Judge Ralph C. Hofer, Case 21STCV35909 2023-05-05 Tentative Ruling

Plaintiffs Maria Zalazar, Raul Zalazar, and Julio Cesar Zalazar bring this action individually and as heirs and successors in interest to their father, decedent Julio Zalazar, alleging that defendant Glendale Post Acute Center was a skilled nursing facility or intermediate care facility operating in Glendale, and licensed and/or operated by defendants LAC Verdugo Operation, LLC, and LAC SNF, LLC. Defendant Jocelyn Arevalo is alleged to have been the director of nursing for the facility.

Plaintiffs allege that during the residency, decedent suffered neglect, abuse of an elder or dependent adult, and abandonment and isolation. The complaint alleges defendants negligently, recklessly or knowingly failed to meet their duties and statutory and regulatory obligations to decedent in several ways, including failing to provide decedent with decedent’s own unsoiled clothing, withholding necessary assistance required for toileting, including withholding empty colostomy bags, failing to provide basic and necessary care or policies procedures and measures to prevent decedent’s exposure to illness and infection, withholding appropriate care and treatment once decedent developed illnesses and infections, failing to observe and report changes to family and physicians, understaffing the facility, and failing to hire, retain, train and supervise staff.

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:

Generally, there is a strong public policy in favor of arbitration of disputes and any doubts concerning the scope of arbitrable disputes should be resolved in favor of arbitration. Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9 (“courts will ‘indulge every intendment to give effect to such proceedings.’”) (quotation omitted). However, it is also recognized that arbitration is “strictly a matter of consent.” Granite Rock Co. v. International Broth. of Teamsters (2010) 561 U.S. 287, 299, quotation omitted; Civil Code section 1648 (a contract “extends only to those things concerning which it appears that the parties intended to contract.”) Accordingly, “[t]he strong public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement.” Comedy Club, Inc. v. Improv West Associates (9th Cir. 2009) 553 F.3d 1277, 1287, quoting Buckner v. Tamarin (2002, 2nd Dist.) 98 Cal.App. 4th 140, 142.

In this case, plaintiffs in their petition argue that a lawful, binding and enforceable agreement to arbitrate this matter exists between the parties, as on July 14, 2018, as part of the admission process to the long-term care facility, various documents were executed, including two standard arbitration agreements (Arbitration Agreement) which was signed by decedent’s son and legal representative, Julio Zalazar, Jr. [Kanno Decl., Ex. A].

As an initial matter, plaintiffs in opposition argue that the moving papers provide no foundation for the purported Arbitration Agreement they seek to enforce against plaintiffs, as the Arbitration Agreement is submitted by the declaration of counsel, who has no personal knowledge concerning the execution of the purported Arbitration Agreement, and does not lay a foundation for the authenticity of the alleged signature by Zalazar Jr. Plaintiffs also object that there is no evidence or declaration from any custodian or officer of the defendants with custody, control and possession of the document, such that the Arbitration Agreement is inadmissible hearsay.

The objections are not separately filed or served, as would usually be required. However, it is true that the subject Arbitration Agreement is submitted by counsel for defendants, who states, without facts establishing personal knowledge that attached is a “true and correct copy of the Arbitration Agreements,” which pertain to decedent and his residency, which were taken from the files of decedent from Glendale Post Acute. [Kanno Decl., para. 3]. No facts are stated concerning counsel’s personal knowledge of the facts surrounding the execution of or origin of the document, such as that counsel was present when the documents were signed or is in a position within Glendale Post Acute to have been a custodian of records.

Under Evidence Code section 702 (a), except for in connection with expert witness opinion testimony, “the testimony of a witness concerning a particular matter is inadmissible unless he has personal knowledge of the matter. Against a party’s objection, such personal knowledge must be shown before the witness may testify concerning the matter.”

“In determining whether an enforceable arbitration agreement exists, the initial burden is on the party petitioning to compel arbitration. “Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.” (Rosenthal v. Great Western Fin. Securities Corp., supra, 14 Cal.4th at p. 413; see Engalla v. Permanente Medical Group (1997) 15 Cal.4th 951, 972 [64 Cal. Rptr. 2d 843, 938 P.2d 903].) Once the petitioner has met that burden, the burden shifts to the party opposing arbitration, to “produc[e] evidence of, and prov[e] by a preponderance of the evidence, any fact necessary to the defense.” (Rosenthal v. Great Western Fin. Securities Corp., supra, 14 Cal.4th at p. 413.”

Under federal law as well, the moving party to compel enforcement of an arbitration agreement bears the burden of establishing the existence of a valid agreement to arbitrate and that the agreement encompasses the dispute at issue, while the opposing party bears the party of establishing any defenses to enforceability. Sanfilippo v. Tinder, Inc. (C.D. Cal. 2018) 2018 WL 6681197, 2.

Moreover, as argued in the reply, there is case law under which it is suggested that the procedures of document authentication are relaxed in connection with establishing the existence of an arbitration agreement. Defendants cite to Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218, in which the court of appeal found that the trial court had improperly denied a petition to compel arbitration on the ground that the purported arbitration agreement had not been properly authenticated. However, the court of appeal in Condee observed that, “In this case, although no evidence was ever introduced to verify the signature’s authenticity, it was never challenged.” Condee, at 218. The case also involved a situation where the trial court had denied a proffer of a declaration of a custodian of records which purported to authenticate the agreement. Condee, at 217. Similarly, the Second District observed in Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165, that if the moving party submits an unauthenticated agreement to meet its prima facie burden, “and the opposing party does not dispute the existence of the arbitration agreement,” then nothing more is required on the initial burden.

Here, there have been objections asserted, and defendants in reply simply attach another declaration of counsel, with no further facts showing personal knowledge, which states again in conclusory fashion, “I have personal knowledge of the fact contained in the Declaration,” attaches what is purportedly decedent’s expanded Business file, and states that “this document was taken from the Business Records files of Decedent from Glendale Post Acute.” [Reply, Kanno Decl., paras. 2-3]. Counsel does not appear to be a custodian or other qualified witness, and there is no testimony concerning the nature of these records, or how they were prepared or maintained to satisfy the Evidence Code. The court could find that defendants have failed to meet their initial burden sufficient to shift the burden to the parties opposing arbitration to produce evidence of facts necessary to a defense, but the court again elects not to do so. In fact, in the case relied upon in the opposition, the court of appeal noted that while the petition to compel arbitration in that matter had been supported by a declaration of defense counsel attaching what counsel “averred was a copy of the Residency Agreement,” signed in that case, “Plaintiffs forfeited any objection to the document submitted with [counsel’s declaration by not objecting to it in the trial court.” Rogers v. Roseville SH, LLC (2022) 75 Cal.App.5th 1065, 1069.

In any case, as argued in the reply, plaintiffs in the opposition have not affirmatively asserted that plaintiff signatory never saw or signed the agreement, or does not remember seeing or signing the agreement, as the Second District suggested would be appropriate to defeat an authentication argument in Gamboa. In addition, plaintiffs in opposition affirmatively rely on provisions of the subject Arbitration Agreement and the other document submitted with the petition to support their argument that the Arbitration Agreement has not been shown to be enforceable against plaintiffs.

Defendants argue that the Arbitration Agreement should be enforced because it applies to the dispute in question, and the public policy favoring arbitration applies when dealing with residential care facilities. Defendants argue that during the admissions process decedent’s son met with the Facility Representative of Glendale Post, and decedent’s son signed the Arbitration Agreements, which just above the signature lines, included the following provision:

Defendants argue that a party to a written contract is charged with having read and understood its contents. Randas v. YMCA (1993) 17 Cal.App.4th 158, 163. Defendants also argue that by executing the contract, the law presumes that decedent read and understood its terms and assented, and also argues that decedent did not clarify, object or take any steps to inform defendants that decedent was unable to be his own legal representative.

The petition goes on to argue that the action and certification of authority to act in this case is consistent with the definition of an agent, defined as “one who represents another, called the principal, in dealings with third persons.” Civil Code section 2295. Defendants argue that the Arbitration Agreement was executed by decedent’s legal representative, Zalazar, Jr., who, in addition to signing the Arbitration Agreement stating that he was acting as his father’s authorized representative, also signed a document entitled, “Appointment of Representative.”

This document states that it is completed by Julio Zalazar, in a section, “TO BE COMPLETED BY APPLICANT/BENEFICIARY,” and states, “I appoint this individual,” with a blank space for the name of the individual, “as my authorized representative to accompany, assist, and represent me in my application for, or redetermination of, Medi-Cal benefits.” [Ex. B]. There is no appointed individual identified; the space remains blank. There is no mention of Zalazar Jr. in this document. This document accordingly does not appear to appoint an authorized representative, does not appear to appoint Zalazar Jr., and in any case only could have done so in connection with Medi-Cal benefits. As argued in the opposition, this appears to be an incomplete document, and does not support the argument made by defendants.

Plaintiffs rely on the recently decided Rogers v. Roseville SH, LLC (2022) 75 Cal.App.5th 1065, in which the court of appeal affirmed a trial court’s order denying the petition of defendants, affiliated with a residential care facility for the elderly, to compel arbitration of claims made against them by the wife and sons of a deceased former resident of the facility for elder abuse, fraud and wrongful death.

The court of appeal set forth the agency analysis to be conducted, focusing on the burdens of proof and the lack of evidence submitted by the moving party which could support either actual or ostensible agency, based on a lack of evidence that the principal, the father and decedent Claude Rogers in that case, engaged in any conduct which would establish an agency relationship.

“The right to compel arbitration depends on the existence of an agreement to arbitrate. (Young v. Horizon West, Inc. (2013) 220 Cal.App.4th 1122, 1128, 163 Cal.Rptr.3d 704 (Young).) Whether a valid agreement to arbitrate exists is determined under applicable contract law. (Garrison v. Superior Court (2005) 132 Cal.App.4th 253, 263, 33 Cal.Rptr.3d 350 (Garrison).) “Generally, a person who is not a party to an arbitration agreement is not bound by it. [Citation.] However, there are exceptions. For example, ... a person who is authorized to act as the [resident or] patient's agent can bind the [resident or] patient to an arbitration agreement. [Citations.]” (Flores, supra, 148 Cal.App.4th at p. 587, 55 Cal.Rptr.3d 823, italics omitted; see also Monschke v. Timber Ridge Assisted Living, LLC (2016) 244 Cal.App.4th 583, 586-587, 197 Cal.Rptr.3d 921 (Monschke).)

“ ‘An agent is one who represents another, called the principal, in dealings with third persons.’ [Citation.] In California, an agency is ‘either actual or ostensible.’ ” (Valentine, supra, 37 Cal.App.5th at p. 1086, 249 Cal.Rptr.3d 905.) 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. (Tomerlin v. Canadian Indemnity Co. (1964) 61 Cal.2d 638, 643, 39 Cal.Rptr. 731, 394 P.2d 571 (Tomerlin); see, e.g., Hogan v. Country Villa Health Services (2007) 148 Cal.App.4th 259, 262, 55 Cal.Rptr.3d 450 [health care power of attorney authorized daughter to sign arbitration agreements for mother, as part admissions packet for a long-term health care facility]; Garrison, supra, 132 Cal.App.4th at pp. 258, 265-267, 33 Cal.Rptr.3d 350 [mother's claims must be arbitrated where daughter was authorized under a health care power of attorney to enter into arbitration agreements on behalf of mother].) Ostensible agency arises when the principal's conduct causes the third party reasonably to believe that the agent has the authority to act on the principal's behalf. (Tomerlin, supra, 61 Cal.2d at p. 643, 39 Cal.Rptr. 731, 394 P.2d 571.)

“[A]n agency[, whether actual or ostensible,] cannot be created by the conduct of the agent alone; rather, conduct by the principal is essential to create the agency.” (Flores, supra, 148 Cal.App.4th at pp. 587-588, 55 Cal.Rptr.3d 823, italics omitted; see Hartong v. Partake, Inc. (1968) 266 Cal.App.2d 942, 960, 72 Cal.Rptr. 722 [stating that liability for the acts of an ostensible agent rests on the doctrine of estoppel, which requires representations by the principal].) “ ‘ “ ‘The principal must in some manner indicate that the agent is to act for [the principal], and the agent must act or agree to act on [the principal's] behalf and subject to [the principal's] 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 ....” ’ ” (Flores, at p. 588, 55 Cal.Rptr.3d 823, italics omitted; see Howell v. Courtesy Chevrolet, Inc. (1971) 16 Cal.App.3d 391, 401, 94 Cal.Rptr. 33 (Howell) [stating that ostensible agency requires the principal to intentionally communicate the agency relationship to the third party or to negligently cause the third party to believe that there is an agency relationship].) 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. (Flores, at p. 588, 55 Cal.Rptr.3d 823; Howell, at p. 401, 94 Cal.Rptr. 33.)

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. (Lopez v. Bartlett Care Center, LLC (2019) 39 Cal.App.5th 311, 313, 319, 251 Cal.Rptr.3d 813; Valentine, supra, 37 Cal.App.5th at pp. 1086-1088, 249 Cal.Rptr.3d 905; Hutcheson v. Eskaton FountainWood Lodge (2017) 17 Cal.App.5th 937, 958, 225 Cal.Rptr.3d 829; Young, supra, 220 Cal.App.4th at pp. 1132-1134, 163 Cal.Rptr.3d 704; Goldman, supra, 220 Cal.App.4th at p. 1173, 164 Cal.Rptr.3d 11; Flores, supra, 148 Cal.App.4th at p. 585, 588, 55 Cal.Rptr.3d 823; Pagarigan v. Libby Care Center, Inc. (2002) 99 Cal.App.4th 298, 301-303, 120 Cal.Rptr.2d 892.)”

The court of appeal in Rogers recognized that Richard had signed the arbitration agreement as his father’s representative but could not conclude Richard acted under an express agency, as defendants “produced no evidence that Richard was expressly authorized to act as Claude’s agent.” Rogers, at 1075. The court of appeal also found it was insufficient for defendants to base a claim of agency on Richard’s apparent belief that he had the authority to sign papers on his father’s behalf and decedent’s asserted failure to disavow Richard of that belief, reasoning,

“[b]ut Richard's conduct alone cannot create an agency (Flores, supra, 148 Cal.App.4th at pp. 587-588, 55 Cal.Rptr.3d 823) and there is no evidence that any conduct on Claude's part justified a belief by defendants that Richard had the authority to sign the arbitration agreement on Claude's behalf.”

“ ‘A third person ... 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 [of she] is dealing is the agent, but also of ascertaining the scope of [that person's] powers.’ ” (Young, supra, 220 Cal.App.4th at p. 1134, 163 Cal.Rptr.3d 704; see also Howell, supra, 16 Cal.App.3d at p. 401, 94 Cal.Rptr. 33.) I

“was not bound by the arbitration agreement, the arbitration agreement does not bind his “spouse, heirs, representatives, executors, administrators, successors, assigns, managers, and agents.” The individual claims of Claude's wife and sons are also not subject to the arbitration agreement because Richard did not sign the arbitration agreement in his personal capacity and there was no evidence that he had the authority to sign the arbitration agreement on behalf of his mother and/or brothers. (Monschke, supra, 244 Cal.App.4th at pp. 585, 587, 197 Cal.Rptr.3d 921; Goldman, supra, 220 Cal.App.4th at pp. 1176-1178, 164 Cal.Rptr.3d 11; Goliger, supra, 123 Cal.App.4th at pp. 377-378, 19 Cal.Rptr.3d 819.)

As argued in the opposition, here, defendants have failed to submit any showing to meet their burden of showing that there was any actual agency or ostensible authority on the part of Zavala Jr. to bind decedent to the Arbitration Agreement. There is no evidence or argument made concerning any conduct in this matter by the principal, only by the agent, Zavala Jr., which evidence supports no more than the execution of the Arbitration Agreement pursuant to the agent’s attestation of representative standing. As discussed above in Rogers, an agency “cannot be created by the conduct of the agent alone; rather, conduct by the principal is essential to create the agency.” Rogers, at 1074.

Defendants in the reply do not mention Rogers, do not distinguish it from the showing here, and do not submit any further argument or evidence to provide the necessary showing. There is no declaration of a representative of the facility, for example, describing conduct of decedent which would have reasonably suggested the existence of an agency relationship. There has been no production of a power of attorney. The reply again points to the representation by the agent in executing the Arbitration Agreement that he was acting with the consent or authorization of the principal, and the principal never objecting, with no reference to any conduct of the principal. The court of appeal in Rogers pointed out that in that case there had been no evidence that decedent had approved similar acts by his son in the past, or that decedent remained silent even though he knew that his son had signed the arbitration agreement on his behalf. Rogers, at 1076. Such evidence has also not been presented here. These assertions are the same arguments and showing found insufficient in Rogers, as based on no conduct by the principal. The showing is also insufficient here.

Defendants here have not met their burden to show the existence of agency, and the motion to compel arbitration of the claims by decedent is denied. Also, pursuant to Rogers, since decedent has not been shown to have entered into an enforceable arbitration agreement, and there is no evidence Zavala Jr. executed the agreement or entered into it in his individual capacity, plaintiffs cannot be compelled to arbitrate their individual claims.

Moreover, plaintiffs have also argued persuasively that even if the court were to find the existence of an enforceable agreement to arbitrate, this procedural posture is a situation where certain claims in the complaint are not subject to the arbitration agreement. Hence, the court should, and does, exercise its discretion and therefore declines to order any portion of the matter to arbitration, given the risk of inconsistent rulings if the claims are to proceed in different forums.

“If the court determines that a party to the arbitration is also a party to litigation in a pending court action or special proceeding with a third party as set forth under subdivision (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.”

Here, the Arbitration Agreement repeatedly provides that a resident by entering into the Arbitration Agreement cannot waive the ability to sue for violation of the Resident Bill of Rights. The Arbitration Agreement states, in bold letters at the beginning, just under the title, “ARBITRATION OF MEDICAL MALPRACTICE DISPUTES,” “Residents shall not be required to sign this arbitration agreement as a condition of admission to this facility, and cannot waive the ability to sue for violation of the Resident Bill of Rights.” [Ex. A, p. 2].

The Arbitration Agreement further provides, “Pursuant to California Health and Safety Code Section 1430, the Resident does not waive his/her right to bring a lawsuit in court against the Facility for violations of the Patient’s Bill of Rights contained in Title 22 of the California Code of Regulations Section 72527.”

The document also states, in capital letters, “HOWEVER, UNDER SECTION 1430 OF THE CALIFORNIA HEALTH AND SAFETY CODE, THE RESIDENT DOES NOT WAIVE HIS/HER RIGHT TO BRING A LAWSUIT IN COURT AGAINST THE FACILITY FOR VIOLATIONS OF THE PATIENT’S BILL OF RIGHTS CONTAINED IN TITLE 22 OF THE CALIFORNIA CODE OF REGULATIONS SECTION 72527.” [Ex. A, p. 2].

The Complaint here alleges a third cause of action for Violation of H&S Code section 1430(b), which, under the express term of the Arbitration Agreement itself, is not subject to waiver, or to the agreement to arbitrate. The cause of action is based on much of the same conduct alleged to be actionable in the other causes of action of the Complaint, and the possibility of inconsistent rulings is significant. The petition accordingly is denied on this ground as well.

Defendants have failed to meet their burden to show the existence of agency, either actual or ostensible, to establish that the Arbitration Agreement is enforceable against decedent Julio Zalazar. Since decedent has not been shown to have entered into an enforceable arbitration agreement, and there is no evidence Julio Zavala Jr. executed the agreement or entered into it in his individual capacity, or on behalf of the other plaintiffs, plaintiffs cannot be compelled to arbitrate their individual claims. See Rogers v. Roseville SH, LLC (2022) 75 Cal.App.5th 1065.

The Court also finds that this is a matter pursuant to which the Court would deny arbitration based on CCP section 1281.2, as the Arbitration Agreement expressly excludes claims for violation of the Resident’s Bill of Rights/Patient’s Bill of Rights, which claim is being pursued in this litigation in the third cause of action. The third cause of action would not be subject to arbitration. Pursuant to CCP §1281.2(c), the court determines that this is accordingly a case where parties to the alleged arbitration agreement would also be parties to a pending court action or special proceeding with the parties pursuing the third cause of action, arising out of the same transaction or series of related transactions, and that there is significant possibility of conflicting rulings on a common issue of law or fact. Pursuant to CCP §1281.2(d), based on this determination, the Court in its discretion refuses to enforce the arbitration agreement.

Plaintiffs’ Objections to Evidence discussed in the opposition memorandum have been considered by the Court, and the Court questions the methods here employed in the petition and reply to submit, authenticate and establish an exception to the hearsay rule. However, the Court will nevertheless consider the documents, based on the relaxed authentication standard applied under case law, and the waiver implied by the reliance by plaintiffs in the opposition papers on the terms of the submitted documents.