At least in theory, the days are long gone in most jurisdictions when courts were openly hostile to arbitration. Nevertheless, petitions to arbitrate are a frequent battleground between plaintiffs and defendants. On Thursday, a unanimous Illinois Supreme Court offered important guidance for determining such petitions, filing its decision in Carter v. SSC Odin Operating Co.
Carter arises from the decedent's nursing home care. The first count of plaintiff's complaint is a survival claim alleging that decedent's personal injuries were caused by violations of the Nursing Home Care Act, 210 ILCS 45/1-101. In the second count, plaintiff purported to state a claim for wrongful death.
The defendant filed a motion to compel arbitration, citing identical arbitration agreements signed during decedent's successive stays in the defendant's nursing home -- the first signed by plaintiff as decedent's "legal representative." According to the arbitration agreements, the parties agreed to binding arbitration of any controversy with more than $200,000 at issue. The parties also agreed that defendant would pay the arbitrators' fees, as well as up to $5,000 of attorneys fees and costs incurred by the decedent, regardless of who prevailed in the arbitration. Finally, the parties agreed that the decedent could choose the location of any arbitration. The trial court denied the motion to compel arbitration in all respects.
A divided Appellate Court affirmed. The majority emphasized the different circumstances faced by the defendant and the decedent: almost any claim that the decedent might have against the defendant was likely to be for more than $200,000, thus triggering the arbitration clause, while the chances that the defendant would have a $200,000+ claim against the decedent seemed slim. Given that the arbitration clause was unlikely to be triggered against the defendant, the majority concluded that it was invalid for lack of mutuality of obligation. The Court held that the wrongful death claim was non-arbitrable because plaintiff had not signed the arbitration agreement in her personal capacity.
The Supreme Court unanimously reversed with respect to the survival claim. The concept of mutuality of obligation, the Court noted, is closely tied to consideration. Whether or not any potential claim by defendant was likely to ever be subject to arbitration was not dispositive; the question was whether the defendant had suffered any detriment in return for plaintiff's promise to arbitrate. The answer was yes -- the defendant agreed to pay the arbitrator's fees, as well as a portion of the decedent's attorney fees and costs, win or lose. Since the agreement was supported by consideration, the Court held that the survival claim had to be arbitrated.
Turning to the second count, the defendant argued that wrongful death is expressly described as an asset of the decedent's estate by Section 2.1 of the Wrongful Death Act. As such, according to the defendant, the decedent necessarily had the right to control the forum or manner in which the claim could be brought.
The Supreme Court disagreed, pointing out that the proceeds of the wrongful death claim do not pass through the estate pursuant to the Probate Act. Further, the Court noted that a wrongful death claim does not abate on the death of a beneficiary; the plaintiff essentially brings the action as a trustee for all the next of kin. The Court concluded that the legislature did not intend that the wrongful death claim should be a true asset of the decedent. Instead, the legislature's intent was merely to facilitate the filing and prosecution of the claim.
The defendant also pointed the Court to decisions in several states holding that because a wrongful death action is derivative of the decedent's personal injury claim, the decedent's promise to arbitrate necessarily governs both. The Supreme Court declined to follow these cases, holding that the generally derivative nature of the claim could not justify disregarding fundamental principles of contract law: since the plaintiff was not a party to the arbitration agreement in her personal capacity, she could not be bound by it.