Judge: Jon R. Takasugi, Case: 24STCV19559, Date: 2024-11-15 Tentative Ruling

Case Number: 24STCV19559    Hearing Date: November 15, 2024    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendants’ motion to compel arbitration is GRANTED. This action is stayed pending the completion of arbitration.

            On 8/5/2024, Plaintiffs Santos Hernandez by and through her Successor in Interest Sonia Hernandez, Sonia Hernandez, Sergio Hernandez, and Junior Hernandez (collectively, Defendants) filed suit against ALAL, LLC, Aspen Skilled Healthcare Inc., and Aspen Healthcare Services, LLC (collectively, Defendants), alleging: (1) elder abuse; (2) negligence; (3) wrongful death; (4) violations of Health & Safety Code section 1430(b); and (5) violations of the Consumer Legal Remedies Act.

            On 10/17/2024, Defendants moved to compel Plaintiffs to arbitrate their Complaint, and stay this action pending the completion of arbitration. 

Legal Standard

“Where the Court has determined that an agreement to arbitrate a controversy exists, the Court shall order the petitioner and the respondent to arbitrate the controversy …unless it determines that…  grounds exist for rescission of the agreement.” (Code Civ. Proc., § 1281.2.) Among the grounds which can support rescission are fraud, duress, and unconscionability. (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 239.) The Court may also decline to compel arbitration wherein there is possibility of conflicting rulings on a common issue of law or fact. (Code Civ. Proc., § 1281.2 (c).)

Discussion

1.      Defendants’ Burden

The party moving to compel arbitration “bears the burden of proving [the] existence [of an arbitration agreement] by a preponderance of the evidence.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) The moving party also bears the burden of demonstrating that the claims fall within the scope of the arbitration agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.)

A.    Existing Agreement

Defendants submitted evidence that an Arbitration Agreement was executed on behalf of resident Santos Hernandez, by and through his surrogate decision maker and successor-in-interest daughter Plaintiff Sonia Hernandez. (Diaz Decl., Exh. A.)

            Defendants argue that Plaintiff’s execution on behalf of Mr. Hernandez is binding because she was acting as an authorized agent to contract on his behalf.

Under California law, "[a]gency '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." "The principal must in some manner indicate that the agent is to act for [him], and the agent must act or agree to act on [his] behalf and subject to [his] control." ... ' [Citations.] Thus, the 'formation of an agency relationship is a bilateral matter. Words or conduct by both principal and agent are necessary to create the relationship. (Warfield v. Summerville Senior Living, Inc. (2007) 158 Cal.App.4th 443, 448, italics omitted.)

Here, as evidence of an agency relationship, Defendants point to the fact that Ms. Hernandez expressed and represented to Kei-Ai that she had the authority to, and was acting as, Santos Hernandez’ authorized agent, when Ms. Hernandez signed the Arbitration Agreement. Ms. Hernandez signed the line of the Arbitration Agreement expressly set out just above the signature line which states:

The Resident and/or the person executing this Agreement certifies that he/she has read this Agreement and has been given a copy of this agreement, and affirmatively represents that he/she is duly authorized, by virtue of the Resident’s consent, instruction and/or durable power of attorney, to execute this Agreement and accept its terms on behalf of the Resident and acknowledges that the Facility is relying on the aforementioned certification.”

            (Diaz Decl., Exh. A.)

            As such, Defendants contend that Ms. Hernandez specifically certified that she was authorized to act as Santos Hernandez’ agent/surrogate decision maker in the execution of the Arbitration Agreement and Advanced Directives Acknowledgment form and acknowledged that Kei-Ai relied on her representation.

            In opposition, Plaintiff cite the recently decided Harrod v. Country Oaks Partners, LLC (2024) 15 Cal.5th 939. There, Plaintiff Charles Logan appointed his nephew Mark Harrod to be his health care agent. Two years after executing this authorization, the 76-year-old Logan broke his femur, and ultimately required skilled nursing care to help with his recovery. Harrod enrolled Logan at defendant County Oaks skilled nursing facility, signing a state-mandated admission agreement and a separate, optional, arbitration agreement, presented to him at the same time. Thereafter, following what he alleged to be negligent treatment during his one-month stay, Logan sued Country Oaks, and Country Oaks moved to compel Logan to arbitration based on the arbitration agreement signed by Harrod. The trial court denied the motion, holding that Harrod lacked authority to sign the arbitration form on behalf of Logan, a holding which was then affirmed by both the Court of Appeal and the California Supreme Court. In setting forth its reasoning, the Court explained:

Under California's Health Care Decisions Law (Prob. Code, § 4600 et seq.),1 a principal may appoint a health care agent to make health care decisions should the principal later lack capacity to make them. In this case, a health care agent signed two contracts with a skilled nursing facility. One, with state-dictated terms, secured the principal's admission to the facility. The other made arbitration the exclusive pathway for resolving disputes with the facility. This second contract was optional and had no bearing on whether the principal could access the facility or receive care. The issue before us is whether execution of the second, separate, and optional contract for arbitration was a health care decision within the health care agent's authority. It was not, and the facility's owners and operators may not, therefore, rely on the agent's execution of that second agreement to compel arbitration of claims arising from the principal's alleged maltreatment that have been filed in court. We affirm the judgment of the Court of Appeal and remand for further court proceedings.

(Harrod v. Country Oaks Partners, LLC, supra, 15 Cal.5th at pp. 946–947.)

In other words, the Supreme Court found that the plain language of California’s Health Care Decisions Law limited the authority of a health care agent to only those matters directly related to the physical and mental health care of the principal. The Court found that the execution of an arbitration agreement does not constitute a health care decision, and therefore exceeded the scope of an appointed health care agent. The Court expressly rejected the argument that a health care agent has implied authority to enter into arbitration agreements on behalf of their principal so long as the agreement is “connected” to healthcare decisions.

As such, based on Harrod, this Court must conclude that Plaintiff Sonia Hernandez lacked actual agency authority to enter into the purported arbitration agreement on behalf of Mr. Hernandez based on her status as a health care agent. This is also true given that Civil Code section 2309 provides that a principal may orally confer upon the agent authorization to act “for any purpose, except that an authority to enter into a contract required by law to be in writing can only be given by an instrument in writing.” (Civil Code § 2309, italics and underscoring added.) An arbitration agreement is a contract required to be in writing to be enforceable under either the Federal Arbitration Act or the California Arbitration Act. (See 9 U.S.C. § 2 [“an agreement in writing to submit to arbitration …. shall be valid…”]

However, in Harrod, the Court expressly did not address “the possibility that Logan, through this form or by any other act, led defendants to believe Harrod had authority to act under a theory of ostensible agency.” (Harrod, supra, 14 Cal.5th, fn 3.) This was because the admissions paperwork also included a one-page form stating, “I, Logan Charles, am able to sign for myself but would to like [sic] authorize Harrod Mark my nephew to sign the following documents on my behalf.” Below this statement, six categories of documents are listed and next to each is a line with a check mark. The checked categories of documents are: temporary consent to treat, advance directive acknowledgement, influenza vaccine/pneumonia vaccine consent, POLST (Physician Orders for Life-Sustaining Treatment), informed consent for use of device, and California admission packet. As such, here there, was no reasonable basis for the facility to have believed that Harrod had the authority to act on Logan’s behalf to behind him to an arbitration agreement. 

Here, by contrast, Ms. Hernandez specifically certified that she was authorized to act as Santos Hernandez agent/surrogate decision maker in the execution of the Arbitration Agreement and Advanced Directives Acknowledgment form and acknowledged that Kei-Ai relied on her representation. Moreover, at no such time did Ms. Hernandez subsequently seek to revoke the Arbitration Agreement or disclose to Kei-Ai that Ms. Hernandez did not have the authority to sign on behalf of Santos Hernandez. (See Civ. Code, § 2300 [“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.”].)

The Court agrees with Defendants that Ms. Hernandez’ claim that she lacked the authority to act on Decedent’s behalf is inconsistent with Ms. Hernandez’ actions. Ms. Herandez electronically signed the Arbitration Agreement on the line marked “Surrogate Decision Maker,” and just above which states “The Resident and/or person executing this Agreement certifies he/she has read this Agreement, by virtue of the Resident’s consent, instruction and/or durable power of attorney, to execute this Agreement and accept its terms on behalf of the Resident and acknowledges that the Facility is relying on the aforementioned certification.” (Exh. A.) Moreover, Ms. Hernandez at no time acted to rescind the Arbitration Agreement. Specifically, the Arbitration Agreement on its face provided Ms. Hernandez with the opportunity to rescind within thirty (30) days of execution. Article 4 provides that the Arbitration Agreement “may be rescinded by written notice within thirty (30) days of signature.”

As such, Ms. Hernandez engaged in conduct on the part of Decedent that reasonably created in a belief in the minds of Defendants the Ms. Hernandez had agency to act on behalf of Decedent, and Defendants reasonably relied on this belief. (Warfield, supra, 158 Cal.App.4th at p. 448.)

Based on the foregoing, Defendants’ motion to compel arbitration is granted. This action is stayed pending the completion of arbitration.

It is so ordered.

Dated:  November    , 2024

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.  For more information, please contact the court clerk at (213) 633-0517.