McKean v. GGNSC Atlanta, LLC

• Decision Date: 07 November 2014
• Docket Number: No. A14A1396.,A14A1396.
• Citation: 329 Ga.App. 507,765 S.E.2d 681
• Court: Georgia Court of Appeals
• Parties: McKEAN et al. v. GGNSC ATLANTA, LLC et al.

329 Ga.App. 507

765 S.E.2d 681

McKEAN et al.

v.GGNSC ATLANTA, LLC et al.

No. A14A1396.

Court of Appeals of Georgia.

Nov. 7, 2014.

Slappey & Sadd, James Nicholas Sadd, Atlanta, Daniel Marshall Epstein, for Appellants.

Hawkins Parnell Thackston & Young, Daniel Nathan Mills, Christian John Lang, David C. Marshall, Atlanta, for Appellees.

Opinion

BRANCH, Judge.

Acting individually and as executor of his mother Patricia's estate, Dwayne McKean filed suit for wrongful death in the State Court of Fulton County alleging that the defendants' negligence in providing nursing home care to his mother caused her pain and suffering and death. The defendants moved to dismiss, to compel arbitration, and to stay discovery based on an arbitration agreement that McKean signed ostensibly on his mother's behalf when she was admitted to the nursing home. McKean argued that he did not have authority to sign for his mother at the time, but the trial court found that McKean was authorized to bind his mother and her estate's successors and assigns to the arbitration agreement. McKean appeals that decision. For the reasons that follow, we reverse.

The record contains the few relevant facts. Patricia was admitted to the Golden Living Center nursing home on March 9, 2012; she was suffering from the recent onset of paraplegia¹ due to a subarachnoid hemorrhage.²

At the time, Patricia had not executed any form of power of attorney appointing McKean or anyone else as her attorney-in-fact. On the day of his mother's admission, McKean signed a nursing home admission agreement, which is not in the record, and a separate “Alternative Dispute Resolution Agreement” (the “ADR agreement”). The ADR agreement provides that any dispute between the parties to the agreement “shall be resolved exclusively by an ADR process.” The agreement provides that it is not a condition of admission to the facility, but that upon execution by the resident, it becomes a part of the admission agreement. Finally, the ADR agreement provides that the resident has an option to revoke the agreement “within thirty (30) days of signing it.”

McKean signed below the blank signature line for the Resident in a space for “Signature of Resident's Legal Representative.” Immediately below McKean's signature is an acknowledgment that states, “By my signature, I represent that I am a person duly authorized by Resident or by law to execute this Agreement and that I accept its terms.” The agreement required McKean to “Specify Capacity of Legal Representative (e.g., Power of Attorney, Agent, Next of Kin),” for which McKean indicated that his capacity to sign was “Son.” There is no evidence in the record that Patricia was present when McKean signed the agreements or that she had knowledge of the ADR agreement on the day it was signed or at any time thereafter.

Nineteen days after McKean signed these agreements, his mother executed a durable power of attorney appointing McKean as her attorney-in-fact and giving McKean authority, among other things, to sign arbitration agreements: i.e., authority

[t]o act for [Patricia] in all legal matters, ... including but not limited to the authority to ... sign all documents, submit claims to arbitration or mediation, settle claims, and pay judgments and settlements; and exercise all powers with respect to legal actions that I could if present and under no disability.

Patricia continued to reside at the nursing home for 40 days after naming McKean as her legal representative. During that time, Patricia developed serious medical issues and she died on May 19, 2012. McKean later filed this suit in the State Court of Fulton County in his capacity as “the expected executor of the estate of Patricia McKean, and individually as a surviving child.” The trial court thereafter granted the defendants' motion to dismiss and compel arbitration, apparently on the basis that McKean ratified his own signature by not revoking the ADR agreement after he became his mother's attorney-in-fact and because he represented on the ADR agreement that he was authorized to sign the agreement on his mother's behalf.³ McKean appeals.

1. Whether a valid and enforceable arbitration agreement exists is a question of law for the court. OCGA § 13–2–1 ; Miller v. GGNSC Atlanta, 323 Ga.App. 114, 117(1), 746 S.E.2d 680 (2013). We therefore review a trial court's order granting or denying a motion to compel arbitration de novo. Id. The appellees, as the parties seeking arbitration, bear 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 Ga., III v. Johnson, 298 Ga.App. 204, 206(2), 679 S.E.2d 785 (2009) (citations omitted).

“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. Because the record shows that Patricia did not personally assent to the ADR agreement, the appellees' position depends on a finding that McKean had authority to sign or that his mother, or McKean acting on her behalf, later ratified his act of signing the ADR agreement.

(a) Under Georgia law, “[t]he relation[ship] 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. Here, there is no evidence that Patricia, prior to or at her admission to the nursing home, gave McKean express authority to enter into the ADR agreement on her behalf. Without evidence of express authority, we turn to apparent or implied authority.⁴

Apparent authority requires evidence of words or conduct by Patricia suggesting that she gave her son authority:

apparent authority to do an act is created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him.

Howard v. St. Paul Fire & Marine Ins. Co., 180 Ga.App. 802, 804(1), 350 S.E.2d 776 (1986) (emphasis in original). The appellees have not presented any evidence of words or conduct by Patricia that could cause the nursing home to believe that McKean had apparent authority to sign the arbitration agreement on her behalf. No evidence has been introduced regarding her behavior at the time she was admitted to the nursing home. And McKean's own action of signing the agreement as his mother's agent is insufficient to create agency: “[A]ny manifestations of implied agency or apparent authority arising only through the words or acts of [the purported agent] are insufficient to authorize a finding that an agency existed.” Walker v. Williams, 177 Ga.App. 830, 832, 341 S.E.2d 487 (1986) (citation omitted). See also Omni Builders Risk v. Bennett, 313 Ga.App. 358, 360(1), 721 S.E.2d 563 (2011) (“Apparent authority is that which the principal's conduct leads a third party reasonably to believe the agent has.”) (citation and punctuation omitted).

Finally, the simple fact that McKean is Patricia's son is insufficient to establish agency. See, e.g., Life Care Centers of America v. Smith, 298 Ga.App. 739, 743(1), 681 S.E.2d 182 (2009) (arbitration agreement not enforceable when signed by daughter who held her mother's health care power of attorney but where that power did not authorize daughter to enter into arbitration agreements); Triad Health, 298 Ga.App. at 207(2), 679 S.E.2d 785 (son's relationship to incapacitated father was not “in itself sufficient to establish that [son] was his father's agent” for purposes of signing agreement to arbitrate); Ashburn Health Care, 286 Ga.App. at 26, 648 S.E.2d 430 (marriage alone does not establish an agency relationship and therefore arbitration agreement signed by husband when wife entered nursing home was not binding on wife or her estate).

(b) Because there is no evidence that Patricia gave express or implied authority to McKean or that McKean had apparent authority to sign the agreement on her behalf, we examine ratification. See OCGA § 10–6–1 (requiring either authorization or ratification by the principle to create agency). The appellees contend that McKean's action of entering into the ADR agreement on her behalf was ratified in two ways: (1) Patricia ratified McKean's act when, nineteen days after McKean signed the ADR agreement, she gave McKean power of attorney to enter into arbitration agreements on her behalf; or (2) after being granted the power of attorney, McKean, now standing in his mother's shoes, did not exercise the option to revoke the ADR agreement as provided therein, thereby ratifying his earlier act of signing the ADR agreement.

Ratification of an act may be express or implied, including by the silence of the principal, but the principal must have full knowledge of all material facts:

It has long been the law in Georgia that a ratification by the principal relates back to the act ratified, and takes effect as if originally authorized. A ratification may be express, or implied from the acts or silence of the principal. Where a principal is informed by his agent of what he has done, the principal must express his dissatisfaction within a reasonable time, otherwise his assent to his agent's acts will be presumed. Unless the principal repudiates the act promptly or within a reasonable time, a ratification will be presumed. But in order for a ratification to be binding, the principal must have had full knowledge of all material facts.

Merritt v. Marlin Outdoor Advertising, 298 Ga.App. 87, 91(2)(b), 679 S.E.2d 97 (2009) (punctuation and footnotes omitted). See also OCGA § 10–6–52 (“A ratification may be express or...