Northport Health Servs. of Ark., LLC v. Posey

• Decision Date: 23 July 2019
• Docket Number: No. 18-2459,18-2459
• Citation: 930 F.3d 1027
• Parties: NORTHPORT HEALTH SERVICES OF ARKANSAS, LLC, doing business as Covington Court Health and Rehabilitation Center ; NHS Management, LLC; Northport Health Services, Inc., Plaintiffs - Appellees v. Mark Wesley POSEY, Individually and as Special Administrator of the Estate of Clyde Wesley Posey, and on Behalf of the Wrongful Death Beneficiaries of Clyde Wesley Posey, Defendant - Appellant Arkansas Trial Lawyers Association ; AARP; AARP Foundation, Amici on Behalf of Appellant(s) Arkansas Health Care Association ; American Health Care Association; National Center for Assisted Living, Amici on Behalf of Appellee(s)
• Court: U.S. Court of Appeals — Eighth Circuit

930 F.3d 1027

NORTHPORT HEALTH SERVICES OF ARKANSAS, LLC, doing business as Covington Court Health and Rehabilitation Center ; NHS Management, LLC; Northport Health Services, Inc., Plaintiffs - Appellees

v.Mark Wesley POSEY, Individually and as Special Administrator of the Estate of Clyde Wesley Posey, and on Behalf of the Wrongful Death Beneficiaries of Clyde Wesley Posey, Defendant - Appellant

Arkansas Trial Lawyers Association ; AARP; AARP Foundation, Amici on Behalf of Appellant(s)

Arkansas Health Care Association ; American Health Care Association; National Center for Assisted Living, Amici on Behalf of Appellee(s)

No. 18-2459

United States Court of Appeals, Eighth Circuit.

Submitted: March 7, 2019

Filed: July 23, 2019

Counsel who presented argument on behalf of the appellant was Darren O'Quinn, of Little Rock, AR.

Counsel who presented argument on behalf of the appellee was Kirkman T. Dougherty, of Fort Smith, AR. The following attorney(s) appeared on the appellee brief; Jeffrey W. Hatfield, of Rogers, AR., Stephanie I. Randall, of Fort Smith, AR.

Before BENTON, MELLOY, and SHEPHERD, Circuit Judges.

SHEPHERD, Circuit Judge.

Representing the estate of his deceased father, Clyde Posey, Mark Posey appeals the district court’s adverse grant of summary judgment in his wrongful death action against Northport Health Services of Arkansas, LLC (Northport). Having jurisdiction pursuant to 28 U.S.C. § 1291, we reverse.

On September 2, 2004, Clyde and another son, Matt Posey, arrived at a residential rehabilitation center owned by Northport and sought Clyde’s admission to the facility. Clyde was experiencing disorientation, delusions, and hallucinations. As part of the admission process, Matt and Clyde received an admission agreement (the Agreement) that included an arbitration agreement and waiver of jury trial. Both Clyde and Matt signed the Agreement; Clyde signed as the "Resident," Matt as the "Responsible Party." The Agreement defined Responsible Party as a legal guardian, attorney-in-fact, "or some other individual or family member who agrees to assist the Facility in providing for [the resident’s] health, care, and maintenance." It also noted that "[t]he Responsible Party represents to the Facility that he or she manages, uses, directs or controls funds or assets which may be used to pay for Resident’s Facility charges and/or that he or she tends to make decisions for or otherwise act on behalf of Resident." It is undisputed that Matt was not his father’s legal guardian or attorney-in-fact.

Northport admitted Clyde as a resident to its center, where he stayed until his death in January 2016. A few months later, Mark Posey, as special administrator of his father’s estate, sued Northport in Arkansas state court for wrongful death. Northport filed a separate action in federal court, seeking to stay the state court action and compel arbitration of the wrongful death claim pursuant to the Agreement. The parties then filed competing motions for summary judgment. The district court denied Mark’s motion and granted Northport’s motion to the extent that it sought to compel arbitration. Basing its reasoning solely on the Agreement, assuming without finding that Clyde was incompetent at the time of his admission, and recognizing that Matt was not his father’s legal representative, the district court used the third-party beneficiary theory to find as a matter of law that Matt, in his individual capacity, entered into a binding arbitration agreement with Northport, for which Clyde was the intended beneficiary. Therefore, the district court directed Clyde’s estate to arbitrate the dispute. This appeal follows, with Mark asserting that the district court misused the third-party beneficiary theory when no underlying agreement was present between the Poseys and Northport.

"We review de novo the district court’s grant of summary judgment, applying the same standards as the district court." Dulany v. Carnahan, 132 F.3d 1234, 1237 (8th Cir. 1997). The record must indicate an absence of a genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Id. (citing Fed. R. Civ. P. 56(c) ). "In the summary judgment context, we view the facts and the inferences to be drawn from them in the light most favorable to the nonmoving party." P.H. v. Sch. Dist. of Kan. City, 265 F.3d 653, 656 (8th Cir. 2001).

Though there is a "liberal federal policy favoring arbitration agreements," Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), "[a] matter should not be sent to arbitration unless there is a valid agreement to arbitrate and the underlying dispute falls within the scope of that agreement." Telectronics Pacing Sys., Inc. v. Guidant Corp., 143 F.3d 428, 433 (8th Cir. 1998). While "any doubts concerning the scope of arbitratable issues should be resolved in favor of arbitration[,] ... a party who has not agreed to arbitrate a dispute cannot be forced to do so." Lyster v. Ryan’s Family Steak Houses, Inc., 239 F.3d 943, 945 (8th Cir. 2001) (internal quotation marks omitted).

To determine whether a valid agreement to arbitrate exists, we look to the forum state’s contract law—here, Arkansas’s. Baker v. Golf U.S.A., Inc., 154 F.3d 788, 791 (8th Cir. 1998). In doing so, we "are not bound to follow the decisions of intermediate state courts," but we consider their decisions "highly persuasive" and follow them "when they are the best evidence of state law." First Tenn. Bank Nat. Ass’n v. Pathfinder Exploration, LLC, 754 F.3d 489, 490-91 (8th Cir. 2014) (internal quotation marks and alterations omitted). Arkansas lists five contractual elements for a valid arbitration agreement: "(1) competent parties, (2) subject matter, (3) legal consideration, (4) mutual agreement, and (5) mutual obligations." Tyson Foods, Inc. v. Archer, 356 Ark. 136, 147 S.W.3d 681, 684 (2004). Arkansas also recognizes the third-party beneficiary theory, typically used when a third-party beneficiary seeks to hold a contract party liable for breach of contract. See Perry v. Baptist Health, 358 Ark. 238, 189 S.W.3d 54, 58 (2004).

The Arkansas Trial Lawyers Association’s amicus brief argues the district court used the third-party beneficiary doctrine inappropriately, given that the doctrine developed in common law to allow beneficiaries to enforce agreements against promisors and not vice versa. However, we need not reach this argument because the district court’s use of the third-party beneficiary doctrine was premised on the conclusion that Matt Posey signed a contract with Northport in his individual capacity and that Matt did not sign as a representative for his father. Arkansas courts have repeatedly declined to find that...