Progressive Eldercare Servs.-Chicot Inc. v. Long , 449 S.W.3d 324 ( 2014 )

Cite as 2014 Ark. App. 661ARKANSAS COURT OF APPEALS
DIVISION I
No. CV-14-401
PROGRESSIVE ELDERCARE Opinion Delivered November 19, 2014
SERVICES – CHICOT, INC., D/B/A
LAKE VILLAGE REHABILITATION
AND CARE CENTER AND CHICOT APPEAL FROM THE CHICOT
OPERATIONS, LLC D/B/A LAKE COUNTY CIRCUIT COURT
VILLAGE REHABILITATION AND [NO. CV-12-80]
CARE CENTER
APPELLANTS
V. HONORABLE DON GLOVER,
JUDGE
SUE LONG, AS THE
ADMINISTRATOR FOR THE ESTATE AFFIRMED
OF MARION L. “SUGAR” LONG,
DECEASED
APPELLEE
DAVID M. GLOVER, Judge
Appellee, Sue Long, as administrator for the estate of her husband, Marion L. “Sugar”
Long, filed suit against appellants, Progressive Eldercare Services—Chicot, Inc. d/b/a Lake
Village Rehabilitation and Care Center and Chicot Operations, LLC d/b/a Lake Village
Rehabilitation and Care Center (Progressive), seeking damages for negligence and wrongful
death. Progressive filed a motion to compel arbitration, which the trial court denied. In
denying the motion to compel, the trial court determined that Sue Long did not have actual
or apparent authority to sign the arbitration agreement. The trial court further determined
that Marion Long was not a third-party beneficiary of the agreement that was executed by
Sue Long. Progressive does not appeal the decision regarding lack of authority. Rather, the
Cite as 2014 Ark. App. 661two issues it raises in this appeal both challenge the trial court’s decision regarding third-
party-beneficiary status: 1) under Arkansas contract law, the third-party-beneficiary doctrine
applies to enforce an arbitration agreement against a nursing-home resident when the
agreement was entered into between the responsible party and the nursing-home defendant;
2) persuasive authority from the U.S. District Court for the Western District of Arkansas and
other state and federal jurisdictions further supports applying the third-party-beneficiary
doctrine to compel arbitration in these circumstances. We affirm the trial court’s denial of
the motion to compel arbitration.
Background
In its February 6, 2014 order, the trial court explained the context in which the case
arose and its rationale for denying the motion to compel. On July 7, 2010, Marion Long,
Sue’s husband and the decedent in this case, became a resident of the Lake Village
Rehabilitation and Care Center. When he was admitted, Sue Long signed all of the required
documents, including an arbitration agreement. Marion Long resided at the center until on
or about September 1, 2010, when appellant Progressive Eldercare Services—Chicot, Inc.,
assumed control and operation of the facility. It is undisputed that Sue Long did not have
a power of attorney or any court or legal document authorizing her to serve as Marion
Long’s agent, i.e., to sign on his behalf. It is also undisputed that Marion Long was
incapacitated and confused at the time of his admission, preventing him from being able to
understand the contents of the admission forms and to make care and treatment decisions,
even though he had not been declared mentally incompetent. None of the admission
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Cite as 2014 Ark. App. 661documents were ever executed by Marion Long; rather, they were executed by Sue Long.
The arbitration agreement signed by Sue provides in part:
The facility and Patient or Legal Representative agree to first utilize the Facility
Grievance process to resolve all concerns, but if not satisfied, there is agreement to
participate in arbitration to settle a dispute between the parties. Arbitration assists in
the resolution of the concern faster and less expensive then litigating the dispute in the
courts. An unrelated and unbiased individual, the arbitrator, is selected by the Patient
or Legal Representative and the Facility, to hear the dispute. Specifically, the Patient
or Legal Representative will select the Arbitrator from a list of five names provided
by the Nursing Facility. The patient or Legal Representative may select the
Arbitrator from this list or propose list of five names to serve as the Arbitrator to the
Nursing Facility for its selection. The list must contain the names of certified
Arbitrators with five or more years of experience and be licensed Arkansas attorneys
whose offices are located within the State of Arkansas. The Nursing Facility will
contact the selected Arbitrator and finalize the appointment. The Resident or Legal
Representative will have the right to be represented by an attorney at the Arbitration
hearing. Each party shall bear its own expenses of preparing for and participation in
the Arbitration. The Nursing Facility will pay the Arbitrator’s fee and the court
reporter’s fee. The decision of the arbitrator binds both parties and is final.
She signed her name on a line under which was printed, “Patient or Legal Representative.”
In explaining its rationale for denying the motion to compel arbitration, the trial court
explained that it considered the dispositive issue to be whether Sue Long had actual or
apparent authority to sign the arbitration agreement. As noted earlier, the trial court
concluded that she did not, and that decision is not challenged in this appeal. The trial court
then addressed Progressive’s contention that the arbitration agreement was binding because
Marion Long was a third-party beneficiary to the agreement that was executed by his wife,
Sue Long. The trial court stated that it was not persuaded by the argument and denied the
motion to compel.
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Cite as 2014 Ark. App. 661Our jurisdiction to hear this appeal is pursuant to Rule 2(a)(12) of the Arkansas Rules
of Appellate Procedure–Civil and Arkansas Code Annotated section 16-108-228(a)(1),
whereby interlocutory appeals from orders denying motions to compel arbitration are
permitted. See also Courtyard Gardens Health & Rehab., LLC v. Quarles, 2013 Ark. 228, 428
S.W.3d 437. We review a trial court’s order denying a motion to compel arbitration de
novo on the record. Id.Because both of Progressive’s points of appeal challenge only the denial of third-party-
beneficiary status to Mr. Long, with the first point relying upon Arkansas law and the second
point relying upon cases from other jurisdictions, we can most easily address them together.
Progressive contends that there are two elements that are necessary in order to apply
the third-party-beneficiary doctrine under Arkansas law: 1) there must be an underlying valid
agreement between two parties (citing Andrews v. Victor Metal Prods. Corp., 239 Ark. 763, 394
S.W.2d 123 (1965)), and 2) there must be evidence of a clear intention to benefit a third
party (citing Perry v. Baptist Health, 358 Ark. 238, 189 S.W.3d 54 (2004)). We do not
disagree. Rather, the problem we have with Progressive’s argument is that we do not have
to go any further than the first element to conclude that the doctrine does not apply here.
There is not a valid underlying agreement between two parties.
Sue Long signed the admission documents, particularly the arbitration agreement, in
her representative capacity, not her individual capacity. The documents were clearly
designed to be signed by the patient himself or his “Legal Representative.” In its amended
motion to compel arbitration, Progressive stated, “Sue Long, as Mr. Marion Long’s
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Cite as 2014 Ark. App. 661representative, executed a binding Arbitration Agreement with the intent to encompass the
claims made in [the] complaint.” (Emphasis added.) A copy of the arbitration agreement
was attached to the motion and incorporated by reference. As determined by the trial court,
however, she was not authorized to sign the documents as Mr. Long’s representative. That
decision has not been challenged in this appeal. Consequently, the underlying agreements
were not valid, and without that first prong, the third-party-beneficiary doctrine does not
apply.
With respect to the cases decided in other jurisdictions and relied upon by
Progressive, it is axiomatic that we are not compelled to follow their holdings, and more
importantly, we did not find them convincing under the circumstances presented here.
Affirmed.
PITTMAN and WHITEAKER, JJ., agree.
Kutak Rock LLP, by: Mark W. Dossett, Jeff Fletcher, and Max Deitchler, for appellants.
David A. Couch, PLLC, by: David A. Couch, for appellee.
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