Crossman v. Life Care Centers of Am., Inc., 2013 WL 149857 (N.C. App. Jan. 15, 2013).
A North Carolina appellate court held that a nursing home could not compel arbitration where the underlying arbitration was impossible to perform.
Lionel Crossman was admitted to a nursing home owned by Life Care Centers of America, Inc., and others. On admission, Crossman signed an arbitration agreement stipulating that, among other things, the parties would submit all claims arising out of care and treatment to binding arbitration and such disputes would be handled by a board of three arbitrators selected from the American Arbitration Association (AAA). At the time, the AAA had a policy statement informing potential parties to an arbitration agreement that it would no longer accept cases involving individual patients unless there was a post-dispute agreement to arbitrate.
After Crossman’s death several years later, his wife sued the nursing home, alleging ordinary and medical negligence and other claims. The trial court denied a defense motion to compel arbitration, holding that the lack of post-dispute agreement made the underlying agreement impossible to perform.
Affirming, the appellate court noted the state’s strong public policy favoring arbitration. Notwithstanding this, the court found that the parties’ agreement specifically requires use of arbitrators selected from the AAA and, as such, seeks “to employ an organization that refuses to be so employed.” The court concluded that the provision requiring use of AAA arbitrators is a material provision of the agreement.
Thus, the court held, the agreement is unenforceable as impossible to perform.
Plaintiff counsel: AAJ member Kenneth L. Connor, Augusta, Ga.