AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• Michael Hegerty, as the personal representative of his mother, Joan Hegerty's estate, filed a wrongful death lawsuit against Skilled Healthcare, LLC, St. Catherine Healthcare and Rehabilitation, LLC, and others, following Ms. Hegerty's death after her admission to St. Catherine for rehabilitation services. The defendants sought to compel arbitration based on an arbitration agreement signed upon Ms. Hegerty's admission, which the plaintiff contested as substantively unconscionable (paras 2-4).

Procedural History

• District Court of Santa Fe County, December 1, 2014: Found the arbitration agreement to be a valid contract but ruled it substantively unconscionable, requiring an evidentiary hearing for further examination (para 4).
• District Court of Santa Fe County, May 6, 2015: Granted summary judgment in favor of the plaintiff, ruling the arbitration agreement substantively unconscionable without the need for an evidentiary hearing (para 5).

Parties' Submissions

• Plaintiff-Appellee: Argued that the arbitration agreement was substantively unconscionable, preventing a valid agreement requiring arbitration from existing (para 4).
• Defendants-Appellants: Moved to compel arbitration based on the arbitration agreement and the Federal Arbitration Act, contending that the district court erred by not allowing an evidentiary hearing on the unconscionability of the contract provision and by not considering recent Tenth Circuit authority on the matter (paras 6, 13).

Legal Issues

• Whether the arbitration clause exception for small claims was substantively unconscionable as a matter of law (para 1).
• Whether the doctrine of substantive unconscionability is preempted by federal law in the context of arbitration agreements (para 12).

Disposition

• The Court of Appeals reversed the district court's ruling on the substantive unconscionability of the small claims exception in the arbitration agreement and remanded the case for further proceedings (para 16).
• The Court of Appeals upheld the district court's rejection of federal preemption regarding the substantive unconscionability defense (para 15).

Reasons

• Per Timothy L. Garcia, J. (James J. Wechsler, J., J. Miles Hanisee, J., concurring):
  The Court of Appeals found that, in light of the New Mexico Supreme Court's decision in Dalton v. Santander Consumer USA, Inc., the small claims exception in the arbitration agreement was not substantively unconscionable as a matter of law. This conclusion was based on the reasoning that such exceptions do not unambiguously benefit the drafting party alone and are not inherently unfair, even if one party is more likely to bring small claims actions (paras 8-11).
  Regarding the preemption by federal law, the Court of Appeals concluded that New Mexico courts may invalidate arbitration agreements through the generally applicable contract defense of unconscionability without violating the Federal Arbitration Act. This conclusion was supported by existing New Mexico Supreme Court precedent, which has not been overridden by the Tenth Circuit's analysis in Patton (paras 12-15).