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Courtyard Gardens Health and Rehabilitation, LLC v. Davis

Court of Appeals of Arkansas, Division II

December 14, 2016

COURTYARD GARDENS HEALTH AND REHABILITATION, LLC, ET AL. APPELLANTS
v.
ERICKA ANN DAVIS, SPECIAL ADMINISTRATOR OF THE ESTATE OF JULIUS MARKS, DECEASED APPELLEE

         APPEAL FROM THE CLARK COUNTY CIRCUIT COURT [NO. 10CV-14-38] HONORABLE ROBERT MCCALLUM, JUDGE

         REVERSED AND REMANDED

          Kutak Rock LLP, by: Mark W. Dossett, Samantha B. Leflar, and Luke Burton, for appellants.

          Appellate Solutions, PLLC, by: Deborah Truby Riordan; The Edwards Firm, P.L.L.C., by: Robert H. Edwards; and Wilkes & McHugh, P.A., by: William P. Murray III, for appellee.

          RITA W. GRUBER, Judge.

         Appellant Courtyard Gardens Health and Rehabilitation, LLC, along with its owners, administrators, and other related entities (collectively "Courtyard"), appeal from an order denying their motion to compel arbitration.[1] We reverse and remand.

         I.

         In 2009, Julius Marks, the father of appellee Ericka Ann Davis, became a resident of Courtyard's nursing-home facility in Arkadelphia, Arkansas. Mr. Marks's admission papers, including an arbitration agreement, were signed on his behalf by Ms. Davis, pursuant to her power of attorney.

         The arbitration agreement provided, in essence, that any claims related to Courtyard's provision of services or health care would be resolved exclusively by binding arbitration. The agreement also provided that arbitration would be conducted in accordance with the National Arbitration Forum ("NAF") Code of Procedure, which was incorporated into the agreement.

         Mr. Marks remained at Courtyard until shortly before his death in October 2013. In April 2014, Ms. Davis, as special administrator of her father's estate, filed suit against Courtyard in Clark County Circuit Court, alleging negligence and medical malpractice in her father's care and treatment. Courtyard moved to compel arbitration of the claim in accordance with the above-referenced arbitration agreement. However, Davis responded that the arbitration agreement was legally impossible to perform because the NAF, whose procedural code was incorporated into the agreement, no longer conducted consumer arbitrations. The court agreed and ruled that the arbitration agreement was impossible to perform due to the unavailability of the NAF. Courtyard filed a timely appeal.

         II.

         Courtyard argues that the parties' arbitration agreement remained enforceable, despite the NAF's unavailability as an arbitration forum. We agree.

         The NAF's absence from consumer-arbitration cases stems from an action filed by Minnesota's Attorney General in 2009. The action alleged that the NAF had violated various consumer-protection laws while handling consumer arbitration claims. See Green v. U.S. Cash Advance Ill., LLC, 724 F.3d 787 (7th Cir. 2013); Meskill v. GGNSC Stillwater Greeley, LLC, 862 F.Supp.2d 966 (D. Minn. 2012); Miller v. GGNSC Atlanta, LLC, 746 S.E.2d 680 (Ga.Ct.App. 2013). To settle the case, the NAF signed a consent decree barring it from accepting consumer arbitration cases. As a result, a legal dilemma arose with regard to arbitration agreements that, like the one here, invoked the NAF procedures. See Meskill, supra. The issue that would soon be addressed by numerous courts was whether the NAF's unavailability rendered such arbitration agreements legally impossible to perform.

         The courts split on this question, but our supreme court recently resolved the issue for our State in Courtyard Gardens Health & Rehabilitation, LLC v. Arnold, 2016 Ark. 62, 485 S.W.3d 669. The Arnold court held that, based on the language of the parties' arbitration agreement and the applicable law, the absence of the NAF did not render performance of the arbitration agreement impossible. Specifically, the court determined that the agreement's reference to the NAF was ancillary to, ...


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