November 04, 2011 – Nina R. Strausberg v. Laurel Healthcare Providers, LLC, and Arbor Brook, LLC, d/b/a Arbor Brook Healthcare, No. 29,238

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: __________
Filing Date: November 4, 2011
NO. 29,238
NINA R. STRAUSBERG,
Plaintiff-Appellant,
v.
LAUREL HEALTHCARE PROVIDERS,
LLC, and ARBOR BROOK, LLC, d/b/a
ARBOR BROOK HEALTHCARE,
Defendants-Appellees.
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Clay P. Campbell, District Judge
Harvey Law Firm, LLC
Dusti D. Harvey
Jennifer J. Foote
Albuquerque, NM
for Appellant
Keleher & McLeod, P.A.
Mary Behm
Hari-Amrit Khalsa
Albuquerque, NM
for Appellees
OPINION

VIGIL, Judge.
{1} 	A party who seeks to compel arbitration has the burden to prove the existence
of a valid agreement to arbitrate. In this case, however, the district court shifted the
burden to Plaintiff to prove that the agreement is invalid, and granted Defendants’
motion to compel arbitration under a nursing home mandatory arbitration agreement.
We reverse and remand.
BACKGROUND
{2} 	Plaintiff was required to sign an arbitration agreement in order to be admitted
into a nursing home, Arbor Brook Healthcare (Arbor Brook) to rehabilitate from back
surgery. Notwithstanding the agreement to arbitrate, Plaintiff filed a complaint for
damages in the district court against the operator of Arbor Brook, Arbor Brook LLC,
d/b/a Arbor Brook Healthcare, and Laurel Healthcare Providers, LLC as its owner,
operator, or manager (Defendants). 	Plaintiff alleged that during her stay at Arbor
Brook, she developed painful and preventable decubitus ulcers at or near her surgical
wound; that her surgical wound became infected; that the infection was ignored or not
properly treated, leading to a staph infection; and that her care was negligent in several
other respects.

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{3} 	Defendants responded by filing a motion to dismiss the complaint and compel
arbitration, alleging that under the arbitration agreement between Plaintiff and Arbor
Brook, all of Plaintiff’s claims are subject to arbitration. 	Plaintiff replied that the
arbitration agreement is invalid because it is unconscionable. The district court first
ruled that the arbitration agreement is not substantively unconscionable and then held
an evidentiary hearing to determine whether the arbitration agreement is procedurally
unconscionable. 	At the hearing, Plaintiff and the nurse liaison who obtained
Plaintiff’s signature to the arbitration agreement testified what they recalled about the
circumstances under which Plaintiff signed the arbitration agreement.
{4} 	The district court then issued a letter decision setting forth its ruling and
reasoning. The district court said,
the issue presented was difficult because of the credibility of the
witnesses, not in the sense of their truthfulness, but in the sense of their
ability to recall the events surrounding the signing of the contract. Only
two witnesses testified, one for the Plaintiff and one for Defendant.
Ultimately, however, it was Plaintiff’s burden to establish the contract
she signed is unenforceable.
The district court specifically noted that Plaintiff’s testimony demonstrated she was
confused about signing the arbitration agreement and attributed her confusion to the
pain medication she was under at the time. 	The district court also ruled that the
factors considered to determine the validity of the arbitration agreement “generally are
evenly balanced[.]” One of the factors it considered was whether Plaintiff had the

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option of going to another nursing home facility. As to this factor, the district court
found, “Plaintiff believed that her only option was to be discharged from the hospital
to Defendant[s’] care, but did not testify whether she looked into other placement
options, and it was her burden to prove the contract at issue is unenforceable.”
Ultimately, the district court ruled that the arbitration agreement was not procedurally
unconscionable. A formal order was filed granting Defendants’ motion to dismiss and
to compel arbitration, and Plaintiff appeals.
{5} 	To place our holding in context, we first address our standard of review,
followed by a discussion of: (1) the enforcement of a valid arbitration agreement; (2)
the elements of substantive unconscionability in an arbitration agreement; and (3) the
elements of procedural unconscionability in an arbitration agreement. 	Within this
context we then address: 	(4) which party has the burden of proof when one party
seeks dismissal of a suit to compel arbitration under an arbitration agreement, and the
other party asserts it is unconscionable; and (5) whether shifting the burden of proof
resulted in reversible error.
DISCUSSION
Standard of Review
{6} 	“Whether a contract provision is unconscionable and unenforceable is a
question of law that we review de novo.” Rivera v. Am. Gen. Fin. Servs., Inc., 2011-

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NMSC-033, ¶ 42, 150 N.M. 398, 259 P.3d 803. Our review of a district court order
granting or denying a motion to compel arbitration is also de novo. Piano v. Premier
Distrib. Co., 2005-NMCA-018, ¶ 4, 137 N.M. 57, 107 P.3d 11; Heye v. Am. Golf
Corp., Inc., 2003-NMCA-138, ¶ 4, 134 N.M. 558, 80 P.3d 495. Finally, our review
of whether the district court applied the correct evidentiary rule or legal standard in
deciding the claim before it is likewise de novo. 	See Mayeux v. Winder, 2006-
NMCA-028, ¶ 14, 139 N.M. 235, 131 P.3d 85 (stating that the plaintiff’s argument
that the district court erred in applying the wrong legal standard to their breach of
fiduciary claim is reviewed de novo); see also State v. Torres, 1999-NMSC-010, ¶ 28,
127 N.M. 20, 976 P.2d 20 (“[T]he threshold question of whether the trial court applied
the correct evidentiary rule or standard is subject to de novo review on appeal.”).
The Enforcement of Arbitration Agreements
{7} 	Arbitration agreements are enforced under both New Mexico and federal law.
See Piano, 2005-NMCA-018, ¶ 5; see also NMSA 1978, § 44-7A-7(a) (2001) (“An
agreement contained in a record to submit to arbitration any existing or subsequent
controversy arising between the parties to the agreement is valid, enforceable and
irrevocable except upon a ground that exists at law or in equity for the revocation of
a contract.”); 9 U.S.C. § 2 (2006) (“[A] contract evidencing a transaction involving
commerce to settle by arbitration a controversy thereafter arising out of such contract

5
or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds
as exist at law or in equity for the revocation of any contract.”).
{8} 	However, unconscionability is an equitable doctrine rooted in public policy
under which an arbitration agreement may be deemed unenforceable. Rivera, 2011-
NMSC-033, ¶ 43; Cordova v. World Fin. Corp. of N.M., 2009-NMSC-021, ¶ 21, 146
N.M. 256, 208 P.3d 901. New Mexico recognizes both substantive unconscionability
and procedural unconscionability under the doctrine of contractual unconscionability.
Rivera, 2011-NMSC-033, ¶ 43; Cordova, 2009-NMSC-021, ¶ 21. While a mandatory
arbitration clause may be invalidated for unconscionability when both substantive and
procedural unconscionability are present, “there is no absolute requirement in our law
that both must be present to the same degree or that they both be present at all.”
Cordova, 2009-NMSC-021, ¶ 24.
{9} 	When a contractual term is deemed to be unconscionable, two possible remedial
actions can be taken.
If a contract or term thereof is unconscionable at the time the contract is
made a court may refuse to enforce the contract, or may enforce the
remainder of the contract without the unconscionable term, or may so
limit the application of any unconscionable term as to avoid any
unconscionable result.
Id. ¶ 39 (internal quotation marks and citation omitted); see also Smith v. Price’s
Creameries, 98 N.M. 541, 545, 650 P.2d 825, 829 (1982) (setting forth the same

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options under Article II of the Uniform Commercial Code).
Substantive Unconscionability
{10} 	Contract terms themselves determine whether they are illegal, contrary to public
policy, or grossly unfair, and therefore, substantively unconscionable. Rivera, 2011-
NMSC-033, ¶ 45 (“Substantive unconscionability concerns the legality and fairness
of the contract terms themselves.” (quoting Cordova, 2009-NMSC-021, ¶ 22)); Fiser
v. Dell Computer Corp., 2008-NMSC-046, ¶ 20, 144 N.M. 464, 188 P.3d 1215
(“Substantive unconscionability relates to the content of the contract terms and
whether they are illegal, contrary to public policy, or grossly unfair.”); Guthmann v.
La Vida Llena, 103 N.M. 506, 510, 709 P.2d 675, 679 (1985) (“Substantive
unconscionability is concerned with contract terms that are illegal, contrary to public
policy, or grossly unfair.”); State ex rel. State Highway & Transp. Dep’t v. Garley,
111 N.M. 383, 390, 806 P.2d 32, 39 (1991) (stating that the touchstone for substantive
unconscionability is gross unfairness). 	In determining whether a contract suffers
substantive unconscionability, the “analysis focuses on such issues as whether the
contract terms are commercially reasonable and fair, the purpose and effect of the
terms, the one-sidedness of the terms, and other similar public policy concerns.”
Rivera, 2011-NMSC-033, ¶ 45 (quoting Cordova, 2009-NMSC-021, ¶ 22).

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{11} 	In New Mexico, a contract provision that unreasonably benefits one party over
another is substantively unconscionable. Rivera, 2011-NMSC-033, ¶ 46; 	Cordova,
2009-NMSC-021, ¶ 25; Guthmann, 103 N.M. at 511, 709 P.2d at 680; Monette v.
Tinsley, 1999-NMCA-040, ¶ 19, 126 N.M. 748, 975 P.2d 361. 	In making this
determination, a New Mexico court no longer needs to find that the terms must be
“‘such as no man in his senses and not under delusion would make on the one hand,
and as no honest and fair man would accept on the other.”’ Cordova, 2009-NMSC-
021, ¶ 31 (quoting Hume v. United States, 132 U.S. 406, 411 (1889) (quoting Earl of
Chesterfield v. Janssen, 2 Ves. Sen. 125, 155, 28 Eng. Rep. 82, 100 (Ch. 1750)). “It
is sufficient if the provision is grossly unreasonable and against our public policy
under the circumstances.” Id.
Procedural Unconscionability
{12} 	A contract or provision therein is procedurally unconscionable where there is
such gross inequality in bargaining power between the parties that one party’s choice
is effectively non-existent. Guthmann, 103 N.M. at 510, 709 P.2d at 679.
{13} 	While not a prerequisite, a contract of adhesion may result in a procedurally
unconscionable agreement. Rivera, 2011-NMSC-033, ¶ 44. But see Cordova, 2009-
NMSC-021, ¶ 34 (noting that a contract of adhesion may result in substantive
unconscionability) ; Fiser, 2008-NMSC-046, ¶ 22 (same). To determine whether an

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adhesion contract exists, the court inquires into three factors: 	“(1) whether it was
prepared entirely by one party for the acceptance of the other; (2) whether the party
proffering the contract enjoyed superior bargaining power because the weaker party
could not avoid doing business under the particular terms; and [(3)] whether the
contract was offered to the weaker party without an opportunity for bargaining on a
take-it-or-leave-it basis.” 	Fiser, 2008-NMCA-046, ¶ 	22; Guthmann, 103 N.M. at
509, 709 P.2d at 678; Rivera v. Am. Gen. Fin. Servs., Inc., 2010-NMCA-046, ¶ 15,
148 N.M. 784, 242 P.3d 351, rev’d by 2011-NMSC-033. Accordingly, a contract of
adhesion may result if all the competitors of the dominate party use essentially the
same contract terms or when that dominate party has a monopoly on the relevant
geographic market. Guthmann, 103 N.M. at 509, 709 P.2d at 678.
{14} 	Thus, to determine if a contractual provision has the stigma of procedural
unconscionability, the circumstances surrounding the formation of the contract must
be examined. 	Cordova, 2009-NMSC-021, ¶ 23; Fiser, 2008-NMSC-046, ¶ 20;
Guthmann, 103 N.M. at 510, 709 P.2d at 679. 	Circumstances in the contract
formation to be examined include whether sharp practices or high pressure tactics
were used, the relative sophistication, education, and wealth of the parties, a particular
party’s ability to understand the terms of the contract, the relative bargaining power
of the parties, the relative scarcity of the subject matter of the contract, and the extent

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to which either party felt free to accept or decline the terms demanded by the other.
Cordova, 2009-NMSC-021, ¶ 23; Guthmann, 103 N.M. at 510, 709 P.2d at 679.
Who Has the Burden of Proof
{15} 	A legally enforceable contract is a prerequisite to arbitration under the New
Mexico Uniform Arbitration Act, and without such a contract, the parties will not be
forced to arbitrate. 	Piano, 2005-NMCA-018, ¶ 5; Heye, 2003-NMCA-138, ¶ 8;
DeArmond v. Halliburton Energy Servs., Inc., 2003-NMCA-148, ¶ 9, 134 N.M. 630,
81 P.3d 573. The party who seeks to compel arbitration has the burden of proof to
establish the existence of a valid agreement to arbitrate. See Corum v. Roswell Senior
Living, LLC, 2010-NMCA-105, ¶¶ 3, 16, 149 N.M. 287, 248 P.3d 329 (stating that the
party attempting to compel arbitration has the burden to demonstrate a valid
agreement to arbitrate), cert. denied, 2010-NMCERT-010, 149 N.M. 64, 243 P.3d
1146; DeArmond, 2003-NMCA-148, ¶ 9 (stating that party relying on a contract has
the burden to prove it is legally valid and enforceable). Moreover, when the parties
dispute the existence of a valid arbitration agreement, any presumption in favor of
arbitration disappears. See DeArmond, 2003-NMCA-148, ¶ 8; see also Dumais v. Am.
Golf Corp., 299 F.3d 1216, 1220 (10th Cir. 2002) (“The presumption in favor of
arbitration . . . disappears when the parties dispute the existence of a valid arbitration
agreement.”).

1See, e.g., Rogers v. Royal Caribbean Cruise Line, 547 F.3d 1148, 1158 (9th
Cir. 2008) (holding that employees challenging the arbitration agreement in their
employment contract failed to meet “their burden of establishing that the arbitration
clause at issue in this case is unconscionable”); Faber v. Menard, Inc., 367 F.3d 1048,
1053 (8th Cir. 2004) (noting that “[u]nder Iowa law, the burden of proof that a
particular provision or contract is unconscionable rests on the party claiming it is
unconscionable” and concluding that the employee failed to meet his burden of
proving that the arbitrator’s fees made the agreement unconscionable due to their
prohibitive cost); Parilla v. IAP Worldwide Servs. VI, Inc., 368 F.3d 269, 277 (3d Cir.
2004) (stating that “the burden of proving such unconscionability lies with the party
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{16} 	The foregoing rules are well embedded in New Mexico jurisprudence. 	For
example, in Shaw v. Kuhnel & Associates, Inc., 102 N.M. 607, 608, 698 P.2d 880, 881
(1985), superceded by statute as stated in Aguilera v. Palm Harbor Homes, Inc.,
2002-NMSC-029, ¶ 6, 132 N.M. 715, 54 P.3d 993, our Supreme Court repeats that
parties are generally bound to resolve disputes by arbitration when they have
contractually agreed to do so. “However, a motion to compel arbitration is essentially
a suit for specific performance of an agreement to arbitrate.” 	Id. 	Clearly, a party
seeking specific performance has the burden of proving grounds for such relief. In
this case, it is the existence of a legally valid and enforceable contractual agreement
to arbitrate.
{17} 	We acknowledge and recognize that most courts that have considered the
question, place the burden on the party seeking to set aside an arbitration agreement
on unconscionability grounds.1 However, these cases all deal with commercial

challenging the contract provision” in a case addressing whether the arbitration
agreement in an employment contract is unconscionable) (citing E. Allen Farnsworth,
Farnsworth on Contracts § 4.28 & n.14 (3d ed. 1999)); Bess v. Check Express, 294
F.3d 	1298, 	1306-07 	(11th 	Cir. 	2002) 	(stating 	that 	“[u]nder 	Alabama 	law,
unconscionability is an affirmative defense to the enforcement of a contract, and the
party asserting that defense bears the burden of proving it by substantial evidence” in
a class action case for alleged violations of state and federal law arising out of “cash
advances” 	or 	deferred 	payment 	transactions 	between 	the 	plaintiffs 	and 	the
defendants); Harris v. Green Tree Fin. Corp., 183 F.3d 173, 181 (3d Cir. 1999)
(applying Pennsylvania law in a suit where the plaintiffs claimed to be victims of a
fraudulent home improvement scheme that the “party challenging a contract provision
as unconscionable generally bears the burden of proving unconscionability”).
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transactions, and we conclude that they are distinguishable and unpersuasive in the
context before us.
{18} 	The case before us is not a mere commercial transaction. When individuals are
dealing with admission into a nursing home, the health issue making nursing home
care a necessity is often so grave, critical, or severe, that the only focus is on getting
proper treatment, with everything else being secondary. 	In a nutshell, such
individuals are often at their most vulnerable, emotionally or physically, or both. And
this often includes immediate family members. 	Moreover, the context does not
usually allow for measured consideration of what nursing homes are available, the
terms required for admission, and the like. 	Thus, we have already noted that
admission agreements and other admission-related documents such as mandatory
arbitration agreements are often presented to aging and infirmed individuals and their
families “when they are at their most vulnerable, in need of quick assistance, and

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potentially can easily be taken advantage of.” Barron v. The Evangelical Lutheran
Good Samaritan Soc’y, 2011-NMCA-094, ¶ 41, ___ N.M. ___, ___ P.3d ___.
{19} 	In recognition of these realities, the West Virginia Supreme Court has declared
that all mandatory arbitration clauses in nursing home admission agreements are
unconscionable and unenforceable. Brown v. Genesis Healthcare Corp., No. 35494,
2011 WL 2611327 (W. Va. 2011). We have not been asked to, and therefore decline
to adopt the holding of Brown. Nevertheless, we consider the following expressed
reasons for treating nursing home contracts with mandatory arbitration agreements
differently from mere commercial contracts very persuasive:
Because 	of 	illness, 	incapacitation, 	or 	physical 	or 	mental
impairment, people being admitted to a nursing home are usually quite
vulnerable . . . .
. . . .
[I]n the 1980s, the government changed the way hospitals were
paid for their Medicare patients; since the change, discharge planning
occurs “quicker and sicker.” 	The weakened physical and emotional
condition of a person from an acute illness is one of the most significant
factors that compels a decision to seek post-hospital nursing home
placement. Compounding the dangers of this decision-making time, not
only is the person being discharged “quicker and sicker,” but the hospital
treatment itself often further debilitates the person. 	A person’s
“decision” to enter a nursing home is, therefore, often made when the
person’s decision-making abilities are seriously impaired.
Unlike the situation that exists when a consumer signs a contract
for a product or service, people entering a nursing home have to sign
admissions contracts in the midst of a crisis, without time to comparison

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shop or to negotiate the best service and price combination. Put simply,
there is usually little time to investigate options or to wait for an opening
at a nursing home of choice. Time pressure during the hospital discharge
process significantly impairs people’s ability to seek and carefully
consider alternatives.
. . . .
Ultimately, people being admitted to long-term care facilities and
their 	families 	have 	to 	sign 	admission 	contracts 	without 	time 	to
comparison shop or to negotiate the best service and price combination.
The pressures of deciding placement at such a time, coupled with
physical and/or mental infirmities, facing discharge from the hospital,
financial limitations, and/or lack of knowledge about long-term care
options make consumers vulnerable and dependent on full disclosure by
facilities.
(internal quotation marks and footnotes omitted).
{20} 	We therefore hold that when a nursing home relies upon an arbitration
agreement signed by a patient as a condition for admission to the nursing home, and
the patient contends that the arbitration agreement is unconscionable, the nursing
home has the burden of proving that the arbitration agreement is not unconscionable.
Shifting The Burden of Proof Resulted in Reversible Error
{21} 	Defendants had the burden of proving that the arbitration agreement is not
unconscionable. However, the district court shifted the burden to Plaintiff to prove
that the arbitration agreement is not unconscionable. We conclude this was reversible
error.

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{22} 	We have demonstrated that many factual issues must be decided by a district
court in determining whether an arbitration agreement is unconscionable. 	In
determining whether the contract is procedurally unconscionable, the district court
said the issues were difficult to decide because neither Plaintiff nor the nurse who
obtained her signature on the arbitration agreement had clear recollections of the
factual circumstances, and that the factors it considered to determine whether the
arbitration agreement is unconscionable “generally are evenly balanced[.]” 	The
district court said that the “deciding factor” in its mind was Plaintiff’s understanding
of the arbitration agreement at the time she signed it. However, we have no way of
assessing what weight the court would have given this evidence, or whether the
district court would have come to the same conclusion if the burden of proof had been
properly allocated to Defendants. 	In addition, we have no way of determining
whether the district court applied the correct burden of proof in ruling that the
mandatory arbitration agreement is not substantively unconscionable. 	Moreover,
when the issue of substantive unconscionability was first considered, the parties and
the district court did not have the benefit of our Supreme Court’s opinion in Rivera,
2011-NMSC-033. We therefore reverse the order of the district court. 	See State v.
Fernandez, 128 N.M. 111, ¶ 36, 990 P.2d 224 (Ct. App. 1999) (reversing and
remanding for a new suppression hearing where trial court applied incorrect standard

15
in reviewing alleged falsehoods and omissions in a search warrant affidavit); see also
State v. Young, 117 N.M. 688, 692, 875 P.2d 1119, 1123 (Ct. App. 1994) (remanding
because the district court applied the wrong legal standard in deciding whether
voluntary intoxication was relevant to a waiver of Miranda rights).
{23} 	On remand, we encourage the district court to enter findings of fact and
conclusions of law pursuant to Rule 1-052 NMRA to facilitate appellate review of its
factual determinations relating to unconscionability and its legal ruling on whether the
arbitration is legally unconscionable.
CONCLUSION
{24} 	We reverse and remand for further proceedings in accordance with this
Opinion.
{25} 	IT IS SO ORDERED.
__________________________________
MICHAEL E. VIGIL, Judge
I CONCUR:
__________________________________
MICHAEL D. BUSTAMANTE, Judge
JAMES J. WECHSLER, Judge (dissenting).

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WECHSLER, Judge (dissenting).
{26} 	Our Supreme Court has stated the “fundamental principle that arbitration is a
matter of contract.” 	Rivera, 2011-NMSC-033, ¶ 16 (internal quotation marks and
citation omitted). To this end, “courts must place arbitration agreements on an equal
footing with other contracts[.]” Id. (internal quotation marks and citation omitted).
I therefore do not agree with shifting the burden to the party seeking to enforce an
arbitration agreement to prove that an arbitration agreement is not unconscionable,
because this position does not have a basis in well-established contract law. 	As a
result, I respectfully dissent.
{27} 	The majority correctly states that “[t]he party who seeks to compel arbitration
has the burden of proof to establish the existence of a valid agreement to arbitration.”
Majority Opinion ¶ 15. However, the cases cited by the majority indicate that this
burden applies to contract formation issues, not to defenses by a party seeking to stop
the enforcement of an otherwise valid contract. For example, in DeArmond, 2003-
NMCA-148, ¶¶ 11-14, the issues addressed by this Court were whether a party to an
arbitration agreement had knowledge of a change in his employment contract that
included a mandatory arbitration clause and therefore accepted the modification and,
alternatively, whether mutuality existed to form a binding contract. 	Corum, 2010-
NMCA-105, ¶ 16, similarly addresses contract formation issues. 	In particular, the

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issue in Corum was whether the individual who entered into an arbitration agreement
on behalf of a nursing home patient had statutory authority to enter into the agreement.
Id.
{28} 	Unconscionability, on the other hand, is an equitable doctrine that is a defense
or “exception” to enforcing an otherwise valid contract. See Montano v. N.M. Real
Estate Appraiser’s Bd., 2009-NMCA-009, ¶ 12, 145 N.M. 494, 200 P.3d 544 (“We
will allow equity to interfere with enforcing clear contractual obligations only when
well-defined equitable exceptions, such as unconscionability, mistake, fraud, or
illegality justify deviation from the parties’ contract.” (internal quotation marks and
citation omitted)); see also Fidelity Nat’l Bank v. Tommy L. Goff, Inc., 92 N.M. 106,
107, 583 P.2d 470, 471 (1978) (stating that the answer to a complaint contained the
“affirmative defense[]” of unconscionability). Generally, a party seeking to set aside
enforcement of a contract based on a defense or exception, such as unconscionability,
has the burden of proof. See Mason v. Salomon, 62 N.M. 425, 429, 311 P.2d 652, 654
(1957) (holding that the party seeking to set a contract aside for fraud has the burden
of proof); see also W. Commerce Bank v. Gillespie, 108 N.M. 535, 538, 775 P.2d 737,
740 (1989) (declining to shift the burden of persuasion to the party challenging a
contract because the action was “a simple contract issue” requiring the court to
determine whether the “making of the contract” satisfied the “condition[s] precedent”

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as opposed to an action seeking to set aside a contract on a ground such as fraud,
mistake, misrepresentation, or undue influence). 	Similarly, Farmington Police
Officers Association Communication Workers of America Local 7911 v. City of
Farmington, 2006-NMCA-077, ¶ 16, 139 N.M. 750, 137 P.3d 1204, addressed the
burden of proof in an arbitration case and concluded that the party seeking to enforce
an arbitration clause in a collective bargaining agreement had the burden of persuasion
as to whether the clause applied to the dispute. 	In Farmington Police Officers
Association, this Court stated that
we believe that where the meaning of a material contract term is in
dispute a party seeking affirmative relief based upon its interpretation
necessarily bears the burden of establishing that its interpretation
controls. 	This approach is consistent with the general default rule
allocating the burden of persuasion in civil cases to the party who
invokes the authority of a court to alter the extrajudicial status quo.
Id. (citation omitted).
{29} 	As the majority acknowledges, most courts that have addressed the issue have
placed the burden on the party seeking to set aside an arbitration agreement on
unconscionability grounds. Majority Opinion ¶ 17 n.1. Consistent with these other
courts, this Court has recently clarified that the party challenging a provision of an
arbitration agreement that banned class action claims on unconscionability grounds
has the burden of proof. See Felts v. CLK Mgmt., Inc., 2011-NMCA-062, ¶¶ 34, 37,
149 N.M. 681, 254 P.3d 124, cert. granted, 2011-NMCERT-___, ___ N.M. ___, ___

19
P.3d ___ (Nos. 33,011 and 33,013, June 8, 2011).
{30} 	The majority distinguishes Felts and cases from other jurisdictions because the
cases involve “commercial transactions.” 	Majority Opinion ¶ 17. 	However, even
cases in other jurisdictions specifically involving challenges to arbitration agreements
in nursing home admission documents impose the burden of proof upon the party
challenging the agreement. See, e.g., Briarcliff Nursing Home, Inc. v. Turcotte, 894
So. 2d 661, 665 (Ala. 2004) (“The burden of proving unconscionability of an
arbitration agreement rests with the party challenging the agreement.” (internal
quotation marks and citation omitted)); Estate of Perez v. Life Care Ctrs. of Am. Inc.,
23 So. 3d 741, 742 (Fla. Dist. Ct. App. 2009) (“The party seeking to avoid the
arbitration provision has the burden to establish unconscionability.”); Hayes v.
Oakridge Home, 122 Ohio St. 3d 63, 2009-Ohio-2054, 908 N.E.2d 408, at ¶ 20 (“The
party asserting unconscionability of a contract bears the burden of proving that the
agreement is both procedurally and substantively unconscionable.”).
{31} 	I also note that in Brown, 2011 WL 2611327, the West Virginia Supreme Court
stated the policy considerations quoted in Paragraph 19 of the majority opinion as
background to establish the context of the agreements in the case, rather than as the
basis for its holding that mandatory arbitration clauses in nursing home admission
documents adopted prior to the negligent incident at issue are unconscionable. West

20
Virginia recognizes, as a matter of public policy, a “public service” exception to the
enforcement of pre-injury contracts that either absolves a public service provider of
liability for personal injuries or wrongful death or that allows a public service provider
to escape public scrutiny in the courtroom. 	Id. 	Brown invalidated the arbitration
agreements based on the public service exception because a nursing home is a public
service provider and the arbitration agreements prevented the nursing homes from
“courtroom scrutiny of their negligent conduct that caused a personal injury or
wrongful death[.]” Id.
{32} 	Although I share the majority’s concern that “individuals are often at their most
vulnerable, emotionally or physically, or both” when seeking admission to a nursing
home, I do not believe this concern justifies a sweeping exception to well-established
law for nursing home patients that the majority creates. 	Majority Opinion ¶ 18. 	I
would therefore treat an arbitration agreement signed by a patient as a condition for
nursing home admission the same as any other arbitration agreement and would hold
that, generally, a party seeking to set aside the arbitration agreement has the burden
of proving that the arbitration agreement is unconscionable. A party’s vulnerability
is 	a 	fact 	for 	the 	court 	to 	consider 	in 	determining 	the 	issue 	of 	procedural
unconscionability.
{33} 	Moreover, even assuming that there may be appropriate cases for a district court

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to shift the burden of proof to a party seeking to set aside an arbitration agreement
when the facts of the case indicate that the party seeking to enforce the arbitration
agreement would be in a better position to prove whether an arbitration agreement is
unconscionable, this is not such a case. The district court found that upon admission
to the nursing home on April 11, 2007, Plaintiff was confused as the result of pain
medication, that she had ten minutes to complete forty minutes of paperwork during
the admission process, and that she did not have her glasses. However, the district
court further found that Plaintiff signed the arbitration agreement on April 10, 2007,
before the transfer to the nursing home, and Plaintiff presented no testimony regarding
her state of mind or condition on that date. Additionally, the district court stated that
the 	“deciding 	factor” 	in 	determining 	that 	the 	arbitration 	agreement 	was 	not
unconscionable was Plaintiff’s understanding of the agreement at the time she signed
it. Importantly, Plaintiff admitted that she understood that the arbitration agreement
“significantly limited her rights,” even though she was medicated. 	Under these
circumstances, the district court did not err in determining that Plaintiff had the burden
to prove that the arbitration agreement was unconscionable, and I respectfully dissent.
________________________________
JAMES J. WECHSLER, Judge