Case Notes

Michael Moffitt and Helen Ingraham Tuttle provide an in-depth breakdown of recent cases on trending issues, including arbitration in the context of elder abuse and appellate mediation in the context of immigration cases.

Arbitration Clause Unconscionable in Alleged Elder Abuse Context

Haydon v. Elegance at Dublin, 316 Cal. Rptr. 3d 326 (Cal. Ct. App. 2023)      

Sally Ann Haydon, an elderly patient suffering from dementia, signed a contract to take up residence in an assisted living facility, “Elegance at Dublin.” At the very end of the forty-page-long contract, in a section marked “Miscellaneous,” appeared a binding arbitration clause. Haydon brought a claim under the Elder Abuse Act, alleging that she was assaulted during her stay at the facility. The trial court denied defendants’ motion to compel arbitration, finding the arbitration clause unconscionable. The court noted that Haydon’s sister reported that she was pressured into signing the agreement “because [Haydon’s] condition was declining, she had limited financial resources, and the facility was offering a discount contingent on her signing up quickly.” On appeal, the defendants focused attention on the contract’s opt-out provision. This, they suggested, meant that the contract could not be considered adhesive, and suggested that it was not procedurally unconscionable. Citing Gentry v. Superior Court, 165 P.3d 556, 573-75 (Cal. 2014), the Court of Appeals held that procedural unconscionability exists even in the absence of adhesion if there is not “an authentic, informed choice” to opt out. Regarding substantive unconscionability, the Court of Appeals determined that the arbitration procedures contained an unreasonable confidentiality clause, unreasonable limitations on discovery (at least in the elder abuse context), and an unreasonable fee structure. The trial court’s denial of the motion to compel arbitration was, therefore, upheld.

Referral to Appellate Mediation Program Denied in Immigration Case

Ayanian v. Garland, 64 F.4th 1074 (9th Cir. 2023)

Nzshan Ayanian, a citizen of Armenia residing in the United States, filed various petitions for review and reopening of his application for legal citizenship. Although he cited concerns about changing and challenging conditions in Armenia, none of Ayanian’s arguments prevailed in front of the Board of Immigration Appeals. In 2022, he filed a motion to stay appellate proceedings, citing in part the recent approval of his family members’ petitions to become lawful permanent residents. The government could not, however, guarantee that Ayanian’s petition would be successful, and so it supported Ayanian’s petition to move the proceeding to mediation.

A divided panel of the Ninth Circuit denied the request to move the case to mediation. After reciting the stated policy aims of mediation, it concluded that mediation was not appropriate for a case such as this. In its words, “Ayanian is not seeking (and does not need) a creative solution to his claims, nor does he require a mediator to assist in preserving the parties' relationship or to overcome poor communications.”  The parties did not indicate “how a mediator's assistance in negotiating, defining the relevant issues, or exploring alternatives would assist Ayanian in achieving his goal.” According to the court,  “the parties have not disguised the fact that the objective of transferring this matter to mediation is to delay Ayanian's removal from the country until the government has agreed to provide discretionary relief.” This, the court concluded amounts to “an abuse of our mediation process,” causing the case to “linger on our docket, ‘asleep but not dead.’” The majority noted, instead, that the government has numerous other methods of protecting Ayanian from removal, if that was its interest.

The concurrence agreed that the substance of Ayanian’s claims lacked merit. Judge Wardlaw dissented, however, in the mediation decision, noting that “[i]t is well known that our nation’s immigration system is broken.” Calling the referral to mediation “a modest procedural remedy,” the dissent reiterated the purpose of mediation – “bringing parties to the table.”

ADR as Precondition to Suit Requires Examination of Each Claim

Mazeghou v. Desert Inn Villas Homeowners’ Association, No. 84218, 2023 WL 5317952 (Nev. Aug. 17, 2023)

Omar Mazeghou and Nancy Farley own property in a residential community managed by Desert Inn Villas Homeowners’ Association (HOA). They suffered severe water damage after a burst pipe in their unit. Plaintiffs alleged the HOA was negligent in its maintenance of the property and management of monthly assessment fees, in violation of the “covenants, conditions or restrictions” (CC&Rs) of their property agreement. Nevada Revised Statutes 38.310 requires parties in civil claims related to "the interpretation, application or enforcement of any covenants, conditions or restrictions applicable to residential property or any bylaws, rules or regulations adopted by an association” to attempt alternative dispute resolution prior to filing a civil complaint. On appeal of the dismissal of the entire complaint, the appellate court determined that a claim only “relates” to the CC&Rs if it requires the “interpretation, application, or enforcement” of them. It held that the trial court erred by not individually assessing each claim to determine its relationship to the CC&Rs.

"Fearless Girl” Dispute Required Efforts at Mediation

State Street Global Advisors Trust Company v. Visbal, 1:19-cv-1719-GHW, 2023 WL 4053170 (S.D.N.Y. June 16, 2023)  

The “Fearless Girl” sculpture, a hugely successful installation on Wall Street, also gave rise to a number of intellectual property disputes between sculptor Karen Visbal and asset management company State Street Global Advisors (“State Street”). State Street alleged that Visbal breached their contract when Visbal used reproductions of the sculpture without State Street’s approval and sold a replica for exhibition in Australia. The parties’ agreement required a mandatory thirty-day “cure period” after any alleged breach and then mediation before a claim could be brought. The district court found that State Street did not need to comply with the thirty-day cure period because Visbal had already demonstrated an intent to continue with the breach through her sale of the statue to Australia. However, the court held that the mediation clause must be given effect because to hold otherwise would “effectively destroy the purpose of mediation clauses.” The court did not, however, dismiss State Street’s claim because the court noted that dismissal would be for the purpose of having the parties mediate as required by their contract. During the pendency of the dispute, the parties had already engaged (albeit unsuccessfully) in mediation. The court, therefore, considered the parties’ cross-motions for summary judgment to be appropriately before the court, the alleged breaches of the “cure” and “mediation” provisions notwithstanding.