Rizzio v. Surpass Senior Living (CA1 1/30/20)

We learn here that the validity of a plaintiff’s contract with a defendant can depend on the nature of the fee agreement she later signs with her lawyer.

Plaintiff’s daughter put her in Defendant’s nursing home. Plaintiff was injured at the home and sued it. Defendant moved to compel arbitration, there being an arbitration agreement in the contracts Daughter (who had mom’s power of attorney) had signed. Plaintiff objected, arguing that the agreement was unconscionable. The facts were:

  1. The agreement required Plaintiff to pay Defendant’s costs and attorney’s fees regardless of the outcome of a dispute;
  2. The contract advised the patient to obtain counsel before signing it;
  3. Signing it was not a requirement for admission to the nursing home;
  4. Daughter testified that she met with Defendant’s representative for 10-15 minutes before signing and the arbitration provision was not pointed out to her; the representative testified that her standard practice was to send out the documents beforehand, point out the arbitration agreement, and meet with people for over one hour;
  5. the provision regarding costs and fees was expressly severable from the remainder of the contract;
  6. Plaintiff’s fee agreement with her lawyer was of the no-recovery-no-fee (or cost) variety.

After an evidentiary hearing the trial court denied the motion, deciding that the agreement was procedurally and substantively unconscionable and that it violated Plaintiff’s reasonable expectations. Defendant appealed.

The Court of Appeals reverses.

First, it says that the “superior court’s findings here do not establish procedural unconscionability.” This was merely a “standardized adhesion contract.” Such contracts do not have to be explained, and it was Daughter’s fault for not reading it, and anyway the part she didn’t read told her to get a lawyer. “This record does not support a finding of procedural unconscionability and we therefore reverse that finding.” (It is not clear here whether the court means “finding” or “conclusion” or whether it knows the difference.  In any event, is the court saying that the conclusion does not follow from the findings or that the findings are unsupported by the evidence? The former is an odd call, the latter a risky one.)

The court then agrees that the provision regarding costs and fees is unconscionable, “oppressive and may not be enforced.” Then it rules that the provision should be severed. (Actually, it doesn’t; it simply says that Plaintiff’s arguments on severability are wrong. But later it suggests that this part of the opinion had indeed “stricken” or “severed” the provision.)

Is the agreement unconscionable without the fee provision? It can be if the costs of pursuing arbitration are prohibitive. But Plaintiff didn’t have to pay anything unless she won. So the court decides that costs are not prohibitive. For it this is the crux of the opinion; its opinion’s first sentence tells us that the case concerns “an agreement to arbitrate . . . when counsel for the party seeking to avoid arbitration has agreed to advance all costs.” And so the validity of the contract Plaintiff signed in April 2017 depends on the nature of her agreement with her lawyer a year or so later. (And so her lawyer’s act in having her enter into it caused or contributed to her failure to overturn the arbitration agreement. Will he report that to his carrier?)

Finally, the court decides that the trial court erred in finding a violation of reasonable expectations. Defendant, the court tells us, “had [no] reason to believe” that Plaintiff wouldn’t have signed the contract had she known about the arbitration cost provision and, anyway, the court severed it. (A provision that makes her pay whether she wins or loses in a contract she doesn’t have to sign in order to get her mom admitted — and there’s no reason to believe that she wouldn’t have signed it had she known? The court has already told us that the provision is “oppressive”; has that no bearing on what a defendant has reason to believe?)

Costs on appeal to Defendant; remanded for proceedings consistent.

Your homework: calculate the chances that Defendant will change even one comma of that oppressive, unconscionable, and unenforceable — but delightfully in terrorem and conveniently severable if the rubes catch on — provision.

(Opinion: Rizzio v. Surpass Senior Living)

In Re: Terrell v. Torres (1/23/20)

We blogged the Court of Appeals’ opinion here; go there for the facts.

The Supreme Court vacates that opinion and affirms the trial court’s disposition, though for a different reason. The court agrees with the parties and the lower courts that contract law should govern (though it notes that going forward the statute will override such contracts). Unlike CA1, the court then actually cites and applies principles of contract law. It reviews the facts and recognizes that the contract called for a particular result and did not authorize courts to balance interests. The trial court, though it employed some balancing, had ordered that result.

“We are cognizant of the unavoidable emotional fall-out attendant to the disposition of the embryos here. But the family court was required to enforce the . . . Agreement.” One wonders at what point the court feels it appropriate to apologize for hurting someone’s feelings by enforcing the correct legal result.

(Opinion: In Re: Terrell v. Torres)

AU Enterprises v. Edwards (CA2 1/21/20)

There are things called Rules of Procedure for Eviction Actions. We don’t recall reading through them before, not having handled a forcible entry and detainer since the days when they had to remind us were to park at that courthouse. They seem to have been novelties as well to everyone involved in this FED.

Plaintiff won in the trial court. The court’s order allowing the eviction also allowed fees and costs in amounts to be determined. But it was in the form of a “judgment” and contained Rule 54(c) language (“no further matters remain pending.”). Plaintiff filed for attorney’s fees. Defendant filed an appeal and then filed an objection to the fee request. The court granted fees but deferred a cost award “until the time a final judgment is entered.” That unsigned minute entry was the last thing done in the trial court.

Apparently (we’re reading between the lines), the court and parties thought that the decision on possession had a life of its own, independent of the rest of the action. The Court of Appeals first needs to figure out if that’s true; otherwise the appeal is premature.

FED actions are purely statutory. The statute (A.R.S. 12-1178) provides that the court “shall” give judgment for restitution, damages, fees, and costs. “Thus . . . the statute contemplates that a judgment in an FED action shall include an award of attorney fees.”

Technically that should conclude the analysis but the court goes on to consider the Rules of Procedure for Eviction Actions. Rule 13 says that the court “shall” award fees when applicable.

(The court also points out that Rule 54(c) doesn’t apply to the case, being superseded by the eviction rules.)

So the final judgment in an FED action includes restitution, damages, costs, and fees. Since there never was such a judgment here, even after the appeal, the appeal is premature and can’t be saved. Dismissed pending the entry of a proper final judgment.

But the court is troubled by the result and so includes a few paragraphs of hand-wringing dicta: what about the evicted tenant who can’t yet appeal the eviction? “[A] public policy argument exists for a rule triggering appellate jurisdiction when a trial court issues any judgment for possession and a writ of restitution.” “[O]ur trial judges should consider issuing immediately enforceable judgments of possession only in conjunction with final orders.” The opinion doesn’t appear to understand clearly the difference between the FED judgment and the writ of restitution. Under Rule 13 the latter can’t issue until five days after the former has been signed. And the tenant can then post a bond to stay execution. (There are circumstances involving immediate possession but they are statutory and the rules deal with them appropriately.)

But, but . . . other than that “[a]ll other procedural means of securing . . . a stay would require defendants to challenge the merits . . . before the very court that has recently ruled adversely to them.” In other words, the rules provide various additional ways of avoiding a writ by going back to the trial court. And if that is a problem then we should also revisit such other unjust practices as rehearing, reconsideration, or, for that matter, remand.

(Opinion: AU Enterprises v. Edwards)