Innisfree Health & Rehab, LLC v. Titus

2021 Ark. App. 403

636 S.W.3d 781

INNISFREE HEALTH AND REHAB, LLC ; Central Arkansas Nursing Centers, Inc.; Nursing Consultants, Inc., d/b/a Professional Nursing and Rehabilitation Services; Innisfree Estates, LLC ; and Michael S. Morton, Appellants

v.Vicki TITUS, as Special Administrator of the Estate of Helen Gale Gilmore, Deceased, and on Behalf of the Wrongful Death Beneficiaries of Helen Gale Gilmore, Appellee

No. CV-20-584

Court of Appeals of Arkansas, DIVISION II.

Opinion Delivered October 20, 2021

Hardin, Jesson & Terry, PLC, by: Jeffrey W. Hatfield, Kynda Almefty, Carol Ricketts, Little Rock, Kirkman T. Dougherty, and Stephanie I. Randall, Fort Smith, for appellants.

Rainwater, Holt & Sexton, P.A., by: Jeff R. Priebe, for appellee.

KENNETH S. HIXSON, Judge

This is an interlocutory appeal concerning the denial of a motion to compel arbitration.¹ The appellants are Innisfree Health and Rehab, LLC; Central Arkansas Nursing Centers, Inc.; Nursing Consultants, Inc., d/b/a Professional Nursing and Rehabilitation Services; Innisfree Estates, LLC; and Michael Morton. The appellee is Vicki Titus, as special administrator of the estate of Helen Gale Gilmore, deceased, and on behalf of the wrongful death beneficiaries of Helen Gale Gilmore. For the following reasons, we affirm the trial court's order denying appellants’ motion to compel arbitration.

Helen Gale Gilmore was admitted to Innisfree Health and Rehab, LLC (Innisfree), on April 11, 2018. In connection with her admission, Helen's husband, Matthew Gilmore, signed multiple documents. Included among those documents was an arbitration agreement, which was part of the admission agreement. Signing the arbitration agreement was a condition of admission, and it provided that any claims, disputes, or controversies arising out of the admission agreement or any service or health care provided by the facility shall be resolved exclusively by binding arbitration. Helen was a resident of Innisfree through June 10, 2018, and she later died in hospice care on August 5, 2018.

On December 13, 2019, Vicki Titus, as special administrator of Helen's estate, filed a lawsuit against appellants asserting claims of negligence and medical negligence for the injuries to, and wrongful death of, Helen. The complaint alleged that as a result of appellants’ negligence during Helen's residency at Innisfree, Helen sustained numerous injuries including respiratory distress and anoxic brain injury, which lead to Helen's untimely death.

On January 15, 2020, appellants filed an answer wherein they denied the allegations in the complaint and stated that the dispute was governed by the arbitration agreement. On January 31, 2020, appellants filed a motion to compel arbitration as to all claims and to stay proceedings. In their motion, appellants contended that the arbitration agreement signed by Helen's husband, Matthew Gilmore, was signed pursuant to a durable power of attorney and that it bound Helen and her estate to the agreement. Appellants attached to their motion the admission agreement that contained the arbitration agreement, as well as a power of attorney executed by Helen in favor of husband Matthew.

The admission agreement identifies Helen as the "Resident," and Matthew as the Resident's "Responsible Party." The agreement provides that the Resident's Responsible Party "is the Resident's legal guardian, if one has been appointed, the Resident's attorney-in-fact, if the Resident has executed a power of attorney, or some other individual or family member who agrees to assist the facility in providing for the Resident's health, care, and maintenance." The arbitration agreement is denominated "Section 6" of the admission agreement. The arbitration agreement identifies Matthew as the Resident's Responsible Party, but the line that identifies the Resident is left empty. The arbitration agreement is signed by Matthew as the Resident's "Spouse." The agreement contains a space to mark—indicating to be checked if applicable—if the Responsible Party provided the facility with a copy of a power of attorney, guardianship papers, or other legal documents. That designated space is left blank.

Helen executed the power of attorney in favor of husband Matthew on November 15, 2017, which was seven months prior to Helen's admission to Innisfree. The power of attorney appointed Matthew "as my agent, or attorney in fact, to make decisions regarding my health care during periods when my health care provider has determined that I lack capacity to decide for myself." Among other things, the power of attorney provided authorization "to admit me to hospitals, including ... nursing homes ... and to sign all appropriate forms, consents, and releases in connection with any of said matters."

On February 14, 2020, Vicki Titus, as special administrator of Helen's estate, filed a response to appellants’ motion to compel arbitration. In the response, Titus asserted that no legal authority for Matthew's signature was noted on the arbitration agreement and that Matthew had signed only as Helen's "Spouse." Titus also argued that Matthew's power of attorney was ineffective because there was no evidence that Helen lacked sufficient mental capacity to decide for herself when she was admitted to Innisfree. Finally, Titus argued in the alternative that even had the power of attorney been effective, the scope of the power of attorney did not include the authority to bind Helen to arbitration.

On February 24, 2020, appellants filed a reply to Titus's response wherein they alleged that Helen lacked capacity when she was admitted to Innisfree and that the terms of the power of attorney authorized husband Matthew to consent to arbitration on Helen's behalf. The appellants attached the affidavit of Melissa Huckaby, Innisfree's social-services director who had signed the arbitration agreement as Innisfree's representative. Huckaby's affidavit states, "Upon information and belief, at the time of Ms. Gilmore's admission, it was determined that she lacked the capacity to make decisions regarding her admission to Innisfree."

A hearing was held on appellants’ motion to compel arbitration on June 2, 2020. At the conclusion of the hearing, the trial court announced that it would deny the motion. On June 12, 2020, the trial court entered an order denying the motion to compel for the following reasons:

1. The Court finds that Matthew Gilmore signed the Arbitration Agreement solely as the "spouse" of Helen Gilmore and, as a spouse, Matthew Gilmore did not have the authority to bind his wife to the Arbitration Agreement and that this ruling is consistent with the decision in the Hickory Heights [Health and Rehab, LLC v. Cook , 2018 Ark. App. 409, 557 S.W.3d 286 ] case;

2. The Court finds it material that the box located on the signature page was not checked and, thus, the Defendants did not rely on any documentation or power of attorney, including the durable power of attorney for health care, when Matthew Gilmore signed the Arbitration Agreement; and

3. That the durable medical power of attorney for health care was a springing power of attorney that did not provide Matthew Gilmore the authority to sign the Arbitration Agreement and that Defendants failed to prove that the social worker, whose affidavit was submitted to the Court, was a healthcare worker and that she was capable of making a determination as to whether Helen Gilmore lacked the capacity to make decisions.

Appellants filed their timely notice of appeal on July 8, 2020. The sole issue before our court is whether the trial court erred in denying appellants’ motion to compel arbitration.

We review a trial court's order denying a motion to compel arbitration de novo on the record. Courtyard Gardens Health & Rehab., LLC v. Quarles , 2013 Ark. 228, 428 S.W.3d 437. Arbitration is simply a matter of contract between parties. Id. Whether a dispute should be submitted to arbitration is a matter of contract construction, and we look to the language of the contract that contains the agreement to arbitrate and apply state-law principles. Id. The same rules of construction and interpretation apply to arbitration agreements as apply to agreements generally; thus, we will seek to give effect to the intent of the parties as evidenced by the arbitration agreement itself. Id. The construction and legal effect of an agreement to arbitrate are to be determined by this court as a matter of law. Id. We are also guided by the legal principle that contractual agreements are construed against the drafter. Carter v. Four Seasons Funding Corp. , 351 Ark. 637, 97 S.W.3d 387 (2003).

Generally, the terms of an arbitration contract do not apply to those who are not parties to the contract. Bigge Crane & Rigging Co. v. Entergy Ark., Inc. , 2015 Ark. 58, 457 S.W.3d 265. In Arkansas, the presumption is that parties contract only for themselves; thus, a contract will not be construed as having been made for the benefit of a third party unless it clearly appears that such was the intention of the parties. Elsner v. Farmers Ins. Group, Inc. , 364 Ark. 393, 220 S.W.3d 633 (2005).

Appellants argue that there was a valid arbitration agreement between the parties. Appellants contend that husband Matthew's power of attorney was triggered because Innisfree determined that Helen lacked capacity to make her own decisions, and contend further that the power of attorney authorized Matthew to consent to arbitration. Appellants further argue that Matthew signed the arbitration agreement in his capacity as Helen's attorney-in-fact pursuant to the power of attorney. Appellants claim that it is of no consequence that Matthew signed as Helen's "Spouse" or that there was no checkmark in the box signifying that the power of attorney was provided to Innisfree. Appellants note that Matthew signed the arbitration agreement as the "Responsible Party," which, according to the agreement,...