Elder Care Alert: Waiver in Residency Agreement of Plaintiff’s Statutory Right to Recover Attorneys’ Fees and Costs is Contrary to Public Policy

In Bickel v. Sunrise Assisted Living, 2012 WL 1821398, plaintiff, Ruth Chappell, filed a lawsuit alleging that defendant Sunrise Assisted Living (“Sunrise”), violated the Elder Abuse and Dependent Adult Civil Protection Act (“Elder Abuse Act”) concerning its care of plaintiff while she was a resident at Sunrise.

At the time of plaintiff’s admission to Sunrise, she entered into a residency agreement that included an arbitration clause. In response to plaintiff’s lawsuit, Sunrise petitioned the trial court to compel arbitration of plaintiff’s elder abuse claims pursuant to the residency agreement. The trial court granted the petition, 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. The Elder Abuse Act specifically allows for the recovery of attorney fees and costs to prevailing plaintiffs pursuant to Welfare & Institutions Code § 15657 to effectuate the important public purposes of the law.

The case proceeded to arbitration. Plaintiff prevailed on her claims under the Elder Abuse Act and the arbitrator awarded compensatory and punitive damages. In addition, the arbitrator awarded plaintiff attorney fees costs pursuant to § 15657 of the Elder Abuse Act. Defendant thereafter appealed, challenging the trial court’s decision to sever the attorney fees and costs waiver. The appellate court affirmed, finding that the waiver in the residency agreement of plaintiff’s statutory right to recover attorney fees and costs under § 15657 of the Elder Abuse Act was contrary to public policy.

Pursuant to California Civil Code § 3513, anyone may waive the advantage of a law intended solely for his benefit, but a law established for a public reason cannot be contravened by a private agreement. The appellate court held that that § 15657 of the Elder Abuse Act, including its provision for recovery of attorney fees and costs, was designed to accomplish an important public purpose. Therefore, the rights established in § 15657 were unwaivable. The appellate court reasoned that the heightened remedies enacted in § 15657 were remedial measures designed to correct a significant problem affecting a highly vulnerable segment of our society. That is, elders and dependent adults were not being adequately protected from abuse and neglect under existing law because there was little incentive for attorneys to take such cases. As a solution, the heightened remedies were established by the Legislature as an essential vehicle to better protect these needy individuals. As such, the appellate court concluded that § 15657, including the attorney fees and cost recovery provided therein, was enacted to carry out an important public purpose: that of protecting an especially vulnerable portion of our population—elders and dependent adults—by creating civil incentives for attorneys to represent victims of egregious abuse and neglect.

This case reaffirms that anytime Elder Abuse is alleged, there is the potential exposure to attorneys’ fees. Plaintiff attorneys will continue to use the potential for attorneys’ fees to increase the value of the case. Attorneys’ fees and costs are only recoverable if Plaintiff can show by clear and convincing evidence that the defendant is guilty of recklessness, oppression, fraud, or malice and, in the case of an employer, only if the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.

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May 23, 2012