FL Appeals Court Says Woman, 92, Was Competent To Sign Arbitration Agreement

03/11/2013 // Keller Grover LLP // Carey Been // (press release)

Winter Haven, Fla.—An outrageous ruling by the Florida District Court of Appeals compelling arbitration has consumer protection lawyers up in arms. The Court overturned the trial court and decided to force arbitration in the wrongful death case of a 92 year old woman, who signed admittance contracts for a nursing home, in spite of being mentally incapable of understanding what she was signing, reports San Francisco consumer protection attorney Carey Been.

In the case Spring Lake v. Holloway, the woman who had a fourth grade education, memory problems, was described as “increasingly confused,” signed contracts filled with legalese that even the most competent individuals would have trouble discerning. In addition, the contracts included a separate arbitration agreement preventing the plaintiff from bringing the nursing care facility to court over any claims.

From August 20, 2010 to January 4, 2011, Ms. Holloway was a patient at Spring Lake rehabilitation center. Upon admittance to the facility, she executed a standard resident admission and financial agreement and an arbitration agreement. Ms. Holloway was 92 years old at the time and had trouble reading and spelling, and experienced memory and confusion problems. But, at the time, it does not appear that the admissions staff at Spring Lake failed to follow any proper procedures to obtain Ms. Holloway’s signature or misled her in any way.

During trial court proceedings it was not found that Ms. Holloway was incompetent or incapacitated at the time of her admittance to the care facility, which would have prevented her from entering into a contract. But the court did agree that because of the complexity of the contracts, Ms. Holloway could not have possibly understood the terms of these agreements. In addition, the court found that there was “no meeting of the minds between the parties and that the arbitration clause was unenforceable.”

But the appeals court ruled that Ms. Holloway’s “limited abilities are not a basis to prevent enforceability of this contract.” They also noted that a large percentage of people who enter nursing homes and rehabilitation centers also have mental or physical limitations that hinder them from understanding the agreements.

The appeals court also addressed the additional component of the trial court’s decision not to compel arbitration, which was that there was no “meeting of the minds” because of the lack of understanding by Ms. Holloway, so therefore the arbitration agreement was unenforceable. They found that the concept is not valid in today’s society and our society couldn’t function if a “meeting of the minds” was a mainstay in all contractual agreements. The “meeting of the minds” assumes that both parties have a comparable, subjective understanding of the agreement, which is clearly not the case with most contracts consumers sign. Back in the day when all agreements were individually crafted and not boilerplate, that may have been true.

The appeals court ultimately sided with the appellants and reversed the trial court’s decision, allowing Spring Valley to force arbitration in Ms. Holloway’s case.

“This is a bold faced injustice to consumers, says Been, a San Francisco consumer protection attorney at Keller Grover LLP. “It has become common practice for the courts to rule in favor of businesses over consumers, forcing arbitration even in cases where there is little chance for the consumer to fully understand what they are signing. That said it is a little unnerving to see a ruling as in-your-face as this, finding that even the inherent inability to understand the terms of a contract does not prevent its enforceability. What ever happened to the concept of mutual consent in arbitration cases?”

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