Brown v. Genesis Healthcare Corp.

229 W.Va. 382

729 S.E.2d 217

Clayton BROWN, as guardian for and on behalf of Clarence Brown, Petitioner

v.GENESIS HEALTHCARE CORPORATION; Genesis Healthcare Holding Company II, Inc.; Genesis Health Ventures, Inc. of West Virginia; Genesis Eldercare Corporation; Genesis Eldercare Network Services, Inc.; Genesis Eldercare Management Services, Inc.; Genesis Eldercare Rehabilitation Services, Inc.; Genesis Eldercare Staffing Services, Inc.; Genesis Eldercare Hospitality Services, Inc.; Marmet SNF Operations, LLC; 1 Sutphin Drive Associates, LLC; 1 Sutphin Drive Operations, LLC; Genesis WV Holdings, LLC; Glenmark Associates, Inc.; Marmet Health Care Center, Inc. n/k/a MHCC, Inc.; Canoe Hollow Properties, LLC; Robin Sutphin; and Shawn Eddy, Respondents.

Jeffrey Taylor, personal representative of the Estate of Leo Taylor, Petitioner

v.MHCC, Inc., f/k/a Marmet Health Care Center; Canoe Hollow Properties, LLC; Genesis Healthcare Corporation d/b/a Marmet Health Care Center; Glenmark Associates, Inc.; Glenmark Limited Liability Company I; Glenmark Properties, Inc.; Genesis Healthcare Corporation; Genesis Health Ventures of West Virginia, Inc.; Genesis Health Ventures of West Virginia, LP; Genesis Eldercare Corporation; Genesis Eldercare Network Services, Inc.; Genesis Eldercare Management Services, Inc.; Genesis Eldercare Rehabilitation Services, Inc.; Genesis Eldercare Staffing Services, Inc.; Genesis Eldercare Physician Services, Inc.; Genesis Eldercare Hospitality Services, Inc.; Horizon Associates, Inc.; Horizon Mobile, Inc.; Horizon Rehabilitation, Inc.; GMA Partnership Holding Company, Inc.; GMA–Madison, Inc.; GMA–Brightwood, Inc.; Helstat, Inc.; Formation Capital, Inc.; FC–GEN Acquisition, Inc.; Gen Acquisition Corporation; and JER Partners, LLC, Respondents

Sharon A. Marchio, Executrix of the Estate of Pauline Virginia Willett, Petitioner

v.Clarksburg Nursing & Rehabilitation Center, Inc., a West Virginia Corporation, d/b/a Clarksburg Continuous Care Center; Sheila K. Clark, Executive Director of Clarksburg Nursing & Rehabilitation Center, Inc., d/b/a Clarksburg Continuous Care Center; John/Jane Doe # 1; and Jennifer McWhorter, Respondents.

Nos. 35494, 35546, 35635.

Supreme Court of Appeals of West Virginia.

Submitted June 6, 2012.

Decided June 13, 2012.

Syllabus by the Court

1. “Under the Federal Arbitration Act, 9 U.S.C. § 2, a written provision to settle by arbitration a controversy arising out of a contract that evidences a transaction affecting interstate commerce is valid, irrevocable, and enforceable, unless the provision is found to be invalid, revocable or unenforceable upon a ground that exists at law or in equity for the revocation of any contract.” Syllabus Point 6, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011).

2. “Congress did not intend for arbitration agreements, adopted prior to an occurrence of negligence that results in a personal injury or wrongful death, and which require questions about the negligence be submitted to arbitration, to be governed by the Federal Arbitration Act.” Syllabus Point 21, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011).

3. In accordance with Marmet Health Care Center, Inc. v. Brown, 563 U.S. ––––, 132 S.Ct. 1201, 182 L.Ed.2d 42 (2012) (per curiam), Syllabus Point 21 of Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011) is overruled.

4. “The doctrine of unconscionability means that, because of an overall and gross imbalance, one-sidedness or lop-sidedness in a contract, a court may be justified in refusing to enforce the contract as written. The concept of unconscionability must be applied in a flexible manner, taking into consideration all of the facts and circumstances of a particular case.” Syllabus Point 12, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011).

5. “An analysis of whether a contract term is unconscionable necessarily involves an inquiry into the circumstances surrounding the execution of the contract and the fairness of the contract as a whole.” Syllabus Point 3, Troy Mining Corp. v. Itmann Coal Co., 176 W.Va. 599, 346 S.E.2d 749 (1986).

6. “A determination of unconscionability must focus on the relative positions of the parties, the adequacy of the bargaining position, the meaningful alternatives available to the plaintiff, and ‘the existence of unfair terms in the contract.’ ” Syllabus Point 4, Art's Flower Shop, Inc. v. Chesapeake and Potomac Telephone Co. of West Virginia, Inc., 186 W.Va. 613, 413 S.E.2d 670 (1991).

7. “Unconscionability is an equitable principle, and the determination of whether a contract or a provision therein is unconscionable should be made by the court.” Syllabus Point 1, Troy Mining Corp. v. Itmann Coal Co., 176 W.Va. 599, 346 S.E.2d 749 (1986).

8. “If a court, as a matter of law, finds a contract or any clause of a contract to be unconscionable, the court may refuse to enforce the contract, enforce the remainder of the contract without the unconscionable clause, or limit the application of any unconscionable clause to avoid any unconscionable result.” Syllabus Point 16, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011).

9. “A contract term is unenforceable if it is both procedurally and substantively unconscionable. However, both need not be present to the same degree. Courts should apply a ‘sliding scale’ in making this determination: the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the clause is unenforceable, and vice versa.” Syllabus Point 20, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011).

10. “Procedural unconscionability is concerned with inequities, improprieties, or unfairness in the bargaining process and formation of the contract. Procedural unconscionability involves a variety of inadequacies that results in the lack of a real and voluntary meeting of the minds of the parties, considering all the circumstances surrounding the transaction. These inadequacies include, but are not limited to, the age, literacy, or lack of sophistication of a party; hidden or unduly complex contract terms; the adhesive nature of the contract; and the manner and setting in which the contract was formed, including whether each party had a reasonable opportunity to understand the terms of the contract.” Syllabus Point 17, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011).

11. “A contract of adhesion is one drafted and imposed by a party of superior strength that leaves the subscribing party little or no opportunity to alter the substantive terms, and only the opportunity to adhere to the contract or reject it. A contract of adhesion should receive greater scrutiny than a contract with bargained-for terms to determine if it imposes terms that are oppressive, unconscionable or beyond the reasonable expectations of an ordinary person.” Syllabus Point 18, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011).

12. “Substantive unconscionability involves unfairness in the contract itself and whether a contract term is one-sided and will have an overly harsh effect on the disadvantaged party. The factors to be weighed in assessing substantive unconscionability vary with the content of the agreement. Generally, courts should consider the commercial reasonableness of the contract terms, the purpose and effect of the terms, the allocation of the risks between the parties, and public policy concerns.” Syllabus Point 19, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011).

13. “Provisions in a contract of adhesion that if applied would impose unreasonably burdensome costs upon or would have a substantial deterrent effect upon a person seeking to enforce and vindicate rights and protections or to obtain statutory or common-law relief and remedies that are afforded by or arise under state law that exists for the benefit and protection of the public, are unconscionable; unless the court determines that exceptional circumstances exist that make the provisions conscionable. In any challenge to such a provision, the responsibility of showing the costs likely to be imposed by the application of such a provision is upon the party challenging the provision; the issue of whether the costs would impose an unconscionably impermissible burden or deterrent is for the court.” Syllabus Point 4, State ex rel. Dunlap v. Berger, 211 W.Va. 549, 567 S.E.2d 265 (2002).

James B. McHugh, Esq., Michael J. Fuller, Esq., D. Bryant Chaffin, Esq., McHugh Fuller Law Group, PLLC, Hattiesburg, MI, Harry G. Deitzler, Esq., Hill, Peterson, Carper, Bee, & Deitzler, PLLC, Charleston, WV, for Petitioner Clayton Brown.

Andrew L. Paternostro, Esq., Jeff D. Stewart, Esq., The Bell Law Firm, PLLC, Charleston, WV, Attorneys for Petitioner Jeffrey Taylor.

Frank E. Simmerman, Jr., Esq., Chad L. Taylor, Esq., Simmerman Law Office, PLLC, Clarksburg, WV, Attorneys for Petitioner Sharon A. Marchio.

Shawn P. George, Esq., George & Lorensen PLLC, Charleston, WV, Attorney for Respondents Marmet Health Care Center, Inc., Canoe Hollow Properties, LLC, and Robin Sutphin.

Mark A. Robinson, Esq., Ryan Brown, Esq., Justin D. Jack, Esq., Flaherty Sensabaugh Bonasso PLLC, Charleston, WV, Attorneys for Respondents Clarksburg Nursing & Rehabilitation Center, Inc., Sheila K. Clark, John/Jane Doe # 1, and Jennifer McWhorter.

Christopher J. Regan, Esq., Bordas & Bordas, PLLC, Wheeling, WV, Attorney for Amicus Curiae West Virginia Association for Justice.

Ancil G. Ramey, Esq., Steptoe & Johnson, PLLC, Charleston, WV, Attorney for Amicus Curiae West Virginia Health Care Association.

Elizabeth S. Lawton, Esq., Shuman, McCuskey & Slicer, PLLC, Charleston, WV, Marc James Ayers, Esq., Christopher C. Puri, Esq., Bradley Arant Boult Cummings LLP, Birmingham, AL, Attorneys for Amicus Curiae American Health Care...