Pines - Progressive Eldercare Serv., Inc. v. Carnahan

686 S.W.3d 524

2024 Ark. App. 138

PINES - PROGRESSIVE ELDERCARE SERVICES, INC., d/b/a the Pines Nursing and Rehabilitation Center; Progressive Eldercare Services, Inc.; Southern Administrative Services, Inc.; ProCare Therapy Services, LLC; CarePlus Staffing Services, LLC; Professional Nursing Solutions, LLC; OHI Asset (AR) Hot Springs, LLC; MasterTen, LLC; Angela D. Marlar, Individually and in Her Capacity as Administrator and President of the Pines Nursing and Rehabilitation Center; John Does 1 Through 5, Unknown Defendants; and John Doe Insurance Companies A-D, Unknown Defendants, Appellants

v.Laura CARNAHAN, as Administratrix of the Estate of Mary Evelyn Rhea, Deceased, and on Behalf of the Wrongful Death Beneficiaries of Mary Evelyn Rhea, Appellee

No. CV-22-400

Court of Appeals of Arkansas, DIVISION II.

Opinion Delivered February 28, 2024

APPEAL FROM THE GARLAND COUNTY CIRCUIT COURT [NO. 26CV-20-380], HONORABLE MARCIA R. HEARNSBERGER, JUDGE

Conner & Winters, LLP, Fayetteville, by: Vicki Bronson and Emily C. Mizell; Wright, Lindsey & Jennings LLP, Little Rock, by: Jeffrey L. Singleton and Quinten J. Whiteside; and Kutak Rock LLP, by: Mark Dossett, Rogers, Jeff Fletcher, Fayetteville, and Caleb S. Sugg, for appellants.

Appellate Solutions, PLLC, by: Deborah Truby Riordan; Law Offices of Travis Berry, Conway, by: Travis R. Berry; and Trammell Piazza Law Firm, P.L.L.C., by: Melody H. Piazza, for appellee.

ROBERT J. GLADWIN, Judge

₂This is an interlocutory appeal from an order of the Garland County Circuit Court denying a motion to compel arbitration. Appellants are Pines - Progressive Eldercare Services, Inc., d/b/a The Pines Nursing and Rehabilitation Center; Progressive Eldercare Services, Inc.; Southern Administrative Services, LLC; ProCare Therapy Services, LLC; CarePlus Staffing Services, LLC; Professional Nursing Solutions, LLC; OHI Asset (AR) Hot Springs, LLC; MasterTen, LLC; Angela D. Marlar, individually and in her capacity as administrator and president of The Pines Nursing and Rehabilitation Center; John Does 1 through 5, unknown defendants; and John Doe Insurance Companies A-D, unknown defendants. The appellee is Laura Carnahan, as administratrix of the estate of Mary Evelyn Rhea, deceased, and on behalf of the wrongful death beneficiaries of Mary Evelyn Rhea ("Carnahan"). Appellants contend that the circuit court erred in denying their motion to compel arbitration despite the existence of a valid and enforceable arbitration agreement. We affirm.

I. Background Facts

On October 24, 2018, Mary Evelyn Rhea ("Rhea") was admitted to the Pines - Progressive Eldercare Services, Inc., a nursing home (the "Facility") by one of her daughters, Mary Courtney (otherwise known and referred to herein as "Beth"). In connection with Rhea’s admission, Beth signed multiple documents for Rhea, including an arbitration agreement. When Beth arrived at the Facility prior to Rhea’s transfer, she presented the Facility a durable power of attorney ("POA") for health care dated June 19, 2018. The healthcare POA listed Stephen Rhea ("Stephen") as Rhea’s healthcare agent, and Beth was ₃listed as an alternate agent in the event Stephen was "unavailable, unable or unwilling" to make healthcare decisions for Rhea. Beth signed the arbitration agreement and checked the box marked "Power of Attorney" next to her signature.

Beth stated that she informed the Facility representative, Pam Tabor, that Stephen was the primary healthcare POA, that he lived less than a mile away, and that he was available to come to the Facility later that afternoon to sign any healthcare paperwork as needed. Beth recalled in her deposition testimony that Tabor stated she could sign the admissions paperwork, including the arbitration agreement, because the healthcare POA authorized her to do so. Beth recalls that she made phone calls to two of her sisters—to further consult them regarding the admissions paperwork—but she was unable to reach either one. Stephen arrived at the Facility later that afternoon, and the Facility provided him copies of all the papers that Beth had signed; however, he was not asked to sign any of the documents.

When the discussion moved to financial matters of payment for Rhea’s admission to the Facility, Beth told the Facility’s financial officer that her sister, Sue Bennett ("Sue"), had authority over Rhea’s financial matters. After Rhea was transferred to the Facility, Sue arrived and provided the Facility with a copy of the statutory POA—dated October 22, 2018—which granted Sue the authority as Rhea’s agent over a list of subjects, including "claims and litigation." The statutory POA also granted Sue the authority to "authorize another person to exercise the authority granted under this power of attorney." Sue testified that after arriving at the Facility, she spent a couple of hours going over financial paperwork that she ₄was required to sign; however, the Facility never presented Sue the arbitration agreement for signature.

Rhea was a resident of the Facility from October 24, 2018, through March 10, 2019, and later passed away on March 18, 2019. On March 5, 2020, Carnahan, as administratrix of the Rhea’s estate and on behalf of Rhea’s wrongful death beneficiaries, filed a complaint against the appellants, including the Facility, asserting claims for negligence and medical malpractice for the injuries to, and wrongful death of, Rhea. The complaint alleged that Rhea sustained numerous injuries, which included the following: infections; pressure sores, including a Stage IV coccyx sore with purulent drainage; malnourishment; severe pain and suffering; and an untimely death. The appellants filed answers asserting the defense of arbitration. On May 7, 2021, the Facility filed its motion to compel arbitration. Carnahan opposed the arbitration demand, denying that the arbitration agreement was binding against the Rhea’s estate.

In its reply, the Facility argued that the arbitration agreement was valid and enforceable because Beth executed the agreement under the assumption that she had the authority to do so pursuant to her appointment as an alternate agent under the healthcare POA, and furthermore, that Sue subsequently ratified Beth’s execution of the arbitration agreement.

On June 24, 2021, the Facility requested a thirty-minute hearing on the briefed issues regarding the motion to compel arbitration. In response, the circuit court held a hearing on September 20, and the court took the motion under advisement. On January 21, 2022, the ₅circuit court issued a letter opinion finding that the Facility failed to prove that a valid arbitration agreement exists. In its order denying the motion to compel arbitration, the court stated as follows:

1. The Court finds that Defendants failed to meet their burden to prove that a valid arbitration agreement exists between Plaintiff and Defendants. Defendants failed to show that Beth Courtney had authority to bind Mary Evelyn Rhea to the arbitration agreement. There is no evidence before the Court that Sue Bennett granted her sister, Beth Courtney, such authority or that Beth Courtney believed she was acting pursuant to an assignment of Sue Bennett’s powers when she signed the arbitration agreement.

2. The Court cannot presume agency. Defendant failed to establish the existence of an agency relationship between Beth Courtney and Mary Evelyn Rhea when Beth Courtney signed the arbitration agreement. It is well established Defendant knew Sue Bennett and not Beth Courtney had Power of Attorney to act on Mary Evelyn Rhea’s behalf in a matter such as the arbitration agreement, yet Defendant did not present the arbitration agreement for her to sign. Sue Bennett did not have knowledge of her sister’s unauthorized act. Therefore, her silence regarding her sister’s act or acceptance of benefits, if any, from that act cannot serve to ratify it. Because no valid agreement for arbitration exists, the scope of the document is irrelevant.

The circuit court entered the order denying the Facility’s motion to compel arbitration on March 1, 2022. The Facility filed a timely notice of appeal, and this appeal followed.

II. Standard of Review

[1–6] An order denying a motion to compel arbitration is immediately appealable pursuant to Arkansas Rule of Appellate Procedure-Civil 2(a)(12) (2023). We review a circuit court’s denial of a motion to compel arbitration de novo on the record. Courtyard Gardens Health & Rehab., LLC v. Arnold, 2016 Ark. 62, 485 S.W.3d 669. Arbitration is simply a matter of contract between parties. Hickory Heights Health & Rehab, LLC v. Cook, 2018 Ark. App. 409, ₆557 S.W.3d 286. 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. at 5, 557 S.W.3d at 290. 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.

III. Points on Appeal

The Facility argues the following on appeal: (1) the circuit court erred in finding no valid and enforceable arbitration agreement exists; and alternatively, (2) the circuit court erred by not holding a jury trial on disputed issues of fact as required by the Federal Arbitration Act, 9 U.S.C. §§ 1–16 (the "FAA").

IV. Discussion

[7, 8] When a court is asked to compel arbitration, it is limited to deciding two threshold questions: (1) whether there is a valid agreement to arbitrate between the parties, and (2) if such an agreement exists, whether the dispute falls within its scope. Asset Acceptance, LLC v. Newby, 2014 Ark. 280, 437 S.W.3d 119. The threshold issue—and the one that is dispositive in this case—is whether...