APPEAL from a judgment of the Superior Court of Fresno County. Donald S. Black, Judge. (Super. Ct. No. 08CECG01807)
The opinion of the court was delivered by: Kane, J.
CERTIFIED FOR PUBLICATION
Plaintiff Ruth Chappell*fn1 filed a lawsuit alleging
that defendant Sunrise Senior Living Management, Inc., also known as
Sunrise Assisted Living, violated the Elder Abuse and Dependent Adult
Civil Protection Act (Welf. & Inst. Code, § 15600 et seq.; the Elder
Abuse Act),*fn2 concerning its care of plaintiff while
she was a resident at defendant's assisted living facility (Sunrise).
At the time of plaintiff's admission to Sunrise, she entered into a
residency agreement that included an arbitration clause.*fn3
In response to plaintiff's lawsuit, defendant petitioned
the trial court to compel arbitration of plaintiff's elder abuse
claims pursuant to the residency agreement. The trial court granted
the petition, but severed one provision of the arbitration clause that
specified each party would bear their own attorney fees and costs in
the arbitration. The trial court severed that provision on the ground
that it was contrary to public policy, since the Elder Abuse Act
specifically called for recovery of attorney fees and costs to
prevailing plaintiffs (§ 15657) to effectuate the important public
purposes of the law. The case proceeded to arbitration, plaintiff
prevailed on her claims under the Elder Abuse Act and the arbitrator
awarded compensatory and punitive damages. In addition, the
arbitrator awarded plaintiff the sum of $666,725.30 in attorney fees
and $94,694.70 in costs pursuant to section 15657 of the Elder Abuse
Act. After the arbitration award was confirmed and judgment was
entered by the trial court, defendant filed the instant appeal
challenging the trial court's decision to sever the attorney fees and
cost waiver. Because we agree that the waiver in the residency
agreement of plaintiff's statutory right to recover attorney fees and
costs under section 15657 of the Elder Abuse Act was contrary to
public policy, we will affirm.
FACTS AND PROCEDURAL HISTORY
On May 27, 2008, plaintiff filed her complaint for damages alleging several violations of the Elder Abuse Act. The complaint asserted that during the period from March 3 until July 21, 2006, plaintiff was a resident at the assisted living facility operated by defendant referred to as Sunrise. While a resident at Sunrise, defendant allegedly engaged in conduct constituting elder abuse of plaintiff. Such conduct allegedly included leaving plaintiff unattended and isolated in her room for prolonged amounts of time resulting in dehydration, ignoring plaintiff's calls for help or assistance, and failing to respond to plaintiff's basic health and personal hygiene needs. Allegedly, defendant's conduct was committed with recklessness, oppression, fraud, or malice and thus came within the scope of section 15657. Section 15657 provides in part: "Where it is proven by clear and convincing evidence that a defendant is liable for physical abuse as defined in Section 15610.63, or neglect as defined in Section 15610.57, and that the defendant has been guilty of recklessness, oppression, fraud, or malice in the commission of this abuse, the following shall apply, in addition to all other remedies otherwise provided by law: [¶] (a) The court shall award to the plaintiff reasonable attorney's fees and costs."
On September 2, 2008, defendant filed its petition under Code of Civil Procedure section 1281.2 to compel arbitration of plaintiff's claims pursuant to the provision in the arbitration agreement. Specifically, the residency agreement entered by the parties on or about March 30, 2006, provided in article VI, paragraph X., under the heading "Arbitration," as follows:
"By entering into this Agreement, you agree that any and all claims and disputes arising from or related to this Agreement or to your residency, care or services at this Community shall be resolved by submission to neutral, binding arbitration; except that any claim involving unlawful detainer actions (eviction) or any claims that are brought in small claims court shall not be subject to arbitration unless both parties agree to arbitrate such proceedings. Both parties give up their constitutional rights to have any such dispute decided in a court of law before a jury, and instead accept the use of arbitration. The arbitration shall be conducted in Fresno County, California, by a single neutral arbitrator selected as provided in the California Code of Civil Procedure, unless otherwise mutually agreed. In reaching a decision, the arbitrator shall prepare findings of fact and conclusions of law. Each party shall bear its own costs and fees in connection with the arbitration." (Italics added.)
Plaintiff opposed the petition to compel arbitration on the ground that the above arbitration terms were unconscionable and/or contrary to public policy. Plaintiff argued the entitlement to attorney fees and costs under the Elder Abuse Act was a substantive statutory remedy designed to increase the likelihood that attorneys would take elder abuse cases and ensure that victimized seniors would receive adequate representation. According to plaintiff's opposition, that policy would be undermined if arbitration could be ordered while at the same time the trial court enforced a provision that each party bear his or her own costs and fees. At oral argument, plaintiff argued further that the provision relinquishing attorney fees recovery was contrary to public policy to the extent that it resulted in a waiver of statutory rights that were intended to be "unwaivable." Plaintiff pointed out that if the substantive remedies in the Elder Abuse Act were waivable in this manner, "every facility would just include [a provision to] 'waive attorney fees,'" which plaintiff argued would impede the goals of the Elder Abuse Act. In its reply, defendant countered that arbitration is favored under state and federal law, and that the waiver provision was a matter of the freedom of contract that should not be disturbed by the courts. After oral argument, the trial court took the matter under submission.
In September 2008, the trial court issued its written order granting the petition to compel arbitration. The trial court found that plaintiff failed to prove that the arbitration agreement was procedurally or substantively unconscionable. However, as noted, the trial court did find the discrete provision waiving recovery of attorney fees and costs to be in violation of public policy embodied in the Elder Abuse Act, and the court severed that waiver provision. The trial court explained this aspect of its ruling as follows: "[T]he arbitration provision does provide for what is in effect a waiver of plaintiff's right to recover, under certain circumstances, attorneys' fees under the Elder Abuse Act. To that extent, it is contrary to public policy and unlawful. [Citation.] This does not require a finding that the arbitration agreement as a whole is unlawful as it is not 'permeated with unconscionability.' (Armendariz [v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83], at p. 122 [(Armendariz)].) Rather this provision of the agreement can be, and is, severed and the remainder of the agreement enforced. (Civ. Code § 1670.5[, subd. ](a); Armendariz, at pp. 121-122.)" In accordance with this determination, the trial court ordered the case to arbitration but held that "plaintiff shall be entitled to assert all rights and claim all remedies available to her under the Elder Abuse Act" and "the provision of the agreement requiring the parties to bear their own fees and costs is severed from the agreement and the parties will have such right to attorneys' fees and costs as are provided for in and consistent with the Elder Abuse Act."
Arbitration of plaintiff's causes of action was duly conducted in September and October 2009 before a neutral arbitrator. In March 2010, the arbitrator issued an interim arbitration award regarding plaintiff's elder abuse claims. The arbitrator found clear and convincing evidence of elder abuse based on, among other things, (1) failure to make more prompt discovery of plaintiff's dangerously low blood pressure and failure to take prompt action to obtain medical care to assist plaintiff after such discovery was made; (2) failure to respond to plaintiff's numerous emergency calls for help in a timely fashion and failure to notify plaintiff's family of the frequency of plaintiff's calls for help; and (3) failure to notify plaintiff's family of her falls on June 16 and July 15, 2006. As compensatory damages, the arbitrator awarded special damages of $1,954.96 and general damages in the amount of $125,000. In addition, the arbitrator found by clear and convincing proof that plaintiff was entitled to recover punitive damages for defendant's conduct, which the arbitrator described as "reckless conduct conducted with malice and oppression." Punitive damages were awarded in the amount of $187,500.
The arbitrator further held that plaintiff was entitled to an award of attorney fees and costs under the Elder Abuse Act, the amounts to be determined at a subsequent hearing. On November 23, 2010, after a separate hearing to determine the issue of attorney fees and costs, the arbitrator awarded plaintiff the sum of $666,725.30 in attorney fees and $94,694.70 in costs. On January 11, 2011, the arbitrator issued a final arbitration ruling, incorporating all the prior interim rulings therein.
On January 19, 2011, a "JUDGMENT CONFIRMING CONTRACTUAL ARBITRATION AWARD" was entered by the trial court. ...