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Rizzio v. Surpass Senior Living LLC - 8/17/2021

Arizona Supreme Court holds that an individual’s fee arrangement with their attorney can be considered in determining her ability to financially bear the costs of arbitration.

A daughter arranged for her mother to be placed in a nursing care facility.  As part of the arrangement, the daughter signed a contract with the facility.  The contract included an arbitration clause that provided that the daughter would be responsible for all costs of arbitration, including attorney’s fees, arbitration fees, and other costs, if the daughter made a claim against the facility—even if she prevailed.  While staying at the nursing care facility, another resident attacked the mother.  The daughter filed a lawsuit against the nursing care facility, alleging negligence and abuse of a vulnerable adult for the attack.  The nursing home filed a motion to compel arbitration under to the contract. 

The trial court denied the motion to compel arbitration, concluding that the entire arbitration agreement was unconscionable, due to the cost-shifting agreement.  The Court of Appeals also concluded that the cost-shifting provision was substantively unconscionable.

The Supreme Court disagreed.  It held that the arbitration agreement was not substantively unconscionable, in part, because the daughter’s attorneys had agreed to front the costs of arbitration under the terms of her fee arrangement for the matter.  The Court also clarified that the daughter could recover her costs under Arizona law, regardless of the terms of the arbitration agreement.  The Court further reasoned that because the daughter could recover at least some of the costs of the arbitration if she prevailed, the agreement was not substantively unconscionable. 

Justice Montgomery authored the opinion for the Court.

Posted by: John Bullock

Posted On: 9/16/2021