Oak Crest Manor Nursing Home, LLC v. Barba

• Decision Date: 01 December 2016
• Docket Number: NO. 03-16-00514-CV,03-16-00514-CV
• Parties: Oak Crest Manor Nursing Home, LLC; Day Life Corporation; Terry Rowan; Norma Elemento; and Grover Moore, Appellants v. Peggy Barba, as Guardian of S. F., Appellee
• Court: Texas Court of Appeals

Oak Crest Manor Nursing Home, LLC; Day Life Corporation; Terry Rowan;

Norma Elemento; and Grover Moore, Appellants v. Peggy Barba, as Guardian of S. F., Appellee

NO. 03-16-00514-CV

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

December 1, 2016

FROM THE PROBATE COURT NO. 1 OF TRAVIS COUNTY

NO. C-1-PB-16-000776, HONORABLE GUY S. HERMAN, JUDGE PRESIDING

MEMORANDUM OPINION

In this interlocutory appeal, Oak Crest Manor Nursing Home, LLC (Oak Crest); Day Life Corporation; Terry Rowan; Norma Elemento; and Grover Moore appeal the probate court's order denying their motion to compel arbitration and stay proceedings in the underlying action filed by Peggy Barba, as guardian of Shawn Frank, for injuries that Frank sustained after fleeing from Oak Crest,¹ where he was a resident. We will affirm the probate court's order.

BACKGROUND

Barba's original petition alleged that Frank, her forty-year-old son, was admitted to Shoal Creek Hospital in October 2013 to undergo treatment for depression, schizophrenia, andbipolar disorder after he jumped off a freeway overpass in a suicide attempt. Her petition further alleged, "For [Frank's] safety . . . on or about December 13, 2013, he was transferred to [Oak Crest] because it held itself out to be able to care for patients with risks of flight and elopement" and that Frank's "admission and continued residency [at Oak Crest] were predicated upon the determination by his treating physician that he required full-time nursing and/or assisted living care, which was purportedly being offered by Defendants." Barba also alleged that Oak Crest was aware of Frank's "tendencies, proclivities, and risks" because a care plan was developed at the time of his admission due to his multiple psychiatric conditions, history, and prior suicide attempts.

Barba's petition alleged that on or about January 14, 2014, Frank was "negligently permitted to leave [Oak Crest] and wandered around the neighborhood before returning . . . and reporting the incident to . . . Barba," who reported the incident to Oak Crest staff members, several of whom are named defendants.² The petition alleged that Oak Crest and the other defendants were "put on notice that [Frank] exited and returned to the [] [f]acility through the only window in his room," which was unlocked and remained unmonitored on the following day, on which Frank "was again negligently permitted to leave the [facility] through his window" and jumped off another highway overpass, suffering serious bodily injuries. Barba's petition asserted causes of action against all defendants for negligence, negligence per se, and gross negligence, and against Oak Crest for breach of contract.

Just two days before Frank sustained the injuries that are the subject of this lawsuit, Barba filed an application in the probate court to be appointed guardian of his person and was so appointed on March 13, 2014. Barba later filed an application to be appointed guardian of Frank's estate as well, which the probate court granted in December 2015, shortly after which she filed this lawsuit in district court. On Barba's motion, the cause was transferred a few months later to the probate court because of that court's continuing jurisdiction over Frank's guardianship and its determination that the case concerns "matters related to the guardianship proceeding."

Appellants filed a motion to compel arbitration and stay the proceedings, asserting that Frank "voluntarily admitted himself into Oakcrest Manor" and thereupon reviewed and executed a standard "Facility Admission Agreement" (the Agreement), which set forth the terms and conditions of his residency at the facility, including his rights as a resident and the obligations of the facility, and contained a provision wherein the parties agreed that "[a]ny dispute relating to this Agreement will be settled by binding arbitration." In her response and at the hearing on appellants' motion, Barba contended that due to Frank's psychological and mental disorders (evidenced by the probate court's adjudication of him as "totally incapacitated" and other documents), he lacked capacity to enter into an enforceable contract and, therefore, the Agreement and its arbitration provision are unenforceable and void. After the hearing and reviewing the evidence of both parties, and without making findings of fact or conclusions of law, the probate court denied the motion to compel and stay, and appellants filed this interlocutory appeal.

DISCUSSION

In their first issue, appellants contend that the probate court erred in denying their motion to compel arbitration because the evidence establishes that Frank "possessed the requisite capacity" to enter into a valid and enforceable contract and, therefore, the arbitration agreement is enforceable. See Turner v. Hendon, 269 S.W.3d 243, 247-48 (Tex. App.—El Paso 2008, pet. denied) (noting that burden of proving incapacity is on party attempting to void contract). To establish mental capacity to execute a contract, a party "must have had sufficient mind and memory at the time of execution to understand the nature and effect of [his] act," Harrell v. Hochderffer, 345 S.W.3d 652, 661 (Tex. App.—Austin 2011, no pet.) (also noting that any evidence from before or after date contract was executed must be "near enough in time" to be probative of mental capacity on execution date); Jones v. LaFargue, 758 S.W.2d 320, 325 (Tex. App.—Houston [14th Dist.] 1988, writ denied) ("Evidence of incompetency [to contract] at other times [than on day of contract execution] can be used to establish incompetency on the day the [contract] was executed if it is demonstrated that the condition had some probability of being the condition of the [executor] at the time the [contract] was executed.").

In reviewing the denial of a motion to compel arbitration, "we apply a no-evidence standard to the trial court's factual determinations and a de novo standard to legal determinations." Sidley Austin Brown & Wood, L.L.P. v. J.A. Green Dev. Corp., 327 S.W.3d 859, 863 (Tex. App.—Dallas 2010, no pet.) (describing this standard as "the same as the abuse of discretion standard of review"); see also Sun Fab Indus. Contracting, Inc. v. Lujan, 361 S.W.3d 147, 150 (Tex. App.—El Paso 2011, no pet.) ("A trial court abuses its discretion when it refuses to compelarbitration pursuant to a valid and enforceable arbitration agreement."). Whether the parties agreed to be bound to an arbitration agreement is a contract-formation question that we review de novo, deferring to the trial court's findings of historical fact as between the parties so long as those determinations are supported by evidence. United Rentals, Inc. v. Smith, 445 S.W.3d 808, 812 (Tex. App.—El Paso 2014, no pet.). While a trial court's determination of the formation, validity, and enforcement of an arbitration agreement is ordinarily a question of law subject to de novo review, see J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003), the extent to which a person knows or understands the nature and consequences of executing a contract (and therefore has contractual capacity) is a question of fact, Fox v. Lewis, 344 S.W.2d 731, 739 (Tex. Civ. App.—Austin 1962, writ ref'd n.r.e.); see also Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 268-69 (Tex. 1992) (noting that motions to compel arbitration are ordinarily decided in summary proceedings "on the basis of affidavits, pleadings, discovery, and stipulations"); In re Bunzl USA, Inc., 155 S.W.3d 202, 208 (Tex. App.—El Paso 2004, orig. proceeding) ("A summary motion to compel arbitration is essentially a motion for partial summary judgment, subject to the same evidentiary standards.").

Accordingly, we will review the record to determine whether there was legally sufficient evidence to support the probate court's implied factual finding that Frank did not have sufficient capacity to enter into the Agreement. See Kmart Stores of Tex., L.L.C. v. Ramirez, ___ S.W.3d ___, No. 08-15-00094-CV, 2016 WL 1055870, at *3 (Tex. App.—El Paso Mar. 16, 2016, pet. filed); Sidley Austin Brown & Wood, 327 S.W.3d at 863 (noting that when trial court conducts evidentiary hearing on enforceability of arbitration agreement, appellate court reviews trial court'sfindings for legal sufficiency); see also Paragon Indus. Applications, Inc. v. Stan Excavating, L.L.C., 432 S.W.3d 542, 548 (Tex. App.—Texarkana 2014, no pet.) ("In a nonjury proceeding, when no findings of fact or conclusions of law are filed or requested, we infer that the trial court made all the necessary findings to support its judgment."). "When the inferred findings of fact are supported by the evidence, the appellate court must uphold the judgment on any theory of law applicable to the case." Paragon Indus., 432 S.W.3d at 549.

The following evidence supports the probate court's implied determination that Frank did not possess the requisite capacity to enter into the Agreement:

• Oak Crest's admission and discharge records, indicating that upon admission on December 13, 2013 Frank had then-current diagnoses of bipolar disorder, depression, schizophrenia, and neurotic disorder.

• Oak Crest's nurse's notes, created upon Frank's admission, indicating that he was a 40-year old "schiz[ophrenic]" with a "long Hx [history] of mental illness" and violence and that he was "suicidal," having jumped from a bridge the previous month.

• Oak Crest's progress notes and social-services assessment, both created on December 17, 2013, indicating that Frank had a history of multiple psychiatric admissions since he had jumped off a bridge, a "25 (+)- year Hx of MI [mental illness] with multiple psych st. [stops]," and that he denied having mental illness.

• The affidavit of David E. Mansfield, M.D., who attested that he reviewed the medical records of Frank for this proceeding and, relying on his expertise after 40 years of practicing medicine, opined that someone with Frank's conditions (1) "would have difficulty

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