April 14, 2022

In its unpublished opinion dated February 16, 2022, the Court of Appeal of the State of California First Appellate District Division Five (“California Appellate Court”) held: “We agree with the trial court that the plaintiffs are not bound by an arbitration agreement signed by Debbie admitting Gary into Windsor’s facility, because Windsor did not prove that Debbie had the authority to act as Gary’s agent for this purpose. We also conclude the trial court, and not the arbitrator, properly made this determination. We affirm.”

The Underlying Facts

Gary was admitted to a skilled nursing facility in 2019 at the age of 66 for rehabilitation following the partial amputation of his foot due to diabetes, and he died after a series of physical ailments culminating in sepsis caused by a bed sore. Windsor Oakridge Healthcare Center, LP d.b.a. Windsor Healthcare Center of Oakland (“Windsor”) filed a motion to compel arbitration, alleging that Debbie, as Gary’s authorized representative, had signed a separate arbitration agreement on his behalf in connection with his admission to the Windsor facility. They attached the arbitration agreement signed by Debbie, in which she certified, “By virtue of Resident’s consent, instruction and/or durable power of attorney, I hereby certify that I am authorized to act as Resident’s agent in executing and delivering of this arbitration agreement. I acknowledge that the facility is relying on this representation.” Windsor did not present any evidence that Debbie was a conservator or guardian of Gary, that Gary was incapacitated in any way at the time of his admission, or that Debbie was acting pursuant to a power of attorney.

California Appellate Court Opinion

Who Decides If Agreement To Arbitrate?

The California Appellate Court stated, “The language cited by Windsor would be clear and unmistakable evidence of an intent to delegate the issue of arbitrability from the court to the arbitrator if it had been demonstrated that Gary actually entered into the arbitration agreement which contains the delegation clause … When a party seeks to compel arbitration, the trial court—not the arbitrator—must initially determine in a summary proceeding whether an agreement to arbitrate exists … Although in this case the contract on which the motion to compel arbitration is based contains an arbitration clause, that clause is only effective if it was signed by the principal or a person who had authority to bind the principal. Otherwise, it cannot be said that the principal agreed to arbitrate the case … the court properly determined the threshold question of whether there was an agreement to arbitrate.”

Was Debbie Gary’s Agent?

The California Appellate Court further stated, “It is undisputed that Debbie was the person who signed the arbitration agreement on behalf of Gary, that she was not his conservator or guardian and that she was not acting under a power of attorney … This leaves the question of whether Debbie was otherwise Gary’s agent … while there was evidence from which it could be inferred that Debbie had represented that she was Gary’s agent when she signed the arbitration agreement (the agreement said as much), there was no evidence from which the court could infer that Gary authorized Debbie to act on his behalf. Thus, there was no evidence that Gary, who apparently was in full possession of his capacities, was bound by the arbitration agreement signed by Debbie.”

Furthermore, “there was a possibility of conflicting rulings if Debbie’s claims were arbitrated because the claims of Gary and Allison were not subject to arbitration and presented common issues of law and fact … Section 1281.2, subdivision (c) provides that arbitration will be ordered when there is an agreement to arbitrate unless “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact” … We also note that because Debbie signed the arbitration agreement in her capacity as Gary’s representative (a status that has been properly found by the trial court not to exist), the agreement did not purport to bind Debbie in her individual capacity.”

Source Naganuma v. Windsor Oakridge Healthcare Center, LP, A162113.

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