Opinion
No. 1 CA-CV 14-0352
06-04-2015
PHILLIP HURST, Personal Representative of the Estate of FRANCES M. HURST, on behalf of the ESTATE OF FRANCES M. HURST, and PHILLIP HURST, Personal Representative, on behalf of FRANCES M. HURST'S statutory beneficiaries pursuant to A.R.S. Section 12-612(A), Plaintiff/Appellee, v. SILVER RIDGE MANAGEMENT, INC., an Arizona corporation doing business as THE LEGACY REHAB AND CARE CENTER; CREATIVE CARE, INC., an Arizona corporation; MOHAVE HEALTH CARE ASSOCIATES LIMITED PARTNERSHIP, an Arizona limited partnership; MAGNUM DEVELOPMENT CO.; JULIO CASAS, Administrator; MARK GUNNELL, Administrator, Defendants/Appellants.
COUNSEL Wilkes & McHugh, P.A., Phoenix By Melanie L. Bossie, Donna Y. Oh Co-Counsel for Plaintiff/Appellee Law Office of Scott E. Boehm, P.C., Phoenix By Scott E. Boehm Co-Counsel for Plaintiff/Appellee Quintairos Prieto Wood & Boyer, P.A., Phoenix By Anthony J. Fernandez, Vincent J. Montell, Rita J. Bustos Counsel for Defendants/Appellants
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. Appeal from the Superior Court in Mohave County
No. S8015CV201300871
The Honorable Lee Frank Jantzen, Judge
VACATED AND REMANDED
COUNSEL Wilkes & McHugh, P.A., Phoenix
By Melanie L. Bossie, Donna Y. Oh
Co-Counsel for Plaintiff/Appellee
Law Office of Scott E. Boehm, P.C., Phoenix
By Scott E. Boehm
Co-Counsel for Plaintiff/Appellee
Quintairos Prieto Wood & Boyer, P.A., Phoenix
By Anthony J. Fernandez, Vincent J. Montell, Rita J. Bustos
Counsel for Defendants/Appellants
MEMORANDUM DECISION
Presiding Judge Margaret H. Downie delivered the decision of the Court, in which Judge Kenton D. Jones and Judge Jon W. Thompson joined. DOWNIE, Judge:
¶1 Silver Ridge Management, Inc., dba The Legacy Rehab and Care Center, Creative Care, Inc., Mohave Health Care Associates Limited Partnership, Magnum Development Co., Julio Casas, and Mark Gunnell (collectively, "Legacy") appeal from the superior court's denial of their motion to dismiss and compel arbitration. Because disputed issues of material fact exist, we vacate the judgment and remand for further proceedings to determine the validity of the agreements to arbitrate.
FACTS AND PROCEDURAL HISTORY
¶2 In September 2009, Phillip Hurst accompanied his mother, Frances Hurst ("Mother"), to an assisted living facility ("Silver Creek"), where she was admitted as a resident. Hurst signed numerous documents at the time of Mother's admission to Silver Creek, including an arbitration agreement, residency agreement, medical history, resident service plan, and privacy and informed choice forms.
¶3 Mother moved to a Legacy facility in April 2010. Hurst signed numerous documents associated with her admission, including:
• Resident and Facility Agreement for Binding ArbitrationIn August 2010, after Mother had been briefly hospitalized, Hurst signed additional documents to have her readmitted to Legacy, including:
• Prehospital Medical Care Directive
• Resident Advanced Directives
• Authorization and Consent for Transfer
• Informed Consent for Pneumococcal Vaccine
• Informed Consent for Influenza Vaccine
• Admission Agreement
• Medicare Beneficiary Questionnaire
• Agreement Regarding Personal Funds
• Notice of Privacy Practices
• Alzheimer's & Dementia Disclosure
• Photo Release Form
• Activity Trip Release Form
• Fall Risk Disclosure
• Tobacco Use Policy
• Desert West Pharmacy Contractual Agreement
• Release of Responsibility
• Residents' Bill of Rights
• Prehospital Medical Care DirectiveHurst signed some of the aforementioned documents as "son;" others contained pre-printed designations near his signature, including "Resident," "Patient," "Resident Representative," "Responsible Party," and "Resident/Responsible Party."
• Resident Advanced Directives
• Consent for Use of Psychoactive Medications
• Informed Consent for Influenza Vaccine
• Informed Consent for Pneumococcal Vaccine
• Residents' Bill of Rights
• Release of Responsibility
• Notice of Privacy Practices
• Resident and Facility Agreement for Binding Arbitration
• Tobacco Use Policy
• Alzheimer's & Dementia Disclosure
• Fall Risk Disclosure
• Activity Trip Release Form
• Photo Release Form
• Medical Records Release
¶4 With the exception of brief hospitalizations, Mother resided at a Legacy facility until her death in August 2011. Thereafter, as personal representative of her estate, and on behalf of the statutory beneficiaries, Hurst sued Silver Creek and Legacy, asserting claims under the Adult Protective Services Act ("APSA") and, as to the Legacy defendants, wrongful death.
In its reply brief, Legacy acknowledges that the wrongful death cause of action is not subject to arbitration based on this Court's holding in Dueñas v. Life Care Ctrs. of Am., Inc., 236 Ariz. 130, 138-39, ¶ 25, 336 P.3d 763, 771-72 (App. 2014) (agreement purporting to bind statutory heirs to arbitrate wrongful death claims invalid and unenforceable).
¶5 Legacy moved to dismiss and to compel arbitration based on the arbitration agreements Hurst signed in May and August 2010. Hurst opposed the motion. After briefing and oral argument, the superior court denied the motion. Legacy unsuccessfully sought reconsideration. After the court entered a signed judgment, Legacy timely appealed. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101.01(A)(1).
DISCUSSION
¶6 An arbitration agreement "is valid, enforceable, and irrevocable save upon such grounds as exist at law or in equity for the revocation of any contract." A.R.S. § 12-1501; see also U.S. Insulation Inc. v. Hilro Constr. Co., 146 Ariz. 250, 256, 705 P.2d 490, 496 (App. 1985). The validity and enforceability of an arbitration agreement is a mixed question of fact and law that we review de novo. Estate of Decamacho ex rel. Guthrie v. La Solana Care & Rehab, Inc., 234 Ariz. 18, 20, ¶ 9, 316 P.3d 607, 609 (App. 2014).
¶7 When a party denies the existence of an enforceable agreement to arbitrate, the court "shall proceed summarily to the determination of the issue so raised." A.R.S. § 12-1502(A). "[C]ourts have repeatedly analogized a trial court's duty in ruling on a motion to compel arbitration [with] its duty in ruling on a motion for . . . summary judgment." Ruesga v. Kindred Nursing Ctrs., L.L.C., 215 Ariz. 589, 596, ¶ 23, 161 P.3d 1253, 1260 (App. 2007). Proceeding summarily means that the trial court initially determines whether material issues of fact are disputed and, if so, the court conducts an evidentiary hearing to resolve the disputes. Id. at 596, ¶ 24, 161 P.3d at 1260; Brake Masters Sys., Inc. v. Gabbay, 206 Ariz. 360, 365, ¶¶ 13-14, 78 P.3d 1081, 1086 (App. 2003) (summary judgment standard appropriate in determining whether evidentiary hearing required on existence or terms of arbitration agreement).
¶8 The parties dispute whether Hurst was acting as Mother's authorized agent in signing the arbitration agreements. Absent a valid agency relationship, Hurst's signature on those agreements does not bind the estate. See Bank of Douglas v. Robinson, 78 Ariz. 231, 239, 278 P.2d 417, 422 (1954); see also Ruesga, 215 Ariz. at 596, ¶ 23, 161 P.3d at 1260.
¶9 The relevant inquiry is whether Hurst had the requisite authority at the time he signed the arbitration agreements. See Rebecca E. Hatch, Cause of Action for Enforcement of Arbitration Clause in Long-Term Care Agreement, in 41 Causes of Action 2d 1, § 16 (2009) (A party "filing a motion to compel arbitration must be sure that there are sufficient facts to prove that an implied agency relationship existed at the time the arbitration agreement was signed."). "Generally, [t]he question of whether an agency existed is one of fact." Ruesga, 215 Ariz. at 595, ¶ 21, 161 P.3d at 1259. "An agency relationship can derive from either actual or apparent authority." Id. at 597, ¶ 28, 161 P.3d at 1261. Actual authority may be express or implied. Canyon State Canners v. Hooks, 74 Ariz. 70, 72, 243 P.2d 1023, 1024 (1952).
¶10 A principal must be competent to confer actual express authority and must also be competent at the point in time when apparent agency is alleged to exist. See Ruesga, 215 Ariz. at 597, ¶ 30, 161 P.3d at 1261. But as Ruesga makes clear, actual implied authority may exist based on a prior, authorized course of conduct, notwithstanding the putative principal's current lack of competency.
¶11 Although the superior court concluded Mother was incompetent, the record before it was ambiguous regarding her competency at the relevant points in time. A presumption of competency exists. Golleher v. Horton, 148 Ariz. 537, 541, 715 P.2d 1225, 1229 (App. 1985) ("In Arizona there is a presumption of competency which continues despite a subsequent period of incompetency since such persons may have lucid intervals."). Documentation of record as of May 2010 and August 2010 consists primarily of pre-printed forms that Hurst signed. There are no official medical diagnoses in our record that shed light on Mother's competency, although Legacy had Hurst sign an "Alzheimer's & Dementia Disclosure." And after Mother's readmission to the facility in August 2010, Hurst signed a form consenting to the use of psychoactive medications that stated: "Targeted Behaviors/Symptom: Agitation." On the other hand, Hurst twice signed forms reflecting that Mother wished to attend trips outside the facility, which included "weekly 'Out on the Town' van trips, monthly Wal-Mart Shopping and special events."
Although the parties themselves did not raise the competency issue in their filings, the superior court conclusively decided the issue, making it ripe for our review. See City of Tempe v. Fleming, 168 Ariz. 454, 815 P.2d 1 (App. 1991) (tenet that arguments not made in the trial court cannot be asserted on appeal is procedural, not jurisdictional, and may be suspended by the appellate court at its discretion); see also State v. Payne, 223 Ariz. 555, 569 n.8, 225 P.3d 1131, 1145 (App. 2009) ("If application of a legal principle, even if not raised before the trial court, would dispose of an action on appeal and correctly explain the law, it is appropriate for us to consider the issue").
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¶12 Legacy's implied authority argument under Ruesga also calls into question Mother's competency at the time of her admission to Silver Creek — a fact-intensive inquiry not conclusively answered by the documents of record. As noted supra, we lack medical records, but on a Silver Creek admission form entitled "Medical History," Hurst checked "Yes" next to a box labeled dementia, but "No" next to a box labeled Alzheimer's.
¶13 In sum, evidence of record gives rise to a genuine issue of material fact regarding Mother's competency at the relevant points in time. As such, an evidentiary hearing was necessary. Indeed, Hurst requested such a hearing. See Ruesga, 215 Ariz. at 596, ¶ 24, 161 P.3d at 1260 (party claiming dispute of fact regarding arbitrability must request evidentiary hearing).
¶14 On remand, should the superior court conclude that Mother was in fact incompetent at the relevant times, then, as a matter of law, neither apparent agency nor express actual authority purportedly conveyed while she was incompetent permitted Hurst to sign as her agent. In that event, the superior court must then consider whether, notwithstanding Mother's incompetency, Hurst possessed actual implied authority, which we discuss infra. On the other hand, if the court concludes Mother was competent when Hurst signed the arbitration agreements, it must then ascertain whether actual express authority, actual implied authority, or apparent authority existed.
¶15 In assessing actual implied authority, Ruesga is instructive. Ruesga was admitted to a care center "in a severely compromised state" after suffering a stroke and heart attack; he "was virtually non-responsive." Ruesga, 215 Ariz. at 591, ¶ 2, 161 P.3d at 1255. Ruesga's wife ("Wife") signed a series of admission documents, including an arbitration agreement. Id. at 591-92, ¶¶ 3-4, 161 P.3d at 1255-56. Wife had no power of attorney, and Ruesga had not given her express authorization to sign the arbitration agreement. Id. at 592, ¶ 5, 161 P.3d at 1256. In subsequent litigation brought by Wife, the care center moved to compel arbitration. Id. at ¶ 6. The superior court granted the motion, and Wife appealed. Id. at 592-93, ¶¶ 6-7, 161 P.3d at 1256-57.
¶16 This Court affirmed, holding that Wife had actual implied authority to execute the arbitration agreement. Id. at 599-600, ¶¶ 36, 40, 161 P.3d at 1263-64. The care center "produced several medical records that revealed a history of [Wife's] acting and making decisions on [Ruesga's] behalf." Id. at 599, ¶ 35, 161 P.3d at 1263. Additionally, Wife had an almost fourteen-year history of signing documents for Ruesga, leading the court to conclude there was "circumstantial evidence of an agency relationship." Id.
¶17 We express no opinion about whether a similarly sufficient pattern of conduct exists here. There is, however, sufficient evidence of record to create a material issue of fact. Unlike the related case of Hurst v. Silver Creek Inn, L.L.C., 1 CA-CV 14-0338, (Ariz. App. June 4, 2015) (mem. decision) which we also decide today, at the time Mother was admitted to the Legacy facility, there was some documented history of Hurst acting on her behalf.
¶18 Because the issue may arise on remand, we briefly address the superior court's reliance on "judicial economy and simplification of proceedings" as a basis for declining to compel arbitration. As Hurst conceded at oral argument before this Court, such concerns do not support a refusal to order arbitration of otherwise-arbitrable claims. In Hallmark Indus., L.L.C. v. First Systech Int'l, Inc., we stated:
We acknowledge that having a court and arbitrators resolve the same factual issues is not a particularly efficient allocation of resources, may be somewhat impractical, and theoretically could lead to inconsistent results. The primary purpose of our arbitration statutes, however, is to "validate arbitration agreements" and "make the arbitration process effective." Any inefficiency or risk of inconsistent results is a consequence of the parties' bargaining. Under our arbitration statutes, we are required to enforce those bargains despite their potential shortcomings.203 Ariz. 243, 246, ¶ 13, 52 P.3d 812, 815 (App. 2002) (citations omitted).
¶19 The parties raise additional arguments regarding the validity of the arbitration agreements, including substantive and procedural unconscionability, adhesion, reasonable expectations, fiduciary duties, and enforceability by non-signatories. Although these issues were briefed below, the superior court did not reach them due to its determination Mother was incompetent. We decline to address these issues for the first time on appeal, especially because some or all may be rendered moot after the evidentiary proceedings on remand. See, e.g., Ariz. Water Co. v. Ariz. Dep't of Water Res., 208 Ariz. 147, 158, ¶ 47, 91 P.3d 990, 1001 (2004) (declining to address certain issues the superior court did not reach); Austin Shea (Ariz.) 7th St. & Van Buren, L.L.C. v. City of Phx., 213 Ariz. 385, 393, ¶ 34, 142 P.3d 693, 701 (App. 2006) (remanding for further proceedings on undecided issues). The superior court may consider and decide these issues on remand if appropriate.
CONCLUSION
¶20 We vacate the judgment denying Legacy's motion to dismiss and compel arbitration. We remand to the superior court for further appropriate proceedings. We award Legacy its taxable costs on appeal upon compliance with ARCAP 21.