Judge: Salvatore Sirna, Case: 23PSCV03569, Date: 2024-08-07 Tentative Ruling

Case Number: 23PSCV03569    Hearing Date: August 7, 2024    Dept: G

Defendants Country Oaks Partners, LLC and Sun-Mar Management Services, Inc.’s Petition to Compel Binding Arbitration and Request for Stay of Discovery

Respondent: Plaintiff Mark Harrod

TENTATIVE RULING

Defendants Country Oaks Partners, LLC and Sun-Mar Management Services, Inc.’s Petition to Compel Binding Arbitration and Request for Stay of Discovery is DENIED.

BACKGROUND

This is a wrongful death action. From November 10, 2019, to December 13, 2019, Defendants Country Oaks Partners, LLC (Country Oaks) and Sun-Mar Management Services, Inc. (Sun-Mar) provided in-patient rehabilitation care and services to Charles Logan at the Country Oaks Care Center in Pomona. During this time, Country Oaks and Sun-Mar allegedly failed to provide proper care and supervision for Logan which resulted in Logan suffering from falls and pressure injuries. After Logan’s health continued to decline, Logan passed away in November 2022.

On November 15, 2023, Mark Harrod filed a complaint against Country Oaks, Sun-Mar, Alessandra Hovey, Denise Harrod-Barrow (as a nominal defendant), and Does 1-100, alleging a single cause of action for wrongful death.

On February 2, 2024, Country Oaks and Sun-Mar filed the present motion. A hearing on the present motion is set for August 7, 2024, along with a case management conference and OSC RE: Failure to File Proof of Service/Dismissal as to Hovey.

ANALYSIS

Country Oaks and Sun-Mar petition to compel Harrod to binding arbitration pursuant to an arbitration agreement. For the following reasons, the court DENIES their petition.

Legal Standard

“A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.) The court must grant a petition to compel arbitration unless it finds no written agreement to arbitrate exists, the right to compel arbitration has been waived, grounds exist for revocation of the agreement, or litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. (Code Civ. Proc., § 1281.2.) A petition to compel arbitration functions as a motion. (Code Civ. Proc., § 1290.2.)

In a motion or petition to compel arbitration, “the moving party bears the burden of producing ‘prima facie evidence of a written agreement to arbitrate the controversy.’” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165 (Gamboa).) Once the court finds an arbitration agreement exists, the party opposing arbitration bears the burden of establishing a defense to enforcement by preponderance of the evidence. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) In interpreting an arbitration agreement, courts apply the same principles used to interpret contractual provisions with the fundamental goal of giving effect to the parties’ mutual intentions and applying contractual language if clear and explicit. (Valencia v. Smyth (2010) 185 Cal.App.4th 153, 177.) Because public policy strongly favors arbitration, “any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” (Coast Plaza Doctors Hosp. v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.)

The Federal Arbitration Act (FAA) applies to contracts that involve interstate commerce (9 U.S.C. §§ 1, 2), but since arbitration is a matter of contract, the FAA also applies if stated in the agreement. (See Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 355.) Pursuant to the FAA, the court’s role “is limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” (Philadelphia Indemnity Ins. Co. v. SMG Holdings, Inc. (2019) 44 Cal.App.5th 834, 840, quoting U.S. ex rel. Welch v. My Left Foot Children’s Therapy, LLC (9th Cir. 2017) 871 F.3d 791, 796.)

Discussion

In this case, Country Oaks and Sun-Mar argue the present action is subject to an arbitration agreement that was signed by Harrod on November 29, 2019. (Blaylock Decl., Ex. B.) The arbitration agreement states it is between the Country Oaks Care Center and Logan with Harrod signing as Logan’s legal representative or agent. (Blaylock Decl., Ex. B, § 2.1.) In the arbitration agreement, Logan agreed to submit to arbitration “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 tendered or not rendered.” (Blaylock Decl., Ex. B, § 1.1.) The arbitration agreement also states it applies to “any and all other disputes, controversies, demands or claims that relate or arise out of the provision of services or health care or any failure to provide services or health care” by Country Oaks Care Center. (Blaylock Decl., Ex. B, § 1.2.) And as to Harrod, the arbitration agreement states it applies to any claims asserted in Harrod’s “personal capacity that arise out of or relate to any the provision of or failure to provide services (medical or otherwise) or goods by the Facility  [Country Oaks Care Center] to the Resident [Logan] . . . .” (Blaylock Decl., Ex. B, p. 3.) Last, the arbitration agreement states it evidences “a transaction in interstate commerce governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-16.” (Blaylock Decl., Ex. B, p. 1.)

Based on the above, Country Oaks and Sun-Mar have adequately established the existence of an applicable arbitration agreement that is governed by the FAA. Accordingly, the burden now shifts onto Harrod to establish any defenses to the enforcement of this agreement.

In opposition, Harrod argues the arbitration agreement is unenforceable because (1) Country Oaks and Sun-Mar failed to establish the existence of a valid agreement, (2) the agreement does not identify Harrod as a party and Harrod did not sign the agreement in an individual capacity, (3) the agreement is unconscionable, and (4) there is a significant risk of conflicting rulings. The court addresses these arguments below.

Existence of Valid Arbitration Agreement

Harrod first argues Country Oaks and Sun-Mar failed to properly authenticate the arbitration agreement at issue. (Opp., p. 9:3-20.) To establish prima facie evidence of an arbitration agreement, the party moving for arbitration need only provide a copy of the arbitration provision that purports to be signed by the parties or set forth the agreement’s terms in the motion. (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165 (Gamboa).) The moving party is not required “to follow the normal procedures of document authentication.” (Ibid, quoting Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218.) The opposing party “bears the burden of producing evidence to challenge the authenticity of the agreement” and can do so with statements under oath. (Ibid.) If the opposing party meets their burden, the moving party must then establish a valid arbitration with admissible evidence by preponderance of the evidence. (Ibid.)

Here, the court finds Harrod failed to present evidence that challenges the authenticity of the arbitration agreement provided by Country Oaks and Sun-Mar. Because Harrod failed to do, Country Oaks and Sun-Mar do not have the burden of authenticating the arbitration agreement and Harrod’s signatures. Thus, the court finds this argument lacks merit.

Application of the Arbitration Agreement to Harrod

Harrod next contends the arbitration agreement cannot be enforced against Harrod because Harrod was not clearly identified as a party to the arbitration agreement and did not sign the arbitration agreement in Harrod’s individual capacity. (Opp., p. 11:19-12:4.) Harrod contends the present case is substantially similar to the facts in Goldman v. Sunbridge Healthcare, LLC (2013) 220 Cal.App.4th 1160 (Goldman).

The court in Goldman held a nursing facility could not compel the arbitration of wrongful death claims by a deceased resident’s wife because the wife did not have authority to sign the arbitration agreements on the resident’s behalf and did not sign the agreements in an individual capacity. (Id., at p. 1164-1165.) While the wife’s signature was labelled as the “Signature of Resident's Legal Representative in his/her Individual and Representative Capacity,” the court held the signature and label had no legal effect because the wife was not the resident’s legal representative. (Id., at p. 1176-1177.) The court also noted there was ambiguity as to whether the wife was signing in an individual capacity in addition to the wife’s capacity as legal representative and that such ambiguity would be construed against the nursing home as the drafter. (Ibid.)

In this case, the signature lines for Harrod in the arbitration agreement list Harrod as “Legal Representative/Agent.” (Blaylock Decl., Ex. B, p. 3.) Harrod contends these signatures were ineffective as Harrod was neither. (Opp., p. 11:19-22.)

While Harrod’s opposition does not explicitly state so, it appears this contention is based on our supreme court’s recent decision in Harrod v. Country Oaks Partners, LLC (2024) 15 Cal.5th 939 (Harrod), petn. for writ of cert. pending, petn. filed June 26, 2024, No. 23-1357. (Opp., p. 7:18-8:1.) The Harrod case involves the same parties and arises from the same of substantial identical transactions, incidents and/or events.  Despite this, the parties did not alert this court to the related case already being litigated between the parties, case 20STCV26536, Dept. 71, Mosk Courthouse, as mandated in California Rules of Court, Rule 3.300 (b) & (d).

In Harrod, our supreme court addressed whether the same arbitration agreement at issue here could compel the arbitration of Logan’s separate claims against Country Oaks and Sun-Mar for negligence and elder abuse. (Id., at p. 949.) Our supreme court held Country Oaks and Sun-Mar could not rely on Harrod’s execution of the arbitration agreement to compel Logan to arbitration because agreeing to arbitration was not within Harrod’s authority as Logan’s health care agent. (Id., at p. 946-947.)

In their moving papers and reply brief, Country Oaks and Sun-Mar fail to address Harrod and instead raise the same argument Harrod rejected by claiming Logan’s health care directives gave Harrod authority to sign the arbitration agreement. (Id., at p. 966; Motion, p. 3:11-16, 4:8-9.) Because Harrod is binding authority and because Defendants fail to address or distinguish it, the court rejects this argument. In addition, Defendants suggest Harrod was Logan’s agent by virtue of language in the arbitration provision which certified that Harrod has authority to sign on Logan’s behalf. (Motion, p. 4:8-16.) Defendants also claim a declaration by Country Oaks Care Center’s admission coordinator, Sandra Alvarado, establishes Logan gave consent to Harrod to sign on Logan’s behalf. (Motion, p. 3:15-19.)  The court disagrees.

To the extent Country Oaks and Sun-Mar contend Harrod has ostensible agency, the court notes this contention has not been foreclosed in Harrod. (Id., at p. 948, fn. 3 [noting the court did not address the possibility that Harrod had authority to act pursuant to the theory of ostensible agency].) “When a defendant contends an agreement to arbitrate is binding because it was signed by an agent of the plaintiff, the defendant bears the burden of proving the signatory was the plaintiff’s actual or ostensible agent.” (Kinder v. Capistrano Beach Care Center, LLC (2023) 91 Cal.App.5th 804, 812 (Kinder).)

Actual agency occurs “when the agent is really employed by the principal” (Civ. Code, § 2299) while ostensible agency occurs “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.) In other words, ostensible agency requires the following: “(1) conduct by the [principal] that would cause a reasonable person to believe that the [alleged agent] was an agent of the [principal], and (2) reliance on that apparent agency relationship by the plaintiff.” (Mejia v. Community Hospital of San Bernardino (2002) 99 Cal.App.4th 1448, 1453.)

Here, Country Oaks and Sun-Mar contend the following clause establishes Harrod had authority to sign on Logan’s behalf:

“By virtue of Resident’s consent, instruction and/or durable power of attorney, I hereby certify that I am authorized to act as Resident’s agent in executing and delivering of this arbitration agreement. I acknowledge that the Facility is relying on this representation. . . .” (Motion, p. 4:10-14, quoting Blaylock Decl., Ex. B, p. 3.)

But “[a] person cannot become the agent of another merely by representing [themselves] as such.” (Pagarigan v. Libby Care Center, Inc. (2002) 99 Cal.App.4th 298, 301 (Pagarigan).) In similar circumstances, multiple courts have rejected the argument that the inclusion of such a provision in the arbitration agreement signed by the purported agent is sufficient to create actual or ostensible agency. (Kinder, supra, 91 Cal.App.5th at p. 813 [collecting cases]; see also Goldman, supra, 220 Cal.App.4th at p. 1176.) Thus, Country Oaks and Sun-Mar can only establish Harrod had authority to sign as Logan’s agent by pointing to Logan’s actions or conduct. While they attempt to do so by pointing to Alvarado’s declaration, the court finds this incomplete form declaration to be wholly insufficient.

First, while the instructions on the form declaration state to “circle the one following statement that applies,” Alvarado failed to circle any of the four statements that followed which address whether the resident consented to the arbitration agreement. (Alvarado Decl., ¶ 3-7.) Thus, the court finds this declaration is incomplete.  Second, while Alvarado failed to circle one of the four statements, Alvarado did fill in the blanks for the third statement which reads as follows (with Alvarado’s additions underlined):

“The Resident was unable to sign himself or herself. The Resident authorized Mark Harrod (name) his or her nephew (relationship to Resident) to sign the Agreement on his or her behalf.” (Alvarado Decl., ¶ 6.)

Even if the court disregarded Alvarado’s failure to follow the instructions in the form and circle this statement, the court would still find this statement insufficient as it does not state how Logan authorized Harrod to sign the arbitration agreement. Additionally, the court finds the statement sufficiently vague since the court is unable to determine whether the authorization to which Alvarado refers is the healthcare directives Logan executed, directives which are insufficient as noted above. Furthermore, Alvarado’s declaration suggests Logan was not present at the time the arbitration agreement was signed since Alvarado only describes explaining the agreement to Harrod. (Alvarado Decl., ¶ 1.) As such, the court finds Country Oaks and Sun-Mar failed to provide sufficient evidence that demonstrates Harrod was Logan’s agent pursuant to a theory of ostensible agency.

Because Harrod was neither Logan’s legal representative nor agent, the court finds Harrod’s two signatures to the contrary in the present arbitration are ineffective. (See Goldman, supra, 220 Cal.App.4th at p. 1177.)

Country Oaks and Sun-Mar attempt to distinguish Goldman by contending the present arbitration agreement also includes the following clause:

“I also acknowledge that pursuant to the terms of this agreement, any claims that I may assert in my personal capacity that arise out of or relate to the provision of or failure to provide any services (medical or otherwise) or goods by the Facility to the Resident or the admission agreement are governed by this Arbitration Agreement.” (Reply, p. 3:16-4:2, quoting Blaylock Decl., Ex. B, p. 3.)

While this clause purports to establish Logan’s legal representative or agent is also signing the agreement in an individual capacity, the court finds this clause does not apply to Harrod because Harrod’s signature was ineffective since Harrod did not have authority to sign the agreement in the first place. (Id., at p. 1176 [noting that because there was no person who qualified as resident’s legal representative, “there was also no legal representative to sign in his or her individual capacity”].

Thus, the court finds Harrod was not effectively a party to the arbitration agreement and cannot be compelled to arbitration.

Accordingly, Country Oaks and Sun-Mar’s petition is DENIED.

CONCLUSION

Based on the foregoing, the court DENIES Country Oaks and Sun-Mar’s petition to compel arbitration.