Judge: Armen Tamzarian, Case: 23STCV03032, Date: 2023-10-19 Tentative Ruling
Case Number: 23STCV03032 Hearing Date: October 19, 2023 Dept: 52
Defendants The Earlwood, LLC, Newgen
Administrative Services, LLC, and BQ Operations Holdings LLC’s Motion to Compel
Arbitration
Defendants
The
Earlwood, LLC, Newgen Administrative Services, LLC (Newgen), and BQ Operations
Holdings LLC (BQ) move to compel
arbitration and stay this action by plaintiff Jane Abrams as an individual and
as successor-in-interest for Jeff Abrams.
Claims by Jeff Abrams Against The Earlwood, LLC
Defendants
do not meet their burden of showing Jeff Abrams agreed to arbitrate disputes
with them. Jeff Abrams did not sign the
arbitration agreement. (Pedraza Decl.,
Ex. A.) Defendants rely on the theory
that Jane Abrams acted as Jeff Abrams’ agent in signing the arbitration
agreement on his behalf. “Generally, a
person who is not a party to an arbitration agreement is not bound by it.” (Flores v. Evergreen at San Diego, LLC
(2007) 148 Cal.App.4th 581, 587 (Flores).) But “a person who is authorized to act as the
patient’s agent can bind the patient to an arbitration agreement.” (Ibid.) Jane Abrams signed the agreement as the “Patient’s
Representative” and “as power of attorney, legal guardian or agent authorized
to bind Patient to this Agreement.” (Pedraza
Decl., Ex. A, p. 5.)
Defendants present insufficient evidence of conduct
by Jeff Abrams authorizing Jane Abrams to act as his agent. “[A]n agency cannot be created by the conduct
of the agent alone; rather, conduct by the principal is essential to
create the agency. Agency ‘can be
established either by agreement between the agent and the principal, that is, a
true agency [citation], or it can be founded on ostensible authority, that is,
some intentional conduct or neglect on the part of the alleged principal
creating a belief in the minds of third persons that an agency exists, and a
reasonable reliance thereon by such third persons.’ ” (Flores, supra, 148 Cal.App.4th at pp.
587-588.) “The party seeking to compel
arbitration does not meet its burden of proving the existence of an arbitration
agreement when it does not present any evidence that the purported principal’s
conduct caused the agent or the third party to believe that the agent had the
authority to bind the principal.” (Rogers
v. Roseville SH, LLC (2022) 75 Cal.App.5th 1065, 1075 (Rogers).)
A. Actual Agency
Defendants
rely in part on the doctrine of actual agency.
“Actual agency arises when the principal’s conduct causes the agent
reasonably to believe that the principal consents to the agent’s act on behalf
of the principal.” (Rogers, supra,
75 Cal.App.5th at p. 1074.)
Defendants argue Jeff Abrams authorized Jane Abrams
to enter binding arbitration agreements on his behalf pursuant to his advance
healthcare directive. (Schroeder Decl.,
Ex. D.) In that document, Jeff Abrams
appointed Jane Abrams as his agent “to make healthcare decisions for” him. (Id., § 1.1.) The directive provides, “My agent shall have
the power to execute contracts that bind me to arbitration and the power to
submit to arbitration.” (Id., §
1.11.)
That authority, however, required a condition
precedent. The advance healthcare
directive provides, “Period During
Which Agent’s Authority Is Effective My agent’s authority becomes effective when
my primary physician determines that I am unable to make my own health care
decisions.” (Schroeder Decl., Ex. D, §
1.4.) Defendants present no evidence
Jeff Abrams’ primary physician made that determination.
The facts in Goldman v. Sunbridge Healthcare,
LLC (2013) 220 Cal.App.4th 1160 (Goldman) are analogous.
There, the patient’s “advance directive expressly reserved to him the
right to make his own decisions until and unless he became incapacitated.” (Id. at p. 1172.)
The Court of Appeal noted “there is no evidence [the patient’s] primary
care physician ever declared [the patient] to lack capacity to make his own
decisions.” (Id. at p. 1170.)
“A determination of incapacity cannot be tacit.” (Ibid.)
Young v. Horizon West,
Inc. (2013) 220 Cal.App.4th 1122 (Young) further supports plaintiff’s position. There, the patient’s advance health care
directive “provided that when plaintiff’s primary physician determined that she
was unable to make her own health care decisions, her ‘agent’ was authorized to
make specified health care decisions for her.”
(Id. at p. 1128.)
It was undisputed “that plaintiff's physician never made this
determination.” (Ibid.) The court
reasoned that purported evidence of the patient’s “complete incapacity and need
for [the agent’s] intervention … does not substitute for satisfaction of the
condition stated in the terms of plaintiff’s advanced health care directive.” (Ibid.)
Defendants argue, “[W]hile it is true that in” Goldman and Young, “the Court of Appeal found there to be no
evidence of incapacity which, per the language of the Goldman and Young advance healthcare directives, is what triggered
the need for agent intervention, that is simply not the case here.” (Reply, p. 5.) Defendants do not identify or cite any
evidence in the record showing that is not the case here. They present no evidence showing Jeff Abrams’
primary physician determined he was unable to make his own healthcare
decisions. Defendants instead rely on “additional
evidence, beyond the [Advance Healthcare Directive], of Mr. Abrams designating
his wife as his ‘Power of Attorney for Health Care.’ ” (Ibid.)
That additional evidence does not establish actual
agency. The court first notes that “[n]ew
evidence is generally not permitted with reply papers.” (Valentine v. Plum Healthcare Group, LLC
(2019) 37 Cal.App.5th 1076, 1089 (Valentine).) Defendants
present a document titled “home health admission consent.” (Schroeder Decl., Ex. E.) The
agreement includes a line stating, “I have made an Advance Health Care
Directive”, followed by the option for “Yes” filled out, and “(If yes, provide
a copy to the agency.)” (Id., p
1.) The next line states, “I have a
Power of Attorney for Health Care,” with the option for “Yes” filled out. (Id., ¶ 2.) Under that line, the agreement states, “Name
of Power of Attorney for Health Care: Jane Abrams.” (Ibid.)
Based on this document, defendants argue, “Mr.
Abrams personally confirmed in writing to his Home Health provider that he made
an Advance Healthcare Directive and that Jane Abrams held ‘Power of Attorney
for Health Care’ over him.” (Reply, p.
5.) But they have no evidence Jeff Abrams
personally filled out or signed those statements. Defendants
present “no authentication of the signatures” and “no eyewitness testimony of
the document’s execution or modification.”
(Valentine, supra, 37 Cal.App.5th at p. 1090.) They rely solely on the certification by
Torrance Home Health and Hospice’s custodian of records (Supp. Schroeder Decl.,
¶ 2, Ex. E, p. 1), but there is no evidence the custodian of records has
personal knowledge that Jeff Abrams signed the admission agreement.
After the portion discussed above, the document has
a line with an unchecked box before the text, “Patient unable to sign due to: .” (Supp. Schroeder Decl., Ex. E, p. 2.) Under that, the document has a signature box
labeled, “Patient/Representative/Le [sic].”
(Ibid.) Inside the
box is an illegible signature. (Ibid.) Though the
box for “Patient unable to sign” is not checked, defendants present no evidence
the signature below belongs to Jeff Abrams.
The document also has a separate page with a
section for the patient’s signature. (Supp.
Schroeder Decl. Ex, E, p. 4.) That
section provides, “I, Abrams, Jeffrey, have been informed of my right to choose
a Home Health/Hospice Agency. I have
chosen Torrance Memorial Home Health and Hospice as my home health/hospice
provider. [¶] Authorized Representative signature [blank,
¶] Relationship to Patient [blank, ¶] Reason for Representation [blank, ¶]
Patient’s Signature” followed by another illegible signature. (Ibid.) Assuming
defendants presented evidence that Jeff Abrams signed that portion of the
document, that section makes an independent assertion about the patient’s
choice of his home health or hospice provider.
It does not clearly indicate he consented to everything on the prior
pages or made those assertions.
Defendants have not met their burden of showing Jeff Abrams gave Jane
Abrams actual authority to enter the arbitration agreement on his behalf.
Even assuming the admission agreement were
admissible and Jeff Abrams signed it, it expressly refers to the separate “Advance
Health Care Directive” and notes the patient was required to “provide a copy to
the agency.” (Supp. Schroeder Decl., Ex.
E, p. 2, ¶ 1.) As discussed above, that
directive only gave Jane Abrams power to bind Jeff Abrams to arbitration
agreements after a finding by his primary physician that he was unable to make
his own healthcare decisions. Signing
the admission agreement with Torrance Memorial Home Health and Hospice would
not supersede that condition precedent.
Doing so would instead refer to and incorporate the terms of his advance
healthcare directive.
B. Ostensible Agency
Defendants
also do not present sufficient evidence for ostensible agency. “The ostensible authority of an agent cannot
be based solely upon the agent’s conduct.”
(Kaplan v. Coldwell Banker Residential Affiliates, Inc. (1997) 59
Cal.App.4th 741, 747.) “The person
dealing with the agent must do so with belief in the agent’s authority and this
belief must be a reasonable one; such belief must be generated by some act or
neglect of the principal sought to be charged; and the third person in relying
on the agent’s apparent authority must not be guilty of negligence.” (Associated Creditors' Agency v. Davis
(1975) 13 Cal.3d 374, 399.)
Defendants again rely on the admission agreement
with Torrance Memorial Home Health and Hospice.
In addition to the defects discussed above, this agreement fails to show
ostensible agency for another reason. There
is “no evidence the document was seen, possessed, or
relied upon by defendants.” (Valentine,
supra, 37
Cal.App.5th at p. 1090.) The document is
an admission agreement with Torrance Memorial Home Health and Hospice—not
defendants. (Supp. Schroeder Decl., Ex.
E.) The custodian of records executed
the certification on June 20, 2023 (id., p. 1), nearly two years after Jane Abrams
signed the arbitration agreement as Jeff Abrams’ personal representative. Defendants did not know about this conduct by
Jeff Abrams. That conduct therefore could
not cause defendants to reasonably believe Jane Abrams had authority to act on
behalf of her husband. Nothing in the
record shows conduct by Jeff Abrams that would permit defendants to reasonably
believe Jane Abrams had ostensible authority to bind him.
Jane Abrams’ Cause of Action Against The Earlwood,
LLC
The
Earlwood, LLC is entitled to compel Jane Abrams to arbitrate the fourth cause
of action for wrongful death. Plaintiff Jane
Abrams argues the arbitration agreement does not bind her because there was no
consideration between her and The Earlwood as required for an enforceable
contract. The arbitration agreement was
supported by consideration. “Any benefit
conferred, or agreed to be conferred, upon the promisor, by any other person,
to which the promisor is not lawfully entitled, or any prejudice suffered, or
agreed to be suffered, by such person, other than such as he is at the time of
consent lawfully bound to suffer, as an inducement to the promisor, is a good
consideration for a promise.” (Civ.
Code, § 1605; see Property California SCJLW One Corp. v.
Leamy (2018) 25 Cal.App.5th 1155, 1165 [“Consideration
is present when the promisee confers a benefit or suffers a prejudice”].)
Both The Earlwood, LLC and Jane Abrams gave
consideration: each suffered the detriment of giving up the right to a jury
trial. The arbitration agreement
provides, “Both parties to this contract, by entering into it, are giving up
their constitutional right to have any such dispute decided in a court of law
before a jury, and instead are accepting the use of arbitration.” (Pedraza Decl., Ex. A, p. 1, art. 1.) Such “mutual, obligating promises to
arbitrate” constitute valid consideration.
(Garner v. Inter-State Oil Company (2020) 52 Cal.App.5th 619, 625.)
Moreover, Jane Abrams did not only sign the
arbitration agreement as a purported agent for Jeff Abrams. She also signed the agreement on her own
behalf. Under her signature, the
agreement provides, “Signature of Patient’s Representative in his/her individual
capacity and in his/her capacity as power of attorney, legal guardian or agent
authorized to bind Patient to this Agreement.”
(Pedraza Decl., Ex. A, p. 5.)
Claims Against Nonsignatory Defendants
Plaintiff argues defendants Newgen Administrative
Services, LLC and BQ Operations Holdings LLC cannot enforce the arbitration
agreement because they did not sign it. “[N]onsignatory
persons who are agents or alter egos of a signatory party or intended third
party beneficiaries of an arbitration agreement” may enforce the
agreement. (Bouton v. USAA Casualty
Ins. Co. (2008) 167 Cal.App.4th 412, 424.)
Newgen and BQ may enforce the agreement against Jane Abrams both as
agents and as intended third party beneficiaries.
The arbitration agreement provides, “It is the
parties’ intention that this Agreement shall inure to the direct benefit of and
bind the Center, its direct and indirect parent companies, affiliates, direct
and indirect subsidiary companies, owners, landlords, administrative service
providers, management companies, officers, directors, joint ventures,
co-adventurers, partners, medical directors, employees, successors, assigns and
agents… .” (Pedraza Decl., Ex. A, p. 3,
§ 17.)
Newgen and BQ may enforce the agreement as agents
of The Earlwood, LLC. “[A] nonsignatory
sued as an agent of a signatory may enforce an arbitration agreement.” (Rowe v. Exline (2007) 153 Cal.App.4th
1276, 1284.) Plaintiff’s complaint
alleges Newgen and BQ “provided management services to the FACILITY and in so
doing shared control of the operation of the FACILITY.” (Comp., ¶ 4.)
Plaintiff thus alleges Newgen and BQ were “administrative service
providers,” “management companies,” or “agents” of The Earlwood, LLC.
Newgen and BQ may also enforce the arbitration
agreement as third party beneficiaries. “A
third party may qualify as a contract beneficiary where the contracting parties
must have intended to benefit that individual, an intent which must appear in
the terms of the agreement.” (Principal
Mut. Life Ins. Co. v. Vars, Pave, McCord & Freedman (1998) 65
Cal.App.4th 1469, 1486.) “The third
party need not be identified by name. It
is sufficient if the claimant belongs to a class of persons for whose benefit
it was made.” (Ibid.) The provision quoted above expressly states
the parties intended to benefit The Earlwood, LLC’s administrative service
providers, management companies, partners, or agents. Though the arbitration agreement does not
identify Newgen or BQ by name, they belong to the covered classes of entities.
The
circumstances in Laswell v. AG Seal Beach, LLC (2010) 189 Cal.App.4th
1399 (Laswell) are analogous. There,
the Court of Appeal reasoned, “According to [plaintiff’s] own allegations, all
of the defendants are related Country Villa entities. AG Seal Beach, LLC, the licensee and operator
of the facility doing business as Country Villa Seal Beach Healthcare Center,
entered into a management agreement with Country Villa Service Corporation,
doing business as Country Villa Health Services, to operate the facility.” (Id. at p. 1407.) “[T]he substance of [plaintiff’s] allegations
is that all of the defendants are responsible for the improper care that she
received while she resided at Country Villa Seal Beach Healthcare Center,
demonstrating her claims against all defendants are based on the same facts and
theory and are inherently inseparable.”
(Ibid.) The court concluded,
“Under these circumstances,” the nonsignatory defendants “can enforce the
arbitration agreement against” plaintiff.
(Ibid.)
Plaintiff’s
complaint makes similar allegations about the nonsignatory defendants in this
action. Plaintiff’s opposition criticizes Laswell (Opp., pp. 8-9)
but provides no contrary authority.
Separate Proceedings
Plaintiff argues the court should deny this motion
even if part of the action is subject to arbitration. If “[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,” the court has discretion to choose one of four options. (CCP § 1281.2(c).) The court: “(1) may refuse to enforce the
arbitration agreement and may order intervention or joinder of all parties in a
single action or special proceeding; (2) may order intervention or joinder as
to all or only certain issues; (3) may order arbitration among the parties who
have agreed to arbitration and stay the pending court action or special
proceeding pending the outcome of the arbitration proceeding; or (4) may stay
arbitration pending the outcome of the court action or special
proceeding.” (CCP § 1281.2.)
The causes
of action by decedent Jeff Abrams against defendants are not subject to the
arbitration agreement. Both plaintiffs’
claims arise out of the same events. There
is a possibility of conflicting rulings on common issues. The court exercises its discretion to choose
the third option: staying this civil action pending the outcome of the
arbitration proceeding.
Staying
the civil action is particularly appropriate in this case because that is what
the parties to the arbitration agreement intended. The
agreement provides: “Stay of Disputes and Related Proceedings. It is the intent of the Parties to completely
avoid the judicial system with respect to Disputes. However, in the event it is determined that
there are legal controversies between the Parties that are not subject to
arbitration, or related lawsuits or claims that are not subject to arbitration,
the Parties to this Agreement, as well as the other persons or entities
entitled to or required to participate in the Arbitration, expressly agree that
any legal controversies between the Parties not subject to arbitration, and
related lawsuits or claims not subject to arbitration, shall be stayed pending
the outcome of the Arbitration Hearing.”
(Pedraza Decl., Ex. A, § 11.)
Even assuming such a provision cannot limit the
court’s powers under Code of Civil Procedure section 1281.2, exercising the
court’s discretion in accordance with the parties’ intent serves the interest
of justice.
Disposition
Defendants The
Earlwood, LLC, Newgen Administrative Services, LLC, and BQ Operations Holdings
LLC’s motion to compel arbitration is denied as to the first three causes of action by the late plaintiff
Jeff Abrams. Defendants’ motion to
compel arbitration is granted as to the fourth cause of action by plaintiff Jane
Abrams. Plaintiff Jane Abrams is ordered to arbitrate her fourth cause of action against
defendants The Earlwood, LLC, Newgen Administrative Services, LLC, and BQ
Operations Holdings LLC. The court
hereby stays the entire action pending conclusion of the
arbitration proceeding.