The District Court of Appeal of Florida Second District (“Florida Appellate Court”) held in its Octiber 13, 2021 opinion that “the trial court erroneously concluded that the [defendant assisted living facility’s] arbitration agreement is unconscionable.”
On March 20, 2015, Mrs. Pascazi was admitted to Osprey Health Care Center, a licensed assisted living facility. Sharon Outwater was authorized to act as Mrs. Pascazi’s attorney-in-fact and signed several documents for Mrs. Pascazi’s admission to Osprey Health Care Center, including a document entitled “Mediation and Arbitration Agreement.”
Mrs. Pascazi left Osprey Health Care Center (“Osprey”) in January 2017. A year later, she sued Osprey and alleged claims for negligence, breach of fiduciary duty, and violations of section 415.1111, Florida Statutes (2016). Osprey moved to compel arbitration. Mrs. Pascazi opposed Osprey’s motion, maintaining that the arbitration agreement was (1) invalid because it lacked specific terms regarding arbitration rules and procedures; (2) void as against public policy principally because it contained a provision impermissibly shortening the applicable statute of limitations; and (3) procedurally and substantively unconscionable for myriad reasons, including those underlying Mrs. Pascazi’s “missing terms” and voidness arguments.
The trial court orally ruled that the agreement was unconscionable and denied Osprey’s motion to compel arbitration in an unelaborated order. Osprey appealed.
Florida Appellate Court Opinion
The Florida Appellate Court stated that unconscionability is a defense to enforcement of an arbitration agreement and is based on the common law concept that a court may refuse to enforce a contract where it would be inequitable to do so. Because Mrs. Pascazi sought to avoid arbitration on unconscionability grounds, she had the burden to establish that the arbitration agreement is both procedurally and substantively unconscionable.
Procedural unconscionability relates to the manner in which the contract was entered and is described as the absence of meaningful choice when entering into the contract. Substantive unconscionability requires assessment of the contract’s terms to determine whether they are so outrageously unfair as to shock the judicial conscience. A party seeking to avoid arbitration on unconscionability grounds must demonstrate both procedural and substantive unconscionability, and the two types of unconscionability are distinct.
The Florida Appellate Court stated that in the present case, “The “totality of the circumstances” on which the trial court properly could rely to find procedural unconscionability encompassed only matters pertinent to execution of the arbitration agreement, not challenges to its substance.”
“As Osprey correctly argues, this record doesn’t support a finding of procedural unconscionability. Confined to its proper boundaries, Mrs. Pascazi’s procedural unconscionability claim is based on the facts that Ms. Outwater felt rushed during the admission meeting with Osprey because she had a “plane to catch,” she didn’t ask any questions of Osprey Health Care Center’s admissions personnel, and she merely skimmed the documents before signing them, so she didn’t fully understand the import of the agreement. Ms. Outwater received full copies of all documents, there was no evidence that she was either prevented or discouraged from reading them before she signed them, and there is no evidence that she was coerced or otherwise pressured to sign the documents. These facts are legally insufficient to establish procedural
unconscionability … Because we hold that Mrs. Pascazi failed to establish procedural unconscionability, we “need not address substantive unconscionability.””
The Florida Appellate Court further held: “Mrs. Pascazi did not and cannot establish in what manner the procedures for arbitration are insufficiently delineated in the agreement, which is unsurprising given the comprehensive procedures that are spelled out in the agreement. To the extent any question remains as to arbitration procedures, the FAC [Revised Florida Arbitration Code] addresses matters such as arbitrator appointment, conduct of the arbitration hearing, the award and modification of it, remedies, and so on.”
The Florida Appellate Court held: “In short, the only true public policy violation made out in this case is the shortened statute of limitations provision. We hold that it is severable. To the extent the trial court concluded otherwise in its misguided substantive unconscionability analysis, it did so erroneously.”
The Florida Appellate Court concluded: “These parties made a valid agreement in which they agreed to arbitrate claims of the type alleged in Mrs. Pascazi’s complaint. Mrs. Pascazi failed to carry her burden of establishing that the agreement is procedurally and substantively unconscionable. The trial court erred reversibly by denying Osprey’s motion to compel arbitration on this ground. The agreement provides comprehensive guidance concerning arbitration procedures, and any remaining “gaps” as to such procedures can be resolved by reference to the FAC. The shortened statute of limitations provision violates public policy, but it can and should be severed from the agreement. Reversed and remanded with instructions to enter an order compelling arbitration.”
Source Osprey Health Care Center, LLC v. Pascazi, No. 2D19-4787.
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