Court Opinion

ID: 3201556
Source: CourtListenerOpinion
Date Created: 2016-05-09 17:01:45.405948+00
Date Added: 2024-06-11T14:28:16.614514
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                          File Name: 16a0247n.06

                                       Case No. 15-1793

                         UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT

                                                                                   FILED
                                                                             May 09, 2016
SCOTT ROWAN, next friend of George                  )
                                                                         DEBORAH S. HUNT, Clerk
Rowan,                                              )
                                                    )
       Plaintiff-Appellant,                         )     ON APPEAL FROM THE UNITED
                                                    )     STATES DISTRICT COURT FOR
v.                                                  )     THE WESTERN DISTRICT OF
                                                    )     MICHIGAN
BROOKDALE SENIOR LIVING                             )
COMMUNITIES, INC., dba Wynwood of                   )
Portage,                                            )
                                                    )
       Defendant-Appellee.                          )

       BEFORE: KEITH, COOK, and McKEAGUE, Circuit Judges.

       COOK, Circuit Judge. George Rowan, by Scott Rowan, his son and next friend, appeals

the district court’s order granting Brookdale Senior Living Communities, Inc.’s motion to

compel arbitration and dismissing the case. Rowan contends the district court erred in discerning

no genuine issue of material fact regarding the validity or the enforceability of the arbitration

clause. Disagreeing, we AFFIRM.

                                               I.

       After a stroke diminished his physical and mental functioning, Rowan Sr. moved into an

assisted-living facility operated by Brookdale. He struggled with this new living arrangement

and one evening wandered from the facility to a nearby residential subdivision. He tripped and
Case No. 15-1793
Rowan v. Brookdale Senior Living Communities, Inc.

fell on a resident’s driveway, leaving him unable to move. Later that night, the resident pulled

out of the driveway and ran him over, causing severe injuries. Rowan, his father’s next friend,

sued Brookdale for negligence, gross negligence, and fraud.

       Brookdale moved to compel arbitration, citing the Residency Agreement that Rowan Sr.

signed when he moved in. Rowan opposed arbitration, contesting the validity of the Residency

Agreement on grounds that his father lacked mental competence to contract. And even if his

father were competent when signing, Rowan said that various contract defenses would prevent

enforcement of the arbitration clause. The district court granted Brookdale’s motion to compel

arbitration and dismissed the case, finding the evidence insufficient to raise a genuine issue of

material fact regarding the validity or enforceability of the arbitration clause. This appeal

followed.

                                                 II.

       As applicable here, before compelling arbitration a court must determine whether a valid

arbitration agreement exists and whether the dispute falls within that agreement’s scope. See

Fazio v. Lehman Bros., Inc., 340 F.3d 386, 392 (6th Cir. 2003) (citing Stout v. J.D. Byrider, 228

F.3d 709, 714 (6th Cir. 2000)). The Federal Arbitration Act (FAA) guides us in determining the

validity of an arbitration agreement, reading in relevant part:

       The court shall hear the parties, and upon being satisfied that the making of the
       agreement for arbitration or the failure to comply therewith is not in issue, the
       court shall make an order directing the parties to proceed to arbitration in
       accordance with the terms of the agreement. . . . If the making of the arbitration
       agreement . . . be in issue, the court shall proceed summarily to the trial thereof.

9 U.S.C. § 4. “The party opposing arbitration must show a genuine issue of material fact as to

the validity of the agreement to arbitrate”—a standard “mirror[ing] that required to withstand

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summary judgment in a civil suit.” Great Earth Cos. v. Simons, 288 F.3d 878, 889 (6th Cir.

2002) (citing Doctor’s Assocs., Inc. v. Distajo, 107 F.3d 126, 129–30 (2d Cir. 1997)). The

nonmoving party, here Rowan, may challenge an arbitration agreement “upon such grounds as

exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.

       Rowan raises on appeal the same two arguments he presented to the district court. We

review de novo an order compelling arbitration, viewing all facts in the light most favorable to

the nonmoving party and determining whether a reasonable fact finder could conclude from the

presented evidence that no valid agreement to arbitrate exists. See Great Earth Cos., 288 F.3d at

889 (citing Aiken v. City of Memphis, 190 F.3d 753, 755 (6th Cir. 1999)).

   A. Contract Formation

       Rowan asserts that his father lacked mental capacity to contract citing: his father’s short-

term memory problems before signing the Residency Agreement, his emotional and mental state

after signing, and the circumstances of his wandering-off.

       Rowan bears the burden of proving his father’s lack of mental capacity to contract. See

Klein v. Kent, 95 N.W.2d 864, 867 (Mich. 1959). To possess mental capacity to contract,

Michigan law evaluates whether:

       [T]he person in question possesses sufficient mind to understand, in a reasonable
       manner, the nature and effect of the act in which he is engaged. However, to
       avoid a contract it must appear not only that the person was of unsound mind or
       insane when it was made, but that the unsoundness or insanity was of such a
       character that he had no reasonable perception of the nature or terms of the
       contract.

Howard v. Howard, 352 N.W.2d 280, 282 (Mich. Ct. App. 1984) (quoting Van Wagoner v. Van

Wagoner, 346 N.W.2d 77, 81–82 (Mich. Ct. App. 1983)). Though capacity is determined at

contract formation, a contracting party can rely on his condition before and after formation to

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prove incapacity, and a “prior or subsequent condition may be presumed to exist at the time [of

contract formation].” Beattie v. Bower, 287 N.W. 900, 903 (Mich. 1939).

       First, Rowan argues that the short-term memory problems his father experienced before

he signed the Residency Agreement demonstrate his incapacity to contract. But the evidence

Rowan offers in support falls short. While Rowan’s sister described her father’s memory as

“compromised,” she also attested that she had no reservations regarding his contractual capacity

around the time that he signed the Residency Agreement. Similarly, though a cognitive therapist

doubted that Rowan Sr. “would have been able to recall the entire [Residency Agreement]” and

“may have had some difficulty” interpreting its interrelated provisions, the therapist also

expressed confidence in Rowan Sr.’s ability to “comprehend each section [of the Residency

Agreement].” Neither the daughter’s nor the therapist’s testimony supports the proposition that

Rowan Sr.’s memory deficiency was “of such a character that he had no reasonable perception of

the nature or terms of the [Residency Agreement].” See Howard, 352 N.W.2d at 282.

       Next, Rowan cites Dr. Kameswara Tatineni’s conclusion that, after moving into the

Brookdale facility, his father suffered from anxiety, depression, and limited insight/judgment as

a result of either mild vascular dementia or delirium. Dr. Tatineni, however, did not assess

competence. In fact, Dr. Tatineni expressed no opinion on Rowan Sr.’s ability to read and

understand the Residency Agreement.

       Finally, Rowan contends that because his father wandered from Brookdale’s facility

previously and needed extra supervision the day prior to his injury, a fact finder could infer

incapacity to contract. Yet the Michigan Department of Human Services reported that the

incident “could not have [been] reasonably expected,” and grounded its conclusion in part on an

assessment finding Rowan Sr. “capable of independent decision making,” “oriented to person,

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Rowan v. Brookdale Senior Living Communities, Inc.

place and time,” and able to communicate effectively.         In any event, Rowan’s conclusory

assertion that the circumstances of his father’s injury evidence incapacity is insufficient to

withstand summary judgment. See, e.g., Lewis v. Philip Morris Inc., 355 F.3d 515, 533 (6th Cir.

2004) (noting that “mere speculation, conjecture, or fantasy” cannot overcome a summary-

judgment motion).

       That Rowan Sr. executed at least five legal documents in the month before he moved into

the Brookdale facility also counsels against finding incapacity. For example, he signed a durable

power of attorney for health-care purposes—a single-spaced, nine-page document—and another

for financial purposes—a single-spaced, twelve-page document.           Plus, he also signed two

personal protection orders as well as a verified complaint for divorce. No one has challenged his

mental capacity regarding these signings. Indeed, one of the documents includes an attorney’s

and a doctor’s sworn declarations that Rowan Sr. appeared to be of sound mind.

       Accordingly, drawing all reasonable inferences in Rowan’s favor, we discern no genuine

issue of material fact regarding whether Rowan’s father lacked a reasonable perception of the

nature or terms of the Residency Agreement.

   B. Enforceability of the Arbitration Clause

       Even if his father possessed contractual capacity, Rowan continues, the arbitration clause

is unenforceable because it: (1) violates public policy, (2) lacks mutual assent, (3) needs

consideration, (4) fails to provide a knowing and voluntary waiver of his father’s jury-trial right,

and (5) imposes a financial burden. State law “governs ‘generally applicable contract defenses

to an arbitration clause.’” Great Earth Cos., 288 F.3d at 889 (quoting Doctor’s Assocs. v.

Casarotto, 517 U.S. 681, 687 (1996)) (brackets omitted). We address each defense in turn.

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Rowan v. Brookdale Senior Living Communities, Inc.

           1. Void for Public Policy

       Rowan claims that the arbitration clause violates Michigan public policy by waiving jury-

trial rights secured by Michigan’s Truth in Renting Act, Mich. Comp. Laws § 554.633(1)(f), and

by limiting liability for gross negligence, thereby promoting elder abuse. Though Michigan

invalidates contracts that violate public policy, Michelson v. Voison, 658 N.W.2d 188, 190

(Mich. Ct. App. 2003), Rowan’s argument fails for two reasons. First, to the extent Rowan

contends that provisions in the Residency Agreement aside from the arbitration clause violate

Michigan law, those issues are reserved for arbitration. See Masco Corp. v. Zurich Am. Ins. Co.,

382 F.3d 624, 628 (6th Cir. 2004) (“One seeking to challenge an arbitration clause must make an

argument that is specific to the arbitration clause . . . and . . . does not simply challenge the

contractual obligation to which the arbitration clause applies.” (citing Burden v. Check Into

Cash of Ky., LLC, 267 F.3d 483, 491 (6th Cir. 2001))). Second, though Rowan argues that the

arbitration clause violates Michigan’s prohibition on arbitration in the residential context, the

Federal Arbitration Act emphatically favors arbitration and displaces conflicting state statutes or

policies. Marmet Health Care Ctr., Inc. v. Brown, 132 S. Ct. 1201, 1203 (2012) (per curiam)

(citations omitted).

           2. Lack of Mutual Assent

       Next, Rowan alleges that the arbitration clause lacked mutual assent because Brookdale

failed to allow his father an opportunity to read the agreement at signing.         True, contract

formation requires mutual assent on all essential terms. See Quality Prods. & Concepts Co. v.

Nagel Precision, Inc., 666 N.W.2d 251, 258 (Mich. 2003). But Michigan law “presumes that

one who signs a written agreement knows the nature of the instrument,” Watts v. Polaczyk, 619

N.W.2d 714, 717 (Mich. Ct. App. 2000), and a signatory “will not be heard to say, when

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enforcement is sought, that he did not read it, or that he supposed it was different in its terms.”

Farm Bureau Mut. Ins. Co. v. Nikkel, 596 N.W.2d 915, 920 (Mich. 1999) (quoting Komraus

Plumbing & Heating, Inc. v. Cadillac Sands Motel, Inc., 195 N.W.2d 865, 868 (Mich. 1972)).

       In any event, Rowan fails to counter Brookdale’s evidence that it provided his father a

copy of the Residency Agreement in advance of signing. Indeed, Rowan Sr. toured a number of

residential facilities with his ex-wife prior to selecting the Brookdale facility. When potential

residents visit, Brookdale provides them an informational packet that includes a copy of the

Residency Agreement along with a physician’s plan of care.            Rowan Sr. had a physician

complete the plan of care three days before signing the Residency Agreement, suggesting that he

received the packet with the Residency Agreement in advance of signing.

           3. Want of Consideration

       Pushing on, Rowan argues that the arbitration clause lacks consideration. But “the basic

rule of contract law is that whatever consideration is paid for all the promises is consideration for

each one.” Rowady v. K Mart Corp., 428 N.W.2d 22, 25 (Mich. Ct. App. 1988). Here, there was

a bargained-for exchange: Rowan Sr. paid money to Brookdale for housing and other services,

and both agreed to arbitrate disputes.

           4. Waiver of Jury-Trial Right

       Rowan further challenges the enforceability of the arbitration clause because it lacks

comprehensible language, and urges the court to apply Morrison v. Circuit City Stores, Inc.’s test

to evaluate whether his father knowingly and voluntarily waived his jury-trial right. 317 F.3d

646, 668 (6th Cir. 2003) (en banc). Morrison is inapplicable, however, because it is limited “to

the validity of arbitration clauses in employment agreements where an employee’s statutorily

created federal civil rights are at issue.” Stutler v. T.K. Constructors Inc., 448 F.3d 343, 345 (6th

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Cir. 2006). Regardless, the arbitration clause here is clear: it twice states in bold, “The parties to

this Agreement further understand that a jury will not decide their case,” and the immediately

following section reads—using capital letters, bolding, and underlining—“waiver of trial by

jury.”

            5. Imposition of Financial Burden

         Finally, Rowan argues against enforceability on the grounds that the arbitration clause

imposes an impermissible financial burden upon his father and others similarly situated in

violation of Morrison, 317 F.3d at 646. Morrison, again, is inapposite. Furthermore, Rowan

fails to explain how the arbitration clause imposes intolerable costs.

                                                   III.

         For these reasons, we AFFIRM the district court’s order.

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