Opinion
G062152
10-23-2023
NANCY KAVATHAN, Plaintiff and Respondent, v. PARK VIEW ESTATES, et al., Defendants and Appellants.
Fraser Watson &Croutch, Stephen C. Fraser and David A. Koester for Defendants and Appellants. Walton Law Firm, Randall R. Walton and Lukas I. Pick for Plaintiff and Respondent.
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County No. 30-2022-01276949, Deborah C. Servino, Judge. Affirmed.
Fraser Watson &Croutch, Stephen C. Fraser and David A. Koester for Defendants and Appellants.
Walton Law Firm, Randall R. Walton and Lukas I. Pick for Plaintiff and Respondent.
OPINION
DELANEY, J.
David Alvarado sued Park View Estates, Fountain Valley OPCO LLC, doing business as Park View Estates, and Sunshine Retirement Living LLC, the purported owners and operators of a residential care facility (collectively, Park View), for elder abuse and related claims. Park View unsuccessfully moved to compel arbitration of those claims, relying on agreements signed by Alvarado's other daughter, Diane Schwickerath. On appeal, Park View contends the trial court erred in ruling that no valid arbitration agreement existed. We disagree and affirm the order.
While this appeal was pending, Alvarado passed away, and his daughter Nancy Kavathan, acting as his successor in interest, was formally substituted in as the respondent.
FACTS
In January 2022, Alvarado was admitted to a residential care facility for the elderly called Park View Estates (the Facility). According to the complaint, he suffered from Alzheimer's disease and dementia, had a history of falls, "sustained three unwitnessed falls" in his first few days at the Facility, and suffered "four fractured ribs and a head injury." Alvarado sued Park View for statutory elder abuse/neglect, negligence, breach of contract, and willful misconduct.
Before Alvarado's admission to the Facility, Schwickerath signed two contracts: an "Alternative Dispute Resolution Agreement between Resident and Facility" (the ADR Agreement) and a "Residency Agreement." Relying on these two contracts, Park View filed a motion to compel arbitration of Alvarado's claims.
The ADR Agreement, dated January 18, 2022, states it is between Alvarado and "Park View Estates." On the last page, it is e-signed by Heather Myers for Park View Estates and by Schwickerath for Alvarado, who is identified as the "Resident." Schwickerath also e-signed the following paragraph: "I am the Legal Representative of the Resident and, in that capacity, as well as individually, I [h]ave read this agreement and have had it explained to me. I am signing this Agreement on behalf of the Resident as well as on my own behalf. I am authorized to sign this Agreement on behalf of the Resident. I have authority to act on behalf of the Resident, pursuant to a power of attorney, conservatorship, or guardianship, I have provided a copy of the legal documents to support my authority to sign this Agreement on behalf of the Resident." (Italics omitted.)
The ADR Agreement states the parties "have entered into an agreement relating to the admission of Resident to the Facility [Park View Estates] and the health care and other services to be provided by the Facility." It further provides that "[a]ll claims or disputes arising out of or in any way relating to the admission agreement, the health care services and other services provided to the Resident by the Facility" will be resolved by mediation first and, if necessary, by binding arbitration.
The top of the first page of the ADR Agreement states in boldface: "(NOT A CONDITION OF ADMISSION)." Section 2 repeats in boldface that "[a]dmissionto the facility is not conditioned on the execution of this Agreement." And section 13 reiterates in boldface: "By signing this Agreement, the Resident and or their authorized representative acknowledges an[d] understands . . . the execution of this Agreement is not a condition of admission or to the furnishing of services to the Resident by the Facility."
The Residency Agreement, signed January 18 but dated January 21, states it is between Alvarado and "Fountain Valley Senior Living Group, LLC doing business as Park View Estates." Like the ADR Agreement, it is e-signed by Myers and Schwickerath. Schwickerath signed underneath Alvarado's name, listed as "Resident #1," and she also signed as "Responsible Person for Resident #1." Section 21 of the Residency Agreement is titled "ARBITRATION" (Section 21) and states in boldface: "THE COMMUNITY EXPECTS TO RESOLVE ALL DISPUTES THROUGH ALTERNATIVE DISPUTE RESOLUTION PROCESS, MEDIATION AND ARBITRATION, PURSUANT TO THE ATTACHED SEPARATE ARBITRATION AGREEMENT." The "Community" is identified as "the assisted living/memory care community" where Alvarado was admitted.
This entity was not named in, and is not a party to, this action.
Alvarado opposed the motion to compel, in part, on the ground that he did not sign the contracts and that his daughter did not have authority to sign for him. Although Park View submitted copies of the ADR Agreement and the Residency Agreement as evidence, neither side offered declarations or live testimony from the individuals who signed them-Heather Myers on behalf of Park View and Schwickerath on behalf of Alvarado.
The trial court denied the motion to compel arbitration due to insufficient evidence of Schwickerath's authority to bind Alvarado to the ADR Agreement. The court also rejected Park View's arguments that Alvarado was bound by the ADR Agreement as a third party beneficiary and under principles of equitable estoppel. Park View timely appealed.
DISCUSSION
The main issue on appeal is whether Park View has shown Schwickerath had the authority to bind Alvarado when she signed the agreements. We conclude, as the trial court did, that Park View has not. We also reject Park View's alternative arguments that Alvarado's claims must be arbitrated based on the doctrine of equitable estoppel, because he is a third party beneficiary of the Residency Agreement, and because of the strong public policy favoring arbitration.
"Where, as here, the evidence is not in conflict, we review the trial court's denial of arbitration de novo." (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 (Pinnacle).) "The right to compel arbitration depends on the existence of an agreement to arbitrate," which "is determined under applicable contract law." (Rogers v. Roseville SH, LLC (2022) 75 Cal.App.5th 1065, 1073-1074 (Rogers).) "'Generally, a person who is not a party to an arbitration agreement is not bound by it.'" (Id. at p. 1074.) One exception to this rule occurs when an agent signs the agreement for another. (Ibid.) "'"An agent is one who represents another, called the principal, in dealings with third persons." [Citation.]'" (Ibid.) "'For example, . . . a person who is authorized to act as the [resident or] patient's agent can bind the [resident or] patient to an arbitration agreement.'" (Ibid.)
But "an agency cannot be created by the conduct of the agent alone; rather, conduct by the principal is essential to create the agency. Agency 'can be established either by agreement between the agent and the principal, that is, a true agency [citation], or it can be founded on ostensible authority, that is, some intentional conduct or neglect on the part of the alleged principal creating a belief in the minds of third persons that an agency exists, and a reasonable reliance thereon by such third persons.' . . . Thus, the 'formation of an agency relationship is a bilateral matter. Words or conduct by both principal and agent are necessary to create the relationship ....'" (Flores v. Evergreen at San Diego, LLC (2007) 148 Cal.App.4th 581, 587-588 (Flores).)
As the party seeking arbitration here, Park View "bears the burden of proving the existence of an arbitration agreement ...." (Pinnacle, supra, 55 Cal.4th at p. 236.) To meet this burden, it must "present [ ] evidence that the purported principal's conduct caused the agent or the third party to believe that the agent had the authority to bind the principal." (Rogers, supra, 75 Cal.App.5th at p. 1075.) In other words, here, Park View had to offer evidence of something Alvarado said or did that caused them or Schwickerath to believe she was authorized to sign the ADR Agreement for him.
No such evidence was presented. Although Schwickerath signed the ADR Agreement as Alvarado's "Legal Representative" and represented that she had "authority to act" on his behalf under "a power of attorney, conservatorship, or guardianship," her actions alone were not enough to create an agency. (Flores, supra, 148 Cal.App.4th at pp. 587-588.) There is no evidence of conduct on Alvarado's part to justify Park View's belief that Schwickerath had the authority to sign for Alvarado. For example, the ADR Agreement required the agent to represent that she "provided a copy of the legal documents to support my authority to sign this Agreement on behalf of the Resident," but Park View did not offer any such documents. There was no evidence that a Park View representative spoke with Alvarado about the ADR Agreement, that Alvarado had approved similar acts by Schwickerath in the past, or that he remained silent even though he knew she had signed the ADR Agreement on his behalf. (See Chicago Title Ins. Co. v. AMZ Ins. Services, Inc. (2010) 188 Cal.App.4th 401, 426 [stating ostensible authority may be established by proof the principal approved agent's prior similar acts or that principal remained silent despite knowing agent held herself out as such].) Because there was no evidence of Schwickerath's actual or ostensible authority to bind Alvarado to the ADR Agreement, the trial court did not err in denying the motion to compel arbitration.
In the alternative, Park View argues that Alvarado's claims should be compelled to arbitration based on the doctrine of equitable estoppel and because he is a third party beneficiary of the Residency Agreement. According to Park View, Alvarado benefitted from the Residency Agreement because he was admitted into the Facility and sued for breach of the Residency Agreement, his claims are dependent upon and inextricably intertwined with the Residency Agreement, and thus he "should not be permitted to disavow" its arbitration provision. We are unpersuaded.
Under the doctrine of equitable estoppel, "[a] nonsignatory plaintiff may be estopped from refusing to arbitrate when he or she asserts claims that are 'dependent upon, or inextricably intertwined with' the underlying contractual obligations of the agreement containing the arbitration clause." (Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 306 (Jensen).) But Alvarado did not accept the benefits of a contract while rejecting the arbitration clause contained in it. To be sure, he relied on the services provided at the Facility, but his admission to the Facility was authorized by the Residency Agreement alone. While Section 21 of the Residency Agreement was titled "Arbitration," it did not obligate either party to arbitrate.
Section 21 simply provided that the "Community"-i.e. the Facility- "expects to resolve" disputes through arbitration pursuant to a "separate arbitration agreement." That "separate arbitration agreement" is the ADR Agreement, and it expressly and repeatedly provided that it was "not a condition of admission" to the Facility. Put another way, the ADR Agreement is "a different, optional agreement." (Warfield v. Summerville Senior Living, Inc. (2007) 158 Cal.App.4th 443, 450-451.) Because Alvarado did not seek any benefit from the ADR Agreement, he is not estopped to assert the ADR Agreement is unenforceable against him. (Id. at p. 451.)
The cases relied upon by Park View are of no help. All but one of them are easily distinguishable from our facts because they addressed contracts with arbitration clauses that required the parties to arbitrate their disputes. (See NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 72 [disputes "will be submitted to and settled by arbitration"]; Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003) 109 Cal.App.4th 1705, 1710 [disputes "shall be settled by binding arbitration"]; Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 266 [disputes "shall be submitted to binding arbitration"]; JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1233 [disputes "shall . . . be resolved by binding arbitration"]; Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 299 [parties agreed claims "shall be submitted to binding Arbitration"].) The lone remaining case is neutral, as it simply referred to an "arbitration provision" without setting forth the precise language. (DMS Services, LLC v. Superior Court (2012) 205 Cal.App.4th 1346, 1350.)
Park View's third-party-beneficiary theory fails for the same reason. There is no arbitration agreement in the Residency Agreement.
Finally, Park View urges us to consider California's "strong public policy in favor of arbitration" and resolve any doubts on arbitrability in favor of it. (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.) But "'there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate.'" (Goldman v. Sunbridge Healthcare, LLC (2013) 220 Cal.App.4th 1160,1169.) The policy favoring arbitration "does not override ordinary principles of contract interpretation." (Rice v. Downs (2016) 248 Cal.App.4th 175, 185.)
In sum, Park View failed to establish Schwickerath had authority to bind Alvarado to arbitration or that equitable principles justify compelling him to arbitrate his claims. The trial court therefore properly denied the motion.
DISPOSITION
The order is affirmed. Respondent to recover costs on appeal.
WE CONCUR: O'LEARY, P. J., MOORE, J.