with the Florida Rules of
Appellate Procedure 9.210 requiring the font size of the type herein to be at least
fourteen points if in Times New Roman format.
aac R. Ruiz-Carus, Esquire
Florida Bar No.: 0017004
11