Ala. Somerby, LLC v. L.D.

• Decision Date: 12 May 2023
• Docket Number: SC-2022-0828
• Parties: Alabama Somerby, LLC, d/b/a Brookdale University Park IL/AL/MC; Brookdale Senior Living, Inc.; and Undrea Wright v. L.D., as next friend of E.D.
• Court: Alabama Supreme Court

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Alabama Somerby, LLC, d/b/a Brookdale University Park IL/AL/MC; Brookdale Senior Living, Inc.; and Undrea Wright v. L.D., as next friend of E.D.

No. SC-2022-0828

Supreme Court of Alabama

May 12, 2023

Appeal from Jefferson Circuit Court (CV-22-900852)

SHAW JUSTICE.

Alabama Somerby, LLC, d/b/a Brookdale University Park IL/AL/MC Brookdale Senior Living, Inc.; and Undrea Wright, who are defendants in the action below, appeal from the Jefferson Circuit Court's order denying their motion to compel arbitration of the claims asserted against them by the plaintiff, L.D., as the next friend of her mother E.D.^[1]We reverse and remand.

Facts and Procedural History

Alabama Somerby and Brookdale Senior Living (collectively referred to as "Brookdale") operate an assisted-living facility for seniors ("the nursing home") in Jefferson County; Wright is the administrator of the nursing home.

In December 2016, E.D. executed in Illinois both a durable "Power of Attorney for Property" ("the property POA") and a "Power of Attorney for Health Care" ("the health-care POA"). The property POA specifically named E.D.'s daughter, C.C., as E.D.'s agent and attorney-in-fact authorized to make decisions on E.D.'s behalf with respect to broad categories of personal business, including transactions claims, and litigation. It also included a specific authorization for "Estate and Long Term Care Planning" that authorized C.C. as follows:

"Caregiver Agreements. I authorize my agent to enter into, execute, modify, alter or amend any contract agreement (for example, a Caregiver Agreement or Personal Services Contract) pertaining to my medical, personal or general care that I may require at my residence, assisted living facility, nursing facility, or in another's residence on my behalf."

(Emphasis added.) The property POA further provided both that it would become "effective on the date [E.D.'s designated agent] determines that [E.D. is] unable to give prompt and intelligent consideration to financial decisions" and that any "such determination shall be made only with the concurring opinion of a physician who ha[s] examined or treated [E.D.] within the last three months of rendering such an opinion."

The health-care POA similarly designated C.C. as E.D.'s "health care agent" with, among other powers, the authority to make health-related decisions, including "agreeing to admit [E.D.] to or discharge [her] from any hospital, home, or other institution." Pursuant to the healthcare POA, L.D., E.D.'s other daughter, was named as an optional successor in the event that C.C. "is unable or does not want to make health care decisions for [E.D.]." The health-care POA further provided that "[o]nly one person at a time [could] serve as [E.D.'s] agent." Like the property POA, it expressed E.D.'s desire that C.C. become her healthcare agent and "[m]ake decisions for [E.D.] only when [E.D. could not] make them for [herself]" and further specified:

"The physician(s) taking care of [E.D.] will determine when [she lacks] this ability. Starting now, for the purpose of assisting ... with ... health care plans and decisions, [C.C.] shall have complete access to my medical and mental health records, the authority to share them with others as needed, and the complete ability to communicate with [E.D.'s] personal physician(s) and other health care providers, including the ability to require an opinion of [E.D.'s] physician as to whether [E.D. lacks] the ability to make decisions for [herself]."

It appears undisputed that E.D. was competent at the time these powers of attorney were executed.^[2]

On January 19, 2021, C.C. executed a "Transfer of Health Care Power of Attorney" ("the transfer POA"), purporting to transfer the health-care POA to L.D.:

"Pursuant to the Health Care Power of Attorney signed by [E.D.] on December 14, 2016, I, [C.C.], am the appointed health care agent for [E.D.]. Effective January 30, 2021, I voluntarily relinquish my position as health care agent for [E.D.] and transfer this authority to the successor agent [L.D.] as directed by the above referenced Health Care Power of Attorney. This transfer of authority is effective until such time as [L.D.] is no longer able or willing to act as health care agent for [E.D.], at which time the authority will revert back to me and I will resume the position as health care agent for [E.D.]."

In July 2021, then 81-year-old E.D., who had, by that time, purportedly been diagnosed as suffering generally from "dementia," was admitted to the nursing home. In connection with E.D.'s admission, Brookdale was provided, as part of its routine business practices in such circumstances, copies of the property POA, the health-care POA, and the transfer POA. Also at that time, C.C. executed all admission-related documentation on E.D.'s behalf, including, among others, a "Residency Agreement" ("the residency agreement") that contained an "Agreement to Arbitrate" ("the arbitration provision") providing, in pertinent part:

"1. Any and all claims or controversies arising out of, or in any way relating to, this [Residency] Agreement or any of your stays at [the nursing home], excluding any action for involuntary transfer or discharge or eviction, and including disputes regarding interpretation, scope, enforceability, unconscionability, waiver, preemption and/or violability of this [Residency] Agreement, whether arising out of Local, State or Federal law, whether existing or arising in the future, whether for statutory, compensatory or punitive damages and whether sounding in breach of contract, tort or breach of statutory duties, or otherwise, irrespective of the basis for the duty or the legal theories upon which the claim is asserted, shall be submitted to binding individual arbitration _ and shall not be filed in a court of law. The parties to this [Residency] Agreement further understand that a judge and/or jury will not decide their case.

"2. The parties hereby expressly agree that this Arbitration Provision, the Residency Agreement and the Resident's stays at [the nursing home] substantially involve interstate commerce, and stipulate that the Federal Arbitration Act ('FAA') shall exclusively apply to the interpretation and enforcement of this [Residency] Agreement, and shall preempt any inconsistent State law and shall not be reverse preempted by the McCarran-Ferguson Act; United States Code Title 15, Chapter 20, or other law. Any party who demands arbitration must do so for all claims or controversies that are known, or reasonably should have been known, by the date of the demand for arbitration, and if learned of during the course of the arbitration proceeding, shall amend the claims or controversies to reflect the same. All current damages and reasonably foreseeable damages arising out of such claims or controversies shall also be incorporated into the initial demand or amendment thereto. Except as otherwise stated explicitly herein, this Arbitration Provision is entered into pursuant to, is governed by, and must be interpreted and enforced under the [FAA]."

(Emphasis omitted.)

C.C. executed the residency agreement as E.D.'s "Legal Representative" and referenced, as the supporting "legal authority" on which she relied in doing so, a "Financial Power of Attorney." A "Resident Move-In Record and Agreement" contemporaneously executed by C.C. as E.D.'s "Legal Representative and ... Financially Responsible Party," as well as E.D.'s "daughter [and] POA," also identified L.D. as E.D.'s "daughter [and] healthcare POA." That same form identified, as reported by C.C., the sole "medical reason" that E.D. herself was "physically unable" to sign the admission documentation as "dementia."

In March 2022, L.D. filed on E.D.'s behalf, in the Jefferson Circuit Court, a complaint against Brookdale and Wright ("the Brookdale defendants") and others, asserting various tort claims and seeking related damages premised on allegations that, following her admission to the nursing home, E.D. had been subjected to multiple sexual assaults both by other residents and by an employee of Brookdale. The complaint, which specifically alleged that E.D. was "legally incompetent" and "lacked mental capacity to consent to any sexual conduct," included the following footnote and accompanying citation to decisions from this Court on the doctrine of apparent authority:

"[Brookdale] has an arbitration agreement that was signed by a daughter that had relinquished her rights as . [E.D.'s] healthcare power of attorney six (6) months prior to executing the agreement. [Brookdale] was aware that the individual had relinquished her rights and failed to have the proper healthcare power of attorney sign their agreement, which makes the agreement unenforceable. In order to enforce an arbitration clause a party must have the signature of someone with a legal authority to act on their behalf for healthcare."

In addition to filing responsive pleadings, the Brookdale defendants jointly moved to compel arbitration of L.D.'s claims against them or, alternatively, to dismiss the action without prejudice to allow those claims to proceed via arbitration. Citing the fact that the residency agreement containing the arbitration provision implicated interstate commerce and specifically referencing the property POA, the Brookdale defendants argued that C.C. explicitly had been granted authority to handle claims, litigation, or arbitration and/or to enter into contracts for medical or personal care on E.D.'s behalf, specifically including "'caregiver agreements.'" The motion further alleged that, during the admission process and as required by the admission documentation, a copy of the property POA and the transfer POA had been presented to Brookdale as...