Legacy Health Services, Inc. v. Christopher Jackson III as Administrator of the Estate of Christine Jackson ( 2021 )

RENDERED: JANUARY 15, 2021; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2019-CA-1770-MR
LEGACY HEALTH SERVICES, INC.; APPELLANTS
CAMBRIDGE PLACE GROUP, LLC
D/B/A CAMBRIDGE PLACE; AND
CAMBRIDGE PLACE PROPERTIES,
LLC
APPEAL FROM FAYETTE CIRCUIT COURT
v. HONORABLE KIMBERLY N. BUNNELL, JUDGE
ACTION NO. 15-CI-01838
CHRISTOPHER JACKSON, III, AS
ADMINISTRATOR OF THE ESTATE
OF CHRISTINE JACKSON,
DECEASED APPELLEE
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: ACREE, KRAMER, AND TAYLOR, JUDGES.
ACREE, JUDGE: Legacy Health Services, Inc., and Cambridge Place Group,
LLC d/b/a Cambridge Place, and Cambridge Place Properties, LLC (“Cambridge”)
appeal from an order of the Fayette Circuit Court denying its motion to compel
arbitration of medical malpractice claims brought by Christopher Jackson, III, as
guardian for his mother, Christine. Cambridge argues Jackson, as Christine’s
court-appointed guardian, had the authority to enter into an arbitration agreement
on her behalf, and the circuit court erred in finding otherwise. After our careful
review and consideration of applicable law, we reverse and remand for additional
proceedings.
BACKGROUND
In December 2011, after adjudicating Christine wholly disabled, the
Fayette District Court appointed Jackson as her legal guardian.1 The order of
appointment did not contain any limitations on Jackson’s authority. Additionally,
in accordance with KRS2 387.580(3)(c), the order denied Christine the right to vote
in future election contests. (Trial Record (T.R.) at 204.)
Three years later, Jackson agreed with Cambridge, a long-term care
facility, that his mother would reside there. As part of the admissions process,
Jackson, in his capacity as Christine’s guardian, signed a voluntary alternative
dispute resolution agreement as his mother’s guardian. The agreement required
“[a]ny and all claims or controversies arising out of or in any way relating to [the]
1
See In re: Christine Jackson, 99-H-00125-011 (Fayette District Court December 20, 2011).
2
Kentucky Revised Statutes.
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Agreement or [his mother’s] stay at the [Cambridge] [f]acility . . . [to] be submitted
to alternative dispute resolution as described in the Agreement.”
Jackson remained Christine’s guardian until her death on January 27,
2015. He then filed a medical negligence lawsuit against Cambridge on May 18,
2015. Cambridge moved the circuit court to compel arbitration. The circuit court
held oral arguments on the motion in November 2015, but entered an order holding
the case in abeyance. The circuit court was waiting for the Kentucky Supreme
Court to decide whether to grant discretionary review of this Court’s opinion in LP
Pikeville, LLC v. Wright, No. 2013-CA-000959-MR, 2014 WL 1345293 (Ky. App.
Apr. 4, 2014) (Wright I).
The circuit court’s decision to abate the case is understandable. This
Court had designated Wright I for publication because it addressed, as a matter of
first impression, the authority of a guardian appointed pursuant to KRS Chapter
387 to legally obligate his ward to resolve disputes by arbitration. But the wait for
the Supreme Court would be long and disappointing.
That Court granted discretionary review in March of 2016. Pursuant
to the automatic rule regarding publication in CR3 76.28(4)(a),4 Wright I was
3
Kentucky Rules of Civil Procedure.
4
CR 76.28(4)(a) says: “Upon entry of an order of the Supreme Court granting a motion for
discretionary review the opinion of the Court of Appeals shall not be published, unless otherwise
ordered by the Supreme Court.”
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ordered to be unpublished, preventing the Court of Appeals opinion from
becoming precedent. The circuit court and the parties would have to wait until the
Supreme Court itself addressed the novel issue, and then only if it decided to
publish its own opinion.
The parties briefed the Supreme Court case of Wright v. LP Pikeville,
LLC, No. 2014-SC-0238-DG (Ky. Feb. 20, 2019) (Wright II) and the case was
submitted for decision on August 12, 2016. However, before the Supreme Court
rendered an opinion, the parties in Wright II settled the case and filed a joint
motion to dismiss. In February 2019, the Supreme Court ordered the case
dismissed but chose not to order Wright I published,5 notwithstanding that the case
had addressed an issue of first impression. The circuit court in the instant case was
left to decide Cambridge’s motion to compel arbitration without the precedent for
which it waited four years.
As the circuit court correctly noted, Wright I “is not binding on this
Court.” It entered an order denying Cambridge’s motion, finding Jackson lacked
authority to bind his ward to an arbitration agreement. This appeal followed.
STANDARD OF REVIEW
A party seeking to compel arbitration has the initial burden of
establishing the existence of a valid agreement to arbitrate. First Options of
5
See footnote 4, supra.
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Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920, 1924, 131 L. Ed. 2d
985 (1995); Dixon v. Daymar Colleges Group, LLC, 483 S.W.3d 332, 341 n.23
(Ky. 2015). An appellate court reviews de novo the circuit court’s application of
rules governing the validity of an arbitration contract, but the court’s factual
findings, if any, will be disturbed only if clearly erroneous. Conseco Finance
Servicing Corp. v. Wilder, 47 S.W.3d 335, 340 (Ky. App. 2001).
ANALYSIS
For good reason, the circuit court hoped for guidance from our
appellate courts before ruling, and Wright I seemed near providing it. The circuit
court’s and the parties’ wait, as it turned out, proved a waste of time. Still, the
circuit court’s order cites Wright I as do both briefs.
We want to be perfectly clear that nothing distinguishes Wright I from
any other unpublished opinion. No one now should read anything into the fact that
this Court deemed it worthy of publication. Nor should significance be ascribed
either to Wright I’s “depublication” in accordance with CR 76.28(4)(a), or the
Supreme Court’s refraining from ordering Wright I published when it dismissed
the appeal after the parties settled.
There is an important rule that “denial of a motion for discretionary
review by the Supreme Court or by the Court of Appeals shall not be taken as
indicating its approval of the opinion or order sought to be reviewed, and shall not
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be cited as connoting such approval.” SCR6 1.030(8)(b). There is no logical or
other reason to withhold applying the spirit of that rule to each procedural step that
eventually resulted in the status of Wright I as unpublished. What is significant is
its current status. It is an unpublished opinion.7
We thus proceed with our analysis without binding precedent on this
specific issue. However, just as this Court is bound by precedent when it exists,
we strive for continuity in all our jurisprudence, published and unpublished. To do
otherwise would invite criticism that, with unpublished opinions, “the same issue
under similar facts can be decided in entirely different ways . . . .” Goodlet v.
Commonwealth, 825 S.W.2d 290, 292 (Ky. App. 1992). Worse still would be a
resurrection of the charge that the body of unpublished opinions is “a rug under
which judges sweep whatever they wish never to see the light of day.” Id.Although our opinion is in harmony with Wright I, we are unaffected
by it. We reach the same conclusion by following existing precedent relating to
arbitration.
6
Rules of the Supreme Court.
7
We note that the popular computerized legal research database, Westlaw Edge, marks opinions
of this Court with a red flag when the Supreme Court, either by rule or by order, renders the
opinions unpublished. According to the database, a red flag indicates “Severe Negative
Treatment.” This is an editorial comment by the database’s vendor. Attorneys and jurists should
attribute no significance to it and treat the case no differently than if it had been designated by
this Court as unpublished when originally rendered.
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The outcome here is directed by arbitration jurisprudence clarified in
Kindred Nursing Centers Ltd. Partnership v. Clark, 137 S. Ct. 1421, 197 L. Ed. 2d
806 (2017). Generally, Kindred found the Kentucky rule of law limiting authority
of attorneys-in-fact to bind their principals only to contracts other than arbitration
agreements to be in violation of the supremacy of the Federal Arbitration Act
(FAA). Kindred analogized principles articulated in AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 131 S. Ct. 1740, 179 L. Ed. 2d 742 (2011), relating to
real and hypothetical statutes and applied them to the grants of powers of attorney.
See Kindred, 137 S. Ct. at 1426-27. In the instant case, we can apply those same
principles more directly.
The law as expressed in Kindred is clear to this Court. Interpreting
KRS 387.500, et seq., in a way that allows a guardian authority to enter into
contracts generally but denies that authority relative to an arbitration agreement is
to create a rule violating the supremacy of the FAA, 9 U.S.C.8 § 2.
That statutory provision establishes an equal-treatment
principle: A court may invalidate an arbitration agreement
based on “generally applicable contract defenses” like
fraud or unconscionability, but not on legal rules that
“apply only to arbitration or that derive their meaning from
the fact that an agreement to arbitrate is at issue.” AT & T
Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S.
Ct. 1740, 179 L. Ed. 2d 742 (2011). The FAA thus
preempts any state rule discriminating on its face against
arbitration—for example, a “law prohibit[ing] outright the
8
United States Code.
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arbitration of a particular type of claim.” Id., at 341, 131
S. Ct. 1740.
Kindred, 137 S. Ct. at 1426. Of course, Kentucky’s guardian statutes do not, on
their face, discriminate against arbitration. But that does not matter.
The Act also displaces any rule that covertly accomplishes
the same objective by disfavoring contracts that (oh so
coincidentally) have the defining features of arbitration
agreements. In Concepcion, for example, we described a
hypothetical state law declaring unenforceable any
contract that “disallow[ed] an ultimate disposition [of a
dispute] by a jury.” Id., at 342, 131 S. Ct. 1740. Such a
law might avoid referring to arbitration by name; but still,
we explained, it would “rely on the uniqueness of an
agreement to arbitrate as [its] basis”—and thereby violate
the FAA. Id., at 341, 131 S. Ct. 1740 (quoting Perry v.
Thomas, 482 U.S. 483, 493, n.9, 107 S. Ct. 2520, 96 L. Ed.
2d 426 (1987)).
Id.When the Kentucky Supreme Court rendered the case Kindred
reversed, Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. 2015), it held
“that an attorney-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[.]’” Kindred Nursing Centers Limited Partnership v. Wellner, 533
S.W.3d 189, 190-91 (Ky. 2017).
The Kentucky Supreme Court’s clear-statement rule, in
just that way, fails to put arbitration agreements on an
equal plane with other contracts. By the court’s own
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account, that rule (like the one Concepcion posited) serves
to safeguard a person’s “right to access the courts and to
trial by jury.” 478 S.W.3d, at 327; see supra, at 1425-
1426. In ringing terms, the court affirmed the jury right’s
unsurpassed standing in the State Constitution: The
framers, the court explained, recognized “that right and
that right alone as a divine God-given right” when they
made it “the only thing” that must be “ ‘held sacred’ ” and
“ ‘inviolate.’ ” 478 S.W.3d, at 328-329 (quoting Ky.
Const. § 7). So it was that the court required an explicit
statement before an attorney-in-fact, even if possessing
broad delegated powers, could relinquish that right on
another’s behalf. See 478 S.W.3d, at 331 (“We say only
that an agent’s authority to waive his principal’s
constitutional right to access the courts and to trial by jury
must be clearly expressed by the principal”). And so it
was that the court did exactly what Concepcion barred:
adopt a legal rule hinging on the primary characteristic of
an arbitration agreement—namely, a waiver of the right
to go to court and receive a jury trial. See 563 U.S., at
341-342, 131 S. Ct. 1740; see also 478 S.W.3d, at 353
(Abramson, J., dissenting) (noting that the jury-trial right
at the core of “the majority’s new rule” is “the one right
that just happens to be correlative to the right to arbitrate”
(emphasis deleted)). Such a rule is too tailor-made to
arbitration agreements—subjecting them, by virtue of
their defining trait, to uncommon barriers—to survive the
FAA’s edict against singling out those contracts for
disfavored treatment.
Kindred, 137 S. Ct. at 1426-27 (emphasis added) (footnote omitted).
The circuit court did what Kindred prohibits. It adopted “a legal rule
hinging on the primary characteristic of an arbitration agreement—namely, a
waiver of the right to go to court and receive a jury trial.” Id. at 1427. We must
reject that rule. We cannot interpret KRS 387.500, et seq., as did the circuit court
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because it is “too tailor-made to arbitration agreements . . . singling out those
contracts for disfavored treatment.” Id. (footnote omitted).
Nor do we believe this was the legislature’s intent. The legislation
very clearly recognizes and presumes an adjudication of total disability involves
“the attendant deprivation of civil and legal rights that such a determination
requires.” KRS 387.500(2).
We note a broader question that is not before the Court – whether a
guardian may validly agree, generally, with a residential care facility for the care of
his ward. The complaint is not based on a breach of contract. However, the
negligence claim alleges breaches of duty owed by Cambridge. Those duties arose
because of the existence of a contract.
Because neither party argues that such general authority is lacking, we
will only note that the statutes governing guardianship for disabled persons, KRS
387.500, et seq., are “remedial rather than exclusive. These statutes intend to
provide services for incompetent persons not only as specifically articulated but
also as reasonably inferable from the nature of the powers of a guardian, which
include in KRS 387.660[.]” DeGrella By and Through Parrent v. Elston, 858
S.W.2d 698, 704 (Ky. 1993). Consistent with that view is the idea that “[t]he
scope of authority . . . of a guardian is much broader than that of a traditional
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power of attorney, even one intended to survive disability.” Rice v. Floyd, 768
S.W.2d 57, 59 (Ky. 1989).
The authority to enter into contracts generally is within the ambit of
what is reasonably inferable from the statutes. That being so, we cannot interpret a
statute to create, in effect, a rule that “covertly accomplishes” the objective of
disfavoring arbitration agreements. Kindred, 137 S. Ct. at 1426.
CONCLUSION
For the foregoing reasons, we reverse the Fayette Circuit Court’s
order and remand with instructions that the circuit court order the parties to
arbitration in accordance with KRS 417.060(1).
KRAMER, JUDGE, CONCURS.
TAYLOR, JUDGE, CONCURS AND WRITES SEPARATE
OPINION.
TAYLOR, JUDGE, CONCURRING: Respectfully, I concur with the
majority but note that had this been a wrongful death action rather than a medical
negligence case, the ruling of this Court would likely be different. See Preferred
Care Partners Mgmt. Group, L.P. v. Alexander, 530 S.W.3d 919 (Ky. App. 2017).
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BRIEFS FOR APPELLANTS: BRIEF FOR APPELLEE:
Rebecca R. Schafer Lisa E. Circeo
Paul A. Dzenitis Hannah R. Jamison
Emily W. Newman Megan L. Adkins
Louisville, Kentucky Lexington, Kentucky
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