Searcy Healthcare Ctr. LLC v. Murphy , 2013 Ark. 463 ( 2013 )

Cite as 2013 Ark. 463
SUPREME COURT OF ARKANSAS
No. CV-13-210
SEARCY HEALTHCARE CENTER, Opinion Delivered November 14, 2013
LLC D/B/A SEARCY HEALTHCARE
CENTER; SEARCY HC HOLDINGS, APPEAL FROM THE WHITE
LLC; PERENNIAL BUSINESS COUNTY CIRCUIT COURT
SERVICES, LLC; PERENNIAL [NO. CV-2011-13]
CONSULTING SERVICES, LLC;
PERENNIAL LEASING, LLC; SHC HONORABLE THOMAS M.
PROPERTIES, LLC; V. JAMES HUGHES, JUDGE
SANTARSIERO, INDIVIDUALLY,
AND AS THE GOVERNING BODY OF REVERSED AND REMANDED;
SEARCY HEALTHCARE CENTER; CROSS-APPEAL DISMISSED.
JEANNE BUTTERWORTH,
INDIVIDUALLY, AND AS THE
GOVERNING BODY OF SEARCY
HEALTHCARE CENTER; AND
PAMELA MURPHY, IN HER
CAPACITY AS ADMINISTRATOR OF
SEARCY HEALTHCARE CENTER
APPELLANTS
V.
JOHN MURPHY, AS
ADMINISTRATOR OF THE ESTATE
OF JOHN WESLEY MURPHY,
DECEASED, AND ON BEHALF OF
THE WRONGFUL DEATH
BENEFICIARIES OF JOHN WESLEY
MURPHY
APPELLEE
KAREN R. BAKER, Associate Justice
Searcy Healthcare Center, LLC d/b/a Searcy Healthcare Center, Searcy HC Holdings,
Cite as 2013 Ark. 463
LLC, Perennial Business Services, LLC, Perennial Consulting Services, LLC, Perennial
Leasing, LLC, SHC Properties, LLC, V. James Santarsiero, individually, and as governing
body of Searcy Healthcare Center, Jeanne Butterworth, individually, and as governing body
of Searcy Healthcare Center, and Pamela Murphy, in her capacity as administrator of Searcy
Healthcare Center (“SHC”), appeal from the decision of the White County circuit court
denying SHC’s motion to compel arbitration. We reverse and remand.
John Wesley Murphy was a resident of SHC from January 7, 2010, until January 29,
2010. He died on February 12, 2010.
On January 8, 2010, John Wesley Murphy executed a written arbitration agreement
with SHC. The arbitration agreement was not a requirement for John Wesley Murphy to
become a resident at SHC, and testimony showed that John Wesley Murphy had thirty days
from the time of his signature to revoke the agreement. The agreement stated as follows:
Any controversy, claim, or dispute (“claim”) between the parties arising under the
Admissions Agreement, breaches of the Admissions Agreement, the care the Resident
received or does not receive, or in any way arising out of or relating to the Resident’s
stay at SEARCY HEALTHCARE CENTER, LLC shall be settled by arbitration.
The agreement also stated that it was binding on the Resident, the Resident’s representative,
and SHC, as well as the resident’s “spouse, children, heirs, personal representatives, assigns,
guardians, persons appointed pursuant to a power of attorney, and administrators of the
Resident’s estate.”
On January 11, 2011, John Murphy (Murphy) filed a nursing-home-malpractice action
against SHC, as administrator of John Wesley Murphy’s estate and on behalf of the statutory
wrongful-death beneficiaries. SHC filed a motion to stay proceedings and compel arbitration
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based on the arbitration agreement John Wesley Murphy had signed.
On November 9, 2011, the circuit court held a hearing over the motion to compel
arbitration. After the hearing, the circuit court entered a written order denying the motion
to compel arbitration as to the wrongful-death beneficiaries. The circuit court found that
John Wesley Murphy was competent when he signed the agreement, that it was not
unconscionable, and that the Federal Arbitration Act controlled the agreement. However,
the circuit court found that John Wesley Murphy had not extinguished the substantive rights
of the wrongful-death beneficiaries by signing the arbitration agreement. The circuit court
therefore denied the motion to compel arbitration against the wrongful-death beneficiaries.
On appeal, SHC asserts that the circuit court erred in finding that the wrongful-death
beneficiaries were not required to arbitrate their claims. Murphy cross-appeals, arguing that
the circuit court erred in finding that: (1) the Federal Arbitration Act governed the agreement,
and (2) John Wesley Murphy was competent to agree to arbitration.
An order denying a motion to compel arbitration is an immediately appealable order
under Arkansas Rule of Appellate Procedure–Civil 2(a)(12) (2013). We review a circuit
court’s order denying a motion to compel arbitration de novo on the record. HPD, LLC v.
Tetra Techs., Inc., 2012 Ark. 408, ___ S.W.3d ___.
On appeal, SHC contends that the circuit court erred in denying the motion to
compel arbitration as to the wrongful-death beneficiaries. SHC contends that, because a
wrongful-death claim is derivative to the injury claim that the decedent could have brought
had he survived, the wrongful-death beneficiaries are bound by the arbitration agreement.
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SHC asserts that John Wesley Murphy contracted away his right to a jury trial by signing the
arbitration agreement and that the wrongful-death beneficiaries stand in his legal shoes.
Murphy argues that while the wrongful-death claim is derivative of the survivorship claim,
they remain two separate claims with separate plaintiffs and separate rights, and therefore John
Wesley Murphy could not have contracted away the rights of those who were not party to
the arbitration agreement.
The Arkansas wrongful-death statute states as follows:
Whenever the death of a person . . . is caused by a wrongful act, neglect, or
default and the act, neglect, or default would have entitled the party injured to
maintain an action and recover damages in respect thereof if death had not ensued,
then and in every such case, the person or company or corporation that would have
been liable if death had not ensued shall be liable to an action for damages.
Arkansas Code Annotated section 16-62-102(a)(1) (Supp. 2013). The wrongful-death action
is a statutory creation, and since it is in derogation of or at variance with the common law,
we construe it strictly. Estate of Hull v. Union Pac. R.R. Co., 355 Ark. 547, 141 S.W.3d 356
(2004). Strict construction requires that nothing be taken as intended that is not clearly
expressed. Id.
A wrongful-death claim is derivative of the claim that the decedent would have had,
had he survived. See Hull, supra. The right of the next of kin to recover under the Arkansas
death statute is not a mere continuation of the original right of the decedent; it is a new action
in the sense that it arises at a different time, the beneficiaries are different, and the measure of
damages is different. Id. However, it is still a derivative action, and arises only where the
original right of the decedent has been preserved. Id.
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In Hull, we cited comment b of section 46 of the Restatement (Second) of Judgments
(1982) to explain the difference between derivative and independent claims for wrongful
death. That comment states, in part, as follows:
If the claim for wrongful death is treated as wholly derivative, the beneficiaries
of the death action can only sue if the decedent would still be in a position to sue. In
this approach, the decedent’s action for personal injuries during his lifetime has the
same consequences as it does under the survival statute. Accordingly, settlement of the
decedent’s personal injury claims or its reduction to judgment for or against the alleged
tortfeasor extinguishes the wrongful death claim against the tortfeasor. Similarly, issue
preclusion applicable against the decedent is applicable also against the claimant in the
wrongful death action.
In other words, because the wrongful-death claim is derivative, the wrongful-death
beneficiaries have the same limitations as the decedent would if the decedent brought the
claim, and are bound by the agreements entered into by the decedent involving the decedent’s
claims. In Hull, we held that the settlement agreement of the decedent for his injuries bound
the wrongful-death beneficiaries, and they were precluded from bringing a claim. Similarly,
in Brown v. Pine Bluff Nursing Home, 359 Ark. 471, 199 S.W.3d 45 (2004), we held that
wrongful-death beneficiaries were barred from bringing a claim where the action for the
injuries of the decedent had been twice dismissed, the second time with prejudice.
Murphy argues that there is a difference between a settlement agreement and an
arbitration agreement, in that the arbitration agreement does not prohibit the wrongful-death
beneficiary from bringing a claim. This is a distinction without a difference. The FAA places
arbitration agreements on equal footing with other contracts, and requires courts to enforce
them according to their terms. HPD, supra. By holding as Murphy argues, we would be
treating an arbitration agreement differently than we do other contracts, as other contracts
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signed by the decedent are binding on wrongful-death beneficiaries. We would also be
assigning more rights to the wrongful-death beneficiaries than we would to the decedent, in
a derivative action, as the decedent would not be able to avoid arbitration.
Murphy asserts that this court may affirm the circuit court’s order because the
arbitration agreement is not binding against all named defendants. This court may affirm an
order of a circuit court if it reached the right result, even if it is for the wrong reason. See
Courtyard Gardens Health and Rehabilitation, LLC v. Quarles, 2013 Ark. 228, ___ S.W.3d ___.
However, here, we cannot say that the circuit court’s order reached the right result. The
arbitration agreement plainly provides that it is binding upon the “employees, managers,
officers, directors, parent company, subsidiaries, and successors in interest” of Searcy
Healthcare, LLC. We enforce arbitration agreements according to their terms. HPD, supra.
Though Murphy argues that SHC has not brought forward evidence to show that all
defendants are parties to the arbitration agreement, Murphy specifically stated in his complaint
that the basis for claims against each of the defendants was their participation and control over
the operation and business of Searcy Healthcare, LLC. Doubts about arbitrability must be
resolved in favor of arbitration. Id.
Because the circuit court erred as a matter of law in finding that the wrongful-death
beneficiaries were not bound by the arbitration agreement executed by the decedent, we
reverse and remand.
On cross-appeal, Murphy argues that the circuit court erred in finding that the Federal
Arbitration Act governed the agreement and that John Wesley Murphy was competent to
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agree to arbitration. SHC filed a motion to dismiss the cross-appeal, citing two grounds: (1)
that Murphy did not have standing to bring a cross-appeal as the prevailing party below; and
(2) that Murphy attempts to appeal an interlocutory order enforcing the arbitration agreement,
which is not subject to immediate appeal. We hold that the issues that Murphy brings before
us on cross-appeal are not cognizable in the limited, interlocutory appeal of the denial of a
motion to compel arbitration. Accordingly, they are not ripe for appeal.
Murphy alleges that the circuit court erred in finding that the FAA governed the
agreement and that John Wesley Murphy was competent to sign the arbitration agreement.
Both of the errors alleged by Murphy attack the validity of the arbitration agreement and ask
us to hold the agreement as a whole invalid. These arguments have no place in the appeal of
an order denying a motion to compel arbitration. They are more suited for the appeal of an
order granting a motion to compel arbitration.
Pursuant to the Uniform Arbitration Act, an appeal may be taken from an order
denying an motion to compel arbitration or an order granting a motion to stay arbitration.
See Arkansas Code Annotated section 16-108-228 (Supp. 2013). However, an order
compelling arbitration is not appealable. England v. Dean Witter Reynolds, Inc., 306 Ark. 225,
811 S.W.2d 313 (1991). Since we do not allow interlocutory appeals of orders granting
motions to compel arbitration, the issues presented here are not ripe for appeal. Therefore,
we dismiss the cross-appeal.
Reversed and remanded; cross-appeal dismissed.
HANNAH, C.J., and DANIELSON, J., concur.
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JIM HANNAH, Chief Justice, concurring. Based on the doctrine of stare decisis,
I concur in the decision reached by the majority. However, I again state my belief that this
court errs in holding that a wrongful-death action is derivative of the decedent’s action. We
should correct the law governing wrongful-death actions. See Brown v. Pine Bluff Nursing
Home, 359 Ark. 471, 199 S.W.3d 45 (2004) (Hannah, J., concurring).
DANIELSON, J., joins.
Anderson, Murphy & Hopkins, LLP, by: Julia M. Hancock and Mark D. Wankum;
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., by: Stuart P. Miller and Brian A.
Pipkin; and
Wright, Lindsey & Jennings, LLP, by: Jerry J. Sallings and Gary D. Marts, Jr., for
appellants.
Wilkes & McHugh, P.A., by: Jeff R. Priebe and Deborah Truby Riordan, for appellee.
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