We travel out to Nebraska for a state supreme court decision in a nursing home arbitration case which, like most cases of this type, seems to present (yet another) new twist to an area which should have been fairly well scoured by now. For years, nursing homes and other health care facilities have been making arbitration "optional" so that the admission agreement is not considered an adhesion contract. This case suggests that such an "option" may be outside of the scope of an "agent" or family member who is authorized to sign medical papers -- ironically, if it was mandatory, the court suggests that the agent could have signed it.

Whether you are pro-arbitration or against it, take a look at the conclusions about agency and consider how lawyers -- much less "civilians" -- might predict how a court would interpret the lines of agency in future situations.

In Frank Koricic, Next of Kin of Manda Baker v. Beverly Enterprises - Nebraska, Inc. formerly dba Beverly Hallmark et al., an adult son admitted his competent mother to a nursing home with her advanced knowledge and assent. There was no formal power of attorney or guardianship, simply a long history of the son signing medical paperwork for his mother. In this case, upon placing her in the room, the son left with an employee for the sole purpose of signing the paperwork.

Based upon the foregoing, and after a discussion of "actual agency," the court found the son had actual authority to sign the admission paperwork.

However, because the arbitration provision was optional and not a condition for admission, the court found there was neither actual nor apparent authority for the son to sign that document. The court concluded that, "nothing in the record suggests that a reasonable person should have expected an arbitration agreement to be included with admission documents from a nursing home."

In light of (1) federal and state legislation, (2) a nationwide favoritism towards alternative dispute resolution, and (3) the widespread use of health care forms which address claims, insurance, and other non-health matters, the court's conclusion seems out of touch. When was the last time you went to the doctor or a health care facility and did NOT sign an arbitration agreement? That's not a pro or anti-arbitration statement but (at least anecdotally) fairly commonplace. Here, the facility is at least making it option to avoid the allegation that it was an adhesion contract -- now the court makes a distinction to carve out arbitration from other terms in a standard admission packet.

Plaintiff lawyers seeking to avoid arbitration should use this argument in the face of an optional arbitration agreement.

Defense lawyers seeking to enforce an optional arbitration agreement may want to consider introducing evidence as to the commonality of arbitration agreements (or that the agent signed prior arbitration clauses).

For a mediation settlement agreement to be enforced by a court, Florida Rule of Civil Procedure 1.730(b) requires it to be "reduced to writing and signed by the parties and counsel, if any." Few court documents require attorney and part signature -- remember this one as the exception.

The case of Michael Dean v. Rutherford Mulhall, P.A. (Polen, Warner and Kaplan) raises the question of enforceability of an unsigned mediation settlement agreement which was essentially already answered a year ago by the Third District's opinion in Mastec, Inc. v. Rolando Cue.

In the Dean case, a dispute arose over attorney's fees and a formal mediation was adjourned with the mediator reporting to the court that the parties were trying to work it out. Later, the plaintiff/firm filed for judgment based upon a mediation settlement agreement signed by defendant's counsel but not the actual party. Judgment was granted and an appeal resulted. Technical appellate issues about the record were used to goal-tend the judgment but did not survive.

Bottom line, the analysis in this case appears the same as in the Mastec case.

Lesson: mediators and lawyers need to know that the rule requires the parties to walk out of mediation with a settlement signed by parties and lawyers.

An "simple, self-contained" arbitration clause in a four page document does not need to "leap off the page," says a Panel from the Third District in National Financial Services, LLC, Bank of America Corporation, Bank of America Investment Services, Inc. v. James W. Mahan.

In this case, a bank customer opened two related accounts by completing a four page application which stated the same arbitration provision twice in same-size, italicized print. The arbitration clause was also set out in its own paragraph.

The trial court reportedly "invalidated the arbitration language... because its formatting made it procedurally unconscionable." Taking the issue in steps, the Panel (Cortinas, Shepherd, and Lagoa) noted that the format of the application was not procedurally unconscionable and there was no corresponding substantive unconsionability.

In a move which may unnecessarily open doors best left closed, the Panel compared the situation to Romano v. Manor Care and Prieto v. Healthcare (discussed here) where, prior to completing the paperwork, one side was already performing under the contract and, in the other case, where the signor complained they were given a "packet" of documents to sign.

The First District considered a case where, between 1987-1993, the parties entered into several contracts with broad arbitration clauses. Eleven years later, in 2004, they enter into another contract which "supplements but does not replace" the prior contracts. That later contract does not include an arbitration clause. A dispute ensues and the issue arises whether the court should compel arbitration.

The case is Blue Cross and Blue Shield of Florida, Inc. and Health Options v. University of Florida Board of Trustees, University of Florida College of Dentistry (Roberts, Kahn, and Thomas).

The Court investigated whether the dispute over the 2004 contract still nonetheless triggered the arbitration provisions in the prior contracts. In short, the court was investigated prong 2 of the Seifert agreement, to wit, whether an arbitrable agreement existed.

The Panel determined that the parties had not sought a declaratory judgment regarding the prior contracts NOR did any party allege a violation of the prior contracts. Moreover, the Panel concluded that the matter could be resolved without reliance or reference to the prior contracts. Arbitration was therefore denied.

In what appears to be a surprisingly weak argument, a plaintiff assisted living facility resident was able to convince a Florida trial judge that she was not bound by arbitration -- despite the Resident and the power of attorney signing the arbitration agreement. The appellate court, however, found that barring coercion or other grounds,the signatures on the agreement created a binding legal contract.

In Rocky Creek Retirement Properties, Inc. d/b/a Rocky Creek Retirement Village et al. v. Estate of Virginia Fox (Villanti, Davis, Morris), the ALF facility initially did not include an arbitration clause in their admission agreement. In 2006, the facility asked residents to sign an arbitration agreement (not voluntary) and gave everyone time to consider and discuss. The subject Resident signed and her daughter/POA signed. There was no indication they discussed the ramifications nor consulted a lawyer before signing.

According to the Opinion, the sole issue was whether there was a valid contract. This was not a case of unconscionability. The Second DCA cited cases from other intermediate district courts which held that a party is bound by a signed contract unless they can prove they were prevented/induced, even when the signor is physically unable to read the agreement or chooses not to. See two cases near to our hearts, given our involvement in them: Consolidated Res. Healthcare v. Fenelus and Etting v. Regents Park.

Lacking such evidence, the trial court was reversed and arbitration ordered.

Florida courts have been clear, almost to a fault, that the Proposal for Settlement rules are strictly construed. For day-to-day practitioners, that approach has created a minefield of picky technicalities complying with the Rule of Civil Procedure and the statute. Tromping through that minefield, the Third District had a blast yesterday in Jose Milton v. John Reyes (Shepherd, Suarez, Rothenberg).

In a personal injury case, the plaintiff served a Proposal for Settlement on defendant and filed a Notice with the court. The Notice included an accurate and appropriate certificate of service. The Proposal was timely, said the right things, and was sent to the right people, but... did not contain a certificate of service (no explanation why not). Rule 1.442(c)(2)(G) requires that a Proposal "shall include a certificate of service in the form required by rule 1.080(f). Remember, there was a certificate of service to the Notice and no dispute as to proper and timely receipt. Does that void a Proposal?

Yes.

In the Florida Supreme Court 2007 decision in Campbell v. Goldman, the Court held that failure to reference section 768.79 (even when it is the only statute on point) will void the Proposal. The First DCA allowed some wiggle room in Jefferson v. City of Lake City, where the Notice had the right statute but the Proposal had a typo -- that was enforceable. Here, a total absence of the certificate of service -- despite all other indicators that everyone timely received it -- was fatal.

Practice tip: take a look at the 2008 article, "Building a Better Proposal for Settlement." It is on the right side of your screen, under "Articles." It would have avoided this problem.

Practice tip: pinned down by what appears to be a valid Proposal? Crack open the Rule and Statute and carefully compare the Proposal you are facing. The Rule/Statute combination is so wrought with technical requirements, you may -- like this defendant -- just get lucky.

Perhaps a form Proposal in the Rules of Civil Procedure would relieve these issues?

Is there a "be careful what you wish for" tone in the Fifth District's recent decision where, in declining to accept an appeal out of arbitration, the Panel notes that "arbitration, after all, is a form of alternative dispute resolution..." (their emphasis)

That said, there is some legal truth to the statement that arbitration is an alternative dispute forum where there are only five "narrow" grounds for appeal which are rarely invoked with success. That means that an arbitrator can make an error of law, decline to correct it, and there is nothing the losing party can do about it.

The case which brings up this dirty little secret of arbitration nuance is Commercial Interiors Corporation of Boca Raton v. Pinkerton & Laws, Inc. and Hartford Fire, etc. (Monaco, Griffin and Sawaya).

Back in 2006, we mentioned that the Third and Fifth DCAs acknowledge five -- and only five -- grounds to vacate an arbitrator's order, see here and here. Not too long after that, we stumbled across the sternly worded "poor loser" case from the Eleventh Circuit which indicated there was only four grounds to vacate an arbitration award, at least in the 11th Circuit's eyes. Even in late 2007, we found that vacating awards was not an easy task -- at the same time, the Third DCA confirmed that an arbitrator need not be apply the right law in Regalado and CareMed v. Cabezas.

Now in late 2009, the Fifth DCA heard a dispute over a construction subcontract where both parties agreed the subject contract included an arbitration clause however the property owner claimed it was relieved from paying the bill because the opposing party did not have a contractor's license, thus leading the contract to be void under Florida Statutes 489.128. This case was noted to be similar to the prior case of Charles Boyd Construction v. Vacation Beach.

Under Buckeye Check Cashing, Inc. v. Cardegna, the issue of the illegality of the contract is for the arbitrator to decide. Thereafter, any arbitrator's award can be appealed under the Florida Arbitration Code, Florida Statute 682.13, for fraud, partiality, exceeding powers, refusal to postpone hearing, or no arbitration agreement.

The Fifth DCA found no such grounds existed. Moreover, relying upon a 1989 Florida Supreme Court case, the Panel confirmed that "the trial court simply disagreed with the arbitrator's application of the law in this case" but "that, however, is not a sufficient basis to set aside this arbitration proceeding." Phrased in more tart language, the state supreme court had previously noted, "an award of arbitration may not be reversed on the grounds that the arbitrator made an error of law."

We have previously suggested that a bright line rule has yet to emerge when Florida courts consider the third prong of the Seifert test, waiver of arbitration. Thus, taking action other than filing a Motion to Compel Arbitration is not recommended for defendants (likewise, plaintiffs should be aware of any arbitration rights before filing suit). That said, two intermediate appellate courts have recently ruled that filing an Answer, raising arbitration as an affirmative defense, is not waiver by a defendant; that said, we maintain our concerns that this is not a "best practice" since filing an Answer exists in nearly all cases where a Florida court has found that the defendant waived arbitration.

As indicated, we previously reported that the Second District found that an Answer with an affirmative defense of arbitration was not waiver, even where the Answer requested a jury trial. We're concerned about the reasoning of this case, or that it might be distinguished, and recommend AGAINST relying on this opinion as grounds to file such pleadings.

More recently, in Jerry T. Lynch v. Solid Waste Haulers Florida LLC and Payroll Management Inc., the First District (Clark, Benton and Lewis) held that a motion to dismiss filed by one defendant, and an answer with an arbitration affirmative defense filed by the second defendant, is not waiver.

That said, defendants who inadvertantly filed responsive pleadings and then realized they had arbitration rights likely want to grab onto these life rafts from the First and Second DCA's.

What happens when a Proposal for Settlement is served by plaintiff on defendant in good faith -- and then plaintiff later adds a new claim and beats the Proposal at trial ONLY because of the new claim?

In yesterday's decision in Eucenda Segundo v. Cedric Reed out of the Third District, the panel (Shepherd, Suarez, and Rothenberg) considered that very issue.

In this auto accident case, the plaintiff originally claimed shoulder and neck injuries and served a Proposal for Settlement on the defendant for $10,000 (apparently the amount of available insurance). That Proposal expired.

Six months later, plaintiff's counsel determined that there may be a claim for a shoulder injury. That shoulder injury became part of the case that was tried. It was undisputed that neither side considered or relied upon the shoulder injury when the Proposal had been served and rejected.

The plaintiff won at trial and, if you broke down the verdict, it was evident that the "new" shoulder injury pushed the verdict more than 25% above the Proposal. In other words, but for the "new" claim which was plead after the Proposal expired, the plaintiff would NOT have beaten the Proposal.

Should the defendant, under these circumstances, still be sanctioned under Florida Statute 768.79 and Rule 1.442?

No, says the Third DCA, ruling that, while the Proposal was made in good faith based upon information known at the time, the trial court abused its discretion under Florida Statute 768.79(7)(b) by not considering "all other relevant criteria" when deciding the amount of fees.

Interestingly, the appellate court reversed and sent the matter back to the trial court to use (better?) discretion in reviewing and awarding fees. The defendant had proposed paying fees limited to those incurred between the expiration of the Proposal and the development of the "new" claim, which was about $1,700 in fees.