Opinion
D083307
04-22-2024
DOREEN ACRA, et al., Plaintiffs and Respondents, v. CALIFORNIA MAGNOLIA CONVALESCENT HOSPITAL, INC., Defendant and Appellant.
Lewis Brisbois Bisgaard & Smith, Lann G. McIntyre, Tracy D. Forbath, Rima M. Badawiya and Suzanne L. Schmidt for Defendant and Appellant. Smith Clinesmith, Dawn M. Smith and Janine A. Mitchell for Plaintiffs and Respondents.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Riverside County, No. CVR12101471 Chad Firetag, Judge.
Lewis Brisbois Bisgaard & Smith, Lann G. McIntyre, Tracy D. Forbath, Rima M. Badawiya and Suzanne L. Schmidt for Defendant and Appellant.
Smith Clinesmith, Dawn M. Smith and Janine A. Mitchell for Plaintiffs and Respondents.
DO, J.
INTRODUCTION
California Magnolia Convalescent Hospital, Inc. (Magnolia) appeals the trial court's order denying its petition to compel arbitration in Doreen Acra's action for elder abuse, negligence, and wrongful death. Magnolia asserted Doreen was acting as the agent of her now deceased husband, Billy Acra, when she signed a form agreement to arbitrate upon Billy's admission to Magnolia. To prove Doreen had actual or ostensible authority to execute the form agreement on her husband's behalf, Magnolia relied exclusively-with no supporting information or context-on a single statement in the form agreement itself. The statement purports to certify that Doreen was "duly authorized" to execute the agreement as "the representative / agent" of Billy. As a matter of law, this statement, standing alone, was not enough to prove a valid agency. We affirm the trial court's order denying the petition.
BACKGROUND
In March 2021, Doreen and Pamela Archuleta, Billy's stepdaughter (together plaintiffs), filed a complaint against Magnolia asserting claims of elder abuse (Welf. & Inst. Code, § 15600 et seq.), negligence, and wrongful death. They asserted their claims for elder abuse and negligence as Billy's heirs and successors in interest, and for wrongful death in their individual capacities.
According to the operative complaint, Billy was admitted to Magnolia on March 25, 2020, for physical therapy and rehabilitation following a stroke. At the time, the COVID-19 virus outbreak presented an exceptionally dangerous risk for Billy because of his frail condition. Magnolia nevertheless allowed a physical therapist who had the virus to continue seeing patients. As the outbreak progressed, Magnolia's staff members stopped coming into work and Billy was left with very little food and water and minimal care for five days. Magnolia suddenly discharged him to his family on April 8, with no warning and no plan or instructions for his continued care. Billy was then admitted to a skilled nursing care facility run by Magnolia's co-defendant, Ballard Rehabilitation Hospital. He died a few weeks later, allegedly from willful and negligent care by the two facilities.
In February 2022, Magnolia discovered a single-page binding arbitration agreement in Magnolia's file for Billy while responding to discovery requests propounded by plaintiffs. Plaintiffs would not agree to arbitrate their claims, so Magnolia filed a petition to compel arbitration.
Magnolia's petition contained an allegation that Doreen signed Magnolia's form agreement to arbitrate on behalf of Billy as his agent. The allegation reads as follows: "When [Doreen] signed the Magnolia Arbitration Agreement, and all other related admission agreements, she was acting at all times as [Billy's] agent, and she had no reason to do so otherwise." The only evidence adduced by Magnolia to support the agency allegation, however, was a copy of the purported agreement itself and two supporting declarations.
Neither declaration addressed whether Doreen had authority to act on her husband's behalf. The first declaration by Magnolia's counsel stated that the arbitration agreement "was taken from the files of Decedent Billy Acra from Magnolia" and the files "were kept securely in the ordinary course of business from the time they were created to the present." The second declaration by one of Magnolia's employees familiar with its business practices stated, "The Arbitration Agreement pertaining to Billy Acra was prepared and maintained in the normal course of business by authorized persons at or near the time of the act, condition or event."
As for the alleged binding agreement itself, there are two signatures that appear to be handwritten and appear to spell "Doreen Acra." The signatures are located above signature lines that state "Resident Representative / Agent Signature." Above the two signatures, there is a paragraph-the one Magnolia relies upon-that states, "The undersigned certifies that he/she has read this Agreement, and has been given a copy, and is either the Resident, or is the representative / agent of the Resident, duly authorized to execute the above and accept its terms."
Thus, the single item of evidence adduced by Magnolia to prove that Doreen had authority as an agent to bind her husband to arbitration was her own alleged representation of that authority.
The trial court denied Magnolia's petition on two grounds. First, the court found Magnolia failed to meet its initial burden to authenticate Doreen's signatures on the alleged agreement. Second, the court found Magnolia failed to meet its burden to prove Doreen had actual or ostensible authority to agree to arbitration on Billy's behalf. As explained in the court's ruling, "No evidence is cited in support of any of [Magnolia's] assertions, and none was presented; the only exhibit is the arbitration agreement."
DISCUSSION
California has a strong public policy in favor of resolving claims through arbitration. (Marsch v. Williams (1994) 23 Cal.App.4th 250, 254 (Marsch).) "[D]oubts concerning the scope of arbitrable issues are to be resolved in favor of arbitration." (Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 323.)
The right to compel another party to arbitrate, however, requires a contract. (Young v. Horizon West, Inc. (2013) 220 Cal.App.4th 1122, 1128 (Young).) This is because California also recognizes that "the right to pursue claims in a judicial forum is a substantial right and one not lightly to be deemed waived." (Marsch, supra, 23 Cal.App.4th at p. 254.) As a result, "the strong public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement or who have not authorized anyone to act for them in executing such an agreement." (County of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996) 47 Cal.App.4th 237, 245.)
With these principles in mind, we turn to Magnolia's contentions on appeal. Because the trial court's decision was based solely on questions of law, our review is de novo. (Kinder v. Capistrano Beach Care Center, LLC (2023) 91 Cal.App.5th 804, 811 (Kinder); Rogers v. Roseville SH, LLC (2022) 75 Cal.App.5th 1065, 1072 (Rogers) ["Although agency is generally a factual question, where the facts are undisputed, . . . we independently review the case to determine whether agency and a valid arbitration agreement exists."].)
I.
The Trial Court Correctly Ruled That Magnolia Failed to Prove Billy Agreed to Arbitrate His Claims
A party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972 (Engalla).) "The question of whether a valid agreement to arbitrate exists is determined by reference to the law applicable to contracts generally." (Kinder, supra, 91 Cal.App.5th at p. 811 [cleaned up].)
Here, Doreen brought the causes of action for elder abuse and negligence as Billy's heir and successor in interest. But it is Doreen's alleged signature, not Billy's, that appears on the purported agreement. Under most circumstances, a person who is not a party to an arbitration agreement is not bound by it. (Flores v. Evergreen At San Diego, LLC (2007) 148 Cal.App.4th 581, 587 (Flores).) However, a person who is authorized to act as another person's agent can commit the principal to binding arbitration. (Kinder, supra, 91 Cal.App.5th at p. 812.) Thus, in order to compel arbitration of the elder abuse and negligence claims, Magnolia needed to prove Doreen signed the alleged arbitration agreement on behalf of Billy as his agent.
"An agent is one who represents another, called the principal, in dealings with third persons.... In California, an agency is either actual or ostensible." (Kinder, supra, 91 Cal.App.5th at p. 812 [cleaned up].) Therefore, "[w]hen a defendant contends an agreement to arbitrate is binding because it was signed by an agent of the plaintiff, the defendant bears the burden of proving the signatory was the plaintiff's actual or ostensible agent." (Ibid.)
We agree with the trial court that Magnolia failed to present competent evidence in its petition that Doreen was Billy's actual agent, and failed to adduce any evidence at all that Doreen was Billy's ostensible agent. Magnolia is also mistaken as to how the authentication of documents work, and its effect, if any, on the burden of proof on a petition to compel arbitration.
A. No Proof of Actual Agency
" '[A]n agency[, whether actual or ostensible,] cannot be created by the conduct of the agent alone; rather conduct by the principal is essential to create the agency.'" (Rogers, supra, 75 Cal.App.5th at p. 1074.) "Actual agency arises when the principal's conduct causes the agent reasonably to believe that the principal consents to the agent's act on behalf of the principal." (Ibid.; Civ. Code, § 2316.)" 'The principal must in some manner indicate that the agent is to act for him, and the agent must act or agree to act on his behalf and subject to [the principal's] control.'" (van't Rood v. County of Santa Clara (2003) 113 Cal.App.4th 549, 571.)
Magnolia contends it satisfied its burden of proof on the question of agency by attaching the alleged arbitration agreement to its petition and authenticating it as a document that was found in its patient files and prepared in the ordinary course of business. According to Magnolia, the representation by Doreen that she was "duly authorized" to accept the arbitration terms as a "representative / agent" of Billy constitutes prima facie evidence that her husband authorized her to act as his agent. Doreen was presumed to have read and understood the form agreement under general principles of contract law. She presented no evidence during the underlying proceedings to refute the representation that she was acting as Billy's agent. Therefore, according to Magnolia, the trial court should have inferred that Doreen was Billy's actual agent and found the burden of proving a valid agreement was satisfied.
Magnolia's argument overlooks a long-established principle of agency law and the rules of evidence. "It is, of course, a well settled and just principle of law that no person is bound by the declarations of another who is not his agent and expressly or by implication authorized by him to make the declarations." (Union Const. Co. v. Western Union Telegraph Co. (1912) 163 Cal. 298, 305.) For this reason, "[a]gency is not provable by the mere declarations of the agent, not made under oath or in the presence of the principal, unless communicated to, and acquiesced in, by the principal." (Ibid.; accord Howell v. Courtesy Chevrolet, Inc. (1971) 16 Cal.App.3d 391, 400-401; Dooley v. West American Commercial Ins. Co. (1933) 133 Cal.App. 58, 62 ["the mere declaration of a person that he is the agent of another is not, in and of itself, competent evidence of the agency, unless made in the presence of, or communicated to and acquiesced in by, the principal"]; see also Evid. Code, § 1222.) Applying this rule to the interpretation of contracts, "a defendant cannot meet its burden to prove [a] signatory acted as the agent of a plaintiff by relying on representations of the purported agent alone." (Kinder, supra, 91 Cal.App.5th at p. 812.)
A host of cases apply this and related agency principles in the context of petitions to compel arbitration filed by skilled nursing facilities under closely analogous circumstances. (Kinder, supra, 91 Cal.App.5th at pp. 813814 [collecting cases]; Goldman v. Sunbridge Healthcare, LLC (2013) 220 Cal.App.4th 1160, 1173 (Goldman); cf., Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1221-1222.) Kinder, not cited by either party, is directly on point. We agree with its analysis.
The plaintiff in Kinder, like Billy, was a resident at a skilled nursing facility. The defendant facility brought a petition to compel arbitration based on arbitration agreements allegedly signed on her behalf by her adult children. (Kinder, supra, 91 Cal.App.5th at p. 808.) The pre-printed agreements in Kinder are functionally indistinguishable from Magnolia's form agreement. The resident's name appeared in the" 'Resident Name'" field. The apparent signatures of the resident's children appeared above a signature line reserved for the resident's representatives. And directly above the signature block, language that purports to certify the adult children are authorized agents appears as follows:" 'By virtue of Resident's consent, instruction and/or durable power of attorney, I hereby certify that I am authorized to act as Resident's agent in executing and delivering [sic] this arbitration agreement.'" (Id. at pp. 809-810.) Like here, the only other evidence presented in support of the petition was a declaration asserting the agreements were prepared and maintained in the ordinary course of business. (Id. at p. 809.)
On these facts, which are virtually identical to those here, the Kinder court rejected the defendant facility's contention that the purported certification by the resident's children was sufficient on its own to satisfy its burden to prove they were acting as her actual agents. (Kinder, supra, 91 Cal.App.5th at p. 813.) The court concluded the defendant nursing facility presented no competent evidence that the plaintiff did anything to lead her children to believe they had actual authority to enter into arbitration agreements on her behalf, because "actual agency cannot be established without evidence of the principal's conduct." (Ibid., citing Flores, supra, 148 Cal.App.4th at p. 588.)
So too here. Magnolia did not offer any evidence of actual authority other than Doreen's own purported representation of that authority. This was insufficient to prevail as a matter of law.
Magnolia raises a new argument for the first time in its reply brief on appeal. It asserts "undisputed" allegations in the unverified operative complaint establish that Billy negligently caused Doreen to believe she was authorized to execute an arbitration agreement on his behalf. Based on allegations that Billy "moved into a full-time skilled nursing facility for extensive care and rehabilitation," "had just suffered a stroke," and "required extensive assistance in the basic activities of daily living such as ambulation, turning and reposition, feeding, bathing, and dressing," Magnolia asks us to infer that "he would turn to someone he trusted to fill out his admission paperwork on his behalf." From there, Magnolia would have us jump to the conclusion that Billy explicitly authorized Doreen to agree to arbitrate any claims that might arise against Magnolia. We decline to do so.
For one, Magnolia failed to raise this argument in a timely manner and thus it is forfeited. (Golden Door Properties, LLC v. County of San Diego (2020) 50 Cal.App.5th 467, 559; Tisher v. California Horse Racing Board (1991) 231 Cal.App.3d 349, 361 [holding the "failure to raise an issue in the[ ] opening brief waives the issue on appeal"].) For another, the inference we are asked to draw-that it is virtually certain an elderly man, who just suffered a stroke, upon admission to a skilled nursing facility, would discuss with his wife on his own initiative whether to arbitrate potential claims that might arise-is entirely speculative.
The unverified allegations Magnolia cites are also irrelevant. They address Billy's condition at the time of his second admission to Magnolia. The arbitration agreement was allegedly signed six months earlier at the time of his first admission. Magnolia's new argument, even if not forfeited, is thus unavailing.
The trial court correctly ruled Magnolia failed to prove Doreen had actual authority to act as Billy's agent and agree to binding arbitration.
B. No Proof of Ostensible Agency
"Ostensible agency arises when the principal's conduct causes the third party reasonably to believe that the agent has the authority to act on the principal's behalf." (Rogers, supra, 75 Cal.App.5th at p. 1074; Civ. Code, § 2317.)" 'Before recovery can be had against the principal for the acts of an ostensible agent, three requirements must be met: The person dealing with an agent must do so with a reasonable belief in the agent's authority, such belief must be generated by some act or neglect by the principal sought to be charged and the person relying on the agent's apparent authority must not be negligent in holding that belief.'" (Valentine v. Plum Healthcare Group, LLC (2019) 37 Cal.App.5th 1076, 1087 (Valentine).) Magnolia presented no evidence at all on any of these points.
To demonstrate ostensible authority, Magnolia relied on the declaration of one of its employees familiar with its business practices. The employee's declaration stated only that the employee is "familiar with the documents Magnolia generates in its normal course of business, including Admission and Arbitration Agreements," and "[t]he Arbitration Agreement pertaining to Billy Acra was prepared and maintained in the normal course of business by authorized persons at or near the time of the act, condition or event." The declaration says nothing about anything Billy allegedly did to lead Magnolia to believe that Doreen was authorized to enter into an arbitration agreement on his behalf.
In the case of ostensible authority, it is the principal's conduct that is at issue, not the agent or the third party. (Civ. Code, § 2300.)" 'Ostensible agency cannot be established by the representations or conduct of the purported agent; the statements or acts of the principal must be such as to cause the belief the agency exists.'" (Valentine, supra, 37 Cal.App.5th at p. 1087.) As the trial court correctly explained, "Invoking these rules . . . requires proof of facts showing actions, and by the principal in particular, to create the appearance of agency. Nothing like that at all was submitted with the [petition].... There is no evidence of any kind that Magnolia had reason to think Doreen was acting as [Billy's] authorized agent when she purported to bind him to the arbitration agreement because there is no evidence of any kind regarding [w]hat [Billy] did or was capable of doing. [¶] As such, . . . Magnolia has failed to meet its burden of proof, and the [petition] to compel arbitration is denied."
It is true, as Magnolia points out, that ostensible authority can arise as a result of the principal's negligence, and that "[t]o establish actual or ostensible authority the principal's consent need not be express." (Tomerlin v. Canadian Indem. Co. (1964) 61 Cal.2d 638, 644.) Also true, "the creation of an agency may be proved by circumstantial evidence." (MacDonnell v. California Lands, Inc. (1940) 15 Cal.2d 344, 347.) But a party that seeks to rely on circumstantial evidence to satisfy its burden of proof cannot prevail in a vacuum. Here, Magnolia asserts Doreen had ostensible authority "because there is no evidence [Billy] limited, disavowed or objected to his wife's conduct. For example, there is no evidence [Billy] attempted to stop [Doreen] from signing the agreement." But a lack of evidence in the record does not help Magnolia and does not permit the drawing of circumstantial inferences.
Magnolia had the burden of proving the express or negligent creation of ostensible authority. (Valentine, supra, 37 Cal.App.5th at pp. 1086-1087.) Magnolia did not attempt to meet this burden with testimony, for example, by an employee about its business practices when a third party handles the admission process for a new resident. (See Garcia v. KND Development 52, LLC (2020) 58 Cal.App.5th 736, 739 ["[Defendant's] declarant inferred from the arbitration agreements and her understanding of the admission process that [the patient] nodded or shook his head in a manner authorizing the execution of the arbitration agreements on his behalf."].) Magnolia did not attempt to demonstrate Doreen was acting as Billy's agent pursuant to a durable power of attorney. (See Gordon v. Atria Management Co., LLC (2021) 70 Cal.App.5th 1020, 1022 ["[The patient] signed a durable power of attorney and nomination of conservator (DPOA), appointing . . . two other individuals as her 'co-attorneys-in-fact,' who were jointly and severally authorized to act on her behalf and in her 'name, place, and stead' as set forth in the DPOA.' "].) In fact, as noted by the trial court, the record does not even address whether Billy was conscious or unconscious when he was first admitted. (See Pagarigan v. Libby Care Center, Inc. (2002) 99 Cal.App.4th 298, 302 ["Defendants produced no evidence . . . this comatose and mentally incompetent woman did anything which caused them to believe either of her daughters was authorized to act as her agent in any capacity."].) Absent this and other basic information about the admission process at the time of Billy's first admission to Magnolia, it is simply impossible to say whether he may or may not have been negligent in creating an appearance of agency on the part of Doreen. (Young, supra, 220 Cal.App.4th at pp. 1132-1134 [collecting cases]; Valentine, supra, 37 Cal.App.5th at pp. 1086-1087.)
Also of no help to Magnolia is the line of authority that addresses silent principals. Magnolia complains it is difficult to prove a negative and therefore purportedly illogical to demand that it present proof of conduct of the principal when the standard is satisfied by the principal's failure to act. Given this difficulty and the relevant agency principles, Magnolia contends it was entitled to rely on the appearance of Doreen's agency in the face of Billy's alleged silence.
The problem with Magnolia's argument-once again-is the lack of evidence in the record. The rule about silent principals is as follows: "where the principal knows that the agent holds himself out as clothed with certain authority, and remains silent, such conduct on the part of the principal may give rise to liability." (Valentine, supra, 37 Cal.App.5th at p. 1089, italics added [cleaned up].) The record contains no evidence as to what Billy did or did not know about Doreen's actions. It does not contain evidence as to whether he was silent on the question of agency. We do not know whether Billy spoke to anyone at Magnolia's facility about arbitration or whether he knew anything at all about the arbitration agreement. As noted, we do not even know whether he was conscious or unconscious when the agreement was signed.
A person who chooses to pursue a contract with a principal through a purported agent" 'takes the risk not only of ascertaining whether the person with whom he is dealing is the agent, but also of ascertaining the scope of his powers.'" (Young, supra, 220 Cal.App.4th at p. 1134.) "A defendant cannot prove a plaintiff consented to arbitration merely by showing the plaintiff stood idly by while the purported agent signed on his or her behalf." (Kinder, supra, 91 Cal.App.5th at p. 816; see also Goldman, supra, 220 Cal.App.4th at pp. 1172-1173 ["[W]e reject [the] suggestion that [the decedent's] silence on the matter be considered to be an adoptive admission of the arbitration agreements signed by [his wife]."].)
The trial court correctly ruled Magnolia failed to prove Doreen had ostensible authority to act as Billy's agent and agree to binding arbitration.
C. No Burden Shifting on the Question of Agency
As a second ground for denying Magnolia's petition, the trial court ruled that Magnolia failed to authenticate Doreen's signature. Magnolia asserts this was error, and further asserts that it met its entire evidentiary burden because it authenticated the agreement by attaching a copy to its petition to compel and Doreen failed to offer evidence in response. Magnolia contends the burden shifted to Doreen to present evidence sufficient to demonstrate either (1) the agreement was inauthentic, or (2) the agreement was invalid for another reason.
This argument misunderstands what it means for a document to be "authentic." It also turns the rules governing the burden of proof on their head.
The Code of Civil Procedure sets forth a procedure for the summary determination of whether a valid contract to arbitrate exists. (Code Civ. Proc., §§ 1281.2, 1290.2.) Under this procedure, "[t]he petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.] In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court's discretion, to reach a final determination." (Engalla, supra, 15 Cal.4th at p. 972, citing Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413-414 (Rosenthal).)
Within this general structure, Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215 (Condee) and several cases that interpret Condee discuss the specific, burden-shifting logistics of proving one aspect of a valid agreement to arbitrate: whether the alleged binding agreement is authentic. (Kinder, supra, 91 Cal.App.5th at pp. 813-816.) Condee does not address the burden of proving agency authority or other components of a valid agreement. (Kinder, at p. 814.) Condee does not shift the burden of proof for those components; nor could it do so given controlling California Supreme Court law. (Kinder, at p. 815.) "Properly understood, Condee holds that a petitioner is not required to authenticate an opposing party's signature on an arbitration agreement as a preliminary matter in moving for arbitration or in the event the authenticity of the signature is not challenged." (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846.)
Explained another way, authentication requires a party to establish as a preliminary fact the genuineness and authenticity of the writing, "i.e., that the writing was made or signed by the person represented by the partyproponent to be the maker or signer." (1 Jefferson, Cal. Evidence Benchbook (Cont.Ed.Bar 4th ed. 2023) Authentication and Proof of Writings, § 31.9.) "[T]he objection that a document has not been authenticated does not go to the truth of the contents of the document, but rather to the introduction of evidence sufficient to sustain a finding that it is the writing that the proponent claims it to be." (Interinsurance Exchange v. Velji (1975) 44 Cal.App.3d 310, 318.) Consequently, a party does not automatically meet its burden to show a valid agreement merely by proving the authenticity of a written agreement. (Kinder, supra, 91 Cal.App.5th at pp. 813-816.) In the case of an agreement signed by an agent of one of the parties, for example, the burden remains on the proponent to further demonstrate actual or ostensible authority on the part of the agent. (Ibid.)
In Condee, exactly as was the case here, the defendant moved to compel arbitration based on an agreement allegedly signed by an agent. (Condee, supra, 88 Cal.App.4th at p. 218.) The trial court denied the petition based on a finding that the defendant had not properly authenticated the agreement. (Ibid.) The Court of Appeal reversed on the ground that the party opposing arbitration had not challenged the authenticity of the agreement. The court held that a party seeking to compel arbitration does not have to authenticate an arbitration agreement with its moving papers. The agreement will be presumed authentic unless the opposing party challenges the agreement's authenticity, which had not happened during the proceedings below. (Id. at p. 219.) Significantly, as explained in Kinder, Condee "did not reach the issue whether the petitioner had presented sufficient evidence to establish agency; instead, the court remanded the matter to 'permit the trial court to consider the other issues,' including whether the patient was bound by the agreement through the actions of his purported agent." (Kinder, supra, 91 Cal.App.5th at p. 814.)
Thus, based on the procedure for authentication explained in Condee, the trial court here may have erred when it ruled that Magnolia failed to authenticate the arbitration agreement. But we do not need to resolve this question. Even assuming the agreement was adequately authenticated- meaning the signatures are genuine and it was prepared and placed in Billy's file in the ordinary course of business-Magnolia is mistaken about the ramifications of finding that Doreen's signature was genuine and the agreement was authentic. Assuming the burden shifted to Doreen to dispute the authenticity of what appeared to be her handwritten signature, the burden did not shift to Doreen to prove agency. It remained Magnolia's burden of proof, one which it failed to sustain. (Kinder, supra, 91 Cal.App.5th at p. 816.) The agreement-whether authentic or not-was insufficient standing alone to meet Magnolia's burden of proving that Doreen had actual or ostensible authority to sign on Billy's behalf. (Id. at p. 813.) Proof of authenticity does not shift this burden. (Id. at p. 816.)
Magnolia relies on cases that address burden-shifting on the question of authentication, not the ultimate burden of proof. (See e.g., Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 754-755 [addressing burden-shifting on the question of authenticity where "the authenticity of plaintiffs' signatures" was in dispute].) For the reasons we have already explained, these cases are inapposite.
Magnolia also relies on cases where the party opposing arbitration raised a defense to the enforcement of the arbitration clause. In these cases, under standard contract principles, the courts held that the burden of proving enforcement defenses is on the party asserting them. (See e.g., Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 761, 764-765; Strauch v. Eyring (1994) 30 Cal.App.4th 181, 186; Owens v. Intertec Design, Inc. (1995) 38 Cal.App.4th 72, 75.) If Doreen had raised a defense to the enforceability of the agreement, such as fraud in the execution or fraud in the inducement, the burden would have been on her to prove this kind of defense. (Rosenthal, supra, 14 Cal.4th at pp. 413, 415.) But she did not. And in any event, it was Magnolia's burden to prove a valid agency, not Doreen's. (Goldman, supra, 220 Cal.App.4th at pp. 1172-1173.)
Magnolia thus could not and did not sustain its burden of proof on the question of agency merely by authenticating the agreement.
D. No Proof of Ratification
Magnolia claims Billy ratified the arbitration agreement by voluntarily accepting its benefits when he continued to reside at Magnolia after it was signed and then by "returning to Magnolia a second time." This theory for compelling arbitration fails for lack of evidence as well.
"The fundamental test of ratification by conduct is whether the releasor, with full knowledge of the material facts entitling him to rescind, has engaged in some unequivocal conduct giving rise to a reasonable inference that he intended the conduct to amount to a ratification." (Union Pacific R. R. Co. v. Zimmer (1948) 87 Cal.App.2d 524, 532, italics added.) Here, there is no evidence Billy knew the agreement existed, that Doreen signed it, nor that it stated he had 30 days to rescind.
Moreover, as required by statute, the arbitration agreement was a separate, optional agreement not linked to Billy's admission to Magnolia's facility for treatment. (See Health & Saf. Code, § 1599.81, subd. (a).) The agreement expressly stated in bold print, "Residents shall not be required to sign this arbitration agreement as a condition of admission to this facility." Billy's continued acceptance of services accordingly did not constitute the acceptance of the benefits of an agreement to arbitrate. (Kinder, supra, 91 Cal.App.5th at p. 816; Warfield v. Summerville Senior Living, Inc. (2007) 158 Cal.App.4th 443, 450-451.)
Magnolia thus failed to prove Billy ratified the alleged agreement.
E. Conclusion
Because Magnolia failed to prove actual agency, ostensible agency or ratification, the trial court correctly denied Magnolia's motion to compel arbitration.
Had Magnolia's motion to compel been successful, the remaining wrongful death claim, brought in the plaintiffs' individual capacities, potentially could have been required to follow the two related claims to arbitration. (Ruiz v. Podolsky (2010) 50 Cal.4th 838, 841.) Because we affirm the trial court's order denying arbitration, we do not reach Magnolia's contention on this point.
II.
Doreen Did Not Agree to Arbitrate Her Individual Claim
Magnolia contends that, if Doreen did not sign the agreement as Billy's agent, then she must have signed in her individual capacity and is therefore bound as a party to arbitrate her individual claim for wrongful death. This argument is contradicted by the plain language of the agreement, which binds Billy and Magnolia, but not Doreen, as parties.
Magnolia did not raise this issue below. We exercise our discretion to address it here in the first instance.
The agreement is titled, "RESIDENT-FACILITY ARBITRATION AGREEMENT," and Billy is specifically identified as the resident. Doreen is not identified anywhere as a party. To the contrary, the signature block where Doreen's alleged signature appears is clearly labelled "Resident Representative / Agent Signature." The agreement further states in two places that it is the parties to the agreement who are giving up their right to a jury trial: "Resident and Facility, as parties to this agreement, are giving up their Constitutional rights to have a dispute under this agreement decided in a court of law before a jury, and instead are accepting the use of arbitration." This language does not purport to bind Doreen in her individual capacity.
Magnolia contends that Doreen is bound as an individual based on a provision that addresses Billy's potential successors in interest as follows: "This Agreement is binding on all parties, including their personal representatives, successors, family members and heirs." The plain meaning of this language, however, is that the agreement remains binding with respect to disputes between the parties, namely Billy and Magnolia, including if Doreen or someone else steps into Billy's shoes as an heir or other successor in interest. As our sister court explained with respect to a virtually identical provision: "In context, the provision making the arbitration clause binding on heirs means only that the duty to arbitrate the survivor claims is binding on [the decedent] and other persons who would assert the survivor claims on [the decedent's] behalf, namely, her 'spouse, heirs, representatives, executors, administrators, successors, and assigns, as applicable.' The agreement does not indicate an intent to bind third parties with claims independent of the survivor claims, such as wrongful death claimants." (Daniels v. Sunrise Senior Living, Inc. (2013) 212 Cal.App.4th 674, 681.)
A non-party to an arbitration agreement cannot be compelled to arbitrate a dispute he or she has not agreed to arbitrate. (Monschke v. Timber Ridge Assisted Living, LLC (2016) 244 Cal.App.4th 583, 586-587.) There are exceptions to this general rule. (Id. at p. 587.) But Magnolia does not raise any of them.
Finally, Magnolia points to a principal of agency law that makes unauthorized agents responsible to third parties under some circumstances. "One who assumes to act as an agent is responsible to third persons as a principal for his acts in the course of the agency when he enters into a written contract in the name of his principal without believing in good faith that he has authority to do so." (Ferroni v. Pacific Finance Corp. (1943) 21 Cal.2d 773, 777-778, italics added.) There is no evidence of bad faith on Doreen's part here. This is because, aside from the alleged agreement and the two declarations that purport to authenticate it, there is no other evidence in the record at all.
Magnolia thus failed to prove Doreen agreed to arbitrate her individual claim.
DISPOSITION
The trial court's order denying Magnolia's motion to compel arbitration is affirmed. Plaintiffs are awarded their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).
WE CONCUR: O'ROURKE, Acting P. J., RUBIN, J.