Opinion
DOCKET NO. A-2453-12T4
07-16-2013
MICHAEL HALL, Executor of the Estate of CREOLA HALL, Deceased, Plaintiff-Respondent, v. HEALTHSOUTH REHABILITATION HOSPITAL OF VINELAND; ATLANTICARE REGIONAL MEDICAL CENTER; ACUITY SPECIALTY HOSPITAL OF NEW JERSEY; and LINWOOD CARE CENTER, Defendants-Respondents, and THE HEALTH CENTER AT GALLOWAY and SENIORS MANAGEMENT NORTH, INC., Defendants-Appellants.
Donna J. Fudge (Fudge & McArthur, P.A.) of the Pennsylvania bar, admitted pro hac vice, argued the cause for appellants (Anthony P. DeMichele (O'Brien & Ryan) and Ms. Fudge, attorneys; Paul E. Peel, of counsel; Mr. DeMichele of counsel and on the brief). Nicholas S. Jajko (Schwartz Culleton PC) argued the cause for respondent Michael Hall (Mr. Jajko, attorney; Christopher J. Culleton and Mr. Jajko, on the brief). Thomas M. Walsh argued the cause for respondent HealthSouth Rehabilitation Hospital of Vineland (Parker McCay P.A., attorneys; John D. Cirrinicione, on the brief). Fox Rothschild LLP, attorneys for respondent AtlantiCare Regional Medical Center, join in the brief of respondents HealthSouth Rehabilitation Hospital of Vineland and Linwood Care Center. Eric D. Heicklen argued the cause for respondent Linwood Care Center (Buchanan Ingersoll & Rooney, PC, attorneys; Robin Archie on the brief). Respondent Acuity Special Hospital has not filed a brief.
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Sapp-Peterson and Sabatino.
On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-3883-12.
Donna J. Fudge (Fudge & McArthur, P.A.) of the Pennsylvania bar, admitted pro hac vice, argued the cause for appellants (Anthony P. DeMichele (O'Brien & Ryan) and Ms. Fudge, attorneys; Paul E. Peel, of counsel; Mr. DeMichele of counsel and on the brief).
Nicholas S. Jajko (Schwartz Culleton PC) argued the cause for respondent Michael Hall (Mr. Jajko, attorney; Christopher J. Culleton and Mr. Jajko, on the brief).
Thomas M. Walsh argued the cause for respondent HealthSouth Rehabilitation Hospital of Vineland (Parker McCay P.A., attorneys; John D. Cirrinicione, on the brief).
Fox Rothschild LLP, attorneys for respondent AtlantiCare Regional Medical Center, join in the brief of respondents HealthSouth Rehabilitation Hospital of Vineland and Linwood Care Center.
Eric D. Heicklen argued the cause for respondent Linwood Care Center (Buchanan Ingersoll & Rooney, PC, attorneys; Robin Archie on the brief).
Respondent Acuity Special Hospital has not filed a brief. PER CURIAM
In this interlocutory matter under Rule 2:2-3(a), appellants, The Health Center at Galloway and Seniors Management North (collectively, "Galloway"), challenge the trial court's denial of Galloway's motion to dismiss plaintiff's negligence and survivorship action and to refer the case to arbitration. The court denied the motion after determining that a judicial hearing is required to resolve the threshold question of whether plaintiff had the authority to bind the decedent, his wife, to Galloway's standardized mandatory arbitration provisions when she was admitted to its nursing home.
Because plaintiff's legal authority to bind the decedent to mandatory arbitration comprises a "gateway" issue that must be resolved by a court, not an arbitrator, we affirm the trial court's decision. We also reject Galloway's alternative claim that the decedent's alleged status as a third-party beneficiary of the nursing home contract compels immediate referral of this case to arbitration, irrespective of plaintiff's express or implied authority to bind his wife to that document. The third-party beneficiary issue, like the agency issue, involves threshold factual disputes that must be resolved in the first instance by the trial court.
I.
We recite the pertinent background as follows, mindful of the interlocutory posture of this matter and the lack of adjudicated facts. In essence, our task here is not to review any factual findings, but simply to confirm the proper forum in which this case initially should be heard.
Plaintiff Michael Hall is the executor of the estate of his wife, Creola Hall, who died in June 2011. From May 20, 2010 to June 9, 2010, the decedent was a resident of co-defendant HealthSouth Rehabilitation Hospital of Vineland ("HealthSouth"). Decedent was then seventy-three years old. She was receiving treatment for a stroke she had recently suffered on May 6, 2010.
According to plaintiff's complaint, on June 9, 2010, HealthSouth discovered a sacral pressure sore on decedent, which required debridement. The same day, decedent was discharged from HealthSouth and placed under the care of Galloway, a nursing home facility. Decedent was also treated at co-defendant AtlantiCare Regional Medical Center ("AtlantiCare") on four occasions during her stay with Galloway for "various acute care needs." Decedent remained with Galloway until she was discharged on August 26, 2010. She thereafter became a patient at co-defendant Acuity Specialty Hospital of New Jersey ("Acuity") from August 31, 2010 to December 3, 2010, except for a week in November 2010. Then, from December 3, 2010 to June 16, 2011, decedent was a resident of co-defendant Linwood Care Center ("Linwood"). During this time, she also had numerous in-patient admissions to AtlantiCare.
From June 9, 2010 through April 12, 2011 — a period that included her stay at Galloway — the decedent's sacral pressure wound allegedly deteriorated to a "Stage IV" wound. The decedent additionally developed Stages III and IV pressure sores on her left heel, right heel, right ankle, right ischium, and left ischium.
The decedent passed away on June 16, 2011. Plaintiff, the decedent's husband and executor of her estate, filed a complaint against the various named defendants in May 2012. The complaint alleged negligence, and also sought damages under a survival cause of action.
One of the two critical documents at issue in Galloway's present appeal is a form Admission Agreement ("AA") dated June 9, 2010. It is undisputed that plaintiff, not the decedent, filled out blank portions of the form. The decedent's name is printed, but not signed, under the heading "RESIDENT[.]" Plaintiff's name is printed on the first page of the document as decedent's "Legal Representative and Responsible Party." Plaintiff additionally printed his name under the heading "RESIDENT'S LEGAL REPRESENTATIVE[.]" Plaintiff signed his name on the line labeled as "Signature of Resident's Legal Representative in his/her Individual capacity[.]" However, for reasons that have not been clearly explained, plaintiff did not sign his name on the line entitled "Signature of Resident's Legal Representative in his/her Representative capacity." (Emphasis added).
It is undisputed that, at the time of his wife's admission to Galloway, plaintiff did not have a power of attorney from her. Nor had she been judicially declared incompetent, and no court order had appointed plaintiff her legal guardian.
According to plaintiff's sworn deposition testimony, the decedent did not give him permission to sign the AA. Plaintiff contends that he made no representation to Galloway that his wife was incapacitated. Moreover, he contends that she could have signed the document for herself if she had chosen to do so.
We have been furnished only with portions of plaintiff's deposition transcript.
On the other hand, Galloway's assistant director of admissions, Cathy Singer, testified at her deposition that the decedent did not sign for herself because "[s]he was a very ill patient." According to Singer, the decedent's nurses informed Singer that "they didn't think that it was such a good idea" to have the decedent sign for herself.
The AA contains, among other things, the following provisions, the significance of which are disputed in this appeal:
15. Alternative Dispute Resolution Agreement[("ADRA")]: The "[ADRA]" is incorporated herein by reference and the parties agree that any and all disputes arising out of or relating in any way to the [AA], the Resident's stay at this facility[,] or the [ADRA] shall be resolved solely under the [ADRA].
16. Severability: Any term, phrase[,] or provision contained herein is severable, and in the event any of them shall be held to be void, invalid[,] or unenforceable for any reason, this [AA] shall be interpreted as if
such term, phrase[,] or provision were not contained herein, and the remaining provisions of this [AA] shall not be affected by such determination and shall remain in full force and effect. No part of the [AA] will be construed against any party because that party wrote the [AA].
[Emphasis added.]
At the time of the decedent's admission, Galloway also presented the second related and disputed document, the ADRA, to plaintiff for his signature. The first page of the ADRA states that the ADRA is an agreement made "between you Creola Hall Resident and/or Resident's Legal Representative ("Resident") and [Galloway] . . . intended to Resolve by Alternative Dispute Resolution any Dispute (as defined below)." The ADRA broadly defines a "dispute" as:
Her name is handwritten on the document.
E. ADR PROCESS
1. "Disputes": Any and all claims or controversies arising out of or in any way relating to this Agreement, the [AA,] or any of the Resident's stays at the Facility, including disputes regarding the making, execution, validity, enforceability, voidability, unconscionability, severability, scope, interpretation, preemption, waiver, duress or any other defense to enforceability of this Agreement, whether arising out of State or Federal law, whether existing now or arising in the future, whether for statutory, compensatory or punitive damages and whether sounding in breach of contract, tort (i.e., negligence
or wrongful death), or breach of statutory duties (including, without limitation, any claim based on Residents' Rights or a claim for unpaid facility charges), irrespective of the basis for the duty or of the legal theories upon which the claim is asserted, shall be submitted to mediation, and if not resolved therein, to binding arbitration.
Additionally, the ADRA recites in paragraph 5 of Section H which parties are allegedly intended to be bound by it:
It is the intention of the Resident and [Galloway] that this [ADRA] shall inure to the direct benefit of and bind [Galloway] . . . and shall inure to the direct benefit of and bind the Resident (as defined herein), his/her successors, spouses, children, next of kin, guardian, administrator, legal representative, responsible party, assigns, agents, attorneys, health care proxies, health care surrogates, third party beneficiaries, insurers, heirs, trustees and representatives, including the personal representative or executor of his/her estate, any person whose claim is derived through or on behalf of the Resident or relates in any way to the Resident's stays at this facility, or any person who previously assumed responsibility for providing Resident with necessary services such as food, shelter, clothing, or medicine, etc., and any person who signed this [ADRA] or the [AA] . . . The Parties stipulate that to the extent the Resident himself does not sign this agreement (i.e., an adult family member or friend signs on behalf of the Resident), the Resident does sign himself but the legality of his signature is challenged[,] or no one signs this [ADRA], then the Parties stipulate that the Resident is an intended third party beneficiary of the [AA] and of this [ADRA] because the purpose of both such agreements is to directly benefit the Resident.
[Emphasis added.]
The ADRA also contains a provision entitled "Manner of Acceptance:"
Acceptance of this [ADRA] can be done by signing below, by the Resident's continued residency [with Galloway] after the admission date[,] or by any other manner of acceptance recognized by contract law or equity.
Paragraph 7 of Section E of the ADRA states that the Federal Arbitration Act, 9 U.S.C.A. §§ 1-16 (the "FAA"), will govern the enforceability of the ADRA. It also states that the FAA's application will preempt any inconsistent state law.
On the final page of the ADRA, above the signature lines, the document states, "The person signing for the Resident confirms by his/her signature below that he/she has been granted permission/authority by the Resident to sign below on behalf of the Resident." Beneath this statement, the decedent's name is printed under "RESIDENT" and plaintiff's name is printed under "RESIDENT'S LEGAL REPRESENTATIVE[.]"
The quoted text is bolded and capitalized in the ADRA.
Plaintiff signed his name on the signature line entitled "Signature of Resident's Legal Representative in his/her Individual capacity[.]" However, similar to the way that plaintiff signed the AA, he inexplicably did not sign the ADRA on the line labeled "Signature of Resident's Legal Representative in his/her Representative capacity."
After being served with plaintiff's complaint, Galloway filed a motion to dismiss in lieu of an answer. In its motion, Galloway contended that plaintiff's claims against it must be resolved in an alternative dispute resolution process, specifically arbitration. Galloway maintained that the ADRA, which was signed by plaintiff as the decedent's representative, requires such arbitration in lieu of a civil action.
Plaintiff opposed Galloway's dismissal motion, contending, among other things, that he lacked express or implied authority to bind his late wife to the agreement. He further argued that the binding arbitration provisions within the contract are unconscionable and thus unenforceable.
The trial judge, Hon. Nelson C. Johnson, J.S.C., denied Galloway's initial motion to dismiss, in an order dated September 28, 2012. The judge ruled that discovery was necessary in order to explore whether plaintiff, in fact, had the express or implied authority to bind the decedent to Galloway's mandatory arbitration provisions. Following this initial ruling, the parties engaged in limited discovery on the agency question, including depositions of plaintiff and of Singer.
Our record contains the full deposition transcript of Singer.
Galloway then renewed its motion to dismiss, again seeking to compel arbitration. Judge Johnson issued a written decision on December 21, 2012, denying the motion. The judge found that, as a threshold matter, it had not yet been established by the parties' written submission that plaintiff had the legal authority to contract on behalf of the decedent at the time that he signed the AA and ADRA. The judge reasoned that "[t]here are outstanding questions as to whether or not [plaintiff] had actual or apparent authority[,]" which needed to be resolved by the court, and not by an arbitrator. The judge also noted that under case law applying the FAA, courts may exercise the threshold authority to determine "whether or not a valid agreement to arbitrate exists."
Galloway now appeals the denial of its dismissal motion. It argues that: (1) the trial court failed to apply correctly the FAA and case law under that statute; (2) the so-called "delegation" provision in the contract is severable and also must be presumed valid; (3) plaintiff failed to challenge the delegation provision specifically, and instead attacked the arbitration agreements as a whole; (4) the agreements recite that an arbitrator, not a judge, should decide all disputes concerning this matter, including their validity; (5) the AA's alternative dispute resolution clause should not be singled out for disparate treatment; (6) Galloway performed the contract and thus deserves the benefit of its arbitration clauses; (7) the decedent was a third-party beneficiary of the contract; (8) the court erroneously applied a state-law standard to the motion to dismiss; (9) the court improperly favored plaintiff's interests; and (10) the court improperly placed upon Galloway the burden of proving the validity of the arbitration provisions.
We have reorganized and summarized Galloway's arguments from the point headings in its brief.
Plaintiff opposes Galloway's arguments, maintaining that the trial court is correctly exercising its initial jurisdiction to decide whether the decedent is bound by the arbitration provisions and, more specifically, to resolve whether plaintiff had the express or implied authority to do so on her behalf. Co-defendants HealthSouth, Linwood, and AtlantiCare, meanwhile, contend that their cross-claims against Galloway for indemnity and contribution should be adjudicated in the Law Division, regardless of whether plaintiff's disputes with Galloway are arbitrated.
Acuity has neither filed a brief in this appeal nor a letter joining in the co-defendants' arguments.
II.
In reviewing the trial court's decision to retain jurisdiction and resolve the threshold question of agency, we recognize that our "standard of review of the applicability and scope of [the] arbitration agreement is plenary." EPIX Holdings Corp. v. Marsh & McLennan Cos., Inc., 410 N.J. Super. 453, 472 (App. Div. 2009) (citing Harris v. Green Tree Fin. Corp., 183 F.3d 173, 176 (3d Cir. 1999)). Applying that plenary review standard, we are satisfied that the trial court's denial of Galloway's demand to refer its dispute with plaintiff immediately to arbitration was legally sound.
A.
Because nursing home residency agreements involve interstate commerce, arbitration provisions contained within them are governed by the FAA. Estate of Ruszala ex rel. Mizerak v. Brookdale Living Cmtys., Inc., 415 N.J. Super. 272, 292 (App. Div. 2010). Plaintiff does not dispute this.
Given the public policy strongly favoring arbitration as a means of resolving disputes, "there is no material difference between the approach to the interpretation of arbitration agreements mandated by the FAA and the approach our courts have taken as a matter of [s]tate law even when the FAA does not apply." Angrisani v. Fin. Tech. Ventures, L.P., 402 N.J. Super. 138, 148 (App. Div. 2008) (citing Martindale v. Sandvik, Inc., 173 N.J. 76, 84 (2002); Marchak v. Claridge Commons, 134 N.J. 275, 282 (1993)). However, even under the FAA, state courts "appl[y] . . . general state[] law principles of contract formation." Martindale, supra, 173 N.J. at 86 (citing Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 475, 109 S. Ct. 1248, 1254, 103 L. Ed. 2d 488, 498 (1989)); see also NAACP of Camden Cnty. E. v. Foulke Mgmt. Corp., 421 N.J. Super. 404, 427-28 (App. Div.), certif. granted, 209 N.J. 96 (2011), dismissed, 213 N.J. 47 (2013).
As the United States Supreme Court has observed, "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." AT&T Techs, v. Commc'ns Workers of Am., 475 U.S. 643, 648, 106 S. Ct. 1415, 1418, 89 L. Ed. 2d 648, 655 (1986) (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S. Ct. 1347, 1353, 4 L. Ed. 2d 1409, 1417 (1960)). In that regard, the FAA requires that, "upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue," the trial court must "direct[] the parties to proceed to arbitration in accordance with the terms of the agreement." 9 U.S.C.A. § 4 (emphasis added).
Here, Galloway contends that the decedent agreed to arbitrate this dispute because plaintiff had the authority to sign on the decedent's behalf, consistent with the recitals in the AA and the ADRA. Plaintiff disputes that contention, thereby raising unresolved factual questions about the scope of his authority.
The threshold question therefore is which forum has jurisdiction to resolve whether plaintiff had the authority to bind his wife to the mandatory arbitration provisions that Galloway wishes to have enforced. Several reported cases are instructive in answering that question.
In Prima Paint Corp. v. Flood & Conklin Manufacturing Co., 388 U.S. 395, 399, 87 S. Ct. 1801, 1803, 18 L. Ed. 2d 1270, 1275 (1967), the plaintiff argued that the arbitration clause that had been agreed to should not be enforced because the plaintiff had been fraudulently induced into signing the contract. The Supreme Court held that, if a claim of fraudulent inducement specifically concerned the making of the agreement to arbitrate, the courts retained jurisdiction. Id. at 403-04, 87 S. Ct. at 1806, 18 L. Ed. 2d at 1277. However, challenges to the contract as a whole are ordinarily to be resolved in arbitration. Ibid. The Court has continued to apply this standard more recently. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 449, 126 S. Ct. 1204, 1210, 163 L. Ed. 2d 1038, 1046 (2006) (stating that "a challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator"); see also Rent-A-Center, West, Inc. v. Jackson, ___ U.S. ___, ___, 130 S. Ct. 2772, 2779, 177 L. Ed. 2d 403, 413 (2010) (holding that, absent a specific challenge to the arbitration clause, courts should "leav[e] any challenge to the validity of the [a]greement as a whole for the arbitrator").
Nevertheless, "[t]he issue of the contract's validity is different from the issue [of] whether any agreement between the alleged obligor and obligee was ever concluded." Buckeye, supra, 546 U.S. at 444 n. 1, 126 S. Ct. at 1208 n. 1, 163 L. Ed. 2d at 1043 n. 1 (emphasis added) (citations omitted). The Court's opinion in Buckeye expressly acknowledged that it "addresse[d] only the former, and d[id] not speak to the issue . . . [of whether] it is for courts to decide whether the alleged obligor ever signed the contract, whether the signor lacked authority to commit the alleged principal, and whether the signor lacked the mental capacity to assent." Ibid.
Though the Court expressly declined in Buckeye to address this issue, the cases cited to in the Court's footnote, including one decided by the Third Circuit Court of Appeals, have all held that a court, not an arbitrator, must decide such contract-formation issues. See Sandvik AB v. Advent Int'l Corp., 220 F.3d 99, 107 (3d Cir. 2000) (holding that a court must examine a person's signatory authority because agreement to a contract "is a necessary prerequisite to the court's fulfilling its role of determining whether the dispute is one for an arbitrator to decide under the terms of the arbitration agreement"); see also Spahr v. Secco, 330 F.3d 1266, 1272 (10th Cir. 2003) (holding that a court must decide whether a party had sufficient mental capacity to enter into a contract containing an arbitration provision); Chastain v. Robinson-Humphrey Co., 957 F.2d 851, 854-55 (11th Cir. 1992) (holding that a court must decide the issue of whether a party signed a contract containing an arbitration provision).
Plaintiff here does not challenge the nursing home contract as a whole. Rather, he contends that he did not have the authority to bind the decedent to the mandatory arbitration provisions within the form contract documents presented to him by Galloway.
When "a party claims that it never actually manifested assent to a contract containing an agreement to arbitrate — for example, because its signature was forged on the contract, or because an imposter purported to be an agent of that party with authority to bind it" — then "that party cannot be forced to arbitrate until it is first established by a court that the party willingly manifested assent to the underlying contract." Nuclear Elec. Ins. v. Cent. Power & Light Co., 926 F. Supp. 428, 434 (S.D.N.Y. 1996) (citing Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1140-41 (9th Cir. 1991); Restatement (Second) of Contracts §§ 163 cmt. a, 174 cmt. a).
Consistent with these principles, the trial court here correctly decided to retain jurisdiction over the discrete issue of plaintiff's authority. Indeed, as the United States Supreme court reaffirmed only a few weeks ago, "'certain gateway matters . . .' are presumptively for courts to decide." Oxford Health Plans LLC v. Sutter, ___ U.S. ___, ___, ___ S. Ct. ___, ___, 186 L. Ed. 2d 113, 119 n. 2 (2013) (emphasis added) (quoting Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 452, 123 S. Ct. 2402, 2407, 156 L. Ed. 2d 414, 422 (2003) (plurality opinion)).
Galloway insists that the broad wording of the AA, which purports to refer to mandatory arbitration "any" controversies relating to the contract, including the "making" and "validity" of the contract itself, can only be decided by an arbitrator, not by a judge. We reject that position.
If we were to apply Galloway's approach, then an imposter or stranger hypothetically could sign a binding arbitration clause purportedly on another person's behalf, and the victim of that wrongful act would be forced to present his or her objection solely to an arbitrator and be deprived of direct access to the courts. As the federal court in Nuclear Electric, supra, 926 F. Supp. at 434 sensibly recognized, it would be unfair to require such a victim to appear in a tribunal that it says it never agreed to in the first place.
Moreover, it is inadequate to say that an arbitrator's decision to compel such a victim to arbitrate ultimately could be subject to judicial review. The standards for vacating a decision generated by an arbitration, or other alternative dispute resolution process, are typically far more narrow than the ordinary standards for appellate review of trial court decisions. See, e.g., N.J.S.A. 2A:23A-13 (reciting the limited grounds for setting aside a decision under the New Jersey Alternative Procedure for Dispute Resolution Act); N.J.S.A. 2A:24-8 (reciting the limited grounds for setting aside an arbitration award under the New Jersey Arbitration Act); see also Mt. Hope Dev. Assocs. v. Mt. Hope Waterpower Project, L.P., 154 N.J. 141, 149 (1998) (noting the restrictions upon arbitration participants rights, and the limited availability of judicial review). In addition, a litigant's ability to obtain discovery in arbitration is commonly more restrictive than in a civil action governed by the Rules of Court. See, e.g., N.J. Mfrs. Ins. Co. v. Bergen Ambulatory Surgery Ctr., 410 N.J. Super. 270, 278 (App. Div. 2009).
We discern no federal mandate in First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S. Ct. 1920, 131 L. Ed. 2d 985 (1995), nor in Rent-A-Center, supra, ___ U.S. at ___, 130 S. Ct. at 2772, 177 L. Ed. 2d at 403 — two of the key cases relied upon by Galloway — requiring that the "gateway" issue of plaintiff's authority to bind the decedent be litigated before an arbitrator.
In First Options, 514 U.S. at 947, 115 S. Ct. at 1925, 131 L. Ed. 2d at 985, the Supreme Court recognized that courts may exercise their independent review on the question of whether the parties to an arbitration agreement "clearly agree[d]" to such arbitration. In the present case, plaintiff's deposition testimony, as well as his undisputed lack of a power of attorney for his wife and the absence of a court order of incapacity or guardianship, reasonably call into question whether his wife "clearly" assented to mandatory arbitration. Moreover, the failure of plaintiff to sign the "representative" signature line on the ADRA form also has not been explained. As Judge Johnson's December 2012 decision aptly notes, Singer acknowledged at her deposition that no medical personnel at Galloway determined that the decedent had the capacity to understand and sign the contract documents. We also concur with Judge Johnson that "it cannot be assumed that because [p]laintiff was merely present and inquired about payment when [his wife] was admitted to [Galloway's] facility that he had apparent authority to act on her behalf."
We do not read Rent-A-Center, supra, a case where the exclusive challenge to an arbitration agreement was based upon a claim of unconscionability, as guiding the analysis here. Plaintiff, through his assertions in discovery and his legal arguments on the present appeal, has sufficiently challenged the alleged delegation of authority from his late wife to place that issue before the court, even if other aspects of the arbitration agreement may be for an arbitrator to address. Although plaintiff here has also argued unconscionability as a secondary argument, Judge Johnson's decision solely rested upon the unresolved issues of agency and delegation. Hence, Rent-A-Center is not on point.
Plaintiff has argued unconscionability as an alternative position, should his argument on lack of agency fail. His brief in opposition to Galloway's dismissal motion in the trial court notably presented lack of agency as his first discrete argument.
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We recognize that Congress, by enacting the FAA, and the courts have supported a national policy favoring voluntary arbitration, where it is clear that the parties have elected that alternative process. It may well be that the present case ultimately ends up in arbitration, if the trial court decides after an appropriate evidentiary hearing that plaintiff did indeed have the authority to bind the declarant to Galloway's mandatory arbitration provisions. But that procedural eventuality must await a later day. In the meantime, the case is properly before the Law Division on the limited threshold issues of agency and delegation.
B.
As an alternative point, Galloway contends that, even if the decedent is not a party to the ADRA, decedent is, at the very least, a third-party beneficiary of the AA for the services she received at the nursing home. Thus, she should be bound by the arbitration clause. We decline to overturn the trial court's order retaining jurisdiction on this theory, one which the judge's opinion did not address.
We are mindful that, "in certain situations, a non-signatory to an arbitration agreement may compel a signatory to arbitrate." EPIX Holdings, supra, 410 N.J. Super. at 463 (citing Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 629, 129 S. Ct. 1896, 1901, 173 L. Ed. 2d 832, 839 (2009)). Here, Galloway advances the inverse proposition: to give a signatory (i.e., plaintiff) the authority to compel a non-signatory (i.e., the decedent) to arbitrate because the non-signatory allegedly was the intended beneficiary of the nursing home contract.
In Jansen v. Salomon Smith Barney, Inc., 342 N.J. Super. 254 (App. Div.), certif. denied, 170 N.J. 205 (2001), we concluded that the beneficiaries of a decedent's retirement accounts could be compelled to arbitrate their negligence claim against the defendant brokerage house. We reasoned that such a result could be appropriate because the plaintiff's cause of action was "essentially derivative of the decedent's rights." Id. at 258.
Here, Galloway relies in its brief upon Jansen to support its third-party beneficiary theory. However, in Jansen, it was established that a valid contract to arbitrate had been formed. Id. at 256. Here, the validity of that contract has yet to be confirmed in the trial court.
Moreover, the record is murky as to plaintiff's actual status with respect to the documents he signed, which in several places recite that he is a "representative" of the decedent, but on the signature page of the ADRA identifies him as signing in an "individual" capacity. These fact-dependent issues are also best reserved for the trial court, as it examines more closely on a plenary basis the actual relationship between plaintiff, the decedent, and the nursing home.
We have fully considered the balance of Galloway's remaining arguments, and conclude they lack sufficient merit to be addressed in this opinion. R. 2:11-3(e)(1)(E).
C.
Lastly, we discern no reason at this time to address, in an advisory fashion, the alleged non-arbitrability of the co-defendants' cross-claims for indemnity and contribution. See G.H. v. Twp. of Galloway, 199 N.J. 135, 136 (2009) (noting that courts generally should not "answer abstract questions or give advisory opinions").
Affirmed. The matter may proceed in the Law Division for plenary adjudication of the threshold questions of agency and third-party beneficiary status.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION