Curto v. Illini Manors, Inc. , 405 Ill. App. 3d 888 ( 2010 )


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  •                           No. 3--10--0260
    _________________________________________________________________
    Filed December 7, 2010
    IN THE
    APPELLATE COURT OF ILLINOIS
    THIRD DISTRICT
    A.D., 2010
    MARILEE CURTO, an Administrator ) Appeal from the Circuit Court
    of the Estate of Charles Curto, ) of the 10th Judicial Circuit,
    Deceased                        ) Tazewell County, Illinois,
    Plaintiff-Appellee,        )
    )
    v.                         ) No. 09--L--116
    )
    ILLINI MANORS, INC., an         )
    Illinois Corporation, and       )
    PEKIN MANORS,                   ) Honorable
    ) Michael E. Brandt,
    Defendant-Appellant.       ) Judge, Presiding.
    _________________________________________________________________
    JUSTICE LYTTON delivered the judgment of the court, with
    opinion.
    Justices O'Brien and Wright concurred in the judgment and
    opinion.
    OPINION
    _________________________________________________________________
    Plaintiff, Marilee Curto, filed a complaint against defendant,
    Illini Manors, Inc., and Pekin Manors (Pekin Manors),1 under the
    Illinois Nursing Home Care Act (Nursing Home Care Act) (210 ILCS
    45/1-101 et seq. (West 2008)) for personal injuries her husband
    suffered while a resident at Pekin Manors and his wrongful death.
    Defendant moved to dismiss the complaint and compel arbitration.
    1
    The correct name of defendant is "UDI #10, LLC."
    The trial court denied the motion, and we affirm.
    On August 9, 2007, Marilee entered into a contract with Pekin
    Manors, a residential nursing home, to admit and care for her
    husband, Charles.      The contract named Charles as the resident and
    Marilee as the "Guardian/Responsible Party."              Marilee signed the
    form on the preprinted signature line which designated her as the
    "Legal Representative."         Charles did not sign the contract.
    The     parties   also     entered      into   a   separate   arbitration
    agreement, which provided that "any and all disputes arising
    hereunder shall be submitted to binding arbitration and not to a
    court for determination." In the arbitration agreement, each party
    waived   its   right   to   a    trial    by   jury.     Marilee   signed   the
    arbitration agreement above the line that stated "Signature of
    Resident Representative."         Charles did not sign the arbitration
    agreement.
    On August 13, 2009, Marilee filed a complaint against Pekin
    Manors pursuant to the Nursing Home Care Act for personal injuries
    Charles sustained while he was a resident.                The complaint also
    sought damages suffered by Charles' next of kin under the Wrongful
    Death Act (740 ILCS 180/1 et seq. (West 2008)).            It further alleged
    that Charles suffered pain and anguish, which subjected defendant
    to liability under the Survival Act (755 ILCS 5/27-6 (West 2008)),
    and that his heirs incurred expenses, which they were entitled to
    recover under the Rights of Married Persons Act (Family Expense
    2
    Act) (750 ILCS 65/15 (West 2008)).
    Pekin    Manors    filed     a   motion        to   dismiss    and     to   compel
    arbitration, asserting that the estate was contractually bound by
    the arbitration agreement Marilee signed when Charles was admitted.
    After    a   thorough     examination          of   authority      supporting      both
    positions, the trial judge denied the motion. The judge found that
    "the spouse is not an agent for the other spouse for purposes of an
    agreement    to   arbitrate."         He   concluded       that    the    arbitration
    agreement was not valid and enforceable because there was no
    indication that Marilee had the authority to bind Charles to the
    mandatory arbitration terms of the contract.
    STANDARD OF REVIEW
    Initially,     the    parties      dispute      the   standard       of     review.
    Generally, the issue we are asked to consider on an interlocutory
    appeal is whether there was a sufficient showing to sustain the
    order of the trial court granting or denying the relief sought.
    Onni v. Apartment Investment & Management Co., 
    344 Ill. App. 3d 1099
     (2003).      However, where the trial court does not make any
    factual findings, or the underlying facts are not in dispute and
    the court’s decision is based on a purely legal analysis, we review
    the trial court’s denial of a motion to stay the proceedings and
    compel   arbitration      de    novo.          La   Hood   v.     Central      Illinois
    Construction, Inc., 
    335 Ill. App. 3d 363
     (2002).                    Here, the trial
    court based its decision on the undisputed facts in the record.
    3
    Thus, our review of the issue is de novo.     See La Hood, 335 Ill.
    App. 3d at 364.
    ANALYSIS
    Pekin Manors claims that Marilee was Charles' agent and thus
    the agreement to arbitration is enforceable against him.          It
    contends that the evidence permitted a finding of agency based on
    (1) actual authority and (2) apparent authority.
    I.   Agency
    Whether a nonsignatory party is bound to an arbitration
    agreement is dictated by the ordinary principles of contract and
    agency.   Johnson v. Noble, 
    240 Ill. App. 3d 731
     (1992).        The
    spouse's signature on an arbitration agreement may bind a nursing
    home resident if the spouse has the authority to sign the document
    as the resident's agent.   The status of the parties as husband and
    wife, by itself, does not create an agency relationship.     Capital
    Plumbing & Heating Supply Co. v. Snyder, 
    2 Ill. App. 3d 660
     (1971).
    The agency of the spouse is a question of fact to be proved by
    direct or circumstantial evidence; there is no presumption that the
    wife has authority to act for the husband.   Fettes, Love & Sieben,
    Inc. v. Simon, 
    46 Ill. App. 2d 232
     (1964).   The scope and extent of
    an agency relationship depend on the terms of the agreement between
    the principal and the agent and the intention of the parties.
    Brown v. Kerber Packing Co., 
    342 Ill. App. 474
     (1951).     The party
    claiming an agency relationship must prove it by a preponderance of
    4
    the evidence.     Granite Properties Ltd. Partnership v. Granite
    Investment Co., 
    220 Ill. App. 3d 711
     (1991).
    A.   Actual Authority
    Pekin Manors first argues that Marilee had actual authority to
    bind Charles to the arbitration agreement because she signed the
    admission contract and the arbitration agreement as her husband's
    "representative."
    In any agency relationship, the principal can be legally bound
    by action taken by the agent where the principal confers actual
    authority on the agent.     Granite Properties, 220 Ill. App. 3d at
    714.     Actual authority may be express or implied.    Buckholtz v.
    MacNeal Hospital, 
    337 Ill. App. 3d 163
     (2003).     Express authority
    is directly granted to the agent in express terms by the principal
    and extends only to the powers the principal confers upon the
    agent.    United States v. Schaltenbrand, 
    930 F.2d 1554
     (11th Cir.
    1991).    Such authority may be granted through a written contract,
    a power of attorney or a court-ordered guardianship. Amcore Bank,
    N.A. v. Hahnaman-Albrecht, Inc., 
    326 Ill. App. 3d 126
     (2001) (power
    of attorney explicitly listed powers given to the attorney-in-
    fact); 755 ILCS 5/11a-17(a) (West 2006) (guardian has authority as
    provided in court order under provisions of Probate Act).    Implied
    authority, on the other hand, is actual authority circumstantially
    proved.    Buckholtz, 337 Ill. App. 3d at 172.    It arises when the
    conduct of the principal, reasonably interpreted, causes the agent
    5
    to believe that the principal desires him to act on the principal's
    behalf.     See Restatement (Second) of Agency §26 (1958).                 For
    example,    implied       authority    may     be   established    from    the
    circumstances of a case based on prior course of dealing of a
    similar nature between the alleged agent and principal or from a
    previous agency relationship.          Hartshorn v. State Farm Insurance
    Co., 
    361 Ill. App. 3d 731
     (2005); Linowiecki v. Wisniewski, 
    249 Ill. App. 474
     (1928).
    In   this   case,    Marilee's   signature     on   the   nursing   home
    documents did not confer express or implied authority on her.
    First, nothing in the record suggests that Charles gave Marilee
    express authority to make legal decisions on his behalf. The terms
    of the admission contract and the arbitration agreement did not
    give Marilee authority to act as Charles' agent, nor did Charles
    execute a power of attorney appointing Marilee as his agent for
    that purpose.      Second, Pekin Manors failed to demonstrate any
    implied authority.     No evidence indicates that Charles was present
    and directed Marilee to sign the arbitration agreement as his
    representative, nor is there any indication in the record that
    Charles knew Marilee signed the agreement and agreed to or adopted
    her   signature   as   his    own.     Thus,    Marilee’s   signature     as   a
    representative does not establish that she had actual authority to
    sign the arbitration agreement on Charles’ behalf.
    We recognize that this issue is one of first impression in
    6
    Illinois.   However, several other jurisdictions have addressed the
    authority of a spouse to bind a nursing home resident to an
    arbitration agreement and have reached similar dispositions.                        In
    Dickerson   v.     Longoria,         
    995 A.2d 721
       (Md.    2010),    a   personal
    representative signed an arbitration agreement on the resident's
    behalf when he was admitted to the nursing home.                         The Maryland
    Court of Appeals held that the representative, Dickerson, did not
    have actual authority to sign the arbitration agreement. The court
    concluded that Dickerson's reference to herself as the resident's
    "legal power of attorney" did not expand her authority absent some
    evidence    that    the    resident,         Bradley,   authorized,       adopted   or
    acquiesced to the statement.               The court specifically noted: "The
    fact that Dickerson signed the arbitration agreement at issue in
    this case certainly does not alter Dickerson's authority, as there
    is no evidence suggesting that Bradley authorized Dickerson to make
    this type of decision on his behalf."               Dickerson, 995 A.2d at 740.
    The    majority      of    jurisdictions       have   followed       Dickerson's
    reasoning and have concluded that a spouse or other family member
    did not have actual authority to sign an arbitration agreement on
    the resident's behalf.           Koricic v. Beverly Enterprises-Nebraska,
    Inc., 
    773 N.W.2d 145
     (Neb. 2009) (decedent's son did not possess
    authority necessary to sign arbitration agreement); Mississippi
    Care Center of Greenville, LLC v. Hinyub, 
    975 So. 2d 211
     (Miss.
    2008)   (daughter    did       not    have    authority    to   enter     arbitration
    7
    agreement where there was no declaration of resident's inability to
    manage his affairs and no power of attorney in the record); Mt.
    Holly Nursing Center v. Crowdus, 
    281 S.W.3d 809
     (Ky. Ct. App. 2008)
    (spouse   lacked    authority     to       bind   resident   to    arbitration
    agreement); Goliger v. AMS Properties, Inc., 
    19 Cal. Rptr. 3d 819
    (Cal. Ct. App. 2004) (daughter was not acting as mother's agent
    when she signed arbitration agreement without some evidence of
    authority beyond merely signing admission contracts).                  See also
    Compere's Nursing Home, Inc. v. Estate of Farish, 
    982 So. 2d 382
    (Miss. 2008); Sennett v. National Healthcare Corp., 
    272 S.W.3d 237
    (Mo. Ct. App. 2008); Ashburn Health Care Center, Inc. v. Poole, 
    648 S.E.2d 430
     (Ga. Ct. App. 2007); Flores v. Evergreen at San Diego,
    LLC, 
    55 Cal. Rptr. 3d 823
     (Cal. Ct. App. 2007); Landers v.
    Integrated Health Services of Shreveport, 39,739-CA (La. App. 2
    Cir. 5/11/05) 
    903 So. 2d 609
    ; Pagarigan v. Libby Care Center, Inc.,
    
    120 Cal. Rptr. 2d 892
     (Cal. Ct. App. 2002).
    Even where a health care power of attorney was present, courts
    have concluded     that   the   spouse      lacked   authority    to   sign   the
    arbitration agreement.      Those cases have held that a health care
    power of attorney granted for medical decisions does not confer
    authority to sign an arbitration agreement waiving legal rights.
    See Life Care Centers of America v. Smith, 
    681 S.E.2d 182
     (Ga. App.
    2009) (power of attorney granted to daughter for medical decisions
    did not grant authority to waive legal rights under arbitration
    8
    agreement); Lujan v. Life Care Centers of America, 
    222 P.3d 970
    (Colo. Ct. App. 2009) (health care proxy's decision to agree to
    arbitrate was unauthorized); Texas Cityview Care Center, L.P. v.
    Fryer, 
    227 S.W.3d 345
     (Tex. Ct. App. 2007) (medical power of
    attorney did not indicate that it was intended to confer authority
    to sign arbitration agreement). See also Monticello Community Care
    Center, LLC v. Estate of Martin, 
    17 So. 3d 172
     (Miss. Ct. App.
    2009); Moffett v. Life Care Centers of America, 
    187 P.3d 1140
    (Colo. App. 2008); Blankfield v. Richmond Health Care, Inc., 
    902 So. 2d 296
     (Fla. Dist. Ct. App. 2005).               But see Owens v. National
    Health   Corp.,   
    263 S.W.3d 876
           (Tenn.    2007)   (attorney-in-fact
    authorized to enter into arbitration agreement as part of contract
    admitting nursing home resident).
    As the trial court said in denying the motion to compel
    arbitration: "[T]he agreement to submit to binding arbitration is
    ultra vires of a power       of attorney for health care and the
    duty/power to provide for the nursing home spouse's medical needs."
    These cases support our conclusion that a spouse's signature
    on an arbitration agreement as the resident's representative does
    not demonstrate actual authority to bind a nursing home resident to
    the agreement. An actual agency relationship is controlled by the
    express authorization of the principal or implied conduct of the
    principal   and   agent.    The   principal's          conduct   is   crucial   to
    establish actual authority.       Such authority is not dictated by an
    9
    independent act or signature of the agent.                 Thus, absent some
    evidence that the resident gave the agent spouse authority to sign
    the agreement to arbitrate on his behalf, the resident is not bound
    by its terms.      By our decision today, we join the majority of
    states reviewing this issue.
    Nevertheless, Pekin Manors urges us to consider the decisions
    of a minority of courts that have enforced nursing home arbitration
    agreements signed by a family member.                Those cases follow the
    reasoning of Sovereign Healthcare of Tampa, LLC v. Estate of
    Huerta, 
    14 So. 3d 1033
     (Fla. Dist. Ct. App. 2009).                 In Sovereign
    Healthcare, the Florida appellate court held that a daughter-in-law
    had    the   authority   to   sign   a    contract   for   admission    on   the
    resident's behalf, including the arbitration agreement, in reliance
    on a durable power of attorney.           The durable power of attorney in
    that case included a catch-all provision giving the attorney-in-
    fact the authority "to sign any and all releases or consent
    required." Sovereign Healthcare, 
    14 So. 3d at 1035
    ; see also Triad
    Health Management of Georgia, III, LLC v. Johnson, 
    298 S.E.2d 785
    (Ga. 2009) (signature of patient's son on arbitration agreement was
    enforceable where son had general power of attorney executed by
    father); Five Points Heath Care, Ltd v. Mallory, 
    998 So. 2d 1180
    (Fla. Dist. Ct. App. 2008) (daughter had durable power of attorney
    to    prosecute,   defend     and   settle    all   actions   or   other   legal
    proceedings and to "do anything" regarding resident’s estate).
    10
    These cases, however, are distinguishable.          In each case, there is
    at least some evidence of actual authority granting general powers
    of attorney to the spouse or family representative.             Here, Pekin
    Manors    has   produced   neither   a    general   or   property   power   of
    attorney, nor an order of guardianship authorizing Marilee to
    administer her husband's legal affairs.              Thus, Marilee lacked
    actual authority to sign the arbitration agreement on Charles'
    behalf.
    B.     Apparent Authority
    Pekin Manors also claims that the arbitration agreement is
    valid because Marilee acted as her husband's apparent agent at the
    time of his nursing home admission. Pekin Manors argues that since
    Marilee made a health care decision for her husband to be placed in
    the nursing home and Charles remained in the nursing home, Charles
    consented to Marilee's authority to sign the arbitration agreement.
    In the absence of actual authority, a principal can be bound
    by the acts of a purported agent when that person has apparent
    authority to act on behalf of the principal.         Amcore Bank, 326 Ill.
    App. 3d at 137. Apparent authority arises when a principal creates
    a reasonable impression to a third party that the agent has the
    authority to perform a given act.         Crawford Savings & Loan Ass'n v.
    Dvorak, 
    40 Ill. App. 3d 288
     (1976).          To prove apparent authority,
    the proponent must show that (1) the principal consented to or
    knowingly acquiesced in the agent's exercise of authority, (2)
    11
    based on the actions of the principal and agent, the third party
    reasonably concluded that the agent had authority to act on the
    principal behalf, and (3) the third party justifiably relied on the
    agent's apparent authority to his detriment. Career Concepts, Inc.
    v. Synergy, Inc., 
    372 Ill. App. 3d 395
    , 404 (2007) (company's sales
    manager had apparent authority to sign contract with employee-
    placement agency where company authorized manager to enter other
    contracts and interview potential employees).                     In establishing
    apparent authority, it is critical to find some words or conduct by
    the principal that could reasonably indicate consent.                    Emmenegger
    Construction Co. v. King, 
    103 Ill. App. 3d 423
     (1982).                   An agent's
    authority    may   be     presumed    by   the    principal's     silence      if   the
    principal knowingly allows another to act for him as his agent.
    Elmore v. Blume, 
    31 Ill. App. 3d 643
    , 647 (1975).
    The record before us demonstrates that Charles never acted or
    conducted himself in a way that would indicate to Pekin Manors that
    Marilee was his apparent agent for purposes of the arbitration
    agreement.    There is no evidence showing that Charles was present
    when Marilee signed the agreement or that Charles understood
    Marilee was signing an agreement waiving his legal rights.                          The
    record   contains        no   words   or   conduct    by    Charles     that    would
    reasonably indicate consent. Thus, Pekin Manor failed to establish
    that   Marilee     had    apparent    authority      to    sign   the   arbitration
    agreement on her husband's behalf.               As a result, Marilee cannot be
    12
    required to arbitrate Charles' claims against the nursing home.
    Pekin Manors attempts to analogize this case to Strino v.
    Premier Healthcare Associates, P.C., 
    365 Ill. App. 3d 895
     (2006).
    In that case,    parents of a newborn filed a medical negligence case
    against the obstetrician that delivered the baby Cesarian section.
    The jury found the mother was contributorily negligent due to the
    father's decision to decline the use of forceps for a vaginal
    delivery.       On   appeal,    the   parents   claimed   that   the   agency
    instruction was error.         The reviewing court disagreed, finding an
    agency relationship based on the father's blatant refusal to allow
    the doctor to use forceps, the mother's presence in the operating
    room and her silence when the doctor requested her permission to
    use forceps.     Strino, 365 Ill. App. 3d at 902.
    The facts in this case are dissimilar.           The record does not
    indicate that Charles was present when Marilee signed the contracts
    on his behalf.       And neither party suggests that the nursing home
    staff asked Charles to agree to the terms of the arbitration
    agreement. Without some evidence of an agency relationship, he
    cannot be bound by the arbitration agreement.
    II.   Marilee's Personal Claims
    In the alternative, Pekin Manors argues that Marilee is
    obligated to arbitrate her personal claims for wrongful death and
    medical expenses because she had the authority to bind herself to
    the agreement.       We disagree.
    13
    Marilee     signed    the     arbitration     agreement        as   "Resident
    Representative."          Marilee   did    not   sign   the   agreement     in   her
    individual capacity.        She signed the agreement as a representative
    of the beneficiary, Charles.         Thus, Marilee's signature carries no
    legally binding weight regarding the arbitration of her personal
    claims against the nursing home under the Wrongful Death Act or the
    Family Expense Act.         See Ward v. National Healthcare Corp., 
    275 S.W.3d 236
     (Mo. 2009) (arbitration clause signed by daughter did
    not preclude daughter's personal wrongful death claim); Goliger,
    
    19 Cal. Rptr. 3d at 821
    .
    CONCLUSION
    Because Marilee lacked authority to enter into the arbitration
    agreement on behalf of Charles, the arbitration agreement is
    invalid.       Therefore, Marilee is not required to arbitrate her
    claims against Pekin Manors.          In light of our holding on the issue
    of   agency,    it   is   unnecessary     for    this   court   to    address    the
    remaining issues raised on appeal.
    The judgment of the circuit court of Tazewell County denying
    the motion to dismiss and compel arbitration is affirmed.                        The
    cause is remanded to the circuit court for further proceedings
    consistent with this opinion.
    Affirmed and remanded.
    14