MEAGAN DONAHUE et al. v. WELLTOWER, INC. et al.

A nonsignatory plaintiff may be estopped from refusing to arbitrate where he asserts claims that are dependent upon or inextricably intertwined with the underlying contractual obligations of the agreement containing the arbitration clause. (Jensen v. U- Haul Co. of California (2017) 18 Cal.App.5th 295, 306.) The focus is on the nature of the claims asserted; a plaintiff’s actual dependence on the underlying contract is the sine qua non of equitable estoppel, and even if claims touch on matters relating to the arbitration agreement the claims are not arbitrable unless the plaintiff relies on the agreement to establish his cause of action. (Goldman v.

KMPG, LLP (2009) 173 Cal.App.4th 209, 229-230 (Goldman).) The fundamental point is that a party is not entitled to make use of a contract containing an arbitration clause as long as it worked to his advantage and then attempt to avoid its application in defining the forum of the dispute. (NORCAL Mutual Insurance Co. v. Newton (2000) 84 Cal.App.4th 64, 84.)

Moving Defendants establish the existence of an arbitration agreement between MEAGAN on one side and PSL on the other as an initial matter. The Declaration of Oliver Aden (“Aden Dec.”), Sales Director for the relevant care facility at the time Decedent was admitted, sets out as Exhibit A the Residence and Care Agreement by which Decedent was accepted to the care facility and within that broader agreement there is on its fifteenth page an arbitration agreement signed by MEAGAN and initialed by Mr. Aden.

WPL is listed as one of the parties to the Residence and Care Agreement at the beginning of the document but disclaims its signatory status, arguing that its name being there was a scrivener’s error. (Joinder filed 6/24/26 at 2:7-10.)

However, while MEAGAN signed the arbitration agreement, CORTLAND did not. Moving Defendants cannot avail themselves of estoppel principles with regard to CORTLAND’s individual cause of action for wrongful death. When analyzing a claim of equitable estoppel in the arbitration context “the essential concern is whether plaintiffs are trying to enforce contractual terms beneficial to them while avoiding their own contractual agreement to arbitrate.” (Ford Motor Warranty Cases (2025) 17 Cal.5th 1122, 1136.)

However, the potential liability Moving Defendants face from CORTLAND here derives from statute, not a contract. (Id. at p. 1136.) CORTLAND’s personal claim for wrongful death is founded on statutory obligations in the Welfare and Institutions Code and general principles of common law, not the Residence and Care Agreement. CORTLAND’s personal claim touches on matters encompassed by the contract (the care of his elderly mother Decedent) but he does not rely on the agreement to establish his cause of action. (See Theresa D. v.

MBK Senior Living LLC (2021) 73 Cal.App.5th 18, 31 [elderly resident’s abuse claim against home dependent on duties imposed by law, not terms of care agreement].)

Unconscionability. Though California and federal law alike favor arbitration, general contract defenses such as unconscionability may be applied to invalidate arbitration agreements. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125 (Kho).) A contract is unconscionable if one of the parties lacked a meaningful choice in deciding whether to agree (“procedural unconscionability”) and the contract contains terms that are unreasonably favorable to the other party (“substantive unconscionability”). (Ibid.)

Both forms of unconscionability must be present for a contract to be found unconscionable overall, but a high degree of one form of unconscionability will reduce the amount of the other form that must be present in order to support an ultimate finding of unconscionability. (Id. at pp. 125-126.) The ultimate issue is whether a contract is sufficiently unfair in light of all of the circumstances that a court should refuse enforcement. (Id. at p. 126.) A party asserting unconscionability bears the burden of proof. (Ibid.)

Procedural unconscionability analysis begins with determining whether a contract is one of adhesion. (Kho, supra, 8 Cal.5th at p. 126.) A contract of adhesion is standardized, on a preprinted form, and presented on a “take it or leave it” basis. (Ibid.) After determining that a contract is one of adhesion a court must analyze whether the circumstances of the contract’s formation created such oppression or surprise that further inspection of fairness should be done. (Kho at p. 126.) “Oppression” here refers to a lack of negotiation and meaningful choice; “surprise” to hiding contractual provisions within prolix printed forms. (Ibid.)

Circumstances relevant to establishing oppression include, without limitation, the amount of time given the party to consider the contract, pressure exerted on the party to sign, the length and complexity of the contract and the challenged provision, the education and experience of the party, and whether the party had the aid of an attorney. (Kho, supra, 8 Cal.5th at 126-127.)

Analysis of substantive unconscionability is a matter of seeking out terms that are overly harsh, unduly oppressive, or unfairly one-sided. (Kho, supra, 8 Cal.5th at pp. 129-130.) Unconscionable terms impair the integrity of the bargaining process, attempt to impermissibly alter fundamental legal duties, or otherwise contravene public interests and policies. (Id. at p. 130.) They might include, without limitation, fine-print terms, unreasonably or unexpectedly harsh terms regarding the central aspects of the transaction, or terms that undermine the non-drafting party’s reasonable expectations. (Ibid.) Again, because procedural and substantive unconscionability are evaluated on a sliding scale, terms that might not be unconscionable in the abstract could be so if imposed by an oppressive procedure. (Ibid.)

The arbitration agreement in this case features a low degree of procedural unconscionability. Comparison to Dougherty v. Roseville Heritage Partners (2020) 47 Cal.App.5th 93 (Dougherty) is illustrative. In Doughtery the plaintiff had placed her demented father in two care homes prior to dealing with the defendant care home but he was removed from both due to behavioral problems. (Id. at p. 97.) The plaintiff found the defendant home “the only feasible care option” for her father, who was set to be released from the hospital the night she toured the place. (Ibid.)

The plaintiff signed an arbitration agreement on pages forty-three to forty-five of a seventy-page admission contract composed of preprinted forms she was not told she could alter. (Id. at pp. 97- 98.) The arbitration agreement was not a condition of residency. (Id. at p. 98.) Though the defendant argued the plaintiff had a duty to read what she signed, she lacked evidence that her father had no other options, and the arbitration agreement was a standalone section of the care agreement with its own signature line and a thirty-day opt-out provision, the appellate court found the arbitration agreement procedurally unconscionable because the plaintiff felt a great deal of pressure to find something for her difficult to manage father (and told the defendant’s representative such), the arbitration agreement was buried in a lot of other information despite technically standing alone, and the defendant failed to make available a copy of the arbitration rules. (Id. at pp. 102-104.)

The plaintiff was told to sign the documents and not given an explanation that the arbitration agreement was optional. (Id. at p. 104.) This constituted overall a “high degree of procedural unconscionability.” (Ibid.)

MEAGAN declares that she felt great pressure to find a care home for her mother because Decedent needed specialized memory care and MEAGAN’s family could not help shoulder the burden of helping Decedent because CORTLAND was coping with cancer and her father was also exhibiting signs of dementia. (Declaration of Meagan Donahue in Support of Opposition (“Donahue Dec.”) at ¶¶ 2-7.) She did not understand that she had any power to alter any of the terms of the care agreement. (Id. at ¶¶ 10- 11.) That MEAGAN was under pressure to find a specialized memory care program makes her situation similar to that of the Dougherty plaintiff. The facts that the arbitration agreement was optional and had a standalone signature line and an opt-out provision do not totally defeat a finding of procedural unconscionability here any more than they did in Dougherty.

On the other hand, MEAGAN elected to remove Decedent from her previous care home, her mother was not imminently leaving the hospital and thus immediately needing a place to stay, and she does not declare that she communicated her weak position to any defendant (though she “discussed this [decision-critical memory care] program” with WHINERY). (Donahue Dec. at ¶ 8.) These are significant points of distinction from Dougherty that decrease the degree of but do not entirely eliminate the procedural unconscionability present.

The most key point, present in Dougherty, is present here: this was a standardized contract of adhesion presented to MEAGAN without allowing for negotiation. It contained surprise in that the arbitration agreement was just one of a great many pages she needed to read and sign to admit her mother to a specialized memory care facility, separate signature line notwithstanding. There was also no copy of the arbitration rules provided.

Though there is a lower degree of procedural unconscionability present in the arbitration agreement than as in Dougherty, there is some procedural unconscionability. The court proceeds to analyze substantive unconscionability, noting again that unconscionability is evaluated on a sliding scale and a low degree of procedural unconscionability can support an overall finding of unconscionability when matched to a high degree of substantive unconscionability.

There is high substantive unconscionability in the arbitration agreement. The agreement is insufficiently mutual. The agreement states that MEAGAN “agree[s] that any and all claims and disputes arising from or related to this Agreement or to [Decedent’s] residency, care or services at the Community, whether made against us or any other individual or entity” shall be resolved by arbitration. (Aden Dec. at ¶ 2, Exhibit A [page 15].) A clause soon following the specification that the agreement pointedly includes personal injury and wrongful death pointedly excludes unlawful detainer actions and small claims from the arbitration.

The latter are claims a care home is a lot more likely to bring than a resident. Lopez v. Bartlett Care Center, LLC (2019) 39 Cal.App.5th 311, 321-322 (Lopez) found just such an exclusion clause substantively unconscionable. Moving Defendants’ attempts at distinction are not persuasive. Moving Defendants do not establish a “legitimate commercial need” to be able to press unlawful detainer and collections actions in court. The example given in Lange v. Monster Energy Co. (2020) 46 Cal.App.5th 436 concerned a company’s proprietary information.

The case Lange cites for the proposition that it is acceptable to let a party with superior bargaining strength have certain protections in an arbitration clause if business realities so require – Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519 – also concerns proprietary information. Significantly, it also states at page 1536 that unless the business realities that justify an apparently one-sided arbitration clause are explained in the contract itself there must be facts presented to the court establishing said realities.

The contract here does not explain why Moving Defendants must have their carve-out and they have not presented evidence to the court on the point either. This is not a situation like an arbitration clause that permits injunctive relief to protect against misuse of trade secrets.

There is further substantive unconscionability in the limitations on discovery found in the JAMS arbitration rules the arbitration agreement requires (of which the court takes judicial notice pursuant to Evidence Code section 452, subdivision (h) and Moving Defendant’s request), viewed in the unique context of elder abuse claims and their heightened standards of proof. (Haydon v. Elegance at Dublin (2023) 97 Cal.App.5th 1280, 1291 (Haydon).) Moving Defendants’ contrary precedent, Vo v. Technology Credit Union (2025) 108 Cal.App.5th 632, is distinguishable on the basis that it did not concern claims with heightened standards of proof, being as the claims to be arbitrated there were Fair Employment and Housing Act discrimination and harassment and wrongful termination.

Moving Defendant’s other precedent, Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, while it is a California Supreme Court case, does not address the heightened standard of proof issue either. The court finds Haydon is precisely on point and controlling.

Haydon further states that a confidentiality clause forbidding disclosure of the existence, content, or results of an arbitration of an elder abuse action, such as the one in the instant agreement, is “unconscionable to a high degree.” (Haydon, supra, 97 Cal.App.5th at p. 1290; Aden Dec. at ¶ 2, Exhibit A.) Again Moving Defendants’ stated distinction is unavailing. The agreement allows for disclosure on a court order but the requirement of seeking a court order concerning an arbitration that is supposed to have its very existence kept secret still restricts informal information gathering and enables elder abusers to more easily reoffend. (Haydon at p. 1290 [reasons confidentiality unconscionable in elder abuse arbitration].)

The instant case does not feature every unconscionable term seen in Haydon, however. Haydon finds unconscionable an arbitration agreement’s provision that each side will pay its own costs and fees, another factor present in the agreement before this court. (Haydon, supra, 97 Cal.App.5th at p. 1291.) Further, Bickel v. Sunrise Assisted Living (2012) 206 Cal.App.4th 1, 10-13 (Bickel) states that a provision in an arbitration agreement holding that both sides will bear their own fees and costs in an elder abuse case is functionally an unenforceable and unconscionable waiver of the right to recover attorneys’ fees in elder abuse cases.

However, Haydon hinged its finding that the fees and costs provision was unconscionable as applied on evidence presented that JAMS charges high amounts for its services and the plaintiff had severely restricted income and limited assets. Plaintiffs here do not present such evidence. As for Bickel, that provision flatly stated that the parties would bear their own expenses while the provision before the court now says they will do so “unless otherwise provided by law,” thus allowing for recovery of attorneys’ fees on an elder abuse claim per the law.

In summary, the arbitration agreement under analysis features some procedural unconscionability matching some factors identified in Dougherty. The arbitration agreement also features a high degree of substantive unconscionability matching many of the most serious factors identified in Lopez and Haydon. There is sufficient procedural unconscionability paired with very significant substantive unconscionability such that the arbitration agreement is unenforceable as a whole. The court finds severance is not appropriate in these circumstances because the agreement is permeated with unconscionable purpose. (Dougherty, supra, 47 Cal.App.5th at p. 107.)

Conclusion. Moving Defendants’ motion to compel arbitration is denied.

BEASLEY v. SELENE FINANCE, L.P., et al. Case No. cu26-03170

Demurrer by Defendant MOREHOUSE HOMES, INC. to Plaintiff’s Complaint

TENTATIVE RULING

The nonjudicial foreclosure process is designed to give the borrower(s) time and opportunity to cure and/or stop the sale for good cause, but if completed is conclusive to give superior rights to a bona fide purchaser for value. Moeller v. Lien (1994) 25 Cal.App.4th 822, 830-832.