Jon Berg, et al. v. Compass Health Inc., et al.

Jon Berg, et al. v. Compass Health Inc., et al., 25CV-0761

Hearing: Defendants’ Motion to Compel Arbitration Defendants’ Motion to Stay Plaintiffs’ Motion for Preference

Date: July 28, 2026

Jon Berg, Connie Berg, Angeliquea Passaglia, and Ron Berg filed this action in December 2025, against Compass Health, Inc., Compass Health, Inc. dba San Luis Post Acute Center, and Compass Holding, Inc. The complaint alleges Defendants failed to provide basic custodial care to protect the post-surgery wounds on Jon’s feet from infection, resulting in bilateral, above the knee amputations of both his legs. The complaint sets forth nine causes of action. The first seven of which are brought on behalf of Jon. 1 The eighth cause of action for negligent infliction of emotional distress is brought on behalf of all Plaintiffs and the ninth cause of action for loss of consortium is brought on behalf of Connie.

On March 17, 2026, Plaintiffs filed a motion for preference. Defendants filed their answer that same day. The answer alleged an existing arbitration agreement as an affirmative defense. Defendants filed a motion to compel arbitration on April 29, 2026.

Plaintiffs’ motion for preference and Defendants’ motion to compel arbitration are both on calendar, along with Defendants’ motion to stay. As set forth below, the Court denies Defendants’ motions and grants Plaintiffs’ motion for preference.

I. DEFENDANTS’ MOTION TO COMPEL ARBITRATION

Defendants move pursuant to both the Federal Arbitration Act (9 U.S.C. § 1 et seq.) (the FAA) and California law (Code Civ. Proc., § 1280 et seq.).2 (Ntc. of Mtn., p. 2, ll. 18-20.)

A. Legal Standard

“[U]nder both federal and California law, arbitration agreements are 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; see also, Code Civ. Proc., § 1281.)” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 98.) In deciding arbitrability of a controversy, the court 1 Due to their shared surname, the Bergs are referred to by their first names when necessary for clarity. No disrespect is intended.

2 Subsequent statutory references are to the Code of Civil Procedure unless otherwise stated.

determines “(1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” (Chiron Corp. v. Ortho Diagnostic Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130 [discussing the FAA]; Trinity v. Life Ins. Co. of North America (2022) 78 Cal.App.5th 1111, 1120 [threshold question under California law is whether an agreement to arbitrate exists].)

If the court determines that an agreement to arbitrate exists, it must order the parties to arbitration unless it finds that “(a) the right to compel arbitration has been waived by the moving party, (b) grounds exist for revocation of the agreement, or (c) a party to the arbitration agreement is also a party to a pending court action with a third party arising out of the same transaction.” (Sargon Enterprises, Inc. v. Browne George Ross LLP (2017) 15 Cal.App.5th 749, 762, citing § 1281.2; 9 U.S.C. § 2 [arbitration agreements valid “save upon such grounds as exist at law or in equity for the revocation of any contract”].)

“The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972; Knutson v. Sirius XM Radio Inc. (9th Cir. 2014) 771 F.3d 559, 565.)

B. California Procedural Law Applies to Defendants’ Motion to Compel Arbitration

Despite moving pursuant to both the FAA and California law, Defendant argue the Resident- Facility Arbitration Agreement (the Agreement) at issue is governed by the FAA, including its procedural provisions. In general, California’s procedural rules “apply by default to cases brought in California courts, including those in which the FAA governs the arbitrability of the controversy, the FAA’s procedural rules may apply if the parties expressly agree they do or if the CAA’s procedural rules are preempted.” (Quach v.

California Commerce Club, Inc. (2024) 16 Cal.5th 562, 582, italics added; Wright v. WellQuest Elk Grove, LLC (2026) 119 Cal.App.5th 267, 281 (Wright) [“to indicate an affirmative choice to be bound by the FAA’s procedures over the expected CAA provisions the parties are required to expressly state so”].) “[W]e examine the language of the contract to determine whether the parties intended to apply the FAA to the exclusion of California procedural law.” (Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 383 (Cronus); Valencia v.

Smyth (2010) 185 Cal.App.4th 153, 161-162 [same; applying de novo review].)

Here, Article 10 of the Agreement provides that “California substantive law ... applies to any and all claims arising out of the care, treatment, and services provided to the Resident by the Facilities, including those claims outlined in Article 1 and Article 2.” (Italics added.) The same article subsequently states, “The parties [] agree that the underlying admission to the Facility involves interstate commerce governed by the Federal Arbitration Act.”

Such a broad reference to the FAA is insufficient to deviate from the default application of California procedural law. (Wright, supra, 119 Cal.App.5th at p. 283 [agreement providing that

disputes arising under it “shall be resolved by submission to a neutral, binding arbitration in accordance with the Federal Arbitration Act” insufficient to displace California procedural rules], disagreeing with Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th (2006) 136 Cal.App.4th 1110 (Rodriguez).)3

Moreover, despite Article 10’s general reference to the FAA, Articles 1 and 2 specifically provide that disputes falling under their provisions “will be determined by submission to arbitration as provided by California law ....” (Italics added.) Thus, Defendants and Jon agreed to the application of California’s procedural law when determining whether to submit disputes to arbitration. Such a reading is supported by the fact that the Agreement specifically precludes section 1281.2, which would be unnecessary if the parties intended the FAA’s procedural rules apply.

The Court finds California’s procedural rules apply to this dispute regarding whether to compel arbitration.

C. Defendants Have Shown an Agreement to Arbitrate Exists

Defendants report Jon signed the Agreement on September 1, 2025. The Agreement covers “any dispute as to medical malpractice ...” and “any dispute ... that relates to the provision of care, treatment, and services the Facility provides to the Resident ....” (Agt., arts. 1, 2.)

Plaintiffs do not dispute Jon signed the Agreement.

D. Plaintiffs Have Established a Defense to Enforcement of the Arbitration Agreement

Plaintiffs raise four defenses to its application. The Court finds that Plaintiffs have shown the Agreement is unconscionable but did not meet their burden on the other three defenses.

1. Waiver Under Section 1281.2(a)

Plaintiffs argue Defendants have waived their right to enforce arbitration on the ground they (a) delayed in seeking to arbitrate the claim and (b) engaged the litigation machinery by issuing subpoenas to various medical providers, which is inconsistent with an intent to arbitrate. (Reyda Decl., ¶¶ 2-4, Exs. A-C [subpoenas to medical providers].)

3 The arbitration agreement in Rodriguez provided, “ARBITRATION: Pursuant to the Federal Arbitration Act, any controversy or claim arising [out] of or related to this Agreement or the breach of any provision thereof shall be settled by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association currently in effect, unless the parties mutually agree otherwise.” (Rodriguez, supra, 136 Cal.App.4th at p. 1116 [finding arbitration could not be stayed under section 1281.2(c) due to application of FAA].) The court in Wright (also third district) disagreed that “the use of such broad language indicates the parties’ intention to deviate from the default application of the CAA ....” (Wright, supra, 119 Cal.App.5th at p. 281; see e.g., Cronus, supra, 35 Cal.4th at p. 394 [language which called for the application of the FAA “if it would be applicable,” should not be read to preclude the application of section 1281.2(c)].)

“Waiver is not to be lightly inferred and the party seeking to establish it bears a ‘heavy burden of proof,’ with all doubts resolved in favor of arbitration. [Citation.] Nonetheless, waiver may be ‘implied, based on conduct indicating an intent to relinquish the right.’ [Citation.]” (Leger v. R.A.C. Rolling Hills L.P. (2022) 84 Cal.App.5th 240, 246-247.)

Plaintiffs argue pre-trial discovery is not allowed under the FAA. (9 U.S.C. § 7 [subpoena power to compel attendance and document production at arbitration hearing, but not pre-hearing discovery]; CVS Health Corp. v. Vividus, LLC (9th Cir. 2017) 878 F.3d 703, 708 [section 7 does not give arbitrators power to order discovery from third parties prior to a hearing].) Defendants respond that under California law, the arbitrator has the power to issue non-party subpoenas. (§§ 1282.6, 1283.05.)

The Agreement itself provides “that any arbitration pursuant to this agreement will proceed according to the Medical Arbitration Rules of the California Hospital Association – California Medical Association.” (Agt., art. 3.) Neither side addresses whether these rules permit discovery, including issuance of subpoenas. It was Plaintiffs’ burden to support this argument.4

As for the alleged delay, Defendants report that they requested the matter be submitted to arbitration on March 2, 2026, prior to filing their answer and issuing any subpoenas. (Devlin Decl., ¶ 5.) On March 13, 2026, Plaintiff responded that they would not consent to arbitration. (Devlin Decl., ¶ 5, Ex. D.) Although the motion to compel arbitration was not filed until three months after service of the complaint, that brief delay without more is insufficient to demonstrate a waiver of the right to arbitrate.

The Court finds Plaintiffs have failed to show Defendants waived their right to enforce the arbitration agreement with Jon.

2. Rescission Under Section 1281.2(b) and Civil Code Section 39

Plaintiffs argue the Agreement is subject to rescission under Civil Code section 39 because Jon lacked capacity to understand the nature, purpose and effect of the agreement when signed.

Civil Code section 39, subdivision (a) provides a “contract of a person of unsound mind, but not entirely without understanding, made before the incapacity of the person has been judicially determined, is subject to rescission ....” (Civ. Code, § 39, subd. (a).) The test to determine whether a party had capacity to enter into a contract is “ ‘whether he understood the nature, purpose and effect of what he did.’ [Citation.]” (Algo-Heyres v. Oxnard Manor LP (2023) 88 Cal.App.5th 1064, 1072.) A finding regarding mental capacity is reviewed for substantial evidence. (Id. at p. 1070.)

4 In March 2026, Defendants provided Plaintiffs’ counsel “a copy of the arbitration rules that were current as of March 2022. (Devlin Decl., Ex. D.) That attachment provided in counsel’s email correspondence was not included in the exhibit filed with the Court.

“A determination that a person is of unsound mind or lacks the capacity to make a decision or do a certain act, including [] the incapacity to contract ... shall be supported by evidence of a deficit in at least one of the following mental functions ....” (Prob. Code, § 811.) Those mental functions include (1) alertness and attention (e.g., level of consciousness and ability to concentrate); (2) information processing (e.g., memory and recognition of familiar objects/persons); and (3) thought processes (e.g., hallucinations). (Prob. Code, § 811(a)(1)-(3).)

In support of Jon’s incapacity, Plaintiffs provide declarations by Jon and Connie. Connie was not present when the Agreement was signed and thus, has no direct evidence regarding Jon’s capacity at that time. (Connie Decl., ¶ 4.) Instead, Connie asserts generally that “Jon has become more forgetful and easily confused” over the past few years so that she handles their “financial accounts because Jon struggles to know what bills to pay and how to pay them.” (Id. at ¶ 2; Jon Decl., ¶ 2 [same].) This is insufficient to raise the type of deficits set forth in Probate Code section 811 or to raise the rebuttable presumption in section 39(b).5 Plaintiffs do not present any objective evidence of ongoing cognitive issues such as medical records, and Defendants rightly point out no guardian ad litem was appointed for Jon in this proceeding.

As for specific incapacity on the day, Jon states he was so intoxicated with pain medications that he does not have any memory of agreeing to arbitrate, but remembers the admission process took a long time, he did not have his hearing aids, and he did not hear the word arbitration. (Jon Decl., ¶¶ 5, 6, 8.) “Incapacity ... may arise from intoxication of such a degree as to deprive a person of reason and understanding. [Citation.]” (Walton v. Bank of California, N.A. (1963) 218 Cal.App.2d 527, 541.)

Plaintiffs submit medical records showing Jon received morphine on the day of his admission to the facility (Reyda Decl., Ex. D) but offer no expert testimony explaining how the administered dosages might affect Jon’s capacity to contract.

Defendants for their part present a declaration from Cassandra Tinajero, the admissions coordinator at the facility, who reviewed the paperwork with Jon. Tinajero states, “Throughout the entirety of my interactions with Mr. Berg on September 1, 2025, Mr. Berg’s demeanor, actions, and words indicated to me that he had the cognitive capacity and was mentally competent to deal with the admissions paperwork process, including the arbitration agreement, with a full understanding of his rights.” (Tinajero Decl., ¶ 11.)

Tinajero also states that her regular practice is to review the nurse’s assessment of the incoming resident to determine whether the resident was assessed as capable of making medical decisions before proceeding with any paperwork. (Tinajero Decl., ¶ 4.) In such cases where the assessment provides the resident is incapable of making such decisions, Tinajero reaches out to the resident’s 5 Section 39(b) provides, “A rebuttable presumption affecting the burden of proof that a person is of unsound mind shall exist for purposes of this section if the person is substantially unable to manage his or her own financial resources or resist fraud or undue influence. Substantial inability may not be proved solely by isolated incidents of negligence or improvidence.”

family member to complete the admissions paperwork. (Ibid.) Tinajero states she followed this usual practice when admitting Jon to the facility. (Id., ¶ 7.)

Having reviewed the evidence provided, the Court finds Plaintiffs have failed to show Jon lacked capacity at the time he signed the Agreement.

3. Coordination with Third Party Claims Under Section 1281.2(c)

Plaintiffs argue the motion should be denied pursuant to section 1281.2(c), which allows a court to deny a request to compel arbitration when one of the contracting parties is also a party to a pending court action with a third party arising out of the same transaction. The Agreement expressly excludes application of section 1281.2(c) with respect to Article 1 (medical malpractice) and Article 2 (“the provision of care, treatment, and services the Facility provides to the Resident”). (Agt., art. 9.)

In addition, section 1281.2(c) itself states it does not apply “to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.” The Agreement is subject to section 1295. (Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 841 [“Section 1295 is part of California’s Medical Injury Compensation Reform Act (MICRA)”]; see also Ruiz v. Podolsky (2010) 50 Cal.4th 838, 841 [“wrongful death claimants are bound by arbitration agreements entered into pursuant to section 1295 ...”].)

Plaintiffs argue their claims sound in elder abuse, not professional negligence. Regardless, the Agreement excludes section 1281.2(c) from applying to those claims as well. (Agt., arts. 2, 9.)

Plaintiffs next argue that the other plaintiffs, who are not signatories to the Agreement, are not bound by its terms. The Court agrees. Plaintiffs, however, have not provided any authority that other non-signatory plaintiffs may invoke section 1281.2(c) in response to a motion to compel another party to arbitration. In particular, when the signatory-party agreed that section 1281.2(c) would not apply. Nor have Plaintiffs shown that private parties are prohibited from contracting around section 1281.2(c), and thereby, limiting the Court’s discretion to refuse to enforce the arbitration agreement. 6

4. Unconscionability

The general principles of unconscionability are well established. A contract is unconscionable if one of the parties lacked a meaningful choice in deciding whether to agree and the contract contains terms that are unreasonably favorable to the other party. Under this standard, the unconscionability doctrine “ ‘has both a procedural

6 Arguably, the Court retains discretion under 1281.2(d) to stay either the court action or arbitration proceeding pending the outcome of the other. In addition to the other plaintiffs’ claims in the eighth and ninth causes of action, Defendants acknowledge that Count 7 asserting Violation of Patient’s Bill of Rights is also not subject to arbitration. (Opp., p. 6:4-5.)

and a substantive element.’ ” “The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power. Substantive unconscionability pertains to the fairness of an agreement’s actual terms and to assessments of whether they are overly harsh or one-sided.”

Both procedural and substantive unconscionability must be shown for the defense to be established, but “they need not be present in the same degree.” Instead, they are evaluated on a “ ‘sliding scale.’ ” “[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to” conclude that the term is unenforceable. Conversely, the more deceptive or coercive the bargaining tactics employed, the less substantive unfairness is required.”

(OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125-126 (OTO), citations omitted.)

a. Procedural Unconscionability

“A procedural unconscionability analysis ‘begins with an inquiry into whether the contract is one of adhesion.’ [Citation.] An adhesive contract is standardized, generally on a preprinted form, and offered by the party with superior bargaining power ‘on a take-it-or-leave-it basis.’ [Citations.]” (OTO, supra, 8 Cal.5th at p. 136.)

Article 6 of the Agreement provides, “The execution of this arbitration agreement is not a precondition to receiving medical treatment, care or for admission to the Facility.” Moreover, Tinajero states her usual practice was to inform the resident that they could sign the arbitration agreement or decline to sign it. (Tinajero Decl., ¶ 6.) The Agreement, however, is still a pre-printed form, proffered by a party with superior bargaining power with no opportunity for negotiation.

Even “[i]n the absence of an adhesion contract, the oppression aspect of procedural unconscionability can be established by the totality of the circumstances surrounding the negotiation and formation of the contract. [Citation.]” (Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc. (2015) 232 Cal.App.4th 1332, 1348; Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322, 1329 [“the manner in which the contract was negotiated and the circumstances of the parties at that time”].) “Oppression occurs where a contract involves lack of negotiation and meaningful choice, ....” (OTO, supra, 8 Cal.5th at p. 126, citations and internal quotation marks omitted; McManus v. CIBC World Mkt. Corp. (2003) 109 Cal.App.4th 76, 8 [oppression also arises from unequal bargaining power].)

“ ‘The circumstances relevant to establishing oppression include, but are not limited to (1) the amount of time the party is given to consider the proposed contract; (2) the amount and type of pressure exerted on the party to sign the proposed contract; (3) the length of the proposed contract and the length and complexity of the challenged provision; (4) the education and experience of the party; and (5) whether the party’s review of the proposed contract was aided by an attorney.’ [Citation.]” (OTO, supra, 8 Cal.5th at pp. 126-127.)

Jon reports that after his surgery, he “was in a lot of pain and very disoriented,” that he had received a lot of morphine and “was very affected by it.” (Jon Decl., ¶ 5.) Jon further reports he “was confused, tired, and [] had trouble understanding people” and that he “usually wear[s] hearing aids, but [] did not have them with [him] which added to [his] confusion.” (Ibid.) He states on the day he left the hospital and was admitted to the Facility, he “was in a lot of pain, heavily medicated, and very confused.” (Id., ¶¶ 6, 7.)

Jon further reports that “someone came to my bed shortly after my admission with a large stack of papers and told me that I needed to sign. I did not believe I could raise any objections to any of the paperwork because I needed to be admitted there, I was far from home, and I had nowhere else to go. Accordingly, I signed the paperwork.” (Jon Decl., ¶ 7; Reyda Decl., Ex. E. [Tinajaro Dep., 39:3-7].)

Jon states when presented with the “large stack of paper,” “the staff member quickly turned to pages I needed to sign. There was no time for me to read any of the pages I was signing, nor was I in any condition to read. I was still exhausted, in a lot of pain, and medicated. I do not think I spent more than a couple minutes signing the paperwork and nothing was ever explained to me. I never heard the word ‘arbitration’ mentioned and I have no recollection of reading or signing an ‘arbitration’ agreement. At that time, I did not know what arbitration meant or what I would be giving up by agreeing to it.” (Jon Decl., ¶ 8.)

While the fact Jon had just been released from the hospital and was on morphine may be insufficient to show lack of capacity, it nevertheless shows he was in a weakened physical state affecting the parties’ respective bargaining power at the time the Agreement was signed. In addition, Jon had already been denied admission to his first choice of care facility due to a lack of beds, and he reports he was not given an option other than San Luis Post Acute Center. (Jon Decl., ¶¶ 6, 7.) The inability to go to his first choice of care facility prevented Connie from being present for the admission process. (Connie Decl., ¶ 4.)

Finally, the Agreement was part of 141 pages of admission documents. (Reyda Decl., ¶ 8, Ex. G; see e.g., Dougherty v. Roseville Heritage Partners (2020) 47 Cal.App.5th 93, 103-104 (Dougherty) [arbitration agreement provided on preprinted form as part of a 70-page packet of admission documents to elderly resident needing immediate placement supported procedural unconscionability finding].)

The court finds the circumstances of Jon’s admission to San Luis Post Acute Center show procedural unconscionability.

b. Substantive Unconscionability

Plaintiffs argue four grounds to show substantive unconscionability. The Court (a) finds Plaintiffs failed to adequately support two of those grounds; (b) has questions regarding the evidence submitted regarding the costs of arbitration; and (c) agrees with Plaintiffs that Article 7 of the Agreement creates a lack of mutuality.

First, Plaintiffs argue the Agreement seeks to apply MICRA’s limitation on damages (§ 667.7 and Civ. Code, §§ 3333.1-3333.2)7 to its elder abuse claims, thereby limiting the statutory remedies provided for such claims in the Welfare and Institutions Code. “[A]n arbitration agreement ‘may not limit statutorily imposed remedies such as punitive damages and attorney fees.’ ” (Dougherty, supra, 47 Cal.App.5th at p. 106, quoting Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 103 (Armendariz).)

Welfare and Institutions Code section 15657 allows for both punitive damages and attorney’s fees upon a showing a defendant is liable for physical abuse, neglect, or abandonment.8 The section “was designed to accomplish an important public purpose,” and as such cannot be waived. (Bickel v. Sunrise Assisted Living (2012) 206 Cal.App.4th 1, 12; see also Civ. Code, § 3513 [“a law established for a public reason cannot be contravened by a private agreement”].) Plaintiffs, however, have not shown section 667.7 or Civil Code sections 3333.1 and 3333.2 limit potential recovery of punitive damages or attorneys’ fees. 9

Second, Plaintiffs argue that the Agreement would deny Jon his right to calendar preference under section 36(a). They do not provide any authority that such a right cannot be waived. (Civ. Code, § 3513 [“Any one may waive the advantage of a law intended solely for their benefit”].)

Defendants respond that section 36(a) has no relevance to determining whether to grant a motion to compel arbitration. In support, they cite Laswell v. AG Seal Beach, LLC (2010) 189 Cal.App.4th 1399, 1409-1410 (Laswell), which found the party’s “advanced age and the trial court’s decision to grant her trial preference have no relevance to whether Code of Civil Procedure section 1281.2, subdivision (c), applies, and, given it does not, whether to grant the petition to compel arbitration.” Although Laswell concerned section application of 1281.2(c) and not an unconscionability analysis, Plaintiffs have nonetheless failed to show section 36(a), a procedural rule, is not subject to contractual waiver.

Third, Plaintiffs argue the Agreement requires Defendants and Jon to share the cost of arbitration. (Agt., art. 9.) The default rule is that unless the parties agree otherwise, “each party to the arbitration shall pay his pro rata share of the expenses and fees ... together with other expenses of the arbitration incurred ....” (§ 1284.2.) The rule has been modified in certain contexts. (Armendariz, supra, 24 Cal.4th at p. 113 [costs of arbitration in connection with FEHA claims];

7 Section 667.7 allows any party to request that a judgment for damages against a health care provider be paid by periodic payments rather than a lump-sum. Civil Code section 3333.1 limits the common law collateral source rule in medical malpractice litigation. Civil Code section 3333.2(b) places a cap on a defendant’s liability for noneconomic damages. 8 Welfare and Institutions Code section 15657 also requires a showing that the “that the defendant has been guilty of recklessness, oppression, fraud, or malice in the commission of this abuse.” 9 Welfare and Institutions Code section 15657(b) specifically provides that “damages recovered shall not exceed the damages permitted to be recovered pursuant to subdivision (b) of Section 3333.2 of the Civil Code.” (See also Welf. & Inst. Code, § 15657.2.)

Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 920 (Sanchez) [costs of arbitration in consumer cases]; Haydon v. Elegance at Dublin (2023) 97 Cal.App.5th 1280, 1291 (Haydon) [upholding trial court’s substantive unconscionability finding regarding costs provision in resident versus residential care facility dispute].)10

The parties should come prepared to discuss whether there is sufficient evidence to support the argument that the costs provision in Article 9 is unconscionable. (See Jon Decl., ¶ 9; Reyda Decl., ¶ 9.)

Fourth, Plaintiffs argue there is a lack of mutuality. (Haydon, supra, 97 Cal.App.5th at p. 1289 (Hayden) [in determining substantive unconscionability, mutuality is the “paramount consideration”].) As previously stated, Articles 1 and 2 of the Agreement provide for arbitration of medical malpractice claims and any disputes relating “to the provision of care, treatment, and services the Facility provides to the Resident ....” Article 7 then provides, “This agreement shall be binding for any dispute except for disputes pertaining to collections or evictions.”

The Court finds the Agreement lacks mutuality “because it requires residents to arbitrate those claims they are most likely to bring against the Facility (medical malpractice, personal injury, elder abuse) while allowing the Facility to pursue in courts the actions the Facility is most likely to bring against residents (evictions and collections).” (Lopez v. Bartlett Care Center (2019) 39 Cal.App.5th 311, 321; see also Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 115 [arbitration agreement between employee and employer lacked mutuality because it required “employees to arbitrate the claims they are most likely to assert against [the employer], while simultaneously permitting [the employer] to litigate in court the claims it is most likely to assert against its employees”].)

The Court finds Article 7 of the Agreement to be unconscionable due to the lack of mutuality.

Defendants argue any unconscionable provisions may be severed.

“ ‘In deciding whether to sever terms rather than to preclude enforcement of the provision altogether, the overarching inquiry is whether the interests of justice would be furthered by severance; the strong preference is to sever unless the agreement is “permeated” by unconscionability.’ [Citation.]” (Magno v. The College Network, Inc. (2016) 1 Cal.App.5th 277, 292.)

However, “ ‘no bright-line rule requires a court to refuse enforcement if a contract has more than one unconscionable term. Likewise, a court is not required to sever or restrict an unconscionable term if an agreement has only a single such term.” (Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 516 (Ramirez).) Moreover, “[e]ven if a contract can be cured, the court 10 Plaintiffs also cite Aronow v. Superior Court (2022) 76 Cal.App.5th 865, which addressed the trial court’s jurisdiction, upon a stay pending arbitration, to determine if the plaintiff was unable to pay arbitration costs. The unconscionability of a provision to share arbitration costs was not addressed. (Id. at p. 871, fn. 2.)

should ask whether the unconscionability should be cured through severance or restriction because the interests of justice would be furthered by such actions.” (Ibid.)

To sever an unconscionable term, the problematic provision must be collateral to the contract’s main purpose. (Ramirez, supra, 16 Cal.5th at p. 517.) The term excusing Defendants from arbitrating the claims that they are most likely to bring is not collateral to the main purpose of the Agreement (i.e., to compel arbitration of disputes between the parties).

Additionally, when considering whether to sever an unconscionable term, “the court may also consider the deterrent effect of each option.” (Ramirez, supra, 16 Cal.5th at p. 517 [citing example where severing unconscionable provisions and enforcing remainder could “create an incentive for an employer to draft a one-sided arbitration agreement to include the bilateral terms the employer should have included in the first place”].) If the Court severed the portion of the Agreement allowing Defendants to proceed to court on the claims they are most likely to assert, it would not deter them from continuing to include such a provision in the arbitration agreements they present to their residents.

The Court denies Defendant’s request to sever the unconscionable term.

In light of the finding that the Agreement is unconscionable, the Court denies Defendant’s motion to compel arbitration.

II. DEFENDANTS’ MOTION TO STAY

Considering the Court’s ruling on Defendants’ motion to compel arbitration, the motion to stay is moot and is denied on that ground.

III. PLAINTIFFS’ MOTION FOR PREFERENCE

Plaintiffs seek trial preference under section 36(a), which provides:

A party to a civil action who is over 70 years of age may petition the court for a preference, which the court shall grant if the court makes both the following findings:

(1) The party has a substantial interest in the action as a whole.

(2) The health of the party is such that a preference is necessary to prevent prejudicing the party’s interest in litigation.

Pursuant to section 36.5, “an affidavit submitted in support of a motion for preference under subdivision (a) of Section 36 may be signed by the attorney for the party seeking preference based upon information and belief as to the medical diagnosis and prognosis of any party.” Moreover, “[t]he attorney’s declaration can consist entirely of hearsay and conclusions. [Citation.]” (Weil &

Brown, Cal. Practice Guide: Civ. Proc. Before Trial (The Rutter Guide 2026) ¶ 12:247.1.) Here, counsel’s declaration reports that Jon is 87 years old and his health “is precarious after bilateral above-the-knee amputations.” (Reyda Decl., ¶¶ 3-5.)

Defendants do not oppose the motion, and ask only that if granted, the trial not be set less than 120 days from the date the motion is granted.

The motion is granted. The Court will address the date of trial at the hearing. The parties should be prepared to participate in a case management conference to address deadlines for discovery and expediting discovery and other potential motions which may require court hearings prior to the trial date.

ORDER (PROPOSED)

Defendants’ motion to compel arbitration and motion to stay are denied.

Plaintiffs’ motion for preference is granted.

The Court sustains Plaintiffs’ objection to exhibit B of Tinajero Declaration. (Opp., p. 8, fn. 1.)

The Court grants Plaintiffs’ unopposed request for judicial notice of exhibit H. (Evid. Code, § 452(d); People v. Woodell (1998) 17 Cal.4th 448, 455 [limitations of judicial notice of court records].)

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