Kindred Nursing Centers Limited Partnerhship D/B/A Winchester Centre for Health and Rehabilitation N/K/A Fountain Circle Health and Rehabilitation v. Beverly Wellner Individually and on Behalf of the Estate of Joe P. Wellner, and on Behalf of the Wrongful Death Beneficiaries of Joe P. Wellner ( 2017 )

CORRECTED: NOVEMBER-22, 2017
\
RENDERED: NOVEMBER 2, 2017
TO BE PUBLISHED
KINDRED NURSING CENTERS LIMITED APPELLANTS
PARTNERSHIP D/B/A WINCHESTER .
CENTRE FOR HEALTH AND -
REHABILITATION N/K/ A FOUNTAIN1
CIRCLE HEALTH AND REHABILITIATION;
KINDRED NURSING CENTERS EAST, LLC;
KINDRED HOSPITALS LIMITED
PARTNERSHIP; KINDRED HEALTHCARE,
INC.; AND KINDRED HEALTHCARE
OPERATING, INC. .
ON REMAND FROM THE UNITED STATES.SUPREME COURT
V. CASE NO. 16-32
CLARK CIRCUIT COURT CASE NO. 10-CI-00472
BEVERLY WELLNER, INDIVIDUALLY AND APPELLEE
ON BEHALF OF THE ESTATE OF JOE P.
WELLNER, DECEASED, AND ON BEHALF
OF THE WRONGFUL DEATH
BENEFICIARIES OF JOE P. WELLNER
OPINION OF THE COURT BY JUSTICE VENTERS
)
This matter is before the Gourt on remand pursuant to the opinion of the
United States Supreme Court in Kindred Nursing Centers Ltd. Partnership v.
Clark, 137 S. Ct. 1421 (2017). The case initially came to this Court as three
separate actions which we consolidated into a single opinion styled Ex:tendicare
Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. 2015).1 Extendicare Homes,
Inc., did not seek review by the United Stated Supreme Court, and so our
disposition of its case, No. 2013-SC-000426-1, Extendicare Homes, Inc. v.
Whisman became final. Without Extendicare Homes as a party to the United
States Supreme Court action, the case went forward with Kindred identified as
the Appellant. To avoid confusion, we refer to the final decision of this Court
as "E~endicare' and the decision of the United States Supreme Court as
"Kindred."
Among other holdings, ~xtendicare held that an attomey-in..;fact did not
have the authority to bind his principal to a pre-dispute" arbitration· agreement
unless that authority was clearly stated in the power-of-attorney document.. In
Kindred, the Supreme Court dubbed this the "clear statement rule," and for
convenience and consistency we accept that term as a useful name. As
articulated in Ext,endicare, we set forth the clear statement rule as a more
specific application of the general rule stated in Pi.ng v. Beverly Enterprises,
Inc., 376 S.W.3d 581 (Ky. 2012).2 We said in Extendicare:
· [Ping] caution~ ... that given the 'significant legal consequences~
arising from an agreement waiving the principal's rights of ·access
to the courts and to trial by jury, 'authority to make such a waiver
is not to be inferred lightly.' Our holdings throughout this opinion,
··~
as in Pi.ng itself, serve to highlight our reservation about casually
inferring a power laden with such consequences.
1 The three cases are: No. 2013-SC-000426-1, Extendicare Homes, Inc., v.
Whisman; No. 2013-SC-000430-1, Kindred Nursing Centers Limited Partnership v.
Clark, and No. 2013-SC-000431-1, Kindred Nursing Centers Limited Partnership v.
Wellner.
2 Cert. denied,_. U.S._, 133 S. Ct. 1996 (2013).
2
478 S.W.3d at 327 (quo~g Pi.ng, 376 S.W.3d at 593).
Kindred Nursing Centers challenged the "clear statement rule" by
petitioning the United States Supreme Court for a writ of certiorari. ' The writ
was granted and the Supreme Court ultimately concluded that our adoption of
the clear statement rule, insofar as it affected Kindred's pre-dispute arbitration
agreement, impinged upon the supremacy of the Federal Arbitration Act. Our
· ruling in the case of Kindred Nursing Centers Ltd. Partnership v. Clark turned
exclusively upon the clear statement rule, and so the Supreme Court's decision
reversed It. How~ver, otir ruling in the associated case of Kindred Nursing
Centers Ltd. Partnership v. Wellner also rested upon alternative grounds.
Uncertain about whether we had· incorporated the clear statement.rule into the
alternative basis for the Wellner decision, the Supreme Court remanded that
case for us to determine whether the altem~te grounds for our holding with
r~spect to the Wellner POA was "wholly independent" of the clear statement
rule. The Supreme Court said:
The Kentucky Supreme Court began its opinion by stating that the
Wellner power of attorney was ipsufficiently broad to give Beverly
the authority to execute an arbitration agreement for Joe. If that
interpretation of the dKindred, 137 S. Ct. at 1429 (internal citations omitted) _(emphasis added). So,
the question that Kindred presents to us on remand is this:
3
Was our interpretation that the Wellner POA did not authorize
attomey-in-fact Beverly Wellner to execute Kindred's pre- .
dispute arbitration agreement wholly independent of, and not
impermissibly tainted by, the clear statement rule?
The Supreme Court directed on remand that we "evaluate the
document's meaning anew" only if our o_riginal construction of the Wellner POA
was "impermissibl[y] taint[ed]" by, or not "wholly independent of," our
subsequent adoption of the "clear statement rule." It follows that if our
construction of the We~er POA was "wholly ~dependent of [the] clear-
statement rule, then nothing [in Kindred] disturbs it." Id.3
Our ruling in Extendicare relating to Kindred's demand for arbitration of
the Wellner claim was based_ upon two.alternative grounds. First, we
concluded that neither of the two POA provisions relied upon by Kindred gave
the agent, Beverly Wellner, the authority to execute on behalf of her principal,
Joe Wellner, a pre-dispute arbitration agreement. Second, we applied the ill-
fated clear statement _rule. The Supr~me Court was "uncertain" about whether
the second alternative unduly influenced our reasoning in deciding the first
alternative.· The premise behind the Supreme Court's uncertainty seems to be
its perception that our application
. of the clear statement rule, rather than
.
the
3 Kindred Nurs:ing Centers did not challenge our construction of the Wellner
POA beyond its criticism of the clear statement rule. K:indred's petition for a rehearing
and its petition for a writ of certiorari instead focused exclusively on the clear
statement rule, which it described as "a newly-created rule of law disfavoring
enforcement of agent-created arbitration agreements." The failure. of any party to
challenge our construction of the Wellner POA except in the special circumstance
identified by the Supreme Court precludes further de novo reconsideJ:'ation.
Accordingly, we do not review our original :interpretation of the Wellner POA ab initif?.
By the explicit terms of the Supreme Court's mandate, if our original interpretation of
the Wellner POA was wholly independent of the clear s~atement rule, then it must
stand as the final decision of this Court.
4
manifestation of our profound respect for the right of access to the Court of
Justice explicitly guaranteed by the Kentucky Constitution and the right to
trial by jury designated as "sacred" b:y Section 7 of the Kentucky Constitution,
demonstrated
.
instead a hostility to federal policies implicit in the. Federal
Arbitration Act and aresulting aversion to any implication of authority to make
an arbitration agreement.
So, we explain that aspect of our Extendicare decisiOn to demonstrate its
purity from the taint of anti-arbitration bias. As a frame of reference for '-
whether our interpretation of the breadth and scope of the Wellner POA was
unduly influenced :by the clear statement rule, we begin with a glance at the
Clark POA. We concluded that the universally broad and vagu~ language
employed in the Clark POA, 4 without any express reference to the waiver of the
rights of access to the courts and jury trials, nevertheless did indeed vest the
principal's attorney-in-fact with authority to execute a pre-dispute arbitration
agreement. We held that the Clark POA authorized the agent's execution of
Kindred's pre-dispute arbitration agreement despite the absence of a clear
statement to that effect; only the application of the clear statement rule avoided
that result. Obviously, nothing even close to a "clear statement" was needed in
the Clark POA to authorize the agent to waive her principal's fundamental
constitutional right of access to the courts and a jury trial. That power, we
said, would be implied from the vague and all-encompassing language of the.
Clark POA. The concern that, because of some residual influence of the clear
4 The Clark POA granted the powers "to transact, handle, and dispose of all :
matters affecting me and/ or my estate in any possible way" and "generally to do and
perform for me in my name all that I might if present."
5
. . .
statement rule, we are averse to inferring the authority to exe~ute an
arbitration agreement dissolves upon recognizing that we inferred exactly that
authority in the Clark matter. See Extendicare, 478 S.W.3d at 327.
Turning now to our interpretation of the Wellner POA's specific language,
we note again that Kindred relied upon only two provisions of the Wellner POA
·as authority for Beverly Wellner's execution of Kindred's pre-dispute arbitration
agreement: 1) the power. "to demand, sue for, collect, re·cover and receive all
debts, monies, interest and demands whatsoever now due or that.may
. I
hereafter be or become due to me (including the right to institute legal
proceedings therefor)"; and, 2) the power "to make, execute and deliver deeds,
releases, conveyances and contracts of every nature in relation to both real and
personal property, including stocks, bonds, and insurance." Id. at 325.5
At this pofut it-is worth· recalling that the "act" of Wellner's agent which
required authorizing language from the POA document was riot the
enforcement, through legal proceedings or otherwise, of something then due or
to become due to Joe Wellner; nor was it :the making of a contract or
instrument pertaining to any of Joe Wellner's property. The "act" that required
authorization was signing an agreement which makes no reference at all to
Joe's property and instead pertains exclusively to his constitutional rights.
Our construction of tbe two cited provisions of the Wellner POA issues
was dear and logical and, in opposition to the clear statement rule, expressed a
s Whether other provisions of the Wellner POA would support Kindred's position
is beyond the scope of appellate review. ~rland v. Commonwealth, 458 S.W.3d 7~1,
785 (Ky. 2015) ("Arguments not pursued on appeal are deemed waived.").
6
willingness to infer in proper cases the power to commit to arbitration evc:;n
where that express authority was lacking. With respect to the powers to
"demand, sue for; collect, recover and receive all ... demands whatsoever" and
"to institute legal proceedings," it should be noted that our Welmer analysis
incorporated by direct reference our ~alysis of the similar language of the
Whisman POA. We said without reservation that "the power to 'institute or
defend suits concerning my property rights' would necess~y encompass the
)
power to make litigation-related decisions within the context of a suit so
instituted, including the decision to submit the pending dispute to mediation or
arbitration." Id. at 323 (emphasis added). Despite the lack of a clear statement
· authorizing the waiver of the principal's fundamental rights of access to the
·courts and to a jury trial, we expressly held that _the power to bind existing
claims to arbitration would be inferred from the "institute suits" provision of
the Wellner POA. Far from being tainted by an association with the clear
statement rule, that holding is antithetical to the clear statement rule.
The distinction we made with respect to the pre-dispute arbitration
agreement was not based at all on any aversion to an implied, rather than an
express, power to waive constitutional rights. Beverly Wellner did not execute
Kindred's optional free standing pre-dispute arbitration agreement within the
context of a lawsuit or claim for the recovery of anything belonging to Joe
Wellner. The act that required supporti.i:ig authorization was.her execution of
the pre-dispute arbitration agreement in ~e context of admitting him to a
7
nursing home. 6 That act was in no way connected to the pursuit of any claim
of Joe's. Rather than an insistence upon a clear statement, we rejected
Kindred's argument simply because the act of executing a pre-dis'put~
arbitration agreement upon admission to a nursing home had nothing at all to
do with "demand[ing], su[ing] for, collect[ing], recover[ing] and receiv[ing] all . ..
demands whatsoever" and "institut[ing] legal proceedings," and even settling
existing claims by arbitration or litigation. Id. at 325.
As to our construction of the power to make contracts "in relation to both
real and personal property," we explicitly recognized that "a personal injury
claim is a chose-in-action, and therefore constitutes personal property." Id. at
325-326. Notwithstanding the absence of a clear statement auth.orizing
arbitration, we straightforwardly held that the power to make contracts relating.
to personal property authorizes the agent to arbitrate the principal's pers9nal
injuzy claim. Here, too, our disagreement with Kindred has nothing to do with
the concept of the clear statement rule that the authority to waive the
constitutional rights of another person must be clearly stated. Rather than any
reliance upon the clear statement rule, our decision with respect to this
provision of the POA was based exclusively upon the clear fact that Kindred's
pre-dispute arbitration contract did not relate to any property rights of Joe
Wellner. It did not buy, sell, give, trade, alter, repair, destroy, divide, or
otherwise affect or dispose of in any way any of Joe Wellner's personal
property. By executing Kindred's pre-dispute arbitration agreement, Beverly
6 We note that Kindred's optional pre-dispute arbitration agreement was a
completely free-standing instrument, fully independent of and not conditioned upon
the separate nursing home admission contracts. See Extendicare, 478 S.W.3d at 318.
8
/
did not "make, execute and deliver deeds, releases, conveyances and contracts
of [any] nature in relation to [Joe's] property." The only "thing"- of Joe Wellner's
affected by the pre-dispute arbitration agreement was his constitutional rights,
which no one contends to be his real or personal property. Id.
Not a sciritilla of our original analysis ·of the Wellner POA -rested upon the
premise that the authority to waive constitutional rights (or the corresponding
authority to arbitrate a claim) must be clearly stated. Moreover, our analysis
clearly expressed the opposite--that whenever reasonably consistent with the
principal's expressed grant of authority, we would infer without a clear _
statement the power to bind him to an arbitration agreement. Kindred's
agreement
.
failed, not because the'Wellnet POA lacked a·\ clear statement
.
I
referencing the authority to waive Joe's fundamental constitutional rights; it
failed because, by its own specific terins it was not executed in relation to any
of Joe Wellner's property, and it was not a document pertaining to the
enforcement of a,ny of Joe's existing claims.
As established by the rationale plainly stated in Extendicare, our
I
conclusion that the Wellner POA was insufficient to vest Beverly Wellner with
I
the power to execute a pre-dispute arbitration agreement as part of Joe
' '
Wellner's admission to a nursing home was wholly independent of the clear
· statement rule decried. by the United States Supreme Court. Therefore, as
stated by the United States Supreme Court, that aspect of the Extendicare
decision remains undisturbed.
All sitting. Cunningham, Keller, and Wnght, JJ., concur. Hughes, J.,
dissents by separate opinion in which, Minton, C.J., and VanMeter, J., join.
9
HUGHES, J., DISSENTING: I respectfully dissent because I believe that
the majority has failed to follow the United States Supreme Court's directive in
the penultimate paragraph of its decision forcefully reversing the original
majority opinion in this case. That d,irective states:
The Kentucky Supreme Court began its opinion by stating that the
Wellner power of attorney was insufficiently broad to give Beverly
the authority to execute an arbitration agreementfor Joe. See
supra, at 3. If that interpretation of the document is· wholly
independent of the court's clear-statement rule, then nothing we
have said disturbs it. But if that rule at all influenced the
construction of the Wellner power of attorney, then the court must
· evaluate the document's meaning anew. The court's opinion leaves
us uncertain as to whether such an impennissible taint occurred.
We therefore vacate the judgment below and return the case to the
state court for further consideration. See Mann.et Health Care
Center, Inc. v. Brown, 565 U.S. 530, 534 (2012) (per curiam)
(vacating and rem~ding another arbitration decision because we
could not tell "to what degree [an] alternative holding was
influenced by" the state court's erroneous;arbitration-specific
rule). On remand, the court should determine whether it adheres,
in the absence of its clear-statement rule, to its prior reading of the
Wellner power of attorney. · ·
Kindred Nursing Ctrs, Ltd Partnership v. Clark, 581 U.S. __, 137-S. Ct. 1421,
· .1429 (2017) (emphasis s:upplied). Prior to i&suing this directive, the Supreme~ .
Court noted that this Court had "flouted the rfAA's command to place
[arbitration] agreements on an equal footing with all other contracts." Id. This
Court's distinction between pre-dispute arbitration agreements as not
pertaining to a principal's property rights but rather only his constitutional
jmy right vis-a-vis post-dispute (or. perhaps active dispute) arbitration
agreements, which they concede necessarily affect property rights, is simply
another attempt to single out arbitration for "hostile" treatment under the guise
of KentuckY contract and agency law.
10
An arbitration agreement, regardless of when signed or whetjier
characterized as pre- or post-dispute, has ·absolutely no reason to exist unless
there is a .current or potential claim to be pursued or defended against. If there
is never a claim, the agreement has no purpose-it just sits there as an
executed document/contract clause of no real consequence. An arbitration
agreement, whether freestanding or part of a broader contract, derives its
entire meaning from the fact that the signatories may have or do have a
dispute and they agree on the forum for disposing of that claim, whenever it
arises. Indeed, the first sentence of the arbitration agreement at issue
("Arbitration Agreement") states:
Any and all claims or controversies a.dsing out of or i,n any way
relating to this ADR Agreement ("Agreement") or the Resident's stay
at the Facility including disputes regarding interpretation of this
Agreement, whether arising out of State or Federal law,' whether
existing or arising in the future, whether for statutory,
compensatory or punitive damages and whether sounding in
breach of contract, tort or breach of statutory duties (including,
without limitation, any claim based on violation of nghts,
negligence medic.al malpractice, any other departure from the
accepted standards of health care or safety or the Code of Federal
Regulations or unpaid nursing home charges), irrespective of the
basis for the duty or of the legal theories upon which the claim is
asserted, shall be submitted to alternative dispute resolution as
described in this Agreement. ·
The subjects of this first sentence are plainly "claims and controversies."
The particular provision of the Wellner POA that, in my view, authorizes
the agent to sign an arbitration agreement, even pre-dispute, is the power "to
make execute and deliver deeds, releases, conveyances and contracts of every
' .
nature in relation to both real and personal property, including stocks, bonds,
and insurance." In the original opinion of this Court ("Extendicarej, the
majority noted that property in Kentucky has been broadly con~trued to
11
include things that are tangible and i:qtangible, visible or invisible, "real or
personal, choses in action as well as in possession, everything which has an
exchangeable value, or which goes to make up one's wealth or estate." 4 78
S.W.3d at 326 (emphasis in original) citing Commonwealth v. Kentucky
Distilleries & Warehouse Co., 136 S.W.1032, 1037 (Ky. 1911). The Court
acknowledged that a personal injucy claim is a chose-in-action and therefore
constitutes personal property. Id. at 325-26 citing Button v. Drake, 302 Ky.
517, 195 S.W.2d 66, 69 (1946). The majority then reasoned that, nonetheless,
a pre-dispute arbitration agreement is not about property rights but rather
'
constitutional rights.
Joe's personal injucy claim was personal property and Beverly had
the authority to make contracts relating to it. But the Kindred pre-
dispute arbitration agreement was not a contract made "in
relation" to a property claim. The agreement did nothing to affect
any of Joe's property or his property rights. The arbitration
agreement does not even purport to be a "contract ... in relation
to both real and personal property." As clearly expressed within
the agreement.itself, the agreement was made in relation to Joe's
c~nstitutional right to access the courts and to trial by juiy.
Constitutional rights are decisively not "personal property" as we ,
have defined the term. They are not "money, goods,_ chattels, ·
things in action, and evidences of debt;" nor do they have "an
exchangeable value, or which goes to make up one's wealth or
estate."
(Footnote omitted). Id.
But, of course, an arbitration agreement is about property rights because
without a claim regarding such ri$hts it has no meaning or purpose. See the
first sentence of the Arbitration Agreement quoted supra. The majority's view
of arbitration as contraiy to the "sacred" right to a juiy trial (a point which it
continues to emphasize in the current majority) clearly underlies its willingness
' to divorce an arbitration agreement from the r~ality of what it is and what it
12
does. An arbitration agreement is plainly a contract "in relation to . . . personal
property."
\
The current majority opinion attempts to show its "purity from the taint
of anti-arbitration bias" by noting that the Clark POA had "vague and all-
encompassing language" and, consequently, the Extendicare·majority
concluded that Clark's agent was vested with authority to execute even a pre-
dispute arbitration agreement. So, a power "to transact, handle and dispose of
all matters affectlp.g me and/or my estate in any possible way" and "generally
to do and perform for me in my name all that I might if present" is sufficient.
But under the former and current majority's view a broad power "to make ...
contracts of every nature in relation to both real and personal property" is
(
insufficient. This is the exact language from the Wellner POA and so is the
following:
I hereby further grant unto my Attorney-in-Fact full power in and
concerning the above premises and to do any and all acts as set·
forth above as fully as I could do· if I were· personally present, and
at my decease to pay, transfer and deliver over to my personal
representative, all principal and income then in his possession and
control, and I do ratify and confirm whatever my said. Attomey-in-
Fact shall lawfully do under these presents, provided however, that
my attorney shall not bind me as surety, guarantor for
accommodation nor give away any of my estate, whatsoever, nor
shall my attorney be authorized to accept service of process for or
on my behalf....
478 S.W.3d at 319-20. 7
The only response offered to this language, language.that is both specific
as to contracts of every nature affecting property and broad as to general
1 To state the obvious, it would be very difficult for an agent to discern the
limits on his or her authority that today's majority readopts and restates.
13
powers, is the unfounded premise that an arbitration agreement is .not. about
property rights, just the waiver of a constitutional right. Given how that
premise ignores the reality of what an arbitration agreement is, why fr exists
and what it relates to, I firmly believe the analysis of the Wellner POA is
impermissibly tainted by the same anti-arbitration bias as the so-called "clear
statement rule."
Addressing the clear statement rule' in Kindred Nursing Centers, 137 S.
Ct. 1427, the U.S. Supreme Court held that it was "too tailor-made to
arbitration agreements ... to survive the FAA's edict against singling out those
contracts for disfavored treatment." Justice Kagan noted wryly that the
Kentucky Constitution protects property rights ~d speech rights but no one
was suggesting that the "broader" constitutional rule adopted by the
Eictendicare majority would realistically apply to prevent an agent from selling
her principal's furniture or signing a non-disclosure agreement unless those
particular constitutioni:tl rights were addressed ~xpressly in the POA. Id. The
ensuing short passage deserves careful consideration:
[T]he [Kentucky Supreme] court hypothesized a slim set of both
patently objectionable and utterly fandful :contracts that would be
subject to its rule: No longer could a representative lacking explicit
authorization waive her "principal's right to worship freely" or
"consent to an arranged marriage" or "bind [her] principal to
personal servitude." Placing arbitration agreements within that
class reveal~.the kind of "hostility to arbitration" that led Congress.
to enact the FAA. And.doing so only makes clear the arbitration-
specific character of the rule, much as if it were made applicable to
arbitration agreements and blackswans. ,
Id. at 1427-28 (citations and footnote omitted). In my view, today's holding
returns to black swan territory by a different route. 'J;'he narrow focus on the
constitutional ju:ry right to the exclusion of the reality of an arbitration
14
agreement returns us to the realm of "utterly fanciful contracts" where .
I
arbitration agreements exist in a vacu~m independent of disputes and property
rights.
Arbitration has received its fair share of criticism and some of it is fully
justified but adopting the majority's artificial distinctions regarding language in
POAs is a dangerous way to combat the perceived dangers of arbitration. ·What
(
happens after the issuance of this majority opinion in the following everyday
scenarios?
An aging principal let it be known that he did not want to leave· his home
of forty years, a multi-level residence that cannot accommodate his current
needs. His daughter, as agent under his POA, wants to enter into a
construction contract to make the needed modifications so he can stay in his
home but all the local contractors' construction contracts have arbitration
clauses. Can she sign such an agreement with a pre-dispute arbitration
clause? If she does and a dispute arises with the contractor, is the arbitration
clause enforceable by either party to the contract? If the arbitration clause is
not enforceable, does it invalidate the
.
entire construction
.
contract? The
daughter is also looking for around-the-clock care, including the provision
.,
of
meals, for her .father. All the local in-home care agencies require a signed
contract. Those contracts also have arbitration clauses. --Can she execute one
l ~
and, if she does, what happens if there is a disp:ute as to billing or quality of
cate? These contracts, for construction and in-home care, were signed pre-
;
dispute and under the majority's view the arbitration clauses were never about
property rights but rather solely constitutional rights not covered by the power
15
to "make ... contracts of every nature in relation to both real and· personal
property." So, what happens?
Another principal is a shareholder in a closely-held, third generation
family business. She, her siblings and several cousins own all the stock. Her
son is agent under her POA and, due to her incapacity, he has been
approached by his aunt and uncle (his mother's ~ister and brother) about
~ signing. a voting and buy-sell agreement with them and one of. the cousins.
They are worried about the direction t:Wo out-of-state shareholders (also the
principal's cousins) seem to be charting and they know if they vote together
· and agree to offer ¢.eir stock to each other if and when they decide to sell, the
company can stay on the track earlier generations intended. Can the son sign
the agreement if it contains an arbitration clause requiring the signatories to
arbitrate any disputes among themselves as to, say, the value of the stock? If
he does sign, is it at all enforceable? Suppose everyone looks the other way at
the legality and they proceed to ar:t>itration. After the principal's death, can the
executor challenge the son's actions and the arbitration award as not
authorized?
These scenarios are not even the more likely instances where confusion
will occur from the majority's holding. The principal's homeowner's insurance
policy needs to be renewed. The principal rents an apartment and her lease is
due for renewal. The principal has few assets but unexpectedly receives a
sizeable inheritance, so the agent wants to open an account with a conservative
. stock brokerage company. All these contracts have arbitration clauses. If the
agents execute them, are the contracts themselves invalid or just the
arbitration ~lause? Perhaps the majority would conclude that none of these
16
pose a problem because the arbitration clause is embedded in a."contract in
relation to" either real or personal property. If that's the case, are only
freestanding. pre-dispute arbitration agreements verboten under the POA~ And
why is that? The freestanding arbitra~on agreement, liked the embedded
clause, has no purpose other than to identify the forum for the parties to settle
disputes .about prop~rty interests. It is a "contract ... in relation to . . .
personal property. "B
Additionally, the majority places great emphasis on "pre-dispute" as
indicative of the fact that an arbitratie>n agreement such as the one at issue
here is only about constitutional rights. In their view, the "futureness" of the
dispute between the parties means that the agreement is not about property at
all, just the jury trial right under Section 7 of the Kentucky Constitution. Aside
from the repeatedly noted fact about the very, indeed. only, reason for an
arbitration agreement, where does the emphasis on the futureness of
somethin~ lead? When a principal, such as Mr. Wellner, gives his agent
authority under a POA to collect debts, that authority manifestly includes
future debts owed him by others, such as a tenant's rental payment or a form.er
employer's final payments under an employment contract or pursuant to a
pension plan. The authority to make "contracts of every nature in relation to
s Again, in our original Extendicare opinion, the majority aclmowledged that a
personal injuiy claim is a chose in action and therefore personal property. 478
S.W.3d at 326. The dissent noted that a chose in action is defined "generally as '[a]
proprietary right in personam, such as a debt owed by another person, a share in a
joint-stock company, or a claim for damages in tort' and also as 'the right to bring an.
action to recover a debt, money or thing."' 478 S.W.3d at 348, citing BLACK'S LAW
DICTIONARY, 275 (9th ed. 2009). .
17
. .
both real and personal property" includes future property of the principal
~ whether a stock dividend, a check for· a property insurance claim, an
unexpected inheritance or a run-of-the mill refund in a consumer class action.
All these future thing~. are encompassed by the POA because that is the nature
. .
of the instrument, i.e., to deal with the principal's affairs in the manner stated
whether or not a particular thing, event, type of property was in existence or
even envisioned at the time of the execution of the POA. The majority's
position would presumably respect
.
the agent's authority
.
in all these future
matters.but not the future matter of a potential legal claim (a chose in action
an.d therefore personal property) and whether or not to agree to arbitration.
Finally, recent emphasis on .arbitration, and its increasing prevalence in
various facets of everyday life, has heightened the bar's awareness of the need
to consider carefully what the principal wishes to authorize tl?.e agent to do on
that score. Many attorneys now inquire whether the principal wishes for his or
her agent to agree .to arbitr~tion, and the POA so states that preference. Going
forward, I believe we can expect more clarity in POA ~nstruments regarding the
specific preferences of the principal, and that is obviously a desirable result..
However,. as for the many POAs that are currently in existence we must take
them as we find them and construe them in a straightforward manner, not
through a lens that disfavors arbitration in violation of the Supremacy Clause
and not with artificial distinctions that cannot-withstand scrutiny.
Because the majority's construction of the Wellner POA was and is
dearly affected, "impermissibl[y] taint[ed]," 137 S. Ct. at 1429; by the same
negative view of arbitration that underlay its clear statement rule, we should
acknowledge that fact. We must "evaluate the document's meaning anew" and
18
~
determine not to ~adhere ... to [the] prior reading of the Wellner power of
attorney." Id. For these reasons, I respectfully and strongly dissent.
Minton, C.J.; and VanMeter, J., join.
·coUNSEL FOR APPELLANTS:
Donald Lee Miller II
Kristin M. Lomond
James Peter Cas~idy III
Quintairos, Prieto, Wood & Boyer P.A.
COUNSEL FOR APPELLEE:
James T. Gilbert
Coy, Gilbert, Shepherd & Wilson
· Richard Eric Circeo
Robert Earl Salyer
Wilkes & McHugh, P.A.
·'
19
20 l 3-SC-000431-1
KINDRED NURSING CENTERS LIMITED APPELLANTS
PARTNERSHIP D /Bf A WINCHESTER
CENTRE FOR HEALTH AND
REHABILITATION N/K/ A FOUNTAIN
CIRCLE HEALTH AND REHABILITIATION;
KINDRED NURSING CENTERS EAST, LLC;
KINDRED HOSPITALS LIMITED
PARTNERSHIP; KINDRED HEALTHCARE,
INC.; AND KINDRED HEALTHCARE
OPERATING, INC.
ON REMAND FROM THE UNITED STATES SUPREME COURT
V. CASE NO. 16-32
CLARK CIRCUIT COURT CASE NO. 10-CI-00472
BEVERLY WELLNE~, INDIVIDUALLYAND APPELLEE
ON BEHALF OF THE ESTATE OF JOE P.
WELLN~R, DECEASED, AND ON BEHALF
OF THE WRONGFUL DEATH
BENEFICIARIES OF JOE P. WELLNER
ORDER
The Opinion of the Court rendered November 2, 2017, is corrected on its face by
. substitution of the attached opinion in lieu of the original opinion. Said correction does
not affect the hp1ding of the original Opinion of the Court.
ENTERED:· November --2.f_; 2017
F JUSTICE JOHN D. MINTON,