Durany v. Majorie House McMinnville, LLC ( 2024 )

No. 733 October 16, 2024 501
IN THE COURT OF APPEALS OF THE
STATE OF OREGON
Karen DURANY,
Personal Representative of
the Estate of Margaret McKechnie,
Plaintiff-Respondent,
v.
MARJORIE HOUSE McMINNVILLE, LLC,
an Oregon corporation doing business as
Marjorie House Memory Care,
Defendant-Appellant.
Yamhill County Circuit Court
22CV17053; A180185
Cynthia Kaufman Noble, Judge.
Argued and submitted July 10, 2024.
Janelle W. Debes argued the cause and filed the briefs
for appellant. Also on the briefs were John E. Pollino and
Garrett Hemann Robertson PC.
Faith Morse argued the cause and filed the briefs for
respondent. Also on the briefs was Morse Law LLC.
Before Aoyagi, Presiding Judge, Joyce, Judge, and
Balmer, Senior Judge.
JOYCE, J.
Affirmed.
502 Durany v. Majorie House McMinnville, LLC
Cite as 335 Or App 501 (2024) 503
JOYCE, J.
Defendant appeals from an interlocutory ruling
denying its motion to compel arbitration and stay the pro-
ceedings pending arbitration of claims for negligence and
wrongful death, claims that plaintiff brought as the personal
representative of her mother’s estate. The claims arose out of
care that defendant provided to plaintiff’s mother while she
was a resident at defendant’s care facility. The trial court
denied defendant’s motion after concluding that, although
plaintiff had the authority to enter into the arbitration
agreement on her mother’s behalf, the arbitration agree-
ment was not enforceable because it violated OAR 411-054-
0027(1)(p).1 Defendant challenges that ruling, arguing that
the Federal Arbitration Act, 9 USC §§ 1 et seq., preempts the
rule. Plaintiff cross-assigns error to the trial court’s deter-
mination that she had legal authority to bind her mother
to the arbitration agreement. We conclude that plaintiff
did not have legal authority to enter into the agreement on
her mother’s behalf. That conclusion obviates the need to
address defendant’s preemption argument. Accordingly, we
affirm.
At the time of admission to defendant’s facility,
plaintiff’s mother suffered from dementia. Plaintiff signed
admission documents on her mother’s behalf, including a
“Resident Admission Agreement” and an arbitration agree-
ment that required a separate signature.
The “Resident Admission Agreement” included a
section titled “Resident’s Representative,” which provided
that the person signing the document was
“designated by the Resident as his or her Representative for
the purpose of this contract. This is the person the Resident
wishes the Facility to contact in case of emergency, or for
consultation relating to care, services or other needs. If
Resident has a legal Representative, then discussions and
notices addressed to Resident in this Agreement should
1
After plaintiff brought her claims, that rule was renumbered but not sub-
stantively amended. We cite to the current version, which provides that a facility
must implement a residents’ “Bill of Rights” that, among other things, states that
residents have the right to “be free of any written contract or agreement lan-
guage with the facility that purports to waive their rights or the facility’s liability
for negligence.”
504 Durany v. Majorie House McMinnville, LLC
be made to the Resident Representative. The Resident
Representative personally guarantees all financial and
other obligations of this Agreement. However, if another
person holds a Power of Attorney or is the legal guard-
ian of the Resident, that individual(s) may be involved in
financial or health care decisions. If legal documentation
exists designating a Power of Attorney for healthcare or
legal guardian, a copy must be provided to the Facility, and
notice provided of any changes in this designation.”
The two-page arbitration agreement stated that “the
Resident agrees that any and all claims and disputes arising
from or related to the Marjorie House Resident Admission
Agreement or to the Resident’s care or services at Marjorie
House shall be resolved by submission to neutral, binding
arbitration[.] * * * Both parties give up their right to have
any such dispute decided in a court of law before a jury, and
instead accept the use of arbitration.” The document also
stated that the “execution of this Arbitration Agreement is
not a precondition to the execution of the Marjorie House
Resident Admission Agreement.”
Plaintiff signed both the Resident Admission
Agreement and the arbitration agreement on her moth-
er’s behalf, representing that she was the “Resident
Representative.” Plaintiff’s mother did not sign either docu-
ment, and she had not executed a power of attorney and did
not have a conservator or guardian.
Plaintiff’s mother resided at defendant’s facility
until her death. Plaintiff, as the personal representative
of her mother’s estate, filed negligence and wrongful death
claims against defendant. Defendant filed a motion to com-
pel arbitration and stay the proceedings pending arbitra-
tion, arguing that plaintiff had lawfully executed the arbi-
tration agreement on behalf of her mother and that, under
the Federal Arbitration Act, 9 USC §§ 1 et seq., the trial
court was required to enforce the agreement against her
mother’s estate.
In response, plaintiff argued that the agreement
was not enforceable on multiple grounds. First, plain-
tiff argued that the arbitration agreement was not valid
because she did not hold a power of attorney or any other
Cite as 335 Or App 501 (2024) 505
legal authority to sign the contract on her mother’s behalf.
Plaintiff also argued, among other things, that the arbitra-
tion agreement violated OAR 411-054-0027(1)(p), which pro-
vides that residents in licensed care facilities have the right
“[t]o be free of any written contract or agreement language
with the facility that purports to waive their rights or the
facility’s liability for negligence.”
Defendant countered that plaintiff had legal author-
ity to enter into the arbitration agreement on her mother’s
behalf as a “designated representative” under OAR 411-054-
0005(27).2 That rule defines “designated representative” as
“(a) Any adult, such as a parent, family member,
guardian, advocate, or other person, who is:
“(A) Chosen by the individual or, as applicable, the
legal representative;
“(B) Not a paid provider for the individual; and
“(C) Authorized by the individual, or as applicable the
legal representative, to serve as the representative of the
individual, or as applicable the legal representative, in con-
nection with the provision of funded supports.”3
Defendant argued that plaintiff’s mother “chose”
plaintiff to be her designated representative, as evidenced
by the fact that plaintiff’s mother lived on plaintiff’s prop-
erty prior to being admitted to defendant’s facility; plain-
tiff authorized the release of her mother’s medical records
to defendant before admission; plaintiff “held herself out to
[defendant] as [her mother’s] designated representative”;
and plaintiff had been involved in arranging medical care
for her mother.
At the hearing on the motion, plaintiff argued
that “there is zero evidence on the record that [plaintiff’s
mother] chose or authorized [plaintiff] to sign anything on
her behalf.” Plaintiff also argued that, even if her mother
2
After plaintiff brought her claims, that rule was renumbered but not sub-
stantively amended. We cite to the current version.
3
“Funded” supports refers to Medicaid-funded Home and Community-Based
Services (HCBS) and settings which must comply with federal regulations. OAR
411-004-0000(3); OAR 411-054-0000(2) (“Residential care and assisted living
facilities are also required to adhere to Home and Community-Based Services[.]”).
506 Durany v. Majorie House McMinnville, LLC
had chosen her to be a designated representative, the rule
“is very helpful in some situations but to bind a memory care
resident who does not have a power of attorney, this section
does not give the facility the ability to do that. It simply
doesn’t have the ability to create a legal representative when
one does not already exist.”
The trial court ruled that, under OAR 411-054-
0005(27), plaintiff had the legal authority to execute the
arbitration agreement on behalf of her mother, stating that
“under basic contract law we’ve got an arbitration agree-
ment in 2020 that was entered into by the plaintiff. I believe
that she is recognized in her capacity as the [designated]
representative. There’s certainly reasons that that ability
was put into place in situations for families that didn’t have
POAs or conservators to be able to help get a party in care.”
The court denied the motion to compel arbitration, however,
after concluding that the arbitration agreement violated
OAR 411-054-0027(1)(p). The court thus entered an order
denying defendant’s motion to compel arbitration.
Defendant then brought this interlocutory appeal,
arguing that the court incorrectly denied the motion because
the Federal Arbitration Act preempts OAR 411-054-0027(1)
(p). See ORS 36.730(1)(a) (an appeal may be taken from an
order denying a motion to compel arbitration). Plaintiff cross-
assigns error to the trial court’s determination that she had
authority to sign the contract on her mother’s behalf. The
resolution of plaintiff’s cross-assignment is dispositive, so
we turn to the parties’ relevant arguments.
As a threshold matter, defendant contends that
plaintiff was required to file a cross-appeal. More specifi-
cally, defendant argues that plaintiff is seeking to “modify
the trial court’s ruling by concluding [plaintiff] did not have
the authority to enter into the arbitration agreement on
behalf of her mother.” We disagree. Plaintiff is not seeking to
reverse or modify the trial court’s order denying defendant’s
motion to compel arbitration. Rather, plaintiff is raising an
alternative ground on which the trial court’s order may be
upheld—that plaintiff did not have the legal authority to
enter into the arbitration agreement on her mother’s behalf.
See Murray v. State of Oregon, 203 Or App 377, 388, 124 P3d
Cite as 335 Or App 501 (2024) 507
1261 (2005), rev den, 340 Or 672 (2006) (“We have explained
that a cross-appeal is not necessary where a respondent
raises an alternative ground on which the judgment may be
upheld[.]”) (Internal citation omitted.)). Plaintiff was there-
fore not required to file a cross-appeal.
Turning to the merits, plaintiff renews her argu-
ment that, because she neither held a power of attorney nor
was her mother’s conservator or guardian, she did not have
the legal authority to contract on her mother’s behalf. See
Drury v. Assisted Living Concepts, Inc., 245 Or App 217, 262
P3d 1162, rev den, 351 Or 318 (2011) (resident agreement
with an arbitration clause, signed by resident’s son, who did
not have power of attorney for resident nor was resident’s
guardian or conservator, did not bind resident’s estate; res-
ident, who did not sign the agreement and suffered from
dementia at the time, did not manifest her assent to the
terms of the agreement). Plaintiff further argues that OAR
411-054-0005(27), which defines “designated representa-
tive,” did not provide independent legal authority for plain-
tiff to sign a contract on her mother’s behalf.
We review the denial of a motion to compel arbitra-
tion for legal error. Lumm v. CC Services, Inc., 290 Or App
39, 43, 414 P3d 454 (2018). Arbitration arises as a matter
of contract, and a valid contract requires “a meeting of the
minds of the parties, a standard that is measured by the
objective manifestations of intent by both parties to bind
themselves to an agreement.” Drury, 245 Or App at 221(internal quotation marks and citation omitted). Here, plain-
tiff’s mother did not sign the arbitration agreement, and as
noted above, plaintiff did not hold a power of attorney and
was not a conservator or guardian. We agree with plaintiff
that, under Drury, plaintiff did not have the legal authority
to bind her mother to the arbitration agreement.4 Because
OAR 411-054-0005(27) did not become effective until after
4
We also note that plaintiff did not have apparent authority to enter into
the arbitration agreement on her mother’s behalf. Apparent authority requires
that the principal—in this case plaintiff’s mother—”engage in some conduct that
the principal should realize is likely to cause a third person to believe that the
agent has authority to act on the principal’s behalf.” Taylor v. Ramsay-Gerding
Construction Co., 345 Or 403, 410, 196 P3d 532 (2008) (internal quotation marks
and citation omitted). Defendant does not argue, and the record does not estab-
lish, that plaintiff’s mother engaged in the type of conduct that would reasonably
508 Durany v. Majorie House McMinnville, LLC
Drury, however, Drury did not address whether that rule
grants a designated representative the legal authority
to enter into an arbitration agreement on an individual’s
behalf. Assuming, without deciding, that plaintiff’s mother
“authorized” plaintiff to be her designated representative,
as required under OAR 411-054-0005(27), we conclude that
that rule did not authorize plaintiff to enter into the arbitra-
tion agreement on her mother’s behalf.
In interpreting administrative rules, “absent a con-
trolling construction by the authoring agency, we apply the
same analytical framework that applies to the construction
of statutes.” Schaefer v. Marion County, 323 Or App 390,
400, 523 P3d 1142 (2022) (internal quotation marks and
citation omitted). Under that framework, “we seek to divine
the intent of the rule’s drafters by considering the text of the
rule in its regulatory and statutory context.” Id. (internal
quotation marks omitted). We conclude that the plain text
and context of the rules indicate that a designated repre-
sentative does not have the legal authority to enter into a
binding arbitration agreement on behalf of an individual.
First, contrary to defendant’s argument, the text
of OAR 411-054-0005(27)(C) does not, on its face, explic-
itly authorize a designated representative to serve as the
legal representative of the individual. The rule states that
a designated representative is someone “[a]uthorized by
the individual, or as applicable the legal representative, to
serve as the representative of the individual, or as applica-
ble the legal representative, in connection with the provision
of funded supports.” OAR 411-054-0005(27)(C) (emphasis
added). Defendant interprets that text to mean that a des-
ignated representative is authorized to serve as the repre-
sentative or, as applicable, the legal representative, of the
individual. The grammatical structure of the rule, how-
ever, indicates that a designated representative is someone
authorized by the individual to serve as the representative
of the individual, or, as applicable, someone authorized by
the legal representative to serve as a representative of the
legal representative. In other words, the rule does not permit,
cause defendant to believe that plaintiff had the authority to agree to mandatory
arbitration on her mother’s behalf.
Cite as 335 Or App 501 (2024) 509
absent some other authority, a designated representative to
serve as a legal representative.
That conclusion is consistent with the fact that the
rules provide a separate definition for “legal representative.”
See OAR 411-054-0005(61) (a legal representative is “a per-
son who has the legal authority to act for an individual”).
Thus, a legal representative’s authority is distinct from a
designated representative’s authority. See State v. Newell,
238 Or App 385, 392, 242 P3d 709 (2010) (the use of differ-
ent terms generally means that those terms have different
meanings).
With respect to the scope of a designated represen-
tative’s authority, the rule that defines a designated repre-
sentative limits the authority of a designated representative
to serving as the representative of the individual “in connec-
tion with the provision of funded supports.” OAR 411-054-
0005(27)(C). “Funded supports,” in turn, refers to services
provided by Medicaid-funded residential care and assisted
living facilities. OAR 411-004-0000; OAR 411-054-0000(2).
Thus, a designated representative’s authority is
limited to serving as the representative of an individual in
connection with the provision of services. That authority
includes, for instance, entering into a residency agreement
on behalf of an individual. OAR 411-004-0010(18) (a desig-
nated representative can enter into a “residency agreement,”
in turn defined as a “written, legally enforceable agreement
between a residential provider and * * * [a] designated rep-
resentative of the individual” that “identifies the rights and
responsibilities of the individual and the residential pro-
vider”). The designated representative’s authority, again in
connection with the provision of services for the individual
in an assisted living facility, also includes selecting a resi-
dential setting, and assisting an individual in the process of
developing “person-centered service plans” and a risk agree-
ment. OAR 411-004-0020(1)(b) - (f) (describing residential or
non-residential setting options available to be chosen “by an
individual or, as applicable, the * * * designated representa-
tive of the individual”); OAR 411-004-0010(14) and 411-004-
0030(2)(a)(B) (a “person-centered service plan” is “the writ-
ten details of the supports, desired outcomes, activities, and
510 Durany v. Majorie House McMinnville, LLC
resources required for an individual to achieve and maintain
personal goals, health, and safety” and “must be developed
by the individual and, as applicable, the * * * designated
representative”); OAR 411-054-0036(6) (a risk agreement
“explore[s] alternatives and potential consequences with
the resident” when the resident’s “actions or choices pose a
potential risk to that resident’s health or well-being” and
must be developed with “the resident’s designated represen-
tative”). Importantly, no rule purports to grant a designated
representative legal authority to enter into an arbitration
agreement—a contract that concerns a resident’s right to
a jury trial rather than services provided by a facility—on
behalf of a resident. In other words, even if, in the abstract,
an arbitration agreement “identifies the rights and respon-
sibilities of the individual and the residential provider,”
OAR 411-004-0010(18) (defining “residency agreement”),
an individual’s right to a jury trial is not connected to the
facility’s provision of services. Consequently, an arbitration
agreement is not an agreement that the designated repre-
sentative can enter into on the individual’s behalf.
We note that our text-based understanding that
the rules do not provide authority for a designated repre-
sentative to waive the right to a jury trial on behalf of an
individual is consistent with OAR 411-054-0027. That rule
describes residents’ rights and protections that each facility
must implement. One of those rights is to be “free of any
written contract or agreement language with the facility
that purports to waive their rights or the facility’s liabil-
ity for negligence.” OAR 411-054-0027(1)(p). Construing the
rules related to designated representatives in the manner
that we have—so as to prevent a designated representative
from waiving a person’s right to a jury trial—is consistent
with the prohibition on binding residents to any contract or
agreement that “waive[s] their rights[.]” Id.We thus conclude that under the plain text and
context of the rules, there is no independent legal authority
for a designated representative to enter into an arbitration
agreement on an individual’s behalf. Accordingly, because
plaintiff did not hold a power of attorney or any other legal
authority that authorized her to bind her mother to the
Cite as 335 Or App 501 (2024) 511
arbitration agreement, the trial court erred in concluding
that she had authority to agree to arbitration on her moth-
er’s behalf. Consequently, the trial court correctly denied
the motion to arbitrate.
Affirmed.