Harbaugh v. BKD Arbors of Santa Rosa CA1/1 ( 2023 )

Filed 12/13/23 Harbaugh v. BKD Arbors of Santa Rosa CA1/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
ROBERT HARBAUGH et al.,
Plaintiffs and Respondents,
A168599
v.
BKD ARBORS OF SANTA ROSA, (Sonoma County
LLC, et al., Super. Ct. No. SCV-272523)
Defendants and Appellants.
Robert Harbaugh, who was 82 years old and had dementia and
Parkinson’s disease, was admitted to a residential care facility. He died a few
months later, after suffering several falls. Harbaugh’s wife and children
(collectively, plaintiffs) sued the facility and associated entities (collectively,
defendants), alleging claims on both Harbaugh’s behalf and their own.1
Defendants filed a motion to compel arbitration of all the causes of
action, based on an arbitration agreement in the residency agreement
Harbaugh’s wife signed when Harbaugh was admitted to the residential care
facility. The trial court denied the motion, holding that Harbaugh’s wife did
1 Plaintiffs are Harbaugh’s wife, his daughter, and his five sons,
including one who is his successor-in-interest. Defendants are BKD Arbors of
Santa Rosa, LLC d/b/a Brookdale Chanate (Brookdale Chanate), Brookdale
Senior Living Communities, Inc., and Brookdale Senior Living, Inc.
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not have authority to bind him to arbitration. On appeal from this ruling,
defendants argue that Harbaugh’s wife did have such authority and
Harbaugh is estopped from claiming the arbitration agreement is
unenforceable. We affirm.
I.
FACTUAL AND PROCEDURAL
BACKGROUND
As alleged in the complaint, Harbaugh was admitted to Brookdale
Chanate, a Santa Rosa residential care facility for the elderly, in mid-
September 2021. Harbaugh’s wife “no longer felt she was able to adequately
provide him with the care he needed,” with falls being a particular concern.
Brookdale Chanate assessed Harbaugh as having a high risk for falling but
“failed to actually generate any real plan or identify concrete interventions
that would protect [him] from falling.” Harbaugh then sustained serious
falls, requiring hospital visits, in late September and mid-October. Later in
October, after the hospital refused to discharge him to Brookdale Chanate, he
was transferred to another facility. His “condition continued to deteriorate,”
and he died on November 19, 2021.
Plaintiffs sued defendants in January 2023. The complaint alleges
causes of action for elder neglect, negligence, and constructive fraud on
Harbaugh’s behalf and negligent infliction of emotional distress and wrongful
death on plaintiffs’ own behalf. After answering the complaint, defendants
filed a motion to compel arbitration of all the claims.
The motion to compel arbitration rested on a 17-page “Residency
Agreement” between Brookdale Chanate and Harbaugh (residency
agreement), which Harbaugh’s wife signed as his “Legal Representative.”
The agreement contains a typed provision identifying her legal authority to
sign as “Healthcare Power of Attorney.” It is undisputed on appeal that in
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fact, Harbaugh’s wife never had durable power of attorney over his
healthcare decisions.
The residency agreement contains a three-page “Agreement to
Arbitrate” (arbitration agreement). The arbitration agreement requires
arbitration of “[a]ny and all claims or controversies arising out of, or in any
way relating to[,] services and care provided by [Brookdale Chanate]
pursuant to [the residency agreement], and including disputes regarding
interpretation of [the residency agreement],” except that it “does not apply to
actions for eviction, tenant’s rights, landlord-tenant issues[,] or housing-
related claims.”
In July 2023, after a hearing, the trial court issued a written order
denying the motion to compel arbitration. The court rejected defendants’
arguments that plaintiffs were bound by the arbitration agreement on the
bases that (1) Harbaugh’s wife signed the residency agreement as Harbaugh’s
“Healthcare Power of Attorney”; (2) Harbaugh’s wife “had the power to bind
[Harbaugh] to the arbitration agreement merely by being his wife”; and
(3) “[Harbaugh] accepted the other terms of the contract, . . . and he cannot
pick and choose which portions of the contract he now wishes to accept.”
II.
DISCUSSION
On appeal, defendants do not challenge the trial court’s conclusion that
they failed to establish Harbaugh’s wife held healthcare power of attorney.
Rather, they contend she had a fiduciary duty “to obtain and provide housing
and medical care for her husband,” meaning she had authority to sign the
residency agreement—and thus the arbitration agreement—on Harbaugh’s
behalf. They also claim Harbaugh is estopped from denying that the
arbitration agreement is enforceable. We are not persuaded on either count.
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“The party seeking to compel arbitration bears the burden of proving
the existence of a valid arbitration agreement.” (Flores v. Evergreen at San
Diego, LLC (2007) 148 Cal.App.4th 581, 586 (Flores).) “ ‘Although “[t]he law
favors contracts for arbitration of disputes between parties” [citation], “ ‘there
is no policy compelling persons to accept arbitration of controversies which
they have not agreed to arbitrate.’ ” ’ ” (Goldman v. Sunbridge Healthcare,
LLC (2013) 220 Cal.App.4th 1160, 1169 (Goldman).) Thus, the general rule
is that “ ‘ “one must be a party to an arbitration agreement to be bound by it
or invoke it.” ’ ” (Pillar Project AG v. Payward Ventures, Inc. (2021)
64 Cal.App.5th 671, 675.)
There are exceptions to this rule. “ ‘ “ ‘[A]s one authority has stated,
there are six theories by which a nonsignatory [to an agreement] may be
bound to arbitrate: “(a) incorporation by reference; (b) assumption;
(c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third[-]party
beneficiary.” ’ ” ’ ” (Pillar Project AG v. Payward Ventures, Inc., supra,
64 Cal.App.5th at p. 675.) Only the theories of agency and estoppel are at
issue here. Whether an arbitration agreement is binding on a nonsignatory
is a question of law that we review de novo. (Ibid.)
Initially, we note that neither the parties nor the trial court clearly
distinguished between individual plaintiffs or causes of action in determining
whether the arbitration agreement is enforceable. Thus, while the analysis
arguably differs for the claims that Harbaugh’s family members brought on
their own behalf, we consider only whether Harbaugh was bound to arbitrate
his own claims through his wife’s execution of the residency agreement.
In denying the motion to compel arbitration, the trial court relied on
several cases holding that marital status alone does not convey agency to sign
an arbitration agreement on a spouse’s behalf. (Valentine v. Plum Healthcare
4
Group, LLC (2019) 37 Cal.App.5th 1076, 1083–1085; Goldman, supra,
220 Cal.App.4th at pp. 1171–1172; Warfield v. Summerville Senior Living,
Inc. (2007) 158 Cal.App.4th 443, 447–449 (Warfield); Flores, supra,
148 Cal.App.4th at pp. 586–587.) All these cases involved arbitration
agreements signed in connection with the nonsignatory spouse’s placement in
a skilled nursing facility or, as here, a residential care facility for the elderly.
(Valentine, at pp. 1080–1081; Goldman, at p. 1164; Warfield, at pp. 444–445;
Flores, at p. 585.)
Defendants argue that these cases are distinguishable because they
involved stand-alone arbitration agreements, whereas the arbitration
agreement here was part of the residency agreement. According to
defendants, this distinction is significant because Harbaugh’s wife had
fiduciary duties to ensure he had housing and medical care, and she was thus
“legally obligated to execute” the residency agreement.
Flores rejected a similar argument. The Fourth District Court of
Appeal “agree[d] that spouses are fiduciaries and owe a duty of support in the
family law context,” but it concluded that “these duties do not create a power
to contractually bind each other in the agency context.” (Flores, supra,
148 Cal.App.4th at p. 589; accord Goldman, supra, 220 Cal.App.4th at
pp. 1172–1173.)2 Flores also observed that “[u]nlike admission decisions and
medical care decisions, the decision whether to agree to an arbitration
2 Flores recognized that “[s]ome decisions contain broad dicta stating
spouses can bind each other to arbitration agreements” but concluded that
this proposition did not apply across the board because it was supported by
cases addressing different situations, such as where a “patient bound the
other spouse to arbitration of claims arising from the [patient’s] medical
treatment.” (Flores, supra, 148 Cal.App.4th at p. 589, fn. 4.) Defendants do
not convincingly explain why we should apply such cases instead of Flores
and other decisions involving more analogous facts.
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provision in a nursing home contract is not a necessary decision that must be
made to preserve a person’s well-being. Rather, an arbitration agreement
pertains to the patient’s legal rights, and results in a waiver of the right to a
jury trial.” (Id. at p. 594.) Thus, while Harbaugh’s wife may have signed the
residency agreement in fulfillment of her fiduciary duties to Harbaugh, she
had no fiduciary duty to execute the arbitration agreement on his behalf.
Our conclusion is not altered merely because the arbitration agreement
was part of the residency agreement instead of being a stand-alone document.
Harbaugh had no obligation to agree to arbitration to enter Brookdale
Chanate. The arbitration agreement states that the resident or resident’s
legal representative “understand[s] that you have the choice to opt out of [the
provisions requiring arbitration] with respect to any future, but not existing,
claims against [Brookdale Chanate],” and provides a space to sign to opt out.
The arbitration agreement also states that consent to arbitrate may be
withdrawn within 30 days upon written notice to Brookdale Chanate. Thus,
Harbaugh’s wife could have signed the residency agreement on Harbaugh’s
behalf without agreeing to arbitration.
Defendants also claim that Harbaugh is estopped from denying that
the arbitration agreement is enforceable because he enjoyed the benefits of
the residency agreement. They rely on NORCAL Mutual Ins. Co. v. Newton
(2000) 84 Cal.App.4th 64 (NORCAL), in which Division Two of this court
addressed an arbitration provision in a medical-malpractice insurance policy
bought by a psychiatrist. (Id. at pp. 66, 72.) The psychiatrist and his wife,
who allegedly provided unauthorized treatment herself, were both sued for
malpractice, and they sought defense and indemnity from the insurer. (Id.
at pp. 66–67.) At one point, after the malpractice action settled, they
demanded arbitration of certain issues under the policy, but the wife later
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purported to withdraw her consent to arbitration. (Id. at pp. 68–70.)
NORCAL held that the wife was bound to arbitrate her claims, because her
“demands for arbitration, along with her acceptance of a defense funded by
[the insurer] in the malpractice case and agreement to the settlement
resulting from that defense, constituted conduct seeking the benefit, and
therefore requiring acceptance of the burden, of the insurance policy.” (Id. at
p. 81.)
Warfield, which like this case concerned an arbitration agreement
pertaining to a nonsignatory spouse’s placement in a residential care facility,
distinguished NORCAL and declined to apply it. (Warfield, supra,
158 Cal.App.4th at pp. 445, 450.) First, unlike the NORCAL wife, the
Warfield nonsignatory wife never sought to compel the facility to arbitrate.
(Id. at p. 450.) Second, unlike the NORCAL wife, the Warfield wife was “not
trying to take advantage of certain provisions of a contract while avoiding
application of other provisions of that same contract. Rather, [she] . . .
utilized the services of the residential care facility as provided under certain
admissions documents. Those are separate agreements from the arbitration
agreement—a different, optional agreement. [She] has not sought to make
use of the arbitration agreement and she is not estopped to assert that it is
unenforceable against her.” (Id. at pp. 450–451.)
Seizing on Warfield’s statement that the admission documents there
were “separate agreements from the arbitration agreement” (Warfield, supra,
158 Cal.App.4th at p. 450), defendants claim that Warfield “reache[d] its
conclusion because [the residential care facility] attempted to enforce a stand-
alone contract for arbitration” from which the nonsignatory spouse clearly did
not benefit. Again, however, we are not persuaded that the fact the
arbitration agreement here was part of the residency agreement is
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significant. Not only was the arbitration agreement “optional,” as was the
one in Warfield, Harbaugh never attempted to “make use” of it in any way, in
contrast to the NORCAL wife’s actions. (Warfield, at pp. 450–451.) To
conclude that Harbaugh is estopped from challenging the arbitration
agreement merely because it was not contained in a separate document
would elevate form over substance.
In short, defendants fail to identify any valid theory by which
Harbaugh’s wife had the authority to consent to arbitration on his behalf. As
a result, the trial court properly denied their motion to compel arbitration.
III.
DISPOSITION
The order denying appellants’ motion to compel arbitration is affirmed.
Respondents are entitled to their costs on appeal.
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_________________________
Humes, P.J.
WE CONCUR:
_________________________
Margulies, J.*
_________________________
Banke, J.
*Retired Justice of the Court of Appeal, First Appellate District.
Harbaugh et al. v. BKD Arbors of Santa Rosa, LLC, et al. A168599
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