Opinion
2024-CA-0005-MR
09-20-2024
JEFFERSONTOWN OPCO, LLC D/B/A JEFFERSONTOWN REHABILITATION AND KARA MEREDITH, IN HER CAPACITY AS ADMINISTRATOR OF JEFFERSONTOWN OPCO, LLC D/B/A JEFFERSONTOWN REHABILITATION APPELLANTS v. KAREN BENZ, AS EXECUTRIX OF THE ESTATE OF RICHARD BENZ APPELLEE
BRIEFS FOR APPELLANTS: A. Pete Pullen Shem D. Beard Louisville, Kentucky BRIEF FOR APPELLEE: Tad Thomas Julie P. Anderson Louisville, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM JEFFERSON CIRCUIT COURT HONORABLE SUSAN SCHULTZ GIBSON, JUDGE ACTION NO. 22-CI-006053
BRIEFS FOR APPELLANTS: A. Pete Pullen Shem D. Beard Louisville, Kentucky
BRIEF FOR APPELLEE: Tad Thomas Julie P. Anderson Louisville, Kentucky
BEFORE: THOMPSON, CHIEF JUDGE; EASTON AND KAREM, JUDGES.
OPINION
THOMPSON, CHIEF JUDGE
Jeffersontown OPCO, LLC, et al., ("Appellants") appeal from an opinion and order of the Jefferson Circuit Court denying their motion to compel arbitration in a medical negligence action filed by Karen Benz, as Executrix of the Estate of Richard Benz ("Appellee"). Appellants argue that the circuit court improperly failed to give effect to an arbitration agreement executed by Appellee as attorney-in-fact for Mr. Benz. They seek an opinion reversing the opinion and order on appeal and remanding the matter for arbitration. After careful review, we find no error and affirm the opinion and order on appeal.
FACTS AND PROCEDURAL HISTORY
Mr. Benz was admitted to Jeffersontown Rehabilitation, a long-term care facility, on February 16, 2016. On May 1, 2018, Jeffersontown OPCO, LLC took over the operation of the facility from the prior operator. On May 18, 2018, Jeffersontown OPCO presented an agreement ("the Agreement") to Appellee, who Mr. Benz had previously designated as his attorney-in-fact.
Appellant states that Karen Benz and Mr. Benz were siblings. Appellee and the Jefferson Circuit Court refer to Karen Benz as Mr. Benz's wife.
The Agreement purported to be between Mr. Benz as resident of the facility, Appellee as "Sponsor," and "Jeffersontown Rehab." It contained several provisions addressing the scope of services, financial charges, and various authorizations. Several of the Agreement's clauses were followed by signature lines designated for the resident or his/her representative.
Section 4 of the Agreement defined "Sponsor" as "a person legally responsible for the Resident."
The Agreement also contained an arbitration clause, followed by three signature lines. The first line had no name designation, the second line was for "Resident (individual or by legal representative)," and the third line was to be signed by "Guarantor." Appellee left the first two lines blank, and signed the third "Guarantor" line and dated it. The Agreement did not contain the signature of a Jeffersontown OPCO representative.
On November 21, 2022, Appellee instituted the instant action in Jefferson Circuit Court setting out several negligence claims centering on the treatment Mr. Benz received at Jeffersontown Rehabilitation. Mr. Benz died on March 6, 2023, and the action was revived pursuant to Kentucky Rules of Civil Procedure ("CR") 25.01 and Kentucky Revised Statutes ("KRS") 395.278.
On September 25, 2023, Appellants filed a motion to compel arbitration per the Agreement. Appellee opposed the motion. On December 28, 2023, the Jefferson Circuit Court rendered an opinion and order denying Appellants' motion to compel arbitration. In support of its ruling, the circuit court found that while Appellant signed one clause of the Agreement designated for the "Resident/Sponsor," and signed the "Guarantor" line under the arbitration clause, she did not sign the arbitration clause as Mr. Benz's attorney-in-fact. Additionally, the court found that Appellee did not sign the Agreement's final page which stated,
SPONSOR MUST COMPLETE AND SIGN BELOW AS ACKNOWLEDGMENT OF HIS/HER HAVING READ AND FULLY UNDERSTOOD, AND AGREED TO THE PERSONAL UNDERTAKINGS OF THE SPONSOR, AS PROVIDED FOR IN THE AGREEMENT[.]
Further, the circuit court noted that neither the individual clauses, nor the document as a whole, were signed by Appellants' representative. Having determined that Appellee did not assent to arbitration on Mr. Benz's behalf, and as the Agreement was not signed by Appellants' representative, the circuit court concluded that Mr. Benz's estate was not bound by the arbitration clause, and so ordered. This appeal followed.
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, Div. of S. Energy Homes, Inc. v. Peay, 406 S.W.3d 828, 833 (Ky. 2013) (citation omitted).
ARGUMENTS AND ANALYSIS
Appellants argue that the Jefferson Circuit Court committed reversible error in ruling that the parties did not execute an enforceable arbitration clause. They first note that arbitration clauses are favored as a matter of public policy and are to be enforced as any contract may be enforced. They assert that the Agreement was signed by Appellee as attorney-in-fact for Mr. Benz, and is therefore valid and enforceable. As part of this argument, they maintain that Appellee's signature above the "Guarantor" line following the arbitration clause does not render the arbitration clause unenforceable; that an attorney-in-fact does not need to specify that capacity when signing; and, that the power of attorney granted by Mr. Benz to Appellee provided sufficient authority for her to execute the Agreement's arbitration provision. In sum, they seek an opinion reversing the order on appeal and returning the matter to the circuit court for submission to arbitration.
A party seeking to compel arbitration has the burden of establishing the existence of a valid arbitration agreement. Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581, 590 (Ky. 2012). Arbitration agreements are contracts; therefore, a court must look to principles of contract law to determine if an arbitration agreement is enforceable. Id. at 591. To form a valid and enforceable agreement, "there must be voluntary and complete assent by parties having the capacity to contract." Cambridge Place Group, LLC v. Mundy, 617 S.W.3d 838, 840 (Ky. App. 2021) (citation omitted). The elements of a contract are offer and acceptance, complete terms, and consideration. Cantrell Supply, Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381, 384 (Ky. App. 2002).
A legal representative may execute an arbitration agreement on behalf of a resident. Ping, 376 S.W.3d at 593. However, an attorney-in-fact does not have the authority to bind principals to pre-dispute arbitration agreements unless such authority is clearly stated in the durable power of attorney. Genesis Healthcare, LLC v. Stevens, 544 S.W.3d 645, 651 (Ky. App. 2017). The question before us is whether the Jefferson Circuit Court properly determined that the parties failed to execute a binding arbitration contract.
The instant facts are strikingly similar to those of Providence Healthcare of Pine Meadows, LLC v. Roark, No. 2020-CA-0117-MR, 2020 WL 7086083 (Ky. App. Dec. 4, 2020). In Roark, a nursing home resident's son was granted a power of attorney to act on his father's behalf. The son executed an agreement with the nursing home containing an arbitration clause, but did not sign it in his capacity as his father's attorney-in-fact. The trial court determined that because the son did not sign the agreement in his capacity of his father's attorney-in-fact, he did not bind his father to the arbitration agreement. On appeal, a panel of this Court affirmed the trial court's decision because the party which drafted the agreement and sought to enforce it, i.e., the nursing home, could have designated the signatory's line as power of attorney but did not. The panel also noted that the son either chose not to sign as attorney-in-fact, or negligently failed to do so. Either way, the panel determined that the trial court correctly found that no enforceable arbitration agreement was executed.
As in Roark, the Appellee herein did not sign the arbitration clause in her capacity of attorney-in-fact for Mr. Benz. It is also undisputed that she did not sign the last page of the Agreement acknowledging that she read and fully understood the Agreement and agreed to the personal undertakings of the Sponsor as provided for in the Agreement. Additionally, the Agreement was not signed by a representative for Appellees.
CONCLUSION
"[A]rbitration 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." Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 591, 154 L.Ed.2d 491 (2002) (internal quotation marks and citation omitted). Appellee did not submit to arbitration on Mr. Benz's behalf, and the Jefferson Circuit Court properly so found. For these reasons, we affirm the opinion and order of the Jefferson Circuit Court denying Appellants' motion to compel arbitration.
ALL CONCUR.