Opinion
NO. 2017-CA-000807-MR
04-27-2018
L.P. PIKEVILLE, LLC D/B/A SIGNATURE HEALTHCARE OF PIKEVILLE; LPMM, INC.; TERRI MACK, IN HER CAPACITY AS ADMINISTRATOR OF SIGNATURE HEALTHCARE OF PIKEVILLE; AND SAMANTHA COOK, IN HER CAPACITY AS DIRECTOR OF NURSING OF SIGNATURE HEALTHCARE OF PIKEVILLE APPELLANTS v. TERESA SMITH, ADMINISTRATOR OF THE ESTATE OF DOROTHY FAY SKEENS, DECEASED APPELLEES
BRIEF FOR APPELLANTS: Laura M. Brymer Louisville, Kentucky BRIEF FOR APPELLEES: Stephen M. O'Brien Lexington, Kentucky
NOT TO BE PUBLISHED APPEAL FROM PIKE CIRCUIT COURT
HONORABLE STEPHEN D.
ACTION NO. 16-CI-00736 OPINION
VACATING AND REMANDING
** ** ** ** **
BEFORE: ACREE, COMBS, AND MAZE, JUDGES. COMBS, JUDGE: LP Pikeville, LLC d/b/a Signature HealthCARE of Pikeville; LP Manager, LLC; LPMM, Inc.; Terri Mack, in her capacity as Administrator of Signature HealthCARE of Pikeville, and Samantha Cook, in her capacity as Director of Nursing of Signature HealthCARE of Pikeville, (referred to collectively as "the Facility") appeal from the denial of their motion to compel arbitration. Based, in part, upon the opinion of the Supreme Court of the United States in Kindred Nursing Centers Ltd. Partnership v. Clark, 581 U.S. ___, 137 S.Ct. 1421, 197 L.Ed.2d 806 (2017), we reverse and remand for an order dismissing the action.
On August 17, 2015, Dorothy Fay Skeens was admitted as a long-term care resident of the Facility. At that time, Teresa Smith, the appellee, signed on Skeens's behalf a document entitled "Agreement to Informally Resolve and Arbitrate All Disputes." Smith represented that she was acting as the "Resident's Authorized Representative" who had "the proper authority to sign this Agreement." In support of Smith's representation, she provided the Facility with a copy of a General Power of Attorney (POA) executed on January 6, 2012.
The POA broadly granted Smith "full power and authority to do and undertake all acts on [Skeens's] behalf that [Skeens] could do personally. . . ." It also provided specific authority to Smith, including "the right to execute, accept, undertake and perform any and all contracts in [Skeens's] name" and the "right to initiate, defend, commence or settle legal actions on [Skeens's] behalf."
Pursuant to the arbitration agreement, the parties agreed that "if any dispute or legal claim of any kind. . . arises between the parties signing this agreement," they would attempt to resolve the dispute informally. The agreement clearly provided that the parties were waiving the right to file a legal action and to have a judge or jury decide any dispute or any issues related to the agreement.
The Facility included the execution of its arbitration agreement as part of the admissions process. Execution of the agreement is required of all new residents and/or their legal representatives. The agreement provided that it could be revoked or cancelled within thirty days of its execution.
On August 4, 2016, Smith filed an action against the Facility in Pike Circuit Court. The Facility answered and defended on the basis of the parties' arbitration agreement. It also filed a motion to compel the alternative dispute resolution process required by the terms of the arbitration agreement.
After briefing and oral argument, the circuit court denied the motion. It relied upon the decisions of the Supreme Court of Kentucky in Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581 (Ky. 2012) and Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. 2015). This appeal followed.
On appeal, the Facility argues that the trial court's refusal to dismiss the action and to compel arbitration cannot be affirmed on the basis of the Whisman and/or Ping decisions since the rationale supporting their holdings was recently rejected by the Supreme Court of the United States in Kindred Nursing Centers v. Clark, supra. We agree that Clark has indeed changed the law with respect to powers of attorney.
In Whisman, the Supreme Court of Kentucky examined the power-of-attorney documents in each of three consolidated cases. The court stated as follows:
without a clear and convincing manifestation of the principal's intention to do so, we will not infer the delegation to an agent of the authority to waive a fundamental personal right so constitutionally revered as the "ancient mode of trial by jury."Id. at 313. The court concluded that an attorney-in-fact has authority to execute an arbitration agreement only where the power-of-attorney document explicitly grants that specific authority - the "clear-statement rule."
In its review, the Supreme Court of the United States noted that the Federal Arbitration Act (the FAA) preempts any state rule discriminating on its face against arbitration. 9 U.S.C. § 2. The Court rejected our "clear-statement rule" because it singled out arbitration agreements for disfavored treatment in contravention of the FAA. It concluded that in Whisman, supra, the Kentucky Supreme Court had "specially impeded the ability of attorneys-in-fact to enter into arbitration agreements" and had thus "flouted the FAA's command to place those agreements on an equal footing with all other contracts." 581 U.S. at ___, 137 S.Ct. at 1429.
In the case before us, the trial court relied expressly and correctly on the precedent of Whisman to deny the motion to compel arbitration on the grounds that the POA failed to comply with the clear-statement rule. However, the Supreme Court of the United States has since held that the clear-statement rule runs afoul of the provisions of the FAA. Thus, we cannot affirm the order of the trial court.
Anticipating this result, the appellees contend that the trial court's decision can nonetheless be affirmed on the basis of the Ping decision. We disagree.
The appellees argue that the POA fails to grant Smith authority to bind Skeens to the arbitration agreement for two reasons. First, they contend that the POA does not grant Smith the power to make healthcare decisions for Skeens and that the arbitration agreement at issue here constituted a healthcare decision under Ping. Second, they contend that the specific powers enumerated in the POA are limited to decisions related to Skeens's finances and property under the rationale set forth in Ping. We shall address each of these contentions.
The Facility required the execution of the arbitration agreement before Skeens was admitted as a resident for long-term care. The appellees claim that this requirement transformed the arbitration agreement into a health care decision that is outside the scope of Smith's authority under the terms of the POA. They rely on Ping for this position. However, the court in Ping held only that the power to make health care decisions under a POA did not extend to the execution of an arbitration agreement signed in connection with -- but not required for -- a long-term care facility admission. Ping refused to permit a POA to be deemed a means to compel arbitration in the health care context without a specific grant of authority to waive the right of access to a court. We cannot read Ping so broadly as to support the argument that the issue of arbitrability per se is in any way a health care decision.
We also reject the appellees' contention that the specific powers enumerated in the POA limited Smith to making decisions related to Skeens's finances and property. The Ping court determined that the POA in that case was limited to financial and health care decisions only. The POA at issue here is not similarly limited but covers a range of power and authority. It includes the power to execute "any and all" contracts and to "initiate, defend, commence or settle legal actions." Moreover, the POA's grant of "full power and authority to do and undertake all acts" that Skeens could do personally is consistent with the broad grant of authority found in Clark, supra. The POA at issue in Clark was deemed to be sufficient to encompass the execution of the arbitration agreement both in Whisman and in Kindred. The most recent pronouncement of the U.S. Supreme Court is that extremely broad grants of authority like those found in the Clark POA are sufficient to include the authority necessary to execute an arbitration agreement and that agreements executed pursuant to such authority must be enforced. Therefore, we conclude that the POA at issue in this case is sufficient to confer the authority necessary to execute the disputed arbitration agreement.
The order of the Pike Circuit Court is vacated and this matter is remanded for entry of an order consistent with this opinion.
ALL CONCUR. BRIEF FOR APPELLANTS: Laura M. Brymer
Louisville, Kentucky BRIEF FOR APPELLEES: Stephen M. O'Brien
Lexington, Kentucky