Knight v. Altercare Post-Acute Rehab. Ctr., Inc. , 94 N.E.3d 957 ( 2017 )

[Cite as Knight v. Altercare, 2017-Ohio-6946.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
PORTAGE COUNTY, OHIO
PHYLLIS KNIGHT, EXECUTRIX : OPINION
OF THE ESTATE OF PEGGY J. YOUNG,
DECEASED, :
CASE NO. 2016-P-0045
Plaintiff-Appellee, :
- vs - :
ALTERCARE POST-ACUTE :
REHABILITATION CENTER, INC., et al.,
:
Defendants-Appellants.
:
Civil Appeal from the Portage County Court of Common Pleas, Case No. 2014 CV
00823.
Judgment: Reversed in part, remanded in part, and dismissed in part.
Martin S. Delahunty, III, Slater & Zurz, One Cascade Plaza, Suite 2210, Akron, OH
44308 (For Plaintiff-Appellee).
Steven J. Hupp, Ronald A. Margolis, and Brian F. Lange, Bonezzi Switzer Pilito &
Hupp Co., LPA, 1300 East Ninth Street, Suite 1950, Cleveland, OH 44114 (For
Defendants-Appellants).
CYNTHIA WESTCOTT RICE, P.J.
{¶1} Appellants, Altercare Post-Acute Rehabilitation Center and Altercare of
Ohio, Inc., appeal from the judgment entered by the Portage County Court of Common
Pleas staying proceedings pending arbitration and denying their motion for summary
judgment. At issue is whether the trial court erred in staying the matter for arbitration
where appellee, Phyllis Knight, Executrix of the Estate of Peggy J. Young (“the
decedent”), was not a party to the underlying arbitration agreement and whether the
denial of appellants’ motion for summary judgment is a final, appealable order. We
reverse the court’s judgment of the former issue and dismiss the appeal as it relates to
the latter issue.
{¶2} The decedent was a resident of appellee, Altercare Post-Acute
Rehabilitation Center, Inc., a long-term nursing home. Upon entering the facility, the
decedent and/or her legal representative entered into an arbitration agreement with the
facility to arbitrate any and all claims that arise between the parties. On June 25, 2012,
the decedent passed away while a resident of the facility.
{¶3} On June 10, 2014, appellee, through counsel, sent appellants a letter
advising them of appellee’s intention to invoke the arbitration agreement “with respect to
her wrongful death claim and any and all claims which exists as of this point and time.”
Appellants subsequently refused to participate in arbitration, citing the expiration of the
statute of limitations on both survivorship and wrongful-death claims. Appellants further
stated that the agreement is only binding in a wrongful-death claim when executed by
all beneficiaries to the decedent’s estate, not merely the decedent’s representative.
{¶4} On October 14, 2014, appellee filed a complaint alleging negligence
surrounding the circumstances of the decedent’s death; appellee asserted she
attempted to invoke the arbitration agreement to submit the claims to arbitration, but
appellants refused. As a result, appellee claimed appellants breached the arbitration
agreement and intentionally interfered with the contract between the decedent and the
facility. Appellants answered the complaint and later filed a motion for summary
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judgment. In their motion, they argued the statute of limitations had expired on the
wrongful-death claim and a request for arbitration could not be used to toll the statute of
limitations. They further asserted appellee could not style her complaint as a breach of
contract claim as a means to avoid the expiration of the limitations period on the
wrongful-death claim. Appellants also maintained they could not be required to arbitrate
a wrongful-death claim for beneficiaries who did not sign the underlying agreement.
{¶5} Appellee filed a response to appellants’ motion, arguing the arbitration
agreement was a valid, enforceable contract. She attached a copy of a residency
agreement, signed by representatives for the facility and the decedent. The contract
included an “Agreement to Resolve Legal Disputes Through Arbitration,” which
provided, inter alia, that “[a]ny legal controversy, dispute, disagreement or claim of any
kind now existing or occurring in the future between the parties arising out of or in any
way relating to this Agreement or the Resident’s stay at Facility shall be settled by
binding arbitration * * *.” According to appellee, the language bound the facility to
arbitrate the underlying wrongful-death claim. Appellants filed a reply to appellee’s
memorandum in opposition.
{¶6} After considering the parties’ positions, the trial court denied appellants’
motion for summary judgment. It additionally ordered: “[p]ursuant to the agreement of
the parties, this matter is hereby stayed and the parties shall Arbitrate Plaintiff’s claim of
wrongful death pursuant to the terms of the Arbitration agreement entered into with
Altercare.”
{¶7} Appellants now appeal and raise two assignments of error. The first
provides:
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{¶8} “The trial court erred in staying this action pending arbitration since the
plaintiff did not execute any arbitration agreement with the defendants.”
{¶9} Generally, a trial court’s decision to stay proceedings pending arbitration is
reviewed for an abuse of discretion. River Oaks Homes, Inc. v. Krann, 11th Dist. Lake
No. 2008-L-166, 2009-Ohio-5208, ¶41. When the trial court’s grant or denial of a stay is
premised upon questions of law, we review the judgment de novo. Naylor Family
Partnership v. Home S. & L. Co. of Youngstown, 11th Dist. Lake No. 2013-L-096, 2014-
Ohio-2704, ¶13. “Therefore, this court reviews de novo a trial court’s legal conclusion
as to whether a party is contractually bound by an arbitration clause.” Id.
{¶10} Under their first assignment of error, appellants argue the trial court erred
by staying the matter for arbitration because appellee was not a party to the arbitration
agreement. They further maintain appellee cannot seek to have a wrongful-death claim
arbitrated under the agreement because such a claim belongs to the decedent’s
individual beneficiaries and these individuals were not parties to the agreement.
Appellants cite Peters v. Columbus Steel Castings Co., 115 Ohio St. 3d 134, 2007-Ohio-
4787, in support.
{¶11} In Peters, the Ohio Supreme Court addressed the question of “whether
the personal representative of a decedent’s estate is required to arbitrate a wrongful-
death claim when the decedent had agreed to arbitrate all claims against the alleged
tortfeasor.” Id. at ¶1. The Court held that, in a wrongful-death claim, the beneficiaries
could not be restricted to arbitration by an agreement executed by the decedent. Id. at
¶19. The Court explained that the “wrongful death claim belongs to the decedent’s
beneficiaries” and requiring the beneficiaries to arbitrate their wrongful-death claim
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without them signing the arbitration agreement would be “unconstitutional, inequitable
and in violation of a century of established precedent.” Id. at ¶10, 20.
{¶12} Here, the decedent and/or her representative executed the agreement
with appellants. And, although appellee could have utilized the arbitration agreement to
pursue a survival action, no survival claim was initiated by the estate. Once the statute
of limitations on the survival claim ran, the agreement to arbitrate all claims against the
facility had no effect and appellee possessed no authority to demand arbitration of the
wrongful-death claim. In Peters, supra, the Court observed:
{¶13} As opposed to a survival claim, through which a decedent’s estate
may recover for the injuries suffered by the decedent before his
death, a wrongful-death claim belongs to the decedent’s
beneficiaries. Compare R.C. 2125.02(A)(1) with R.C. 2305.21.
“Except as provided in this division, a civil action for wrongful death
shall be brought in the name of the personal representative of the
decedent for the exclusive benefit of the surviving spouse, the
children, and the parents of the decedent * * * and for the exclusive
benefit of the other next of kin of the decedent.” (Emphasis added.)
R.C. 2125.02(A)(1). * * *. (Emphasis sic.) Peters, supra, at ¶10.
{¶14} The Court further emphasized that “survival claims and wrongful-death
claims are distinct claims that belong to separate individuals, even though they are
generally brought by the same nominal party (the personal representative of the
estate).” Id. at ¶17. Accordingly, the Court continued:
{¶15} When [the decedent] signed the arbitration agreement, he agreed
to arbitrate his claims against the company, whether brought during
his life or after his death. Thus, the provision in the agreement
binding [the decedent’s] heirs, beneficiaries, successors, and
assigns applies to a survival action, which is the vessel to pursue
his claims after death.
{¶16} However, [the decedent] could not restrict his beneficiaries to
arbitration of their wrongful-death claims, because he held no right
to those claims; they accrued independently to his beneficiaries for
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their injuries personally suffered as a result of his death. * * *
Thus, a decedent cannot bind his or her beneficiaries to arbitrate
their wrongful-death claims. * * * The beneficiaries can agree to
arbitrate these claims themselves, but they are not required to do
so. (citations omitted). Id. at ¶18-19.
{¶17} Here, appellee, as personal representative of the decedent, brought the
underlying claims, which sought to utilize the arbitration agreement to arbitrate a
wrongful-death claim. As discussed above, appellee was not a party to the agreement
and neither were any of the decedent’s beneficiaries. We acknowledge that the
beneficiaries, in this instance, have “agreed” to arbitrate their wrongful-death claims.
We do not, however, read Peters to permit beneficiaries to use an arbitration agreement
between a decedent and a facility, to which they are not signatories, as a vehicle to
arbitration. Indeed, such a scenario places the proverbial cart before the horse.
{¶18} Initially, in order to propose arbitration as a means to resolve a claim, it
stands to reason that a party must first, in fact, have a claim. As a wrongful-death claim
involves an independent right that beneficiaries are entitled to assert, and the
beneficiaries are not parties to the agreement, appellants breached no agreement
between themselves and the beneficiaries in refusing to arbitrate the claim.
{¶19} Moreover, appellee’s breach of contract and intentional-interference
claims were premised upon the facility’s refusal to arbitrate. The legal issue appellee
wished to arbitrate, however, was a claim for wrongful death. The breach-of-contract
claim was therefore a veiled attempt to assert a claim for which the statute-of-limitations
period had passed. R.C. 2521.02(D)(1) sets forth a two-year statute-of-limitations
period on a wrongful-death claim. The decedent passed on June 25, 2014, and the
underlying complaint was filed on October 14, 2014 – more than two years after the
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cause-of-action accrued. Appellee offers no support for the proposition that making a
request for arbitration by letter to appellants before the expiration of the statute of
limitations tolls the limitations period. Hence, even if the complaint did not fail as a
matter of law, there would be no viable claim to submit to arbitration.
{¶20} We do not read Peters to stand for the proposition that when an
agreement to arbitrate exists, to which wrongful-death beneficiaries are not signatories,
that those beneficiaries may “agree to arbitrate,” via that agreement, to avoid the
applicable statute-of-limitations period. A decedent’s beneficiaries consent or
agreement to arbitrate a claim is of no consequence if the underlying claim is legally
defunct. Peters simply states, as a matter of substantive law, that survival and
wrongful-death claims are independent of one another, and that a decedent cannot bind
his or her beneficiaries to arbitrate their wrongful-death claims. The latter point does not
imply the beneficiaries are required to litigate their independent claim in a court of law.
To the contrary, once a wrongful-death claim is filed, the beneficiaries may enter into a
separate agreement to arbitrate the claim in lieu of litigating the matter. This decision,
however, involves a separate and discrete agreement between the beneficiaries and the
facility pursuant to the independent wrongful-death claim. Peters’ statement that “[t]he
beneficiaries can agree to arbitrate these claims themselves, but are not required to do
so[,]” stands for the unremarkable principle that, in the course of prosecuting their
wrongful-death claim, beneficiaries may independently agree to arbitrate their claim.
Such a decision, however, necessarily presupposes the existence of a valid wrongful-
death claim – something appellee does not possess.
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{¶21} Notwithstanding the foregoing points, we recognize that, under certain
circumstances, non-signing, third parties may enforce arbitration agreements. See e.g.
Trinity Health Sys. v. MDX Corp., 180 Ohio App. 3d 815, 2009-Ohio-417, ¶22 (7th Dist.).
“‘[A] third-party beneficiary will only be bound by the terms of the underlying contract
where the claims asserted by that beneficiary arise from its third-party beneficiary
status.’” Peters v. Columbus Steel Casting Co., 10th Dist. Franklin No. 05AP-308, 2006-
Ohio-382, quoting E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin
Intermediaries, S.A.S., 269 F.3d 187, 197 (3d Cir.2001). Hence, in order for a third-
party to possess enforceable rights under an arbitration agreement, “* * * the
performance of [the] promise [to arbitrate] must also satisfy a duty owed by the
promisee to the beneficiary.” Hill v. Sonitrol of Southwestern Ohio, Inc., 36 Ohio St. 3d
36, 40, 521 N.E.2d 780 (1988).
{¶22} The arbitration agreement evinces the intent that disputes, including
negligence, between the decedent and the facility would be subject to binding
arbitration. As emphasized above, however, “a wrongful death action is an independent
cause of action.” (Emphasis added). Thompson v. Wing, 70 Ohio St. 3d 176, 183
(1994). Because, as a matter of law, the arbitration agreement could not envelop the
beneficiaries’ wrongful-death claims without their consent when the agreement was
entered, the promise to arbitrate does not satisfy a duty owed by the facility to the
beneficiaries. Further, the wrongful-death claim does not “arise out of” any third-party
beneficiary status the decedent’s beneficiaries might possess under the agreement.
Instead, the claim, by legal necessity, arises from alleged injuries they suffered as a
result of the decedent’s death. See Peters, 2006-Ohio-382, ¶22. Again, this is
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independent of any potential benefits they could ultimately receive as beneficiaries to
the decedent’s estate resulting from the binding arbitration of a survival or any other
similar claim contemplated by the parties’ agreement. Hence, while the beneficiaries
may be third-party beneficiaries of, e.g., a survival claim, their wrongful-death claim is a
separate cause flowing from their independent status as statutory beneficiaries.
{¶23} A review of the arbitration agreement reveals it was signed by the
decedent’s representative as well as an agent for the facility. The agreement does not
include the signatures of any of the decedent’s beneficiaries and, as a result, the
decedent’s beneficiaries were not parties to the agreement. See Peters, supra;
McFarren v. Emeritus at Canton, 5th Dist. Stark No. 2013CA00040, 2013-Ohio-3900,
¶30 (“arbitration agreements are not enforceable against non-signing beneficiaries to a
wrongful death claim.”) Because they are not parties to the agreement, they may not
attempt to enforce it. The arbitration process assumes the beneficiaries have a legally
viable claim to arbitrate. In this case, no such claim exists. Appellee’s breach of
contract and intentional interference with business contract claims fail as a matter of law
and, by necessary implication, the trial court’s judgment staying the matter pending
arbitration must be reversed.
{¶24} Appellants’ first assignment of error has merit.
{¶25} For their second assignment of error, appellants contend:
{¶26} “The trial court erred in denying the appellants’ motion for summary
judgment as the plaintiff’s claims were barred by the applicable statute of limitations.”
{¶27} While an appeal relating to the grant of a stay pending arbitration creates
a final order, the order is final only as to that issue. And the denial of a motion for
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summary judgment is generally not a final appealable order, because it does not
determine the action and prevent a judgment. See e.g. Sagenich v. Erie Ins. Group,
11th Dist. Trumbull No. 2003-T-0144, 2003-Ohio-6767, ¶3. “The denial of a motion for
summary judgment is always reviewable on appeal following a subsequent final
judgment.” Id. Because the denial of appellants’ motion for summary judgment is not
final, we lack jurisdiction to consider their second assignment of error.
{¶28} Appellant’s second assignment of error is dismissed.
{¶29} The trial court erred as a matter of law when it stayed the proceedings
pending arbitration. The beneficiaries were not parties to the arbitration agreement and,
as a result, could not seek enforcement of the same for purposes of pursuing their
legally defunct wrongful-death claim. Our disposition and rationale for reversing the trial
court’s order staying the proceedings has the practical effect of vitiating appellee’s
breach-of-contract and intentional-interference claims. Nevertheless, because the trial
court denied appellants’ motion for summary judgment, this matter must be remanded
to finalize any remaining issues. This opinion should not be construed to prevent the re-
filing of motions for summary judgment.
{¶30} The judgment of the Portage County Court of Common Pleas is reversed,
in part, remanded, in part; and the portion of appellants’ appeal assigning error to an
interlocutory order denying summary judgment is dismissed.
TIMOTHY P. CANNON, J., concurs,
DIANE V. GRENDELL, J., concurs in part and dissents in part, with a Dissenting
Opinion.
____________________
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DIANE V. GRENDELL, J., concurs in part and dissents in part, with a Dissenting
Opinion.
{¶31} While I agree with the majority’s determination that the second assignment
of error must be dismissed given the lack of a final order, I must dissent as to the
reversal of the trial court’s decision staying proceedings pending arbitration. Since
Altercare and Knight both consented to arbitration, and in accordance with Ohio’s well-
established policy of encouraging arbitration, the lower court’s judgment should be
affirmed.
{¶32} “It has been the long-standing public policy of Ohio to favor and
encourage arbitration between parties as ‘a speedy and inexpensive way [toward] a
final disposition of the controversy between them, and to avoid future litigation
concerning the same matters.’” Portage Cty. Bd. of Mental Retardation and Dev.
Disabilities v. Portage Cty. Educators Assn. for Mentally Retarded, 11th Dist. Portage
No. 2006-P-0111, 2007-Ohio-2569, ¶ 10, citing Corrigan v. Rockefeller, 67 Ohio St.
354, 367, 66 N.E. 95 (1902). Arbitration provisions are ordinarily valid and enforceable.
See R.C. 2711.01(A). “As a result, a court must indulge a strong presumption in favor
of arbitration and resolve any doubts in favor of arbitrability.” Wascovich v. Personacare
of Ohio, 190 Ohio App. 3d 619, 2010-Ohio-4563, 943 N.E.2d 1030, ¶ 24 (11th Dist.);
also Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St. 3d 185,
2006-Ohio-657, 842 N.E.2d 488, ¶ 5.
{¶33} The majority’s decision fails to properly consider and apply the foregoing
principles, especially in light of the facts of this case, where both parties consented to
have matters relating to Young’s care resolved through arbitration. While the arbitration
agreement at issue was signed by a representative of Young rather than by Knight,
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nonsignatories can enforce arbitration agreements against signatories under certain
circumstances. Trinity Health Sys. v. MDX Corp., 180 Ohio App. 3d 815, 2009-Ohio-
417, 907 N.E.2d 746, ¶ 22 (7th Dist.). A third party can seek to benefit from a contract,
including an arbitration agreement, provided it is contemplated by the parties with intent
to provide a benefit. West v. Household Life Ins. Co., 170 Ohio App. 3d 463, 867 N.E.2d
868, 2007-Ohio-845, ¶ 13 (10th Dist.); Huntington Natl. Bank v. A & J Plumbing, Inc.,
11th Dist. Geauga No. 2011-G-3021, 2012-Ohio-526, ¶ 37 (“[t]he parties to the contract
must intend that a third party benefit from the contract in order for the third party to have
enforceable rights under the contract”) (citation omitted).
{¶34} Here, the wishes of both parties show an intent to participate in arbitration,
since Altercare signed the agreement and Knight sought to enforce it. The claims to be
covered by arbitration include negligence and medical malpractice, specific claims that
could be pursued by Young’s beneficiaries if she died from these causes. A wrongful
death matter is in the same vein as these claims. In addition, Knight properly
emphasizes the arbitration agreement’s inclusion of the following clause:
The decision of the arbitrator shall be binding on all of the parties to
the arbitration, and also on their successors and assigns, including
the agents and employees of Facility, and all persons whose claim
is derived through or on behalf of the Resident, including, but not
limited to, that of any parent, spouse, child, guardian, executor,
administrator, legal representative, or heir of Resident.
{¶35} This language reveals that persons including any heirs were anticipated to
be impacted by this agreement by both Knight and appellants. It specifically indicates
that arbitration decisions made from claims “derived through” Young should be binding
on heirs. Use of this language appears to directly consider wrongful death claims,
which are not claims brought “on behalf of” the resident but claims brought
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independently by the heirs. The only way for heirs to be bound by arbitration in such a
scenario would be if they were permitted to bring such a claim to arbitration in the first
place. This is precisely what Knight sought to do in the present case.
{¶36} It is also worth noting that principles of equitable estoppel have been
applied in some federal courts when the nonsignatory seeks to enforce an arbitration
agreement or contract against the signatory, where there is a close relationship
between the parties and the dispute is intertwined with the underlying contract. See I
Sports v. IMG Worldwide, Inc., 157 Ohio App. 3d 593, 2004-Ohio-3113, 813 N.E.2d 4, ¶
14 (8th Dist.), citing Thomson-CSF, S.A. v. American Arbitration Assn., 64 F.3d 773,
779 (2nd Cir.1995) (“circuits have been willing to estop a signatory from avoiding
arbitration with a nonsignatory when the issues the nonsignatory is seeking to resolve in
arbitration are intertwined with the agreement that the estopped party has signed”).
Such principles would properly apply here, where appellants clearly sought out an
arbitration agreement, Young entered such an agreement, the agreement covered
claims related to possible negligence and the standard of care, and now seek to avoid
arbitration.
{¶37} Peters v. Columbus Steel Castings Co., 115 Ohio St. 3d 134, 2007-Ohio-
4787, 873 N.E.2d 1258, and McFarren v. Emeritus at Canton, 2013-Ohio-3900, 997
N.E.2d 1254 (5th Dist.), discussed by the appellants and the majority, provide that
arbitration clauses are not enforceable against non-signatory beneficiaries to a wrongful
death claim. It must be emphasized, however, that these cases generally discuss only
whether the beneficiaries are required to submit to the arbitration agreement and do not
address the converse situation which is present in this case: whether the nursing home
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can be bound as well. The conclusion in Peters emphasizes that arbitration “may not
be imposed on the unwilling,” who should not be bound by the decision of another to
arbitrate. Peters at ¶ 20; Wascovich, 2010-Ohio-4563, at ¶ 6. This specific principle
does not apply to appellants, since Altercare signed the arbitration agreement, evincing
an intent to enter into arbitration regarding claims relating to Young.
{¶38} Peters explains that “[t]he beneficiaries can agree to arbitrate these claims
themselves, but they are not required to do so.” Id. at ¶ 19. Here, Knight chose to
agree to arbitrate the claims with appellants by requesting arbitration. The appellants
themselves had already agreed to arbitration of claims relating to Young and, thus,
essentially received exactly what they had bargained for when entering the contract.
{¶39} Finally, it is clear that both Altercare and Young voluntarily agreed to
submit matters relating to her care to arbitration. There is no question raised disputing
that this agreement was fair and is not procedurally or substantively unconscionable,
thus making it a valid agreement absent any argument to the contrary. See generally
Hayes v. Oakridge Home, 122 Ohio St. 3d 63, 2009-Ohio-2054, 908 N.E.2d 408 (finding
a nursing home resident arbitration agreement to be generally valid provided there is no
unconscionability or other defect). Further, as noted by Knight, attempts to timely
invoke the arbitration clause to pursue the wrongful death claim were rejected by
Altercare, which warranted the filing of the present lawsuit.
{¶40} For the foregoing reasons, the trial court’s ruling staying this matter for
arbitration was consistent with the terms of the arbitration agreement, the law, and the
policy in favor of arbitration. As such, its decision should be affirmed and I must
respectfully dissent.
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