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

• In 2012, the estate of Beverly Peavy filed a wrongful death lawsuit against The Rehabilitation Center of Albuquerque, LLC, and other defendants, following Ms. Peavy's death in 2010. The Facility sought to compel arbitration based on an agreement signed upon Ms. Peavy's admission, which required arbitration for most disputes but exempted collections and discharge of residents from mandatory arbitration (paras 2, 4-6).

Procedural History

• District Court: The Agreement was found substantively unconscionable because it exempted the Facility’s likeliest claims while mandating arbitration for residents' claims (para 7).
• Court of Appeals: Affirmed the district court’s ruling, holding the Agreement was facially one-sided and Defendants failed to present sufficient evidence to justify its one-sidedness (para 8).

Parties' Submissions

• Plaintiff-Respondent: Argued the Agreement was substantively unconscionable and unenforceable because it was unfairly one-sided, exempting the Facility’s most likely claims (collections and discharge of residents) from arbitration (para 6).
• Defendants-Petitioners: Contended the Agreement’s collections exception was not unfair or unreasonable, requesting an evidentiary hearing to present evidence supporting this claim (para 6).

Legal Issues

• Whether the arbitration agreement, which exempts the Facility’s likeliest claims from arbitration but requires residents to arbitrate their claims, is substantively unconscionable (para 1).

Disposition

• The Supreme Court of the State of New Mexico affirmed the district court’s order denying the motion to compel arbitration (para 31).

Reasons

• The Supreme Court, per Justice Bacon, held the Agreement was substantively unconscionable. The Court clarified the analysis for determining the substantive unconscionability of an arbitration agreement, emphasizing that a presumption of unfair and unreasonable one-sidedness arises when a drafting party excludes its likeliest claims from arbitration. This presumption can be overcome by evidence showing the agreement's exceptions are fair and reasonable. However, Defendants failed to present sufficient evidence to justify the one-sidedness of the Agreement as fair and reasonable. The Court noted the lack of evidence quantifying the costs associated with arbitrating collections disputes and the failure to justify why only collections actions, as opposed to any low-value claim, were excepted from arbitration. The Court also highlighted the strong public policy favoring dispute resolution through arbitration and concluded that allowing the Facility to circumvent arbitrating high-value collection claims would conflict with this policy (paras 14-30).