Beckley Health Partners, Ltd. v. Hoover

• Court: West Virginia Supreme Court
• Writing for the Court: WALKER, Justice
• Citation: Beckley Health Partners, Ltd. v. Hoover, 875 S.E.2d 337 (W. Va. 2022)
• Decision Date: 15 June 2022
• Docket Number: 20-0680,No. 20-0680
• Parties: BECKLEY HEALTH PARTNERS, LTD. d/b/a the Villages at Greystone ; Chancellor Senior Management, Ltd. ; and Megan Ward Wilson, Residence Manager; Defendants Below, Petitioners, v. Cynthia F. HOOVER, Durable Power of Attorney of Elveria M. Faw Plaintiff Below, Respondent.

875 S.E.2d 337

BECKLEY HEALTH PARTNERS, LTD. d/b/a the Villages at Greystone ; Chancellor Senior Management, Ltd. ; and Megan Ward Wilson, Residence Manager; Defendants Below, Petitioners,

v.Cynthia F. HOOVER, Durable Power of Attorney of Elveria M. Faw Plaintiff Below, Respondent.

No. 20-0680

Supreme Court of Appeals of West Virginia.

Submitted: May 17, 2022

Filed: June 15, 2022

Robert L. Hogan, Esq., Avrum Levicoff, Esq., The Levicoff Law Firm, P.C., Pittsburgh, Pennsylvania, Counsel for Petitioners

S. Andrew Stonestreet, Esq., Jeff D. Stewart, Esq., Andrew L. Paternostro, Esq., Michelle L. Barker, Esq., STEWART BELL, PLLC, Charleston, West Virginia, Counsel for Respondent

WALKER, Justice:

In August 2017, Respondent Ms. Cynthia Hoover admitted her mother, Elveria Faw, to The Villages at Greystone, an assisted living residence in Raleigh County. Ms. Hoover was not her mother's attorney-in-fact. She was her mother's medical surrogate. In that capacity, Ms. Hoover completed two forms on her mother's behalf: a residency agreement, which was required to gain admission to Greystone, and an arbitration agreement, which was not. In 2019, Ms. Hoover (who by then was her mother's attorney-in-fact) sued Petitioners Beckley Health Partners, Ltd. d/b/a The Villages at Greystone, Chancellor Senior Management, Ltd., and Megan Ward Wilson, Residence Manager, alleging that Ms. Faw had suffered injuries while a resident of Greystone due to Petitioners’ negligence. Petitioners moved the circuit court to compel Ms. Hoover to arbitrate the claim. The circuit court concluded that no valid arbitration agreement existed and denied the motion. Petitioners appeal that ruling.

The circuit court correctly applied our decision in State ex rel. AMFM, LLC v. King¹ to conclude that Ms. Hoover lacked authority to bind her mother to the arbitration agreement. It also correctly concluded that Petitioners’ four, alternative theories of contract formation—ratification, assent, estoppel, and unilateral contract—do not establish a valid agreement to arbitrate on the facts of this case. For those reasons, we affirm the circuit court's order and remand this case for further proceedings.

I. FACTUAL AND PROCEDURAL HISTORY

In late August 2017, Ms. Hoover arranged for Ms. Faw, her mother, to become a resident at Greystone, an assisted living residence in Raleigh County.² Ms. Hoover had been appointed her mother's health care surrogate, earlier, according to the terms of the West Virginia Health Care Decisions Act (the Act).³ During the admissions process, Ms. Hoover signed an Assisted Living Residency Agreement (Residency Agreement)⁴ and a Residential and Community Arbitration Agreement (Arbitration Agreement) on her mother's behalf. Ms. Faw did not sign either agreement. The Residency Agreement identified Ms. Faw as Resident or You; Greystone as we, us, our, or Community; and Ms. Hoover as Responsible Party.⁵ Ms. Faw, Greystone, and Ms. Hoover were similarly identified in the Arbitration Agreement.⁶

By executing the Arbitration Agreement, Ms. Hoover purported to bind her mother to arbitrate "any legal dispute, controversy, demand or claim ... that arises out of or relates to the [Residency Agreement] or any other separate agreement entered into by the Resident and the Community or any service or health care provided by the Community to the Resident ...."⁷ Notably, the Arbitration Agreement was not a precondition to admission to Greystone, and an authorized signatory could rescind the agreement within thirty days of its execution. The next-to-last paragraph of the agreement makes this clear:

The Resident understands that ... (2) the execution of this Arbitration Agreement is not a precondition to the furnishing of services to the Resident by the Community, and (3) this Arbitration Agreement may be rescinded by written notice to the Community from the Resident within 30 days of signature.

On or about September 2, 2017, Ms. Faw moved into Greystone. Days later, Ms. Hoover obtained Ms. Faw's power of attorney.⁸

In April 2019, Ms. Hoover filed a complaint in her capacity as Ms. Faw's attorney-in-fact against Petitioners, alleging that they had not provided Ms. Faw a safe environment nor adequately supervised her, so that she suffered multiple falls and a fractured femur while she resided at Greystone. Respondent also alleged violations of various sections of Article 5D, Chapter 16 of the West Virginia Code, related to assisted living residences. After Ms. Faw passed away in October 2019, Ms. Hoover was appointed administratrix of Ms. Faw's estate. The circuit court ordered the case caption be amended accordingly.⁹ For the sake of clarity, we refer to the complaint and the claims within as "the Estate's complaint" and "the Estate's claims." Going forward, we refer to Ms. Hoover as "Administratrix Hoover."¹⁰

In April 2019, Petitioners produced the Arbitration Agreement and moved the circuit court for an order compelling the parties to arbitration. Administratrix Hoover responded that no valid arbitration agreement existed because she had lacked authority as a health care surrogate to bind her mother to arbitrate future disputes when she executed the Arbitration Agreement. Petitioners filed a supplemental memorandum of law in June 2020. There, Petitioners argued that a valid, binding agreement to arbitrate the Estate's claims existed because Administratrix Hoover had ratified the agreement after she obtained her mother's durable power attorney, Administratrix Hoover and Ms. Faw had accepted services under the Residency Agreement, and Administratrix Hoover had personally assented to the Arbitration Agreement. Petitioners also argued that Administratrix Hoover was estopped from rejecting the agreement to arbitrate because she and Ms. Faw had obtained direct benefits from the Residency Agreement.

The circuit court denied the motion. The court identified our decision in AMFM as "remarkably similar." The court applied that case to conclude that, at the time she executed the Arbitration Agreement, Administratrix Hoover had "possessed only the requisite authority to make strictly health care decisions on behalf of Ms. Faw, and was not a ‘competent party’ to sign the Arbitration Agreement on her behalf." The court also concluded that AMFM foreclosed Petitioners’ ratification argument, as this Court had rejected a nearly identical argument, there. The court also dismissed Petitioners’ estoppel theory and unilateral contract theories based, in part, on its conclusion that the Residency and Arbitration Agreements were separate contracts. The court dispatched Petitioners’ assent argument in reliance on fiduciary principles. Petitioners now appeal the court's order denying its motion to compel arbitration.

II. STANDARD OF REVIEW

"An order denying a motion to compel arbitration is an interlocutory ruling which is subject to immediate appeal under the collateral order doctrine."¹¹ "When an appeal from an order denying a motion to dismiss and to compel arbitration is properly before this Court, our review is de novo. "¹²

III. ANALYSIS

Petitioners challenge the circuit court's denial of their motion to compel arbitration. When faced with a motion to compel arbitration, a trial court does not address the merits of the case. Instead,

[w]hen a trial court is required to rule upon a motion to compel arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1 -307 (2006), the authority of the trial court is limited to determining the threshold issues of (1) whether a valid arbitration agreement exists between the parties; and (2) whether the claims averred by the plaintiff fall within the substantive scope of that arbitration agreement.^{[13 ]}

This case turns on the first issue—validity. Because "[a]rbitration agreements are ‘to be treated by courts like any other contract, nothing more, and nothing less,’ "¹⁴ "[w]hether an arbitration agreement was validly formed is evaluated under state law principles of contract formation."¹⁵ Under West Virginia law,

"[t]he fundamentals of a legal contract are competent parties, legal subject matter, valuable consideration and mutual assent. There can be no contract if there is one of these essential elements upon which the minds of the parties are not in agreement." Syllabus Point 5, Virginian Export Coal Co. v. Rowland Land Co., 100 W.Va. 559, 131 S.E. 253 (1926).^{[16 ]}

With those fundamentals to guide us, we proceed to the parties’ arguments regarding whether a valid agreement to arbitrate the Estate's claims was formed.

Petitioners assign a single error to the circuit court's order denying their motion to compel arbitration: that a valid and binding arbitration agreement exists, so the circuit court erred when it concluded otherwise. They contend that the court erroneously looked to AMFM to deny their motion because Administratrix Hoover's "status as a healthcare surrogate [at the time she executed the Arbitration Agreement] is inconsequential to the issue of contract formation and [they] do not rely upon [Administratrix Hoover's former] status as a healthcare surrogate in support of the validity and enforceability of the" Arbitration Agreement. Administratrix Hoover responds that AMFM is factually indistinguishable, and the circuit court correctly applied the case to these facts. Consideration of Petitioners’ appeal begins with AMFM .

A. State ex rel. AMFM, LLC v. King

In AMFM , the administratrix of the estate of Ms. Beulah Wyatt filed a wrongful death suit against McDowell Nursing and Rehabilitation Center, where Ms. Wyatt had lived before her death.¹⁷ McDowell Nursing moved to dismiss the suit and enforce an arbitration agreement that Ms. Wyatt's healthcare surrogate¹⁸ —her daughter, Nancy Belcher—had executed in the process of admitting Ms. Wyatt to the nursing facility.¹⁹ As is the case, here, neither the resident nor her authorized agent had to accept the arbitration agreement in order for the resident to receive services from McDowell...