Opinion
No. COA09-1526
Filed 2 November 2010 This case not for publication
Appeal by defendants from judgment entered 30 July 2009 by Judge W. Erwin Spainhour in Union County Superior Court. Heard in the Court of Appeals 14 April 2010.
Jackson McGee, L.L.P., by Sam McGee, for plaintiff appellee. Hedrick, Gardner, Kincheloe Garofalo, L.L.P., by Gerald A. Stein, II, for defendant appellants.
From Union County No. 09-CVS-00274.
On 26 January 2009, Christine Rodrigues ("plaintiff") filed a complaint alleging Southern Assisted Living, et al. ("defendants"), were negligent in providing adequate adult care and medical services to plaintiff's mother, Ms. Mary Jane Plumley, at Monroe Square, an adult care home facility operated by defendants. Defendants filed an answer on 16 April 2009, and on 15 April 2009, served four interrogatories to plaintiff pursuant to Rule 9(j) of the North Carolina Rules of Civil Procedure. On 15 May 2009, defendants filed a motion in Union County Superior Court to Stay the Proceedings and Compel Arbitration. On 30 July 2009, Judge Erwin Spainhour issued an order denying the motion. Defendants filed notice of appeal with the Union County Superior Court Civil Division on 25 August 2009.
On appeal, defendants contend that the trial court erred by ruling that defendants waived their right to arbitration, and by concluding the arbitration clause was procedurally and substantively unconscionable. Upon review, we reach only the issue regarding waiver of the right to arbitration and affirm the decision of the trial court.
I. Factual Background
On 26 January 2009, plaintiff filed a civil complaint against defendants seeking compensatory and punitive damages due to defendants' alleged negligence in caring for plaintiff's mother, Mary Jane Plumley, at Monroe Square which resulted in the wrongful death of Ms. Plumley. Monroe Square is an assisted living facility owned by defendants. On 16 April 2009, defendants answered plaintiff's complaint and served interrogatories pursuant to Rule 9(j) of the North Carolina Rules of Civil Procedure, wherein they sought detailed information regarding plaintiff's expert, her background and qualifications, any data or information considered by her in forming an opinion, along with her expert opinion regarding defendants' negligence. On 15 May 2009, defendants filed a motion and noticed a hearing to say the proceedings and compel arbitration.
On 17 June 2009, prior to the hearing on defendants' motion, plaintiff answered the interrogatories with the assistance of her named expert Beth R. Strother, BSN, RN, CFN ("Ms. Strother"). Plaintiff contends that answering the interrogatories took approximately five hours and cost plaintiff a total of $750.00. Moreover, after receiving the interrogatories, defendants informally asked plaintiff for medical records from Ms. Plumley's previous residences prior to her stay at Monroe Square.
On 29 June 2009, the Union County Superior Court heard arguments on defendants' 15 May 2009 motion. The trial judge found the following facts during the hearing: The arbitration clause provided that arbitration would be administered by the American Health Lawyers Association ("AHLA") pursuant to their rules of procedure for arbitration ("AHLA Rules"). The AHLA Rules do not incorporate the North Carolina Rules of Civil Procedure or the North Carolina Rules of Evidence. The AHLA rule with regard to discovery states that "the arbitrator may allow the parties to conduct such reasonable discovery and exchange of exhibits as the arbitrator believes necessary or proper."
On 30 July 2009, the trial judge denied defendants' motion issuing an order determining defendants could not stay legal proceedings and compel arbitration. The court concluded defendants waived any right to compel arbitration for two reasons: (1) they substantially participated in activities associated with litigation; and (2) the arbitration clause was both procedurally and substantively unconscionable. Defendants timely filed notice of appeal from the trial court's order.
II. Statement of Jurisdiction
We have jurisdiction to hear the appeal of an interlocutory superior court order when the order affects a substantial right. N.C. Gen. Stat. § 7A-27(d)(1) (2009). Specifically, an order denying arbitration is immediately appealable because it involves a substantial right that may be lost if the appeal is delayed. Servomation Corp. v. Hickory Construction Co., 70 N.C. App. 309, 310, 318 S.E.2d 904, 905 (1984).
III. Defendants' Right to Arbitrate
A. Standard of Review
Determining whether a particular dispute is subject to arbitration is a question of law, which we review de novo. Raspet v. Buck, 147 N.C. App. 133, 136, 554 S.E.2d 676, 678 (2001).
B. Analysis
Contractual rights, such as the right to arbitrate a dispute can be waived. See, e.g., Cyclone Roofing Co. v. LaFave Co., 312 N.C. 224, 229, 321 S.E.2d 872, 876 (1984). "A party waives arbitration when it engages in conduct inconsistent with arbitration which results in prejudice to the party opposing arbitration." Servomation Corp. v. Hickory Construction Co., 316 N.C. 543, 544, 342 S.E.2d 853, 854 (1986). Our Supreme Court has set forth certain circumstances under which the requirements of prejudice are met. Specifically, a party has been prejudiced if the party "takes steps in litigation to its detriment or expends significant amounts of money on the litigation, or . . . its opponent makes use of judicial discovery procedures not available in arbitration." Id. This Court has held that a party seeking arbitration waived its right to arbitration under these circumstances in Douglas v. McVicker, 150 N.C. App. 705, 564 S.E.2d 622 (2002). The defendant in that case waived the arbitration clause by serving a request for production of documents. Id. at 707, 564 S.E.2d at 624. This Court found that a party "may engage in discovery only by leave of the arbitrator." Id.
In this case, defendants served four interrogatories pursuant to Rule 9(j) of the North Carolina Rules of Civil Procedure, seeking detailed information regarding plaintiff's expert, her background and qualifications and any data or information considered by her, along with her opinions about the case. Plaintiff answered these interrogatories on 17 June 2009, which required the assistance of plaintiff's expert, Ms. Strother, and cost plaintiff $750.00.
Defendants contend that plaintiff has not been prejudiced because there were only four interrogatory questions, and they contend that the information requested should have been compiled by plaintiff prior to filing the suit. It is evident that the interrogatories served required much greater detail than what would be required under N.C. Gen. Stat. § 1A-1, Rule 9(j) (2009). Plaintiff asserts that these interrogatories sought any and all discoverable information about Ms. Strother. In addition, interrogatories were unnecessary as a conversation with the expert reviewing the medical care could satisfy the expert certification requirement under Rule 9(j). See Hylton v. Koontz, 138 N.C. App. 511, 530 S.E.2d 108 (2000).
Defendants also assert that the AHLA Rules do not expressly prohibit expert witnesses or discovery requests. While there is not an absolute ban on discovery in arbitration, the parties may not utilize discovery processes without leave of the arbitrator. See Douglas, 150 N.C. App. at 707-08, 564 S.E.2d at 623. The facts in this case clearly show that defendants made use of judicial discovery procedures that are available only at the arbitrator's discretion in AHLA arbitration. Therefore, defendants have waived any right they may have had to compel arbitration.
IV. Conclusion
Because of our ruling on the first issue, it is unnecessary for us to address the second issue raised on appeal regarding unconscionability of the arbitration agreement. A ruling on this issue is not necessary to decide the case before us.
We conclude that the trial court did not err by ruling defendants waived their right to arbitration. Accordingly, we affirm the order of the trial court allowing the litigation to proceed.
Affirmed.
Judges McGEE and STROUD concur.
Report per Rule 30(e).