COA affirms compelled arbitration in assisted living sex abuse dispute

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The legal guardian of an elderly woman housed at a Carmel assisted living facility could not convince the Indiana Court of Appeals on Tuesday that she should not be compelled to arbitration after bringing breach of contract and negligence claims against the facility for allegations of sex abuse.

After looking at new assisted living facilities for 77-year-old “Jane Doe II”, her legal guardian signed an agreement for Jane Doe to reside at the Carmel Senior Living, which contained a binding arbitration clause.

Months after Jane Doe’s move in date, her guardian filed a complaint of breach of contract and negligence against CSL, Spectrum Retirement Communities, and Michael Sullivan. She alleged that Sullivan, while an employee of CSL, sexually abused Jane Doe and that CSL/Spectrum should be held vicariously liable.

The Hamilton Superior Court ultimately issued an order compelling arbitration of the guardian’s claims, prompting her to appeal. Although the Indiana Court of Appeals found the language of the arbitration agreement to be plain, both Guardian and the Indiana Trial Lawyers Association, acting as amicus curiae, asserted that the agreement was invalid because it was “both substantively and procedurally unconscionable.”

Specifically, Guardian argued the agreement was substantively unconscionable because its terms requiring arbitration and prohibiting judicial review, requiring confidentiality of arbitration proceedings, and limiting damages were “oppressively one-sided and harsh.”

But finding her assertion to be that the arbitration agreement is an “adhesion contract,” the appellate court concluded that guardian pointed to no evidence indicating that she was the weaker party or that she was not in a position to “shop around for better terms.”

“In fact, the evidence shows that Guardian did investigate other facilities as possible placements for Resident. And, although Guardian now states that she did not understand that she was agreeing to confidentiality of arbitration and waiving Resident’s access to courts and claims for punitive and exemplary damages, she provides no explanation as to why she did not understand the clear, plain terms of the contract that did just that,” Judge L. Mark Bailey wrote for the appellate court.

“She does not establish — or even claim — that she had difficulty understanding the terms of the agreement or that she initialed and signed it unwillingly,” it continued.

Additionally, the appellate court found that Guardian was given a sufficient amount of time to read the contract and that the agreement was not hidden in the contract as she suggested.

“Rather, as was the case with the nursing home arbitration agreement at issue in Sanford v. Castleton Health Care Ctr., 813 N.E.2d 411, 416 (Ind. Ct. App. 2004), the arbitration agreement here had its own heading in bold capital letters; it is immediately followed by a signature line requiring Guardian to provide her initials, which she did; and there is no evidence that Guardian was precluded from reading the agreement and asking questions about it,” the appellate court wrote.

Finally, it rejected amicus curiae’s argument that the predispute arbitration agreements for nursing home facilities such as the one in this case are unconscionable as against public policy, pointing out that the agreement was for Jane Doe II to live in an “assisted living and memory care apartments,” not a nursing home facility.

“In addition, because Count II of Guardian’s complaint raises allegations of substantially interdependent and concerted misconduct by both Certiphi (a nonsignatory) and CSL (a signatory), Guardian is equitably estopped from asserting that her claims against Certiphi are not subject to the broad language of her agreement to arbitrate ‘all claims,’” the appellate court concluded.

The case is Jane Doe 1, as Legal Guardian of the Person and Estate of Jane Doe 2, an Incapacitated Adult v. Carmel Operator, LLC d/b/a Carmel Senior Living, et al.,19A-CT-2191.

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