Algo-Heyres v. Oxnard Manor ( 2023 )

Filed 2/28/23
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
PEMILADY ALGO-HEYRES et 2d Civil No. B319601
al., (Super. Ct. No. 56-2020-00542015-
CU-NP-VTA)
Plaintiffs and Respondents, (Ventura County)
v.
OXNARD MANOR LP,
Defendant and Appellant.
An arbitration agreement, like any contract, requires the
mutual consent of the parties. Here, we consider whether
respondent Cornelio Heyres, a resident at Oxnard Manor, a
skilled nursing facility, had the capacity to consent to arbitrate
and waive his right to a jury trial on claims for medical
malpractice, elder abuse, and related torts.
The answer is no. Probate Code sections 810 through 812
provide that a party lacks legal capacity to enter into a contract
where deficits in the person’s mental functioning significantly
impair the ability to understand and appreciate the attendant
consequences, risks, and benefits of the contract. Because
respondent lacked legal capacity to enter into a contract, his
arbitration agreement cannot be enforced. The trial court denied
appellant Oxnard Manor’s motion to compel arbitration for that
reason. (Code Civ. Proc., § 1294, subd. (a).) We affirm.
FACTUAL AND PROCEDURAL HISTORY
Cornelio1 suffered a stroke on August 18, 2009. He was
hospitalized at St. John’s Regional Medical Center for two weeks,
followed by a month in St. John’s inpatient rehabilitation facility.
He entered Oxnard Manor, a skilled nursing facility, on October
3.
Four days later, on October 7, Cornelio signed an
arbitration agreement. It stated that he gave up his right to a
jury or court trial, and required arbitration of claims arising from
services provided by Oxnard Manor, including claims of medical
malpractice, elder abuse, and other torts.
Cornelio remained a resident at Oxnard Manor until his
death nine years later. Respondents Pemilady Algo-Heyres and
Wernher Heyres, individually and as Cornelio’s successors in
interest, sued Oxnard Manor for elder abuse/neglect, wrongful
death, statutory violations/breach of resident rights, and
negligent infliction of emotional distress.
Oxnard Manor filed a petition to compel arbitration. Both
sides relied on medical records to demonstrate whether Cornelio
had the mental capacity to consent to the arbitration agreement.
St. John’s records
An occupational therapist assessed Cornelio’s functional
independence in the areas of comprehension, verbal/nonverbal
expression, memory, and problem solving, and rated them as 1
(requires total assistance) on a 7-point scale. The assessment
instrument noted that to “solve complex problems such as
1 We refer to Cornelio Heyres and Wernher Heyres by their
first names for clarity. No disrespect is intended.
2
managing [a] checking account, self-administering meds”
required a score of 6 or 7.
A physical therapy neurological evaluation stated Cornelio
attempted to cooperate during treatment but did not follow
verbal or visual cues. The report noted he had receptive and
expressive communication barriers from aphasia.2 He was rated
as requiring “maximum assist” with problem solving.
A neurologist noted Cornelio “is nodding his head and
seemingly understands the simple questions, but not . . . the
complicated ones.” He “follows the yes or no command” but
“cannot perform the two-step commands and he rarely speaks
more than two or three words.”
Three weeks after the stroke, a speech language pathologist
stated Cornelio’s cognitive insight was “poor” and he required
total assistance with executive function and problem solving. His
overall progress was rated as “slow.”
A month after the stroke, a neurologist noted Cornelio
“spoke 1-2 words” and his comprehension had returned to about
“70-80%.” But he remained unable to follow two-step commands.
A week later, the speech language pathologist noted Cornelio was
“able to follow one-step directions” but required maximum verbal
cues for “abstract, multiple step directions.” He continued to
require maximum assistance for executive functioning and
problem solving.
On discharge from St. John’s on October 2, the
rehabilitation team concluded Cornelio required maximum
2 “Aphasia” was defined as “ ‘a disorder that results from
damage to portions of the brain that are responsible for language.
. . . The disorder impairs the expression and understanding of
language as well as reading and writing.’ ”
3
assistance with executive function and problem-solving skills.
Oxnard Manor records
A weekly summary prepared by a nurse at Oxnard Manor
on October 7, the day the arbitration agreement was signed,
checked boxes for “alert,” “oriented,” and “makes needs known.”
Oxnard Manor also relied on forms from physical
examinations performed by physicians on October 7, 2009,
October 7 of either 2009 or 2011 (the handwritten date is
unclear), and October 15, 2012. On each form, the physician
checked a box indicating that Cornelio “has the capacity to
understand and make decisions.” The handwritten notes on
these forms were partially illegible and included unexplained
abbreviations. The trial court “place[d] little weight on [these]
bare assertions” because Oxnard Manor provided no additional
information to support them.
Wernher’s declaration
Cornelio’s son Wernher stated in his declaration that he
spent several hours daily with his father shortly before and after
the day the agreement was signed. 3 Oxnard Manor caregivers
discussed Cornelio’s condition with Wernher, not with Cornelio.
Wernher made the decisions about his father’s care because
Cornelio did not appear to understand the questions.
Cornelio “struggled with the simplest of speech,” “had
difficulty remembering words,” had difficulty understanding the
speech of others, and would stare blankly in response to simple
questions. “At his best, he would respond to simple yes/no
questions, usually after they were repeated multiple times.” He
3 We consider the declaration even though the trial court’s
ruling did not cite it. (ASP Properties Group, L.P. v. Fard, Inc.
(2005) 133 Cal.App.4th 1257, 1268.)
4
did not appear to recognize family members, including his wife
and his only granddaughter. “[H]is behavior and cognition
appeared constant” during his first month at Oxnard Manor and
neither improved nor deteriorated.
Ruling
The trial court denied Oxnard Manor’s petition to compel
arbitration. It reasoned that “it is more likely to be true than not
true that at the time Cornelio is said to have signed the
arbitration agreement he had a mental deficit that significantly
impaired his ability to understand and appreciate the
consequences of entering into the arbitration agreement.
Therefore, it has not been established that he possessed the
capacity to consent to arbitration.”
DISCUSSION
“ ‘California has a strong public policy in favor of
arbitration as an expeditious and cost-effective way of resolving
disputes. [Citation.] Even so, parties can only be compelled to
arbitrate when they have agreed to do so. [Citation.] . . . Whether
an agreement to arbitrate exists is a threshold issue of contract
formation and state contract law. [Citations.]’ ” (Avila v.
Southern California Specialty Care, Inc. (2018) 20 Cal.App.5th
835, 843-844 (Avila).) “[S]tate law . . . specifically requires
arbitration agreements to be consensual between the parties,
because mutual consent is an essential ingredient of all
contracts.” (Gallo v. Wood Ranch USA, Inc. (2022) 81
Cal.App.5th 621, 638.)
On a petition to compel arbitration, “the trial court sits as a
trier of fact.” (Engalla v. Permanente Medical Group, Inc. (1997)
15 Cal.4th 951, 972.) Where an order denying arbitration is
based on an issue of fact, we review the ruling for substantial
5
evidence. (Fabian v. Renovate America, Inc. (2019) 42
Cal.App.5th 1062, 1066.) We likewise review for substantial
evidence a finding regarding mental capacity. (In re Marriage of
Greenway (2013) 217 Cal.App.4th 628, 649 (Greenway).) On
appeal, we have no power to reweigh the evidence. (Fabian, at p.
1067.) We must resolve all conflicts in the evidence in favor of
the prevailing party. (Ibid.) “ ‘[W]e must “accept as true all
evidence and all reasonable inferences from the evidence tending
to establish the correctness of the trial court’s findings and
decision . . . .” ’ [Citations.]” (Holley v. Silverado Senior Living
Management, Inc. (2020) 53 Cal.App.5th 197, 202.)
Oxnard Manor contends the trial court erroneously placed
the burden on it to show Cornelio had the capacity to enter the
agreement. We disagree.
As noted by the trial court, “The party seeking to compel
arbitration bears the burden of proving the existence of a valid
arbitration agreement.” (Avila, supra, 20 Cal.App.5th at p. 844.)
But the trial court also noted the “rebuttable presumption
affecting the burden of proof that all persons have the capacity to
make decisions and to be responsible for their acts or decisions.”
(Prob. Code, § 810, subd. (a); Wilson v. Sampson (1949) 91
Cal.App.2d 453, 459.)
“A judicial determination that a person is totally without
understanding, or is of unsound mind, or suffers from one or
more mental deficits so substantial that, under the
circumstances, the person should be deemed to lack the legal
capacity to perform a specific act, should be based on evidence of
a deficit in one or more of the person’s mental functions.” (Prob.
Code, § 810, subd. (c).) As the trial court acknowledged, Probate
Code section 811 requires that incapacity to contract be
6
supported by evidence of a deficit in at least one of four areas:
alertness and attention, information processing, thought
processes, and ability to modulate mood and affect. (Prob. Code,
§ 811, subd. (a).) The deficit must “significantly impair[] the
person’s ability to understand and appreciate the consequences of
his or her actions with regard to the type of act or decision in
question.” (Prob. Code, § 811, subd. (b).) The capacity to make a
decision requires the person have the ability to communicate the
decision verbally or by other means, and to understand and
appreciate the rights and responsibilities affected by the decision,
the probable consequences, and the “significant risks, benefits,
and reasonable alternatives involved in the decision.” (Prob.
Code, § 812.)
“[T]he determination of a person’s mental capacity is fact
specific, and the level of required mental capacity changes
depending on the issue at hand . . . with marital capacity
requiring the least amount of capacity, followed by testamentary
capacity, and on the high end of the scale is the mental capacity
required to enter contracts.” (Greenway, supra, 217 Cal.App.4th
at p. 639.) “More complicated decisions and transactions . . .
require greater mental function.” (Andersen v. Hunt (2011) 196
Cal.App.4th 722, 730.) The agreement here was a relatively
complex five-page document that included legal terms, referred to
several statutes, and waived the constitutional right to trial.
While Probate Code sections 811 and 812 provide a
“baseline” for capacity to contract, “Civil Code section 39,
subdivision (b), provides more specific guidelines for determining
the capacity to contract.” (Greenway, supra, 217 Cal.App.4th at
p. 642.) “A rebuttable presumption affecting the burden of proof
that a person is of unsound mind shall exist for purposes of this
7
section if the person is substantially unable to manage his or her
own financial resources or resist fraud or undue influence.” (Civ.
Code, § 39, subd. (b).) When this presumption applies, the party
claiming capacity to contract has the burden “to prove that while
he or she may be unable to manage his or her financial resources
or resist fraud or undue influence, he or she is nevertheless still
capable of contracting being of sound mind as defined by Probate
Code section 811.” (Greenway, at pp. 642-643.)
Evidence here that Cornelio scored below the level
necessary to “solve complex problems such as managing [a]
checking account” supports the conclusion that he was unable to
manage his financial affairs. But regardless of whether the
presumption of Civil Code section 39, subdivision (b) applied,
substantial evidence established that Cornelio lacked the
capacity to enter an arbitration agreement.
Medical professionals at St. John’s concluded that Cornelio
had deficits in receptive and expressive communication, memory,
problem solving, following abstract directions, and executive
functioning. Their reports showed deficits in mental functions
pertaining to information processing, such as memory and the
ability to plan, organize, and carry out actions (Prob. Code, § 811,
subd. (a)(2)(A) & (F)). There was also a deficit in alertness and
attention, including the ability to understand or communicate
with others (id., subd. (a)(2)(B)). Wernher’s declaration
additionally showed that Cornelio was unable to recognize
familiar persons (id., subd. (a)(2)(C)).
The trial court could reasonably infer from the evidence,
including Cornelio’s inability to recognize his wife or
granddaughter, failure to respond to questions about his care,
inability to understand speech, and ability to respond to only
8
simple questions or commands, that his deficits “significantly
impair[ed]” his “ability to understand and appreciate the
consequences” of waiving his right to trial. (Prob. Code, §§ 811,
subd. (b), 812.) Because substantial evidence supported the trial
court’s finding that Cornelio was not competent to enter into an
arbitration agreement, Oxnard Manor did not meet its burden to
establish a valid agreement.
The trial court’s ruling is consistent with Smalley v.
Baker (1968) 262 Cal.App.2d 824, upon which Oxnard Manor
relies. Smalley was decided before the enactment of Probate
Code sections 810 through 812, and was based on Civil Code
sections 38 and 39. It held that “a party is entitled to rescission
of a contract if, when he entered into the contract, he was not
mentally competent to deal with the subject before him with a
full understanding of his rights, the test being, in each instance,
whether he understood the nature, purpose and effect of what he
did.” (Smalley, at p. 832.) Smalley reviewed for substantial
evidence the trial court’s finding that he lacked “the requisite
mental capacity to enter into a contract.” (Ibid.) As discussed
above, substantial evidence here supports the trial court’s finding
that Cornelio lacked the capacity to consent to arbitration.
Finally, we conclude the trial court acted within its
authority as a finder of fact when it credited the St. John’s
reports and gave “little weight on the bare assertions that
Cornelio had the capacity to understand and make decisions.”
(Jennings v. Palomar Pomerado Health Systems, Inc. (2003) 114
Cal.App.4th 1108, 1117.) The trial court found medical notes
from Oxnard Manor to be “nearly illegible,” and noted that no
expert declaration was submitted to interpret them. It weighed
the evidence and found “[t]he more persuasive and compelling
9
evidence is that prior to his admission into defendants’ facility,
Cornelio had a substantial cognitive deficit and, although he was
improving, he was progressing slowly. There is no credible
evidence supporting the abrupt improvement in his condition
that defendants urge the court to find.” This is substantial
evidence that Cornelio lacked capacity to enter into the
arbitration agreement.
DISPOSITION
The order denying appellant’s petition to compel
arbitration is affirmed. Respondents shall be awarded costs on
appeal.
CERTIFIED FOR PUBLICATION.
BALTODANO, J.
We concur:
GILBERT, P. J.
YEGAN, J.
10
Mark S. Borrell, Judge
Superior Court County of Ventura
______________________________
Zarmi Law and David Zarmi for Defendant and Appellant.
Francis Law and Glenna M. Francis for Plaintiffs and
Respondents.