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From the Desk of Partner Gordon C. Klug:
Chances are you have come across an arbitration agreement and have signed it without considering what it really means. Often people don’t realize that arbitration agreements are a favored route to solve conflicts and it is incredibly hard to invalidate them just because you no longer want to arbitrate. The Washington Court of Appeals recently upheld an arbitration agreement between an assisted living facility and a resident despite the resident’s estate claiming it interfered with a right to a jury trial.
The Court of Appeals of Washington Division Two, held that the trial court erred in denying an assisted living facility’s motion to compel arbitration because RCW 70.129.105 does not prohibit its arbitration agreement with a resident. Additionally, the Court held that the Washington statute does not set forth a right to a jury trial and cannot be interpreted as doing such because of the supremacy clause.
Drummond v. Bonaventure of Lacey, LLC, Nos. 54273-1-II, 54423-7-II, 2021 Wash. App. LEXIS 2978 (Ct. App. Dec. 14, 2021).
Raymond Drummond (“Drummond”) was a resident at an assisted living facility owned by Bonaventure. When admitted to the living facility, Drummond’s daughter signed an admission agreement as Drummond’s representative, as well as an addendum that contained a promise to arbitrate any disputes with Bonaventure. While living there he was taken to the hospital and after some testing it was revealed that he was suffering from insulin poisoning from a medication he was not prescribed. Drummond later passed away. Drummond’s estate (“Estate”) filed suit against Bonaventure alleging that Bonaventure was responsible for administering the incorrect medication to Drummond which led to his death. The Estate also brought a wrongful death claim on the beneficiaries’ behalf.
Bonaventure moved to compel arbitration, stating that the arbitration agreement Drummond’s daughter signed was binding on the Estate. The trial court denied the motion and concluded that the arbitration agreement was prohibited by RCW 70.129.105. Bonaventure appealed arguing that the trial court erred when it held that RCW 70.129.105 prohibited the arbitration agreement. The Estate responded that the arbitration agreement is prohibited because RCW 70.129.105 prohibits assisted living facilities from requesting a resident waive a right set forth in RCW 70.129 and a right to a jury trial is set forth in RCW 70.129.005.
RCW 70.129 provides specific rights for long-term care residents. The intention is “that individuals who reside in long-term care facilities receive appropriate services, be treated with courtesy, and continue to enjoy their basic civil and legal rights.” RCW 70.129.005. RCW 70.129.105 provides that “[n]o long-term care facility…shall require or request residents to sign waivers of potential liability for losses of personal property or injury, or to sign waivers of residents’ rights set forth in this chapter.”
Arbitration is favored under Washington and federal law with “all presumptions to be made in favor of arbitration.” Gandee v LDL Freedom Enterprises, Inc, 176 Wn.2d 598, 603, 293 P.3d 1197 (2013). The Federal Arbitration Act (“FAA”) states that arbitration agreements are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract” 9 U.S.C. §2. Thus, a court can invalidate an arbitration agreement on grounds such as fraud or unconscionability, but the FAA preempts any state rule that prohibits or invalidates an arbitration agreement solely because it is an arbitration agreement. Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421, 1426, 197 L. Ed. 2d 806 (2017). Furthermore, the FAA supersedes laws that “covertly” undermine arbitration agreements by targeting the defining characteristics of arbitration agreements. Id.
The Court of Appeals of Washington held that RCW 70.129.005 does not set forth the right to a jury trial and thus, it cannot be used as a basis to argue that RCW 70.129.105 prohibits the arbitration agreement between Drummond and Bonaventure. The Court came to this decision by first addressing the Estate’s claim that RCW 70.129.005 contains the right to a jury trial and second, addressing the issue of preemption and the FAA. The Court reasoned that the legislature did not set forth every basic civil and legal right in chapter 70.129. In fact, it is the Constitution that sets forth the right to a jury, not chapter 70.129. Therefore, since the plain language of RCW 70.129.005 does not set forth a right to a jury, the Estate cannot claim that RCW 70.129.105 prohibits arbitration agreements pursuant to RCW 70.129.005.
Even if there was ambiguity in the statutory scheme, the Court cannot interpret statutes in a way that questions its constitutionality. On the issue of preemption, the Court considered the situation where RCW 70.129.105 was interpreted in the way the Estate argues it should be construed. The Court stated that the Estate’s interpretation would mean that the FAA displaces RCW 70.129.105 because it “covertly” undermines an arbitration agreement by targeting its key features. Thus, the Court points out, the Estate is asking the Court to adopt an interpretation of a statute that creates a preemption problem under the FAA, which in turn violates Washington’s supremacy clause. The Court concluded that they cannot choose an interpretation that renders a statute unconstitutional if an alternate construction prevents the statute from being in violation of the Washington State Constitution.
Therefore, the Court held that RCW 70.129.005 does not set forth the right to a jury trial and thus cannot be utilized as a basis to conclude that RCW 70.129.105 prohibits the arbitration agreement between Bonaventure and Drummond.
The Big Picture:
Arbitration is a favored process and agreements to arbitrate are often found to be valid and enforceable. Thus, state statutes that may be interpreted as prohibiting arbitration agreements are not enforceable under the FAA if an alternate interpretation is available that does not render the statute unconstitutional. In short, arbitration agreements are a powerful tool, and it is quite hard for a party to invalidate them.