PERRY, J.
Angela I. Gessa seeks review of the decision of the Second District Court of Appeal in Gessa v. Manor Care of Florida, Inc., 4 So.3d 679 (Fla. 2d DCA 2009), on the ground that it expressly and directly conflicts with a decision of another Florida district court of appeal on a question of law.
Angela Gessa was admitted as a resident to Manor Care of Florida, Inc., a nursing home. Upon admission, her daughter, acting as her attorney-in-fact, signed admissions documents that included an arbitration agreement. During her stay, Gessa filed suit against Manor Care, alleging negligence, violation of resident's rights, and breach of fiduciary duty. Manor Care moved to compel arbitration. At the hearing on the motion, Gessa argued that the arbitration agreement was unconscionable and contrary to public policy due to the limitation of liability provisions in the agreement that capped noneconomic damages at $250,000 and waived punitive damages. The trial court, however, granted
Gessa raises several issues, including the following: (i) whether the limitation of liability provisions are severable, (ii) whether the court or the arbitrator must decide whether the arbitration agreement violates public policy, and (iii) whether the limitation of liability provisions violate public policy. Manor Care, in counterpoint, contends that the United States Supreme Court's recent decision in Rent-A-Center, West, Inc. v. Jackson, ___ U.S. ___, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010), is applicable here and entitles Manor Care to relief on its motion to compel.
As explained more fully below, our decision in this case is controlled in part by our recent decision in Shotts v. OP Winter Haven, Inc., 86 So.3d 456 (Fla.2011), another nursing home arbitration case. Pursuant to our reasoning in that case, we hold that the district court below erred in the following respects: (i) in ruling that the limitation of liability provisions in this case, which place a $250,000 cap on noneconomic damages and waive punitive damages, are severable; (ii) in failing to rule that the court, not the arbitrator, must decide whether the arbitration agreement violates public policy; and (iii) in failing to rule that the above limitation of liability provisions violate public policy. As in Shotts, we also conclude that the United States Supreme Court's decision in Jackson is inapplicable here.
The relevant facts of this case are set forth in the district court decision under review:
Gessa, 4 So.3d at 680 (citation omitted).
The trial court, in its written order, granted the motion to compel, concluding that the agreement was severable and was not unconscionable:
(Emphasis added.) The court declined to rule on the public policy issue, leaving it for the arbitrator.
Gessa appealed, arguing that the limitation of liability provisions violated public policy and were not severable. The district court affirmed, agreeing with the trial court that the provisions were severable. Also, the district court declined to rule on the public policy issue, leaving it for the arbitrator:
The arbitration agreement that Gessa's daughter signed when Gessa was admitted to Manor Care bore no title. Instead, the document bore the following heading: "THIS AGREEMENT CONTAINS A WAIVER OF STATUTORY RIGHTS. PLEASE READ CAREFULLY." The document was divided into four parts: A, B, C and D. Part A was titled "ARBITRATION PROVISIONS" and was approximately three and one-half pages long. The following provisions were included at various points in Part A:
Significantly, at the conclusion of Part A, just before the beginning of Part B, the document provided:
(Emphasis added.)
Part B of the document, which was approximately one-half page in length, was titled "LIMITATION OF LIABILITY PROVISION[S]: Read Carefully Before Signing," and it contained four provisions, one of which placed a $250,000 cap on noneconomic damages, and another of which called for a waiver of punitive damages. Part B provided as follows in full:
(Emphasis added.) Part C of the document, which was a brief paragraph, was titled "WITHDRAWAL PERIOD," and it provided that each party shall have three business days in which to cancel the agreement. And Part D, which was also a brief paragraph, was titled "FULL AGREEMENT," and it stated that the agreement constitutes the entire agreement between the parties.
As noted above, this case is controlled in part by our decision in Shotts v. OP Winter Haven, Inc., 86 So.3d 456 (Fla.2011), and although the two cases are similar, they differ in several respects. First, whereas the limitation of liability provisions in the present case include a $250,000 cap on noneconomic damages and a waiver of punitive damages, the limitations of remedies provisions in Shotts included the imposition of the AHLA rules
In this claim, Gessa contends that the district court erred in ruling that the limitation of liability provisions in the present case are severable. To the extent this claim is based on written materials before this Court, the issue is a pure question of law, subject to de novo review. See Aills v. Boemi, 29 So.3d 1105, 1108 (Fla. 2010) ("Because this is a question of law... the standard of review is de novo."). In its opinion, the district court below indicated that it agreed with the trial court's ruling that "offensive clauses can be severed." Gessa contends, however, that the district court erred in this respect—she contends that the limitation of liability provisions violate public policy and are not severable. We agree.
This Court addressed a similar scenario in Shotts, where we held that one of the limitations of remedies provisions in that case—the provision called for the imposition of the AHLA rules—was not severable. Because it was unnecessary to do so, we did not address whether the second provision in that case—a waiver of punitive
In Shotts, we then reviewed the decisional law in this area and applied the above standard from Local No. 234 to the limitations of remedies provision in Shotts. We ruled as follows:
Shotts, 86 So.3d at 478.
As in Shotts, we conclude that the limitation of liability provisions in the present case, which place a $250,000 cap on noneconomic damages and waive punitive damages, are not severable from the remainder of the agreement. As noted above, the limitation of liability provisions are contained in Part B of the arbitration agreement, which is titled "LIMITATION OF LIABILITY PROVISION[S]," and the first section in part B provides as follows: "The parties to this Agreement understand that the purpose of [these] `Limitation of Liability Provision[s]' is to limit, in advance, each party's liability in relation to this Agreement." When viewed jointly, the above two provisions place a clear upper limit on noneconomic damages and foreclose the prospect of punitive damages altogether. The extent of liability under the agreement is thus, within bounds, reasonably foreseeable. Without these provisions, on the other hand, the extent of liability would be open-ended. In this respect, the two provisions constitute the financial heart of the agreement.
As in Shotts, we conclude that if the present provisions were to be severed, "the trial court would be hard pressed to conclude with reasonable certainty that, with the illegal provision[s] gone, `there still remains of the contract valid legal promises on one side which are wholly supported by valid legal promises on the other' id.—particularly, when those legal promises are viewed through the eyes of
Under the above standard of review, we hold that the district court below erred in ruling that the limitation of liability provisions in this case are severable.
In this claim, Gessa contends that the district court erred in affirming the trial court's order which, in effect, allowed the arbitrator, not the court, to decide whether the arbitration agreement violates public policy. This issue is a pure question of law, subject to de novo review. See Aills v. Boemi, 29 So.3d 1105, 1108 (Fla. 2010). We agree with Gessa.
This issue has already been decided in Gessa's favor in Shotts. There, we held that the court, not the arbitrator, must decide whether an arbitration agreement violates public policy:
Shotts, 86 So.3d at 471. Again, this conclusion is consistent with the weight of authority in Florida,
Under the above standard of review, we hold that the district court below erred in failing to rule that the court, not the arbitrator, must decide whether the arbitration agreement violates public policy.
In this claim, Gessa contends that the district court erred in failing to rule that the limitation of liability provisions in the present case violate public policy. This issue is a pure question of law, subject to de novo review. See Aills v. Boemi, 29 So.3d 1105, 1108 (Fla.2010). As noted above, the limitation of liability provisions in this case call for a $250,000 cap on noneconomic damages and a waiver of punitive damages. The district court below did not decide whether these provisions violate public policy, but rather left the matter to the arbitrator. Gessa contends that the district court erred in this respect—she contends that the provisions violate public policy, and that the district court should have so ruled. We agree.
As noted above, this Court addressed a similar scenario in Shotts, where the limitations of remedies provisions included the imposition of the AHLA rules and a waiver of punitive damages. There, we ruled as follows:
Shotts, 86 So.3d at 474 (first emphasis in original) (second emphasis added).
As in Shotts, we conclude that the limitation of liability provisions in the present case violate public policy. As noted above, the nursing home statute provides for the award of "punitive damages for gross or flagrant conduct or conscious indifference to the rights of the resident. Moreover, there was no cap on pain and suffering damages in the statute." In contrast, the limitation of liability provisions in the present case eliminate punitive damages altogether and severely restrict damages for pain and suffering. These provisions directly frustrate the remedies created by the statute. The provisions eviscerate the remedial purpose of the statute, or, in the language of Shotts, they "substantially diminish[] or circumvent[] these remedies." Shotts, 86 So.3d at 474. Thus, these limitation of liability provisions, which place a $250,000 cap on noneconomic damages and waive punitive damages, violate the public policy of the State of Florida and are unenforceable. Again, this conclusion is consonant with the weight of authority in Florida.
Under the above standard of review, we hold that the district court below erred in failing to rule that the limitation of liability provisions in the present case violate public policy.
Approximately two weeks after this Court heard oral argument in the present case, the United States Supreme Court issued its decision in Rent-A-Center, West, Inc. v. Jackson, ___ U.S. ___, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010), in which that Court addressed the issue of whether the court or the arbitrator must determine whether an arbitration agreement is unconscionable (Jackson contended that the agreement was unconscionable under Nevada law because it required the splitting
After Jackson was decided, Manor Care filed in this Court a motion to submit supplemental briefing addressing whether Jackson is applicable to the present case. This Court granted the motion and ordered the parties to submit supplemental briefs on an expedited schedule. In its supplemental brief, Manor Care contends that under Jackson the present case must proceed to arbitration because Gessa did not challenge the agreement to arbitrate but rather challenged the limitation of liability provisions, which are separate from that agreement. We disagree.
In Jackson, after Antonio Jackson filed an employment discrimination claim against Rent-A-Center, West, Inc., which was his former employer, Rent-A-Center filed a motion to compel arbitration pursuant to the Mutual Agreement to Arbitrate Claims that Jackson had signed as a condition of his employment. The agreement contained a delegation provision in which the parties agreed to arbitrate the enforceability of the agreement. Jackson did not challenge the delegation provision specifically; rather, he opposed the motion on the ground that the entire arbitration agreement was unconscionable. The federal district court granted the motion, and the circuit court of appeals reversed. The United States Supreme Court granted certiorari and reversed, ruling that the delegation provision was controlling and should have been challenged.
In the present case, because the arbitration agreement contained no delegation provision, there was no such provision for Gessa to challenge. Instead, she challenged the arbitration agreement itself and this included the limitation of liabilities provisions, which had been incorporated by reference into the agreement. This was the proper course of action under section 2 of the Federal Arbitration Act, for unlike the situation in Jackson, the entire arbitration agreement in the present case operated as the "written provision ... to settle by arbitration a controversy," under section 2. See 9 U.S.C. § 2 (2006). Specifically, because the agreement contained no delegation provision, Jackson is inapplicable here.
Based on the foregoing, we conclude that the district court in the present case erred in the following respects: (i) in ruling that the limitation of liability provisions, which place a $250,000 cap on noneconomic damages and waive punitive damages, are severable; (ii) in failing to rule that the court, not the arbitrator, must decide whether the arbitration agreement violates public policy; (iii) in failing to rule that the above limitation of liability provisions violate public policy. We also conclude that the United States Supreme Court's decision in Rent-A-Center, West, Inc. v. Jackson, ___ U.S. ___, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010), is inapplicable here.
We quash the decision of the district court in Gessa v. Manor Care of Florida, Inc., 4 So.3d 679 (Fla. 2d DCA 2009).
It is so ordered.
PARIENTE, LEWIS, QUINCE, and LABARGA, JJ., concur.
POLSTON, J., dissents with an opinion, in which CANADY, C.J., concurs.
The majority errs by holding that the arbitration agreement is not enforceable because challenged limitations of remedies within the agreement violate public policy. Contrary to the majority's ruling, the challenged limitations may be severed from the arbitration provisions so that the arbitration should go forward as agreed by the parties. Moreover, the Florida Legislature, not this Court, should decide whether Florida's public policy has been violated. Because the Florida Legislature has addressed the enforceability of other limitations but not these, the Court should not void the contract. The Court should not be a policy maker.
Therefore, I respectfully dissent.
The arbitration agreement is a standalone agreement, separate from the admissions agreement signed by the parties. The arbitration agreement explicitly provides that the Florida Arbitration Code applies and that it pertains to "[a]ny and all claims or controversies ... arising out of or in any way relating to the Resident's stay at the facility." It states:
The Petitioner challenged this arbitration agreement as unenforceable as contrary to public policy because it includes a limitation of damages otherwise available by Florida's statutes. Specifically, the Petitioner challenged the provisions that provide that (i) "[n]on-economic damages shall be limited to a maximum of $250,000," and (ii) "[p]unitive damages shall not be awarded."
The trial court ruled that these provisions may be severed from the agreement, even though there is no separate severability provision, and that the remaining provisions, including arbitration, are enforceable. See Gessa v. Manor Care of Fla., Inc., 4 So.3d 679, 681 (Fla. 2d DCA 2009). The trial court did not determine whether the challenged provisions violate public policy, but it did rule that the arbitration agreement was neither procedurally nor substantively unconscionable. Id. The trial court granted Manor Care of Florida's motion to compel arbitration. Id. at 680.
On appeal, the Second District Court of Appeal affirmed the trial court's order compelling arbitration. Id. The Second District characterized the trial court's ruling regarding severability as a finding of fact and determined that there was competent
Before this Court, the Petitioner argues that Second District erred in ruling that the arbitrator, not the court, should decide whether the arbitration agreement is enforceable because it includes limitations of remedies that violate public policy.
In Volt Information Sciences, Inc. v. Board of Trustees of the Leland Stanford Junior University, 489 U.S. 468, 477, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989), the United States Supreme Court ruled that parties to a contract may choose another state's arbitration law without preemption by the Federal Arbitration Act (FAA), except to the extent the state law undermines the goals and policies of the FAA. Accordingly, the parties' contract should be enforced according to the Florida Arbitration Code as expressly provided for, except to the extent it conflicts with the FAA.
Generally, under Florida and federal arbitration law, if enforceability of the arbitration agreement, rather than the contract as a whole, is challenged, then the court rather than the arbitration panel will decide enforceability. See Granite Rock Co. v. Int'l Bhd. of Teamsters, ___ U.S. ___, 130 S.Ct. 2847, 2856, 177 L.Ed.2d 567 (2010); O'Keefe Architects, Inc. v. CED Constr. Partners, 944 So.2d 181, 184-85 (Fla.2006). However, the arbitration agreement may delegate to the arbitration panel the power to decide the issue of enforceability of the arbitration agreement, which should be enforced. See Rent-A-Center, W., Inc. v. Jackson, ___ U.S. ___, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010);
Severability of the contract is a matter of state law, therefore is controlled by Florida law. See Terminix Int'l Co. v. Palmer Ranch Ltd. P'ship, 432 F.3d 1327, 1331 (11th Cir.2005).
Who decides whether severance is permissible in this contract—the court or arbitrator? As earlier stated, the enforceability of the arbitration agreement, not the whole admissions agreement, is challenged and there is no delegation clause for the matter to be decided by arbitration. Accordingly, the court, rather than the arbitration panel, must decide severability here. See Howsam, 537 U.S. at 83, 123 S.Ct. 588. But, under both Florida and federal arbitration law, if the challenged provisions are severable, then the case should proceed to arbitration because the matter will be determined in arbitration. See Musnick, 325 F.3d at 1261; Stiehl, 22 So.3d at 99-100; Bland ex rel. Coker v. Health Care & Ret. Corp. of Am., 927 So.2d 252, 258 (Fla. 2d DCA 2006). With severance, there is no longer any dispute for the court to decide because arbitration will occur. See, e.g., Terminix, 432 F.3d at 1332 (describing Anders, 346 F.3d at 1031-32); Gessa, 4 So.3d at 682; Rollins, Inc. v. Lighthouse Bay Holdings, Ltd., 898 So.2d 86, 89 (Fla. 2d DCA 2005).
In this case, there is no severability clause explicitly recognizing the parties' intent to sever. The trial court did not conduct an evidentiary hearing; rather, it simply reviewed the terms of the contract to determine that the challenged provisions were severable. See Gessa, 4 So.3d at 682. Although the Second District characterized this as finding of fact by the trial court, it is based on a construction of the agreement by the trial court, without any evidentiary hearing, to find the challenged terms severable. See id. The majority, while coming to the opposite conclusion that the challenged terms are not severable, also simply reviews the contract. Majority op. at 490.
Contrary to the majority's ruling, the issue of severability cannot be decided in Petitioner's favor. The majority mistakenly considers the $250,000 limitation on noneconomic damages and the preclusion of punitive damages in the contract as "the financial heart of the agreement." Majority op. at 490. However, this ignores and mischaracterizes the economic reality of the transaction. The separate admissions agreement is the financial heart of the agreement between the parties, providing for the rights and responsibilities of the parties relating to the resident's stay at the nursing home, including the room and board rate, ancillary charges, and room and standard services by the facility. The separate arbitration agreement is a side agreement determining the specifics of arbitration, i.e., the scope, how and where the arbitration will be conducted, and the limitations of a potential arbitration award.
Contrary to the majority's ruling, the limitations of noneconomic damages and elimination of punitive damages are divisible and do not eliminate the essence of the agreement to arbitrate the parties' claims. See Stiehl, 22 So.3d at 100 ("[W]e do not find that the remedial limitation is so interrelated and interdependent that it cannot be severed by the arbitrator if necessary...."). The remainder of the agreement, describing what will be arbitrated, how the arbitration process will occur, where the arbitration will occur, and the other limitations could remain intact without "rewriting the contract" as the majority asserts. See id. I agree with the trial court and the Second District that the contract unambiguously may be severed.
Because of the severability of the challenged provisions, the matter should be arbitrated, and the arbitration panel should decide whether the challenged provisions may be enforced, if they ever arise. The speculative nature of these challenged limitations is an additional reason to enforce the arbitration provision. Petitioners may not be able to prove entitlement to noneconomic damages exceeding $250,000 or punitive damages so that the limitations would never be triggered. If that were the case, then the arbitration agreement, which otherwise should be enforced according to the facts of the case, would be improperly rendered unenforceable by the speculation that such limitations might be invoked. See PacifiCare, 538 U.S. at 407, 123 S.Ct. 1531 (holding that courts should not speculate on how an arbitrator might rule "in a manner that casts [agreements'] enforceability into doubt," and in such cases the proper course is to compel arbitration); Kristian v. Comcast Corp., 446 F.3d 25, 40 (1st Cir.2006) (interpreting PacifiCare to state that "[g]iven the presumption in favor of arbitration, a court should not foreclose the operation of that presumption by deciding that there is a question of arbitrability when there is the possibility that an arbitrator's decision in the first instance would obviate the need for judicial decision making"). This rationale is consistent with that used by the United States Supreme Court in Buckeye, 546 U.S. at 448-49, 126 S.Ct. 1204, to address the "conundrum" that a contract ultimately found to be unenforceable could be used to arbitrate a dispute:
In this case, there is a similar conundrum. The limitation provisions of a contract might be invoked if Petitioner proves sufficient damages to exceed the cap and for punitive damages. But to decide at the outset that the agreement is unenforceable because the limitations might be reached is to deny effect to an arbitration provision in a contract that the court may later find to be perfectly enforceable (because the limitations were not reached). As in Buckeye and Prima Paint, the speculative nature of the enforceability issue should be resolved in favor of the separate enforceability of arbitration provisions. See Buckeye, 546 U.S. at 448-49, 126 S.Ct. 1204; Prima Paint, 388 U.S. at 403-04, 87 S.Ct. 1801.
Because the arbitration panel should decide whether the challenged provisions may be enforced as a matter of Florida law, as described earlier, the majority erred by reaching the issue and then again by erroneously deciding the challenged limitation provisions are unenforceable as void against public policy. The Florida Legislature, not this Court, should decide Florida's public policy.
It is well-settled that contractual waivers are enforceable under Florida law for any type of rights. See Bellaire Secs. Corp. v. Brown, 124 Fla. 47, 168 So. 625, 639 (1936) ("A party may waive any right to which he is legally entitled, whether secured by contract, conferred by statute, or guaranteed by the Constitution.").
For instance, one may waive constitutional rights. Article I, section 26 of the Florida Constitution, contained within the Declaration of Rights, provides:
The public policy of the State of Florida was expressed by the vote of the people of Florida by enacting this 2004 Florida constitutional amendment to provide rights relating to contingency attorney's fees. In spite of the remedial provisions in favor of claimants, this Court held that these Florida constitutional rights could be waived by contract and that attorneys could recover more than permitted by this amendment. See In re Amendment to the Rules Regulating the Fla. Bar—Rule 4-1.5(f)(4)(B) of the Rules of Prof'l Conduct, 939 So.2d 1032 (Fla.2006) (adopting an amendment to the Rules Regulating the Florida Bar to permit
Unlike other statutory remedies, the Florida Legislature has not prohibited a waiver of the remedies provided in chapter 400, Florida Statutes (2004). The Florida Legislature has specifically prohibited waiver of rights under chapter 443, Florida Statutes (2004), Florida's unemployment compensation law, and voided any agreement that attempts to waive those rights:
§ 443.041(1), Fla. Stat. (2004).
Moreover, the Florida Legislature stated that any waiver of specified provisions of the Motor Vehicle Retail Sales Finance Act "shall be unenforceable and void." § 520.13, Fla. Stat. (2004). And, regarding liability of persons engaging in certain hazardous occupations, the Legislature has provided:
§ 769.06, Fla. Stat. (2004). Florida's insurance law specifies that "[n]o contract shall contain any waiver of rights or benefits provided to or available to subscribers under the provisions of any law or rule applicable to health maintenance organizations." § 641.31(11), Fla. Stat. (2004). And chapter 713, Florida Statutes, addressing construction liens, makes unwaivable the right to claim a lien before it matures. § 713.20(2), Fla. Stat. (2004) ("A right to claim a lien may not be waived in advance.... Any waiver of a right to claim a lien that is made in advance is unenforceable.").
Similarly, if waiver of the remedies of chapter 400 violates public policy, it should be the Florida Legislature's decision to specify that such waivers are prohibited and void, rather than the judiciary's. See art. II, § 3, Fla. Const. (recognizing separation of powers); Knowles v. Beverly Enters.-Fla., Inc., 898 So.2d 1, 9 (Fla.2004) (ruling that section 400.023 is a legislatively created cause of action to be brought by personal representatives only under certain circumstances and concluding that the Florida Legislature had the authority to determine the extent of the statutory right and to prescribe or limit the remedies available for a violation of the right). Had the legislature intended to void contractual provisions waiving remedies under chapter 400, it could have said so. See Tallahassee Mem'l Reg'l Med. Ctr. v. Kinsey, 655 So.2d 1191, 1198 (Fla. 1st DCA 1995)
Significantly, in Unicare Health Facilities, Inc. v. Mort, 553 So.2d 159, 161 (Fla. 1989), this Court recognized that remedies provided in chapter 400 may be waived when it ruled that the attorney's fees provision of section 400.023 is "merely a statutory right to seek fees," and that "[c]learly, statutory rights can be waived." See also Bland, 927 So.2d at 258 ("[A] compelling argument can be made that, absent a legislative restriction, the courts should honor a party's decision to contract away statutory protections."); § 400.151(2), Fla. Stat. (2004) (stating that nursing home contract shall include "any other matters which the parties deem appropriate"); cf. Am. Int'l Grp., Inc. v. Siemens Bldg. Techs., Inc., 881 So.2d 7, 12 (Fla. 3d DCA 2004) ("It is well settled that the parties are free to `contract out,' by an arbitration provision or otherwise, of any common law remedy which might otherwise be available. See 17 Am.Jur.2d Contracts § 709 (2004).").
The Court has erred by invoking public policy to void this arbitration agreement.
Because the challenged provisions of the arbitration agreement may be severed, and the determination of whether the provisions violate public policy should be determined by the Florida Legislature rather than this Court, I would affirm the Second District's ruling in favor of arbitration. I respectfully dissent.
CANADY, C.J., concurs.
