Arredondo v. SNH SE Ashley River Tenant, LLC
| Decision Date | 10 March 2021 |
| Docket Number | Opinion No. 28011,Appellate Case No. 2019-001767 |
| Court | South Carolina Supreme Court |
| Parties | Thayer W. ARREDONDO, as Personal Representative of the Estate of Hubert Whaley, deceased, Petitioner, v. SNH SE ASHLEY RIVER TENANT, LLC; FVE Managers, Inc.; Five Star Quality Care, Inc.; SNH SE Tenant TRS, Inc.; Senior Housing Properties Trust; SNH TRS, Inc.; Candy D. Cure; John Doe; Jane Doe; Richard Roe Corporation; and Mary Doe Corporation, Defendants, Of which SNH SE Ashley River Tenant, LLC; FVE Managers, Inc.; Five Star Quality Care, Inc.; SNH SE Tenant TRS, Inc.; Senior Housing Properties Trust; SNH TRS, Inc.; and Candy D. Cure are the Respondents. |
Kenneth Luke Connor, Christopher Caleb Connor and Laura S. Jordan, all of Connor & Connor, LLC, of Aiken, for Petitioner.
G. Mark Phillips and Robert William Whelan, of Nelson Mullins Riley & Scarborough, LLP, of Charleston, for Respondents.
This appeal concerns the enforceability of an arbitration agreement executed between Ashley River Plantation, an assisted-living facility (the facility), and Thayer Arredondo, the attorney-in-fact under two powers of attorney executed by Hubert Whaley, a facility resident. In an unpublished opinion, the court of appeals held the arbitration agreement was enforceable. Arredondo v. SNH SE Ashley River Tenant, LLC , Op. No. 2019-UP-293, 2019 WL 3814725 (S.C. Ct. App. filed Aug. 14, 2019). We hold neither power of attorney gave Arredondo the authority to sign the arbitration agreement. Therefore, we reverse the court of appeals.
On October 12, 2012, Arredondo decided to place Mr. Whaley, her father, in Respondents’ Ashley River Plantation assisted-living facility in Charleston. Whaley was eighty-four years old, was diagnosed with dementia
, and required assistance with daily functions such as bathing, dressing, toileting, and taking medications. When Whaley was admitted into the facility, Arredondo held two valid powers of attorney, a General Durable Power of Attorney (GDPOA) and a Health Care Power of Attorney (HCPOA).
When Arredondo and Whaley arrived at the facility, Arredondo met with a facility representative and signed various documents in connection with Whaley's admission. During that meeting, the facility representative did not mention or present an arbitration agreement to Arredondo. Later that day, after Whaley was admitted, Arredondo met with a different facility representative who, according to Arredondo, told her she "needed to sign additional documents related to [her] father's admission to the facility." Included among those documents was the arbitration agreement, which Arredondo signed.
The arbitration agreement, which Arredondo obviously executed before any dispute arose between the parties, contains a mutual waiver of the right to a trial by judge or jury and requires arbitration of all claims involving potential damages exceeding $25,000. The agreement bars either party from appealing the arbitrators’ decision, prohibits an award of punitive damages, limits discovery, and provides Respondents the unilateral right to amend the agreement.
On February 21, 2014, while he was still a resident at the facility, Whaley was admitted to Bon Secours St. Francis Hospital, where he died six days later. Arredondo, as Personal Representative of Whaley's estate, brought this action alleging claims for wrongful death and survival against Respondents.
The complaint alleges that during his residency at the facility, Whaley suffered serious physical injuries and died as a result of Respondents’ negligence and recklessness.
Respondents moved to compel arbitration. In opposition to the motion, Arredondo argued (1) the two powers of attorney did not give her the authority to sign the arbitration agreement, and (2) even if she had authority to sign it, the agreement is unconscionable and therefore unenforceable. To buttress her unconscionability argument, Arredondo submitted an affidavit in which she described the events surrounding her execution of the arbitration agreement. Arredondo stated that when she had questions about the arbitration agreement and told the facility representative she was not comfortable signing it, the facility representative responded, "this [is] a document that everyone sign[s] when admitting their loved ones to the facility and that [Arredondo] needed to sign the ‘Arbitration Agreement’ in order to ensure [Whaley's] admission to the facility." Respondents insist the evidence supports only the conclusion that Arredondo's execution of the arbitration agreement was not a prerequisite for Whaley's admission into the facility. As we will discuss, our determination of whether Arredondo was required to sign the agreement in order for Whaley to be admitted is dispositive of the threshold issue of whether Arredondo had authority under the HCPOA to sign the arbitration agreement.
In denying Respondents’ motion to compel arbitration, the circuit court ruled neither power of attorney gave Arredondo the authority to sign the arbitration agreement and also ruled that even if Arredondo had authority to sign it, the agreement is unconscionable. The court of appeals reversed, holding Arredondo had actual authority to execute the arbitration agreement and holding the agreement is not unconscionable. This Court granted Arredondo's petition for a writ of certiorari to review the court of appeals’ decision.
"Arbitrability determinations are subject to de novo review." Johnson v. Heritage Healthcare of Estill, LLC , 416 S.C. 508, 512, 788 S.E.2d 216, 218 (2016) (quoting Dean v. Heritage Healthcare of Ridgeway, LLC , 408 S.C. 371, 379, 759 S.E.2d 727, 731 (2014) ). "Nevertheless, a circuit court's factual findings will not be reversed on appeal if any evidence reasonably supports the findings." Id. (quoting Simpson v. MSA of Myrtle Beach, Inc. , 373 S.C. 14, 22, 644 S.E.2d 663, 667 (2007) ). "The litigant opposing arbitration bears the burden of demonstrating that he has a valid defense to arbitration." Id.
Arredondo argues the court of appeals erred in holding the two powers of attorney granted her authority to sign the arbitration agreement. She also contends the court of appeals erred in holding the arbitration agreement is not unconscionable. We hold neither power of attorney gave Arredondo the authority to execute the arbitration agreement. In light of our holding on that point, we need not address the issue of unconscionability.
A. Arredondo's Authority to Execute the Arbitration Agreement
"Our courts have looked to contract law when reviewing actions to set aside or interpret a power of attorney." Stott v. White Oak Manor, Inc. , 426 S.C. 568, 577, 828 S.E.2d 82, 87 (Ct. App. 2019). "The cardinal rule of contract interpretation is to ascertain and give effect to the intention of the parties, and, in determining that intention, the court looks to the language of the contract." Id. (quoting Watson v. Underwood , 407 S.C. 443, 454-55, 756 S.E.2d 155, 161 (Ct. App. 2014) ). "When the language of a contract is plain and capable of legal construction, that language alone determines the instrument's force and effect." Id. (quoting Watson , 407 S.C. at 455, 756 S.E.2d at 161 ). Accordingly, we look to the specific language of the GDPOA and HCPOA to determine whether either document authorized Arredondo to execute a pre-dispute arbitration agreement.
Before we begin our review of the authority granted to Arredondo by the powers of attorney, we emphasize our analysis does not turn upon the presence or absence of an explicit reference to arbitration or arbitration agreements in the powers of attorney. The decision of the United States Supreme Court (USSC) in Kindred Nursing Centers Ltd. Partnership v. Clark1 forecloses such an approach. In Kindred , the USSC reviewed two of three consolidated cases from the Supreme Court of Kentucky, one dealing with a power of attorney signed by Wellner and another signed by Clark.2 In both cases, the agents holding the powers of attorney signed arbitration agreements when their principals were admitted into a nursing facility. The Supreme Court of Kentucky held an agent was authorized to sign an arbitration agreement depriving her principal of "an ‘adjudication by judge or jury’ only if the power attorney ‘expressly so provide[d].’ " 137 S. Ct. at 1426 (quoting Whisman , 478 S.W.3d at 329 ). The USSC dubbed this approach the "clear-statement rule" and held it violated the Federal Arbitration Act (FAA) by "fail[ing] to put arbitration agreements on an equal plane with other contracts." Id. at 1426-27. The USSC then held the Clark power of attorney undoubtedly authorized the agent to sign an arbitration agreement because it granted the agent the all-encompassing authority "to transact, handle, and dispose of all matters affecting me and/or my estate in any possible way" and "[g]enerally to do and perform for me and in my name all that I might do if present." Id. at 1425 ; see Whisman , 478 S.W.3d at 317-18. As such, no remand for further proceedings related to the Clark power of attorney was necessary. However, the USSC noted the Supreme Court of Kentucky had invalidated the Wellner arbitration agreement on two alternative grounds, one based upon the prohibited clear-statement rule and the other based upon the Kentucky Court's finding that the Wellner power of attorney was not otherwise broad enough to allow Wellner's agent to sign a pre-dispute arbitration agreement. Noting these alternative holdings, the USSC remanded the Wellner case to the Supreme Court of Kentucky for an analysis of whether the alternative holding was tainted by or not wholly independent of the clear-statement rule. We discuss below the Supreme Court of Kentucky's decision on remand.
Paragraph one of the General Durable Power of Attorney (GDPOA) authorized Arredondo:
To make, sign, execute, issue,...
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