Woodall v. Avalon Care Ctr.-fed. Way LLC

• Decision Date: 10 May 2010
• Docket Number: No. 62894-1-I.
• Citation: Woodall v. Avalon Care Ctr.-Fed. Way, LLC, 155 Wash.App. 919, 231 P.3d 1252 (Wash. App. 2010)
• Court: Washington Court of Appeals
• Parties: Clifford Wayne WOODALL, individually and as representative of the Estate of Henry Wayne Woodall; and Sharon G. Woodall King, Respondents,v.AVALON CARE CENTER-FEDERAL WAY, LLC, Appellant.

155 Wash.App. 919

231 P.3d 1252

Clifford Wayne WOODALL, individually and as representative of the Estate of Henry Wayne Woodall; and Sharon G. Woodall King, Respondents,v.AVALON CARE CENTER-FEDERAL WAY, LLC, Appellant.

No. 62894-1-I.

Court of Appeals of Washington Division 1.

May 10, 2010.

Stephen S. Hornbuckle, The Hornbuckle Firm, Bellevue, WA, for Respondent.

Christopher Holm Howard, Mary Jo Newhouse, Averil Budge Rothrock, Seattle, WA, for Appellant.

PUBLISHED IN PART

COX, J.

¶ 1 Avalon Care Center-Federal Way, LLC (“Avalon”), appeals an order denying in part its motion to compel arbitration of all claims asserted in this survival and wrongful death action. The wrongful death claims are based on statutory causes of action for the benefit of the heirs of Henry Woodall. These heirs did not agree to arbitrate their wrongful death claims. Moreover, there is no basis to require them to arbitrate these claims. We affirm.¹

¶ 2 On October 6, 2006, Henry Woodall was admitted to a facility run by Avalon that provides skilled nursing care. At the time of his admission, Henry ² and Avalon executed a “Resident and Facility Arbitration Agreement.” The agreement provides for arbitration of all disputes and claims for damages arising from personal injury or medical care.

¶ 3 Henry died on July 28, 2007. Clifford Woodall and Sharon Woodall King are the children of Henry and his sole heirs (collectively, “the heirs”). Clifford is the personal representative of Henry's estate.

¶ 4 Clifford, individually and as the representative of the estate, and Sharon King, individually, brought this action against Avalon under the wrongful death and survival statutes. They seek damages, attorney fees, and other relief.

¶ 5 Avalon moved to compel arbitration and to stay these court proceedings pending the outcome of the arbitration of all claims. The trial court ultimately granted Avalon's motion to compel arbitration in part and denied it in part. The court concluded that the survival claims should be resolved through the contractually agreed arbitration process. But the court also concluded that the arbitration agreement did not apply to the wrongful death claims of the heirs. The trial court expressed its reluctance to split the proceedings to resolve the survival and wrongful death claims, stating that litigation “in two separate forums is inefficient, unfair and exposes [all parties] to the inherent danger of conflicting outcomes based on the same set of intertwined facts.” Nevertheless, the court concluded that case and statutory authorities required this result.

¶ 6 Avalon appeals.³

ARBITRABILITY OF WRONGFUL DEATH CLAIMS

¶ 7 Avalon argues that the arbitration agreement between Henry and Avalon binds the heirs to arbitrate their wrongful death claims against Avalon. We disagree.

¶ 8 Whether a person is bound by an agreement to arbitrate is a legal question that is to be determined by the courts.⁴ “While a strong public policy favoring arbitration is recognized under both federal and Washington law, ‘arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.’ ” ⁵

¶ 9 There are limited exceptions to the general rule that one who does not sign an arbitration agreement cannot be compelled to arbitrate.⁶ “For instance, a nonsignator is bound by the terms of an arbitration agreement where the nonsignator's claims are asserted solely on behalf of a signator to the arbitration agreement.” ⁷ “In addition, federal courts have held, and the Washington Court of Appeals has recognized, that ‘[n]onsignatories of arbitration agreements may be bound by the agreement under ordinary contract and agency principles.’ ” ⁸ Among these principles are (1) incorporation by reference; (2) assumption; (3) agency; (4) veil-piercing/alter ego; and (5) estoppel.⁹

¶ 10 Arbitrability is a question of law that we review de novo.¹⁰ The burden of proof of showing that the arbitration agreement is unenforceable is on the party seeking to avoid arbitration.¹¹

¶ 11 Here, the arbitration agreement that Henry and Avalon signed states:

RESIDENT AND FACILITY ARBITRATION AGREEMENT

(Not a Condition of Admission-Please Read Carefully)

...

... We agree to submit to binding arbitration for all disputes and claims for damages of any kind for injuries and losses arising from the medical care rendered or which should have been rendered after the date of this Agreement. All alleged claims for monetary damages against the facility, its owners, lessees, management organization, or their employees, officers, directors, agents, must be arbitrated including, without limitation, claims for personal injury

from alleged negligence, gross negligence, malpractice, or any alleged claims based on any departure from accepted medical or health care or safety standards, emotional distress or punitive damages.^[12]

The agreement further provides:

We expressly intend that this Agreement shall bind all persons whose alleged claims for injuries or losses arise out of care rendered by the Facility or which should have been rendered by Facility after the date of this Agreement, including any spouse, children, or heirs of the Resident or Executor of the Resident's estate.^[13]

¶ 12 It is undisputed that Henry and Avalon were the only persons who signed the arbitration agreement. The heirs did not. Thus, the legal question is whether the heirs are required to arbitrate their wrongful death claims against Avalon where they were not parties to the agreement to arbitrate.

¶ 13 We begin our analysis by considering our supreme court's recent observation in Satomi Owners Association v. Satomi, LLC ¹⁴ that “ ‘arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he [or she] has not agreed so to submit.’ ” ¹⁵ The court stated this long-standing principle of contract law notwithstanding its acknowledgement that there is a strong public policy favoring arbitration recognized under both federal and state law.¹⁶

¶ 14 The court went on to identify “certain limited exceptions” to the general rule that a person who is not a party to an arbitration agreement may not be bound by such agreement.¹⁷ It also identified a group of cases where federal courts have held, and this court has recognized, that a person who has not agreed to arbitrate may be bound to arbitrate based on ordinary contract and agency principles.¹⁸ Applying agency principles in one of the consolidated cases in Satomi, the supreme court held a condominium association was bound to arbitrate based on arbitration agreements signed only by its members, where the association asserted claims of its members.¹⁹

¶ 15 Avalon does not rely on either the Quackenbush v. Allstate Insurance Co. ²⁰ or SouthTrust Bank v. Ford ²¹ line of cases that Satomi cites as examples of the “certain limited exceptions” to the general rule.²² Quackenbush was a case where the rights asserted were on behalf of persons who signed arbitration agreements.²³ Ford involved claims on behalf of an estate's claims.²⁴ These two cases are factually distinguishable from this case. The wrongful death claims here are asserted on behalf of the heirs, neither of whom signed the arbitration agreement between Henry and Avalon.

¶ 16 Avalon relies on Clay v. Permanente Medical Group, Inc. ²⁵ Clay is the third case the Satomi court cited as an example of the limited exceptions to the general rule.

¶ 17 That federal case, based on California law, determined that the plaintiffs were bound to an arbitration provision they did not sign because they asserted claims on behalf of the decedent's estate, among other reasons. ²⁶ Here, the heirs assert wrongful death claims, which are not on behalf of Henry's estate, against Avalon under Washington's wrongful death statutes. Clay is distinguishable.

¶ 18 We note also that Clay identifies a split of authority in California Court of Appeals cases over the question of binding persons who are not parties to an arbitration agreement to arbitrate claims:

Plaintiffs correctly identify a split in the California Courts of Appeals regarding the applicability of binding arbitration provisions to non-signatory adult heirs. Two lines of cases may apply. The first follows Rhodes v. California Hospital Medical Center, 76 Cal.App.3d 606, 143 Cal.Rptr. 59 (1978); the second follows Herbert v. Superior Court of Los Angeles County, 169 Cal.App.3d 718, 215 Cal.Rptr. 477 (1985). Though Plaintiffs identify the split, they fail to provide any reason the Court should follow one line of cases over the other in this matter.^[27]

¶ 19 Because there is a split of authority within the California Court of Appeals on the question before us, Clay is not helpful in deciding this case. Moreover, the California Supreme Court has not, as of this writing, resolved this conflict within the lower appellate court.²⁸

¶ 20 Avalon does not identify any contract or agency principles that would bind the heirs to arbitrate based on the agreement between Avalon and Henry. Likewise, we are unaware of any such principles that would apply to this case.

¶ 21 Avalon also relies on Estate of Eckstein v. Life Care Centers of America, Inc. ²⁹ and Townsend v. Quadrant Corp. ³⁰ In Life Care Centers, the decedent's attorney-in-fact had executed an arbitration agreement on the decedent's behalf upon her admission to defendant Life Care Center.³¹ The United States District Court for the Eastern District of Washington granted the defendants' motion to compel arbitration of all claims, including wrongful death claims brought on behalf of statutory beneficiaries.³² The court recognized that “there are no Washington cases specifically on point” and appears to have relied on a limited search of authorities in other states.³³

¶ 22 But, as Woodall points out, other out-of-state authority can be read to support the conclusion that wrongful death claims are not subject to a decedent's...