Ball Healthcare Servs. v. Flennory
| Decision Date | 19 August 2022 |
| Docket Number | 1200843 |
| Parties | Ball Healthcare Services, Inc., d/b/a Lighthouse Rehabilitation and Healthcare Center v. Ledell Flennory, as personal representative of the Estate of Rosa Lee McCreary |
| Court | Supreme Court of Alabama |
Appeal from Dallas Circuit Court (CV-20-900214)
Ball Healthcare Services, Inc. ("Ball Healthcare") appeals an order of the Dallas Circuit Court denying its motion to compel arbitration in Ledell Flennory's wrongful-death suit against it. Because Flennory did not meet his burden of rebutting Ball Healthcare's evidence that an enforceable arbitration agreement existed, we reverse and remand.
Rosa Lee McCreary sought admission to Lighthouse Rehabilitation and Healthcare Center ("Lighthouse"), a skilled-nursing facility operated by Ball Healthcare. At that time, McCreary had numerous health issues, including gangrene, vascular issues, and complications from diabetes and a stroke. She also had had a leg amputated and was legally blind. McCreary's daughter, Jacqueline Williams, signed the admission paperwork. The paperwork included a dispute-resolution agreement that provided that all disputes between Ball Healthcare and McCreary or her estate would be resolved by arbitration ("the arbitration agreement"). The arbitration agreement stipulated that Ball Healthcare regularly engaged in transactions involving interstate commerce and that its services involved interstate commerce. The arbitration agreement provided that it could be signed by an "Authorized Representative" of the resident:
The arbitration agreement contained three signature blocks, for "Resident," "Responsible Party," and "Facility." The "Resident" block was unsigned. Williams signed in the "Responsible Party" block. Williams's signature was notarized.
McCreary resided at Lighthouse for about two months, until she allegedly developed an infected pressure ulcer on her foot and died from septic shock. Flennory, who was McCreary's son and the personal representative of her estate, commenced this wrongful-death action against Ball Healthcare.
Ball Healthcare moved to compel arbitration and submitted the arbitration agreement in support. Ball Healthcare asserted that Williams's signature created an enforceable agreement to arbitrate.
Flennory responded that Williams was not McCreary's "Authorized Representative," as that term was defined in the arbitration agreement. Specifically, Flennory contended that the arbitration agreement allowed Williams to sign only if McCreary was unable to consent to or sign the arbitration agreement because of a physical disability or mental incompetence. It is undisputed that McCreary was mentally competent to sign the arbitration agreement. Moreover, Flennory asserted, McCreary was physically able to sign the arbitration agreement. In support, he submitted two medical records purportedly signed by McCreary five weeks before and seven weeks after her admission to Lighthouse, which he argued showed that she had the ability to sign documents. Therefore, Flennory argued, Williams did not validly sign the arbitration agreement on behalf of McCreary. Accordingly, Flennory contended, there was no valid agreement to arbitrate.
The circuit court denied Ball Healthcare's motion. Ball Healthcare filed a motion to alter, amend, or vacate the court's order and, while that motion was pending, filed its notice of this appeal to this Court. The circuit court did not rule on the motion to alter, amend, or vacate.[2]
" "
Elizabeth Homes, L.L.C. v. Gantt, 882 So.2d 313, 315 (Ala. 2003) (quoting Fleetwood Enters., Inc. v. Bruno, 784 So.2d 277, 280 (Ala. 2000)) (internal citations omitted).
III. Analysis On appeal, Ball Healthcare argues that it met its burden of showing the existence of a contract calling for arbitration and of a transaction affecting interstate commerce by introducing the signed arbitration agreement, but that Flennory did not meet his burden of rebutting that evidence with evidence that the arbitration agreement was invalid. In particular, Ball Healthcare argues that Flennory failed to submit evidence that McCreary had not authorized Williams to sign on her behalf. Flennory responds that he showed that Williams did not have authority to sign the arbitration agreement because its definition of "Authorized Representative" required that the resident be physically unable to sign and he submitted evidence that McCreary was physically able to sign. In contrast, Ball Healthcare contends that Williams's signature bound McCreary under the doctrine of apparent authority.
Our analysis of whether the arbitration agreement was enforceable must begin with whether each party met its evidentiary burden. As stated above, the party moving for arbitration must show the existence of a contractual arbitration provision and a transaction affecting interstate commerce. Elizabeth Homes, 882 So.2d at 315. (Flennory does not dispute that the arbitration agreement evidenced a transaction affecting interstate commerce, so we do not address that element.) The opposing party must then show that the arbitration provision is not valid or does not apply. Id. To make the required showing, each party must submit substantial evidence. Ex parte Cain, 838 So.2d 1020, 1026 (Ala. 2002). "[S]ubstantial evidence is evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala. 1989).
Thus, Ball Healthcare's initial burden was to submit substantial evidence that a contractual arbitration provision existed. Ball Healthcare met that burden by submitting the arbitration agreement, which, at least on its face, appeared to be signed by a person with authority. See SSC Selma Operating Co. v. Gordon, 56 So.3d 598, 603 (Ala. 2010). In SSC, in support of a motion to compel arbitration, nursing-home defendants submitted an arbitration agreement that appeared to have been signed by the resident's wife. The plaintiff asserted that the wife had not signed the agreement. We held that the defendants had met their initial burden because "[t]he arbitration agreement itself constituted substantial evidence that a contract calling for arbitration existed." Id. at 603.
When Ball Healthcare submitted the signed arbitration agreement, the burden shifted to Flennory to submit evidence that the arbitration agreement was invalid or inapplicable. Flennory contends that he showed that Williams's signature was invalid because the arbitration agreement's "physical disability" condition was not met. Ball Healthcare asserts that Williams had apparent authority to sign the arbitration agreement.
"The doctrine of apparent authority rests upon the principle of estoppel, which forbids one by his acts to give an agent an appearance of authority which he does not have and to benefit from such … conduct to the detriment of one who has acted in reliance upon such appearance." Patterson v. Page Aircraft Maint., Inc., 51 Ala.App. 122, 126, 283 So.2d 433, 437 (Civ. App. 1973). The issue of apparent authority has arisen before in our cases involving nursing-home arbitration agreements. In Owens v. Coosa Valley Health Care, Inc., 890 So.2d 983 (Ala. 2004), we held that a resident was bound by an arbitration agreement signed by her daughter as "'Guardian' and 'Sponsor.'" Id. at 987. We noted that "[t]here [was] no evidence indicating that [the resident] had any objection to [the signatory's] acting on her behalf in admitting [the resident] to the nursing home." Id.
Similarly in Carraway v. Beverly Enterprises Alabama, Inc., 978 So.2d 27 (Ala. 2007), a nursing-home resident's brother signed an arbitration agreement as" 'Authorized representative.'" Id. at 30. We held that the brother had apparent authority to sign, explaining: ...
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