Nord v. Residential Alternatives of Ill.

1

2023 IL App (4th) 230509

THOMAS CRAIG NORD, as Independent Executor of the Estate of Naomi E. Nord, Deceased, Plaintiff-Appellee, v. RESIDENTIAL ALTERNATIVES OF ILLINOIS, INC., an Illinois Not-for-Profit Corporation, d/b/a Manor Court of Freeport, and DEBBIE YATES, Defendants-Appellants.

No. 4-22-0669

Court of Appeals of Illinois, Fourth District

November 3, 2023

Appeal from the Circuit Court of Stephenson County No. 20L45 Honorable Glenn R. Schorsch, Judge Presiding.

Attorneys for Appellant: Donna J. Fudge, of Fudge Broadwater P.A., of St. Petersburg, Florida, for appellants.

Attorneys for Appellee: Amanda J. Hamilton, of Konicek &amp Dillon, P.C., of Geneva, and Lauren E. Park, of Levin & Perconti, of Chicago, for appellee.

JUSTICE STEIGMANN delivered the judgment of the court, with opinion. Justices Harris and Zenoff concurred in the judgment and opinion.

OPINION

STEIGMANN, JUSTICE

¶ 1 In November 2020, Thomas Craig Nord as independent executor of Naomi E. Nord's estate, filed a complaint against defendants, Residential Alternatives of Illinois, Inc., d/b/a Manor Court of Freeport (Manor Court), and Debbie Yates, LPN, alleging defendants provided negligent nursing home care to Naomi Nord which caused or contributed to her death. (For the purposes of this appeal, we will refer to defendants simply as Manor Court.)

¶ 2 In February 2021, Manor Court filed a motion to dismiss and compel arbitration, asserting that, when Naomi was admitted to Manor Court, Naomi and Thomas signed a nursing home contract and arbitration agreement that required some of Thomas's claims to be submitted to arbitration. Thomas responded that the motion should be denied because the arbitration agreement (1) was procedurally and substantively unconscionable and (2) contravened federal regulations containing procedural requirements for nursing homes utilizing arbitration agreements upon the admission of a new resident. In July 2022, following a hearing, the trial court denied the motion.

¶ 3 Manor Court appeals, arguing the trial court erred by (1) failing to enforce a delegation clause in the arbitration agreement and (2) finding that the arbitration agreement was unconscionable due to its fee provisions. Thomas responds that the court's order should be affirmed because (1) Naomi's death terminated the contract, including the arbitration provision; (2) there existed no valid delegation clause; and (3) the arbitration provision is both procedurally and substantively unconscionable.

¶ 4 Because we agree with Thomas that Naomi's discharge from Manor Court, which occurred upon her death, terminated the contract, we affirm the judgment of the trial court.

¶ 5 I. BACKGROUND

¶ 6 A. The Complaint

¶ 7 In November 2020, Thomas filed a complaint against Manor Court, alleging it provided negligent care for Naomi. The complaint asserted a total of five counts against defendants under the Nursing Home Care Act (210 ILCS 45/3-714 (West 2020)), the Illinois Survival Act (755 ILCS 5/27-6 (West 2020)), and the Wrongful Death Act (740 ILCS 180/0.01 et seq. (West 2020)).

¶ 8 The complaint alleged the following. On October 10, 2016 Naomi became a resident at Manor Court, a long-term care facility. Manor Court was aware that Naomi was at high risk for falls. Naomi needed assistance with daily activities such as walking, eating, and dressing. On April 24, 2017, March 1, 2018, and March 3, 2018, Naomi suffered falls. On November 26, 2018, Naomi suffered a fourth fall that resulted in fractures of two of her vertebrae. Naomi died on December 15, 2018. In February 2020, Thomas was appointed as the independent executor of Naomi's estate. Thomas alleged Manor Court provided negligent care, which caused or contributed to Naomi's death.

¶ 9 B. The Motion To Dismiss

¶ 10 1. Defendants' Motion

¶ 11 In February 2021, Manor Court filed a section 2-619(a)(9) (735 ILCS 5/2-619(a)(9) (West 2020)) motion to dismiss and compel arbitration as to the Nursing Home Care Act and Survival Act counts in the complaint. (Manor Court asked to stay the Wrongful Death Act counts pending the conclusion of arbitration.) Manor Court argued that Thomas, as Naomi's son and legal representative, entered into a valid and enforceable arbitration agreement when he signed the "Residency Agreement," pursuant to which Naomi was admitted as a resident to Manor Court. Manor Court argued that "[t]he Arbitration Agreement, contained in an addendum to the Residency Agreement[,] was executed by [Thomas] as Attorney-in-Fact for [Naomi], and expressly provided for the resolution of any potential claims."

¶ 12 In support of its motion, Manor Court submitted the affidavit of Andres Bardelas, the administrator at Manor Court. Relevant to this appeal, he averred as follows "Naomi Nord was admitted as a resident to Manor Court on October 10, 2016. Ms. Nord remained at Manor Court until she was discharged on December 15, 2018."

¶ 13 Defendants also submitted a copy of the residency agreement. At the top right of the document was a notation indicating it was "Form # NH-363 (IL)," last revised "08/16." The document was titled "Contract" between Manor Court and Naomi. The first provision of the contract stated as follows:

"A. Term: The term of the contract shall commence on the day the Resident enters the Facility and terminate the day the Resident is discharged, subject however to the following provisions: (a) that if the Resident is compelled by a change in his/her physical or mental health to require placement in a hospital, the contract and all obligations under it shall terminate on seven (7) days notice; (b) that the Resident may terminate the contract and all obligations under it upon thirty (30) days written notice."

The residency agreement was signed by Thomas, as Naomi's health care power of attorney.

¶ 14 Attached to the residency agreement were two addenda: (1) an "Identified Offender and Criminal History" and (2) the "Arbitration Agreement." Both addenda were signed by Thomas. The top right of the arbitration agreement stated it was "Form NH-363B," "Revised: 04/06," and provided as follows:

"Without limiting any rights set forth in other provisions of this AGREEMENT, any and all disputes arising hereunder shall be submitted to binding arbitration and not to a court for determination. Arbitration shall commence after written notice is given from either party to the other, such arbitration shall be accomplished expeditiously in the county and state where the property which is the subject of this AGREEMENT is located, and shall be conducted in accordance with the rules of the American Arbitration Association ('AAA'). The arbitration shall be conducted by three (3) arbitrators, one of whom shall be appointed by FACILITY and one whom shall be appointed by RESIDENT. The third arbitrator shall be appointed by the first two arbitrators. The arbitrator shall be selected from a list of arbitrators submitted by the AAA. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Arbitration shall not commence until the party requesting it has deposited one thousand five hundred and No/100 U.S. dollars ($1,500.00) with the arbitrators as a retainer for the arbitrators' fees and costs. The party requesting arbitration shall advance such sums as are required from time to time by the arbitrators to pay the arbitrators' fees and costs, until the prevailing party is determined or the parties have agreed in writing to an alternate allocation of fees and costs. Each party shall pay its own legal fees and costs and any other fees incurred in connection with an arbitration proceeding which arises out of or relates in any way to this AGREEMENT; provided, however, that the arbitration panel shall award the arbitrators' fees and costs to the prevailing party in its arbitration judgment.

Notwithstanding the parties intent to submit any controversy or claim arising out of or relating to this AGREEMENT or any other document signed or initialed in connection with this AGREEMENT to arbitration, in the event that a court of competent jurisdiction shall determine or a relevant law shall provide that a particular dispute is not subject to the arbitration provisions of this Section, then the parties agree to the following provisions:

a. Each party believes that justice will be served if issues regarding this AGREEMENT are heard by a judge in a court proceeding, and not a jury, and each party hereby waives their right to a trial by jury. Each party agrees that any claim, demand, action or cause or action, with respect to any action, proceeding, claim, counterclaim, or cross-claim, whether in contract or in tort (regardless if the tort action is presently recognized or not), based on, arising out of, in connection with, or in any way related to this AGREEMENT, the documents (including, without limitation, any declaration), any course of conduct, course of dealing, verbal or written statement, validation, protection, enforcement action or omission of any party shall be heard by a judge in a court proceeding and not a jury.

b. The party prevailing in such dispute shall be entitled to recover all costs incurred, including reasonable attorney's fees and costs, whether incurred before trial, at trial, in bankruptcy proceedings, or on appeal."

¶ 15 In a memorandum in support of the motion to dismiss and compel arbitration, Manor Court argued that "[Thomas] signed a Residency Agreement regarding [Naomi's] admission and care at Manor Court" and "concurrently executed the voluntary arbitration addendum that expressly provided for the resolution of any [sic] 'any and all disputes.'" Manor Court argued that (1) Thomas's claims were within the scope of the...