In an August 29, 2013 unpublished decision, the Appellate Division considered and affirmed the trial court’s denial of a nursing home’s motion to dismiss a personal injury and wrongful death claim brought by the estate of a former resident. Levonas v. Regency Heritage Nursing and Rehabilitation Center (Docket No. A-4995-11T4, Aug. 29, 2013).

In Levonas, the resident’s son (and administrator of the resident’s estate) signed the nursing home’s admission agreement, which contained an arbitration provision. Following the resident’s death, the nursing home filed a collection action against the estate in the Special Civil Part; several months later, the son, individually and as administrator of his mother’s estate, filed a civil action against the nursing home and others, alleging negligence, wrongful death and other claims.

Although the nursing home’s answer included an affirmative defense that the action must be dismissed based on the arbitration provision, the nursing home then proceeded to “actively” engage in the litigation for 30 months before it moved for summary judgment, seeking to dismiss the complaint for failure to arbitrate. The trial court denied the nursing home’s motion, finding that it had waived its right to invoke the arbitration provision.

In reviewing the trial court’s denial, the Appellate Division began its analysis by noting that, because nursing home agreements involve interstate commerce, they are governed by the Federal Arbitration Act, which provides that arbitration agreements are enforceable, and which preempts New Jersey’s anti-arbitration statute, N.J.S.A. 30:13-8 .1.

Nevertheless, the Appellate Division noted that an arbitration agreement is a contract, and legal rules governing contract construction, including waiver, will apply. Considering the “totality of the circumstances,” the court concluded that the nursing home defendants had engaged in “litigation conduct that was inconsistent with their right to arbitrate.” The nursing home defendants had initiated litigation in the judicial arena with the collection action; filed five substantive motions without indicating that such action should not be deemed a waiver of their right to arbitrate; engaged in extensive discovery; and waited 30 months before seeking enforcement of the arbitration clause. In sum, the nursing home “undermine[d] the fundamental principles underlying arbitration.’”

Given the nursing home’s waiver, and noting that the plaintiff would be prejudiced by being forced to arbitrate after engaging in two years of discovery, the Appellate Division affirmed the trial court’s denial of the motion to dismiss.

A copy of the August 29, 2013 opinion can be found here: Levonas v. Regency Heritage Nursing and Rehabilitation Center