CL SNF, LLC v. Fountain

• Decision Date: 19 May 2020
• Docket Number: A20A0773
• Parties: CL SNF, LLC et al. v. FOUNTAIN.
• Court: Georgia Court of Appeals

355 Ga.App. 176

843 S.E.2d 605

CL SNF, LLC et al.

v.FOUNTAIN.

A20A0773

Court of Appeals of Georgia.

May 19, 2020

Quirk & Quirk, Kevin E. Quirk, Kellie T. Holt ; Huff Powell & Bailey, Karen L. Smiley, for appellants.

Bondurant Mixson & Elmore, Michael B. Terry, Jennifer L. Peterson ; Schneider Law, Bethany L. Schneider ; Wagner Hughes, Gretchen H. Wagner, Katherine G. Hughes, for appellee.

Rickman, Judge.

Following the grant of their application for interlocutory appeal, CL SNF, LLC d/b/a Clinch Healthcare Center; RWC Healthcare, LLC; PWW Healthcare, LLC; and Beacon Health Management, LLC (collectively, "Clinch") appeal the trial court's order denying their motion to compel arbitration in an action filed by Minnie Fountain on behalf of her nephew Leroy Wiggins. Clinch contends that the trial court erred in finding the arbitration agreement at issue to be unconscionable and denying their motion to compel arbitration. For reasons that follow, we affirm the trial court's order because Wiggins's guardian did not have authority to sign the arbitration agreement on his behalf.

Wiggins is a mentally incapacitated adult. Fountain was appointed his guardian, and in November 2006, Letters of Guardianship of Adult Ward were issued by the Probate Court of Clinch County. In March 2014, Wiggins was admitted to Clinch Healthcare Center, a skilled nursing facility located in Homerville, Georgia. In connection with Wiggins's admission, Fountain signed a Facility Admission Agreement, which contained an arbitration clause, and a separate Arbitration Agreement. The parties to the Arbitration Agreement were Clinch Healthcare, referred to as the Facility, and Fountain, referred to as the Resident or Resident's Representative. Wiggins did not sign the Arbitration Agreement, and when Fountain signed it, she did not complete the portion of the form asking her to indicate the capacity in which she had signed.

Pursuant to the Arbitration Agreement,

any and all claims or controversies arising out of or in any way relating to this Agreement or the Resident's Admission Agreement, including the interpretation of either, or the Resident's stay at, or the care or services provided by, the Facility, or any acts or omissions in connection with such care or services ..., whether arising out of 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 or regulatory duties (including, without limitation, any claim based on an alleged violation of the state bill of rights for residents of long-term care facilities or federal resident's rights, any claim based on negligence, any claim for damages resulting from death or injury to any person arising out of care or service rendered by the Facility or by any officer, agent, or employee thereof acting within the scope of his or her employment, any claim based on any other departure from accepted standards of health care or safety, or any claim for unpaid nursing home charges), irrespective of the basis for the duty or of the legal theories upon which the claim is asserted, shall be submitted for arbitration.

In addition, the Arbitration Agreement provided that the

Resident has the right to seek legal counsel concerning this Agreement; [t]he signing of the Agreement is not a precondition to admission, expedited admission, or the furnishing of services to the Resident by the Facility; and [t]his Agreement may be revoked by written notice to the Facility from the Resident within thirty (30) days of signature.

Fountain, however, submitted an affidavit in which she averred that she was told that all of the documents she was given had to be signed in order for Wiggins to be admitted to the facility, that no one explained any of the documents to her, and that she was not informed that she had the right to contact an attorney if she had questions about any of the documents. She also averred that she did not discuss the document with Wiggins or seek his permission to sign it.

According to the complaint filed by Fountain, in 2017, while Wiggins was a resident of Clinch Healthcare Center, he was sexually battered and assaulted on multiple occasions by his roommate and Clinch failed to address the roommate's pattern of behavior, which extended to sexual assaults against at least five other residents. The complaint alleged numerous causes of action against Clinch based on alleged negligence in Clinch's care of Wiggins. In response, Clinch answered and filed a motion to compel arbitration and stay proceedings. The trial court denied the motion to compel based on its conclusion that the Arbitration Agreement was unconscionable and its determination that the arbitration clause in the Facility Admission Agreement was unenforceable because it did not state that acceptance of arbitration was not a precondition to admission.

On appeal, Clinch contends that the trial court erred in determining that the Arbitration Agreement was unconscionable and also addresses other issues regarding the validity of the Arbitration Agreement that were raised by Fountain and rejected by the trial court.¹ Those issues include Fountain's authority to sign the Arbitration Agreement for Wiggins, the applicability of the Federal Arbitration Act, the existence of consideration for the Arbitration Agreement, whether the Arbitration Agreement precludes vindication of Wiggins's rights under the Bill of Rights for Residents of Long-Term Care Facilities, the impact of Medicaid regulations, and whether questions of standing or privity remain.

1. We first address whether Fountain had the authority to sign the Arbitration Agreement on behalf of Wiggins. Fountain raised this issue in response to Clinch's motion to compel arbitration, and the trial court determined that the powers granted under the Guardianship Code, specifically those powers found in OCGA § 29-4-23 (a) (3), were sufficient to authorize Fountain to bind Wiggins to the agreement.

Whether a valid and enforceable arbitration agreement exists is a question of law for the court, and we therefore review a trial court's order granting or denying a motion to compel arbitration de novo.

OCGA § 13-2-1 ; McKean v. GGNSC Atlanta , 329 Ga. App. 507, 509 (1), 765 S.E.2d 681 (2014). As the party seeking arbitration, Clinch bears the burden of proving the existence of a valid and enforceable agreement to arbitrate. Ashburn Health Care Center v. Poole , 286 Ga. App. 24, 25, 648 S.E.2d 430 (2007). And the validity of an arbitration agreement is "generally governed by state law principles of contract formation." Triad Health Mgmt. of Georgia, III v. Johnson , 298 Ga. App. 204, 206 (2), 679 S.E.2d 785 (2009) ; see also Lynn v. Lowndes County Health Svcs. , 354 Ga.App. 242, 245 (2), n.3, 840 S.E.2d 623 (2020) (‘‘This principle still applies in cases ... where the arbitration agreement states that the agreement is to be governed by the Federal Arbitration Act.’’).

"To constitute a valid contract, there must be parties able to contract, a consideration moving to the contract, the assent of the parties to the terms of the contract, and a subject matter upon which the contract can operate." OCGA § 13-3-1. Where, as here, a guardian is appointed for an incapacitated adult, the ward loses the power to make a contract, unless the court's order specifies that the power will be retained. OCGA § 29-4-21 (a) (2). The record does not show that Wiggins retained this power. The Arbitration Agreement contemplates execution by the Resident and the Resident Representative and has a space for the Resident Representative to indicate the capacity of his or her representation, with examples including "guardian, attorney-in-fact, agent under Durable Power of Attorney for Healthcare, spouse, son, daughter, etc." As previously noted, Wiggins did not sign the agreement, and Fountain did not indicate the capacity of her representation. But the Arbitration Agreement also provides that the term "Resident" includes "the Resident, his or her guardian, attorney-in-fact, agent, sponsor, representative, or any person whose claim is derived through or on behalf of Resident," and that if the agreement is signed "by the Resident's representative[,] that individual represents that he or she is authorized and has no reason to believe that the Resident would not have signed this Agreement if he or she were competent and able to do so." Despite this language, which contemplates that Wiggins be bound by the Arbitration Agreement and that Fountain was acting in a representative capacity, "whether [Fountain] had the authority to bind [her nephew] is a separate issue." See Triad Health Mgmt. , 298 Ga. App. at 207 (2), 679 S.E.2d 785.

"Traditional principles of agency law may bind a nonsignatory to an arbitration agreement." (Citation and punctuation omitted.) Triad Health Mgmt. , 298 Ga. App. at 206 (2), 679 S.E.2d 785. "The relation of principal and agent arises wherever one person, expressly or by implication, authorizes another to act for him or subsequently ratifies the acts of another in his behalf." OCGA § 10-6-1. Clinch does not contend that Wiggins expressly or implicitly authorized Fountain to act for him or that he later ratified her act of signing the Arbitration Agreement but contends that the Letters of Guardianship issued by the probate court gave Fountain authority to sign the Arbitration Agreement on his behalf.

Despite the implicit concession that traditional rules of agency do not apply here, Clinch nonetheless argues that Triad Health Mgmt. , 298 Ga. App. 204, 679 S.E.2d 785, is "strikingly similar" to this case. In Triad , a son filed a negligence action against a nursing home where his incapacitated father was a patient. Id. at 204-205, 679 S.E.2d 785. As part of his father's admission to the facility, the son signed an "Admission Contract," which stated that any dispute arising out of the health care...