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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
MELBA F. RAPER, EXECUTRIX OF THE ESTATE OF WILLARD O. RAPER,
Deceased, Plaintiff, v. OLIVER HOUSE, LLC d/b/a THE OLIVER HOUSE;
WENDELL HEALTH INVESTORS, LLC; THIRD STREET MANAGEMENT, LLC;
AGEMARK, LLC; AGEMARK MANAGEMENT, LLC; AGEMARK MANAGEMENT
SERVICES, LLC; CHARLES E. TREFZGER, JR.; and DAVID S. JONES,
Filed: 5 December 2005
1. Civil Procedure--allowing untimely served affidavit--abuse of discretion standard
The trial court did not abuse its discretion in a negligence and wrongful death case by
allowing and considering the untimely served affidavit of plaintiff over defendants' objection in a
hearing on defendants' motion to dismiss or to compel arbitration because: (1) the trial court took
such other action as the ends of justice required and proceeded with the hearing; and (2) the order
did not specifically state the trial court relied upon plaintiff's late filed affidavit.
2. Arbitration and Mediation--denial of motion to compel--unconscionability
The trial court erred in a negligence and wrongful death case by ruling the arbitration
clause in a contract between defendant assisted living facility and plaintiff, decedent's
responsibile party and executrix, was unconscionable based upon findings of fact wholly
unsupported by any competent evidence and by denying defendants' motion to compel
arbitration, because: (1) the trial court's finding that there was no independent negotiation on the
terms of the contract or the arbitration agreement was not supported by any competent evidence;
(2) plaintiff admitted she signed the agreement and stated she voluntarily entered into this
agreement with the facility; (3) contrary to the trial court's finding, the use of a standardized form
does not per se lead to unconscionability of the contract; (4) there was no evidence of lack of
mutual agreement or inequality of bargaining power; (5) the agreement to arbitrate was
prominently located on the last page of the contract in bold face type directly above plaintiff's
signature; (6) the provisions of the agreement to arbitrate were mutual and apply equally to all
parties; (7) the trial court's determination that the arbitration clause was unconscionable since it
deals with a matter of substantial important was not based upon any competent evidence and
does not overcome North Carolina's strong public policy presumption in favor of arbitration; and
(8) the agreement was clear and unambiguous.
Appeal by defendants from order entered 29 September 2005 by
Judge Ronald L. Stephens in Wake County Superior Court. Heard in
the Court of Appeals 13 November 2006.
Ferguson, Stein, Chambers, Gresham & Sumter, PA, by Adam Stein
and Henson & Fuerst, PA, by Robert Fuerst and Carmaletta L.
Henson, for plaintiff-appellee.
Bell, Davis & Pitt, P.A., by Alan M. Ruley and Michael D.
Phillips, for defendants-appellants.
Oliver House, LLC d/b/a The Oliver House (defendant Oliver
House), Wendell Health Investors, LLC, Third Street Management,
LLC, Agemark, LLC, Agemark Management, LLC, Agemark Management
Services, LLC, Charles E. Trefzger, Jr., and David S. Jones
(collectively, defendants) appeal from order entered denying
their motion to dismiss, or in the alternative, to compel
arbitration and to stay litigation. We reverse and remand.
Melba F. Raper (plaintiff) is the executrix of the Estate of
Willard O. Raper, deceased (decedent). Defendant Oliver House is
a residential assisted living facility where decedent lived.
On 1 September 2001, plaintiff signed a Residency and Services
Admission Agreement (the Agreement) as decedent's Responsible
Party. Under the Agreement, plaintiff was designated [the]
responsible party and hereby agree[d] to adhere to the provisions
contained herein and voluntarily enter[ed] into this agreement with
The Agreement contained an arbitration clause located directly
above plaintiff's signature in prominent, bold-faced print which
Arbitration. Any dispute or controversy
arising out of, or relating to this Agreement,
shall be settled by arbitration to be held in
Hickory, North Carolina, in accordance with
the rules of the American Arbitration
Association or its successors. The decision
of the arbitrator shall be conclusive and
binding on the parties to the arbitration.
Judgment may be entered on the arbitrator'sdecision in any court having jurisdiction, and
the Facility and the Resident shall
irrevocably consent to the jurisdiction of the
courts of the United States of America for the
Western District of the State of North
Carolina for this purpose. The prevailing
party in any arbitration shall be entitled to
recover from the nonprevailing party the costs
and expenses of maintaining such arbitration,
including reasonable attorneys' fees and
disbursements incurred before such arbitration
is commenced, during arbitration, and on
On 20 September 2004, plaintiff filed a complaint against
defendants alleging negligence, wrongful death, punitive damages,
and seeking to pierce the corporate veil. On 22 November 2004,
defendants filed a motion to dismiss for lack of subject matter
jurisdiction pursuant to Rule 12(b)(1) of the North Carolina Rules
of Civil Procedure, or in the alternative, to compel arbitration
and stay litigation pursuant to N.C. Gen. Stat. § 1-567.3.
On 31 August 2005, the trial court heard defendants' motion.
At the hearing, plaintiff submitted an affidavit in support of her
opposition to defendants' motion. Plaintiff failed to serve
defendants with this affidavit prior to the hearing on the motion.
Defendants objected to the admission of plaintiff's affidavit.
After the hearing, defendants submitted a written objection to the
untimely served affidavit wherein they renew[ed] for the record
their courtroom objection to the untimely service of the Affidavit
of Melba Raper by Plaintiff.
On 29 September 2005, the trial court entered an order that
concluded defendants' Agreement was unconscionable and void as
against public policy and denied defendants' motion to dismiss, orin the alternative, to compel arbitration and stay litigation.
Defendants argue the trial court erred by: (1) considering
the untimely served affidavit of plaintiff over their objection and
(2) denying their motion to compel arbitration on the basis of that
its findings of fact and conclusions of law were unsupported by
competent evidence in the record.
III. Plaintiff's Affidavit
Defendants argue the trial court erred when it allowed and
considered the untimely served affidavit of plaintiff over their
objection. We disagree.
A. Standard of Review
 The trial court's admission of an untimely served
affidavit under Rule 6(b) and (d) of the North Carolina Rules of
Civil Procedure is reviewed under an abuse of discretion. Lane v.
Winn-Dixie Charlotte, Inc., 169 N.C. App. 180, 184, 609 S.E.2d 456,
N.C. Gen. Stat. § 1A-1, Rule 6(d) (2005) states:
For motions, affidavits. -- A written motion,
other than one which may be heard ex parte,
and notice of the hearing thereof shall be
served not later than five days before the
time specified for the hearing, unless a
different period is fixed by these rules or by
order of the court. Such an order may for
cause shown be made on ex parte application.
When a motion is supported by affidavit, the
affidavit shall be served with the motion; and
except as otherwise provided in Rule 59(c),
opposing affidavits shall be served at leasttwo days before the hearing. If the opposing
affidavit is not served on the other parties
at least two days before the hearing on the
motion, the court may continue the matter for
a reasonable period to allow the responding
party to prepare a response, proceed with the
matter without considering the untimely served
affidavit, or take such other action as the
ends of justice require. For the purpose of
this two-day requirement only, service shall
mean personal delivery, facsimile
transmission, or other means such that the
party actually receives the affidavit within
the required time.
It is undisputed that plaintiff failed to serve her opposing
affidavit on defendants within two days prior to the trial court's
hearing on defendants' motion to dismiss, or in the alternative, to
compel arbitration. It is also undisputed that defendants objected
to the admission of plaintiff's affidavit before and after the
trial court's hearing.
The trial court did not abuse its discretion when it [took]
such other action as the ends of justice require and proceeded
with the hearing. N.C. Gen. Stat. § 1A-1, Rule 6(d); see Shopping
Center v. Insurance Corp., 52 N.C. App. 633, 641, 279 S.E.2d 918,
924 (Rule 6(d) allows discretion for the trial court to allow late
filing of affidavits), disc. rev. denied, 304 N.C. 196, 285 S.E.2d
101 (1981). The trial court's order stated, after having heard
the arguments of counsel, [the court] took this matter under
advisement; [and] after having reviewed the file and the briefs
submitted by the parties, entered its findings of fact and
conclusions of law. The order did not specifically state the trial
court relied upon plaintiff's late filed affidavit. The trialcourt exercised its discretion when it proceeded with the hearing.
This assignment of error is overruled.
IV. Motion to Compel Arbitration
 Defendants argue the trial court erred by ruling the
arbitration clause in the parties' contract was unconscionable
based upon findings of facts wholly unsupported by any competent
evidence and denied their motion to compel arbitration. We agree.
A. Standard of Review
An order denying defendants' motion to compel arbitration is
not a final judgment and is interlocutory. Tillman v. Commercial
Credit Loans, Inc., 177 N.C. App. 568, 571, 629 S.E.2d 865, 869
(2006). However, an order denying arbitration is immediately
appealable because it involves a substantial right, the right to
arbitrate claims, which might be lost if appeal is delayed. Id.
(citing Burke v. Wilkins, 131 N.C. App. 687, 688, 507 S.E.2d 913,
A dispute can only be settled by arbitration
if a valid arbitration agreement exists. The
party seeking arbitration must show that the
parties mutually agreed to arbitrate their
disputes. The trial court's findings
regarding the existence of an arbitration
agreement are conclusive on appeal where
supported by competent evidence, even where
the evidence might have supported findings to
the contrary. However, the trial court's
determination of whether a dispute is subject
to arbitration is a conclusion of law that is
reviewable de novo on appeal.
Revels v. Miss Am. Org., 165 N.C. App. 181, 188-89, 599 S.E.2d 54,
59 (internal citations and quotations omitted) (quoting Slaughter
v. Swicegood, 162 N.C. App. 457, 461, 591 S.E.2d 577, 580 (2004)),disc. rev. denied, 359 N.C. 191, 605 S.E.2d 153 (2004); see
Pineville Forest Homeowners v. Portrait, 175 N.C. App. 380, 385-86,
623 S.E.2d 620, 624 (2006) (The question of whether a dispute is
subject to arbitration is a question of law for the trial court,
and its conclusion is reviewable de novo.).
Defendants argue the trial court erred in holding the
arbitration agreement was unconscionable and by denying their
motion to compel arbitration. North Carolina has a strong public
policy favoring arbitration. Red Springs Presbyterian Church v.
Terminix Co., 119 N.C. App. 299, 303, 458 S.E.2d 270, 273 (1995).
The essential thrust of the Federal Arbitration Act, which is in
accord with the law of our state, is to require the application of
contract law to determine whether a particular arbitration
agreement is enforceable; thereby placing arbitration agreements
'upon the same footing as other contracts.' Futrelle v. Duke
University, 127 N.C. App. 244, 247-48, 488 S.E.2d 635, 638 (quoting
Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687, 134 L.
Ed. 2d 902, 909 (1996)), disc. rev. denied, 347 N.C. 398, 494
S.E.2d 412 (1997).
Unconscionability is an affirmative defense and the party
asserting the defense bears the burden of proof. Rite Color
Chemical Co. v. Velvet Textile Co., 105 N.C. App. 14, 20, 411
S.E.2d 645, 649 (1992). In assessing unconscionability, a court is
to consider all the facts and circumstances of a particular case.
Brenner v. School House, Ltd., 302 N.C. 207, 213, 274 S.E.2d 206,210 (1981). This Court has previously held, [t]o find
unconscionability there must be an absence of meaningful choice on
part of one of the parties [procedural unconscionability] together
with contract terms which are unreasonably favorable to the other
[substantive unconscionability]. Martin v. Sheffer, 102 N.C. App.
802, 805, 403 S.E.2d 555, 557 (1991).
Procedural unconscionability involves
bargaining naughtiness in the formation of
the contract, i.e., fraud, coercion, undue
influence, misrepresentation, inadequate
disclosure. Substantive unconscionability . .
. involves the harsh, oppressive, and one-
sided terms of a contract, i.e., inequality of
the bargain. The inequality of the bargain,
however, must be so manifest as to shock the
judgment of a person of common sense, and . .
. the terms . . . so oppressive that no
reasonable person would make them on the one
hand, and no honest and fair person would
accept them on the other.
King v. King, 114 N.C. App. 454, 458, 442 S.E.2d 154, 157 (1994)
A party may condition its willingness to enter into a contract
with another party upon the agreement to resolve any dispute
arising from their contractual relationship through arbitration.
In the absence of any evidence of bad faith, inequality, or lack of
mutuality described above, the inclusion of an agreement to
arbitrate is neither procedurally or substantively unconscionable.
Id.; see Setzer v. Insurance Co., 257 N.C. 396, 401, 126 S.E.2d
135, 139 (1962) ([W]here no trick or device had prevented a person
from reading the paper which he has signed or has accepted as the
contract prepared by the other party, his failure to read when he
had the opportunity to do so will bar his right to reformation.). A party may refuse to enter into a contract containing a provision
or condition to arbitrate any disputes arising therefrom. See
Biesecker v. Biesecker, 62 N.C. App. 282, 285, 302 S.E.2d 826, 828-
29 (1983) ([A] person signing a written instrument is under a duty
to read it for his own protection, and ordinarily is charged with
knowledge of its contents. Nor may he predicate an action for
fraud on his ignorance of the legal effect of its terms.).
The interpretation of the terms of an arbitration agreement
are governed by contract principles and parties may specify by
contract the rules under which arbitration will be conducted.
Trafalgar House Construction v. MSL Enterprises, Inc., 128 N.C.
App. 252, 256, 494 S.E.2d 613, 616 (1998).
Persons entering contracts . . . have a duty to read them and
ordinarily are charged with knowledge of their contents.
Nationwide Mut. Insur. Co. v. Edwards, 67 N.C. App. 1, 8, 312
S.E.2d 656, 661 (1984). Long ago, our Supreme Court stated, the
law will not relieve one who can read and write from liability upon
a written contract, upon the ground that he did not understand the
purport of the writing, or that he has made an improvident
contract, when he could inform himself and has not done so.
Leonard v. Power Co., 155 N.C. 10, 14, 70 S.E. 1061, 1063 (1911).
The trial court found and concluded defendants' arbitration
clause to be unconscionable and unenforceable due to the
combination of: (1) the contract presented to [plaintiff] was a
standardized form used by the Oliver House facility; (2) [t]here
was no independent negotiation between the parties as to the termsof that contract; (3) there was no independent negotiation
between the parties as to the Arbitration provision contained
therein; (4) the arbitration agreement was signed without mutual
agreement or understanding between the parties as to the terms of
that agreement; (5) there was an inequity of bargaining power
between [plaintiff] and The Oliver House; (6) this contract
relates to a matter of substantial public interest, long term care
for the elderly; and (7) the arbitration agreement does not make
clear who is bound by the terms of that contract, as it in no place
refers to anyone other than [plaintiff] by name.
The trial court erred in concluding the arbitration clause was
unconscionable. The trial court's finding that there was no
independent negotiation on the terms of the contract or the
arbitration agreement is not supported by any competent evidence.
Plaintiff admitted she signed the Agreement and stated she
voluntarily enter[ed] into this agreement with the facility. See
Sciolino v. TD Waterhouse Investors Servs., Inc., 149 N.C. App.
642, 645, 562 S.E.2d 64, 66 (The apparent requirement for
independent negotiation underscores the importance of an
arbitration provision and militates against its inclusion in
contracts of adhesion. (internal quotation omitted)), disc. rev.
denied, 356 N.C. 167, 568 S.E.2d 611 (2002). The trial court also
erred in finding the use of a standardized form per se by the
parties led to unconscionability of the contract.
The trial court erred in concluding the arbitration clause was
unconscionable because of a lack of mutual agreement or inequalityof bargaining power. Plaintiff's proffered affidavit stated she
met with representatives of the Oliver House on September 1, 2001,
in order to sign all of the documents necessary for Mr. Raper's
admission to the Oliver House. Plaintiff also signed the
Agreement and stated she voluntarily enter[ed] into this agreement
with the Facility.
The agreement to arbitrate is prominently located on the last
page of the contract in bold face type, directly above plaintiff's
signature. The provisions of the agreement to arbitrate are mutual
and apply equally to all parties. The trial court's findings are
not supported by any competent evidence and these unsupported
findings of fact do not support a conclusion of unconscionability.
The trial court's determination that the arbitration clause is
unconscionable because it deals with a matter of substantial
importance is not based upon any competent evidence and does not
overcome North Carolina's strong public policy presumption in favor
of arbitration. See Red Springs Presbyterian Church, 119 N.C. App.
at 303, 458 S.E.2d at 273 (North Carolina has a strong public
policy favoring arbitration.).
The trial court's finding of fact that the Agreement fails to
clearly state who is bound is not supported by any competent
evidence. The Agreement is clear, unambiguous, and names the
decedent, plaintiff, and defendant Oliver House as parties. The
trial court entered an uncontested finding of fact that plaintiff
held decedent's power of attorney. Plaintiff signed the Agreementas the Responsible Party. Defendants' motion sought to enforce
the arbitration clause and Agreement against plaintiff.
It is well established that a contract is enforceable against
a party who signs the contract. Love v. Harris, 156 N.C. 88, 91,
72 S.E. 150, 151 (1911). Plaintiff signed the Agreement as the
Responsible Party and as decedent's attorney-in-fact. The
Agreement and its arbitration clause is enforceable and provides an
arbitral forum to resolve all claims or disputes arising under the
parties' contract. This Court has also stated:
In the arbitration context, the doctrine
recognizes that a party may be estopped from
asserting that the lack of his signature on a
written contract precludes enforcement of the
contract's arbitration clause when he has
consistently maintained that other provisions
of the same contract should be enforced to
benefit him. To allow [a plaintiff] to claim
the benefit of the contract and simultaneously
avoid its burdens would both disregard equity
and contravene the purposes underlying
enactment of the Arbitration Act.
Ellen v. A.C. Schultes of Maryland, Inc., 172 N.C. App. 317, 321,
615 S.E.2d 729, 732 (2005) (citations omitted), disc. rev. and
cert. denied, 360 N.C. 575, 635 S.E.2d 430 (2006).
The plain and clear language of the contract requires
arbitration and mutually binds all parties to an arbitral forum to
resolve disputes. The trial court's finding that the agreement was
unclear and ambiguous regarding who would be bound by the terms is
irrelevant and not determinative of whether the agreement is
unconscionable. The trial court's findings of fact are unsupported by any
competent evidence. The trial court erroneously concluded the
arbitration clause was unconscionable.
Rule 6(d) provides the trial court with discretion to proceed
with the hearing after plaintiff untimely submitted her affidavit.
The trial court's order does not state it considered plaintiff's
affidavit in its ruling.
The trial court's findings of fact are unsupported by any
competent evidence. The trial court erroneously concluded as a
matter of law the arbitration clause was unconscionable. We
reverse and remand to the trial court for entry of an order
granting defendants' motion to compel arbitration.
Reversed and Remanded.
Chief Judge MARTIN and Judge CALABRIA concur.
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