Scott v. Kindred Transitional Care & Rehab. , 2016 Ohio 495 ( 2016 )

[Cite as Scott v. Kindred Transitional Care & Rehab., 2016-Ohio-495.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 103256
JOYCE THRASHER SCOTT, ADMINISTRATOR
PLAINTIFF-APPELLEE
vs.
KINDRED TRANSITIONAL CARE AND
REHABILITATION, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-13-816565
BEFORE: McCormack, J., Kilbane, P.J., and S. Gallagher, J.
RELEASED AND JOURNALIZED: February 11, 2016
ATTORNEYS FOR APPELLANT
Paul W. McCartney
Bonezzi, Switzer, Polito & Hupp Co., L.P.A.
312 Walnut Street
Suite 2530
Cincinnati, OH 45202
Jennifer R. Becker
Bonezzi, Switzer, Polito & Hupp Co., L.P.A.
1300 E. 9th Street
Suite 1950
Cleveland, OH 44114
ATTORNEYS FOR APPELLEES
Christopher M. Mellino
Meghan C. Lewallen
Margo Moore
The Mellino Law Firm L.L.C.
19704 Center Ridge Rd.
Rocky River, OH 44116
TIM McCORMACK, J.:
{¶1} Doris Thrasher (“Doris Thrasher” hereafter) was admitted into Kindred
Transitional Care and Rehabilitation-Stratford (“appellant” hereafter) for physical
rehabilitative care following a fall and hospitalization. Among the bundle of papers
signed by her daughter Joanne Thrasher at the time of admission was an arbitration
agreement. The arbitration agreement was not a condition for Doris Thrasher’s
admission to the facility.1
{¶2} Doris Thrasher died while in appellant’s care. Subsequently, the
administrator of her estate (“appellee” hereafter) 2 filed a lawsuit against appellant,
claiming negligence and wrongful death.
{¶3} Appellant filed a motion to stay proceedings and compel arbitration. The
trial court denied the motion. This appeal followed. Appellant raises one assignment
of error, arguing the trial court erred in denying its motion to stay proceedings and compel
arbitration.
{¶4} Arbitration is strongly favored as a method to settle disputes. Williams v.
Aetna Fin. Co., 83 Ohio St. 3d 464, 700 N.E.2d 859 (1998). Ohio courts recognize a
presumption for arbitration when the claim in dispute falls within the scope of the
Section K of the arbitration agreement states: “the execution of this Agreement is not a
1
precondition of admission * * * .”
The complaint was filed by John K. O’Toole, administrator of the estate of Doris Thrasher.
2
Plaintiff later substituted Joyce Thrasher Scott for John K. O’Toole.
arbitration provision. Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St. 3d 352,
2008-Ohio-938, 884 N.E.2d 12, ¶ 27. However, because arbitration is a matter of
contract, before a party can be bound by the terms of an arbitration agreement, there must
be an agreement that explicitly requires the arbitration of the parties’ dispute. AT&T
Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 648-649, 106 S. Ct.
1415, 89 L. Ed. 2d 648 (1986). Generally, a trial court’s decision to grant a stay pending
arbitration is reviewed under an abuse of discretion standard. We also keep in mind that
the validity of an arbitration agreement involves a mixed question of law and fact. Corl
v. Thomas & King, 10th Dist. Franklin No. 05AP-1128, 2006-Ohio-2956, ¶ 10.
{¶5} Here, it is undisputed that mother Doris Thrasher did not execute the
arbitration agreement herself. On appeal, appellant makes two arguments. Appellant
argues that Doris Thrasher’s daughter Joanne had actual authority to bind Doris Thrasher
because she signed the arbitration agreement as Doris Thrasher’s power of attorney.
Appellant argues that, in the alternative, Doris Thrasher’s daughter also had apparent
authority to bind Doris Thrasher under agency law.
Actual Authority
{¶6} “The relationship of principal and agent, and the resultant liability of the
principal for the acts of the agent, may be created by the express grant of authority by the
principal.” Master Consol. Corp. v. BancOhio Natl. Bank, 61 Ohio St. 3d 570, 574, 575
N.E.2d 817 (1991). “Express authority is that authority which isdirectly granted to or
conferred upon the agent or employee in express terms by the principal, and it extends
only to such powers as the principal gives the agent in direct terms * * *.” (Citation
omitted.) Master Consol. at 574.
{¶7} In arguing Doris Thrasher’s daughter had actual authority to enter into the
arbitration agreement, appellant points us to the following language above Doris
Thrasher’s daughter’s signature in the arbitration agreement: “If signed by a Legal
Representative, the representative certifies that the Facility may reasonably rely upon the
validity and authority of the representative’s signature based upon actual, implied or
apparent authority to execute this Agreement as granted by the resident.” Next to Doris
Thrasher’s daughter’s signature was a handwritten abbreviation of “P.O.A.” Appellant
argues that, because of this language, Doris Thrasher’s daughter had actual authority to
sign the arbitration agreement on behalf of Doris Thrasher as her agent. In her
deposition, Doris Thrasher’s daughter was asked about her signing the arbitration
agreement as her mother’s P.O.A. She testified that she did not even recall getting the
document; no one reviewed the document with her before she signed it; and she did not
understand that she was binding her mother to the terms of the document.
{¶8} “A power of attorney is a written instrument authorizing an agent to
perform specific acts on behalf of his principal.” Testa v. Roberts, 44 Ohio App. 3d 161,
164, 542 N.E.2d 654 (6th Dist.1988). As required by R.C. 1337.25, a power of attorney
must be signed by the principal (or, in the principal’s conscious presence by another
individual directed by the principal to sign the principal’s name on the power of attorney).
It is undisputed Doris Thrasher did not grant a power of attorney to her daughter in the
manner required under R.C. 1337.25. As such, Doris Thrasher’s daughter was not
expressly authorized to act on Doris Thrasher’s behalf. Her daughter’s signature and
notation of “P.O.A.” had no legal effect in the absence of a statutorily valid power of
attorney signed by Doris Thrasher.
{¶9} In a similar case, Templeman v. Kindred Healthcare, Inc., 8th Dist.
Cuyahoga No. 99618, 2013-Ohio-3738, this court found the power of attorney invalid
because the power of attorney form did not contain the principal’s signature, as required
by the statute. This court observed that defendant Kindred Healthcare was “conversant
with both the usages and the nature of the businesses of providing rehabilitative nursing
health care and compelling alternative dispute resolutions,” and must have been aware of
the requirement of a valid power attorney. Id. at ¶ 24.
{¶10} In the present case, there was not even a document purporting to be a power
of attorney. Appellant points to the “certification” language above Doris Thrasher’s
daughter’s signature to show she acted as her mother’s power of attorney. The
daughter’s “certification” that she had authority as power of attorney to enter into an
arbitration agreement on her mother’s behalf cannot vest her with actual authority in the
absence of a statutorily valid power of attorney.
Apparent Authority
{¶11} On appeal, appellant raises for the first time the argument that, even if Doris
Thrasher’s daughter was without actual authority to enter into the arbitration agreement,
she had apparent authority to do so.
{¶12} We first note that appellant based its argument before the trial court
exclusively on Doris Thrasher’s daughter’s signature on the arbitration agreement as
Doris Thrasher’s power of attorney. Appellant made no argument regarding apparent
authority before the trial court. We are precluded to hear a claim raised for the first time
on appeal. Jacubenta v. Cadillac Ranch, 8th Dist. Cuyahoga No. 98750,
2013-Ohio-586, ¶ 18. Even if appellant had not waived this argument, we find the claim
to be without merit.
{¶13} We recognize that, where one who is assuming to act as an agent for a party
in the making of a contract but in fact has no actual authority to do so, such party will
nonetheless be bound by the contract “‘if such party has by his words or conduct,
reasonably interpreted, caused the other party to the contract to believe that the one
assuming to act as agent had the necessary authority to make the contract.’” Master
Consol., 61 Ohio St. 3d at 576, 575 N.E.2d 817, quoting Miller v. Wick Bldg. Co., 154
Ohio St. 93, 93 N.E.2d 467 (1950). Stated differently, where “a person of ordinary
prudence, conversant with business usages, and the nature of the particular business is
justified in assuming that an agent is authorized to perform on behalf of his principal a
particular act, the principal is estopped from denying the agent’s authority to perform it.”
(Citation omitted.) Id.
{¶14} For a principal to be bound by the acts of his agent under the theory of
apparent agency, however, evidence must affirmatively show:
(1) that the principal held the agent out to the public as possessing sufficient
authority to embrace the particular act in question, or knowingly permitted
him to act as having such authority, and (2) that the person dealing with the
agent knew of those facts and acting in good faith had reason to believe and
did believe that the agent possessed the necessary authority.
Master Consol. at syllabus. Furthermore, under an apparent-authority analysis, it is the
acts of the principal, not those of the agent’s, that create apparent authority. Id. “The
principal is responsible for the agent’s acts only when the principal has clothed the agent
with apparent authority and not when the agent’s own conduct has created the apparent
authority.” Ohio State Bar Assn. v. Martin, 118 Ohio St. 3d 119, 2008-Ohio-1809, 886
N.E.2d 827, ¶ 41, citing Master Consol. at 576-577.
{¶15} Furthermore, the burden of proving that apparent authority exists rests upon
the party asserting the agency. Irving Leasing Corp. v. M&H Tire Co., 16 Ohio App. 3d
191, 475 N.E.2d 127 (2d Dist.1984). Therefore, in this case it is appellant’s burden to
establish that Doris Thrasher’s daughter had apparent authority to enter into the
arbitration agreement on Doris Thrasher’s behalf.
{¶16} This court was confronted with a similar fact pattern in Lang v.
Beachwood Pointe Care Ctr., 8th Dist. Cuyahoga No. 100109, 2014-Ohio-1238, ¶ 6,
appealnot accepted, 140 Ohio St. 3d 1415, 2014-Ohio-3785, 15 N.E.3d 884. This court
held that a nursing home resident did not cloak her stepdaughter with the requisite
apparent authority to bind her to the arbitration agreement, even though her stepdaughter
signed all the paperwork as part of the admission process.
{¶17} Similarly here, appellant fails to demonstrate either of the two prongs
required under an apparent-authority analysis. The record shows that Doris Thrasher’s
daughter handled the paperwork to have her mother admitted. Appellee points to evidence
showing that Doris Thrasher was alert, cognizant, and cooperative at admission.
Appellant, on the other hand, alleges Doris Thrasher suffered from dementia at the time.
Whether Doris Thrasher was competent or not, there is no evidence showing she held her
daughter out as possessing sufficient authority to bind her to an arbitration agreement that
she knew nothing about and the existence of which was not a precondition for admission
into appellant’s facility. See Lang at ¶ 6, citing Licata v. GGNSC Malden Dexter L.L.C.,
466 Mass. 793, 802, 2 N.E.3d 840 (2014). Appellant has not demonstrated the first
prong of the apparent-authority analysis.
{¶18} Under the second prong, appellant fails to prove that it, acting in good faith,
had reason to believe Doris Thrasher’s daughter possessed the necessary authority to bind
Doris Thrasher to a matter unrelated to the admission process. Appellant’s inserting
“certification” clause above the signature line on the arbitration agreement and ensuring
that Doris Thrasher’s daughter signed her name as “P.O.A.” — without explaining the
import of the certification — does not reflect that appellant had a good faith belief that
Doris Thrasher’s daughter possessed the necessary authority to bind Doris Thrasher to the
arbitration agreement. It reflects the opposite.
{¶19} As this court held in Lang, 8th Dist. Cuyahoga No. 100109,
2014-Ohio-1238, and as the Fourth District held in Primmer v. Healthcare Indus. Corp.,
4th Dist. Athens No. 14CA29, 2015-Ohio-4104, ¶ 26, the mere fact that a family member
signed other documents as part of the admission process did not cloak the family member
with the requisite apparent authority to bind the person admitted to a facility to an
arbitration agreement that he or she knew nothing about. Here, Doris Thrasher’s
daughter’s authority was determined by the daughter’s acts alone. There is nothing in
the record to indicate Doris Thrasher did anything affirmatively to clothe her daughter
with apparent authority to enter into the arbitration agreement. Appellant’s reliance on
Doris Thrasher’s daughter’s acts in signing all admission documents was misplaced
because a claim of apparent authority cannot be based on the purported agent’s acts.
{¶20} Appellant cites Brown v. Extendicare, Inc., 2015-Ohio-3059, 39 N.E.3d 896
(2d Dist.), to support its claim that Doris Thrasher’s daughter had apparent authority to
enter into the arbitration agreement. Brown is fundamentally distinguishable. In that
case, there were two separate admissions of the resident. In the first admission, the
resident’s daughter signed an admission agreement as the resident’s legal representative
for healthcare and financial decisions. In the second admission, the resident herself
signed the admission agreement, which also contained a designation of her daughter as
her legal representative for healthcare and financial decisions. Based on these
circumstances, the Second District held that the resident herself clothed her daughter with
the appearance of authority and knowingly permitted her daughter to act as agent on her
behalf.
{¶21} In the present case, Doris Thrasher’s name, no one else, was listed as the
sole financial agent in the admission paperwork. She at no time had ever signed any
document designating her daughter as her representative. There is otherwise no other
evidence showing she knowingly permitted her daughter to act with authority in matters
beyond her admission into the facility. Brown is factually distinguishable.
{¶22} Based on the foregoing analysis, we conclude the trial court did not err in
finding the language relative to a purported arbitration agreement was not binding on
Doris Thrasher and denying appellant’s motion to stay proceedings and compel
arbitration.
{¶23} Judgment affirmed.
It is ordered that appellee recover of appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
______________________________________________
TIM McCORMACK, JUDGE
MARY EILEEN KILBANE, P.J., and
SEAN C. GALLAGHER, J., CONCUR