First, we will address the trial court's decision to deny the motion to compel arbitration because the Nursing Home failed to show "that the parties actually bargained over the arbitration agreement or that it was a reasonable term considering the circumstances." According to Diagnostic Center v. Steven B. Stubblefield, M.D., P.C., 215 S.W.3d 843, 847 (Tenn.Ct.App. 2006), such proof has only been required in cases dealing with contracts of adhesion. Thus, we begin with a review of the law regarding contracts of adhesion.
"If the agreement is not a contract of adhesion, the party seeking to avoid enforcement of the contract must prove unconscionability like any other defense of contract law." Mitchell v. Kindred Healthcare Operating, Inc., 349 S.W.3d 492, 499 (Tenn. Ct. App. 2008) (citing Diagnostic Ctr. v. Steven B. Stubblefield, M.D., P.C., 215 S.W.3d 843, 847 (Tenn. Ct. App. 2006)). Plaintiff does not suggest the employment agreement was an adhesion contract.
"Courts are more likely to find that contracts of adhesion are unconscionable," Mitchell, 349 S.W.3d at 499, and when there is an adhesion contract, the party seeking enforcement of the arbitration provision must demonstrate that the provision was bargained for or was reasonable. Diagnostic Ctr. v. Steven B. Stubblefield, M.D., P.C., 215 S.W.3d 843, 847 (Tenn. Ct. App. 2006). Unconscionability is a factually-driven inquiry, and "[w]hether a particular contract is unconscionable is a question of law."
In 2006, however, this Court limited the application of the Howell rule to only contracts of adhesion. SeeDiagnostic Ctr. v. Steven B. Stubblefield, M.D., P.C., 215 S.W.3d 843, 847 & n. 2 (Tenn.Ct.App.2006) (indicating that the Howell rule only applies to contracts of adhesion); see alsoBroadnax v. Quince Nursing & Rehab. Ctr., LLC , No. W200802130COAR3CV, 2009 WL 2425959, at *7 (Tenn.Ct.App. Aug. 10, 2009) (same); Estate of Mooring v. Kindred Nursing Centers , No. W200702875COAR3CV, 2009 WL 130184, at *5 (Tenn.Ct.App. Jan. 20, 2009) (same). We note, however, that it is unclear how the first part of the Howell rule, that the parties actually bargained over the term, could ever apply to an adhesion contract, which by definition involves no bargaining between the parties.
In Estate of Mooring v. Kindred Nursing Ctrs., No. W2007-02875-COA-R3-CV, 2009 WL 130184, at *3 (Tenn. Ct. App. Jan. 20, 2009), we held that proof "`that the parties actually bargained over [an] arbitration agreement or that it was a reasonable term considering the circumstances[,] . . . has only been required in cases dealing with contracts of adhesion.'" (citation omitted); see also Reagan v.Kindred Healthcare Operating, Inc., No. M2006-02191-COA-R3-CV, 2007 WL 4523092, at *13 n. 11 (Tenn. Ct. App. Dec. 20, 2007) perm. app. denied (Feb. 17, 2009); Diagnostic Ctr. v. Steven B.Stubblefield, M.D., P.C., 215 S.W.3d 843, 847 (Tenn. Ct. App. 2006) perm. app. denied (Feb. 26, 2007). A "contract of adhesion" is defined as "`a standardized contract form offered to consumers of goods and services on essentially a `take it or leave it' basis, without affording the consumer a realistic opportunity to bargain under such conditions that the consumer cannot obtain the desired product or service except by acquiescing to the form of the contract.'"
'" Howell v. NHC Healthcare-Fort Sanders, Inc., 109 S.W.3d 731, 734 (Tenn.Ct.App. 2003) ( quoting Brown v. Kare Mor International, Inc., No. 01A01-9807-CH-00368, 1999 WL 221799 (Tenn.Ct.App. Apr. 19, 1999)). If the agreement is not a contract of adhesion, the party seeking to avoid enforcement of the contract must prove unconscionability like any other defense of contract law. Diagnostic Ctr. v. Steven B. Stubblefield, M.D., P.C., 215 S.W.3d 843, 847 (Tenn.Ct.App. 2006). In Reagan v. Kindred Healthcare Operating, Inc., No. M2006-02191-COA-R3-CV, 2007 WL 4523092 (Tenn.Ct.App. Dec. 20, 2007), the court examined the exact agreement at issue here and found that it was not a contract of adhesion.
Mr. Reagan cites Howell for his argument that "[a]ny defendant seeking enforcement of an arbitration provision must prove that the parties `actually bargained over the arbitration provision or that it was a reasonable term under the circumstances.'" However, according to Diagnostic Center v. Steven B. Stubblefield, M.D., P.C., 215 S.W.3d 843, 847 (Tenn.Ct.App. 2006), such proof has only been required in cases dealing with contracts of adhesion. The Court explained that under the Tennessee Uniform Arbitration Act, a "written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable save upon such grounds as exist at law or in equity for the revocation of any contract."