Court Opinion

ID: 4079806
Source: CourtListenerOpinion
Date Created: 2016-10-05 15:04:22.493566+00
Date Added: 2024-06-11T14:33:24.109274
License: Public Domain

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
                     MOTION AND, IF FILED, DETERMINED

                                           IN THE DISTRICT COURT OF APPEAL

                                           OF FLORIDA

                                           SECOND DISTRICT

DONALD HOCHBAUM, by and through     )
JOANN HOCHBAUM, Attorney-in-Fact,   )
                                    )
           Appellant,               )
                                    )
v.                                  )             Case No. 2D16-89
                                    )
PALM GARDEN OF WINTER HAVEN, LLC;)
PALM GARDEN HEALTHCARE              )
HOLDINGS, LLC; PALM HEALTHCARE      )
MANAGEMENT, LLC; SUMMIT CARE        )
CONSULTING, INC.; SUMMIT CARE,      )
INC.; SUMMIT CARE II, INC.; CYPRESS )
HEALTH GROUP, LLC; CYPRESS          )
MASTER HOLDING, LLC; and HC         )
NAVIGATOR, LLC a/k/a HEALTH CARE )
NAVIGATOR, LLC (as to PALM GARDEN )
OF WINTER HAVEN),                   )
                                    )
           Appellees.               )
                                    )

Opinion filed October 5, 2016.

Appeal pursuant to Fla. R. App. P. 9.130
from the Circuit Court for Polk County;
Mark Carpinini, Judge.

Isaac R. Ruiz-Carus and Megan L. Gisclar
of Wilkes & McHugh, P.A., Tampa, for
Appellant.

Kirsten K. Ullman and Amy D. Prevatt of
Lewis Brisbois Bisgaard & Smith, LLP,
Tampa, for Appellees.
MORRIS, Judge.

              Joann Hochbaum, on behalf of her deceased husband Donald Hochbaum,

appeals an order granting a motion to compel arbitration filed by defendants Palm

Garden of Winter Haven, LLC; Palm Garden Healthcare Holdings, LLC; Palm Garden

Healthcare Management, LLC, Summit Care II, Inc.; Summit Care Consulting, Inc.; and

Summit Care, Inc. (collectively referred to as the nursing home defendants). We

conclude that the arbitration agreements at issue contain an attorneys' fees provision

that violates public policy but that the offending provision may be severed from the

agreements. Accordingly, we affirm the order compelling arbitration but remand for the

trial court to strike the attorneys' fees provision from the arbitration agreements.

              In 2015, Hochbaum filed a three-count complaint against the nursing

home defendants. Count one alleged negligence in violation of section 400.022, Florida

Statutes (2013), count two alleged a breach of fiduciary duty, and count three alleged

violations of section 415.1111, Florida Statutes (2013). The nursing home defendants

filed a motion to compel arbitration, arguing that Hochbaum, as attorney-in-fact for her

husband, had signed arbitration agreements in connection with her husband's residency

at the nursing home.

              The trial court held a hearing on the nursing home defendants' motion to

compel arbitration on December 1, 2015. The nursing home defendants relied on three

arbitration agreements signed by Hochbaum in 2013 and 2014.1 Hochbaum argued

              1
             On July 26, 2013, Hochbaum signed an Optional Arbitration Agreement
and a separate Resident and Facility Arbitration Agreement. On January 14, 2014, she

                                            -2-
that all three arbitration agreements violate public policy because they require each

party to pay for their own attorneys' fees, thereby eliminating the fee-shifting provision of

section 415.1111. The trial court then inquired about procedural and substantive

unconscionability, and Hochbaum argued that the agreements are both unconscionable

and void as against public policy. The trial court ruled that Hochbaum had not

established unconscionability and granted the nursing home defendants' motion to

compel arbitration.

              Hochbaum first argues on appeal that the arbitration agreements are

unenforceable because they violate public policy by limiting Hochbaum's statutory right

to attorneys' fees under section 415.1111. In her complaint, Hochbaum asserted a

count for violation of section 415.1111, alleging that the nursing home defendants' "acts

or omissions constitute exploitation of a vulnerable adult in violation of" the statute.

Section 415.1111 provides that "[a] vulnerable adult who has been abused, neglected,

or exploited as specified in this chapter has a cause of action against any perpetrator

and may recover actual and punitive damages for such abuse, neglect, or exploitation."

It also provides that "[a] party who prevails in any such action may be entitled to recover

reasonable attorney's fees, costs of the action, and damages." Hochbaum claims that

this remedial provision is eliminated by the language of the arbitration agreements

requiring that each party pay their own attorneys' fees and that the agreements are void

as against public policy because they defeat the remedial purpose of the statute.

              The trial court mistakenly understood the issue to be one of

unconscionability and rejected Hochbaum's challenge to the nursing home defendants'

signed an Optional Arbitration Agreement. All three agreements provide that "[e]ach
party shall be responsible for their own attorneys' fees."

                                            -3-
motion to compel arbitration. But the question of whether an agreement is

unconscionable is distinct from the question of whether it is void as against public

policy. See Bland ex rel. Coker v. Health Care & Ret. Corp. of Am., 927 So. 2d 252,

257 (Fla. 2d DCA 2006), abrogated in part on other grounds by Basulto v. Hialeah

Auto., 141 So. 3d 1145, 1159-60 (Fla. 2014), and Shotts v. OP Winter Haven, Inc., 86
So. 3d 456, 474 (Fla. 2011); Fonte v. AT&T Wireless Servs., Inc., 903 So. 2d 1019,

1023 (Fla. 4th DCA 2005). Hochbaum's main argument at the hearing was that the

arbitration agreements are void as against public policy because they defeat the

remedial purpose of section 415.1111.

              "A remedial statute is designed to correct an existing law, redress an

existing grievance, or introduce regulations conducive to the public good. It is also

defined as [a] statute giving a party a mode of remedy for a wrong, where he had none,

or a different one, before." Fonte, 903 So. 2d at 1024 (alteration in original) (quoting

Adams v. Wright, 403 So. 2d 391, 394 (Fla. 1981)). "[W]hen an arbitration agreement

contains provisions that defeat the remedial purpose of the statute, the agreement is not

enforceable." Flyer Printing Co. v. Hills, 805 So. 2d 829, 831 (Fla. 2d DCA 2001).

              In Shotts, 86 So. 3d at 474, the supreme court held that provisions in an

arbitration agreement requiring arbitration to be conducted in accordance with certain

arbitration rules and prohibiting an award of punitive damages violated public policy

because the provisions limited statutory remedies created by the legislature under the

Nursing Home Resident's Rights Act. The court recognized that in enacting the Act, the

legislature created a civil cause of action for violations of nursing home residents' rights;

the legislature set no cap on pain and suffering damages and provided for an award of

                                            -4-
punitive damages. Id. (relying on Romano v. Manor Care, Inc., 861 So. 2d 59, 62-63

(Fla. 4th DCA 2003)). "In light of the recognized need for these remedies and the

salutary purpose they serve," the court "conclude[d] that any arbitration agreement that

substantially diminishes or circumvents these remedies stands in violation of the public

policy of the State of Florida and is unenforceable." Id.; see also Gessa v. Manor Care

of Fla., Inc., 86 So. 3d 484, 493 (Fla. 2011) (holding that limitations on liability in

arbitration agreement, in the forms of a cap on noneconomic damages and a waiver of

punitive damages, "directly frustrate the remedies created by the statute" and thus

violate public policy).

              In enacting the Adult Protective Services Act in chapter 415, the

legislature "recognize[d] that there are many persons in this state who, because of age

or disability, are in need of protective services." § 415.101(2). The legislature intended

"to provide for the detection and correction of abuse, neglect, and exploitation through

social services and criminal investigations and to establish a program of protective

services for all vulnerable adults in need of them." Id. Section 415.1111 creates a civil

cause of action for abuse, neglect, and exploitation committed against vulnerable

adults, and it provides for actual and punitive damages as well as prevailing party fees

and costs. Thus, the Act under which Hochbaum seeks relief in count III is remedial in

nature.

              This court has held that an arbitration agreement that limits the statutory

remedy of attorneys' fees violates public policy. In Flyer Printing Co., the arbitration

agreement "required the parties to equally bear the costs of the arbitration and

arbitrator's fees." 805 So. 2d at 831. But the statutes on which the plaintiff's claims

                                             -5-
were based "permit[ted] the prevailing party to seek recovery of all her fees and costs."

Id. (citing Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-5(k), and the

Florida Civil Rights Act, § 760.11(5), Fla. Stat. (2000)). This court held that the

agreement violated public policy because "[t]he agreement contravened [the plaintiff's]

statutory right to seek a full award of her fees and costs under" the statutes, "thus

defeating the remedial purpose of those statutes." Id. at 833.

              The arbitration agreements in this case require the parties to equally bear

the fees associated with arbitration, in contravention of Hochbaum's statutory right to

seek a full award of her fees under the prevailing party attorneys' fees provision of

section 415.1111. Thus, according to Flyer Printing Co., this provision of the arbitration

agreements violates public policy.2

              The nursing home defendants argue that the arbitrator should decide

Hochbaum's public policy concerns. But in Shotts, the supreme court held that "it is for

the court, not the arbitrator, to determine whether an arbitration agreement 'is

unenforceable on public policy grounds,' " 86 So. 3d at 459 (quoting Global Travel

              2
               We note that the First District in Brasington v. EMC Corp., 855 So. 2d
1212 (Fla. 1st DCA 2003), questioned this court's opinion in Flyer Printing Co. The
Brasington court stated that the Flyer Printing Co. decision was based on a federal
decision that was no longer in force because the federal court vacated the decision on a
joint motion for dismissal, referring to Perez v. Globe Airport Security Services, Inc., 253
F.3d 1280 (11th Cir. 2001), vacated by 294 F.3d 1275 (11th Cir. 2002). 855 So. 2d at
1216. However, this court in Hernandez v. Colonial Grocers, Inc., 124 So. 3d 408, 410
(Fla. 2d DCA 2013), rejected the argument that the fate of the Perez decision affected
the holding of Flyer Printing Co. The Hernandez court clarified that the Flyer Printing
Co. decision was based on the rationale set forth in Paladino v. Avnet Computer
Technologies, Inc., 134 F.3d 1054 (11th Cir. 1998), that an arbitration agreement that
defeats a statute's remedial purpose is not enforceable. 124 So. 3d at 410. The
Hernandez court held that the Flyer Printing Co. decision "is still the law of the Second
District." Id.

                                            -6-
Mktg., Inc. v. Shea, 908 So. 2d 392, 398 (Fla. 2005)), thus abrogating this court's

decisions to the contrary in Bland, 927 So. 2d 252, and Rollins, Inc. v. Lighthouse Bay

Holdings, Ltd., 898 So. 2d 86 (Fla. 2d DCA 2005).

              We next consider whether the offensive provision may be severed from

the agreements. Hochbaum argues that the provision cannot be severed from the

agreements in order to preserve the enforceability of the agreements because the

agreements do not contain severability clauses and because severance of the offending

provision would require the court to rewrite the parties' contracts.

              Case law suggests that in order for an offending provision to be severed

from an agreement, the agreement should contain a severability clause. See LTCSP-

St. Petersburg, LLC v. Robinson, 96 So. 3d 986, 988 (Fla. 2d DCA 2012) (holding that

offending limitation-of-liability provision could be severed from arbitration agreement

because agreement contained "a very broad severability clause"); Presidential Leasing,

Inc. v. Krout, 896 So. 2d 938, 942 (Fla. 5th DCA 2005) (holding that provision in

arbitration agreement violated public policy and could not be severed from agreement

because severance argument had not been made below and the agreement did not

contain a severability clause).

              However, recent supreme court cases indicate that the existence of a

severability clause is not dispositive of the issue. In Gessa, the arbitration agreement

contained limitations of remedies that violated public policy. The agreement had no

severability clause, but the court nonetheless analyzed whether the offensive provisions

could be severed from the agreement. 86 So. 3d at 490. The court recognized that it

              had established a general standard for determining whether
              a contractual provision is severable from the whole, and that

                                            -7-
              standard provides in part: "[A] bilateral contract is severable
              where the illegal portion of the contract does not go to its
              essence, and where, with the illegal portion eliminated, there
              still remains of the contract valid legal promises on one side
              which are wholly supported by valid legal promises on the
              other."

Gessa, 86 So. 3d at 490 (quoting Shotts, 86 So. 3d at 475).3 The Gessa court applied

that standard and concluded that "the limitation of liability provisions . . . , which place a

$250,000 cap on noneconomic damages and waive punitive damages, are not

severable from the remainder of the agreement" because they "constitute the financial

heart of the agreement." 86 So. 3d at 490.

              In Shotts, 86 So. 3d at 459, the arbitration agreement contained two

provisions that violated public policy and a severability provision. But the Shotts court

held that "the limitations of remedies provision in the present case that calls for the

imposition of [specific arbitration] rules is not severable from the remainder of the

agreement. Although the arbitration agreement in this case contains a severability

clause, the [offending] provision goes to the very essence of the agreement." Id. at 478.

              It is clear from both Shotts and Gessa that the existence of a severability

clause is not determinative of whether an offending provision may be severed from the

agreement and that the "controlling issue is whether an offending clause or clauses go

to 'the very essence of the agreement.' " Estate of Yetta Novosett v. ARC Villages II,

LLC, 189 So. 3d 895, 896 (Fla. 5th DCA 2016) (applying Shotts and Gessa and holding

that limitation-of-liability provision capping non-economic damages and precluding

              3
               The Shotts decision quoted and adopted the rationale in Local No. 234 v.
Henley & Beckwith, Inc., 66 So. 2d 818 (Fla. 1953), which considered whether an
offensive provision could be severed without any indication that the agreement at issue
contained a severability clause.

                                             -8-
punitive damages violated public policy and could not be severed, despite the existence

of a severability clause, because the offending provision went to the essence of the

agreement); see also Place at Vero Beach, Inc. v. Hanson, 953 So. 2d 773, 775 (Fla.

4th DCA 2007) (refusing to sever offending provision regarding which arbitration rules

should apply, even though agreement contained severability clause, because the

agreement was built around offending provision and to sever out offending provision

would require court to rewrite terms of the agreement); Lacey v. Healthcare & Ret.

Corp. of Am., 918 So. 2d 333, 335 (Fla. 4th DCA 2005) (refusing to sever an offending

provision from arbitration clause because the "agreement contain[ed] no severance

clause" and the offending provision went to the essence of the contract). Rather, the

court must determine whether the offending provision goes to the very essence of the

agreement.

              Here, the offending provision deals only with attorneys' fees. The

provision does not require the arbitration to be conducted in accordance with certain

rules, and it does not limit the compensatory or punitive damages that Hochbaum may

recover in arbitration. Therefore, the offending provision is severable from each

agreement because it does not go to the essence of the agreement. See Estate of

Deresh ex rel. Schneider v. FS Tenant Pool III Trust, 95 So. 3d 296 (Fla. 4th DCA 2012)

(holding that provision limiting punitive damages, in violation of public policy, could be

severed because it did not go to the heart of the arbitration agreement and because the

arbitration panel could award other damages without limitation).4 It is clear from the

              4
                The arbitration agreement at issue in Estate of Deresh contained a
severability clause, but as explained above, this fact is not dispositive of the issue.
Even though the arbitration agreement contained such a clause, the court in Estate of

                                            -9-
agreements in this case that the parties agreed to bind themselves to arbitration for any

disputes arising out of Donald Hochbaum's residency at the nursing home. The

attorneys' fees provision does not go to the heart of the contracts, and severance of the

attorneys' fees provision would not require a drastic rewriting of the agreements and

would preserve the intent of the parties to adjudicate their disputes in arbitration. See

id.

              Because the offending provision is severable from the arbitration

agreements, we affirm the order compelling arbitration but remand with instructions to

strike the attorneys' fees provision from the agreements.

              Affirmed; remanded.

CASANUEVA and KELLY, JJ., Concur.

Deresh went on to consider whether the offending provision went to the heart of the
agreement. 95 So. 3d at 301.

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