Waterman v. Evergreen at Petaluma

Filed 9/25/08 Waterman v. Evergreen at Petaluma CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

Evergreen at Petaluma, LLC, doing business as Evergreen Health and Rehabilitation Center of Petaluma (Evergreen) appeals from an order denying its petition to compel arbitration of the civil action for personal injuries and elder abuse brought by plaintiff Bambi Waterman (Bambi) as successor in interest to her deceased father, Allen H. Waterman (Allen or father), and for wrongful death brought in her individual capacity.^[1] Bambi signed two arbitration agreements when admitting her father into Evergreens skilled nursing facility. We conclude Bambi did not have authority to bind her father to the arbitration agreements. Accordingly, we affirm the order.

I. FACTUAL AND PROCEDURAL BACKGROUND

In November 2004, Allen, who was 88 years old and suffering from dementia and other ailments, was admitted to Evergreens skilled nursing facility. Bambi, Allens daughter, signed the resident agreement form as a Responsible Party for her father. The form also provided a place for Bambi to sign as her fathers Agent/Guarantor/Attorney-in-fact, which she left blank. As part of the admissions process, Bambi also signed several forms on Allens behalf, either as Representative,^[2]Responsible Party, or Guardian/Family. In addition, Bambi signed two arbitration agreements, one covering medical malpractice and the second covering disputes other than medical malpractice. Both arbitration agreements had two signature lines: Resident (for Allen, left unsigned) and Legal Rep/Responsible Party/Agent. Bambi signed each agreement as Legal Rep/Responsible Party/Agent.

Allen allegedly received negligent care at Evergreen and died in March 2005, after he wandered away from the facility, fell and broke his hip. Bambi sued Evergreen as Allens successor in interest for his personal injuries. She also asserted claims in her individual capacity for Allens wrongful death.

Evergreen petitioned to compel arbitration based on the agreements Bambi had signed in connection with Allens admission to the facility. Evergreen asserted Bambi acted as her fathers agent in admitting him to the facility and signing the arbitration agreements. In support of the motion to compel, Evergreen submitted copies of two documents executed by Allen in January 2002, to wit: an advance health care directive,^[3]containing a power of attorney for health care, designating Bambi as Allens agent for purposes of health care decisions; and a financial power of attorney, naming Bambi as Allens attorney-in-fact. Bambi opposed the motion to compel, arguing that the arbitration agreements were invalid for various reasons, including that she was not Allens agent and that the powers of attorney had not been triggered, and therefore she was not authorized to sign the agreements on behalf of her father.

The trial court denied the motion, ruling that Bambi had not signed the agreements as her fathers agent. In so ruling, the trial court found an ambiguity in the signature lines, which failed to provide separately for legal representative, responsible party, and/or agent. As such, the court concluded that it cannot be determined from the form whether or not [Bambi] signed as agent or otherwise. The court further ruled that neither the advance health care directive nor the financial power of attorney (collectively the powers of attorney) had been triggered so as to empower her to waive Allens jury trial rights.^[4] At the hearing on the motion to compel, Evergreens counsel conceded that the power of attorney for health care had not been triggered, but requested additional time for further discovery to substantiate Evergreens position that Allen was legally incompetent at the time of admission. In the absence of any evidence establishing that the conditions precedent contained in the powers of attorney had been satisfied, the court ruled that further discovery regarding Allens incompetency was not necessary. This timely appeal followed.

II. DISCUSSION

A. Standard of Review

There is no uniform standard of review for evaluating an order denying a motion to compel arbitration. [Citation.] If the [trial] courts order is based on a decision of fact, then [the reviewing court] adopt[s] a substantial evidence standard. [Citations.] Alternatively, if the courts denial rests solely on a decision of law, then a de novo standard of review is employed. [Citations.] (Robertson v. Health Net of California, Inc. (2005) 132 Cal.App.4th 1419, 1425; see also Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 174.)

B. Bambi Did Not Have Authority to Execute the Arbitration Agreements

Public policy favors arbitration as an expedient and economical method of resolving disputes, thus relieving crowded civil courts. However, arbitration assumes that the parties have elected to use it as an alternative to the judicial process. [Citation.] Arbitration is consensual in nature. The fundamental assumption of arbitration is that it may be invoked as an alternative to the settlement of disputes by means other than the judicial process solely because all parties have chosen to arbitrate them. [Citations.] Even 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. The right to arbitration depends on a contract. [Citations.] (County of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996) 47 Cal.App.4th 237, 244-245 (County of Contra Costa).)

Therefore, as a general rule, a nonsignatory is not bound by an arbitration agreement. (See Westra v. Marcus & Millichap Real Estate Investment Brokerage Co., Inc. (2005) 129 Cal.App.4th 759, 763; Benasra v. Marciano (2001) 92 Cal.App.4th 987, 990 (Benasra); County of Contra Costa, supra, 47 Cal.App.4th at p. 245.) However, there are certain limited exceptions in which an arbitration agreement can be enforced against nonsignatories under traditional principles of contract and agency law. (See Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 268; see also County of Contra Costa, supra, 47 Cal.App.4th at pp. 242-243.) For example, a patient who signs an arbitration agreement at a health care facility can bind family members who present claims arising from the patients treatment. (Mormile v. Sinclair (1994) 21 Cal.App.4th 1508, 1511-1516; Bolanos v. Khalatian (1991) 231 Cal.App.3d 1586, 1591.) Moreover, a person who is authorized to act as the patients agent can bind the patient to an arbitration agreement. (Garrison v. Superior Court (2005) 132 Cal.App.4th 253, 264-266 (Garrison); Hogan v. Country Villa Health Services (2007) 148 Cal.App.4th 259, 265-268 (Hogan).)

In Garrison, the court held that a daughter who had a durable power of attorney to make health care decisions for her mother could bind her mother to an arbitration agreement in a residential care facilitys admission documents. (Garrison, supra, 132 Cal.App.4th at p. 256.) In so holding, the court reasoned that the decision whether to accept an arbitration provision in the admissions documents was part of the health care decisionmaking process authorized in the durable power of attorney for health care. (Id. at p. 266.) The court concluded that under the terms of the durable power of attorney for health care and the applicable provisions of the Health Care Decisions Law^[5](Prob. Code,  4600, et seq.), the daughter had the authority to enter into the arbitration agreement on behalf of her mother. (Garrison, at pp. 265-267.)

Similarly, in Hogan, the court held that a mothers designation of her daughter in a durable power of attorney for health care authorized the daughter to enter into a binding arbitration agreement. (Hogan, supra, 148 Cal.App.4th at p. 262.) The Hogan court explained that an agent under a health care power of attorney . . . is empowered to execute arbitration agreements, as part of a long-term health care facilitys admissions package, without violating the principals constitutional right to a jury trial. [Citation.] (Id. at p. 269.)

Here, Allen did not sign the arbitration agreements; thus this is not the case where a signatory patient binds his or her family member who asserts a claim derived from the patients care. Further, unlike the situation in Garrison and Hogan, at the time Bambi signed the arbitration agreements her authority to act as Allens agent for health care decisions had not been triggered. In Garrison, the durable power of attorney for health care was effective immediately upon execution (Garrison, supra, 132 Cal.App.4th at p. 258); also, there was no question regarding the validity of the durable power of attorney for health care in Hogan (see Hogan, supra, 148 Cal.App.4th at pp. 262-264). In the instant case, however, Bambis authority to act as Allens agent with respect to health care was subject to a condition precedent. Specifically, the advance health care directive provided that Bambis authority as her fathers agent for health care decisions did not take effect until his primary physician determined that he was unable to make his own health care decisions. Here, no such evidence was presented.^[6] Thus, there was no written instrument conferring agency power on Bambi.

However, [e]ven where there is no written agency authorization, an agency relationship may arise by oral consent or by implication from the conduct of the parties. [Citation.] (Flores v. Evergreen at San Diego, LLC (2007) 148 Cal.App.4th 581, 587 (Flores).) That said,  [a] person cannot become the agent of another merely by representing herself as such. To be an agent she must actually be so empowered by the principal or the principal intentionally, or by want of ordinary care, [has caused] a third person to believe another to be his agent who is not really employed by him.  (Pagarigan v. Libby Care Center, Inc. (2002) 99 Cal.App.4th 298, 301-302 (Pagarigan).) Accordingly,   [t]he 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 his control. . . . [Citations.] 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 . . . .  (vant Rood v. County of Santa Clara (2003) 113 Cal.App.4th 549, 571, italics added.)

Applying these principles in Flores, the appellate court affirmed the denial of a nursing homes motion to compel arbitration, finding there was no evidence that a wife, suffering from dementia and other ailments, had authorized her husband to act as her agent to bind her to a nursing home arbitration agreement. (Flores, supra, 148 Cal.App.4th at pp. 587-589.) Flores rejected the nursing homes contention that the husbands act of signing the agreement created agency status, explaining that conduct of the principal was necessary to show agency. (Id. at pp. 588-589.) Flores further explained that [e]ven though [the nursing home] presented evidence showing that [the husband] acted as if he were [his wifes] agent, the establishment of the agency also requires conduct on the part of [the wife] conferring that status. (Id. at p. 589.)

Similarly, in Pagarigan, the court affirmed the denial of a nursing homes motion to compel arbitration, in the absence of any evidence that a comatose patient had authorized her daughters to acts as her agents to bind her to a nursing home arbitration agreement. (Pagarigan, supra, 99 Cal.App.4th at pp. 301-302.) The court rejected the contention that the representations by the adult children that they had the power to bind their mother to the arbitration agreements was sufficient to establish an agency, noting that this evidence was totally irrelevant, and explaining that conduct by the principal was necessary to show agency. (Ibid.)

Here, in support of its contention that Bambi was authorized to bind Allen to the arbitration agreements, Evergreen points to times where Bambi acted for her father with respect to his medical matters. For example, Bambi provided the powers of attorney to Allens health care providers, including Evergreen. Also, Bambi made the decision to admit Allen at Evergreens facility without any input from Allen. Although, Evergreen offers instances of Bambis conduct regarding the creation of an agency, it fails to point to evidence regarding Allens conduct in this regard. Rather, Evergreen relies on Allens incompetency as a basis for establishing an ostensible agency.

In support of its claim of ostensible agency, Evergreen maintains Bambi admitted Allen to its facility without his consent, which Evergreen insists was something Bambi could have only accomplished as Allens agent. Not so. [A]s a matter of practical necessity there are certain decisions that must be made for a mentally incompetent nursing home patient even when there is no formal representative. The Legislature [has] recognized this reality [by] specif[ying] next of kin as among the persons authorized to make medical decisions and enforce the Patients Bill of Rights. It is likely the Legislature also intended to allow next of kin to sign a nursing home contract for the limited purpose of admitting a mentally incompetent relative to the facility, even if the family member did not technically qualify as an agent, legal representative or responsible party. As with medical decisions, admission of a mentally incompetent patient to a nursing home is sometimes necessary even when there is no person with recognized legal authority to act on behalf of the patient. (Flores, supra, 148 Cal.App.4th at p. 593; see also Health & Saf. Code,  1418.8, 1599.3, 1599.65, subd. (a); Cal. Code Regs., tit. 22,  72527.)

Nevertheless, Bambis statutory next-of-kin status does not translate into agency authority empowering her to sign the arbitration agreements on Allens behalf. (See Flores, supra, 148 Cal.App.4th at pp. 593-594; Pagarigan, supra, 99 Cal.App.4th at pp. 302-303.) Goliger v. AMS Properties, Inc. (2004) 123 Cal.App.4th 374 (Goliger) is instructive. There, in the course of admitting her mother to a residential health care facility, a daughter signed two arbitration agreements as  responsible party,  but did not sign as  agent.  (Id. at pp. 375-376.) In affirming the denial of the motion to compel, the appellate court held that the defendant had not established the daughters authority to waive her mothers right to a jury trial. In so holding, the court explained the wording of the arbitration agreements, which provided separate signature lines for  agent  and  responsible party,  belied the defendants claim that the daughter was her mothers agent and, thus, was authorized to bind her mother to arbitration. (Id. at pp. 376-377.) The court also rejected the contention that the daughter had authority to bind her mother merely by her next-of-kin status. (Id. at p. 377.)

In the instant case, the wording of the arbitration agreements is ambiguous. Each agreement contained a signature line for Legal Rep/Responsible Party/Agent. From this wording, it is unclear whether Bambi signed the agreements as Allens agent or merely as the responsible party. Moreover, the wording of the resident agreement casts doubt on Evergreens claim of agency. The resident agreement, unlike the arbitration agreements, provided separate signature lines for Responsible Party, and for Agent/Guarantor/Attorney-in-fact. Bambi signed the resident agreement as Allens Responsible Party. Tellingly, she did not sign as his Agent/Guarantor/Attorney-in-fact, instead leaving this line blank.

Finally, Evergreen suggests that Bambi should be estopped from denying the existence of her status as Allens agent by reason of her acceptance of the attendant benefits of the purported agency. This contention is without merit. Bambi utilized the services of the residential care facility as provided under certain admission documents. Those are separate agreements from the arbitration agreements. In other words, Bambi has not sought to make use of the arbitration agreements and, thus, she is not estopped to assert that they are unenforceable with respect to both her fathers and her own claims^[7]against Evergreen.

In sum, there is no basis, either statutory or contractual, for concluding that Bambi was authorized to waive Allens right to pursue legal action rather than arbitration. Consequently, no valid arbitration contract exists. (Pagarigan, supra, 99 Cal.App.4th at pp. 301-303.) Evergreens petition to compel arbitration was properly denied.

III. DISPOSITION

The order denying arbitration is affirmed. Plaintiff is entitled to recover her costs on appeal.

________________________

RIVERA, J.

We concur:

___________________________

REARDON, Acting P. J.

___________________________

SEPULVEDA, J.

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A117682

^[1]We use the parties first names for purpose of clarity and not out of disrespect. (See In re Marriage of Nelson (2006) 139 Cal.App.4th 1546, 1549, fn. 1.)

^[2]Depending on the signature lines provided, Bambi signed as Allens Authorized Representative or Legal Representative.

^[3]Pursuant to Probate Code section 4605,  [a]dvance health care directive . . . means either an individual health care instruction or a power of attorney for health care.

^[4]The advance health care directive provided that Bambis authority as Allens agent became effective when his primary physician determined that he was unable to make his own health care decisions. The financial power of attorney provided that it would take effect only if Allen became incapacitated or unable to manage his financial affairs, and that Allens incapacity was required to be determined by written declarations of two licensed physicians.

^[5]The Garrison court referenced the following three provisions in the Probate Code: First, Probate Code section 4683, subdivision (a) states: Subject to any limitations in the power of attorney for health care: [] (a) An agent designated in the power of attorney may make health care decisions for the principal to the same extent the principal could make health care decisions if the principal had the capacity to do so. . . . Second, Probate Code section 4684 states: An agent shall make a health care decision in accordance with the principals individual health care instructions, if any, and other wishes to the extent known to the agent. Otherwise, the agent shall make the decision in accordance with the agents determination of the principals best interest. . . . Third, Probate Code section 4688 states, Where this division does not provide a rule governing agents under powers of attorney, the law of agency applies.  (Garrison, supra, 132 Cal.App.4th at pp. 265-266.) Evergreen relies on these same provisions on appeal.

^[6]In support of the motion to compel, Evergreen submitted a June 2004 letter from Allens primary physician, which indicated that Allen had been treated for various conditions, including dementia. In this letter, Allens physician opined that Allen could neither live independently nor take care of his own financial affairs. However, the letter did not describe the level of Allens dementia or state that he was unable to make his own health care decisions.

^[7]Evergreen has not addressed the effect of the arbitration agreements on Bambis individual claims, thereby waiving the issue on appeal. (See Duarte v. Chino Community Hospital (1999) 72 Cal.App.4th 849, 856.) Even if this issue had been preserved it is without merit, as there is no evidence that Bambi signed the arbitration agreements in her individual capacity. (See Fitzhugh v. Granada Healthcare & Rehabilitation Center, LLC (2007) 150 Cal.App.4th 469, 471, 474 [husbands wrongful death claims not subject to arbitration in absence of evidence he signed arbitration agreements in individual capacity]; Goliger, supra, 123 Cal.App.4th at pp. 377-378 [daughters wrongful death claims not subject to arbitration because she did not sign agreement in her personal capacity]; see also Benasra, supra, 92 Cal.App.4th at p. 990 [arbitration agreement did not bind corporate officers personal claims because he signed agreement only in representative capacity].)