Judge Stephen Morgan, Case 22AVCV00230 2022-08-04 Tentative Ruling

This is a wrongful death action. Plaintiff Trina Kimberly Hernandez (“Plaintiff”), as an individual and as successor in interest to Fred Ruben Hernandez, Sr. (“Decedent”), alleges that on or about August 15, 2021, Decedent was admitted to Defendant Antelope Valley Healthcare District (“AVHD”)’s facility, Antelope Valley Hospital, at 1600 West Avenue J, Lancaster, CA 93534 because he suffered a heart attack and that on or about September 14, 2021, Decedent was transferred to Defendant Premiere Rehabilitation & Wellness Center of Lancaster, LP dba The Ellison John Transitional Care Center (“Premiere”)’s facility located at 43830 10th Street West, Lancaster, CA 93534 because he was not ready for the needed heart surgery. Plaintiff alleges that at Antelope Valley Hospital and Premiere Decedent suffered pressure sores, was made to sit and sleep in his own urine, and that there were no call/bedside buttons next to Decedent or heart monitors attached to Decedent. Plaintiff further alleges that AVHD and Premiere were responsible for failing to give Decedent antibiotics, prescription blood pressure medication, and caused Decedent to suffer malnutrition and dehydration. Plaintiff believes that due to this, Decedent lost his ability to move his arms and legs and the pressure sores multiplied and got worse, ultimately leading to Decedent’s death on September 25, 2021.

On April 05, 2022, Plaintiff filed her Complaint alleging four (4) causes of action for: (1) Wrongful Death, (2) Elder and Dependent Adult Abuse, (3) Medical Malpractice, and (4) Violation of Patients’ Bill of Rights.

On May 20, 2022, AVHD, Defendant Edward Mirazbegian (“Mirazbegian”), and Defendant Stephanie Herider (“Herider”) filed their Answer.

On June 01, 2022, Premiere, Defendant Shane Carlson (“Carlson”), and Defendant Ruby Grajeda-Olivar (“Grajeda-Olivar” and collectively “Defendants”) filed their Petition to Compel Arbitration.

On August 01, 2022, Plaintiff filed an Opposition to the Declaration of Araceli Acevedo.

Standard for Compelling Arbitration – Cal. Code¿Civ.¿Proc.¿section 1281.2 permits a party to file a motion to request that the Court order the parties to arbitrate a controversy. Under Cal. Code¿Civ.¿Proc.¿section 1281.2, the Court may grant the motion if the Court determines that an agreement to arbitrate the controversy exists.¿

Under¿Cal. Code Civ. Proc.¿section 1281.2, it is the trial court that determines if there is a duty to arbitrate the particular controversy which has arisen between the parties.¿(Engineers & Architects Assn. v. Community Development Dept.¿(1994) 30 Cal.App.4th 644, 652-653.)¿In performing its duty to determine if the parties have agreed to arbitrate that type of controversy, the Court is necessarily required to examine and, to a limited extent, construe the underlying agreement.¿(Id.)¿¿

Doubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration.¿(Id.)¿The Court should order them to arbitrate unless it is clear that the arbitration clause cannot be interpreted to cover the dispute.¿(Id., Cal. Code Civ. Proc. §1281.2 [“. . .unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for the revocation of the agreement”].)¿Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.¿(Id.)¿¿

The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract.¿(Id.)¿There is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.¿(Id.)¿

The party seeking to enforce the arbitration agreement bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence.¿(Giuliano v. Inland Empire Personnel, Inc.¿(2007) 149 Cal.App.4th 1276, 1284.)¿The trial court first decides whether an enforceable arbitration agreement exists between the parties and then¿determine whether the plaintiff’s claims are covered by the agreement.¿(Omar v. Ralphs Grocery Co.¿(2004) 118 Cal.App.4th 955, 961.)¿

The party opposing the petition to compel arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.¿(Giuliano v. Inland Empire Personnel, Inc.,¿supra,¿at¿1284.)¿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.¿(Id.)¿

Application – Defendants move the Court for an order to compel arbitration.

Under “both federal and state law, the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate.” (Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 396 (citing Cheng-Canindin v. Renaissance Hotel Associates (1996) 50 Cal.App.4th 676, 683).) Procedurally, a¿petition¿to compel arbitration or stay proceedings must state verbatim the provisions providing for arbitration, or must have a copy of them attached.¿¿(California Rules of Court, Rule 3.1330.)¿¿Here, a copy of the arbitration agreement is attached. (See Petition, Exh. 2.) However, at issue is the individual who signed it and whether he had the authority or agency to do so.

Defendants argue that “there is no question Eugene Hernandez was authorized to act on behalf of his brother, [Decedent].” (Id. 9:11-12.) Defendant highlights part of the arbitration agreement which reads:

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. I also acknowledge that pursuant to the terms of this agreement, any claims that I may assert in my individual 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.

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. I also acknowledge that pursuant to the terms of this agreement, any claims that I may assert in my individual 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 to the Resident or the admission agreement are governed by this arbitration agreement.

Both sections are signed on September 15, 2021 by Eugene Hernandez (“Eugene”[1]) and a facility representative. (Ibid.)

Defendants argue that Eugene was acting pursuant to Decedent’s authority and, thus, an agent. Alternatively, Defendants argue that Eugene had authority to “to execute the Arbitration Agreement on his behalf pursuant to his ostensible agency.” (Id. 14:4-5.) The Court notes that the syntax of this sentence suggests that Eugene had the authority to execute the arbitration agreement as an individual (i.e., “on his behalf”). However, based on the moving papers, the Court believes that Defendants are attempting to argue that Hernandez’s signature binds not only himself, but also Decedent (through his successor in interest) and Decedent’s daughter, Trina Kimberly Hernandez (“Trina”). Defendants further argue that the principles of equitable estoppel apply as Trina received benefits from the arbitration agreement and would now be attempting to avoid the burdens that the contract imposed.

Plaintiff directly rebuts Defendants’ arguments by presenting that: (1) Trina is the only person who has ever been authorized to make decisions on Decedent’s behalf, the only person who has a power of attorney over Decedent, and the only person who has made decisions on Decedent’s behalf at both Defendant Antelope Valley Hospital and Defendant Premier Rehabilitation (Opp. 4:25-28); (2) “agency cannot be created by the conduct of the agent alone; rather, conduct by the principal is essential to create the agency[]” (Flores v. Evergreen at San Diego, LLC (2007) 148 Cal. App. 4th 581, 587-588); (3) even “[o]stensible authority must be established through the acts or declarations of the principal and not the acts or declarations of the agent[]” (Preis v. American Indemnity Co. (1990) 220 Cal. App. 3d 752, 761 (citing People v. Surety Ins. Inc. (1982) 136 Cal. App. 3d 556, 562)); (4) several California appellate courts have soundly rejected the argument that the signature of a family member creates an agency relationship; and (5) Defendants’ estoppel and third party beneficiary arguments are meritless as the arbitration agreement is unenforceable in its entirety. Plaintiff also presents that Nursing homes cannot require applicants or residents to sign an arbitration agreement as a condition of admission or medical treatment. (California Health & Safety Code §1599.81(a).)

The Court notes that no power of attorney was filed or attached as an exhibit in the Opposition. However, the Court makes note that the power of attorney was filed as an exhibit for the Objection to Declaration of Araceli Acevedo.

Defendants’ Reply argues that Defendants have met their burden of proof by placing before the Court a properly authenticated arbitration agreement and that Plaintiff does not meet her burden to establish by a preponderance of the evidence that the contract is unenforceable. Defendants reiterate that Eugene had authority to sign the arbitration agreement as he intentionally held himself out as Plaintiff’s agent. The notes that the Reply does not make a distinction between Plaintiff and Decedent. Defendant presents that, while generally a person who is not a party to an arbitration agreement is not bound by it, exceptions include (1) a patient can sign an arbitration at a healthcare facility which binds relatives and (2) a person who is authorized to act as a patient’s agent can bind the patient and that, in this case, agency arose from oral consent. Defendant presents the declaration of Araceli Acevedo to show that it was confirmed that Eugene could sign the admission and arbitration agreement. Defendants’ remaining arguments include that the Court can sever any objectional terms, that Eugene legally decided to bind the parties and was not forced, and public policy favors arbitration.

The Declaration of Araceli Acevedo states that Eugene confirmed that he was Fred Hernandez’s responsible party (¶ 8), that Araceli Acevedo confirmed with Decedent’s face sheet and hospital records that Eugene was listed as the responsible party and the number one emergency contact while Plaintiff was the number four emergency contact (¶ 9), that Araceli Acevedo explained the arbitration agreement to Eugene (¶ 12), and that Eugene signed the documents without being pressured (¶ 13).

Plaintiff objects to the Declaration of Araceli Acevedo, arguing that this is a new issue presented in the Reply. Additionally, Plaintiff doubts the veracity of the declaration as Defendants had the opportunity to read Plaintiff’s Opposition prior to crafting the declaration. Plaintiff presents Premiere’s own document that contradicts the declaration. The Court declines to strike the Reply brief and takes into consideration the declaration. The Court also takes into consideration the exhibits filed with the Objection to the Declaration of Araceli Acevedo. These documents include: (1) Premiere’s own document that shows that Premiere initially wrote that Decedent had capacity to understand and make decisions, but crossed it out and marked “does NOT have the capacity to understand and make decisions” without a reason provided, but listing Trina Hernandez as “Surrogate Decisionmaker” and the relationship as “next kin daughter” (Exh. 1); and (2) a power of attorney form for health care listing Trina Hernandez as “agent” and “first alternate” and Frank Gonzales as “Second Alternate” (Exh. 2). The document from Premiere was signed on September 23, 2021 and the power of attorney was signed September 05, 2021.

“ ‘Generally speaking, one must be a party to an arbitration agreement to be bound by it. “The 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.” ’ (Buckner v. Tamarin (2002) 98 Cal.App.4th 140, 142 [119 Cal. Rptr. 2d 489].) There are three exceptions to the rule: (1) ‘an agent can bind a principal,’ (2) ‘spouses can bind each other,’ and (3) ‘a parent can bind a minor child.’ (Ibid.)” (Monschke v. Timber Ridge Assisted Living, LLC, 244 Cal. App. 4th 583, 586-87.) None of the exceptions apply here – Eugene was not Decedent’s agent, Eugene was not married to Decedent, and Eugene was not Decedent’s parent. Instead, Eugene is Decedent’s brother.

With regard to agency, “[e]ven when there is no written agency authorization, an agency relationship may arise by oral consent or by implication from the conduct of the parties. (van't Rood v. County of Santa Clara (2003) 113 Cal.App.4th 549, 571 [6 Cal. Rptr. 3d 746].) However, an agency cannot be created by the conduct of the agent alone; rather, conduct by the principal is essential to create the agency. Agency ‘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.’ (Lovetro v. Steers (1965) 234 Cal. App. 2d 461, 474–475 [44 Cal. Rptr. 604]; see Civ. Code, §§ 2298, 2300.) ‘ “ ‘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 … .” ’ (van't Rood, supra, 113 Cal.App.4th at p. 571, italics added.)” (Flores v. Evergreen at San Diego, LLC (2007) 148 Cal.App.4th 581, 587-88.)

As to whether the principal, Decedent, authorized Eugene to act on his behalf, conflicting evidence is presented to the Court. Araceli Acevedo, Admissions Coordinator for Premiere, has filled out a form declaration checking off “The Resident was unable to sign himself or herself. The Resident authorized (name), his or her (relationship to Resident) to sign the Arbitration Agreement on his or her behalf.” (Petition, Exh. 4.) However, Eugene’s declaration states that (1) he was visiting Decedent at the nursing home and (2) Decedent was deaf and unconscious, and could not make decisions for himself. (Opposition, Exh. 1 ¶¶ 5-7.)

Case precedent also holds that “An adult who has no agency relationship with other adults cannot sign away the other adults' right to a jury.” (Goliger v. AMS Properties, Inc. (2004) 123 Cal. App. 4th 374 [citing Buckner v. Tamarin (2002) 98 Cal.App.4th 140 and reviewing Pagarigan v. Libby Care Center, Inc. (2002) 99 Cal.App.4th 298].)

Further, Decedent was alleged to have been admitted on August 15, 2021. Defendants present that Decedent was admitted on September 14, 2021. Yet the admission documents, including the arbitration agreement, were signed after admission. Premiere apparently did not do a physical exam, including marking whether Decedent had capacity to understand and make decisions until September 23, 2021, 23 days from the alleged intake date and nine (9) days from the date Defendants present. Regardless of the form from Premiere, a power of attorney was signed on September 05, 2021, prior to the intake date listing only Trina Hernandez and Frank Gonzales as designated and alternate agents.

The Court concludes that Defendants have not met its burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence. (See Civil Code § 1633.9; and Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842 [trial court may weigh conflicting evidence to determine whether arbitration agreement exists]; and Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th 674685 [trial court serves as the trier of fact when reviewing the parties' conflicting evidence on a motion to compel arbitration].

As to Defendants’ claim that Trina would have received benefits from the arbitration agreement and is attempting to circumvent the burdens imposed by the agreement, the Court highlights that the arbitration agreement clearly states:

Residents shall not be required to sign this arbitration agreement as a condition of admission to this facility or to continue to receive care at the facility.

1.7 Agreement to arbitration is not a precondition for admission to the Facility or to continue to receive care at the Facility. In other words, Resident has the right not to sign the agreement and still be admitted to, or continue receiving care at, the Facility.

Decedent and Trina, as successor-in-interest, were not receiving any benefits that would not have been provided without the arbitration agreement.

Unconscionable arbitration agreements are not enforceable. To be considered unconscionable, an arbitration agreement must be both procedurally and substantively unconscionable. (Wherry v. Award, Inc. (2011) 192 Cal.App.4th 1242 [internal citations omitted].) “ ‘ “[T]he former focus[es] on ‘ “oppression” ’ or ‘ “surprise” ’ due to unequal bargaining power, the latter on ‘ “overly harsh” ’ or ‘ “one-sided” ’ results.” [Citation.]’ (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071, 130 Cal.Rptr.2d 892, 63 P.3d 979.) But the two elements need not exist to the same degree. The more one is present, the less the other is required. (Armendariz, supra, 24 Cal.4th at p. 114, 99 Cal.Rptr.2d 745, 6 P.3d 669.)” (Ibid.) “ ‘ “[E]ven without any notable surprises,” ’ adhesion contracts ‘ “ ‘bear within them the clear danger of oppression and overreaching.’ ” ’ (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1244 [200 Cal. Rptr. 3d 7, 367 P.3d 6] (Baltazar).) Thus, the take it or leave it nature of an adhesive contract ‘is sufficient to establish some degree of procedural unconscionability.’ (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 915 [190 Cal. Rptr. 3d 812, 353 P.3d 741] (Sanchez).)” (Nelson v. Dual Diagnosis Treatment Center, Inc. (2022) 77 Cal.App.5th 643.) “Substantive unconscionability ‘ “pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided.” ’ [Citation.] This includes consideration of the extent to which the disputed term is outside the reasonable expectation of the nondrafting party or is unduly oppressive.’ (The McCajfrey Group, Inc. v. Superior Court (2014) 224 Cal.App.4th 1330, 1349–1350 [169 Cal. Rptr. 3d 766].) ‘The essential notion … is “ ‘that unconscionability requires a substantial degree of unfairness beyond a “simple old-fashioned bad bargain.” ’ ” ’ (Carbajal, supra, 245 Cal.App.4th at pp. 247–248.)” (Id. at 659.)

Here, while the arbitration agreement appears to lack substantive unconscionability, the actions of the agents for Premiere expose a high level of procedural unconscionability. The arbitration agreement is a contract of adhesion which is sufficient to establish some degree of procedural unconscionability. “By itself, an adhesion contract may present a low or modest degree of procedural unconscionability, but that can ‘rise[] to a moderate level’ when the party drafting the agreement fails to provide a copy of the applicable arbitration rules.” (Id. at 660 [internal citations omitted].) At best, the arbitration agreement in this instant action provides only a low degree of procedural unconscionability and, at worst, a modest degree. However, in addition to this, Premiere agents presented to Eugene that he must sign the document in order for Decedent to stay at the center and receive treatment. (Opposition, Exh. 1 ¶¶ 6, 12, and 14.) Eugene is also diagnosed with bipolar disorder and has “great difficulty understanding or comprehending.” (Id., Exh. 1 at ¶ 4.) This supports a finding of a high degree of procedural unsociability. (See Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74 [Plaintiffs Esteban and Matute Casco could not read English, and yet the car wash companies provided the enforceability clause in English only which led to a finding of a high degree of procedural unconscionability].)

Defendants Premiere Rehabilitation & Wellness Center of Lancaster, LP.; Shane Carlson; and Ruby Grajeda-Olivar’s Petition to Compel Arbitration is DENIED.

[1] The Court means no disrespect to either individual by its use of their first names. As the relevant individuals possess the same surname, the Court refers the individuals by their first names for the purpose of clarity.