Arbitration Clause Does Not Bar Wrongful Death Claim

Arbitration clause does not bar wrongful death claim; Chung et al. v. StudentCity.com, Inc., Lawyers Weekly No. 02-312-11.

Issue:Whether decedent’s consent to an arbitration clause forecloses the executor of that decedent’s estate from bringing a wrongful death action on behalf of statutorily designated beneficiaries.

Summary: Lisa Tam Chung and the plaintiff, Loren Daily went on a student tour of Mexico organized by defendant Studentcity.com, Inc.  A boating accident occurred during the trip, Loren almost drowned and Lisa was killed.  Lisa’s parents Oahn Nguyen Chung (as administratrix of Lisa’s estate) and Liem Chung, Loren Daily, and Loren Daily’s parents Ollie and Patricia Daily brought a suit against StudentCity.com for (1) negligence; (2) gross negligence; and (3) unfair and deceptive acts in violation of Mass. Gen. Laws ch. 93A.  Oahn Nguyen Chung as administratrix also sought damages for (4) conscious pain and suffering.  StudentCity moved to dismiss on the basis of a mandatory arbitration clause contained in the terms and conditions of the contract to undertake the trip, and in the alternative, to stay any claims that are not subject to arbitration pending the outcome of arbitration on those claims properly dismissed.

Lisa Chung had signed a StudentCity registration form before embarking on the trip, which included an Agreement that when signing up for a trip, the payee had to check the box agreeing to.  The Agreement included an “Arbitration” clause stating that “any dispute concerning, relating or referring to this Agreement, the brochure/flier/website/invoice or any other literature concerning my Trip, the Trip itself or any claim for damages due to injury or death which occurs on the Trip shall be resolved exclusively by binding arbitration.”  When Lisa Chung paid for the program she consented to the terms of the Agreement, including the arbitration clause, which included any claim brought on her behalf by her estate as well.  Plaintiffs argue that the judicial review provision of the Agreement impermissibly expands the scope of review beyond that allowed by the Federal Arbitration Act, 9 U.S.C. section 1.  This invalid provision of the Agreement, they argue, is a “material term” whose absence makes at least the entire arbitration clause void under general principles of contract law.  Plaintiffs, however, cite no authority that supports this proposition.

The parents of Lisa Chung are suing under the Commonwealth’s wrongful death statute Mass. Gen. Laws ch. 229.  The parties dispute whether Lisa Chung’s consent to the arbitration clause forecloses the executor of the estate from bringing a wrongful death action on behalf of the statutorily designated beneficiaries.  The parties rely on Lawrence v. Beverly Manor, holding that a wrongful death lawsuit was not barred by an agreement to arbitrate the decedent’s claims and claims derivative therefrom.  273 S.W.3d 525, 527-29 (Mo. 2009).  They argue that it would be inconsistent with fundamental tenets of contract law to hold that those beneficiaries, who did not sign an arbitration agreement, are bound by the decision of the decedent to sign.

The Massachusetts General Law for wrongful death can be found at: http://www.malegislature.gov/Laws/GeneralLaws/PartIII/TitleII/Chapter229.  As for Daily’s parents, Defendant argue that students paid for their trips using their parent’s credit cards and therefore, the parents were put on notice to inquire into the contract terms of what their daughter was paying for.

Holding: The court held that the Defendant’s motion to dismiss is allowed as to the claims of Oahn Nguyen Chung as administratrix of Lisa Tam Chung’s estate brought on the estate’s behalf but are denied as to the wrongful death claims brought on behalf of Oahn and Liem Chung and denied without prejudice as to the claims of the Daily plaintiffs.

Implication: Arbitration clauses are not binding on the estate of the individual who signs in certain circumstances, for example, wrongful death.  Wrongful death is not derivative of the decedent’s claim and it would be inconsistent with contract law to hold non-signatory beneficiaries bound to the decision of the signatory decedent.  Thus, although the individual may agree to an arbitration clause, beneficiaries may not be bound to it.

Additional Resources:

– The entire decision is available at: http://pacer.mad.uscourts.gov/dc/cgi-bin/recentops.pl?filename=zobel/pdf/chung%20v%20studentcity%20sept%202011.pdf

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