Dead Plaintiffs Have Already Cooled Off

Baker v. Italian Maple Holdings, LLC, No. D069797 (D4d1 Jul. 31, 2017)

Code of Civil Procedure § 1295 requires a medical services contract with an arbitration provision to expressly afford a 30-day “cooling off” period, during which the elder can rescind the agreement. Section 1295(c) says the agreement is enforceable “until or unless rescinded by written notice within 30 days of signature.” Here, the patient—a nursing home patient—signed the contract but died before the 30 days ran. But she never rescinded. So the issue is can her estate—suing for wrongful death—be bound to arbitrate.

Based on the plain language of the statue, the court’s majority—Justice Aaron, joined by Justice O’Rourke—says it can. The text of the statute doesn’t require the 30 days to run as a condition precedent of enforceability. It requires an affirmative act of rescission to create an exception to it. And since that act never occurred, the contract was enforceable. In reaching it conclusion, the court parts ways with Rodriguez v. Superior Court, 176 Cal. App. 4th 1461 (2009), which goes the other way.

Justice Huffman dissents. Frankly, I find it a little hard to follow. He says that he does “not quibble with the majority’s interpretation of” § 1295(c), but then he says they interpreted it incorrectly because they failed to consider the case in light of the fact that the arbitration agreement waives the right to jury trial. Because that waiver must be knowing and voluntary, the party seeking to compel arbitration bears the burden of showing that an agreement to arbitrate, did in fact occur. While that is generally true, the tone here seems somewhat in tension with the strong pro-arbitration public policy and interpretive canons. In any event, although Plaintiffs don’t actually argue a lack of consent, undue influence, or stuff like that, Justice Huffman would follow Rodriguez to say that when a signatory dies during the 30-day cool-off, arbitration can’t be compelled unless the defendant proves that the decedent would not have exercised the right to rescind.

Reversed.