Cooley v. LCS Santa Rosa, LLC

MARY JOANN COOLEY, an Incompetent Person, etc. Plaintiff and Respondent, v. LCS SANTA ROSA, LLC, HCP SANTA ROSA CA OPCO, LLC aka ARBOL RESIDENCES OF SANTA ROSA, and MARIELE SORIANO, Defendants and Appellants.

A162751

California Court of Appeals, First District, Fifth Division

October 1, 2021

NOT TO BE PUBLISHED

Sonoma County Super. Ct. No. SCV267750

NEEDHAM, J.

Defendants LCS Santa Rosa, LLC, HCP Santa Rosa CA OpCo, LLC aka Arbol Residences of Santa Rosa and Mariele Soriano (collectively “defendants;” individually “LCS, ” “HCP” and “Soriano”) appeal from the denial of their petition to compel arbitration of this civil suit for negligence and elder abuse filed by plaintiff Mary Joann Cooley by and through her guardian ad litem David Cooley (“plaintiff”). (Code Civ. Proc., § 1281.2.) We affirm.^[1]

I. BACKGROUND

Plaintiff was born in 1931 and suffers from profound hearing loss and dementia. In 2016, she moved to 300 Fountaingrove Parkway in Santa Rosa, a residential facility providing memory care. The facility is now known as Arbol Residences of Santa Rosa (Arbol), of which defendant Soriano is the Executive Director. Defendant LCS is the current owner and operator of the Arbol facility; HCP was the operator until 2020.

On January 28, 2021, plaintiff filed a complaint against defendants alleging negligence, negligence per se and elder abuse. The complaint alleged that defendants owned and operated the Arbol facility, that plaintiff was evacuated and taken to a facility in Cupertino on October 26, 2019 due to wildfires, and that while at the Cupertino facility she suffered two falls and a broken arm due to defendants' failure to adequately monitor her. It further alleged that she was hospitalized nearby before being transported to a hospital in Santa Rosa and then to facilities in Petaluma and Sonoma, and that defendants committed various acts of malfeasance and violated several statues and regulations by providing deficient care to plaintiff during the evacuation by refusing to provide care, and by failing to account for her whereabouts.

Defendants filed a motion to compel arbitration based on an arbitration clause contained within an agreement regarding plaintiff's admission to the Arbol facility, which was then operated by a different corporation. They submitted the declaration of Soriano and a copy of the “BROOKDALE SENIOR LIVING SOLUTIONS RESIDENCY AGREEMENT” entered into by plaintiff and EmeriCare Inc. dba Brookdale Fountaingrove (EmeriCare), which was executed in March 2016 by plaintiff's daughter Karen Cooley-Lugerner under a durable power of attorney (the Residency Agreement).^[2] Defendants argued that the Residency Agreement was enforceable by defendants as the new owners and operators of the facility.

Section V. of the Residency Agreement set forth an “AGREEMENT TO ARBITRATE, ” which provided in relevant part, “1. Any and all claims or controversies arising out of, or in any way relating to, this Agreement or your stay at the Community... shall be submitted to binding arbitration, as provided below, and shall not be filed in a court of law. The parties to this Agreement further understand that a jury will not decide their case.”

Defendants also submitted an agreement entitled, “ARBOL RESIDENCES OF SANTA ROSA AMENDMENT TO RESIDENCE AND SERVICES AGREEMENT TRANSFER TO NEW RESIDENCE” entered into by plaintiff and defendant HCP, HCP S-H LCS OpCo, LLC and HCP MA3 California, LP, setting forth the terms of plaintiff's transfer to a different residence within the Arbol facility (Amendment). The document was dated November 26, 2019 and was signed by Karen Cooley as plaintiff's legal representative and defendant Soriano as defendant HCP's representative. The “RECITALS” of the Amendment stated, “WHEREAS, you and we entered into a Residence and Services Agreement dated November 26, 2019 (‘Residence and Services Agreement') for Residence No. 337 (‘Current Residence') at Arbol Residences of Santa Rosa (‘Community').” The Amendment did not contain an arbitration clause.

Plaintiff opposed the motion to compel arbitration, arguing that the only document submitted to the court that contained an arbitration clause was the 2016 Residency Agreement between plaintiff and EmeriCare, and that the defendants were not parties to that agreement. Plaintiff disputed defendants' suggestion that the Residency Agreement applied by its own terms to successors of EmeriCare.

The court granted an order shortening time and set the case for a hearing on the motion to compel arbitration. It ordered that no reply papers be filed.

Despite this order, defendants filed a reply arguing that the 2016 Residency Agreement had been assigned to HCP and LCS, accompanied by several documents showing a transfer of the operating rights of the Arbol facility to HCP and then to LCS. Plaintiff filed a motion to strike the reply and the exhibits as being in violation of the court's order that no reply be filed by either party.

A hearing commenced and the court noted that the recitals of the 2019 Amendment purported to amend a “Residence and Services Agreement” entered into by plaintiff and HCP on November 26, 2019, but a copy of that agreement had not been provided and the Amendment did not itself contain an arbitration clause. After hearing argument from counsel, including defense counsel's representation that there was no November 26 agreement other than the Amendment itself, the court continued the hearing and allowed the parties to submit up to five pages of supplemental briefing.

Defendants submitted supplemental points and authorities, which stated that (1) plaintiff had entered into the Residency Agreement in 2016 with EmeriCare, which operated the facility at the time; (2) EmeriCare had assigned its rights to operate the facility to HCP in 2019; (3) the owner of the real property had sold it to LCS and HCP had assigned its rights as the operator to LCS in 2020; and (4) the documentation previously submitted with defendants' reply substantiated these transactions and showed that plaintiff's contract with EmeriCare, which contained an arbitration clause, had been assigned to HCP and then to LCS. Defendants submitted a supplemental declaration by defendant Soriano, to which it attached as exhibits substantially the same documents as it had attached to its reply.

Plaintiff submitted supplemental points and authorities in which she argued the 2016 Residency Contract was not assignable, but that assuming it was, defendants had submitted no proof that EmeriCare had executed a successful assignment to HCP. She also argued the 2016 Residency Agreement was not enforceable in any event because it was unconscionable and violated Health and Safety Code section 1599.81, which provides: “(b) All arbitration clauses shall be included on a form separate from the rest of the admission contract. This attachment shall contain space for the signature of any applicant who agrees to arbitration of disputes.”^[3]

At the continued hearing, plaintiff argued that the court should strike the documents submitted by defendants in the reply and in connection with the supplemental briefing on the motion to compel arbitration. The trial court denied the motion to compel, finding defendants had not met their burden of proving a valid arbitration agreement. It granted the motion to strike the documents filed in reply and in response to the order allowing supplemental briefing, but indicated that even if it considered the documents presented it would have denied the motion to compel arbitration. The court also found that the 2016 Residency Agreement was a personal service contract that was not assignable.

II. DISCUSSION

A. Burden of Proof

“The party requesting arbitration bears the burden of proving the existence of an agreement to arbitrate a particular controversy.” (San Francisco Police Officers' Assn. v. San Francisco Police Com. (2018) 27 Cal.App.5th 676, 683; see also Larian v. Larian (2004) 123 Cal.App.4th 751, 760.) “[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence. If the party opposing the petition raises a defense to enforcement-either fraud in the execution voiding the agreement, or a statutory defense of waiver or revocation (see [Code of Civil Procedure] § 1281.2, subds. (a), (b))-that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413; see also Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)

Defendants argue that they produced prima facie evidence of an arbitration agreement and the court impermissibly shifted the burden to them to demonstrate there were no defenses to its enforcement. We disagree. The burden of proving a defense to the arbitration clause might have shifted to plaintiff if defendants had presented an arbitration clause in a contract signed by them, but nonsignatories to an arbitration clause bear the burden of establishing they may invoke an arbitration clause as part of proving the existence of a valid arbitration clause that covers the controversy. (Jones v. Jacobsen (2011) 195 Cal.App.4th 1, 15-16 (Jones).) Thus, defendants properly bore the initial burden of proving they could rely on the 2016 Agreement.

B. The Residency Agreement Did Not By Its Own...