Judge: Lee W. Tsao, Case: 23NWCV03474, Date: 2024-11-07 Tentative Ruling

Case Number: 23NWCV03474    Hearing Date: November 7, 2024    Dept: C

ESCALANTE v. RIVERA SANATARIUM, INC.

CASE NO.:  23NWCV03474

HEARING:  11/07/24 

#6

Defendants’ RIVERA SANATARIUM, INC. and KENT STEPHENS’ Motion to Compel Arbitration and Motion for Stay are DENIED.

Opposing Party to give notice.

This elder abuse/wrongful death action was filed by Plaintiff TERESA ESCALANTE, by and through her Successor in Interest, Maria Torres; and Plaintiff MARIA TORRESS, individually against Defendants RIVERA SANATARIUM dba Colonial Gardens Nursing Home; KENT STEPHENS; JOSE ESCALANTE; and RAYMUNDO ESCALANTE on October 27, 2023.

The operative Complaint alleges that “ESCALANTE was, at all relevant times, over the age of 65, and thus was an elder pursuant to Welfare and Institutions Code section 15610.27. ESCALANTE passed away as a result of her injuries caused by the abuse and neglect alleged more fully herein on July 25, 2023. Accordingly, ESCALANTE brings this action by and through her Successor in Interest, Maria Torres.” (Complaint ¶1.)

The Complaint asserts the following causes of action:

(1) Elder Abuse and Neglect;

(2) Violation of Residents’ Bill of Rights;

(3) Negligence;

(4) Wrongful Death

On June 7, 2024, Defendants RIVERA SANATARIUM and KENT STEPHENS (collectively “Moving Defendants”) filed the subject Motion to Compel Arbitration and Motion for Stay on the following grounds: (1) there is a written agreement between Decedent and Colonial Gardens providing for arbitration of all disputes arising out of or relating to Decedent’s Colonial Gardens admission; and (2) Colonial Gardens requested Plaintiffs comply with the Arbitration Agreement, but they declined to do so.

In Opposition, Plaintiffs argue: (1) Defendants waived their right to arbitration by unreasonably delaying their demand for arbitration and engaging in conduct inconsistent with the right to arbitrate; (2) Maria Torres cannot be bound to arbitrate her wrongful death claim because she is not clearly identified as a party to the arbitration agreement, and she did not sign the Agreement in her individual capacity; (3) the Arbitration Agreement is substantively and procedurally unconscionable; and (4) because Plaintiffs’ second cause of action cannot be arbitrated, there is a significant risk of conflicting rulings, and therefore, Defendants’ Motion should be denied.

Whether Defendants Acted Inconsistently with the Right to Arbitrate

In Opposition, Plaintiffs argue that Defendants waived their right to arbitration by delaying their Demand for Arbitrational and engaging in conduct inconsistent with the right to arbitrate because Defendants waited seven months after the Complaint was filed to file their Motion to Compel Arbitration and propounded discovery.

“Although participation in litigation of an arbitrable claim does not itself waive a party's right later to seek arbitration, at some point, litigation of the issues in dispute justifies a finding of waiver. [Citation.] The relevant factors establishing waiver include whether the  party's actions are inconsistent with the right to arbitrate; whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; whether a party delayed for a long period before seeking a stay; whether important intervening steps (e.g., taking advantage of judicial discovery procedures not available in arbitration) had taken place; and whether the delay affected, misled, or prejudiced the opposing party. (St. Agnes Medical Center (2003) 31 Cal.4th 1187, 1196; Wagner Construction Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 30–31; Zamora v. Lehman (2010) 186 Cal.App.4th 1, 13–15; Roberts v. El Cajon Motors, Inc. (2011) 200 Cal.App.4th 832, 841.)” (Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1204.)

The Court does not find that Defendants waived their right to arbitration or that they “substantially invoked” the “litigation machinery” before the Motion to Compel Arbitration was filed. Defendants Answer, filed on January 5, 2024, includes Defendants thirty-second affirmative defense of “Lack of Subject Matter Jurisdiction pursuant to Existence of a Valid Arbitration Agreement”. (Answer p. 7:26-8:2.) Moreover, this Court does not find that Defendants delayed for a “long period” before seeking a stay.  The Court does not consider seven months to be an unreasonably long period of time. Lastly, propounding one set of discovery and the deposition subpoena of the custodian of records does not qualify as substantially participating in this litigation.

The Court finds that Defendants did not act inconsistently with the right to arbitrate.

Existence of Agreement to Arbitrate

The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination. (Engalia v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951.)

“The FAA…preempts any state rule discriminating on its face against arbitration… [and] also displaces any rule that covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.” (Kindred Nursing Centers Ltd. Partnership v. Clark (2017) 137 S.Ct. 1421, 1426.) “But a court may ‘invalidate an arbitration agreement based on ‘generally applicable contract defenses’ without violating the FAA, so long as it does not apply a generally applicable defense ‘in a fashion that disfavors arbitration.’ [Citation Omitted.]” (Garcia v. KND Development 52, LLC (2020) 58 Cal.App.5th 736, 744.) “[T]he Supreme Court has recognized that the FAA does not preempt generally applicable state law conditioning the validity of an arbitration agreement executed by a purported agent—like any other contract executed by a purported agent—on an adequate evidentiary showing that the agreement falls within the scope of authority, if any, conferred by the principal.” (Id. at 476.)

In support of the instant Motion, Defendants have submitted an Agreement to arbitrate the disputes at issue in this action. (Defendants’ Ex. 1.) The Agreement was executed by Plaintiff Maria Torres, as the representative and agent of her mother, Plaintiff Teresa Escalante (“Decedent”). It is undisputed that the Decedent executed a valid general power of attorney (“POA”). (Defendants’ Ex. 2.) The POA appointed Maria Torres to act as the Decedent’s agent with respect to matters including: maintaining and closing bank accounts; providing support and protection for Decedent, her spouse, and any minor children; property transactions; debts; entering into binding contracts on Decedent’s behalf; maintaining businesses Decedents might own; employing professional and business assistance; preparing, signing, and filing documents with governmental bodies and agencies; making gifts; transferring assets; funding trusts; creating, signing, modifying, or revoking trust agreements; exercising fiduciary responsibilities; disclaiming interests; and having access to healthcare and medical records and statements in regards to billing insurance and payments. . (Defendants’ Ex. 2.)

The Court declines to enforce the Arbitration Agreement. In support of the Motion, Defendants submit Plaintiffs’ General Power of Attorney, which gives Maria Torres “the powers to manage, dispose of, sell and convey… real and personal property, and to use… property as security if [agent] borrows money on [Decedent’s] behalf….” (Defendants Ex. 2.) It does authorize Maria Torres to “[p]rovide for the support and protection of myself … including, without limitation, provision for food, lodging, housing, medical services, recreation and travel” (italics added). However, the General Power of Attorney did not confer upon Maria Torres the power to make healthcare decisions for the Decedent.

In cases discussing whether a power of attorney was sufficient to confer the power to enter an arbitration agreement in connection with admission to a health care facility, the power of attorney was a health care power of attorney. (See Garrison v. Sup. Ct. (2005) 132 Cal.App.4th 253, 266; Hogan v. Country Villa Health Services (2007) 148 Cal.App.4th 259, 268.) In Garrison and Hogan, the execution of an arbitration agreement in connection with admission to a health care facility was determined to be a part of the health care decision making process, for which there was a health care power of attorney. Here, Section 5 of the POA states that Maria Torres has the authority to “[e]nter into binding contracts on [Decedent’s] behalf.” (Defendants’ Ex. 2.) Section 18 gives Maria Torres “access to [Decedent’s] healthcare and medical records and statements in regards to billing insurance and payments.” (Id.)  However, the General Power of Attorney at issue does not confer upon Maria Torres the power to make health care decisions—only the power to make financial management decisions.  The Court notes Exhibit 2 includes a “Notice to Person Accepting the Appointment as Attorney-in-Fact” which describes the responsibilities of an attorney-in-fact.  One such responsibility is to “[t]o cooperate with the principal’s Agent for health care decisions, should the principal appoint such an agent, in making decisions in accordance with the principal’s desires or in the best interest of the principle [sic] if the principal’s wishes are not known.” Thus, the documents attached to the General Power of Attorney draw a distinction between the General Power of Attorney and an Agent for health care decisions. 

Maria Torres executed the Arbitration Agreement while making health care decisions on behalf of the Decedent.  However, the General Power of Attorney did not confer Maria Torres with the authority to make health care decisions on behalf of her mother, which includes admission to the subject facility and entering into the Arbitration Agreement at issue.

The Motion to Compel Arbitration is DENIED. Defendants fail to meet their burden of proving the existence of a valid arbitration agreement.