Opinion
NO. 2013-CA-00193-MR
06-20-2014
KINDRED HEALTHCARE, INC.: KINDRED NURSING CENTERS LIMITED PARTNERSHIP D/B/A KINDRED NURSING AND REHABILITATION - WOODLAND (F/N/A WOODLAND TERRACE HEALTH CARE FACILITY); KINDRED NURSING CENTERS EAST, LLC; KINDRED HOSPITALS LIMITED PARTNERSHIP; KINDRED HEALTHCARE OPERATING, INC.; AND KINDRED REHAB SERVICES, INC. D/B/A PEOPLEFIRST REHABILITATION APPELLANTS v. SHARRON BUTLER, AS EXECUTRIX OF THE ESTATE OF JOHN ALVIN POTTINGER, DECEASED APPELLEE
BRIEFS FOR APPELLANTS: Donald L. Miller, II Jan G. Ahrens Kristin M. Lomond Louisville, Kentucky BRIEF FOR APPELLEE Robert E. Salyer Lexington, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM HARDIN CIRCUIT COURT
HONORABLE KELLY M. EASTON, JUDGE
ACTION NO. 12-CI-01816
OPINION
AFFIRMING
BEFORE: CAPERTON, MOORE, AND VANMETER, JUDGES. MOORE, JUDGE: Kindred Healthcare, Inc. and the associated entities listed above (collectively, "Kindred") appeal the order of the Hardin Circuit Court denying its motion to compel arbitration of claims brought by Sharron Butler, as executrix of the estate of her father, John Pottinger. After thorough review of the record, we affirm.
An order denying a motion to compel is immediately appealable. Kentucky Revised Statutes (KRS) 417.220(1).
I. FACTUAL BACKGROUND
John Pottinger executed an instrument titled "Durable Power of Attorney" on November 13, 2007, in which he named his daughter, Sharron Butler, as his attorney-in-fact. The durable power of attorney document provided the following:
KNOW ALL MEN BY THESE PRESENTS:
That I, JOHN POTTINGER, of 2689 Aetna Furnace Road, Magnolia, Hart County, Kentucky, hereby constitute and appoint my daughter, SHARRON BUTLER, as my attorney-in-fact or if my daughter refuses or is unable to act, I constitute and appoint my son-in-law, MICHAEL BUTLER, as my attorney-in-fact, with full power for me and in my name, place and stead, to make contracts, lease, sell, mortgage or convey any real or personal property that I may now or hereafter own, to collect any funds or debts which may now or hereafter be due to me, to retain and release all liens on real and personal property, to draw, make, endorse and sign any and all checks, contracts, certificates of deposit
or agreements; to invest or reinvest money for me; to obtain my medical records from any source; to file and sign on my behalf any and all federal, state, and local income tax returns; to institute or defend suits concerning my property or rights, and generally to do and perform for me and in my name all that I might do if present, and I hereby adopt and ratify all of the acts of my said attorney-in-fact done in pursuance of the power hereby granted as fully as if I were present acting in my own proper person; provided, however, that my said attorney-in-fact is not to bind me as surety, guarantor or endorser for accommodation nor to give away any of my estate whatsoever.
Pursuant to KRS 386.093, the power herein granted shall not be affected by the disability of the principal.
I, JOHN POTTINGER, hereby revoke any and all Powers of Attorney previously granted by me to any individual.
The document concluded with Mr. Pottinger's notarized signature. Mr. Pottinger was admitted to Woodland Terrace Health Care Center on June 7, 2011. Upon his admission, Ms. Butler signed a document titled "Alternative Dispute Resolution Agreement Between Resident and Facility (Optional)" on his behalf. The ADR Agreement provided, in relevant part:
As indicated in the caption of this case, Kindred Nursing Centers Limited Partnership was doing business as Woodland Terrace Health Care Facility in Hardin County, Kentucky.
Any and all claims or controversies arising out of or in any way relating to this ADR Agreement ("Agreement") or the Resident's stay at the Facility including disputes regarding interpretation of this Agreement, whether arising out of State or Federal law, whether existing or arising in the future, whether for statutory, compensatory or punitive damages and whether sounding in breach of contract, tort or breach of statutory duties (including, without limitation, any claim based on violation of rights, negligence, medical malpractice, any other departureThe other significant portion of the ADR Agreement is the last section appearing just above the signatures. This section is titled "RESIDENT'S UNDERSTANDING OF AGREEMENT." It states that the resident understands that they have the right to seek legal counsel concerning the agreement. It also states that the execution of the Agreement is not a precondition to admission at the facility, but that it was optional and could be revoked within thirty days of signature.
from the accepted standards of health care or safety or the Code of Federal Regulations or unpaid nursing home charges), irrespective of the basis for the duty or of the legal theories upon which the claim is asserted, shall be submitted to alternative dispute resolution in the Commonwealth of Kentucky as described in this Agreement. ... The parties to this Agreement understand that the Dispute Resolution Process contains provisions for both mediation and binding arbitration. If the parties are unable to reach settlement informally, or through mediation, the dispute shall proceed to binding arbitration. Binding arbitration means that the parties are waiving their right to a trial, including their right to a jury trial, their right to trial by a Judge and their right to appeal the decision of the arbitrator(s). Except as expressly set forth herein, the provisions of the Uniform Arbitration Act, KRS 417.045 et seq., shall govern the Arbitration.
In the area designated for signatures, Ms. Butler signed her name on the line labeled "Signature of Resident or Legal Representative." On the line labeled "Legal Representative Printed Name and Capacity (i.e., guardian, durable power of attorney, spouse, son, daughter, etc.)," Ms. Butler printed her name and wrote "daughter" afterwards.
Ms. Butler was named the executrix of Mr. Pottinger's estate following his death. She then instituted this action in Hardin Circuit Court against Kindred. Her complaint against Kindred alleges claims of negligence, medical negligence, corporate negligence, violations of the long-term care resident's rights statute, and wrongful death. Kindred moved to compel arbitration of the claims based on the terms of the ADR Agreement.
The circuit court denied the motion to compel. First, the circuit court found that Ms. Butler did not sign the ADR Agreement in her capacity as a durable power of attorney, but in her capacity as "daughter." This status did not convey to her any authority to bind her father to an arbitration agreement. Secondly, the court relied on Ping v. Beverly Enterprises, 376 S.W.3d 581 (Ky. 2012), and determined that even if the parties intended the existing power of attorney to be used as authority to enter into the agreement, the language used in the power of attorney document was insufficient to authorize such action. The circuit court also acknowledged in its order that even if the arbitration agreement was valid, the wrongful death claims would not be precluded from litigation. Kindred appeals the circuit court's order denying its motion to compel arbitration.
Ping held that even if there was a valid arbitration agreement, a decedent or his agent cannot bind his beneficiaries to arbitrate their wrongful death claims because those claims are not derived through or on behalf of the decedent, but accrue separately. Ping, 376 S.W.3d at 599.
II. STANDARD OF REVIEW
"In reviewing an order denying enforcement of an arbitration agreement, the trial court's legal conclusions are reviewed de novo 'to determine if the law was properly applied to the facts[;]' however, factual findings of the trial court 'are reviewed under the clearly erroneous standard and are deemed conclusive if they are supported by substantial evidence.'" Energy Home, Division of Southern Energy Homes, Inc. v. Peay, 406 S.W.3d 828, 833 (Ky. App. 2013) (quoting Padgett v. Steinbrecher, 355 S.W.3d 457, 459 (Ky. App. 2011)).
III. ANALYSIS
We note at the outset of our analysis that Kindred has failed to address in its brief the determination made by the trial court in finding in favor of Ms. Butler that she did not have the authority to bind her father to an arbitration agreement because Ms. Butler signed the document as "daughter" and not in her capacity as Mr. Pottinger's attorney-in-fact. "When a judgment is based upon alternative grounds, the judgment must be affirmed on appeal unless both grounds are erroneous." Milby v. Mears, 580 S.W.2d 724, 727 (Ky. App. 1979). The appellant's brief should address every ground upon which the trial court's judgment is based. Id. Furthermore, "[a]n appellant's failure to discuss particular errors in his brief is the same as if no brief at all had been filed on those issues. Consequently, the trial court's determination of those issues not briefed on appeal is ordinarily affirmed." Id. (internal citations omitted). Therefore, we are compelled to affirm the circuit court's decision to deny Kindred's motion to compel arbitration because this alternative basis was not challenged. Nonetheless, we are still inclined to address the arguments presented of whether the power of attorney document was sufficient to authorize the arbitration agreement under Ping, and for the reasons stated below, we affirm the trial court and conclude that it was not.
The issue was included in Kindred's prehearing statement and described as one of the proposed issues to be argued on appeal as "whether [the] [c]ircuit [c]ourt erred by improperly denying [the] motion to compel on grounds that [Ms. Butler], even though attorney-in-fact, signed [the] ADR agreement as "daughter." However, Kindred neglected to put forth this argument in its appellant brief.
The enforcement of an arbitration agreement is regulated by the Federal Arbitration Act, (FAA) 9 U.S.C. §§ 1 et seq., and the Kentucky Uniform Arbitration Act (KUAA), KRS 417.045 et seq. "Both Acts evince a legislative policy favoring arbitration agreements, or at least shielding them from disfavor." Ping, 376 S.W.3d at 588. The existence of an agreement to arbitrate depends on state law rules of contract formation. Id. at 590. The party seeking to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate. Id. The FAA does not preempt generally applicable state law contract principles although it does preempt state laws that apply only to arbitration agreements. Great Earth Cos., Inc v. Simons, 288 F.3d 878, 889 (6th Cir. 2002).
The central issue in this case is whether the power of attorney document executed by Mr. Pottinger appointing his daughter, Ms. Butler, as his attorney-in-fact authorized her to enter into the ADR Agreement with the nursing home upon his admission as a resident. "[A] power of attorney is a form of agency." Moore v. Scott, 759 S.W.2d 827, 828 (Ky. App. 1988). The scope of the authority under which the agent acts must be expressly granted by the principal. Ping, 376 S.W.3d at 592.
In the trial court's order, it relied on the Supreme Court decision of Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581. In Ping, the daughter, Donna Ping, served as the attorney-in-fact for her mother, Mrs. Duncan. Id. at 586. Ping entered into an arbitration agreement with a nursing home on her mother's behalf upon her mother's admission as a resident to the home. Id. After Mrs. Duncan died, Ping filed a wrongful death action on behalf of the estate. Id. The nursing home sought to compel arbitration of the claim under the terms of the arbitration agreement Ping signed on her mother's behalf.
The Kentucky Supreme Court refused to compel arbitration, finding the power of attorney did not vest Ping with the authority to execute the arbitration agreement on her mother's behalf. Id. at 594. The scope of authority in Mrs. Duncan's power of attorney limited Ping to make only financial and medical care decisions on her behalf. It also included a "catch-all" provision "to do and perform any, all, and every act and thing whatsoever requisite and necessary to be done, to and for all intents and purposes, as I might or could do if personally present ..." Id. at 586. The Court determined that because the arbitration agreement was not a prerequisite for admission to the nursing home, it did not constitute a medical care decision. Id. at 593. The Court also recognized that the execution of the arbitration agreement did not involve a financial decision. Id. at 594. Additionally, the "catch-all" provision did not authorize Ping to execute the arbitration agreement on her mother's behalf. Id. at 592. The Court observed that the general expressions were limited by the "requisite and necessary" language used in the power of attorney document, and that if the general provisions were given effect, the grants of authority to perform specific acts would be unnecessary. Id. The Ping Court concluded "[a]bsent authorization in the power of attorney to settle claims and disputes or some such express authorization addressing dispute resolution, authority to make such a waiver is not to be inferred lightly." Id. at 593. The Court did not find any indication in the power of attorney suggesting Ping had the authority to make such waivers on her mother's behalf.
Kindred argues that the facts of Ping are distinguishable from this case and that Mr. Pottinger's power of attorney is broader than that in Ping. Kindred first claims the distinguishing feature of the power of attorney in this case to be the express authorization for Ms. Butler "to draw, make, endorse and sign any and all checks, contracts, certificates of deposit or agreements." Additionally, the power of attorney allows Ms. Butler to "institute and defend suits concerning my property or rights." Kindred asserts that this authority must inherently include the ability to mediate, arbitrate, and settle disputes.
Kindred first asserts that Mr. Pottinger's power of attorney is broader than that in Ping because it permits Ms. Butler "to draw, make, endorse and sign any and all checks, contracts, certificates of deposit or agreements." The Ping Court emphasized that an agent's authority under a power of attorney is to be construed with reference to the types of transactions expressly declared in the document. Ping, 376 S.W.3d at 592. This is consistent with the Restatement (Second) of Agency § 37, which provides:
(1) Unless otherwise agreed, general expressions used in authorizing an agent are limited in application to acts done in connection with the act or business to which the authority primarily relates.Mr. Pottinger's power of attorney primarily relates to his property and money. The relevant specific grants of authority for our purposes include, "to make contracts, lease, sell, mortgage or convey and real or personal property ... to draw, make, endorse and sign any and all checks, contracts, certificates of deposit or agreements ... to institute and defend suits concerning my property or rights ...." We recognize that the power of attorney does provide authority to make and sign contracts or agreements, and arbitration is a matter of contract. However, in reading Mr. Pottinger's power of attorney document as a whole, the context in which those grants of authority appear demonstrate that they are meant to relate to Mr. Pottinger's money and property, not the general ability to enter into any contract.
(2) The specific authorization of particular acts tends to show that a more general authority is not intended.
We also note that a general expression is included in Mr. Pottinger's power of attorney authorizing the attorney-in-fact "generally to do and perform for me and in my name all that I might do if present, and I hereby adopt and ratify all of the acts of my said attorney-in-fact done in pursuance of the power hereby granted as fully as if I were present acting in my own proper person." Mr. Pottinger's power of attorney does not contain any limiting "requisite and necessary" language as in Ping. However, based on Ping's approach to the authority granted in a power of attorney, this general expression does not grant universal authority to make any decision on behalf of the individual executing the power of attorney document as it would make specific grants of authority in the document superfluous. It pertains to Mr. Pottinger's property and money.
Kindred next contends that the authority "to institute or defend suits" should include the ability to mediate and arbitrate. It looks to section 35 of the Restatement: "Unless otherwise agreed, authority to conduct a transaction includes authority to do acts which are incidental to it, usually accompany it, or are reasonably necessary to accomplish it." Restatement (Second) of Agency § 35 (1958). However, we disagree that the power to consent to binding arbitration or alternative dispute resolution is incidental or reasonably necessary to accomplish the act of instituting or defending a lawsuit.
The Court in Ping noted the significance of comment h. to Restatement (Third) of Agency § 2.02 (2006), which provides in relevant part:
[T]he consequences that a particular act will impose on the principal may call into question whether the principal has authorized the agent to do such acts. Three types of acts should lead a reasonable agent to believe that the principal does not intend to authorize the agent to do the act. First are crimes and torts, ... Second, acts that create no prospect of economic advantage for the principal, ... Third, some acts that are otherwise legal create legal consequences for a principal that are significant and separate from the transaction specifically directed by the principal.Based on the language employed in Mr. Pottinger's power of attorney of the ability "to institute or defend suits concerning my property or rights," a waiver of the right to proceed by suit and associated right to a jury trial may not be inferred. The use of the specific expression regarding "suits" suggests Mr. Pottinger's intent to have his claims pursued or defended in a court action, not arbitration proceedings.
The use of the term "suits" in Mr. Pottinger's durable power of attorney implies Ms. Butler has the ability to take actions consistent with instituting and defending matters in a court of law. See BLACK'S LAW DICTIONARY (9th ed. 2009) (emphasis added). The court of law reference in defining "suit" suggests a setting administered by a judicial tribunal. Id. Accordingly, the commonly accepted meaning of the language employed in the power of attorney document indicates a consequential distinction between suits in a court of law before a judge and proceedings before an arbitrator.
Furthermore, arbitration proceedings are not required to conform to the procedural rules of courts. The ADR Agreement at issue in this case provides that the proceedings will be "conducted in accordance with the Kindred Healthcare Alternative Dispute Resolution Rules of Procedure." Additionally, the ADR Agreement acknowledges in Part 1, Section I, the distinction between suits and arbitration proceedings: "If the award is not timely paid, the prevailing party may bring legal action pursuant to KRS 417.150 to enforce the award as if it were a judgment entered by a court." (Emphasis added). These provisions in the ADR Agreement further support the differentiation between the terms.
Accordingly, upon review of the applicable law and the language employed in Mr. Pottinger's power of attorney document, we conclude that Mr. Pottinger's durable power of attorney did not authorize Ms. Butler to enter into the optional ADR Agreement on his behalf upon his admission to the nursing home. Therefore, we affirm the order of the Hardin Circuit Court denying Kindred's motion to compel arbitration.
We note that Kindred first raises the argument that Ms. Butler cannot maintain a wrongful death claim in its reply brief. This is an impermissible way to present an argument for review. See Milby v. Mears, 580 S.W.2d at 728("[a] reply brief is not a device for raising new issues which are essential to the success of the appeal"); see also Kentucky Rules of Civil Procedure (CR) 76.12(4)(e). Additionally, Kindred did not include this argument in its prehearing statement. Pursuant to CR 76.03(4)(h) a prehearing statement must include "[a] brief statement of the facts and issues proposed to be raised on appeal, including jurisdictional challenges[,]" and CR 76.03(8) provides that "[a] party shall be limited on appeal to issues in the prehearing statement except that when good cause is shown the appellate court may permit additional issues to be submitted upon timely motion." See Sallee v. Sallee, 142 S.W.3d 697, 698 (Ky. App. 2004) ("Since that issue was not raised either in the prehearing statement or by timely motion seeking permission to submit the issue for "good cause shown," CR 76.03(8), this matter is not properly before this court for review.") Accordingly, this argument is not properly before this Court for review.
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ALL CONCUR. BRIEFS FOR APPELLANTS: Donald L. Miller, II
Jan G. Ahrens
Kristin M. Lomond
Louisville, Kentucky
BRIEF FOR APPELLEE Robert E. Salyer
Lexington, Kentucky