Five Star Quality Care — Mo, L.L.C. v. Lawson

• Citation: 283 S.W.3d 811
• Decision Date: 07 April 2009
• Docket Number: No. WD 69712.,WD 69712.
• Parties: FIVE STAR QUALITY CARE — MO, L.L.C., d/b/a Arbor View Healthcare & Rehabilitation Center, Respondent, v. Bonnie Sue LAWSON, Public Administrator, Appellant.
• Court: Court of Appeal of Missouri (US)

283 S.W.3d 811

FIVE STAR QUALITY CARE — MO, L.L.C., d/b/a Arbor View Healthcare & Rehabilitation Center, Respondent, v. Bonnie Sue LAWSON, Public Administrator, Appellant.

No. WD 69712.

Missouri Court of Appeals, Western District.

April 7, 2009.

Motion for Rehearing and/or Transfer to Supreme Court Denied June 2, 2009.

William E. Erdrich, St. Joseph, MO, for Respondent.

Jere L. Loyd, St. Joseph, MO, for Appellant.

Before LISA WHITE HARDWICK, P.J., VICTOR C. HOWARD, Judge and ZEL M. FISCHER, Special Judge.

VICTOR C. HOWARD, Judge.

Bonnie Sue Lawson appeals the judgment of the trial court awarding Five Star Quality Care $16,779.65 on its breach of contract claim. In her sole point on appeal, Ms. Lawson claims that the trial court erred in holding her personally liable on the contract. Ms. Lawson's point is granted, and the judgment of the trial court is reversed.

Factual and Procedural Background

Five Star Quality Care, doing business as Arbor View Healthcare and Rehabilitation Center ("Arbor View"), filed suit against Bonnie Sue Lawson, who was the guardian of Eloise Selby, a resident of Arbor View. In its petition, Arbor View claimed that Ms. Lawson had breached her agreement with Arbor View to use due care by not promptly following the proper procedures to ensure that Medicaid would cover Ms. Selby's fees. The trial court found that Ms. Lawson had breached her agreement with Arbor View by not using due care in carrying out her duties as Ms. Selby's guardian and that, in the absence of Medicaid coverage, Arbor View expended funds for the care of Ms. Selby. The trial court awarded $16,779.65 in damages to Arbor View and an additional $6,597.00 for costs and attorney fees.

Ms. Lawson, who was the public administrator of Buchanan County at the time, became the guardian of Ms. Selby in July 2004. Prior to Ms. Lawson's appointment as guardian, Ms. Selby had been a resident of Arbor View. In order to continue Ms. Selby's residence in Arbor View, Ms. Lawson executed an admission agreement which designated her as the "Fiduciary Party" and designated Ms. Selby as the "Resident." Paragraph I.B. of the agreement states that "[e]xcept as otherwise expressly provided to the contrary herein, if Fiduciary Party uses due care, Fiduciary Party will not become personally liable for the payment of the Resident's fees and charges by signing this agreement." An addendum to the agreement further provides in a paragraph titled "Benefit Disallowance" that "[i]f the Resident's third-party eligibility coverage is denied or terminated for any reason, the Resident and/or the Fiduciary Party shall pay, from the Resident's assets, any and all unpaid charges for care previously rendered to the extent permitted by law."

Prior to Ms. Lawson's appointment as guardian, Ms. Selby submitted an application for Medicaid benefits on July 6, 2004. Kathy Jordan, an employee of the Family Support Division ("the Division"), testified that Kim Adams, Ms. Lawson's deputy, called the Division in July 2004 and stated that the proper paperwork would be sent to the Division so that the cash value of Ms. Selby's two life insurance policies could be verified. According to Ms. Jordan's testimony, a rejection of the application was sent to Ms. Lawson on August 19, 2004. The notice of rejection stated that the application was denied due to a failure to provide guardianship forms and to sign another form so that the cash value of the policies could be verified in order to determine Ms. Selby's eligibility to receive Medicaid benefits.

Ms. Lawson sent a second application for Medicaid benefits on September 16, 2004. Once the Division received the proper paperwork and was able to determine the cash value of the life insurance policies, it sent a rejection of the application to Ms. Lawson on November 5, 2004. The second application was denied because the cash value of the policies exceeded $999.99, making Ms. Selby ineligible to receive Medicaid benefits. Ms. Lawson submitted a third application on December 16, 2004, which was rejected on February 18, 2005, because the cash value of the policies remained in excess of $999.99.

Ms. Adams testified that while she had been employed in Ms. Lawson's office, an insurance policy could only be cashed in if Ms. Lawson had been appointed as a conservator, rather than solely as a guardian. Ms. Adams stated that, therefore, the notice of rejection of the second Medicaid application, which disclosed the cash value of the policies, should have triggered the filing of an application for a conservatorship. On July 8, 2005, Ms. Lawson filed a petition for conservatorship, and the order appointing her as conservator was signed the same day. Thereafter, the insurance policies were redeemed and Ms. Lawson forwarded the proceeds to Arbor View on June 30, 2005. Ms. Lawson's final application for Medicaid benefits, which was filed on June 30, 2005, was approved.

During the months prior to Ms. Lawson's appointment as conservator, Arbor View had continued to provide care for Ms. Selby, incurring expenses of $16,779.65. Arbor View filed suit against Ms. Lawson, seeking to recover $16,779.65 and attorney fees. Arbor View alleged that by waiting until June 8, 2005, to apply for a conservatorship, Ms. Lawson "failed to use due care as agreed" and failed to "exercise due and diligent care in the exercise of her duties as set out in RSMo 475.120." The trial court found that, by entering into the contract with Arbor View, Ms. Lawson had waived any immunities, and that by the terms of the contract, she had agreed to "use due care in the performance of her responsibilities to her ward including the payment of fees and charges for room, board, medical and other necessities required for the care of her ward[ ]." The court further found that Ms. Lawson failed to use due care by not acting on Ms. Selby's disqualification for Medicaid benefits for nearly nine months, and during that time, Arbor View continued to provide care for Ms. Selby. Therefore, the trial court granted judgment in favor of Arbor View, awarding $16,779.65 in damages and $6,597.00 in costs and attorney fees. This appeal by Ms. Lawson followed.

Standard of Review

In a court-tried case, the appellate court will affirm the judgment of the trial court unless there is no substantial evidence to support it, it is against the weight of the evidence, it erroneously declares the law, or it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). However, the "[i]nterpretation of a contract is a question of law and is subject to de novo review." Crestwood Shops, L.L.C. v. Hilkene, 197 S.W.3d 641, 648 (Mo.App. W.D.2006).

Discussion

In her sole point on appeal, Ms. Lawson contends that the trial court erred in granting judgment in favor of Arbor View and against her personally, rather than in her capacity as guardian or conservator. Ms. Lawson argues that under the express terms of the admission agreement, if Ms. Selby's application for Medicaid benefits was denied, Arbor View was required to seek payment for any unpaid charges from Ms. Selby's assets. In its petition and at trial, Arbor View argued that Ms. Lawson should be held personally liable for the unpaid charges due to her failure to exercise due care as required by the contract and in violation of the duties imposed upon her as a guardian under section 475.120.

In describing the general powers and duties of a guardian, section 475.120 states that the guardian "shall act in the best interest of the ward" and shall "provide for the ward's care, treatment, habilitation, education, support and maintenance." §§ 475.120.2-.3....