Nanney v. THI of S.C. at Spartanburg, LLC

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Betty Nanney, by and through her Attorney-In-Fact, Leslie Nanney, Respondent, v. THI of South Carolina at Spartanburg, LLC d/b/a Magnolia Manor-Spartanburg, Rusty Flathmann, Laura Anne Winn, and Olishia Gaffney, Appellants.

No. 2023-UP-299

Appellate Case No. 2020-000500

Court of Appeals of South Carolina

August 23, 2023

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

Heard March 16, 2023

Appeal from Spartanburg County Grace Gilchrist Knie, Circuit Court Judge

Stephen Lynwood Brown, Donald Jay Davis, Jr., Russell Grainger Hines, and Gaillard Townsend Dotterer, III, all of Clement Rivers, LLP, of Charleston, for Appellants.

Gary W. Poliakoff and Raymond Paul Mullman, Jr., both of Poliakoff & Assoc., PA, of Spartanburg; Jordan Christopher Calloway, of Rock Hill, and Whitney Boykin Harrison, of Columbia, both of McGowan Hood Felder & Phillips, and Edward John Waelde, of Greenville, for Respondent.

PER CURIAM:

In this negligence action, THI of South Carolina at Spartanburg, LLC Rusty Flathmann, Laura Ann Winn, and Olishia Gaffney argue the circuit court erred in (1) declining to compel arbitration regarding claims brought by Betty Nanney; (2) declining to order additional discovery on arbitrability; and (3) failing to clarify whether Winn's motion to dismiss was disposed of in the order on arbitrability. We affirm as modified.

On October 28, 2016, having suffered a ruptured aneurysm in her brain and undergone surgery at another medical facility Betty Nanney (Betty) was checked into the Magnolia Manor-Spartanburg nursing home (Magnolia Manor). Magnolia Manor is the business name of THI of South Carolina at Spartanburg, LLC (THI). After a few days at Magnolia Manor according to an expert affidavit, Betty began to complain of leg pain. The pain started by November 1 and continued until an x-ray performed six days later disclosed a broken leg. A notation from a doctor at the hospital where Betty's leg was treated stated: "Comes from Mag Manor with suspected fall."

Acting through her daughter and attorney-in-fact, Leslie Nanney (Leslie), Betty brought a complaint against THI, Rusty Flathmann (Flathmann), Laura Ann Winn (Winn), and Olishia Gaffney (Gaffney) (collectively, the Defendants) on September 4, 2019. Betty's causes of action included negligence/recklessness, neglect of a vulnerable adult, and negligent administration.

THI answered on October 9, including as an affirmative defense the fact that it had an arbitration agreement with Betty. Similar defenses were included in October 11 answers by Flathmann and Gaffney. Those three parties filed motions to dismiss and compel arbitration on November 11. Winn filed a motion to dismiss on October 11, arguing she was not working for THI when Betty was injured.

The Defendants' argument that Betty had an arbitration agreement with THI traced back to paperwork filled out at the time of Betty's admission to Magnolia Manor. That paperwork was completed by her son, Kaileb Horn. One of the documents Horn signed was an Admission Agreement, which specified that it was to "be governed by and construed in accordance with applicable Federal regulations and those laws of the State in which Facility is located." It also required the patient's representative to "supply Facility with a copy of any power of attorney, durable power of attorney, durable power of attorney for health care[,] or other legal documentation permitting him or her to act on Resident's behalf." Finally, section XVIII of the agreement, labeled "ENTIRE AGREEMENT," stated in part:

I/we hereby acknowledge that I/we have read this page and all preceding pages and acknowledge that this Agreement represents the entire agreement and understanding between the parties and supersedes all previous representations, understandings[,] or agreements, oral or written, between the parties and may not be amended except by written agreement of the parties.

By signing below, I/we further acknowledge that I/we have made the above promises and representations in order to induce Facility to enter into this Agreement. The parties further understand that, by signing this Agreement, Facility is relying upon the truthfulness of the promises and representations I/we have made. . . .

The undersigned further acknowledges that he/she has received and read the Admission Handbook and other Admissions materials and understand that these documents are made a part of this Agreement by reference herein.

At the same time, Horn signed the Arbitration Agreement, which stated in part:

It is further understood that in the event of any controversy or dispute between the parties arising out of or relating to Facility's Admission Agreement, or breach thereof, or relating in any way to Resident's stay at Facility, or to the provisions of care or services to Resident, including but not limited to any alleged tort, personal injury, negligence[,] or other claim; or any federal or state statutory or regulatory claim of any kind; or whether or not there has been a violation of any right or rights granted under State law (collectively "Disputes"), and the parties are unable to resolve such through negotiation, then the parties agree that such Dispute(s) shall be resolved by arbitration, as provided by the South Carolina Alternate Dispute Resolution/Mediation Rules. . . .

The parties acknowledge and agree that, because the services and reimbursement thereof effect[] a transaction that involves interstate commerce, the enforcement of this Arbitration Agreement is not subject to the South Carolina Uniform Arbitration Act and shall be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any contrary provision of this Agreement or contrary state law. . . .

This Agreement shall remain in effect for all care rendered at Facility and shall survive any termination or breach of this Agreement or the Admission Agreement. By his/her signature below, the executing party represents that he/she has the authority to sign on Resident's behalf so as to bind the Resident as well as the Representative.

The top of the Arbitration Agreement stated: "PLEASE READ CAREFULLY."

According to a December 7, 2019 affidavit by Horn, he "did not say [he] was [Betty's] agent" and "made no statements as to [his] legal authority over [Betty]." Horn also swore that Betty was not present when he signed the forms and she made no representations about whether Horn was empowered to act on her behalf. Betty signed a durable power of attorney designating Leslie as her attorney-in-fact on June 23, 2017.

The circuit court held a hearing on arbitrability on December 16, 2019. On January 7, 2020, the circuit court issued an 18-page order denying the Defendants' attempt to invoke the arbitration agreement. The court held that

no valid arbitration contract between [Betty] and [THI] exists because: (1) Kaileb Horn did not have legal authority to bind Betty Nanney to the Arbitration Agreement; (2) there is a lack of consideration and mutuality under the circumstances; and (3) the affirmative defenses of equitable estoppel, ratification, and third-party beneficiary do not apply under the circumstances.

The Defendants filed a motion to alter, amend, and/or reconsider on January 17, which the circuit court denied on February 13. This appeal followed.

"Determinations of arbitrability are subject to de novo review, but if any evidence reasonably supports the circuit court's factual findings, this court will not reverse those findings." Hodge v. UniHealth Post-Acute Care of Bamberg, LLC, 422 S.C. 544, 554, 813 S.E.2d 292, 297 (Ct. App. 2018); see also Weaver v. Brookdale Senior Living, Inc., 431 S.C. 223, 228, 847 S.E.2d 268, 271 (Ct. App. 2020) ("Whether an arbitration agreement may be enforced against a nonsignatory is a question of law we review de novo, but we will not disturb the trial court's underlying factual findings reasonably supported by the record."). "A trial court's rulings in matters related to discovery generally will not be disturbed on appeal in the absence of a clear abuse of discretion." Hodge, 422 S.C. at 576, 813 S.E.2d at 309 (quoting Stokes-Craven Holding Corp. v. Robinson, 416 S.C. 517, 536, 787 S.E.2d 485, 495 (2016)).

Initially, we note that all parties agree that non-arbitration issues should be addressed by the circuit court on remittitur. We are proceeding on the anticipation that the circuit court will address Winn's motion on its merits at that point.

"[B]ecause arbitration . . . exists solely by agreement of the parties, a presumption against arbitration arises where the party resisting arbitration is a nonsignatory to the written agreement to arbitrate." Wilson v. Willis, 426 S.C. 326, 337-38, 827 S.E.2d 167, 173 (2019); see Weaver, 431 S.C. at 230, 847 S.E.2d at 272 (stating that arbitration "'is predicated on an agreement to arbitrate because parties are waiving their fundamental right to access to the courts'" (quoting Wilson, 426 S.C. at 337, 827 S.E.2d at 173)).

At oral arguments, counsel for the Defendants argued that Horn's legal authority to bind Betty with his signature on the Arbitration Agreement was not a key issue. However, we do not believe that this statement is in line with some of the arguments put forward in the Defendants' brief. In any case, out of an abundance of caution, and because it does impact our disposition of certain issues, we will consider Horn's authority under state law. See Weaver 431 S.C. at 230, 847 S.E.2d at 272 ("State law controls when an arbitration agreement may be enforced against someone who has not signed it."). We find that, with regard to the Arbitration Agreement, Horn did...