Tuesday, August 01, 2017

Baker v. Italian Maple Holdings (Cal. Ct. App. - July 31, 2017)

Is an arbitration agreement enforceable if a consumer (1) signs it, (2) has a statutory right to rescind her agreement within 30 days of her signature, but (3) dies before the 30 day statutory period expires?

After this opinion, the Court of Appeal is split on the issue.

One opinion, from eight years ago, holds that the agreement isn't binding in such circumstances.  But a different opinion, from now, holds that the agreement is binding in such circumstances.

It's a statutory interpretation case, and revolves around the meaning of what the statute means when it says that "[o]nce signed, such a contract governs all subsequent open-book account transactions for medical services for which the contract was signed until or unless rescinded by written notice within 30 days of signature."  Does that mean that since the contract was never rescinded, it's still valid?  Or does it mean that since the statutory 30-day period never had a chance to expire, it's invalid?

The question is particularly relevant when, as here, the consumer dies allegedly because of the negligence of the party seeking to enforce the arbitration agreement.  To put it a different way:  Can you frustrate the 30-day statutory cooling off period by killing the signator so she can't exercise her right to rescind?

There's a split in the Court of Appeal.  It's an important issue.  It's one that recurs -- particularly (as here) in the nursing home context, where I imagine a nontrivial number of people die within a month of being admitted.  And the latest opinion not only expressly disagrees with the prior opinion, but also garners a dissent.

The California Supreme Court should step in and decide the issue once and for all.  Whether you get to go to court upon your death shouldn't depend on what particular panel you happen to draw.