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In Birl v. Heritage
Care LLC (April 9, 2009) 09 C.D.O.S. 4360, Division Two of the
Second Appellate District held that a trial court acted within its
discretion to refuse to enforce an arbitration agreement of
defendant Heritage Rehabilitation Center. The court found that
because there were other co-defendants who were not subject to the
arbitration agreement, and the plaintiffs alleged several causes of
action in their individual capacities and beyond the scope of the
agreement, the trial court acted appropriately by refusing to
enforce Heritage’s arbitration agreement to “avoid the possibility
of conflicting rulings on common issues of law or fact.”
Plaintiffs’ decedent was initially treated at Kaiser Permanente
Hospital at Sunset (Kaiser), where he had surgery. About a month
later he was transferred to Brier Oak Terrace Care nursing facility
despite the fact that, according to plaintiffs, he still needed
acute hospital care. He developed complications and was transferred
back to Kaiser. At some point he was transferred to Fountain View
Subacute and Nursing Center, where he was allegedly cared for
improperly and developed another infection. He was then transferred
back to Kaiser’s ER. He remained at Kaiser for several days then was
admitted to the Heritage nursing facility.
While at Heritage, plaintiffs allege Mr. Birl was not properly cared
for and was allowed to deteriorate. When his family visited him and
found him to be unresponsive, they had him transferred by ambulance
to Harbor-UCLA Hospital, where he died on the day of his transfer.
Plaintiffs were the surviving spouse and adult children of Mr. Birl.
They sued Kaiser, the physicians of the Southern California
Permanente Medical Group, various entities of Kaiser and the three
residential nursing facilities. They alleged causes of action as
successors of interest to Mr. Birl, and also in their own capacities
as family members entitled to sue for wrongful death, loss of
consortium (Mrs. Birl) and negligent infliction of emotional
distress.
The Kaiser/SCPMG defendants filed a motion to compel arbitration,
which was denied and not appealed; they answered the complaint and
the court observed they were apparently going to trial. Neither
Brier Oak Terrace nor Fountain View had arbitration agreements and
answered the complaint. Heritage filed a petition to compel
arbitration, but curiously, only as to some of the causes of action
which the court noted would go to trial regardless of the outcome of
the appeal.
Heritage did move to compel arbitration on 8 of the causes of action
alleged against it. Some of the causes of action were alleged by
plaintiffs in their role as successors in interest, some were
brought in their individual capacity. All arose out of the care Mr.
Birl received throughout the course of his treatment at the various
facilities being sued by plaintiffs.
The trial court denied the motion to compel arbitration. In so
doing, it exercised its discretion under CCP 1281.2(c) in order to
“avoid the possibility of conflicting rulings on common issues of
law or fact.” It also found the arbitration agreement did not comply
with the statutory language and formatting requirements for such
agreements. Heritage appealed.
The appellate court first reviewed de novo whether CCP section
1281.2(c) was, as a matter of law, properly invoked. Finding it was,
the court then looked at whether the trial court abused its
discretion under an abuse of discretion standard by refusing to
compel arbitration. Here, the court found the “third party
requirement” of section 1281.2(c) “was satisfied as a matter of law,
and the trial court did not abuse its broad discretion in refusing
to compel arbitration on the basis that there was a possibility of
conflicting rulings on a common issue of law or fact.”
CCP section 1281.2(c) provides that a court shall order parties to
arbitrate when there is a written arbitration agreement, “unless it
determines” as follows: “A party to the arbitration agreement is
also a party to a pending court action or special proceeding with a
third party, arising out of the same transaction or series of
related transactions and there is a possibility of conflicting
rulings on a common issue of law or fact.” The appellate court
observed that in order for Heritage to show the trial court abused
its discretion, it needed to show that none of the other parties to
the action are “third parties” within the meaning of section
1281.29(c).
Heritage acknowledged that Kaiser/SCKPMG and the other nursing care
facilities are third parties; however it argued that the time the
patient stayed at Heritage could be sequestered out from the
treatment timeline. It ignored the fact that Kaiser/SCKPMG
physicians attended Mr. Birl while he was at Heritage. The court
noted it was of “no consequence that Heritage’s services were
separated by time from the sequential services provided by the other
long-term care facilities. A temporal separation does not
necessarily negate the existence of the requisite ‘series of related
transactions.’ (Cite) Likewise, all the co-defendants contributed to
the cause of the injuries suffered by Mr. Birl’s wife and two
daughters, as alleged in their individual causes of action for loss
of consortium and the negligent infliction of emotional distress.”
The court also found the plaintiffs were third parties to the
agreement within the meaning of section 1281.2(c) with respect to
their individual claims for wrongful death and emotional distress.
These claims clearly arose out of the same series of transactions
involved in the injury causes of action that survived Mr. Birl and
were pled against Heritage.
Finally, the Court of Appeal held the trial court correctly assessed
the risk of conflicting rulings on common questions of law and fact
if Heritage were allowed to arbitrate some of its claims and the
remaining defendants went before a jury trial. “[i]f the trier of
fact is the same for all defendants, as would occur if all
defendants are joined in the court action, then the possibility of
conflicting rulings concerning fault and apportionment of damages
(see Civ.Code §1430 et seq.) would not occur.”
In Footnote 3 the court set out a scenario in which, if Heritage
were allowed to arbitrate its claims first, “apportionment of
liability could result in liability by more than one defendant but
nonetheless no monetary recovery for plaintiffs. This could occur in
a scenario where, for example, an arbitrator places 100 percent of
the blame on the Kaiser/SCKPMG defendants and none on Heritage,
while a jury (which is not bound by the findings of an arbitrator)
places 100 percent of the blame on Heritage and none on the Kaiser/SCKPMG
defendants. The trial court’s ruling denying Heritage’s petition to
compel arbitration eliminates the possibility of such a conflicting
and unjust outcome.”
This decision will not be welcomed by those providers and entities
that have arbitration agreements with their patients. However, it
may be useful to those physicians or facilities that do not use
arbitration agreements but are in litigation with a co-defendant
that does and want to keep everyone in the case for purposes of
trial.
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