Illinois Appellate Court Examines Whether Arbitration Agreement Was Enforceable In Premises Liability Case

October 2018

A recent decision from the First District Appellate Court, Kero v. Palacios, et al., 2018 Ill. App. (1st) 172427, addressed the enforceability of an arbitration agreement in connection with a premises liability case.

In the complaint, plaintiff alleged that he was a patient at defendant, Symphony of Lincoln Park, LLC’s (“Symphony”) rehabilitation facility in July 2016. During his stay at Symphony, plaintiff further alleged that he fell out of his bed on July 19 and July 31, 2016, and sustained injuries. Plaintiff alleged negligence in his complaint against Symphony.

Thereafter, Symphony filed a motion to compel arbitration and to dismiss the negligence counts of plaintiff’s complaint pursuant to Section 2-619(a)(9) of Code of Civil Procedure. Symphony argued that a valid arbitration agreement existed between the parties, that the agreement mandated plaintiff to arbitrate any claims of negligence and that “using its then operative name ‘Imperial Grove Pavilion,’ ” Symphony was a party to the arbitration agreement that plaintiff had signed.

Symphony attached the admission contract and arbitration agreement to its motion to dismiss. The documents listed the Imperial Grove Pavilion as the “facility,” and it provided that:

“In the event of any claim arising out (1) any dispute between you and us, (2) any dispute relating to services rendered for any condition, (3) injuries alleged to have been received by patient, (4) services rendered for any condition and arising out of the diagnosis, treatment or care of patient, and (5) collection proceedings in excess of $50,000, the claim will be submitted to binding arbitration pursuant to the provisions of this healthcare arbitration agreement.”

“Resident certifies that Resident has read this agreement and has legal representation regarding thereto or has been given the right to have this agreement reviewed by the Resident’s legal representation. Resident has signed this agreement of Resident’s free will and not under duress of any nature and fully accepts the terms thereof.”

At the bottom of the contract, above plaintiff’s signature, the arbitration agreement noted that healthcare negligence claims would be arbitrated. There was also a notice to the resident indicating that by signing the agreement, his right to trial by jury or a judge in a court would be barred as to any dispute relating to injuries that might result from negligence during the resident’s treatment or care, and it would be replaced by arbitration.

Symphony also attached affidavits from two of its employees stating that plaintiff executed the arbitration agreement on May 12, 2016 and at that time, plaintiff appeared to be alert and oriented and of sound mind and judgment and capable of executing the arbitration agreement and understanding its terms. Affidavits were also submitted indicating that on November 1, 2015, Symphony became a licensee of the facility known as Imperial Grove Pavilion and continued to operate under the name of Imperial Grove Pavilion and Imperial of Lincoln Park until May 18, 2016; that on November 1, 2015 and May 18, 2016, the facility’s building signage, marketing collateral, name badges and internal markings referred to the building as Imperial Grove Pavilion. The affidavits further noted that on May 18, 2016, the facility announced it was changing its operating name to Symphony of Lincoln Park and on that same date, the facility’s signage, awnings, name tags, contracts, and marketing materials were updated to reflect the name Symphony. The two affiants both attested they had personal knowledge of the facts in the affidavits and would testify to same if sworn as a witness.

In his response to Symphony’s motion to enforce the arbitration agreement and dismiss the complaint, plaintiff argued that the arbitration agreement was not enforceable because, (1) no evidence had been presented to show that Symphony was an actual party to the arbitration agreement and (2) due to the duress and the unfair bargaining positions between Symphony and plaintiff when the parties signed the arbitration agreement. Plaintiff also attached to his response brief, a document from the Secretary of State’s website listing the entity name as “Symphony Lincoln Park, LLC,” indicating that the file date was April 23, 2015, and noting that “Symphony of Lincoln Park” was the active assumed name.

Plaintiff also attached his own affidavit to his response stating that he was not told he would have to sign an arbitration agreement before he arrived at Symphony. He further noted in the affidavit he was simply given forms to sign and told that he had to sign them in order to be taken in as a patient, and that when he was admitted to Symphony, he had been discharged from a hospital to receive care and therapy in order to gain strength to go home, and at the time he signed the arbitration agreement, he was unable to go home as a result of his condition.

On September 15, 2017, the Circuit Court granted Symphony’s Motion to Dismiss Plaintiff’s Complaint and enforce the arbitration agreement. Plaintiff filed his notice of appeal on October 3, 2017.

On appeal, plaintiff contended that Symphony, via its affidavits, failed to show that Symphony was a licensee of Imperial Grove Pavilion facility at the time plaintiff signed the arbitration agreement because the affiants failed to offer any factual bases for the foundation of their opinions and also failed to provide any documentary evidence to support their attestations and personal knowledge of the matter. The Appellate Court noted that, under Illinois Supreme Court Rule 191(a), affidavits which are submitted to support a motion to dismiss pursuant to Section 2-619 must be made on the personal knowledge of the affiants; set forth with particularity the facts upon which the claim, counter-claim, or defense is based; shall have attached sworn or certified copies of the documents upon which the affiant is relying; shall not consist of conclusions, but of facts admissible in evidence; and shall affirmatively show that the affiant, if sworn as a witness, will testify competently thereto.

The Appellate Court wrote that the affidavits submitted by Symphony in support of its motion complied with Rule 191. Specifically, both affiants stated that they were employees at the facility where plaintiff was admitted at the time of his admission. Furthermore, both affiants averred that at the time Symphony was a licensee of Imperial Grove Pavilion, and shortly after plaintiff’s arrival to the facility, it officially changed its operating name and signage from Imperial Grove Pavilion to Symphony of Lincoln Park. Accordingly, the Court agreed with Symphony that it was reasonable to deduce that the affiants, in their positions at Symphony, would have personal knowledge of who employed them and the nature of the relationship between their employer and the facility where they worked. And of course, they would be competent to testify to this information if they were called as witnesses.

The affidavits together with the admission contract and arbitration agreement supported Symphony’s claim that it was a party to the arbitration agreement. In the admission contract and the arbitration agreement, “Imperial Grove Pavilion” had been listed as the facility. The arbitration agreement broadly defined “facility” to include Imperial Grove’s “parents, affiliates, subsidiary companies, owners, officers, directors, medical directors, employees, successors, assigns, agents, attorneys and insurers.” The two affidavits made clear that Symphony was at least a successor of Imperial Grove and was also an affiliate. The admission contract showed there was no effort to hide the fact that “facility” included Symphony of Lincoln Park, as plaintiff wrote his initials next to two sections of the contract in which Symphony of Lincoln Park was handwritten as the name of the facility for “consent for treatment” and “consent for payment.” Therefore, Symphony carried its burden of demonstrating it was a party to the arbitration agreement, thereby shifting the burden to plaintiff to raise an issue of fact on this issue or show that the agreement was invalid.

The Appellate Court ruled that plaintiff failed to offer any credible evidence to counter, or raise a factual issue on, Symphony’s claim that it was a party to the arbitration agreement. As such, the Circuit Court did not err in finding Symphony to be a party to the agreement.

The Appellate Court also analyzed whether the arbitration agreement should be unenforceable because plaintiff allegedly signed it under duress. The court wrote that “duress” had been defined by the Illinois Supreme Court as a condition where one is induced by a wrongful act or threat of another to make a contract under circumstances which deprive him of the exercise of his free will, and it maybe conceded that a contract executed under duress is voidable. Kaplan v. Kaplan, 25 Ill. 2d 181, 185 (1962). In the present case, the Appellate Court noted that plaintiff failed to put forward any evidence of duress. The fact that plaintiff was not told in advance that Symphony would give him an arbitration agreement to sign was not evidence of duress. Moreover, plaintiff did not allege that any threats were made, that he protested against signing the arbitration agreement or that he would have refused to sign the agreement. Additionally, it was clearly indicated on the final page of the arbitration agreement in all capital letters above plaintiff’s signature that plaintiff was not required to sign the agreement in order to receive treatment. As such, the Circuit Court was correct in its rejection of plaintiff’s claims of duress.

The learning points in Kero are two-fold. First, an arbitration agreement should include language that is broad enough to ensure that entities which are meant to be covered by the arbitration agreement will be covered by it in the event litigation ensues. Second, when a business or entity requests that a person sign documentation which will enter him or her into the arbitration agreement, it is important that the agreement is not entered into under duress, as defined by Illinois law.