SC08-1774 – Gayle Shotts, Etc. v. OP Winter Haven, Inc., Et Al.

SUPREME COURT CASES

Laws-info.com » Cases » Florida » Supreme Court » 2011 » SC08-1774 – Gayle Shotts, Etc. v. OP Winter Haven, Inc., Et Al.

State: Florida

Court: Supreme Court

Docket No: sc08-1774

Case Date: 11/23/2011

Plaintiff: SC08-1774 – Gayle Shotts, Etc.

Defendant: OP Winter Haven, Inc., Et Al.

Preview:Supreme Court of Florida
No. SC08-1774
GAYLE SHOTTS, etc.,
Petitioner,
vs.
OP WINTER HAVEN, INC., et al.,
Respondents.
[November 23, 2011]
PERRY, J.
Gayle Shotts, personal representative of the estate of Edward Henry Clark,
seeks review of the decision of the Second District Court of Appeal in Shotts v. OP
Winter Haven, Inc., 988 So. 2d 639 (Fla. 2d DCA 2008), on the grounds that it
expressly and directly conflicts with a decision of another Florida district court of
appeal on a question of law.  We have jurisdiction.  See art. V, § (b)(3), Fla. Const.
Edward Clark was involved in an automobile accident in 1977, and he
sustained brain damage.  For many years, Clark's care was provided by his niece,
Gayle Shotts, in her home.  Eventually, Clark was admitted to OP Winter Haven,

Inc.,1 a nursing home in Florida.  He remained there until his death in 2003, at
which time Shotts, as his personal representative, filed a complaint against OP
Winter Haven alleging negligence and breach of fiduciary duties.  OP Winter
Haven moved to compel arbitration based on an agreement Shotts had signed on
Clark‟s admission.  The agreement contained the following “limitations of
remedies” provisions: (i) the arbitration will be conducted in accordance with the
American Health Lawyers Association (AHLA) rules; and (ii) the arbitrators will
have no authority to award punitive damages.  The agreement also stated that its
terms were severable.  At the hearing on the motion to compel, Shotts argued that
the agreement was unenforceable because it was unconscionable and violated
public policy.  The trial court granted the motion, and the district court affirmed.
Shotts sought discretionary review, which we granted.
Shotts raises several issues, including the following: (1) whether the court or
the arbitrator must decide whether the arbitration agreement violates public policy;
(2) whether the limitations of remedies provisions violate public policy; and (3)
whether the limitations of remedies provisions are severable.  OP Winter Haven, in
1.  The respondents here include the following entities: OP Winter Haven,
Inc.; RE Winter Haven, Inc.; Tandem Regional Management of Florida, Inc.;
Tandem Health Care, Inc.; Gail Ward a/k/a Gail Lurie Ward; Nancy C. Thompson;
Michael Bradley; and Irena Blackburn a/k/a Irena Tarran Blackburn (as to Tandem
Health Care of Winter Haven).  In this opinion, the respondents are referred to
collectively as OP Winter Haven, Inc., or OP Winter Haven.
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counterpoint, contends that the United States Supreme Court‟s recent decision in
Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772 (2010), is applicable here
and entitles OP Winter Haven to relief on its motion to compel.
First, as explained more fully below, we hold that the district court below
erred in failing to rule that the court, not the arbitrator, must decide whether the
arbitration agreement violates public policy.  This Court in Seifert v. U.S. Home
Corp., 750 So. 2d 633 (Fla. 1999), held that it was for the court, not the arbitrator,
to determine “whether a valid written agreement to arbitrate exists.”  Id. at 636.
Later, this Court in Global Travel Marketing, Inc. v. Shea, 908 So. 2d 392 (Fla.
2005), explained the meaning of the term “valid” in this context: “No valid
agreement exists if the arbitration clause is unenforceable on public policy
grounds.”  Id. at 398.  Thus, it is for the court, not the arbitrator, to determine
whether an arbitration agreement “is unenforceable on public policy grounds.”
Second, we hold that the district court below erred in failing to rule that the
limitations of remedies provisions in this case violate public policy, for they
directly undermine specific statutory remedies created by the Legislature.  See
§§ 400.022, 400.023, Fla. Stat. (2003).  In light of the recognized need for these
remedies and the salutary purpose they serve, we conclude that any arbitration
agreement that substantially diminishes or circumvents these remedies stands in
violation of the public policy of the State of Florida and is unenforceable.  This
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conclusion comports with the vast weight of authority in Florida, as explained
below.
Third, we hold that the district court below erred in ruling that the
limitations of remedies provision that calls for imposition of the AHLA rules is
severable.  Although the agreement in this case contains a severability clause, the
AHLA provision goes to the very essence of the agreement.  If the provision were
to be severed, the trial court would be forced to rewrite the agreement and to add
an entirely new set of procedural rules and burdens and standards, a job that the
trial court is not tasked to do.  See Local No. 234 v. Henley & Beckwith, Inc., 66
So. 2d 818, 821-22 (Fla. 1953).  Further, if the provision were to be severed, the
trial court would be hard pressed to conclude with reasonable certainty that, with
the illegal provision gone, “there still remains of the contract valid legal promises
on one side which are wholly supported by valid legal promises on the other” id.—
particularly, when those legal promises are viewed through the eyes of the
contracting parties.  See generally id. at 822.
And finally, we conclude that the United States Supreme Court‟s recent
decision in Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772 (2010), is
inapplicable here.  Approximately two weeks after this Court heard oral argument
in the present case, the United States Supreme Court issued its decision in Jackson,
in which that Court addressed the issue of whether the court or the arbitrator must
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determine whether an arbitration agreement is unconscionable (Jackson claimed
that the agreement was unconscionable because it required the splitting of
arbitration fees) where the agreement contained a provision, known as a delegation
provision, in which the parties specifically agreed to arbitrate the enforceability of
the arbitration agreement.  The United States Supreme Court held that, where there
has been no specific challenge to the delegation provision, the arbitrator, not the
court, must decide the issue.  In the present case, because the arbitration agreement
contains no delegation provision, Jackson is inapplicable.
I.  BACKGROUND
The relevant facts of this case are set forth in the district court decision
under review:
Gayle Shotts, as personal representative of the estate of her
uncle, Edward Henry Clark, appeals the nonfinal order granting the
motion to compel binding arbitration filed by the defendants below:
OP Winter Haven, Inc.; RE Winter Haven, Inc.; Tandem Regional
Management of Florida, Inc.; Tandem Health Care, Inc.; Gail Ward
a/k/a Gail Lurie Ward; Nancy C. Thompson; Michael Bradley; and
Irena Blackburn a/k/a Irena Tarran Blackburn (as to Tandem Health
Care Of Winter Haven) (hereinafter collectively “Tandem”). . .
In 1977, Mr. Clark was involved in an automobile accident,
and he sustained brain damage.  He required twenty-four-hour-a-day
care.  For many years, Mr. Clark's care was provided by his niece,
Ms. Shotts, in her home.  Eventually he was placed in a nursing
home.  Thereafter, on May 23, 2003, Mr. Clark was moved from the
nursing home and admitted to Tandem Health Care of Winter Haven.
He remained there until his death on November 23, 2003.
Ms. Shotts, as personal representative, filed a complaint
against the defendants alleging negligence and breach of fiduciary
duties.  The complaint contained a claim for wrongful death and an
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alternative claim for injuries not resulting in death.  At least at this
point, Ms. Shotts has not sought to amend the complaint to allege
punitive damages.
In response to the complaint, Tandem moved to compel
arbitration based on an arbitration agreement executed by Ms. Shotts
on behalf of her uncle.  In her memorandum in opposition to
arbitration, and at the hearing conducted to consider the motion, Ms.
Shotts argued that the agreement was not valid and enforceable
because it was unconscionable and violated public policy.  The trial
court found no merit in Ms. Shotts argument and granted the motion
to compel.  It concluded that the agreement was “enforceable, not
severable and not repugnant to the public policy of the State of
Florida.”
Shotts v. OP Winter Haven, Inc., 988 So. 2d 639, 640-41 (Fla. 2d DCA 2008)
(footnote omitted) (citation omitted).
The arbitration agreement that Shotts signed on behalf of her uncle included
the following terms:
—The arbitration shall be conducted . . . in accordance with the
American Health Lawyers Association (“AHLA”) Alternative Dispute
Resolution Service Rules of Procedure for Arbitration . . .
—All fees of the arbitrators shall be borne equally between the
parties.
—All matters relating the arbitration . . . shall remain
confidential between the parties.
—[T]he parties expressly agree that this Agreement will be
governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (“FAA”).
—The parties agree that damages awarded, if any, in an
arbitration conducted pursuant to this Binding Arbitration Agreement
shall be determined in accordance with the provision of Florida law
applicable to a comparable civil action, except that the parties
acknowledge that the arbitrators shall have no authority to award
punitive damages or any other damages not measured by the
prevailing party‟s actual damages . . .
—In the event that any portion of this Agreement will be
determined to be invalid or unenforceable, the remainder of this
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agreement will be deemed to continue to be binding upon the parties
hereby in the same manner as if the invalid or unenforceable provision
were not a part of the Agreement.
—The execution of this Agreement is not a precondition to
receiving medical treatment or for admission to the Facility.
—The resident has the right to seek legal counsel concerning
this Agreement.
(Emphasis added.)
Shotts appealed, and the district court affirmed the trial court‟s ruling on the
motion to compel, concluding as follows with respect to the public policy issue:
In summary, the trial court correctly found that the arbitration
agreement was not unconscionable.  It is possible, especially if Ms.
Shotts pursues a claim for punitive damages, that portions of the
arbitration agreement could be found to be against public policy;
however, the trial court erred when it concluded that the arbitration
agreement was not severable.  Accordingly, because the arbitrators
will have the ability to sever any offending clauses of the arbitration
agreement, we affirm the trial court's order granting the motion to
compel and remand this case for further proceedings.
Shotts, 988 So. 2d at 644.  Shotts sought discretionary review in this Court, which
the Court granted.  Shotts raises several claims,2 and we address three of them.3
2.  Shotts raises the following claims: (a) the present district court decision
conflicts with decisions of this Court and other district courts on the issue of which
party bears the burden of proving an agent‟s authority under a power of attorney;
(b) the present district court decision conflicts with decisions of this Court and
other district courts on the issue of whether the authority issued through a power of
attorney is to be strictly construed; (c) the present district court decision conflicts
with decisions of other district courts on the issue of whether the arbitration
agreement was unenforceable as contrary to public policy; (d) the present district
court decision conflicts with decisions of this Court which hold that it is for the
court, not the arbitrator, to decide whether an arbitration agreement is enforceable;
(e) the present district court decision conflicts with decisions of other district
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II.  COURT OR ARBITRATOR
In this claim, Shotts contends that the district court erred in remanding this
case so that the arbitrator, not the court, could decide whether the arbitration
agreement violates public policy.  The issue presented in this claim is a pure
question of law, subject to de novo review.  See Aills v. Boemi, 29 So. 3d 1105,
1108 (Fla. 2010) (“Because this is a question of law . . . the standard of review is
de novo.”).  Arbitration law that affects interstate commerce in Florida is governed
by two acts—the Federal Arbitration Act, see 9 U.S.C. §§ 1-16 (2006), and the
Florida Arbitration Code.  See ch. 682, Fla. Stat. (2003).  Shotts contends that
under these acts, it is the court, not the arbitrator, that must decide the public policy
issue.  We agree.
A.  Federal Arbitration Act
The Federal Arbitration Act (FAA), which was originally enacted in 1925
and then reenacted and codified in 1947 as title 9 of the United States Code, see 9
U.S.C. §§ 1-16 (2006), was intended to reverse the longstanding judicial hostility
toward arbitration that had existed at English common law and that had been
courts with respect to the showing that is required to support a finding of
unconscionability; and (f) the present district court decision conflicts with
decisions of other district courts on the issue of whether contract provisions that
violate public policy are severable.
3.  We address, in the following order, claims (d), (c) and (f).  We decline to
address the remainder of Shotts‟ claims.
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imported by American courts.  See Gilmer v. Interstate/Johnson Lane Corp., 500
U.S. 20, 24 (1991).  The FAA was intended to place arbitration agreements on the
same footing as other contracts.  Id.  The FAA‟s primary substantive provision is
contained in section 2, which provides as follows:
A written provision in any . . . contract evidencing a transaction
involving commerce to settle by arbitration a controversy thereafter
arising out of such contract or transaction, or the refusal to perform
the whole or any part thereof, or an agreement in writing to submit to
arbitration an existing controversy arising out of such a contract,
transaction, or refusal, shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the revocation
of any contract.
9 U.S.C. § 2 (emphasis added).
In enacting section 2, “Congress declared a national policy favoring
arbitration and withdrew the power of the states to require a judicial forum for the
resolution of claims which the contracting parties agreed to resolve by arbitration.”
Southland Corp. v. Keating, 465 U.S. 1, 10 (1984).  Congress provided
enforcement mechanisms within the FAA—notably in sections 3 and 4—to
implement section 2‟s substantive rule.
Under § 3, a party may apply to a federal court for a stay of the trial of
an action “upon any issue referable to arbitration under an agreement
in writing for such arbitration.”  Under § 4, a party “aggrieved” by the
failure of another party “to arbitrate under a written agreement for
arbitration” may petition a federal court “for an order directing that
such arbitration proceed in the manner provided for in such
agreement.”
Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772, 2777 (2010).
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The United States Supreme Court recognizes only two limitations on the
enforceability of arbitration agreements governed by the FAA, and it is the latter
limitation that is of import here:
We discern only two limitations on the enforceability of
arbitration provisions governed by the Federal Arbitration Act: [1]
they must be part of . . . a contract “evidencing a transaction involving
commerce” and [2] such clauses may be revoked upon “grounds as
exist at law or in equity for the revocation of any contract.”  We see
nothing in the Act indicating that the broad principle of enforceability
is subject to any additional limitations under State law.
Southland, 465 U.S. at 10-11 (emphasis added) (footnote omitted).  The United
States Supreme Court in Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440
(2006), explained the latter limitation more fully:
Challenges to the validity of arbitration agreements “upon such
grounds as exist at law or in equity for the revocation of any contract”
can be divided into two types.  One type challenges specifically the
validity of the agreement to arbitrate.  The other challenges the
contract as a whole, either on a ground that directly affects the entire
agreement (e.g., the agreement was fraudulently induced), or on the
ground that the illegality of one of the contract's provisions renders
the whole contract invalid.
Buckeye, 546 U.S. at 444 (citation omitted).
The Court in Buckeye reviewed its own precedent and then clarified the
procedures for resolving the two types of challenges to arbitration agreements:
In Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S.
395 (1967), we addressed the question of who—court or arbitrator—
decides these two types of challenges.  The issue in the case was
“whether a claim of fraud in the inducement of the entire contract is to
be resolved by the federal court, or whether the matter is to be referred
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to the arbitrators.”  Id., at 402.  Guided by § 4 of the FAA, we held
that “if the claim is fraud in the inducement of the arbitration clause
itself—an issue which goes to the making of the agreement to
arbitrate—the federal court may proceed to adjudicate it.  But the
statutory language does not permit the federal court to consider claims
of fraud in the inducement of the contract generally.”  Id., at 403-404
(internal quotation marks and footnote omitted).  We rejected the view
that the question of “severability” was one of state law, so that if state
law held the arbitration provision not to be severable a challenge to
the contract as a whole would be decided by the court.
Subsequently, in Southland Corp., we held that the FAA
“create[d] a body of federal substantive law,” which was “applicable
in state and federal courts.”  We rejected the view that state law could
bar enforcement of § 2, even in the context of state-law claims
brought in state court.
Buckeye, 546 U.S. at 444-45 (footnote omitted) (citations omitted).
The Court in Buckeye articulated three key principles to guide courts in
reviewing challenges to arbitration agreements, and again, it is the second principle
that is of particular import here:
First, as a matter of substantive federal arbitration law, an arbitration
provision is severable from the remainder of the contract.  Second,
unless the challenge is to the arbitration clause itself, the issue of the
contract's validity is considered by the arbitrator in the first instance.
Third, this arbitration law applies in state as well as federal courts.
Buckeye, 546 U.S. at 445-46 (emphasis added).
And finally, the United States Supreme Court in Doctor‟s Associates, Inc. v.
Casarotto, 517 U.S. 681, 687 (1996), articulated a fundamental tenet of the FAA:
“Courts may not . . . invalidate arbitration agreements under state laws applicable
only to arbitration provisions.  Allied-Bruce [Terminex Cos. v. Dobson, 513 U.S.
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265, 281 (1995)]; Perry [v. Thomas, 482 U.S. 483, 493, n.9 (1987)].  By enacting
§ 2, we have several times said, Congress precluded States from singling out
arbitration provisions for suspect status, requiring instead that such provisions be
placed „upon the same footing as other contracts.‟  Scherk v. Alberto-Culver Co.,
417 U.S. 506, 511 (1974) (internal quotation marks omitted).”  In Casarotto, the
United States Supreme Court held that the FAA displaced a Montana statute that
required that a special notice provision must be placed on the first page of all
contracts containing an arbitration clause, but not on the first page of all contracts
in general, thus singling out arbitration contracts for special treatment.
B.  Florida Arbitration Code
In Florida, an arbitration clause in a contract involving interstate commerce
is subject to the Florida Arbitration Code (FAC), to the extent the FAC is not in
conflict with the FAA.  This Court in Seifert v. U.S. Home Corp., 750 So. 2d 633
(Fla. 1999), held that, in a hearing on a motion to compel arbitration, the inquiry
follows the same three-step process regardless whether the inquiry is conducted
under the FAC or the FAA:
Under both federal statutory provisions and Florida's arbitration
code, there are three elements for courts to consider in ruling on a
motion to compel arbitration of a given dispute: (1) whether a valid
written agreement to arbitrate exists; (2) whether an arbitrable issue
exists; and (3) whether the right to arbitration was waived.
Seifert, 750 So. 2d at 636.
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Challenges to arbitration agreements in Florida generally focus on the first
of the Seifert elements—“whether a valid written agreement to arbitrate exists”:
Today, arbitration provisions are common, and their use
generally favored by the courts.  However, because arbitration
provisions are contractual in nature, construction of such provisions
and the contracts in which they appear remains a matter of contract
interpretation.  See Seaboard Coast Line R.R. v. Trailer Train Co.,
690 F.2d 1343, 1352 (11th Cir.1982).  Accordingly, the determination
of whether an arbitration clause requires arbitration of a particular
dispute necessarily “rests on the intent of the parties.”  Seaboard, 690
F.2d at 1348; see also Regency Group, Inc. v. McDaniels, 647 So. 2d
192, 193 (Fla. 1st DCA 1994) (“The agreement of the parties
determines the issues subject to arbitration.”).  A natural corollary of
this rule is that no party may be forced to submit a dispute to
arbitration that the party did not intend and agree to arbitrate.  See
Seaboard Coast Line, 690 F.2d at 1352 (holding that the federal policy
favoring arbitration “cannot serve to stretch a contract beyond the
scope originally intended by the parties”); see also Miller v. Roberts,
682 So. 2d 691, 692 (Fla. 5th DCA 1996) (“The general rule is that
where an arbitration agreement exists between the parties, arbitration
is required only of those controversies or disputes which the parties
have agreed to submit to arbitration.”); Regency Group, Inc., 647
So.2d at 193 (“Only those claims which the parties have agreed are
arbitrable may be subject to arbitration.”).
Seifert, 750 So. 2d at 636 (citations omitted).
The issue of “whether a valid written agreement to arbitrate exists” is
controlled by principles of state contract law:
Although the states may not impose special limitations on the
use of arbitration clauses, the validity of an arbitration clause is
nevertheless an issue of state contract law.  Section 2 states that an
arbitration clause can be invalidated on such grounds as exist “at law
or in equity for the revocation of a contract.”  Thus, an arbitration
clause can be defeated by any defense existing under the state law of
contracts.  As the [United States Supreme] Court explained in
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[Doctor‟s Associates, Inc. v. Casarotto, 517 U.S. 681, 687 (1996)],
“generally applicable contract defenses, such as fraud, duress or
unconscionability, may be applied to invalidate arbitration agreements
without contravening [the Federal Arbitration Act].”
Powertel, Inc. v. Bexley, 743 So. 2d 570, 574 (Fla. 1st DCA 1999) (emphasis
added).
With respect to which contract defenses—besides “fraud, duress or
unconscionability”—constitute “generally applicable contract defenses” for
purposes of section 2, we conclude that public policy clearly is such a defense, for
if an arbitration agreement violates public policy, no valid agreement exists.
“[T]he rights of access to courts and trial by jury may be contractually relinquished
[via an arbitration agreement], subject to defenses to contract enforcement
including voidness for violation of the law or public policy, unconscionability, or
lack of consideration. . .                                                                .  No valid agreement exists if the arbitration clause is
unenforceable on public policy grounds.”  Global Travel Marketing, Inc. v. Shea,
908 So. 2d 392, 398 (Fla. 2005) (emphasis added) (citations omitted).
C.  Florida Case Law
Although this Court has not confronted the specific issue of whether the
court or the arbitrator must decide whether an arbitration agreement violates public
policy, the Court in Seifert has ruled that it is for the court, not the arbitrator, to
decide “whether a valid written agreement to arbitrate exists.”  Seifert, 750 So. 2d
at 636 (emphasis added).  Later, this Court explained the meaning of the term
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“valid” in this context: “No valid agreement exists if the arbitration clause is
unenforceable on public policy grounds.”  Global Travel, 908 So. 2d at 398.  Thus,
under Siefert and Global Travel, it is for the court, not the arbitrator, to decide
whether an arbitration agreement violates public policy.
Florida‟s district courts have addressed the public policy issue frequently in
this context, and the decisions of those courts vary.  The Second District Court of
Appeal, on the one hand, has indicated that it is the arbitrator who must decide
whether an arbitration agreement violates public policy.  This position originated
in a non-nursing home, non-public policy case, Rollins, Inc. v. Lighthouse Bay
Holdings, Ltd., 898 So. 2d 86 (Fla. 2d DCA 2005), where the Second District
Court of Appeal addressed the issue of whether an arbitration agreement in a
termite contract was unconscionable because it imposed limitations on statutory
remedies.  The trial court had ruled that the agreement was unconscionable.  The
district court reversed, ruling that the trial court erred in deciding the issue at all.
In conducting its analysis in Rollins, the Second District Court of Appeal
relied almost exclusively on federal precedent, reasoning as follows:
In considering how to answer [this question], we have looked to
the decisions of the federal circuit courts that have confronted these
issues.  The consensus among those courts is that the arbitrator should
decide in the first instance whether particular remedial limitations are
permissible.  See [PacifiCare Health Systems, Inc. v. Book, 538 U.S.
401, 407 (2003)]; Hawkins v. Aid Ass'n For Lutherans, 338 F.3d 801,
807 (7th Cir. 2003) (holding that the adequacy of arbitration remedies
has nothing to do with whether the parties agreed to arbitrate or if the
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claims are in the scope of the arbitration agreement and thus they must
first be considered by the arbitrator); Bob Schultz Motors, Inc. v.
Kawasaki Motors Corp., 334 F.3d 721, 726 (8th Cir. 2003) (holding
that the party seeking to void remedial limitations on punitive
damages and other relief has to address those arguments to the
arbitrator); MCI Telecomms. Corp. v. Matrix Comms. Corp., 135 F.3d
27, 33, n. 12 (1st Cir. 1998) (stating that an argument that an
arbitration agreement is invalid because it forecloses certain remedies
otherwise available “must be brought to the arbitrator because it does
not go to the arbitrability of the claims but only to the nature of
available relief”); Great W. Mortgage Corp. v. Peacock, 110 F.3d 222,
232 (3d Cir. 1997) (stating that “[t]he availability of punitive damages
is not relevant to the nature of the forum in which the complaint will
be heard. Thus, availability of punitive damages cannot enter into a
decision to compel arbitration”).  But see Paladino v. Avnet Computer
Techs., Inc., 134 F.3d 1054 (11th Cir. 1998) (holding that the
arbitrability of statutory claims rests on the assumption that the
arbitration clause permits relief equivalent to court remedies and
pronouncing an arbitration clause unenforceable where it had
provisions that deprived the plaintiff of the ability to obtain
meaningful relief for allegations of statutory violations).  Even the
Eleventh Circuit, which declared an arbitration provision with
remedial limitations unenforceable in Paladino, appears to be
rethinking its decision in that case and has limited its holding.
Specifically, in Anders v. Hometown Mortgage Services, Inc., 346
F.3d 1024 (11th Cir. 2003), the court held that where the parties'
agreement contains remedial limitations, but also contains a
severability clause that permits any invalid provisions to be excised,
the question of the validity of the remedial limitations is for the
arbitrator to decide.  The court reasoned that the presence of the
severability provision evidenced the parties' intention to enforce the
remainder of the agreement in the event any portion of it is deemed
invalid.  Id. at 1031.  The court concluded that because any invalid
provisions were severable, the underlying claims should be arbitrated
regardless of the validity of the remedial restrictions.  Id. at 1032. The
court also noted that the case was going to arbitration, thus, an
arbitrator and not the court should decide the validity of the remedial
limitations because “[a] court compelling arbitration should decide
only such issues as are essential to defining the nature of the forum in
which a dispute will be decided.”  Id. at 1032-33 (quoting Musnick v.
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King Motor Co. of Ft. Lauderdale, 325 F.3d 1255, 1261 (11th Cir.
2003)).
In light of these authorities, we conclude that this case should
be arbitrated and that the arbitrator should in the first instance decide
the validity of the remedial restrictions in the arbitration provision.
We believe that this approach is consistent with the policy Congress
sought to advance with the FAA.  It also seems wise given that at this
stage in the proceedings we can only speculate whether Lighthouse
Bay will ever be affected by the remedial limitations of which it
complains.  That will depend in part on whether Lighthouse Bay
prevails on its claim, and it will also depend on how the arbitrator
construes provisions in the contract outside the arbitration provision.
We also note that the agreement in this case contains a severability
clause.  Thus, even under the approach taken by the Eleventh Circuit,
this case should proceed to arbitration.
Rollins, 898 So. 2d at 88-89.  Bound by its decision in Rollins, the Second District
Court of Appeal later applied the same rationale to nursing home and public policy
cases.4  That court now has acknowledged, however, that its rationale is in conflict
with the decisions of the other Florida district courts.5
In counterpoint to the above position of the Second District Court of Appeal,
other Florida district courts of appeal have taken a different approach to the public
policy issue.  The First District Court of Appeal, Fourth District Court of Appeal,
4.  See, e.g., Manor Care, Inc. v. Estate of Kuhn, 23 So. 3d 773, 774 (Fla. 2d
DCA 2009); Jaylene, Inc. v. Steuer, 22 So. 3d 711, 713 (Fla. 2d DCA 2009); Bland
v. Health Care & Retirement Corp. of Am., 927 So. 2d 252, 257-58 (Fla. 2d DCA
2006).
5.  See Jaylene, 22 So. 3d at 713 (“We note that we are in conflict with
decisions by the First, Fourth, and Fifth Districts holding that the trial court
initially must determine whether an arbitration agreement's limitation on statutory
remedies renders the agreement unenforceable on public policy grounds.”).
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and Fifth District Court of Appeal all hold that the court, not the arbitrator, must
make the initial decision as to whether an arbitration agreement violates public
policy.6  A rationale supporting this position is expressed in the specially
concurring opinion of Judge Altenbernd in Manor Care Health Services, Inc. v.
Stiehl, 22 So. 3d 96 (Fla. 2d DCA 2009).  There, Judge Altenbernd voiced his
misgivings about the position that his own court, the Second District Court of
Appeal, had taken on the issue.  Stiehl is a nursing home case in which the district
court remanded with directions that the arbitrator, not the court, decide whether the
remedial limitations in the agreement violated public policy.  The remedial
6.  See, e.g., Place at Vero Beach, Inc. v. Hanson, 953 So. 2d 773 (Fla. 4th
DCA 2007) (affirming the trial court‟s ruling that the arbitration agreement
conflicted with the Florida Nursing Home Residents Act and was unenforceable);
Fletcher v. Huntington Place Ltd. P‟ship, 952 So. 2d 1225 (Fla. 5th DCA 2007)
(reversing the trial court‟s ruling compelling arbitration and instead holding that a
limitations of remedies provision in a nursing home contract violates public policy
and is void); Alterra Healthcare Corp. v. Estate of Linton, 953 So. 2d 574, 578
(Fla. 1st DCA 2007) (“The issue of whether the provision violated public policy
goes to the first Seifert inquiry: whether there was a valid agreement to arbitrate.
This is a question for the trial court.”); Alterra Healthcare Corp. v. Bryant, 937 So.
2d 263, 267 (Fla. 4th DCA 2006) (“[T]he trial court properly considered whether
the arbitration and limitation of liability provisions were valid.”); SA-PG-Ocala,
LLC v. Stokes, 935 So. 2d 1242, 1243 (Fla. 5th DCA 2006) (“It is the court's
obligation, in deciding a motion to compel arbitration, to determine whether a valid
written agreement to arbitrate exists.”); Lacey v. Healthcare & Retirement Corp. of
Am., 918 So. 2d 333 (Fla. 4th DCA 2005) (reversing the trial court‟s ruling
compelling arbitration and instead holding that a limitations of remedies provision
in a nursing home contract violates public policy and is void); Blankfeld v.
Richmond Health Care, Inc., 902 So. 2d 296 (Fla. 4th DCA 2005) (same).
- 18 -

limitations included a $250,000 cap on noneconomic damages and a waiver of
punitive damages.
Judge Altenbernd wrote at length in Steihl, explaining why, in his view, the
Second District Court of Appeal should abandon its position on this issue and
adopt the approach of the other district courts:
I concur in this decision because it is consistent with the
existing precedent from this district.  I have come to the conclusion,
however, that it is both bad policy and bad law to allow an arbitrator
to make case-specific, non-precedential, confidential decisions about
the enforceability of clauses in an arbitration agreement when those
clauses limit or eliminate rights specially created by the legislature to
protect nursing home residents.  Accordingly, I would prefer to follow
the approach of the other districts and permit trial courts to make
decisions about these restrictive clauses prior to arbitration.
The language of this specific arbitration agreement heightens
my concerns.  I do not question the value of arbitration as an alternate
dispute mechanism for use in nursing home cases, but I believe the
time has come for the legislature to regulate the content of such
agreements—which should primarily provide dispute resolution
procedures—because they are actually being used to eliminate
substantive rights and remedies created by the Legislature in sections
400.022 and 400.023, Florida Statutes, for the protection of some of
our most vulnerable citizens.  If the legislature could establish a
method by which approved, standard arbitration agreements, fair to
both sides, were available for use by nursing homes and their residents
in Florida, we could largely eliminate the seemingly endless supply of
lawsuits and appeals addressing the language of arbitration
agreements that ironically were intended to eliminate lawsuits and
appeals.
The arbitration agreement in this case . . . is well written.  It is
further explained in a short information pamphlet provided by Manor
Care.  There is nothing to suggest that this agreement or the methods
by which the resident is bound by this agreement are procedurally
- 19 -

unconscionable.  On the other hand, the drafters of this agreement do
not disclose the very limited benefit of this agreement to the resident
and the considerable benefit received by Manor Care.  A careful
review of the agreement causes one to wonder why any resident who
actually understood the agreement, assuming it is voluntary and does
not affect the price of care at the facility, would ever sign such a one-
sided arrangement.  There is a good argument that the agreement is
substantively unconscionable, but that is irrelevant in this district so
long as it is not procedurally unconscionable.
The agreement is repeatedly described as “voluntary,” and the
resident or resident's agent is assured that the “signing” of this
agreement is not “mandatory.”  However, if voluntarily signed, it
creates mandatory, binding arbitration subject to extremely limited
rights of appeal.  It is not a voluntary agreement in the sense that the
parties decide whether to use the program only after a claim has
arisen; it applies mandatorily to all future disputes.
The benefit of this agreement is described in the first paragraph
as helping the parties “avoid crowded court dockets and lengthy
appellate procedures.”  Not only has that benefit not been achieved in
this case and the many cases in which the parties fight over the
content of the arbitration agreement, but also the first paragraph does
not really explain the detriments of signing the agreement.  The
resident is told in bold print that it does contain a waiver of statutory
rights and that it should be read carefully, but a brief description of the
rights waived and the consideration for that waiver, which easily
could be recited, is not recited.
The benefits for the parties and the primary substantive
consideration for this agreement appear to be provided in section 1.2
of the Limitation of Liability.  The benefit for the resident appears to
be that, if a dispute arises over unpaid nursing home charges, Manor
Care agrees not to make a claim for pre-judgment interest on those
charges.  The benefit for Manor Care is that non-economic damages
are capped at $250,000, and punitive damages can never be awarded
no matter how egregious the violation of the nursing home resident's
rights.  Intuitively, this does not appear to be an agreement in which
both sides are receiving equivalent economic benefit.
The imbalance, however, is perhaps more pronounced within
the arbitration procedures.  The procedures require an extensive
document production prior to arbitration, but only a designated expert
may be deposed.  Thus, if Manor Care brings a claim for unpaid
- 20 -

nursing home charges, the resident has no ability to depose anyone in
the billing department.  It seems highly unlikely that employees of
Manor Care will be willing to give voluntary statements against the
interest of their employers to the attorneys representing a resident.  Of
even greater concern, if a resident has an accident in the facility, he or
she will be unable to depose employees and other witnesses prior to
arbitration.  As a result, it may be impossible even to obtain sufficient
information to provide to an expert so that the expert can reach an
opinion.  Given that residents tend to be elderly, frail, and forgetful,
there is a real risk that a resident making a claim in arbitration will
never be able to obtain useful statements from other residents for use
in these proceedings, and compelling such resident witnesses to attend
arbitration may not be feasible.  The arbitration agreement does not
explain that the resident is avoiding crowded court dockets and
lengthy appeals by agreeing to procedures that significantly reduce the
resident's ability to prevail in the dispute.
In this district, we have decided that arbitrators in nursing home
cases should decide on the validity of remedial limitations.  In the
context of a dispute between two large corporations that have agreed
to use arbitration to resolve disputes arising out of a unique contract,
that approach seems workable.  However, in the context of a dispute
between a corporation that essentially has physical custody of an
elderly person and that person's guardian, when the dispute arises not
from contract law, but from special rights created by the legislature
for the protection of the elderly, and when the contract is not a unique
contract negotiated on a level playing field, but a form contract
applicable to a large group of senior citizens, I think it is a mistake to
delegate these legal decisions to the arbitrator.
If a trial judge decides that a clause of the arbitration agreement
is enforceable or unenforceable, the order is a public order and an
aggrieved party can appeal that ruling.  The district court can review
the order, and whether the district court affirms or reverses, it can
create precedent that resolves the matter for future similar claims.  If
the agreement needs to be refined for future residents, the drafters
have guidance, and if the legislature concludes that the court has
misinterpreted the rights it created, the statute can be amended.
If an arbitrator makes a similar decision, the parties have agreed
to maintain the confidentiality of the arbitrator's “conclusions of law.”
- 21 -

The agreement prevents an appeal, and the limited judicial review in
circuit court permitted by section 682.13 will not permit a judicial
review of such a ruling.  Not only does this procedure prevent the
creation of binding precedent, it creates nothing approaching the rule
of law.
For example, hypothetically, if a fire breaks out in a care
facility due to the extraordinary negligence of the corporate owner
under circumstances that would warrant punitive damages in circuit
court and that fire kills five residents, they are likely to present their
cases to five different arbitrators.  In this hypothetical, two arbitrators
decide to override the agreement and permit punitive damages to be
awarded.  Three do not.  Two arbitrators enforce all of the limitations,
and one eliminates the cap on non-monetary damages but maintains
the prohibition on punitive damages.  Only the nursing home
corporation will know that the results were so different and resulted in
vastly different awards.  None of the rulings will bind any future
claims.  No one will have a right to appeal or challenge the different
rules of law applied to the same circumstances under the same
statutory and contractual law.  In passing the bill of rights for nursing
home residents, the Legislature cannot conceivably have envisioned
such a result.
If anything, the “nonseverability” clause in this agreement
makes this court's approach to this issue more troublesome.  The
“nonseverability” clause provides that either party may cancel the
agreement—even after an arbitrator has announced his or her ruling—
if the arbitrator determines that any provision of the agreement is
unenforceable.  It is not obvious to me that Manor Care would ever
argue that a portion of the arbitration agreement that it drafted was
unenforceable.  Thus, only when a resident prevails before the
arbitrator on the enforceability of some clause will the agreement
become voidable.  Thus, in the above examples, in the two cases
where the arbitrators awarded punitive damages, the nursing home
will undoubtedly choose to cancel the agreement.  At that point, the
resident must file a lawsuit.  In the two cases where all of the limiting
provisions were enforced, in light of confidentiality, the corporation
will pay the claims and the residents will never have a right to know
that the other residents' cases were referred to the courts.  For the
residents, on first examination, the “nonseverability” clause might
appear bilateral, but in application it appears to benefit Manor Care
exclusively.
- 22 -

There are now over thirty-five written appellate opinions in
Florida addressing arbitration agreements between nursing home
operators and their residents.  Unquestionably there are many appeals
involving these agreements that have not resulted in written opinions
and even more challenges at the trial court level that did not result in
appeals.  Arbitration was intended to create a speedy and
economically efficient dispute resolution process for the residents of
nursing homes.  Instead, it has tended to create a round of time-
consuming, expensive litigation prior to whatever dispute resolution
method ultimately resolves the case.  It is only human that the nursing
home facilities have tended to create arbitration agreements that favor
the nursing homes.  In the case of the relationship between insurance
companies and their insured Florida families, we have created
regulations to level the playing field and protect the property rights of
our families while recognizing the legitimate needs of the insurance
companies.  It seems to me that we have reached a point where the
human rights of our senior citizens deserve no less.  The judiciary is
ill-equipped to provide that protection, but the Legislature could do so
with ease.
Stiehl, 22 So. 3d at 101-05 (Altenbernd, J., concurring specially) (footnotes
omitted) (citations omitted).
And finally, with respect to the adverse conditions under which nursing
home arbitration agreements are often signed, Judge Altenbernd wrote:
Even when residents are given ample time and opportunity to
review these form contracts, the reality is that the resident is often
significantly incapacitated and may not be competent to sign the
agreement.  A spouse, son, or daughter, relying on a power of
attorney to sign for the resident, is often under time constraints to
find a safe facility for a loved one during a very emotional time.
Thus, in an unregulated market, these circumstances do not lend
themselves to the natural creation of a level playing field.
Stiehl, 22 So. 3d at 103 n.5 (Altenbernd, J., concurring specially).
- 23 -

D.  The Present Case
As noted above, this Court in Seifert held that it was for the court, not the
arbitrator, to determine “whether a valid written agreement to arbitrate exists,”
Seifert, 750 So. 2d at 636 (emphasis added), and we later explained the meaning of
the term “valid” in this context, with respect to arbitration and public policy: “No
valid agreement exists if the arbitration clause is unenforceable on public policy
grounds.”  Global Travel, 908 So. 2d at 398.  Thus, under Siefert and Global
Travel, it is incumbent on the court, not the arbitrator, to determine whether an
arbitration agreement violates public policy.  This conclusion is consistent with the
vast weight of authority in Florida, as discussed above.
Further, we conclude that the rationale expressed by Judge Alternbernd in
his specially concurring opinion in Stiehl is cogent and more compelling than the
opposing rationale set forth in Rollins.  We note that the district court in Rollins
relied almost exclusively on federal precedent to support its position, whereas the
matter at issue here—whether an arbitration agreement violates public policy—is
properly a matter of state contract law.  See Global Travel, 908 So. 2d at 398
(“[R]ights of access to courts and trial by jury may be contractually relinquished
[via an arbitration agreement], subject to defenses to contract enforcement
including voidness for violation of the law or public policy, unconscionability, or
lack of consideration.”); Powertel, 743 So. 2d at 574 (“[T]he validity of an
- 24 -

arbitration clause is . . . an issue of state contract law.”).  The Second District Court
of Appeal has now acknowledged that its position in Rollins is in conflict with the
decisions of the First, Fourth, and Fifth District Courts of Appeal, and we note that
one of the Second District‟s own judges, Judge Altenbernd, has suggested that the
court abandon its position on this issue and adopt the approach of the other district
courts.
Under the above standard of review, we hold that the district court in the
present case erred in failing to rule that the trial court, not the arbitrator, must
decide whether the arbitration agreement violates public policy.
III.  LIMITATIONS OF REMEDIES
In this claim, Shotts contends that the district court erred in failing to rule
that the limitations of remedies provisions in the present case violate public policy.
This issue is a pure question of law, subject to de novo review.  See Aills v. Boemi,
29 So. 3d 1105, 1108 (Fla. 2010).  As noted above, the arbitration agreement in the
present case contains the following limitations of remedies provisions: (1) “[t]he
arbitration shall be conducted in accordance with the American Health Lawyers
Association (“AHLA”) Alternative Dispute Resolution Service Rules of Procedure
for Arbitration”; and (2) “the arbitrators shall have no authority to award punitive
damages.”  The district court below did not decide whether these provisions violate
public policy, but rather left that matter for the arbitrator to determine.  Shotts
- 25 -

contends that the district court erred in this respect—she contends that the
limitations of remedies provisions in this case violate public policy, and that the
district court should have so ruled.  We agree.
A.  Florida Case Law
Although this Court has not addressed the issue of whether a limitations of
remedies provision in a nursing home arbitration agreement violates public policy,
the matter has been addressed by Florida‟s district courts, and the decisions of
those courts vary.  The Second District Court of Appeal has confronted the issue
on several occasions, but has never ruled on it, instead leaving the decision to the
arbitrators in the various cases.  That court‟s own position on the issue is unclear.
On occasion, the court has indicated that such a provision might not violate public
policy:
We are mindful that some courts, on public policy grounds,
have refused to enforce remedial limitations in nursing home
arbitration or have refused totally to order arbitration where such
restrictions are present.  The remedial limitations in nursing home
arbitration may be troubling to some.  After all, the Nursing Home
Residents' Rights Act is “[a] remedial statute . . . designed to correct
an existing law, redress an existing grievance, or introduce regulations
conducive to the public good.”  Unquestionably, the legislature
enacted the statute to protect some of Florida's most vulnerable
residents.  Arguably, therefore, the Agreement's remedial limitations
undermine the statute's salutary purposes.  While superficially
appealing, the argument is too facile.
We also must recognize that Florida public policy favors
arbitration.  Nothing in the Nursing Home Residents' Rights Act
reflects a legislative hostility to arbitration.  Moreover, as a general
proposition, a party may waive statutory rights.  The Nursing Home
- 26 -

Residents' Rights Act does not expressly prohibit a contractual waiver
or limitation of statutory rights.  The legislature could have included
such a restriction in the Nursing Home Residents' Rights Act.
Accordingly, a compelling argument can be made that, absent a
legislative restriction, the courts should honor a party's decision to
contract away statutory protections.
Bland, 927 So. 2d at 257-58 (citations omitted) (quoting Lacey, 918 So. 2d at 334).
And yet in other cases, including the present case, the same district court has
indicated that such a provision may well violate public policy.7
In contrast, other district courts of appeal have expressed a clear point of
view on this issue.  The First District Court of Appeal,8 Fourth District Court of
Appeal,9 and Fifth District Court of Appeal,10 have all held that a limitations of
7.  See, e.g., Jaylene, 22 So. 3d at 713 (“[W]e share the circuit court‟s
concern over the limits of liability . . .                                            .”); Stiehl, 22 So. 3d at 99 (“Additionally,
courts in this state have specifically found arbitration agreements containing
remedial limitations similar to those presented here to render an agreement to
arbitrate void and unenforceable.”); Shotts, 988 So. 2d at 643 (“Because it appears
that provisions of this agreement may violate public policy, we consider the issue
of severability . . .                                                                 .”); id. at 644 (“It is possible, especially if Ms. Shotts pursues a
claim for punitive damages, that portions of the arbitration agreement could be
found to be against public policy . . .                                               .”).
8.  See Alterra Healthcare Corp. v. Estate of Linton, 953 So. 2d 574, 578
(Fla. 1st DCA 2007).
9.  See Place at Vero Beach v. Hanson, 953 So. 2d 773 (Fla. 4th DCA 2007);
Alterra Healthcare Corp. v. Bryant, 937 So. 2d 263 (Fla. 4th DCA 2006); Lacey v.
Healthcare & Retirement Corp. of Am., 918 So. 2d 333 (Fla. 4th DCA 2005);
Blankfeld v. Richmond Health Care, Inc., 902 So. 2d 296 (Fla. 4th DCA 2005).
10.  See Fletcher v. Huntington Place Ltd. P‟ship, 952 So. 2d 1225 (Fla. 5th
DCA 2007); SA-PG-Ocala, LLC v. Stokes, 935 So. 2d 1242, 1243 (Fla. 5th DCA
2006).
- 27 -

remedies provision in a nursing home (or assisted living facility) contract violates
public policy.  And although the Third District Court of Appeal has not addressed
this matter from a public policy perspective, it has ruled that a limitation of
remedies provision in a nursing home contract is unenforceable as
unconscionable,11 as has the Fourth District Court of Appeal.12
The Fourth District Court of Appeal in Blankfeld v. Richmond Health Care,
Inc., 902 So. 2d 296 (Fla. 4th DCA 2005), stated its position with respect to
limitations of remedies provisions and public policy:
A remedial statute is one which confers or changes a remedy.
The Nursing Home Resident's Act is remedial.  The “Residents
Rights” provisions in section 400.022 were enacted in 1980 to
respond to a Dade County Grand Jury investigation of nursing homes
which revealed detailed evidence of substantial elder abuse occurring
in nursing homes.  In 1993, the Legislature amended the statute by
enacting section 400.023 (“Civil Enforcement”), providing civil
remedies for nursing home residents for violation of the statute.  A
cause of action “may be brought in any court of competent
jurisdiction to enforce such rights and to recover actual and punitive
damages for any violation of the rights of a resident or for
negligence.”
If nursing home residents had to arbitrate under the NHLA
rules [now known as the AHLA rules13], some of the remedies
provided in the legislation for negligence would be substantially
affected and, for all intents and purposes, eliminated.  The provision
requiring arbitration under those rules is accordingly contrary to the
11.  See Prieto v. Healthcare and Retirement Corp. of Am., 919 So. 2d 531
(Fla. 3d DCA 2006).
12.  See Romano v. Manor Care, Inc., 861 So. 2d 59 (Fla. 4th DCA 2003).
13.  See Shotts, 988 So. 2d at 642.
- 28 -

public policy behind the statute and therefore void.  Mullis v. State
Farm Mut. Auto. Ins. Co., 252 So.2d 229, 235 (Fla.1971) (insurance
policy provision limiting uninsured motorist protection provided in
statute held void as contrary to public policy); Holt v. O'Brien Imps.
of Fort Myers, Inc., 862 So.2d 87 (Fla. 2d DCA 2003) (automobile
purchase contract providing for arbitration which limited remedies
provided by Florida Deceptive and Unfair Trade Practices Act held
void as contrary to public policy); see also Green v. Life & Health of
America, 704 So.2d 1386, 1390 (Fla.1998) (parties can contract
around state or federal law except where such a contract provision
would be void as contrary to public policy).
Blankfeld, 902 So. 2d at 298-99 (citations omitted) (quoting § 400.023(1), Fla.
Stat. (2001)).  The above rationale is echoed in the decisions of the First District
Court of Appeal, Fourth District Court of Appeal, and Fifth District Court of
Appeal.14
14.  See, e.g., Linton, 953 So. 2d at 578 (“The arbitration agreement in the
present case defeats the remedial purpose of the Act by eliminating punitive
damages and capping noneconomic damages, so the trial court correctly ruled that
it was void as against public policy.”); Bryant, 937 So. 2d at 266 (“This court has
held repeatedly that arbitration agreements eliminating punitive damages and
capping non-economic damages defeat the remedial purpose of the NHRA and are,
therefore, void as against public policy.”); Stokes, 935 So. 2d at 1243 (“It would be
against public policy to permit a nursing home to dismantle the protections
afforded patients by the Legislature through the use of an arbitration agreement.”);
Lacey, 918 So. 2d at 334 (“To the extent that a contractual limitation defeats the
purpose of a remedial statute, the limitation may be found void as a matter of
law. . .                                                                                   [The arbitration agreement here] eliminates punitive damages, which are
expressly provided for in the Act.  It also caps non-economic damages at $250,000,
which would seem to substantially affect the compensatory damage remedy. These
provisions are thus void under the public policy rationale utilized in this district.”);
Romano, 861 So. 2d at 62 (“Although parties may agree to arbitrate statutory
claims, even ones involving important social policies, arbitration must provide the
prospective litigant with an effective way to vindicate his or her statutory cause of
action in the arbitral forum.  When an arbitration agreement contains provisions
- 29 -

With respect to the specific limitations of remedies provisions in the present
case, all the above district courts, with the exception of the Second District Court
of Appeal, have held that those provisions violate public policy or are otherwise
unenforceable.  The Fourth District Court of Appeal15 and the Fifth District Court
of Appeal16 have held that the first provision—“[t]he arbitration shall be conducted
in accordance with the American Health Lawyers Association (“AHLA”)
Alternative Dispute Resolution Service Rules of Procedure for Arbitration”—
violates public policy.  The First District Court of Appeal17 and the Fourth District
Court of Appeal18 have held that the latter provision—“the arbitrators shall have no
authority to award punitive damages”—violates public policy.  And the Third
District Court of Appeal19 and the Fourth District Court of Appeal20 have held that
the latter provision is unenforceable as unconscionable.
which defeat the remedial provisions of the statute, the agreement is not
enforceable.”) (citations omitted).
15.  See Hanson, 953 So. 2d 773; Blankfeld, 902 So. 2d 296.
16.  See Fletcher, 952 So. 2d 1225; Stokes, 935 So. 2d 1242.
17.  See Linton, 953 So. 2d 574.
18.  See Bryant, 937 So. 2d 263; Lacey, 918 So. 2d 333.
19.  See Prieto, 919 So. 2d 531.
20.  See Romano, 861 So. 2d 159.
- 30 -

B.  The Present Case
Based on the foregoing, we conclude that the limitations of remedies
provisions in the present case violate public policy, for they directly undermine
specific statutory remedies created by the Legislature.  See §§ 400.022, 400.023,
Fla. Stat. (2003).  This conclusion comports with the vast weight of authority in
Florida, as discussed above.  The Fourth District Court of Appeal in Romano v.
Manor Care, Inc., 861 So. 2d 59 (Fla. 4th DCA 2003), explained succinctly:
Sections 400.022 and 400.023 are remedial statutes, designed to
protect nursing home residents.  The Nursing Home Resident's Rights
Act, section 400.022, was originally enacted after a Dade County
Grand Jury investigation of nursing homes revealed substantial elder
abuse occurring in many nursing homes without any remedial action
being taken.  The law set up rights of residents, including the right to
appropriate medical care, and requires nursing homes to make public
statements of the rights and responsibilities of the residents.  To
enforce these rights, the legislature provided each resident with a
cause of action for their violation. . .                                                .  The legislature also provided
for the award of punitive damages for gross or flagrant conduct or
conscious indifference to the rights of the resident.  Moreover, there
was no cap on pain and suffering damages in the statute.
Romano, 861 So. 2d at 62-63 (emphasis added) (citations omitted).
In light of the recognized need for these remedies and the salutary purpose
they serve, we conclude that any arbitration agreement that substantially
diminishes or circumvents these remedies stands in violation of the public policy
of the State of Florida and is unenforceable.  In this respect, we find the rationale
of the Fourth District Court of Appeal in Blankfeld and Romano cogent and
- 31 -

compelling.  Under the above standard of review, we hold that the district court
below erred in failing to rule that the limitations of remedies provisions in the
present case violate public policy.
IV.  SEVERABILITY
In this claim Shotts contends that the district court below erred in ruling that
the limitations of remedies provisions in the present case are severable.  To the
extent this claim is based on written materials before this Court, the issue is a pure
question of law, subject to de novo review.  See Aills v. Boemi, 29 So. 3d 1105,
1108 (Fla. 2010).  The trial court below held that the provisions were not
severable.  The district court reversed.  The district court held that, if the arbitrator
were to conclude that these provisions violate public policy, they are severable.
Shotts contends that the district court erred in so ruling—she contends that these
limitations of remedies provisions violate public policy and are not severable.  We
agree.
A.  Florida Case Law
Although this Court has not addressed the specific issue of whether a
limitations of remedies provision that violates public policy is severable from the
remainder of an arbitration agreement, this Court has set forth the following
general standard for determining whether a contractual provision is severable from
the whole:
- 32 -

As to when an illegal portion of a bilateral contract may or may
not be eliminated leaving the remainder of the contract in force and
effect, the authorities hold generally that a contract should be treated
as entire when, by a consideration of its terms, nature, and purpose,
each and all of its parts appear to be interdependent and common to
one another and to the consideration.  Stated differently, a contract is
indivisible where the entire fulfillment of the contract is contemplated
by the parties as the basis of the arrangement.  On the other hand, a
bilateral contract is severable where the illegal portion of the contract
does not go to its essence, and where, with the illegal portion
eliminated, there still remains of the contract valid legal promises on
one side which are wholly supported by valid legal promises on the
other.
Whether a contract is entire or divisible depends upon the
intention of the parties.  And this is a matter which may be determined
by a fair construction of the terms and provisions of the contract itself,
and by the subject matter to which it has reference.
Local No. 234 v. Henley & Beckwith, Inc., 66 So. 2d 818, 821-22 (Fla. 1953)
(citations and internal quotation marks omitted).
Florida‟s district courts have specifically addressed the issue of whether a
limitations of remedies provision that violates public policy in a nursing home
contract is severable from the remainder of an arbitration agreement, and the
decisions of those courts vary.  The First District Court of Appeal has held that
such a provision is severable, where the agreement itself contained a severability
clause.  See Linton (finding severability where contract included severability
clause and provisions that capped noneconomic damages at $250,000 and waived
punitive damages).  And the Second District Court of Appeal has held that such a
provision is severable, regardless of whether the agreement contained a
- 33 -

severability clause and even when it included a nonseverability clause.  See Gessa
v. Manor Care of Fla., Inc., 4 So. 3d 679 (Fla. 2d DCA 2009) (finding severability
where contract capped noneconomic damages, precluded punitive damages, and
had no severability clause), quashed, No. SC09-768 (Fla. Nov. 23, 2011); Stiehl
(finding severability where contract capped noneconomic damages, precluded
punitive damages, and had a nonseverability clause).
In the present case, the Second District Court of Appeal ruled as follows
with respect to the limitations of remedies provisions in the arbitration agreement:
In our de novo review, we conclude that the trial court erred
when it found the offensive arbitration clauses could not be severed
from the remainder of the arbitration agreement.  We hold that the
remedial limitation provisions which state that the arbitration
agreement be conducted in accordance with the AHLA Procedures
and that “arbitrators shall have no authority to award punitive
damages” are not so interrelated and interdependent with the
remainder of the arbitration agreement that they cannot be severed by
the arbitrators if necessary.  We note that the agreement anticipates
the use of AHLA procedures but specifies that damages “shall be
determined in accordance with the provisions of Florida law
applicable to comparable civil action, except [for punitive damages].”
Nothing suggests that the arbitrators could not easily resolve this case
using proper elements of damage under Florida law and with the
app

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