June 11, 2020- Lee Hunt v. The Rio at Rust Centre, LLC, No. A-1-CA-37902

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO	1
Opinion Number: _____________	2
Filing Date: JUNE 11, 2020	3
No. A-1-CA-37406 and A-1-CA-37902	4
(consolidated for purpose of opinion)	5
LEE HUNT, as Personal Representative	6
of the WRONGFUL DEATH ESTATE OF	7
SUI YAN, Deceased,	8
Plaintiff-Appellee,	9
v.	10
THE RIO AT RUST CENTRE, LLC, a	11
for-profit New Mexico company, d/b/a	12
THE RIO AT CABEZON; ONPOINTE	13
BUSINESS SERVICES, LLC, a for-profit	14
Texas company; and RCZ MANAGEMENT,	15
LLC, a for-profit Texas company,	16
Defendants-Appellants,	17
and	18
IPC HOSPITALISTS OF NEW MEXICO,	19
INC., a for-profit New Mexico company,	20
Defendant.	21
APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY	22
Francis J. Mathew, District Judge	23
Court of Appeals of New Mexico
Filed 6/11/2020 11:30 AM

McGinn, Montoya, Love & Curry, PA	1
Kathy J. Love	2
Katie Curry	3
Michael E. Sievers	4
Albuquerque, NM	5
for Appellee	6
Modrall, Sperling, Roehl, Harris & Sisk, P.A.	7
Michelle A. Hernandez	8
Tomas J. Garcia	9
Albuquerque, NM	10
The Checkett Law Firm, PLLC	11
Paul J. Sheston	12
Scottsdale, AZ	13
for Appellants	14

OPINION	1
HANISEE, Chief Judge.	2
{1} 	This opinion consolidates two appeals arising from a single cause of action in	3
district court brought by Lee Hunt (Plaintiff), personal representative of the wrongful	4
death estate of Sui Yan (Decedent), against The Rio at Rust Center, LLC (The Rio),	5
a Rio Rancho skilled nursing facility, OnPointe Business Services, LLC (OnPointe)	6
and RCZ Management, LLC (RCZ), the management/employment entities1 for The	7
Rio (collectively, Defendants) following Decedent’s death while in Defendants’	8
care. Both appeals raise questions related to arbitrability. Specifically, (1) did the	9
arbitration agreement between Decedent and The Rio contain a valid delegation	10
clause such that the threshold questions of arbitrability should have been left to the	11
arbitrator?; and (2) were the arbitration provisions in either or both the admissions	12
agreement or the arbitration agreement unconscionable under New Mexico case	13
law? In the first appeal, OnPointe and RCZ challenge the district court’s order	14
granting 	partial 	summary 	judgment 	to 	Plaintiff 	based 	upon 	its 	rejection 	of	15
Defendants’ affirmative defense regarding arbitration, which asserted that the	16
district court “lack[ed] subject matter jurisdiction as a result of an enforceable	17
arbitration agreement[.]” In the second appeal, The Rio appeals the district court’s	18
1 RCZ is an independently contracted management company that handles the
day-to-day operations of The Rio. OnPointe is an affiliate of RCZ that acts as an
employee leasing entity.

2
order denying its motion to compel arbitration. We affirm the district court’s orders	1
in both appeals.	2
FACTUAL BACKGROUND	3
{2} 	Following Decedent’s hip fracture, corrective surgery, and rehabilitation, she	4
and her family hoped Decedent could return to living with her son, Stephan Yan, as	5
soon as possible. However, the Yan family understood that a prerequisite to	6
Decedent qualifying for home healthcare, which she needed since she was no longer	7
able to move freely or take care of herself without falling, was admission to a	8
rehabilitation facility for 90 to 100 consecutive days. The Yan family learned that	9
The Rio was accepting new admissions when other such facilities were not at that	10
time. The family was eager for Decedent to be admitted to The Rio rather than being	11
discharged from the facility overseeing her initial recovery and rehabilitation,	12
because any gap in Decedent’s admission status would permanently disqualify her	13
for in-home healthcare and rehabilitation services under Medicare/Medicaid.	14
{3} 	On Friday, October 30, 2015, Decedent was admitted to The Rio to continue	15
her recovery. When she arrived, admissions staff did not ask Decedent to read and	16
sign the necessary admissions paperwork or review it with her, despite there being	17
no information suggesting that Decedent was incompetent or otherwise unable to	18
understand or sign such documentation. Rather, admissions staff was aware that	19
Decedent’s primary language was Cantonese and she had only limited fluency in	20
English. For such circumstances, however, The Rio had an interpreter hotline,	21

3
including personnel able to speak Cantonese. Yet in this instance, The Rio’s staff	1
did not use this dedicated resource to communicate with Decedent, and instead	2
sought signatures from Decedent’s daughter, Cathy Yan, who possessed a power of	3
attorney for Decedent. In that capacity, Cathy occasionally signed documents on	4
behalf of Decedent, and usually with Decedent present so that Decedent could	5
understand what Cathy was signing on Decedent’s behalf, ask any questions she	6
might have, and so Cathy could translate for Decedent what medical providers said.	7
{4} 	On a typical day, the admissions assistant of The Rio, Alexis Elizondo,	8
reviewed admissions paperwork with three to seven residents or family members.	9
Ms. Elizondo would mark beforehand all the locations in the agreement that had to	10
be signed or initialed. Nicole Balido, the admissions director who trained Ms.	11
Elizondo, confirmed that when reviewing admission paperwork with residents or	12
family members, staff members would go through agreements and ask residents to	13
“initial, initial, [and] sign.” Ms. Balido also acknowledged that she and Ms. Elizondo	14
would “paraphrase” rather than read portions of the agreement verbatim. Ms.	15
Elizondo claimed that she would go through the boldfaced type in the admission	16
agreement with residents or family members and summarize it in her own words.	17
Neither Ms. Balido nor Ms. Elizondo had formal training, or training from lawyers,	18
about the admissions agreement or the implication of its terms, nor did either possess	19
authority to negotiate any of its terms.	20

4
{5} 	Per 	The 	Rio’s 	policy, 	the 	admissions 	agreement—a 	standardized, pre-	1
prepared contract—had to be signed within forty-eight to seventy-two hours of a	2
patient’s arrival, including weekends. If a resident refused to sign the agreement, the	3
resident would be discharged from the facility. Accordingly, the admissions	4
assistant, Ms. Elizondo, called Cathy to inform her that, as Decedent’s power of	5
attorney, Cathy needed to travel to New Mexico as soon as possible to sign the	6
admissions paperwork, and that if Cathy did not sign the paperwork authorizing her	7
mother’s care, Decedent would be discharged. Because Cathy lived in Tucson,	8
Arizona at the time, she drove to Albuquerque on Sunday, November 1, 2015, so	9
that she could be present to sign the admissions agreement on Monday morning.	10
{6} 	Cathy visited Decedent on Sunday evening at The Rio, but she did not speak	11
with the admissions personnel, nor was she given any paperwork. The next day,	12
Monday, November 2, 2015, Cathy met Ms. Elizondo to sign the admissions	13
paperwork in the morning, and the meeting lasted less than fifteen minutes. The	14
thirty-page admission agreement Cathy was provided to initial and sign included an	15
“optional” four-page “Agreement Regarding the Resolution of Legal Disputes and	16
Waiver of Right to Jury Trial” (the Arbitration Agreement), and the signature page	17
of that Arbitration Agreement stated that it “May Be Revoked By Sending Written	18
Notice To The Facility Within Ten (10) Days After Signature.” However, Section	19
22 of the admissions agreement also contained an additional, conflicting, arbitration	20
provision, which was not optional and mandated the arbitration of all disputes	21

5
between the resident and The Rio. Furthermore, although Defendants maintain that	1
the Arbitration Agreement was optional, the vice president of operations for	2
OnPointe—an entity with a management agreement for The Rio—reported that the	3
Arbitration Agreement had never been questioned, revoked, or refused by any	4
resident or family member. Moreover, at no point was Decedent, as the resident,	5
involved in the discussion or shown the admissions agreement, and it was Cathy’s	6
understanding that The Rio required that she alone, as power of attorney, be the one	7
to sign the paperwork.	8
{7} 	Cathy explained that she felt rushed when she signed the paperwork, but she	9
understood that the admissions agreements had to be signed for Decedent to remain	10
at The Rio, and she did not want her mother to become permanently ineligible for	11
in-home rehabilitation services if Decedent was discharged. Ms. Elizondo did not	12
spend significant time explaining the four-page Arbitration Agreement, nor did she	13
ask if Cathy understood what arbitration is. Ms. Elizondo also did not in any way	14
highlight or emphasize Section 22, the separate and non-optional binding arbitration	15
clause that is standard in all of The Rio’s admission agreements.	16
{8} 	With the admissions paperwork complete, Decedent lived at The Rio from	17
late-October 2015 to mid-February 2016. During her time at The Rio, her health	18
deteriorated, she lost almost twenty pounds, she fell on several occasions, and she	19
suffered a severe pressure ulcer on her sacrum such that the bone was exposed. On	20
February 21, 2016, Decedent was transferred from The Rio to the emergency	21

6
department at the adjacent Rust Medical Center, a hospital, where she was diagnosed	1
with a severely advanced pressure ulcer. Due to her declining, and then incurable	2
physical condition, Decedent was discharged home to receive palliative care during	3
her final days. She passed away on March 3, 2016.	4
PROCEDURAL HISTORY	5
{9} 	Plaintiff, as personal representative of Decedent’s estate, filed a wrongful	6
death suit alleging multiple claims related to the nursing care and treatment Decedent	7
received at The Rio. The Rio filed a motion to compel arbitration, as to which RCZ	8
and OnPointe filed a “notice of joinder.” Plaintiff opposed the joinder as improper	9
under Rule 1-007 NMRA and separately filed a motion for partial summary	10
judgment asking the district court to declare that RCZ and OnPointe were not	11
entitled to enforce the Arbitration Agreement in Decedent’s admission contract with	12
the Rio because those Defendants were not parties to nor third-party beneficiaries of	13
the Arbitration Agreement. The district court granted Plaintiff’s motion for partial	14
summary judgment, concluding as a matter of law that neither RCZ nor OnPointe	15
had a right to enforce the Arbitration Agreement. The district court also denied The	16
Rio’s motion to compel arbitration, finding that the Arbitration Agreement was	17
unenforceable because it was substantively and procedurally unconscionable, and	18
because it was not supported by independent consideration. Defendants appeal the	19
district court’s orders, pursuant to NMSA 1978, Section 44-7A-29(a)(1) (2001)	20

7
(stating that “[a]n appeal may be taken from . . . an order denying a motion to compel	1
arbitration”).	2
DISCUSSION	3
{10} 	In their appeal, OnPointe and RCZ contend that although they are not	4
specifically named in the Arbitration Agreement, they are parties or third-party	5
beneficiaries entitled to enforcement of the Arbitration Agreement. We need not	6
resolve this issue, however, because even assuming without deciding that OnPointe	7
and RCZ were parties or third-party beneficiaries to the Arbitration Agreement, we	8
nevertheless conclude that the manner in which arbitration was presented to Cathy	9
was procedurally unconscionable and affirm the district court’s denial of The Rio’s	10
motion to compel arbitration on that basis. See Rivera v. Am. Gen. Fin. Servs., Inc.,	11
2011-NMSC-033, ¶ 47, 150 N.M. 398, 259 P.3d 803 (“Under New Mexico	12
principles of contract law, a finding of unconscionability may be based on either	13
procedural or substantive unconscionability, or a combination of both.”); Cordova	14
v. World Fin. Corp. of N.M., 2009-NMSC-021, ¶ 24, 146 N.M. 256, 208 P.3d 901	15
(“While 	there 	is 	a 	greater 	likelihood 	of 	a 	contract’s 	being 	invalidated 	for	16
unconscionability if there is a combination of both procedural and substantive	17
unconscionability, there is no absolute requirement in our law that both must be	18
present to the same degree or that they both be present at all.”). Before explaining	19
our unconscionability analysis, we first address a question that Defendants in both	20
appeals raise—whether there was a valid delegation clause in the Arbitration	21

8
Agreement such that the questions of arbitrability should have been delegated to the	1
arbitrator.	2
I. 	The 	Threshold 	Questions 	of 	Arbitrability 	Were 	Not 	Specifically	3
Delegated to the Arbitrator	4
{11} 	Defendants contend that there is a valid delegation clause in the Arbitration	5
Agreement, and that the district court erred by not delegating the interpretation of	6
the Arbitration Agreement to the arbitrator. Specifically, RCZ and OnPointe argue	7
that the question of whether they were entitled to enforce the Arbitration Agreement	8
fell within the scope of the delegation clause, and The Rio argued that the validity	9
and enforceability of the Arbitration Agreement should have been decided by an	10
arbitrator. We disagree.	11
{12} 	“Arbitration agreements are a species of contract, subject to the principles of	12
New Mexico contract law.” L.D. Miller Constr., Inc. v. Kirschenbaum, 2017-	13
NMCA-030, ¶ 18, 392 P.3d 194. “Accordingly, we apply New Mexico contract law	14
in [the] interpretation and construction of the [a]rbitration [a]greement.” Id. We	15
review questions of contractual interpretation de novo, Thompson v. Potter, 2012-	16
NMCA-014, ¶ 12, 268 P.3d 57, and our task is to determine the meaning of the words	17
in the arbitration agreement and their legal impact. See Kirschenbaum, 2017-	18
NMCA-030, ¶ 18.	19
{13} 	“The general rule is that the arbitrability of a particular dispute is a threshold	20
issue to be decided by the district court unless there is clear and unmistakable	21

9
evidence that the parties decided otherwise under the terms of their arbitration	1
agreement.” Felts v. CLK Mgmt., Inc. (Felts I), 2011-NMCA-062, ¶ 17, 149 N.M.	2
681, 254 P.3d 124 (emphasis added), aff’d on other grounds, Felts v. CLK Mgmt.,	3
Inc. (Felts II), 2012 WL 12371462 (Nos. 33,011, 33,013, Aug. 23, 2012) (dec.); see	4
Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 68-69 (2010) (“We have recognized	5
that parties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as	6
whether the parties have agreed to arbitrate or whether their agreement covers a	7
particular controversy.”); First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938,	8
944 	(1995) 	(“Courts 	should 	not 	assume 	that 	the 	parties 	agreed 	to 	arbitrate	9
arbitrability unless there is clear and unmistakable evidence that they did so.”	10
(alterations, internal quotation marks, and citation omitted)); AT&T Techs., Inc. v.	11
Commc’ns Workers of Am., 475 U.S. 643, 649 (1986) (“Unless the parties clearly	12
and unmistakably provide otherwise, the question of whether the parties agreed to	13
arbitrate is to be decided by the court, not the arbitrator.” (emphasis added)). This	14
position is further embraced by New Mexico’s Uniform Arbitration Act, NMSA	15
1978, §§ 44-7A-1 to -32 (2001), which provides that the court shall determine	16
whether 	there 	is 	an 	enforceable 	agreement 	to 	arbitrate 	and 	issue 	an 	order	17
accordingly. Section 44-7A-8.	18
{14} 	Moreover, even though the parties’ agreement is also subject to the Federal	19
Arbitration Act (FAA), we explained in Felts I that “although the FAA has limited	20
the role of courts in the arbitration context, certain gateway issues involving	21

10
arbitration provisions have remained within the purview of judicial review.” 2011-	1
NMCA-062, ¶ 17. These gateway arbitrability issues include matters such as the	2
“validity of an arbitration provision, the scope of an arbitration provision, or whether	3
an arbitration agreement covers a particular controversy.” Id.; see Strausberg v.	4
Laurel 	Healthcare 	Providers, 	LLC, 	2013-NMSC-032, 	¶ 52, 	304 	P.3d 	409	5
(“Congress did not, however, intend the FAA to entirely displace state law governing	6
contract formation and enforcement. Courts may invalidate arbitration agreements	7
through the application of generally applicable contract defenses, such as fraud,	8
duress, or unconscionability, without violating the FAA.” (internal quotation marks	9
and citations omitted)). Yet as has the United States Supreme Court, we too have	10
previously recognized that although questions of arbitrability are typically for the	11
courts to decide, the parties can agree to arbitrate these gateway questions, and where	12
there is “clear and unmistakable” intent to have these issues decided by the arbitrator	13
rather than the court, the delegation provision should be upheld. Felts I, 2011-	14
NMCA-062, ¶ 18 (internal quotation marks and citation omitted). Such a delegation	15
provision 	is 	“simply 	an 	additional, 	antecedent 	agreement 	the 	party 	seeking	16
arbitration asks the . . . court to enforce.” Id. (internal quotation marks and citation	17
omitted). And so, the question we must answer is whether the arbitration provision	18
here included “clear and unmistakable evidence of a delegation clause requiring that	19
questions of arbitrability regarding the validity of the arbitration provision be	20
submitted to an arbitrator.” Id. ¶ 21.	21

11
{15} 	The answer in this instance is no. The clause in the arbitration agreement that	1
Defendants claim constitutes such a delegation provides that “[a]ny disputes	2
regarding the interpretation of this [a]greement shall be submitted to arbitration.”	3
Although the clause provides that disputes regarding the interpretation of the	4
agreement should be delegated to an arbitrator, the arbitration agreement fails to	5
specify that distinct threshold questions of arbitrability (i.e. questions about the	6
validity, enforceability, or scope of the arbitration agreement) should also be	7
resolved by an arbitrator. See id. ¶ 22 (stating that “courts must interpret the	8
provisions of an arbitration agreement according to the rules of [state] contract law	9
and apply the plain meaning of the contract language in order to give effect to the	10
parties’ agreement” (alteration, internal quotation marks, and citation omitted)).	11
Because the Arbitration Agreement is silent or at most ambiguous about who should	12
decide 	arbitrability—a 	question 	distinct 	from 	interpretational 	analyses—we	13
conclude that the court, and not an arbitrator, bore the authority to decide that issue.	14
We will not “interpret silence or ambiguity on the ‘who should decide arbitrability’	15
point as giving the arbitrators that power, for doing so might too often force	16
unwilling parties to arbitrate a matter they reasonably would have thought a judge,	17
not an arbitrator, would decide.” First Options of Chicago, Inc., 514 U.S. at 945	18
(internal quotation marks omitted); see Heye v. Am. Golf Corp., Inc., 2003-NMCA-	19
138, ¶ 14, 134 N.M. 558, 80 P.3d 495 (interpreting an arbitration agreement under	20
rules of state contract law and stating that when an agreement to arbitrate is	21

12
ambiguous, “[w]e construe ambiguities . . . against the drafter to protect the rights	1
of the party who did not draft” the agreement).	2
{16} 	Defendants rely heavily on Rent-A-Center for the proposition that the United	3
States Supreme Court allows parties to agree to arbitrate “gateway” questions of	4
arbitrability. See 561 U.S. at 68-69. True, but the arbitration clause at issue in Rent-	5
A-Center specified that “the [a]rbitrator, and not any federal, state, or local court or	6
agency, shall have exclusive authority to resolve any dispute relating to the	7
interpretation, 	applicability, 	enforceability 	or 	formation 	of 	this 	[a]greement	8
including, but not limited to any claim that all or any part of this [a]greement is void	9
or voidable.” Id. at 66 (emphasis added) (alteration, internal quotation marks, and	10
citation omitted). The Court construed that language as an explicit delegation to the	11
arbitrator to decide whether the arbitration agreement was unconscionable. Id. at 65.	12
In the present case, by contrast, there is no such specificity in the purported	13
delegation 	clause 	demonstrating 	a 	“clear 	and 	unmistakable” 	intent 	to 	have	14
arbitrability decided by the arbitrator instead of the court. We interpret the wording	15
of the clause to be, at best, ambiguous, and therefore, the clause does not “clearly	16
and unmistakably” provide that the threshold question of arbitrability should be	17
decided by arbitrator. Accordingly, such was properly subject to independent review	18
by the district court. See Felts I, 2011-NMCA-062, ¶ 17; see also First Options, 514	19
U.S. at 947; Salazar v. Citadel Commc’ns Corp., 2004-NMSC-013, ¶ 8, 135 N.M.	20

13
447, 90 P.3d 466 (stating “a prerequisite to compelling arbitration is the existence of	1
a valid agreement to arbitrate”).	2
II. 	The District Court Did Not Err in Denying The Rio’s Motion to Compel	3
Arbitration	4
{17} 	Defendants contend that the district court erred in denying The Rio’s motion	5
to compel arbitration and in its findings and conclusions stating that the Arbitration	6
Agreement lacked independent consideration, and that it was substantively and	7
procedurally unconscionable. We conclude that the Arbitration Agreement was	8
procedurally unconscionable.	9
{18} 	We review a district court’s denial of a motion to compel arbitration de novo.	10
Cordova, 2009-NMSC-021, ¶ 11. Similarly, we evaluate the legal question of	11
whether an arbitration agreement is unconscionable de novo. Id. Neither Plaintiff	12
nor Defendants challenge the district court’s findings of fact, and consequently, we	13
accept them as true. See Seipert v. Johnson, 2003-NMCA-119, ¶ 26, 134 N.M. 394,	14
77 P.3d 298 (“An unchallenged finding of the trial court is binding on appeal.”).	15
Additionally, while we acknowledge federal and state policy favoring arbitration,	16
which Defendants highlight as foundational, we emphasize that state contract law	17
also applies to arbitration agreements, and even the FAA permits arbitration	18
agreements to be invalidated by generally applicable contract defenses such as	19
unconscionability, which state law governs. See Cordova, 2009-NMSC-021, ¶¶ 36-	20
38 (holding that the FAA does not preclude our examination of the enforceability of	21

14
an arbitration agreement based on New Mexico’s generally applicable doctrine of	1
contractual unconscionability).	2
{19} 	“Unconscionability is an equitable doctrine, rooted in public policy, which	3
allows courts to render unenforceable an agreement that is unreasonably favorable	4
to one party while precluding a meaningful choice of the other party.” Id. ¶ 21.	5
Procedural unconscionability “relates to procedural deficiencies in the contract	6
formation process, such as deception or a refusal to bargain over contract terms,	7
today often analyzed in terms of whether the imposed-upon party had meaningful	8
choice about whether and how to enter into the transaction.” 8 Samuel Williston &	9
Richard A. Lord, Williston on Contracts § 18:10 (4th ed. 2019).	10
{20} 	“Procedural unconscionability may be found where there was inequality in the	11
contract formation.” State ex rel. King v. B & B Inv. Grp., Inc., 2014-NMSC-024,	12
¶ 27, 329 P.3d 658. A contract is procedurally unconscionable “only where the	13
inequality is so gross that one party’s choice is effectively non-existent.” Guthmann	14
v. LaVida Llena, 1985-NMSC-106, ¶ 18, 103 N.M. 506, 709 P.2d 675, overruled on	15
other 	grounds 	by 	Cordova, 	2009-NMSC-021, ¶ 	21. 	Whether 	a party has 	a	16
meaningful choice is “determined by examining the circumstances surrounding the	17
contract formation, including the particular party’s ability to understand the terms of	18
the contract and the relative bargaining power of the parties.” Guthmann, 1985-	19
NMSC-106, ¶ 16. Accordingly, when we evaluate whether an arbitration agreement	20
is procedurally unconscionable, we look beyond the four corners of the contract and	21

15
examine “the particular factual circumstances surrounding the formation of the	1
contract, including the [(1)] relative bargaining strength[; (2)] sophistication of the	2
parties[;] and [(3)] the extent to which either party felt free to accept or decline terms	3
demanded by the other.” Cordova, 2009-NMSC-021, ¶ 23; see City of Raton v.	4
Arkansas River Power Auth., 760 F. Supp. 2d 1132, 1154 (D.N.M. 2009) (“In	5
analyzing whether a contract or a term in a contract is procedurally unconscionable,	6
New Mexico courts consider several factors, including the use of high pressure	7
tactics, the relative scarcity of the subject matter of the contract, and the relative	8
education, sophistication and wealth of the parties.” (citing Guthmann, 1985-	9
NMSC-106)).	10
{21} 	Furthermore, we also consider “whether the agreement is a contract of	11
adhesion, i.e., a standardized contract offered by a transacting party with superior	12
bargaining strength to a weaker party on a take-it-or-leave-it basis, without	13
opportunity for bargaining.” Strausberg, 2013-NMSC-032, ¶ 35 (internal quotation	14
marks and citation omitted). “Adhesion contracts generally warrant heightened	15
judicial scrutiny because the drafting party is in a superior bargaining position.”	16
Rivera, 	2011-NMSC-033, 	¶ 	44. 	“Although 	not 	all 	adhesion 	contracts 	are	17
unconscionable, 	an 	adhesion 	contract 	is 	procedurally 	unconscionable 	and	18
unenforceable ‘when the terms are patently unfair to the weaker party.’ ” Id. (quoting	19
Cordova, 2009-NMSC-021, ¶ 33). While unfairness to a party is more typically a	20
matter that relates to substantive unconscionability, our Supreme Court recognizes	21

16
its applicability in the procedural context as relates to adhesion contracts. See, e.g.,	1
Peavy v. Skilled Healthcare Group., Inc., ___-NMSC-___, ¶ 11, ___ P.3d ___ (No.	2
S-1-SC-37370, Apr. 6, 2020) (“Substantive unconscionability concerns the legality	3
and fairness of the contract terms themselves.” (internal quotation marks and citation	4
omitted)).	5
{22} 	Against this legal framework, Plaintiff first concedes that Cathy is a relatively	6
sophisticated party, considering that she is a business woman who engages with	7
various 	contracts and 	holds 	a bachelor’s 	degree in business 	accounting 	and	8
management. 	However, 	Plaintiff 	contends 	the 	two 	remaining 	factors 	in 	the	9
procedural unconscionability analysis—the relative bargaining strength and the	10
extent to which a party felt free to accept or decline terms demanded by the other—	11
overwhelmingly favor Plaintiff because there was gross inequality in the parties’	12
bargaining strength and neither Decedent nor Cathy were “free to accept or decline	13
the terms of the agreement.”	14
{23} 	In this case, the district court made undisputed findings regarding the	15
inequality of the parties’ bargaining power. The court found that The Rio’s	16
admissions agreement was a “pre-prepared contract” or a “standardized contract”	17
used for all its residents that “must be signed in order to move forward with [a]	18
resident’s treatment” and that “[i]f a resident refused to sign the admission	19
agreement, the resident would be discharged from the facility.” The district court	20
further found that The Rio had “superior bargaining strength over the resident, or the	21

17
resident’s representative, a weaker party, offering an agreement on essentially a	1
take-it-or-leave-it 	basis, 	without 	a 	real 	opportunity 	for 	bargaining.” 	These	2
unchallenged factual findings are binding on appeal. Seipert, 2003-NMCA-119,	3
¶ 26. In any case, our review of the record, including the admissions agreement,	4
confirms that in this instance The Rio had vastly superior bargaining power	5
compared to Cathy and that the contract is one of adhesion, warranting heightened	6
judicial scrutiny. See Rivera, 2011-NMSC-033, ¶ 44.	7
{24} 	It is not enough that the parties’ bargaining power was unequal, however; we	8
must evaluate whether the inequality was so gross that the party’s choice was	9
rendered 	effectively 	non-existent 	before 	concluding 	that 	the 	contract 	was	10
procedurally unconscionable. See Guthmann, 1985-NMSC-106, ¶ 18; 8 Williston,	11
supra, § 18:10 (stating that procedural unconscionability is “today often analyzed in	12
terms of whether the imposed-upon party had [a] meaningful choice about whether	13
and how to enter into the transaction”). In this inquiry, we look to additional factual	14
circumstances surrounding the formation of the contract, such as the extent to which	15
Decedent and Cathy were free to accept or decline terms of the agreement, as well	16
as the use of high pressure tactics and the relative scarcity of the subject matter of	17
the contract.	18
{25} 	We note initially that the Yan family was faced with an urgent need to place	19
Decedent in a rehabilitation facility in order to avoid a gap in her admission status	20
so that Decedent would not be foreclosed from receiving needed in-home healthcare	21

18
down the road. As well, the record establishes that other facilities were not accepting	1
admissions. These facts bear upon whether Decedent and Cathy had a meaningful	2
choice as to whether to accept the terms offered by The Rio. Cf. Guthmann, 1985-	3
NMSC-106, ¶¶ 17-19 (rejecting the plaintiff’s argument that no meaningful choice	4
existed where the only other local life care center that was acceptable to the decedent	5
had no immediate openings, in part because the decedent had engaged in extensive	6
comparative shopping and neither her health or financial circumstances required her	7
immediate admission). After all, if Cathy refused to sign the agreement, Decedent	8
would have been discharged, and Ms. Elizondo, the admissions assistant who	9
reviewed the documents with Cathy, had no authority to negotiate or modify the	10
terms of the agreement on behalf of The Rio. See State ex rel. King, 2014-NMSC-	11
024, ¶ 27 (determining it was procedurally unconscionable when payday loan	12
contracts are prepared entirely by the defendants with superior bargaining power,	13
employees could not modify the terms of the agreement, and these loans are offered	14
to the weaker party—the borrower—on a take-it-or-leave-it basis).	15
{26} 	Defendants contend that assent to the Arbitration Agreement was “not a	16
condition of admission to The Rio.” Defendants also point out that the Arbitration	17
Agreement specifically states the resident or the resident’s agent has the right to	18
consult an attorney before signing and that the agreement could be revoked within	19
ten days. However, this characterization wholly fails to account for Section 22 of the	20
admissions 	contract, which 	is 	distinct 	from the 	Arbitration 	Agreement, 	and,	21

19
importantly, non-optional, providing that that any legal disputes arising out of the	1
admission agreement “shall be resolved exclusively by binding arbitration.” Given	2
these conflicting terms regarding arbitration in the admissions contract, we construe	3
these ambiguities against The Rio as the drafter in order to protect the rights of the	4
resident, the party who did not draft the contract. See Heye, 2003-NMCA-138, ¶ 14	5
(“We conclude that the conflicting terms of the arbitration agreement render it	6
ambiguous [and w]e construe ambiguities in a contract against the drafter to protect	7
the rights of the party who did not draft it.”). Moreover, we note that Section 22,	8
rather than being highlighted in some way, was consistent with the other thirty-four	9
sections of the agreement in both format and style. See Rankin v. Brinton Woods of	10
Frankford, LLC, 211 A.3d 645, 657 (Md. Ct. Spec. App. 2019) (explaining that the	11
failure to highlight the binding nature of an arbitration clause, when considering the	12
format and location of the clause as simply a numbered paragraph presented in the	13
same 	format 	as 	every 	other 	provision 	supports 	a 	finding 	of 	procedural	14
unconscionability). In effect, when Cathy signed the admissions paperwork that	15
included Section 22 for Decedent’s admission to The Rio, Cathy waived Decedent’s	16
constitutional rights to a jury trial, and Ms. Elizondo did not in any manner	17
emphasize the binding arbitration clause nor did she explain that even had Decedent,	18
or Cathy as her power of attorney, opted to exercise the ten-day right of revocation	19
as to the later Arbitration Agreement, such would have been meaningless under	20
Section 22. We therefore agree with the district court that Section 22 effectively	21

20
rendered any choice to revoke the “optional” Arbitration Agreement a legal nullity	1
because Cathy was not, in fact, free to decline the arbitration clause in Section 22.	2
{27} 	Additional facts buttress our conclusion that neither Decedent nor Cathy felt	3
free to accept or decline terms of the agreement. First, Decedent was never consulted	4
regarding her admissions agreement to The Rio, even though no information	5
suggested that Decedent was incompetent to understand or sign the agreement, and	6
The Rio chose not to use a hotline that was readily available for Cantonese language	7
translation. Decedent simply was not given the opportunity to accept or decline the	8
terms of the admissions agreement herself. Nevertheless, because Cathy had a	9
general durable power of attorney, permitting her to execute contracts and provide	10
consent for any and all medical care and treatment on Decedent’s behalf, we focus	11
our attention to the circumstances surrounding Cathy’s signing of the agreement.	12
{28} 	The district court noted Ms. Elizondo had Cathy initial and sign pre-marked	13
spots in a thirty-page agreement that included a four-page Arbitration Agreement in	14
a matter of fifteen minutes. Our review identifies approximately twenty instances	15
where Cathy either initialed or signed the admissions paperwork. It is unsurprising	16
that the district court found that Cathy felt rushed when she signed the paperwork	17
because the limited time suggests that Cathy barely, if at all, had time to read what	18
she was signing. Moreover, the district court stated that other facilities were not	19
accepting new admissions at the time, and that Cathy understood that she had to sign	20
the paperwork for Decedent to remain at The Rio. If Cathy failed to sign the	21

21
agreement on Monday, November 2, 2015, Decedent would have been discharged	1
from the facility since it was the latter end of the seventy-two-hour timeframe	2
permitted by The Rio to complete the paperwork, and Decedent was initially	3
admitted on Friday, October 30, 2015. If Decedent was discharged, Decedent	4
“would not [receive] necessary rehabilitation services and she would become	5
permanently ineligible for Medicare/Medicaid payment for in-home rehabilitation	6
services.” Taken together, these particular facts indicate that Cathy’s choice was	7
rendered effectively non-existent because Cathy was not free to decline the terms of	8
the agreement without losing medical coverage for her mother.	9
{29} 	Defendants cite THI of New Mexico at Vida Encantada, LLC v. Lovato to	10
support their claim that the facts in this case do not support a legal determination of	11
procedural unconscionability. 848 F. Supp. 2d 1309, 1325-26 (D.N.M. 2012).	12
Defendants emphasize Cathy’s sophistication in education and business and note	13
that there was no evidence that Cathy requested additional time or explanations, nor	14
that Ms. Elizondo employed sharp practices, high pressure tactics, fraud, or	15
misrepresentation to induce consent. We are unpersuaded.	16
{30} 	Our review of Lovato indicates three key points of distinction. See id. First,	17
no separate clause in the admissions agreement there rendered the “optional”	18
arbitration agreement effectively meaningless. Second, the resident in Lovato was	19
not faced with the ordeal of finding a facility on an emergency basis, nor with the	20
danger of losing medical coverage as here, and the family there had been looking for	21

22
a place for a month prior to the resident’s admission. See id. at 1325. Finally, the	1
arbitration agreement in Lovato was only two pages long, with directions in bold,	2
capital letters to “please read carefully.” Id. (internal quotation marks omitted).	3
However, in our case, the thirty-page admissions agreement included Section 22—	4
a binding arbitration clause—that was no way highlighted in addition to the four-	5
page “optional” Arbitration Agreement.	6
{31} 	To reiterate, the discussion over a thirty-page agreement here lasted a mere	7
fifteen minutes. Cf. Barron v. Evangelical Lutheran Good Samaritan Soc’y, 2011-	8
NMCA-094, ¶ 46, 150 N.M. 669, 265 P.3d 720 (concluding there was no procedural	9
unconscionability where the admissions representative and the resident’s agent had	10
an hour-and-a-half to review every section of the arbitration agreement wherein it	11
was specifically explained that the arbitration was not a condition of admission, and	12
there was no evidence that the resident’s agent was rushed in signing any of the	13
documents). Fifteen minutes, compared to an hour and a half, is a considerably lesser	14
period of time in which to grasp a thirty-page document that—at least as to	15
arbitration disputes—contained internally conflicting terms. Moreover, in Barron,	16
cases 	from 	other 	jurisdictions 	identifying 	instances 	in 	which 	procedural	17
unconscionability was determined to be present are comparable to the facts in this	18
case and lend additional support to affirming the district court’s finding of	19
procedural unconscionability. See, e.g., Woebse v. Health Care & Ret. Corp. of Am.,	20
977 	So. 	2d 	630, 	633 	(Fla. 	Dist. 	Ct. 	App. 	2008) 	(holding 	that 	procedural	21

23
unconscionability existed where a nursing home resident’s daughter met with the	1
home’s administrator for about five minutes, during which time she was presented	2
with a thirty-seven page document that included an arbitration clause, and instructed	3
that her father’s continued stay in the home was conditioned upon her signing the	4
papers, which the administrator flipped through and presented the signature pages);	5
Prieto v. Healthcare & Ret. Corp. of Am., 919 So. 2d 531, 532-33 (Fla. Dist. Ct.	6
App. 2005) (agreeing with the trial court’s finding of procedural unconscionability	7
where a nursing home resident’s daughter was “hurried into signing numerous	8
documents” that were not explained to her). Given the facts of this case, we conclude	9
that the total circumstances under which Cathy was presented with and signed the	10
agreement eliminated her freedom to decline the terms of the agreement or to	11
circumvent the requirement of arbitration. Accordingly, we affirm the district court’s	12
order 	denying 	The 	Rio’s 	motion 	to 	compel 	arbitration 	on 	procedural	13
unconscionability grounds. Given the dispositive nature of our holding, we decline	14
to reach the additional bases relied upon by the district court for invalidating the	15
Arbitration Agreement here. See, e.g., Living Cross Ambulance Serv., Inc. v. N.M.	16
Pub. Regulation Comm’n, 2014-NMSC-036, ¶ 1, 338 P.3d 1258 (“Because we	17
determine that the attorney disqualification issue is dispositive, we do not reach the	18
other issues in this case.”); State ex rel. Office of State Eng’r v. Romero, 2020-	19
NMCA-001, ¶ 16, 455 P.3d 860 (“As our holding on the issue of partial forfeiture is	20

24
dispositive of the matter, we need not reach the abandonment issue.”), cert. granted,	1
2020-NMCERT-___ (No.S-1-SC-37903, Dec. 26, 2019).	2
CONCLUSION	3
{32} 	For the foregoing reasons, we affirm the district court’s orders in both appeals.	4
{33} 	IT IS SO ORDERED.	5
_____________________________	6
J. MILES HANISEE, Chief Judge	7
WE CONCUR:	8
__________________________	9
MEGAN P. DUFFY, Judge	10
__________________________	11
ZACHARY A. IVES, Judge	12