Hickory Heights Health & Rehab, LLC v. Cook

• Decision Date: 11 September 2018
• Docket Number: No. CV-17-1022,CV-17-1022
• Citation: 2018 Ark. App. 409
• Parties: HICKORY HEIGHTS HEALTH AND REHAB, LLC; CENTRAL ARKANSAS NURSING CENTERS, INC.; NURSING CONSULTANTS, INC. D/B/A PROFESSIONAL NURSING AND REHABILITATION SERVICES; TINA LYNETTE BEARD, INDIVIDUALLY AND AS NURSING HOME ADMINISTRATOR FOR HICKORY HEIGHTS HEALTH AND REHAB, LLC; MICHAEL S. MORTON; AND JOHN DOE DEFENDANTS 1-10 APPELLANTS v. MABEL KELLER COOK APPELLEE
• Court: Arkansas Court of Appeals

2018 Ark. App. 409

HICKORY HEIGHTS HEALTH AND REHAB, LLC; CENTRAL ARKANSAS NURSING CENTERS, INC.;NURSING CONSULTANTS, INC. D/B/A PROFESSIONAL NURSING AND REHABILITATION SERVICES;TINA LYNETTE BEARD, INDIVIDUALLY AND AS NURSING HOME ADMINISTRATORFOR HICKORY HEIGHTS HEALTH AND REHAB, LLC; MICHAEL S. MORTON;AND JOHN DOE DEFENDANTS 1-10APPELLANTS v. MABEL KELLER COOKAPPELLEE

No. CV-17-1022

ARKANSAS COURT OF APPEALS DIVISION III

September 11, 2018

APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT, SIXTH DIVISION

[NO. 60CV-17-2272]

HONORABLE TIMOTHY DAVIS FOX, JUDGE

AFFIRMED

N.MARK KLAPPENBACH, Judge

This is an interlocutory appeal concerning the denial of a motion to compel arbitration.Appellants are Hickory Heights Health and Rehab, LLC; Central Arkansas Nursing Centers, Inc.; Nursing Consultants, Inc. d/b/a Professional Nursing and Rehabilitation Services; Tina Lynette Beard, individually and as nursing home administrator for Hickory Heights Health and Rehab, LLC; Michael S. Morton; and John DoeDefendants 1-10 (collectively "Hickory Heights").Appellee is Mabel Keller Cook("Mabel"), an elderly woman who was a resident for a few months in 2015 at a Hickory Heights skilled-nursing facility while she recovered from a fractured hip.In 2017, Mabel filed a lawsuit in circuit court against Hickory Heights, and Hickory Heights filed a motion to compel her causes of action to be heard in arbitration, which the trial court denied.Hickory Heights appeals the denial of its motion.We affirm.

We begin with a more expansive view of the undisputed facts prior to our legal analysis.Mabel had a durable power of attorney that she executed in February 2014 appointing Charles A. Cook to act as her attorney-in-fact.In June 2015, Mabel's daughter Ethel Cook signed an Admission Agreement and an Arbitration Agreement as the "Responsible Party" upon Mabel's admission into the Hickory Heights facility.

The Arbitration Agreement recited that it was "an addendum to and part of the Admission Agreement" and "a condition of admission" that "governs the resolution of claims."The Arbitration Agreement set forth that "[t]he Resident and/or Responsible Party and the Facility shall be collectively referred to as the 'Parties.'"The terms "Resident and/or Responsible Party" are used throughout both documents to define rights and responsibilities among the parties.The Arbitration Agreement recited that "any and all claims, disputes, and controversies. . . shall be resolved exclusively by binding arbitration and not by a lawsuit or resort to court process."The Admission Agreement begins as follows:

This Admission Agreement includes the terms and conditions agreed by____________, the undersigned resident, Ethel C ook, your Responsible Party, and Hickory Heights Health & Rehab the Nursing Facility ("Facility"), in your request for the admission of Mabel Cook(Resident Name) to the Facilityfor medical, nursing, and personal care.

Both the Admission Agreement and the Arbitration Agreement contain a definition of "Responsible Party" as follows:

Your Responsible Party is your legal guardian, if one has been appointed, your attorney-in-fact, if you have executed a power of attorney, or some other individual or family member who agrees to assist the Facility in providing for your health, care and maintenance.

The Arbitration Agreement and the Admission Agreement provide signature lines for the "Resident," the "Responsible Party," and the "Facility Representative."Ethel signed the Arbitration Agreement listing her relationship to Mabel as "daughter," and a Hickory Heights representative signed, but Mabel did not sign.Notably, at the end of the Arbitration Agreement just below the signature lines is the following language:

____ (Check if applicable): A copy of my guardianship papers, durable power of attorney or other documentation has been provided to the Facility and is attached.

This space was left blank.

The Admission Agreement further defined a "Responsible Party" to include "a person who manages, uses, controls, or otherwise has legal access to Resident's income or resources that legally may be used to pay Resident's share of cost or other charges not paid by the Arkansas Medicaid Program or any other source."Ethel signed her name as the "Responsible Party" on the Admission Agreement, and a Hickory Heights representative signed as well, but Mabel did not sign this document'ssignature line for the "Resident."¹

In May 2017, Mabel filed a lawsuit against Hickory Heights, claiming that during her approximately three months' stay while she recovered from a broken hip, she was sexually assaulted in the facility.Mabel's complaint asserted negligence, medical negligence, and breach-of-contract theories against Hickory Heights.Hickory Heights responded to the lawsuit by filing a motion to compel arbitration based on the documents signed by Ethel.Hickory Heights argued (1) that Mabel's causes of action fell within the ambit of the arbitration provision and (2) that although Mabel did not sign the documents, Ethel did so and bound her mother as the third-party beneficiary of those contracts.Mabel opposed the motion, arguing that Ethel did not have Mabel's power of attorney; that Ethel signed only in an attempt to be Mabel's representative but lacked authority to bind her mother; and that Ethel did not sign in her individual capacity so that the third-party-beneficiary doctrine did not apply.The trial court summarily denied the motion in a one-page order without explaining its reasoning.²Hickory Heights appeals, asserting that thetrial court erred because the third-party-beneficiary doctrine mandates that Mabel's causes of action be resolved in arbitration.

We review a trial court's order denying a motion to compel arbitration de novo on the record.Courtyard Gardens Health & Rehab., LLC v. Quarles, 2013 Ark. 228, 428 S.W.3d 437.Arbitration is simply a matter of contract between parties.Id.Whether a dispute should be submitted to arbitration is a matter of contract construction, and we look to the language of the contract that contains the agreement to arbitrate and apply state-law principles.Id.The same rules of construction and interpretation apply to arbitration agreements as apply to agreements generally; thus, we will seek to give effect to the intent of the parties as evidenced by the arbitration agreement itself.Id.Finally, the construction and legal effect of an agreement to arbitrate are to be determined by this court as a matter of law.Id.In deciding whether to grant a motion to compel arbitration, two threshold questions must be answered.First, is there a valid agreement to arbitrate between the parties?Second, if such an agreement exists, does the dispute fall within its scope?GGNSC Holdings, LLC v. Lamb By & Through Williams, 2016 Ark. 101, 487 S.W.3d 348.In answering these questions, doubts about arbitrability must be resolved in favor of arbitration.Id.We are also guided by the legal principle that contractual agreements are construed against the drafter.Carter v. Four Seasons Funding Corp., 351 Ark. 637, 97 S.W.3d 387(2003).

Undoubtedly, Mabel's lawsuit falls within the scope of the arbitration agreement.The pointed question in the present appeal is whether Mabel is bound by the arbitration agreement by virtue of Ethel's having signed the agreement.Mabel contends that Ethel signed in solely a representative capacity for her but lacked the authority to act as a representative on her behalf.Mabel contends, therefore, that she is not bound by the arbitration agreement.Hickory Heights contends that Ethel signed the arbitration agreement in her individual capacity, not in a representative capacity, and that Mabel was the clearly intended beneficiary of those contracts.Hickory Heights contends this means that Mabel is a third-party beneficiary of the contracts and is bound to their terms requiring arbitration.

Generally, the terms of an arbitration contract do not apply to those who are not parties to the contract.Bigge Crane & Rigging Co. v. Entergy Ark., Inc., 2015 Ark. 58, 457 S.W.3d 265;Amer. Ins. Co. v. Cazort, 316 Ark. 314, 871 S.W.2d 575(1994).In Arkansas, the presumption is that parties contract only for themselves; thus, a contract will not be construed as having been made for the benefit of a third party unless it clearly appears that such was the intention of the parties.Bigge Crane, supra;Eisner v. Farmers Ins. Group, Inc., 364 Ark. 393, 220 S.W.3d 633(2005).

In order to apply the third-party-beneficiary doctrine under Arkansas law, there must be an underlying valid agreement between two parties, and there must be evidence of a clear intention to benefit a third party.SeeProgressive Eldercare Servs.-Chicot, Inc. v. Long, 2014 Ark. App. 661, 449 S.W.3d 324.The salient question here is whether Ethel signed the documents in her individual capacity or in a representative capacity.We hold that there is ambiguity in this contract on the issue of whetherEthel signed these documents in an attempt to be a representative on behalf of Mabel or in her individual capacity.With that ambiguity, we construe the agreement against the drafter and conclude that Ethel attempted to act in a representative capacity.Lacking authority to so act, there is no valid underlying contract to enforce against Mabel.

Although these documents recite that Ethel signed as "Responsible Party" and not as the resident's "Representative," the definition of "Responsible Party" in these documents can reasonably be construed to indicate that such authority is being asserted:

Your Responsible Party is your legal guardian, if one has been appointed, your attorney-in-fact, if you have executed a power of attorney, or some other individual or family member who agrees to assist the Facility in providing for your health, care and maintenance.

The Arbitration Agreement requests documentation to support the asserted authority on which the person...