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Woebse v. Health Care and Lopez v. Ernie Haire Ford: Has the Second DCA Changed Its Tune?

By Christopher B. Hopkins, Esq.

February 6 must have been "arbitration day" at the Second DCA with the release of Marilyn Woebse as Personal Representative for the Estate of David Kramer v. Health Care and Retirement Corporation of America and Morris Lopez et al. v. Ernie Haire Ford, Inc. More specifically, it was a day when two distinct panels of 2nd DCA judges addressed procedural unconscionability.

WOEBSE V. HEALTH CARE

Woebse is clearly the more provocative of the two February 6 decisions because it appears to curtail the bold steps that the Second DCA had been making towards pushing legal issues upon the arbitration as we had seen with Bland v. Health Care and Rollins v. Lighthouse. That said, there is some consistency if one re-reads the Reeves v. Ace Cash Express decision from September 2006. Indeed, time will tell whether Woebse is really all that significant or if it is fact-driven based upon this admission method and this particular arbitration agreement.

In Woebse, a daughter (with a power of attorney) signed a 37-page document which, on the last few pages, contained an arbitration agreement which appears similar to that in Romano and Lacey. According to her testimony, the daughter had a five minute meeting to review and sign the documents. She neither read them nor had any provisions pointed out to her and did not have the chance to take the document with her.

The Woebse panel (Salcines, Altenbernd, and Silberman) found that this was procedurally unconscionable because (1) the arbitration provision was on pages 33-37, (2) the signor did not have an opportunity to read, and (3) the signor was not given a copy to take home and review after the "five-minute encounter." The court summarized, "[w]ith regard to another determinative factor -- equal bargaining power -- it did not exist." This was largely premised on the fact that the signor testified that she was told "they were admission papers that were required to be signed [for her father's] continued stay."

Finding procedural unconscionability, the Woebse panel then found that the agreement was substantively unconscionable for the same reasons as set forth in the Fourth DCA's Romano decision. Arbitration was denied.

Digging deeper, a review of the trial court hearing on the Motion to Compel Arbitration reveals that the trial court was not convinced by the argument that the daughter signed the documents two days into admission. Apparently the Second DCA was not impressed either (even Romano skirted over the fact that the admission paperwork was presented late).

The Woebse decision must be compared and contrasted to the prior Bland v. Health Care decision. The Bland panel (LaRose, Stringer, and Silberman) considered a similarly-worded arbitration agreement under different circumstances and legal arguments. In Bland, the court found that there was no unconscionability and that the public policy arguments regarding enforcement of the remedial limitations were for the arbitrator, not the court. In Bland, the nursing home representative spent two hours explaining the admission paperwork and the arbitration agreement was a separate, free-standing document.

Hence, the differences between Woebse and Bland is (1) Woebse involved only unconscionability whereas Bland dealt with unconscionability and public policy and (2) the short duration of the circumstances surrounding the signing of the admission paperwork, the lack of explanation, the inability to ask questions, and the lack of being able to review the document later amounted to procedural unconscionability in Woebse whereas, in Bland, the duration of the admission signing was hours. Notably, both Bland and Woebse paid little attention to education levels or when, during the admission, the paperwork was presented.

One issue that neither decision addressed was whether the arbitration agreement indicated whether there was a term holding that the arbitrator alone would consider questions regarding enforcement.

Thus, the Second DCA appears to have leaned favorably towards parties seeking to avoid arbitration when the circumstances surrounding the signing of the agreement involve short duration, lengthy paperwork, and a lack of an opportunity to review after the fact. This is curious since these considerations appear to stand in contrast with theories of parole evidence, being bound by one's signature, whether the arbitration provision was mandatory, and the signor's ability to ASK to see the agreement again.

LOPEZ V. ERNIE HAIRE FORD

Back in February 2007, we predicted that the prior Ernie Harris decision was "the most important decision [of 2007] so far." We must not have been too far off since the Second DCA choose to re-write and clarify the opinion.

The Lopez case involves a family purchasing a car from a dealership and signing and arbitration agreement. Contrast these facts with those in Woebse: arbitration was on paragraph 30, the signor initialed that paragraph, the signor negotiated other terms. That said, the signor still claimed he didn't read it and didn't know. Under those facts, the Lopez panel (Northcutt, Kelly, LaRose) held that there was no procedural unconscionability and the signor could not "defeat enforcement of a written contract on the ground that he signed it without reading it."

It appears, if we try to harmonize these cases, that procedural unconscionability will relieve a signor of their obligation to arbitration but, without some element of procedural unconscionability, the lack of reading alone will not avoid arbitration.

CONCLUSION

These are two "meaty" decisions from the Second DCA. There is some room to argue that the Second DCA is backing away from an ardently pro-arbitration stance it had been taking. That said, viewed in the context of cases set forth above, the Second DCA appears to be consistent.

Woebse tilts procedural unconscionability in favor of the consumer seeking to avoid arbitration however these facts are unique given that there was such a short duration to review and sign and the location of the arbitration provision. Arguments which failed were the signor's lack of education and the fact that the paperwork was presented during the admission. Parties involved in procedural unconscionability disputes will likely want to anticipate a Woebse-argument from the Plaintiff and a Lopez-argument from the Defendant.

Full post as published by Florida Arbitration Law on February 15, 2008 (boomark / email).