Newsletter – July 2019
In a recent California Court of Appeal decision, the justices confronted questions of agency and authority when a husband signed arbitration agreements for his wife. Valentine v. Plum Healthcare Group, LLC, et al., No. C080940 (Ct. App. July 2, 2019) illustrates the courts’ power not to enforce an arbitration agreement when someone signs on another person’s behalf and the agreement does not bind all parties to the lawsuit.
Facts of the Case
Shortly after Lila Valentine entered a skilled nursing facility, her husband Roy signed several admissions documents on her behalf. The documents included two arbitration agreements. According to the facility’s admissions coordinator, Lila purportedly could not sign the documents herself because she had broken her shoulder and had episodes of confusion. Roy signed the documents in Lila’s presence, and Lila did not object. But Roy later said that the admissions coordinator did not tell him what the documents were, did not say that they contained arbitration agreements, and did not ask Roy if Lila was capable of signing them herself. According to Roy, Lila was capable of making her own health care decisions and was not aware that Roy was signing arbitration agreements for her.
The arbitration agreements stated that the patient, the facility, and their “heirs, representatives, executors, administrators, successors, and assigns” would be bound to arbitrate medical malpractice and all other claims. In addition, the agreements attempted to bind the patient’s representative, requiring arbitration of the patient’s claims and the representative’s individual claims if the representative signed the agreements instead of the patient.
Lila became very ill at the facility and later died at the hospital. Roy and his family then filed suit against the facility for elder abuse, violation of the Patients’ Bill of Rights, wrongful death caused by reckless neglect and abuse, and negligent infliction of emotional distress. The facility filed a petition to compel arbitration, which the trial court denied and the Court of Appeal confirmed.
Why Couldn’t the Facility Require Arbitration of the Valentine Family’s Claims?
Both the trial court and the Court of Appeal found that the arbitration agreements were valid as to Roy. The facility did not show, however, that Roy signed the agreements as Lila’s agent. Rather, Lila made no indication at all that Roy was authorized to execute arbitration agreements for her. The facility had no reason to believe, based on Roy’s, Lila’s, and family members’ actions, that Roy had the actual or ostensible authority to act on Lila’s behalf in signing the agreements.
Instead, because the agreements also bound a patient’s “heirs, representatives, executors, administrators, successors, and assigns”, Roy was bound in his capacity as Lila’s successor in interest. The agreements did not bind the rest of the Valentine family because Roy did not sign them as Lila’s agent, which potentially could have bound her heirs.
Although Roy was subject to the arbitration agreements as Lila’s successor in interest, the courts agreed that conflicting rulings could arise in the arbitration and the court case if Roy was compelled to arbitration but the family stayed in court. The family might obtain a favorable factual or legal finding while Roy obtained an unfavorable one, or vice versa. As a result, the Court of Appeal and trial court decided not to enforce the arbitration agreements.