Judge Bruce G. Iwasaki, Case 22STCV14533 2022-07-25 Tentative Ruling

Case Name: Thomas L. Carter, et al. v. Glendora Canyon Transitional Care Unit, et al.

Moving Party: Defendants Foothill Nursing Company Partnership dba Glendora Canyon Transitional Care Unit; Foothill Rehab Center, LLC; and 401 West ADA Avenue, LLC

Responding Party: Plaintiffs Thomas L. Carter, in and through his Successor-in-Interest, Tonia L. Kelly; Tonia L. Kelly, individually; Daniel T. Carter, individually; Thomas L. Lark, individually

Defendant health care provider moved to compel arbitration based on an agreement purportedly signed by the decedent’s son as power-of-attorney. Because it was Defendant’s burden to establish that the son had authority to sign on his father’s behalf, but Defendant failed to produce supporting evidence, the motion is denied.

Thomas L. Carter (Thomas), a former resident of Glendora Canyon Transitional Care Unit (Glendora Canyon) died from sepsis on October 6, 2021. His daughter and successor-in-interest, Tonia L. Kelly, and his sons Daniel T. Carter (Daniel) and Thomas L. Lark (Plaintiffs) sued Glendora Canyon Transitional Care Unit, Foothill Nursing Company Partnership, Foothill Rehab Center, LLC, and 401 West ADA Avenue, LLC (Defendants) for elder abuse, negligence, violation of the Patient Bill of Rights, willful misconduct, and wrongful death.

The Complaint alleged that Thomas had a history of stroke and required a G-tube for nutrition and medication. While he resided at Glendora Canyon, he was transported to the hospital on at least three occasions on May 25, June 7, and July 6, 2021. Plaintiffs allege that Defendants failed to provide adequate care, including failing to initiate or follow a Care Plan for Thomas’ catheter management, failing to document Thomas’ condition between June 27, 2021 and July 3, 2021, failed to comply with an order to turn and reposition Thomas every hour to prevent pressure ulcers, and failure to transfer him to a hospital promptly when necessary. Thomas died on October 6, 2021, from sepsis caused by aspiration pneumonia, candida sepsis, and congestive heart failure.

Defendants move to compel arbitration of all claims based on a document titled “RESIDENT – FACILTIY [sic] ARBITRATION AGREEMENT.” As relevant, it states:

Article 1. It is understood that any dispute as to medical malpractice, that is as to whether any medical services rendered under this contract were unnecessary or unauthorized or were improperly, negligently or incompetently rendered, will be determined by submission to arbitration as provided by California law, and not by a lawsuit or resort to court process except as California law provides for judicial review of arbitration proceedings. 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.

Article 2. It is further understood that any dispute between Resident and Foothill Nursing Company Partnership dba Glendora Canyon Transitional Care Unit, its owners, investors, operators, officers, directors, administrators, staff, employees, agents, and any management and administrative services company and all related entities and individuals, their staff, personnel, employees, owners, officers, directors, members, and agents that provide services to the Facility that relates to the provision of care, treatment and services the Facility provides to the Resident, (collectively referred to herein as "Facility), including any action for injury or death arising from negligence, intentional tort and/ or statutory causes of action (including all California Welfare and Institutions Code sections and Health and Safety Code section 1430), will be determined by submission to binding arbitration and not by lawsuit or resort to court process except as California law provides for judicial review of arbitration proceedings. The parties to this agreement are giving up their Constitutional right to have all disputes decided in a court of law before a jury, and instead are accepting the use of binding arbitration. By signing this agreement, the parties waive their right to commence and/or be a party to any class or collective action in any court against the other party relating in any manner whatsoever to the Resident's residency at the Facility. Further, the parties waive their right to commence or be a party to any group, class, or collective action claim in arbitration or any other forum.

Plaintiffs oppose the motion. They argues that Defendants failed to authenticate the arbitration agreement, that Daniel did not have authority to sign on Thomas’ behalf, and that Thomas’ children are not parties to the agreement so their individual claims should not be sent to arbitration. Plaintiffs rely principally on the reasoning in Valentine v. Plum Healthcare Group (2019) 37 Cal.App.5th 1076 (Valentine) to assert that Daniel’s verbal statement that he is Thomas’ power-of-attorney is insufficient by itself to establish ostensible agency.

In Reply, Defendants argue that the arbitration agreement is valid because Plaintiffs does not contest its authenticity, that Daniel failed to show why he signed the agreement if he lacked authority, and that the California Supreme Court in Ruiz v. Podolsky (2010) 50 Cal.4th 838 (Ruiz) applies to compel the heirs’ claim to arbitration.

Plaintiff’s objection to Exhibits A (Arbitration Agreement) of Defendants’ motion to compel arbitration is overruled. Plaintiff’s objection to Exhibit B (Physician Orders for Life-Sustaining Treatment) is sustained.

The Court finds that Defendants have failed to establish the existence of an arbitration agreement because Daniel did not have authority to sign it on behalf of the decedent. Daniel’s individual claims are also not subject to arbitration because he was not a party to the agreement.

Arbitration agreements should be liberally interpreted and ordered unless the agreement clearly does not apply to the dispute in question. (Weeks v. Crow (1980) 113 Cal.App.3d 350, 353; Segal v. Silberstein (2007) 156 Cal.App.4th 627, 633.)

A court must first “determine [whether] an agreement to arbitrate the controversy exists.” (Code Civ. Proc., § 1281.2; see also Fagelbaum & Heller LLP v. Smylie (2009) 174 Cal.App.4th 1351, 1363.) The party moving to compel arbitration has the initial burden to (1) affirmatively admit and allege the existence of a written arbitration agreement, and (2) prove the existence of that agreement by a preponderance of the evidence. (Rosenthal v. Great Western Financial Securities Corporation (1996) 14 Cal. 4th 394, 413.) Once this is met, the burden shifts to the responding party to prove that the agreement is unenforceable by a preponderance of the evidence. (Ibid.)

As a preliminary matter, a moving party must provide prima facie evidence of a written agreement to arbitrate. They may do so by simply providing a copy of the arbitration agreement. (Baker v. Italian Maple Holdings, LLC, 13 Cal. App. 5th 1152, 1160 (2017); Cal. Rules of Court, rule 3.1330.) “For purposes of a petition to compel arbitration, it is not necessary to follow the normal procedures of document authentication.” (Condee v. Longwood Management Corp. (2001), 88 Cal.App.4th 215, 218; Sprunk v. Prisma LLC (2017) 14 Cal.App.5th 785, 793.) If the opposing party disputes the agreement, then the opposing party must provide evidence to challenge its authenticity. (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165.)

Plaintiffs do not challenge its authenticity of the arbitration agreement or dispute that the signature is Daniel’s. Accordingly, Defendant has met its preliminary burden to show the existence of an agreement to arbitrate.

However, Plaintiffs do argue that Daniel had no authority to sign the agreement on behalf of Thomas. Thus, Defendants bore the burden of establishing not only an existing agreement, but a valid one. (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842.) To that end, Defendants were required to produce evidence that Daniel had the authority to act as the Decedent's agent in connection with signing the Arbitration Agreement. They failed to do so.

A party seeking to compel arbitration has the burden of proving that the agreement was signed either by the party to be bound or by a person who had the authority to act on behalf of the party. (Goldman v. Sunbridge Healthcare, LLC (2013) 220 Cal.App.4th 1160, 1173 (Goldman); see also Rogers v. Roseville SH, LLC (2022) 75 Cal.App.5th 1065, 1074 (Rogers).)

“An agency is ‘either actual or ostensible.’ ” (Civ. Code, § 2298; see also Valentine, supra, 37 Cal.App.5th at p. 1086.) An agency is actual “when the agent is really employed by the principal.” (Civ. Code, § 2299.) Actual authority “is such as a principal intentionally confers upon the agent, or intentionally, or by want of ordinary care, allows the agent to believe himself to possess.” (Civ. Code, § 2316.)

An agency is ostensible “when the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who is not really employed by him.” (Civ. Code, § 2300.) “Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess.” (Civ. Code, § 2317.)

Prior to binding a principal for the acts of an ostensible agent, “ ‘three requirements must be met: The person dealing with an agent must do so with a reasonable belief in the agent's authority, such belief must be generated by some act or neglect by the principal sought to be charged and the person relying on the agent's apparent authority must not be negligent in holding that belief. [Citations.] Ostensible agency cannot be established by the representations or conduct of the purported agent; the statements or acts of the principal must be such as to cause the belief the agency exists. [Citations.] “ ‘Liability of the principal for the acts of an ostensible agent rests on the doctrine of “estoppel,” the essential elements of which are representations made by the principal, justifiable reliance by a third party, and a change of position from such reliance resulting in injury. [Citation.]’ [Citation.]” [Citations.]’ ” (Valentine v. Plum Healthcare Group, supra, 37 Cal.App.5th 1076, 1087.)

Plaintiffs rely heavily on the Valentine case. In Valentine, a husband signed arbitration agreements on behalf of his decedent wife. Defendant skilled nursing facility moved for arbitration, asserting that the husband bound the plaintiff heirs’ claims. The trial court denied the motion to compel arbitration. The Court of Appeal affirmed the trial court, finding that defendants did not establish that the husband signed the agreement as the wife’s agent. (Valentine, supra, 37 Cal.App.5th at p. 1085.)

The appellate court in Valentine described the law of agency generally and found that the case before it was a question of ostensible agency as to whether decedent’s “want of ordinary care” caused either the husband or the defendants to believe that the husband had authority to bind decedent to arbitration. (Id. at pp. 1086-1087.) The Court of Appeal rejected defendants’ arguments that an agency was established because the husband was married to the decedent and that he signed the arbitration agreement as “Resident’s Representative.” The defendants relied on its employee’s testimony that the husband was the “responsible party.” However, nothing defined that term. Furthermore, decedent’s silence was irrelevant because there was no historical relationship or course of conduct between defendants and decedent. (Id. at p. 1089.) Finally, the Court rejected defendants’ argument that the decedent ratified the husband’s decision when neither chose to rescind the agreement under their right to do so within 30 days. Because there was no evidence that decedent had “ ‘full knowledge of the material facts entitling him to rescind,’ ” this did not amount to a ratification. (Id. at p. 1090.)

A recent case that neither party cited, Rogers v. Roseville SH, supra, 75 Cal.App.5^th 1065, had similar facts. The decedent’s son had signed the arbitration agreement as the “resident’s representative.” (Id. at p. 1070.) After defendant residential care facility petitioned to compel arbitration, the plaintiffs opposed, submitting a declaration from the son stating that his father did not ask him to sign anything for him and never granted authority to him to sign any medical documents or waive his right to a jury trial. (Id. at p. 1070.)

The Court of Appeal reiterated that agency “ ‘cannot be created by the conduct of the agent alone; rather, conduct by the principal is essential to create the agency.’ ” (Id. at p. 1074.) It was defendants’ burden to prove that a “purported agent had the authority to act for the purported principal.” Thus, “[t]he party seeking to compel arbitration does not meet its burden of proving the existence of an arbitration agreement when it does not present 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. [Citations.].” (Id. at pp. 1074-1075.)

Because in Rogers there was no actual authority given by the father to his son, the court analyzed the issue under the doctrine of ostensible authority. As in Valentine, defendants produced no evidence to show that its employees spoke to the decedent about the arbitration agreement, that the decedent approved similar acts by his son in the past, or that decedent was silent even though he knew that his son had signed the agreement on his behalf. (Id. at p. 1076.) And again, the Court rejected the argument that the failure to object within a 30-day rescission period indicated that the decedent ratified the agreement because there was no evidence to show that the decedent even knew that his son had signed the agreement. (Id. at p. 1077.) The Court concluded that a third-party is not compelled to deal with an agent, but “ ‘ “if he [or she] does so, he [or she] must take the risk. He [or she] takes the risk not only of ascertaining whether the person with whom he [or she] is dealing is the agent, but also of ascertaining the scope of [that person’s] powers.” ’ ” (Ibid.)

Here, there is no evidence that Thomas intentionally designated his son Daniel as his agent with authority to enter arbitration agreements on his behalf. Thus, if an agency relationship exists, it is one based on Thomas’ want of ordinary care that caused either Daniel or Defendants to believe Daniel had the authority to bind Thomas to arbitration under an ostensible agency.

Defendants do not address this issue and fail to even mention Valentine or Rogers in its moving papers or reply. They argue that the form indicates Daniel is the “power of attorney.” Aside from standard verbiage in the arbitration agreement and a handwritten note on the agreement that “Son stated that he’s Resident’s POA,” there is no other evidence to establish that Daniel was, in fact, Thomas’ power of attorney.

Plaintiffs sufficiently rebut this presumption by providing Daniel’s sworn declaration that he did not sign the agreement as Thomas’ representative or agent to bind Thomas. Daniel avers that he was approached by a female employee and asked to sign some paperwork. She did not request Daniel to have Thomas sign the documents, despite Thomas being in his hospital room. (Carter Decl., ¶ 5.) Even though the employee did not explain what the forms were, Daniel signed the paperwork because he was afraid Thomas would be transferred from the facility if he did not comply. (Ibid.) Daniel was unaware of what he was signing, and the entire process took between 5-7 minutes. (Id. at ¶¶ 6, 7.) Daniel did not speak to Thomas or obtain Thomas’ consent before signing the agreement. (Carter Decl., ¶ 9.) Nor did Daniel hold a Durable Power of Attorney, legal guardianship, or conservatorship over Thomas. (Id. at ¶ 10.)

Neither party addressed Thomas’ competency, but under Probate Code section 4657, a patient is presumed to have the capacity to make a health care decision, and a decision to the contrary must be made by a physician in writing. (Prob. Code, §§ 4657, 4658, 4732.) There is no evidence that the female employee that procured Daniel’s signature or that the counter-signatory on the form (“B. Villanueva”) is a physician. Thus, it is presumed that Thomas was competent, and Plaintiffs have provided evidence that Daniel had no authority to sign on Thomas’ behalf.

In reply, Defendants contend that Daniel’s declaration is non-credible but fail to provide any rebuttal evidence. Instead, they simply point to Daniel’s actions that he was aware of signing an arbitration agreement. This is the incorrect standard as the agent’s conduct alone cannot create an agency. Defendants point to no actions by Thomas that would indicate Daniel had authority to act as his agent.

Defendants’ arguments also misstate the burden of proof. Regardless of whether Plaintiffs provide any evidence, the “burden of proving that a purported agent had the authority to act for the purported principal in a particular circumstance lies with the persons dealing with the agent.” (Rogers, supra, 75 Cal.App.5th at p. 1075.) “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, supra, 75 Cal.App.5th at p. 1075.) Defendants have not met their burden.

Defendants instead rely on Ruiz v. Podolsky, supra, 50 Cal.4^th 838. This reliance is misplaced. In Ruiz, the California Supreme Court held that wrongful death claimants may be bound by pre-treatment arbitration agreements entered into by the decedent that limit the scope of the wrongful death action. Ruiz involved a patient-decedent who signed an arbitration agreement with the defendant health care provider that purported to bind “all parties whose claims may arise out of or relate to treatment or service provided by the physician including any spouse or heirs of the patient and any children, whether born or unborn, at the time of the occurrence giving rise to the claim.” (Ruiz, supra, 50 Cal.4th at pp. 841-842.) Specifically, the high Court noted the arbitration agreement complied with the special health care arbitration statute within Code of Civil Procedure section¿1295. That section, the Court stated, is designed to permit patients who sign arbitration agreements to bind their heirs to arbitrate any subsequent wrongful death action if the language of the agreement manifests such an intent. (Ruiz, supra, 50 Cal.4th at p. 849.) As a matter of policy, the Court concluded it would be impractical and unrealistic to obtain the signatures of all potential heirs prior to receiving medical treatment. (Id. at pp. 850–851]. Thus, the individual wrongful death claims of the decedent's spouse and children were subject to arbitration pursuant to the agreement signed by the decedent. (Id. at p. 853.)

In contrast, Thomas, the decedent here, never signed the arbitration agreement and his son Daniel did not have authority to enter into the agreement on the decedent’s behalf. This case does not involve a signatory patient who binds his or her family member who later asserts a claim derived from the patient’s care. Ruiz is inapposite.[1]

Defendant also argues that Daniel had authority because he previously executed a Physicians Order for Life-Sustaining Treatment (POLST) form, and such documents are only “executed by a legally recognizable health care decision maker” under Probate Code section 4780. Defendants failed to authenticate this form. While it may be sufficient for a party to simply provide a copy of the arbitration agreement to prove its existence, this rule does not apply to other evidence used to support the validity of the arbitration. Defendants merely attached the form and failed to authenticate it.[2] The same argument was rejected by the Court of Appeal in Valentine for evidentiary reasons. (Valentine, supra, 37 Cal.App.5th at p. 1090.)

Evidentiary issues notwithstanding, the argument that an agency relationship exists because Daniel signed other documents is faulty. (Flores v. Evergreen at San Diego, LLC (2007) 148 Cal.App.4th 581, 590 [“Although the Legislature has specifically conveyed authority over medical decisionmaking and enforcement of rights to family members, it has not conveyed authority over the arbitration decision to family members. We view this as a significant omission, and accordingly conclude that there is no statutory authorization for a person to agree to arbitration based solely on a familial relationship with the patient”].) Only “a person who is authorized to act as the patient's agent can bind the patient to an arbitration agreement.” (Id. at p. 587.)

To the extent that Defendants argue that Daniel’s conduct somehow caused them to believe he was Thomas’ agent because Daniel never said he was not, one “ ‘takes the risk not only of ascertaining whether the person with whom he is dealing is the agent, but also of ascertaining the scope of his powers.’ ” Thus, “[e]ven if there were sufficient evidence that [Daniel] had actually represented that [he] was authorized to bind [Thomas] to arbitration, [Defendants] took the risk that [he] in fact had no such authority.” (Young v. Horizon West, Inc. (2013) 220 Cal.App.4th 1122, 1134.)

Similarly, if Defendants’ contention is that Thomas failed to object during the 30-day rescission window or that his silence somehow ratified Daniel’s conduct, these arguments have been rejected. (Valentine, supra, 37 Cal.App.5th at pp. 1088-1099; Rogers, supra, 75 Cal.App.5th at pp. 1076-1077.)

Accordingly, Defendants have not met their burden to establish the existence of a binding and valid arbitration agreement.

A party generally cannot be compelled to arbitrate a dispute that he or she has not agreed to resolve by arbitration. (Goldman v. Sunbridge Healthcare, LLC (2001) 220 Cal.App.4th 1160, 1176 [“ ‘[t]he strong public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement, and a party cannot be compelled to arbitrate a dispute that he has not agreed to resolve by arbitration’ ” (Goldman)].)

In Goldman, the Court of Appeal rejected defendants’ claim that a wife who signed an arbitration agreement as her husband’s legal representative was bound to arbitrate her individual claims even though the agreement stated that a legal representative agreed that he or she was executing the agreement both in his or her representative and individual capacity. (Goldman, supra, 220 Cal.App.4th at 1176.) While the wife signed as the decedent’s legal representative, she had no authority to do so and because no such legal representative existed, “there was also no legal representative to sign in his or her individual capacity.” (Ibid.) The Court concluded that the wife “is not bound in her individual capacity because her signature as legal representative was ineffective.” (Id. at p. 1177.)

Here, because Daniel did not have the authority to sign the arbitration agreement on Thomas’ behalf, there was no legal representative to sign in an individual capacity and neither he nor any heirs are bound to arbitrate. As noted in Goldman, “[defendant] could have chosen to have [wife] sign separately and expressly in her own right. It did not do so.” (Id. at p. 1177.) Thus, the basic principle set forth in Goldman is that one cannot bind another to an arbitration agreement absent a showing of agency. No such showing was made here.

Defendants point out that Article 3 of the agreement states that it is “binding on all parties, including . . . family members, and heirs who brings any claims individually or in a representative capacity.” The Court does not find this persuasive as there was similar language in Goldman, which the appellate court rejected. (Goldman, supra, 220 Cal.App.4th at p. 1175 [“ ‘This arbitration agreement shall bind the parties hereto, including the heirs, representatives, executors, administrators, successors, and assigns of such parties’ ”].) Furthermore, another Court of Appeal has found that “[i]n context, the provision making the arbitration clause binding on heirs means only that the duty to arbitrate the survivor claims is binding on [decedent] and other persons who would assert the survivor claims on [decedent’s] behalf, namely, her ‘spouse, heirs, representatives, executors, administrators, successors, and assigns, as applicable.’ The agreement does not indicate an intent to bind third parties with claims independent of the survivor claims, such as wrongful death claimants.” (Daniels v. Sunrise Senior Living, Inc. (2013) 212 Cal.App.4th 674, 681.)[3]

Here, there is no indication that Daniel is a party to the arbitration agreement. While Daniel allegedly signed the agreement “on behalf of the Resident and as an individual,” the Court does not find this dispositive. Daniel’s printed name never fully appears anywhere on the form (apart from his initials on the first page), and the top of the agreement lists the name of Thomas Carter only. Throughout the agreement, there are references to “Resident” and the facility, “Foothill Nursing Company Partnership dba Glendora Canyon Transitional Care Unit,” but there is no mention of Daniel as a party to the agreement. At the bottom of the agreement, near the signature line, it states that the “Resident and/or the person executing this Agreement . . . affirmatively represents that he/she is duly authorized . . . to execute this Agreement and accept its terms on behalf of the Resident.” (Healey Decl., Ex. A, p. 2, italics added) Thus, the agreement is a contract between the resident and the facility. As Daniel was not a “resident,” he was not a party to the agreement and, therefore, did not waive his right to have his individual claims decided in a judicial forum. (See Goldman, supra, 220 Cal.App.4th at p. 1176.)

Accordingly, Daniel’s individual claim for wrongful death is not subject to arbitration.

[1] The other cases cited by Plaintiff involved either a decedent-signatory or a valid signature by decedent’s representative. These cases assumed the existence and validity of the arbitration agreement to begin, which is the central issue being challenged here. Accordingly, the Court declines to address these other cases.

[2] Even if the Court considered the POLST form, the location of Daniel’s purported signature simply states, “verbal consent” and the form is missing multiple fields.

[3] Defendants argue Ruiz applies and that Daniels is inapposite, in part, because Daniels “did not even pertain to a healthcare provider” and instead involved a residential care facility. Defendants fail to elaborate on this further, merely stating that residential care facilities for the elderly “are not afforded the same protections/benefits that are extended by the Legislature to healthcare providers like the instant Defendants.” As mentioned earlier, this argument assumes the validity of the arbitration agreement and the Court need not reach this issue because there is no binding agreement in the first instance.