Ping v. Beverly Enters., Inc.

• Decision Date: 23 August 2012
• Docket Number: No. 2010–SC–000558–DG.,2010–SC–000558–DG.
• Citation: 376 S.W.3d 581
• Parties: Donna PING, Executrix of the Estate of Alma Calhoun Duncan, Deceased, Appellant v. BEVERLY ENTERPRISES, INC., et al., Appellees.
• Court: United States State Supreme Court — District of Kentucky

376 S.W.3d 581

Donna PING, Executrix of the Estate of Alma Calhoun Duncan, Deceased, Appellant

v.BEVERLY ENTERPRISES, INC., et al., Appellees.

No. 2010–SC–000558–DG.

Supreme Court of Kentucky.

Aug. 23, 2012.

Stephen M. O'Brien, III, Lexington, KY, Counsel for Appellant.

Marcia L. Pearson, Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, Louisville, KY, Counsel for Appellees.

Kevin Crosby Burke, Louisville, KY, Jay R. Vaughn, Busald Funk & Zevely, P.S.C., Florence, KY, Counsel for Amicus Curiae.

Opinion of the Court by Justice ABRAMSON.

In October 2008, Donna Ping, as the executrix of the Estate of her deceased mother, Alma Calhoun Duncan, of Lawrenceburg, Kentucky, brought suit in the Franklin Circuit Court against the owners and operators of The Golden Living Center, a long-term care facility in Frankfort, where the seventy-nine year old Mrs. Duncan spent the last several months of her life. The executrix alleges that negligence by the facility's staff and the breach by its management of statutes regulating the provision of nursing home services resulted in injuries to Mrs. Duncan and in her wrongful death. Invoking an Arbitration Agreement executed in conjunction with Mrs. Duncan's admission to the nursing home, the Defendants ¹ moved the trial court to dismiss the complaint or to stay it pending arbitration. (The Appellees–Defendants are hereafter referred to collectively as “Beverly Enterprises” or simply as “Beverly.”) The trial court denied that motion and explained that in its view Ms. Ping, who executed the Admissions Agreement on behalf of her mother, had not had authority to agree to arbitration, and further that the nursing home had obtained Ms. Ping's signature on the agreement by wrongful means and without providing consideration. Beverly Enterprises appealed that ruling to the Court of Appeals, which reversed. The appellate panel rejected the reasons offered by the trial court for invalidating the Arbitration Agreement, as well as several others offered by the executrix, and held that under Kentucky Revised Statutes (KRS) 417.045 et seq., Kentucky's Uniform Arbitration Act, the agreement was to be enforced. We granted the executrix's motion for discretionary review to consider the important question of an agent's authority to bind his or her principal, as well as others, to an arbitration agreement presented with other documents upon the principal's admission to a long-term care facility. Because we agree with the trial court that the agent in this case, Ms. Ping, was not authorized to enter an optional arbitration agreement, we reverse the decision of the Court of Appeals and remand the matter to the Franklin Circuit Court for additional proceedings.

RELEVANT FACTS

There is no significant dispute about the relevant facts. In 1998, Mrs. Duncan executed a writing, entitled “General Power of Attorney,” in which she named her daughter, Ms. Ping, as her agent. Ms. Ping was given authority “to do and perform any, all, and every act and thing whatsoever requisite and necessary to be done, to and for all intents and purposes, as I might or could do if personally present, including but not limited to the following: ...”

The document then specifically authorized several acts pertaining to the management of Mrs. Duncan's property and finances, such as “tak[ing] possession of any and all monies, goods, chattels, and effects belonging to me, wheresoever found; ... receiv[ing], deposit[ing], invest[ing] and spend[ing] funds on my behalf; ... tak[ing] charge of any real estate which I may own in my own name or together with other owners, legally or equitably, and to mortgag[ing], convey[ing] or sell[ing] said real estate and perform [ing] any acts necessary to mortgage, convey or sell said real estate.” The document also authorized Ms. Ping “[t]o make any and all decisions of whatever kind, nature or type regarding my medical care, and to execute any and all documents, including, but not limited to, authorizations and releases, related to medical decisions affecting me; and [t]o generally do any and every further act and thing of whatever kind, nature, or type required to be done on my behalf.”

Finally, Mrs. Duncan declared that it was her

intention and desire that this document grant to my said attorney-in-fact full and general power and authority to act on my behalf and I thus direct that the language of this document be liberally construed with respect to the power and authority hereby granted my said attorney-in-fact in order to give effect to such intention and desire. The enumeration of specific items, rights, or acts or powers herein is not intended to, nor does it limit or restrict, the general and full power herein granted to my said attorney-in-fact. It is further my intention and desire that this document qualify as a DURABLE POWER OF ATTORNEY pursuant to KRS 386.093 and that the power and authority hereby granted by this document shall not be affected by any later disability or incapacity of me as principal.

Ms. Ping testified that she had no occasion to exercise her power of attorney until early 2006. In February of that year, Mrs. Duncan suffered a broken leg, which required surgery and a hospitalization. Less than two weeks later, while Ms. Duncan was residing at a facility for the rehabilitation of that injury, she suffered a stroke. She was returned to the hospital, and when her condition had again stabilized, she was moved, at her daughter's direction, to the Beverly Enterprises facility. The move took place on March 17, 2006. According to Ms. Ping, on that day her mother was still incapacitated as a result of her stroke and would not have been able to manage her own admission.

On her mother's behalf, Ms. Ping met with the facility's admissions director, who, according to Ms. Ping, presented her with a stack of documents—what he referred to as the standard application packet—each one of which she signed where he indicated, without having read it or otherwise being aware of its contents. Among those documents was one headed, “RESIDENT AND FACILITY ARBITRATION AGREEMENT (NOT A CONDITION OF ADMISSION—READ CAREFULLY).” As filled in by the admissions director, the parties to this agreement were “BHR Frankfort (the “Facility”) and Alma Duncan (“Resident”).” The agreement was printed on one-and-a-half single-spaced pages, followed by date and signature lines. Ms. Ping signed the agreement as her mother's “Authorized representative,” and the agreement reflects that she is related to the resident both as daughter and as power of attorney.

In pertinent part, the agreement provides that upon execution it would become part of the Admission Agreement,

and that the Admission Agreement evidences a transaction involving interstate commerce governed by the Federal Arbitration Act. It is understood and agreed by Facility and Resident that any and all claims, disputes, and controversies ... arising out of, or in connection with, or relating in any way to the Admission Agreement or any service or health care provided by the Facility to the Resident shall be resolved exclusively by binding arbitration to be conducted at a place agreed upon by the Parties, or in the absence of such an agreement, at the Facility, in accordance with the National Arbitration Forum Code of Procedure ... and not by a lawsuit or resort to court process.

The Arbitration Agreement does not purport to limit the remedies available under Federal or State law; it includes a provision allowing the resident to rescind the Arbitration Agreement unilaterally by giving notice to the Facility within thirty days of execution; and it includes a warning, in bold, capital letters, that “BY ENTERING INTO THIS ARBITRATION AGREEMENT, THE PARTIES ARE GIVING UP AND WAIVING THEIR CONSTITUTIONAL RIGHT TO HAVE ANY CLAIM DECIDED IN A COURT OF LAW BEFORE A JUDGE AND A JURY, AS WELL AS ANY APPEAL FROM A DECISION OR AWARD OF DAMAGES.”

The agreement also provides that

it is the intention of the parties to this Arbitration Agreement that it shall inure to the benefit of and bind the parties, their successors, and assigns, including without limitation the agents, employees and servants of the Facility, and all persons whose claim is derived through or oh behalf of the Resident, including any parent, spouse, sibling, child, guardian, executor, legal representative, administrator, or heir of the Resident.

About six months after her admission to the Beverly facility, Mrs. Duncan died. The probate court of Anderson County appointed Ms. Ping as the executrix of her mother's Estate, and in that capacity Ms. Ping brought the present action against Beverly Enterprises. The Estate alleges that Mrs. Duncan suffered compensable injuries as a result both of negligent treatment by her caretakers at the facility and of management's breach of statutory standards for nursing home administration. As executrix, Ms. Ping also represents the statutory wrongful death beneficiaries, who claim that the injuries Mrs. Duncan suffered at the facility hastened her demise, and so give them a claim for damages separate from the claim of the Estate. The sole issue presented is whether these claims are subject to the Arbitration Agreement Ms. Ping purported to execute in her capacity as her mother's agent. Ruling that they are, the Court of Appeals held that Ms. Ping enjoyed a virtually unlimited authority to act on her mother's behalf, that binding her mother to the Arbitration Agreement was within that expansive authority, and accordingly that that agreement binds as well her mother's Estate. The Estate contends that the Court of Appeals read too broadly Mrs. Duncan's power of attorney. We agree.

ANALYSIS

I. Mrs. Duncan's Power Of Attorney For Property and Health Care Management Did Not Authorize Her Agent to Agree to Arbitration.

A. The Kentucky Courts Have Jurisdiction to Enforce the Arbitration Agreement, If It is Valid and Enforceable.

Because the dispute before us...