NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4453-14T3

MARY T. KLEINE,

Plaintiff-Appellant,

v.

EMERITUS AT EMERSON, BREA EMERSON,

LLC d/b/a EMERITUS AT EMERSON, 

and EMERITUS CORPORATION, 

Defendants,

and

CARE ONE AT VALLEY, CARE ONE,

LLC, MILLENNIUM HEALTH CARE 

CENTERS II, d/b/a CARE ONE

AT VALLEY, DES HOLDING CO., 

INC. and DES-C 2009 GRAT,

Defendants-Respondents.

________________________________________________________

Argued March 15, 2016 – Decided

Before Judges Fisher, Rothstadt and Currier.

On appeal from the Superior Court of New 

Jersey, Law Division, Bergen County, Docket 

No. L-409-13.

Thomas S. Howard argued the cause for 

appellant (Gartenberg Howard, LLP, attorneys; 

Mr. Howard, on the brief).

Shane P. Simon argued the cause for 

respondents (Buchanan Ingersoll & Rooney, 

P.C., attorneys; David L. Gordon, Eric D. 

Heicklen and Mr. Simon, of counsel and on 

the brief).

June 9, 2016

APPROVED FOR PUBLICATION

June 9, 2016

APPELLATE DIVISION
2 A-4453-14T3

The opinion of the court was delivered by

FISHER, P.J.A.D.

Plaintiff commenced this personal injury action against, 

among others, defendant Care One at Valley,

1 which operates a

nursing facility that moved to compel arbitration of plaintiff's 

claims based on a clause contained in plaintiff's admission 

agreement. Defendant apparently imposes on its patients an 

obligation to arbitrate disputes because it can. The Federal 

Arbitration Act (FAA), 9 U.S.C.A. §§ 1-16, which the Supreme 

Court of the United States broadly construes in favor of 

arbitration, overrides all state policies and concerns, 

including the Nursing Home Act's2 express prohibition against the 

enforcement of such agreements, N.J.S.A. 30:13-8.1.3 See Marmet 

 

1 Plaintiff actually named a number of defendants as being 

responsible for this aspect of her personal injury claims, 

namely: defendants Care One, LLC, Millennium Health Care Centers 

II, d/b/a Care One at Valley, DES Holding Co., Inc., and DES-C 

2009 GRAT (collectively, defendant).

2 N.J.S.A. 30:13-1 to -17.

3 N.J.S.A. 30:13-8.1 declares that "[a]ny provision or clause 

waiving or limiting the right to sue for negligence or 

malpractice in any admission agreement or contract between a 

patient and a nursing home or assisted living facility . . . 

whether executed prior to, on or after [January 12, 2002,] the 

effective date of this act, is hereby declared to be void as 

against public policy and wholly unenforceable, and shall not 

constitute a defense in any action, suit or proceeding."
3 A-4453-14T3

Health Care Ctr., Inc. v. Brown, 565 U.S. __, __, 132 S. Ct.

1201, 1203, 182 L. Ed. 2d 42, 45 (2012) (holding that West 

Virginia's similar nursing home statute, which prohibits

arbitration of personal injury and wrongful death suits, takes a 

backseat to the FAA and the federal policy in favor of 

arbitration); see also Estate of Ruszala v. Brookdale Living 

Communities, Inc., 415 N.J. Super. 272, 292-93 (App. Div. 2010).4

Despite its broad interpretation of the FAA and its 

supremacy over specific state policies and practices,

5 the 

Supreme Court has recognized the "fundamental principle that 

arbitration is a matter of contract," Rent-A-Center, West, Inc. 

v. Jackson, 561 U.S. 63, 130 S. Ct. 2772, 2776, 177 L. Ed. 2d 

 

4 We must comply with Marmet, but we are not required to agree. 

See Reinauer Realty Corp. v. Borough of Paramus, 34 N.J. 406, 

415 (1961); Crespo v. Crespo, 408 N.J. Super. 25, 37 (App. Div. 

2009), aff’d o.b., 201 N.J. 207 (2010). Although we willingly 

embrace the concept of federal supremacy, we find it distressing 

that invocation of the "liberal federal policy favoring 

arbitration," see Moses H. Cone Mem. Hosp. v. Mercury Constr. 

Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 941, 74 L. Ed. 2d 765, 

785 (1983), in many cases has caused the forfeiture of important 

rights because consumers and employees lack the bargaining power

to object to an arbitration clause's inclusion; citation of the 

"liberal federal policy favoring arbitration" merely evokes the 

old saying, "a good catchphrase can obscure fifty years of 

analysis."

5 In recognizing that the Nursing Home Act's sensible bar on 

compelled arbitration must give way to the FAA's long reach, we 

see no impediment to the indirect enforcement of the policies 

embedded in N.J.S.A. 30:13-8.1 through the state's licensing 

power over such facilities.
4 A-4453-14T3

403, 410 (2010), thereby permitting application of state 

contract law to ascertain whether the parties had a meeting of 

the minds when contracting, and whether a party, who has 

ostensibly agreed to waive the right to trial by jury, has 

clearly and unambiguously consented to arbitration, Atalese v. 

U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 442, 444 (2014), 

cert. denied, __ U.S. __, 135 S. Ct. 2804, 192 L. Ed. 2d 847 

(2015). In light of these principles, we turn to the specific 

facts of this case.

Because the trial judge summarily granted defendant's 

motion to compel arbitration and because our review of that 

determination is de novo, we assume as true the factual 

opposition presented by plaintiff in response to defendant's 

motion. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 

540 (1995). In opposition to the motion, Frank J. McMahon

asserted his then eighty-five-year-old sister, plaintiff Mary T. 

Kleine, was "still suffering from the consequences of the trauma 

she had endured" at a nursing facility operated by the other 

defendants,

6 when, through a power of attorney, he sought her 

admission at defendant's facility. An individual in the 

admissions office presented him with "a stack of papers, of 

 

6 Defendants Emeritus At Emerson, Brea Emerson, LLC d/b/a 

Emeritus at Emerison, and Emeritus Corporation (collectively, 

Emerson).
5 A-4453-14T3

which the admission agreement was one of several" documents, and 

he was told "to sign and initial wherever indicated." McMahon 

was then "left alone to do so, without any further explanations 

or instructions."

McMahon further asserted:

No one told me, and I did not notice, that 

the agreement contained a waiver of my 

sister's civil rights, including her right 

to a jury trial and her right to appeal any 

adverse decision to an appellate court. I 

also was not told that my sister would have 

to pay for one-half the cost of the 

arbitration. In fact, the admission person 

said nothing to me about the contents of the 

agreement, except that I had to sign it for 

my sister, and that I had to sign it right 

away because my sister was being admitted to 

that nursing home.

No one told me that I had a right to consult 

with counsel before signing or that my 

sister's admission to the facility was not 

contingent upon my signing the agreement. If 

I had understood that such a provision was 

contained in the admission agreement, I 

would have asked for an explanation so I 

could understand what this provision meant. 

If I had been told that by signing I would 

not only give up her right to a jury trial, 

but also would waive her right to appeal 

from any decision, and that she would have 

to pay for one-half the cost of any 

proceeding to determine whether Care One was 

negligent or caused her injury, I would 

certainly have asked whether I was required 

to agree as a condition of her admission, 

and I would probably have spoken with an 

attorney to fully understand the effect of 

this agreement.

. . . .
6 A-4453-14T3

My sister's finances are very limited. She 

is currently paying the cost of the 

Allendale Nursing Home (about $5,000 per 

month) from the proceeds of the sale of her 

house in 2010, which funds should last her 

another two years or so, so long as she does 

not have any large unanticipated expenses. 

Her only income is the $1,191 she receives 

from Social Security. When her savings are 

expended, she will have to apply for 

Medicaid coverage.

My understanding is that qualified arbitrators 

charge $400-500 or more per hour for their 

services. If our case required 4-5 seven 

hour days to present all the testimony and 

documentary evidence, plus another day for 

the arguments of counsel and the 

arbitrator's consideration of the evidence, 

the arbitrator's fees would range from 

$14,000 — 18,000 and maybe more if more 

hearing days are needed or the arbitrator 

was more expensive, which means my sister 

would have to pay $7,000 — 9,000 or more, 

plus the cost of a transcript if we want to 

obtain one, all with her limited resources. 

Consequently, my sister could only afford to 

pay for an arbitrator to hear the case if 

she sacrificed her ability to pay for her 

continued life at the assisted living 

facility. I do not believe that is a choice 

she should have to make — and I would not 

have signed the admission agreement as 

worded if I had been told that she would 

have to pay that amount of money in order to 

have her claims heard.

The trial judge was required to assume the truth of these sworn 

statements and assume there was no meeting of the minds about 

the arbitration of disputes.
7 A-4453-14T3

Defendant's arbitration clause provided in upper case and 

bold lettering:

Any controversy or claim arising out of or 

relating to this agreement and brought by 

the resident, his/her personal representatives, heirs, attorneys or the responsible 

party shall be submitted to binding 

arbitration by a single arbitrator selected 

and administered pursuant to the commercial 

arbitration rules of the American Arbitration Association. . . .

[7] Any claimant 

contemplated by this paragraph hereby waives 

any and all rights to bring any such claim 

or controversy in any manner not expressly 

set forth in this paragraph, including, but 

not limited to, the right to a jury trial.[8]

It is well-established that the party from whom an 

arbitration clause has been extracted must "clearly and 

unambiguously" agree to a waiver of the right to sue. Atalese, 

supra, 219 N.J. at 443; see also Morgan v. Raymours Furniture 

Co., 443 N.J. Super. 338, 343 (App. Div. 2016), certif. denied, 

 

7 We have omitted a sentence that describes the impact of 

applicable statutes of limitations because of its lack of 

relevance here.

8 The contract's next separate provision, also in upper case and 

bold lettering, states: "This agreement is a binding legal 

document. The resident has read and understands the agreement 

and acknowledges that, if so desired, the resident and/or [sic] 

responsible party has been given the opportunity to consult with 

legal counsel." It is difficult to imagine an infirm individual, 

or his or her family member, is likely to delay admission while 

taking the time to seek a legal opinion about the contract. Our 

Legislature likely appreciated these realities — to which the 

"liberal federal policy favoring arbitration" is blind — when 

enacting N.J.S.A. 30:13-8.1.
8 A-4453-14T3

__ N.J. __ (Apr. 25, 2016). We agree the arbitration clause 

unambiguously declares the resident's waiver of the right to 

pursue a claim in any fashion other than as set forth, but other 

aspects of the clause suggest it may be unconscionable.

For example, it is only the resident or the resident's 

representative who is asked to waive the right to seek redress 

in the courts; the clause's insistence on the utilization of 

arbitration applies to "any controversy or claim arising out of 

or relating to this agreement and brought by the resident [or 

the resident's representatives9]" (emphasis added). If the use of 

the word "and" were not sufficient to demonstrate the promise to 

arbitrate was made only by the resident or her representatives, 

certainly the clause's last sentence, which describes the waiver 

of the right to pursue the claim or controversy in some manner

other than arbitration, is expressed only by "any claimant 

contemplated by this paragraph," i.e., the resident or her 

representatives. In short, only the plaintiff was bound; 

defendant made no such promise, retaining for itself not only 

the right to sue the resident or her representatives in any 

court of competent jurisdiction but also the right to have its 

own claims resolved by trial by jury.

 

9 These representatives are identified as "his/her personal 

representatives, heirs, attorneys or the responsible party."
9 A-4453-14T3

As observed earlier, arbitrability was decided summarily. 

At that stage, the judge was required to assume the truth of 

McMahon's sworn statements and consider the language of the 

agreement in the light most favorable to plaintiff. Brill, 

supra, 142 N.J. at 540. Had the judge done so, the one-sided 

waiver extracted by defendant, as well as an assumption of the 

truth of McMahon's assertions about the manner in which the 

contract was formed, would have required an evidentiary hearing 

related to unconscionability. See, Muhammad v. Cnty. Bank of 

Rehoboth Beach, 189 N.J. 1, 15 (2006), cert. denied, 549 U.S.

1338, 127 S. Ct. 2032, 167 L. Ed. 2d 763 (2007). If that was 

all that was before us, we would remand for such an evidentiary 

hearing and the judge's consideration of both procedural and 

substantive unconscionability factors related to the contract. 

See Sitogum Holdings, Inc. v. Ropes, 352 N.J. Super. 555, 564-66 

(Ch. Div. 2002) (recognizing that procedural unconscionability 

includes consideration of "a variety of inadequacies, such as 

age, literacy, lack of sophistication, hidden or unduly complex 

contract terms, bargaining tactics, and the particular setting 

existing during the contract formation process," and substantive 

unconscionability involves consideration of harsh or unfair onesided terms embedded in the contract). The application of our 

common law unconscionability principles in this fashion would 
10 A-4453-14T3

not create an obstacle inconsistent with FAA principles. See

AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339-40, 131 S. 

Ct. 1740, 1746, 179 L. Ed. 2d 742, 751 (2011).

But we reverse because the arbitration process contemplated 

by the clause in question was not available when the parties 

executed their contract. In opposing the motion to compel 

arbitration, plaintiff provided a certification, which 

authenticated an attached AAA statement that unequivocally 

expressed that, as of January 1, 2003, AAA would "no longer 

accept the administration of cases involving individual patients 

without a post-dispute agreement to arbitrate." Consequently, 

when the parties contracted, their exclusive forum for 

arbitration was no longer available; there being no agreement to 

arbitrate in any other forum, arbitration could not be 

compelled. In short, even assuming the clause was otherwise 

enforceable and consented to by plaintiff, there was no meeting 

of the minds as to an arbitral forum if AAA was not available.

10

 

10 We are mindful defendant has argued the clause does not 

require AAA arbitration, only that the arbitration be 

administered pursuant to AAA's commercial arbitration rules; in 

other words, defendant contends that the provision does not 

limit the appointment of a substitute administrator so long as 

that administrator applies AAA's commercial arbitration rules.

It is difficult to conclude that a reasonable reader of this 

language — particularly one simultaneously contemplating the 

placement of an elderly sister in a nursing home — would make 

that fine distinction even if defendant's interpretation was 

(continued)
11 A-4453-14T3

As Atalese instructs, the party from whom such a provision has 

been extracted must be able to understand — from clear and 

unambiguous language — both the rights that have been waived and 

the rights that have taken their place. See Atalese, supra, 219 

N.J. at 444; see also Khan v. Dell, Inc., 669 F.3d 350, 357-59 

(3rd Cir. 2012) (Sloviter, J., dissenting). Because AAA was not 

available to administer the arbitration of this dispute at the 

time the contract was formed, or even at the time the trial 

court ruled on the application,11 the judge mistakenly compelled 

arbitration of plaintiff's personal injury claims against this 

defendant.12

 

(continued)

plausible. Moreover, the forfeiture of legal rights and the 

compelling of arbitration over objection is not a three-card 

monte game. Atalese requires greater clarity and less ambiguity 

in determining whether and how to enforce such a clause. We 

reject the notion that a court must adopt defendant's strained 

interpretation of the clause it alone drafted.

11 In its appendix, defendant provided a document purporting to 

represent AAA's current position, which, if true, would suggest 

AAA has a new-found willingness to administer such disputes. 

The document is undated and was not appended to a statement 

swearing to its authenticity or identifying when this alleged 

change in policy occurred. We, accordingly, give this item no 

consideration in concluding that arbitration could not be 

compelled because the parties' exclusive forum was unavailable.

12 Compelling arbitration provides further complications. 

Plaintiff alleges two separate acts of negligence against two 

groups of defendants. Because of personal injuries allegedly 

suffered in Emeritus's facility, plaintiff moved to defendant's 

facility; she claims she was later injured as a result of 

(continued)
12 A-4453-14T3

The April 21, 2015 order compelling arbitration is 

reversed.13

 

(continued)

defendant's negligence. Although both facilities extracted 

arbitration clauses when admitting plaintiff — we can only 

wonder whether this is the industry standard despite what 

N.J.S.A. 30:13-8.1 prohibits — in earlier proceedings a 

different judge denied arbitration of plaintiff's claims against 

Emeritus because Emeritus's provision required arbitration 

administered by the National Arbitration Forum, which also does 

not offer its services for any claim arising out of "any aspect 

of healthcare." If the arbitration clause in question in this 

appeal were to be enforced, plaintiff would be relegated to two 

different fora and face the possibility of inconsistent results; 

both those circumstances are inconsistent with New Jersey 

policies and any modern thought on litigation and, indeed, would 

run counter to the reasons that originally triggered our state 

policy in favor of arbitration — the providing of "a speedy, 

inexpensive, expeditious and perhaps less formal manner" 

disposition of claims. See Carpenter v. Bloomer, 54 N.J. Super.

157, 162 (App. Div. 1959).

13 The motion judge never appointed a replacement of the 

unavailable arbitral forum and never described what the parties 

were to do next. The order merely "directed" plaintiff "to 

arbitrate" with defendant and "dismissed" the "matter" from 

"th[e] [c]ourt's jurisdiction." Even if the judge correctly 

ruled, the claims against defendant should only have been 

stayed, not dismissed. See N.J.S.A. 2A:23B-7(g).