Mendez v. Hampton Court Nursing Ctr., LLC

• Decision Date: 22 September 2016
• Docket Number: No. SC14–1349.,SC14–1349.
• Citation: Mendez v. Hampton Court Nursing Ctr., LLC, 203 So.3d 146 (Fla. 2016)
• Parties: Juan MENDEZ, Jr., etc., Petitioner, v. HAMPTON COURT NURSING CENTER, LLC, Respondent.
• Court: Florida Supreme Court

203 So.3d 146

Juan MENDEZ, Jr., etc., Petitioner,

v.HAMPTON COURT NURSING CENTER, LLC, Respondent.

No. SC14–1349.

Supreme Court of Florida.

Sept. 22, 2016.

Charles M.P. George of The Law Offices of Charles M–P George, Coral Gables, FL; Christopher Wayne Wadsworth and Raymond Renato Dieppa of Wadsworth Huott, LLP, Miami, FL, for Petitioner.

Thomas Anthony Valdez of Quintairos, Prieto, Wood & Boyer, P.A., Tampa, FL, for Respondent.

PERRY, J.

Juan Mendez, Jr.(the "son"), as personal representative of the estate of Juan Mendez, Sr.(the "father"), seeks review of the decision of the Third District Court of Appeal in Mendez v. Hampton Court Nursing Center, LLC,140 So.3d 671(Fla. 3d DCA2014), on the ground that it expressly and directly conflicts with decisions of the district courts of appeal on whether a nursing home resident is bound by an arbitration clause in a nursing home contract, when the resident neither signed nor otherwise agreed to the contract.We have jurisdiction.Seeart. V, § 3(b)(3), Fla. Const.

This case concerns whether the father is bound by an arbitration clause in a nursing home contract signed by Hampton Court and the son, but not the father.The Third District found "that the father is bound by the arbitration provision contained in the agreement for care executed by his son, and to which the father was the intended third-party beneficiary."Mendez,140 So.3d at 676.We disagree.Accordingly, we quash the Third District's decision and remand for further proceedings consistent with this opinion.

I.Facts and Procedure

Hampton Court Nursing Center ("Hampton Court") admitted the father to its nursing home facility in 2009.At that time, the son signed a nursing home contract with Hampton Court, providing for the father's residency and care at Hampton Court.The contract included an arbitration clause.The father did not sign the contract.

While under Hampton Court's care in 2011, the father developed an eye infection that eventually required the removal of his left eye.In 2012, the son filed suit on the father's behalf in the Circuit Court for the Eleventh Judicial Circuit, Miami–Dade County, alleging negligence and statutory violations.Hampton Court moved to compel arbitration and stay the judicial proceedings.The circuit court heard argument and granted the motion.The father appealed, but passed away while the appeal was pending.Seeid. at 673.

On appeal from the trial court's order, the Third District affirmed.Id. at 676.Citing Alterra Healthcare Corp. v. Estate of Linton ex rel. Graham,953 So.2d 574(Fla. 1st DCA2007), the Third District held that the father was the intended third-party beneficiary of the nursing home contract, and accordingly, Hampton Court could bind him to its contract even though he never signed it.Mendez,140 So.3d at 674.

II.The Conflict Cases

"Third persons who are not parties to an arbitration agreement generally are not bound by the agreement."21 Williston on Contracts § 57:19, at 181(4th ed.2001).Notwithstanding that principle, the district courts disagree on whether a nursing home resident is bound by an arbitration clause in a nursing home contract, when the resident neither signed nor otherwise agreed to the contract.

The First and Third Districts held that the resident is bound by the contract, because the resident is the intended third-party beneficiary of the contract.SeeMendez,140 So.3d at 674;Alterra Healthcare,953 So.2d at 579.Both courts emphasized that the resident is bound irrespective of whether the resident signed the contract, or whether the signing party had authority to act on the resident's behalf.SeeMendez,140 So.3d at 674;Alterra Healthcare,953 So.2d at 579.As discussed below, we reject this view.

On similar facts, the Second, Fourth, and Fifth Districts held differently.SeePerry ex rel. Perry v. Sovereign Healthcare Metro W., LLC,100 So.3d 146, 147–48(Fla. 5th DCA2012);Fletcher v. Huntington Place Ltd. P'ship,952 So.2d 1225, 1227(Fla. 5th DCA2007);Lepisto v. Senior Lifestyle Newport Ltd. P'ship,78 So.3d 89, 92(Fla. 4th DCA2012);In re Estate of McKibbin,977 So.2d 612, 613(Fla. 2d DCA2008).These decisions analyzed the facts using an agency law framework and held that a resident was not bound by a contract that he or she did not sign, where the signing party did not agree to the contract on the resident's behalf or lacked the authority to act for the resident.SeePerry,100 So.3d at 147–48;Fletcher,952 So.2d at 1227;Lepisto,78 So.3d at 92;McKibbin,977 So.2d at 613.The Fifth District explicitly considered and rejected the type of third-party beneficiary argument upheld in Mendez and Alterra Healthcare.SeePerry,100 So.3d at 147–48.

III.The Third–Party Beneficiary Doctrine

Hampton Court urges us to adopt the rule of Mendez and Alterra Healthcare: that under the third-party beneficiary doctrine, a nursing home resident may be bound by a contract to which the resident never agrees.We disagree.

The doctrine of third-party beneficiaries provides that under certain circumstances, a person may sue to enforce a contract, even though the person is not a party to the contract.See11 Fla. Jur.2dContracts§ 206, at 406–07(2008)."To establish an action for breach of a third party beneficiary contract, [the third-party beneficiary] must allege and prove the following four elements: ‘(1) existence of a contract; (2) the clear or manifest intent of the contracting parties that the contract primarily and directly benefit the third party; (3) breach of the contract by a contracting party; and (4) damages to the third party resulting from the breach.’ "

Found. Health v. Westside EKG Assocs.,944 So.2d 188, 194–95(Fla.2006)(quotingNetworkip, LLC v. Spread Enters., Inc.,922 So.2d 355, 358(Fla. 3d DCA2006) );see alsoPatrick John McGinley, 21 Fla. Prac., Elements of an Action§ 603:1 (2015–2016 ed.).

Critically, the third-party beneficiary doctrine enables a non-contracting party to enforce a contract against a contracting party—not the other way around.See, e.g., Espinosa v. Sparber, Shevin, Shapo, Rosen & Heilbronner,612 So.2d 1378, 1380(Fla.1993);Shingleton v. Bussey,223 So.2d 713, 715(Fla.1969).The third-party beneficiary doctrine does not permit two parties to bind a third—without the third party's agreement—merely by conferring a benefit on the third party.Mendez and Alterra Healthcare are not in accord with this principle.

We have previously held that "[w]e see no reason to allow [the non-contracting third-party beneficiary] to enjoy the benefits of the [contract] without bearing its burdens as well."Nat'l Gypsum Co. v. Travelers Indem. Co.,417 So.2d 254, 256(Fla.1982)(holding that the non-contracting third-party beneficiary had to comply with the contract's pre-litigation notice requirements if the third party wanted to sue to enforce the contract).We distinguish National Gypsum, however, because the third-party beneficiary in that case sued to enforce a contract between other parties; here, the father's estate sued for negligence and statutory violations—not to enforce the son's contract with Hampton Court.

This distinction is consistent with many of the authorities cited in Justice Polston's dissenting opinion.For instance, the dissent observes that "Florida courts have required third-party beneficiaries to arbitrate,"Polston, J., dissenting op.at 154(quotingKong v. Allied Prof'l Ins. Co.,750 F.3d 1295, 1302(11th Cir.2014) ); that "[o]rdinarily, a third party beneficiary is bound by an arbitration clause in the contract under which the party claims third party beneficiary status,"Polston, J., dissenting op.at 154(quoting8 Fla. Prac., Constr. Law Manual§ 7:38 (2015–2016 ed.) ); and that "traditional principles of state law allow a contract to be enforced by or against nonparties to the contract through ... third-party beneficiary theories,' " Polston, J., dissenting op. at 154(quotingArthur Andersen LLP v. Carlisle,556 U.S. 624, 631, 129 S.Ct. 1896, 173 L.Ed.2d 832(2009)(emphasis removed)).We agree that when a plaintiff sues under a contract to which the plaintiff is not a party—unlike the father in this case—we will ordinarily enforce an arbitration clause contained in that contract, absent some other valid defense.Cf.Nat'l Gypsum,417 So.2d at 256.However, the rule of National Gypsum, does not apply here because the father does not bring suit as a third-party beneficiary for the benefit of a contract signed by others.The circumstances presented in National Gypsum are not presented here.Neither Justice Polston's dissenting opinion, Mendez, nor Alterra Healthcare makes this distinction, and none finds support from National Gypsum.

Mendez and Alterra Healthcare also run contrary to the purpose behind the third-party beneficiary doctrine, which is to do justice for the non-contracting third-party beneficiary.From the early days of the third-party beneficiary principle, its proponents recognized that the third-party beneficiary rule was grounded in principles of justice and equity.See, e.g.,Arthur L. Corbin, Law of Third Party Beneficiaries in Pennsylvania, 77 U. Penn. L.Rev. 1, 6(1928);Samuel Williston, Contracts for the Benefit of a Third Person, 15 Harv. L.Rev. 767, 772–73(1902).The seminal case establishing the third-party beneficiary doctrine argued that "manifest justice" required the establishment of the third-party beneficiary doctrine, even if traditional contract principles demanded a different result.Lawrence v. Fox,20 N.Y. 268, 275(1859)(plurality opinion).

Justice Polston's dissent disapproves of these authorities, criticizing them as old.SeePolston, J., dissenting op.at 152–53, 154.Lawrence is now "universally recognized as the landmark case in the evolution of the contract law of third party beneficiaries in the United States."9 Corbin on Contracts § 42.3, at 16(rev. ed.2007).Professor Williston's writings are instructive "because...