Supreme Court reverses part of Fifth District ruling over arbitration agreements
Bethany Krajelis Sep. 21, 2012, 12:00pm
For the second time in two years, the Illinois Supreme Court has issued a ruling in a Fifth District case dealing with arbitration agreements.
In an opinion delivered Thursday by Justice Mary Jane Theis, the court affirmed in part and reversed in part the judgment of the Fifth District Appellate Court, remanding the case to the trial court for further proceedings.
While the justices upheld the appellate court's determination that Sue Carter, the administrator of a deceased nursing home patient, can't be compelled to arbitrate her wrongful death claim against SCC Odin Operating Co., they reversed the panel's finding that the arbitration agreements were unenforceable.
The case stems from a lawsuit Carter, the administrator of Joyce Gott's estate, filed in Marion County against the company, which runs a nursing home in Odin, Ill.
Gott stayed at the nursing home for two months in 2005 and from early 2006 until her Jan. 31, 2006, death.
Carter claimed that Odin violated the state's Nursing Home Care Act and as a result, Gott sustained injury, including gastrointestinal bleeding, anemia and respiratory failure.
Her suit also included a claim under the Wrongful Death Act.
Relying on arbitration agreements executed at Gott's two nursing home admissions, Odin filed a motion to compel arbitration.
Carter signed the 2005 agreement as Gott's legal representative and Gott herself signed the 2006 agreement.
Under the agreements, the parties agreed that would only arbitrate claims in which the amount in controversy was at least $200,000.
Among other provisions, the agreements provided that the defendant would pay the fees of the arbitrators and give the resident the right to choose the location of the arbitration.
The trial court denied Odin's motion to compel arbitration, saying that the agreements were unenforceable because they lacked "mutuality of obligation" and violated public policy.
The court also determined that the wrongful death claim could not be arbitrated.
In 2008, an appeals panel made up of Justices Stephen Spomer, Richard Goldenhersh and Bruce Stewart affirmed the trial court's denial of Odin's motion to compel arbitration.
To reach its decision, the panel examined provisions of the Nursing Home Care Act that provide any waiver by a resident or her legal representative of the right to commence an action under the act shall be null and void.
Theis wrote that the Supreme Court in 2010 reversed the appellate court and held that the act's anti-waiver provisions are the equivalent of anti-arbitration legislation preempted by the FAA.
The state high court then remanded the matter back to the appellate court to consider the appeal's remaining issues.
On remand, the same panel of the appellate court again affirmed the lower court's denial of Odin's motion to compel arbitration.
With one justice dissenting, the panel held that Odin's promise to arbitrate was "illusory" based on the $200,000 limit and a lack of mutuality of obligation rendered the agreements unenforceable.
The panel was unanimous, however, in its conclusion that Carter can't be compelled to arbitrate her wrongful death claim because she did not sign that agreement in her individual capacity.
Following another appeal to the Illinois Supreme Court, the justices this week affirmed in part and reversed in part the panel's findings.
Affirming the panel's holding on the wrongful death claim, Theis wrote that Carter can't be bound by Gott's agreement because she brought the wrongful death claim as the administrator of the estate on behalf Gott's next of kin, not for Gott.
The Supreme Court, however, disagreed the appellate court's ruling that deemed the agreements unenforceable.
To reach its decision that reversed the appeals panel, the justices looked at various provisions of the agreement that "constitute a benefit to Gott and a detriment to defendant."
Those provisions include Odin's promise to pay the arbitrator's fees and Gott's right to choose the location of the arbitration, among others.
"Based on these contract provisions, we conclude that Gott's promise to arbitrate, even if not met with a reciprocal promise to arbitrate by defendant, is nonetheless supported by consideration," Theis wrote.
Justices Charles Freeman and Robert Thomas took no part in the court's decision.
Court records show that Washington, D.C., attorney Malcolm Harkins III represented Odin in oral arguments before the court and O'Fallon attorney Staci Yandle represented Carter.
The case is Sue Carter v. SCC Odin Operating Co., 2012 IL 113204