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Waiver of Attorney Fees in Arbitration Clause is Contrary to Public Policy

What happens when someone enters into a residency agreement that includes an arbitration clause with a provision specifying that each party would bear their own attorney fees and costs in the arbitration? Would a plaintiff still be able to recover attorney costs despite such a provision? The California Court of Appeal has ruled that the waiver in the residency agreement of plaintiff's right to recover attorney fees and costs was deemed unconscionable and a violation of public policy. Accordingly, a prevailing plaintiff may still recover attorney fees and costs in accordance with section 15657 of the Elder Abuse Act.

In Bickel v. Sunrise Assisted Living, Ruth Chappell and later on Bruce Bickel (plaintiff) filed a complaint for damages against Sunrise Assisted Living (defendant and appellant) alleging violations of the Elder Abuse Act. Allegedly, while Ruth was a resident at Sunrise, defendant left plaintiff unattended and isolated for prolonged periods of time resulting in dehydration, ignored plaintiff's calls for help or assistance, and failed on several occasions to respond to Ruth's basic health and personal hygiene needs. Sunrise's conduct was allegedly committed with recklessness, oppression, fraud, or malice and thus came within the scope of section 15657 of the Elder Abuse Act.

However, upon Ruth's admission to Sunrise, she entered into a residency agreement that included an arbitration clause. Thus, in response to the plaintiff's lawsuit, Sunrise petitioned the trial court to compel arbitration of plaintiff's claims pursuant to the provisions in the arbitration agreement. The trial court granted the petition for arbitration but severed one provision of the arbitration clause that specified each party would bear their own attorney fees and costs in the arbitration on the ground that it was contrary to public policy. Section 15657 of the Elder Abuse Act specifically allows for the recovery of attorney fees and costs to prevailing plaintiffs to effectuate the important public purposes of the law.

The case proceeded to arbitration and plaintiff prevailed on her claims under the Elder Abuse Act. Plaintiff was awarded compensatory and punitive damages. In addition, the arbitrator awarded the plaintiff attorney fees and costs pursuant to section 15657 of the Elder Abuse Act. Sunrise Assisted Living appealed, challenging the trial court's decision to sever the waiver of attorney fees and costs.

Stay tuned for more on this topic on subsequent blog.

*This blog entry was not written by an Attorney and should not be construed as professional legal advice.