Document Category:
State: Pennsylvania
Subject Matter: McCumber Daniels Attorneys Win Favorable Opinion in Cost-of-Arbitration Appeal
Document Title:

On September 27,
the District Court of Appeal of
Florida, Second District, issued an opinion in Zephyr Haven Health &
Rehab Center, Inc.
, et al. v. Hardin (2d DCA Case No. 2D12-2647),
which reversed a trial court’s order denying a facility’s motion to compel
arbitration. McCumber Daniels attorneys, Mark Hartig and Amy Miles, represented the
nursing facility, Zephyr Haven Health & Rehab Center, in the trial court
and on appeal

In this case, the
facility’s admission agreement included an arbitration clause in which the
parties agreed that the facility would pay the first $500 of the arbitration
fees and costs and 60% of the remaining arbitration expenses. The resident was
responsible for the remaining 40% of arbitration expenses. When the resident
filed suit against the facility, the facility moved to compel arbitration.


The resident asked
the trial court to find the arbitration agreement unenforceable based on the
fee-splitting provision. She based her objections to the agreement on the
Supreme Court of the United States’ opinion in Green Tree Financial
Corp.-Alabama v. Randolph
, in which the Supreme Court found that an
arbitration agreement could be unenforceable if the cost of arbitration were so
great that it prohibited a plaintiff from bringing federal statutory claims.
The resident argued that she could not afford the cost of arbitration and,
therefore, forcing her to arbitrate would prevent her from vindicating her
statutory rights. The resident presented the trial court with several invoices
from unrelated arbitration cases to demonstrate what the cost could be and
testimony from her stepson regarding her strained finances. The facility
attempted to introduce evidence that the resident had retained her law firm
with a contingency agreement, which ensured that she would not have to pay any
costs unless she obtained a recovery. The resident objected to the questions
regarding the fee agreement, claiming it was attorney-client privileged
information. The trial court agreed. It also found that the cost-splitting
agreement was unconscionable and that performance of the agreement was
financially impossible. Therefore, the trial court denied the facility’s motion
to compel arbitration.


The appellate court
agreed with the facility that the resident had failed to show that the
agreement was unenforceable. Without determining whether the cost-splitting
provision was substantively unconscionable, the appellate court found that
because the resident did not also show procedural unconscionability, the
resident’s unconscionability claim must fail. The appellate court also found
that the resident had not shown that performance was impossible. It noted that
because the resident had other options available to finance her care, even if
less desirable, and because she had not had an adverse change in financial
circumstances since she signed the agreement, she could not escape the
arbitration provision on an impossibility defense.  


The appellate court
also agreed with the facility’s position that if the Supreme Court’s Green
decision applied to this case, the resident would have to show that
she was unable to pay for arbitration and that the cost of arbitration
would be substantially more than the cost of bringing her claims in the court.
Fee-splitting provisions in arbitration agreements are not “per se
unenforceable.” The appellate court found that the resident’s invoices from
unrelated arbitrations did not establish the amount she may have to pay for the
arbitration of her claims. Even if they did, the court noted, the resident had
not attempted to compare that cost with what she would pay in litigation.
Therefore, the resident “failed to carry her burden, to show that her likely
expenses in arbitration would exceed her likely expenses in litigation.”


Finally, as to
whether the resident’s financial agreement with her attorneys was privileged,
the appellate court noted that it was her burden to prove the likelihood of
incurring prohibitively expensive costs. The court acknowledged the facility’s
argument that if the resident’s attorneys were advancing her costs then she
could not prove that the expense of arbitration was keeping her from pursuing
her claims. Therefore, the terms of the financial agreement were relevant to
the cost issue. The court stated that the resident’s “attempt to use the
payment arrangement as both a sword and a shield must fail.” It noted that if
the financial agreement contained privileged information, it could be redacted
before being produced as evidence of the resident’s ability to pay for


For more
information about this case and information any information about McCumber
Daniels, please contact Andrew McCumber at
or call 813-287-2822.

Andrew R. McCumber, Esq.

McCumber, Daniels, Buntz,
Hartig & Puig P.A.

204 S. Hoover Blvd., Suite

Tampa, Florida 33609

(813) 287-2822 Telephone
(813) 287-2833 Fax


1400 South Trooper Road,
Suite 102

Eagleville, Pennsylvania

(610) 650-0871 Telephone
(610) 650-0872 Fax


Document Author: Mark Hartig
Firm/Company: McCumbers Daniels Buntz Hartig & Puig P.A.
Document Date: October 1, 2013
Search Tags: PA opinion
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