Clementson, E. v. Evangelical Manor ( 2018 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
ELSIE CLEMENTSON IN THE SUPERIOR COURT OF
PENNSYLVANIA
v.
EVANGELICAL MANOR D/B/A WESLEY
ENHANCED LIVING PENNYPACK PARK
Appellant No. 299 EDA 2017
Appeal from the Order Entered December 19, 2016
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): 160601775
BEFORE: BOWES, LAZARUS AND PLATT,* JJ.
MEMORANDUM BY BOWES, J.: FILED MARCH 29, 2018
Evangelical Manor d/b/a Wesley Enhanced Living Pennypack Park (the
“Facility”) appeals from the December 19, 2016 order denying its petition to
compel arbitration.1 After thorough review, we affirm.
Elsie Clementson filed this negligence action seeking damages for a
fractured tibia that she sustained in a fall while she was a resident at the
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1 The trial court's order is final and appealable pursuant to Pa.R.A.P.
311(a)(8), which permits an interlocutory appeal from any order made
appealable by statute. See Midomo Co., Inc. v. Presbyterian Housing
Co., 739 A.2d 180, 183-84 (Pa.Super. 1999). The Uniform Arbitration Act,
42 Pa.C.S. §§ 7301 et seq., provides that an appeal may be taken from "[a]
court order denying an application to compel arbitration. . . ." 42 Pa.C.S. §
7320(a)(1).
* Retired Senior Judge specially assigned to the Superior Court.
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Facility. The Facility moved to compel arbitration pursuant to a clause in the
Admission Agreement, which was signed by Ms. Clementson’s daughter,
Joanne Reilly.2 Ms. Reilly did not act pursuant to a power-of-attorney.
The circumstances preceding and surrounding the execution of the
Admission Agreement are as follows. On February 16, 2012, Ms. Reilly
signed the Facility’s Responsible Person Agreement (“RPA”) “to facilitate the
provision of care to the Resident,” her mother, Elsie Clementson.
Responsible Person Agreement, at 1. The RPA provided that, “the
responsible person affirms that he or she has access to Resident’s income
and resources and the Resident’s income and resources are available to pay
for Resident’s care.” Id. at 1¶3. The Responsible Person agrees to pay for
the costs of the stay from Resident’s income and resources in accordance
with the Admission Agreement until the costs are paid by other sources, and
to apply for and submit the documentation required to obtain benefits. Id.
If Responsible Person fulfills his or her obligations under that Agreement,
“she shall not be held personally liable for the Resident’s charges.” Id. at 2.
If, however, Responsible Person does not fulfill the Agreement, “she shall be
liable” to the Facility for any losses it sustains due to Responsible Person’s
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2 The record indicates that the form agreements were preprinted with the
name “Joanne Riley,” but signed by “Joanne Reilly.” There was no indication
on the signature page that Joanne Reilly signed in her capacity as the
Responsible Person for her mother.
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breach. Id. In short, the RPA obligated the Responsible Person to fulfill the
duties of the Resident under the Admission Agreement, most of which were
financial in nature, and subjected the Responsible Person to liability for
failure to do so.
On February 21, 2012, Ms. Reilly was asked by the Facility to execute
the Facility’s Admission Agreement. The Agreement details the nature of the
services provided, the charges, billing, Medicare and Medicaid, and the
“Obligations of Responsible Person.” The latter provision states in pertinent
part:
The Resident has the right to identify a Responsible Person
(usually the Agent in the Resident’s Power of Attorney or
Guardian), who shall be entitled to receive notice in the
event of transfer of discharge or material changes in the
Resident’s condition, and changes to this Agreement.
Resident elects to name JOANNE RILEY of PHILADELPHIA, PA
[address], as the Responsible Person. The Resident’s selected
Responsible Person shall sign this Agreement and the
Responsible Person Agreement in recognition of this
designation with the intent to be legally bound by all
provisions in this Agreement and the Responsible Person
Agreement.
Admission Agreement, ¶4.1 (emphasis added).
Paragraph 20 of the Admission Agreement is entitled “Community’s
Grievance Procedure,” and provides that if the Resident, Resident’s
Attorney-in-Fact, or Responsible Person believes that Resident is being
mistreated or her rights violated, they are to make the complaint known to
the Director of Nursing or Administrator. Such notice is a prerequisite to
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arbitration. It states further that any claim for personal injuries for
inadequate care or medical malpractice while in the Facility are to be
resolved “exclusively by arbitration.” Paragraph 20.3(b). The Agreement
explains that this means that the Resident is relinquishing her right to a jury
trial and will not be able to file a lawsuit. Rather, arbitration administered
by ADR Options, Inc. pursuant to its rules, at a site chosen by the Facility, is
the only option. The parties are to split costs and each bear their own legal
fees. The Agreement provides further that “Resident, or Resident’s spouse
or personal representative in the event of Resident’s incapacity, have the
right to rescind this arbitration clause” by notifying the Facility in writing, by
certified mail, within thirty days of signing. Id. at ¶20.3(h).
The Admission Agreement contains an integration clause providing
that the Admission Agreement, the Application Agreement,3 and the RPA are
the entire agreement and understanding between the parties. Id. at ¶23.4.
The Facility reserved, however, the right to modify unilaterally the terms of
the Agreement to conform to subsequent changes in the law, regulation, or
operations. Id. at ¶23.5.
At the time the aforementioned documents were executed, Ms. Reilly
was not Ms. Clementson’s attorney-in-fact. The parties to the RPA and the
Admission Agreement were Ms. Reilly and the Facility. Later, in 2014, Ms.
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3 The Application Agreement is not contained in the certified record.
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Clementson executed a durable power-of-attorney conferring attorney-in-
fact status upon her daughter. Based on the foregoing, the trial court
denied the petition to compel arbitration finding there was no express or
implied agency based on the RPA. The court also found that the power-of-
attorney executed in 2014, more than two years after the execution of the
Admission Agreement containing the arbitration clause, was not retroactive
as the powers designated therein were not explicitly retroactive.
Furthermore, Ms. Reilly did not have apparent authority to act as there was
no manifestation by the principal, Ms. Clementson, establishing such
authority. Finally, the trial court found no agency by estoppel, as there was
no evidence that Ms. Clementson was present when the paperwork was
signed, that the agreements were presented to her, or that she knew what
they contained. Absent proof that Ms. Clementson knew that her daughter
purportedly agreed to arbitrate, her failure to disavow her daughter’s
authority to agree to same did not create agency by estoppel.
The Facility timely appealed, raising one question for our review: “Did
the trial court err by failing to compel binding arbitration of the claims
brought by [Ms. Clementson] against the Defendant Facility pursuant to the
Facility’s valid and binding Admission/Arbitration Agreement?” Appellant’s
brief at 4.
Our review of the denial of the petition to compel arbitration “is limited
to determining whether the trial court's findings are supported by substantial
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evidence and whether the trial court abused its discretion in denying the
petition." Pisano v. Extendicare Homes, Inc., 77 A.3d 651, 654
(Pa.Super. 2013). We apply a two-part test. “First, we examine whether a
valid agreement to arbitrate exists. Second, we must determine whether
the dispute is within the scope of the agreement.” Id. at 654-55. Since
arbitration is a matter of contract, a party cannot be compelled to arbitrate
unless he or his agent have agreed to do so. Bair v. Manor Care of
Elizabethtown, PA, LLC, 108 A.3d 94 (Pa.Super. 2015). “Whether an
agreement to arbitrate disputes exists is a question of law.” Neuhard v.
Travelers Ins. Co., 831 A.2d 602, 604 (Pa.Super. 2003). Thus, our
standard of review is limited to determining whether the trial court
committed an error of law and our scope of review is plenary. McNulty v.
H&R Block, Inc., 843 A.2d 1267, 1271 (Pa.Super. 2004).
The following principles govern arbitration agreements. The party
alleging the existence of a valid arbitration agreement has the burden of
proof on that issue.4 Washburn v. Northern Health Facilities, Inc., 121
A.3d 1008 (Pa.Super. 2015); Wisler v. Manor Care of Lancaster PA, LLC,
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4 In some instances, courts have permitted discovery on the issue of the
enforceability of an arbitration agreement. See Bair v. Manor Care of
Elizabethtown, PA, LLC, 108 A.3d 94 (Pa.Super. 2015). In other cases,
an evidentiary hearing has been conducted by the court. The petition to
compel arbitration did not allege facts that, if proven, would establish that
the clause was binding on the Plaintiff herein, and the Nursing Home did not
request discovery or an evidentiary hearing.
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124 A.3d 317 (Pa.Super. 2015). In addition, “arbitration agreements are to
be strictly construed and not extended by implication.” Fellerman v. PECO
Energy Co., 159 A.3d 22, 26-27 (Pa.Super. 2017). “When parties have
agreed to arbitrate in a clear and unmistakable manner, every reasonable
effort should be made to favor the agreement unless it may be said with
positive assurance that the arbitration clause involved is not susceptible to
an interpretation that covers the asserted dispute.” Id.First, we must determine whether the trial court correctly concluded
that Ms. Clementson did not agree to arbitrate, since she did not sign either
the RPA or the Admission Agreement containing the mandatory arbitration
clause. Ms. Reilly signed the RPA in her personal capacity; she executed the
Admission Agreement in her capacity as the Responsible Person. The Facility
contends that Ms. Reilly had express, implied, and apparent authority, as
well as authority by estoppel, to act as her mother’s agent and bind her to
the arbitration clause in the Admission Agreement.
The basic elements of agency are the manifestation by the principal
that the agent shall act for him, the agent's acceptance of the undertaking,
and the understanding of the parties that the principal is to be in control of
the undertaking. Washburn, supra at 1010. As we held in Walton v.
Johnson, 66 A.3d 782, 786 (Pa.Super. 2013), “[a]n agent cannot simply by
[her] own words, invest [herself] with apparent authority. Such authority
emanates from the action of the principal and not the agent.” Id. at 787.
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Furthermore, “[t]he relationship of agency cannot be inferred from mere
relationship or family ties unattended by conditions, acts or conduct clearly
implying an agency.” Id. We explained in Walton:
An agency relationship may be created by any of the
following: (1) express authority, (2) implied authority, (3)
apparent authority, and/or (4) authority by estoppel. Express
authority exists where the principal deliberately and specifically
grants authority to the agent as to certain matters. See Bolus
v. United Penn Bank, 363 Pa.Super. 247, 525 A.2d 1215(1987). Implied authority exists in situations where the agent's
actions are 'proper, usual and necessary' to carry out express
agency. See Passarelli v. Shields, 191 Pa.Super. 194, 156
A.2d 343 (1959). Apparent agency exists where the principal,
by word or conduct, causes people with whom the alleged agent
deals to believe that the principal has granted the agent
authority to act. See Turner Hydraulics v. Susquehanna
Construction Co., 414 Pa.Super. 130, 606 A.2d 532 (1992).
Authority by estoppel occurs when the principal fails to take
reasonable steps to disavow the third party of their belief that
the purported agent was authorized to act on behalf of the
principal. See Turnway Corp. v. Soffer, 461 Pa. 447, 336
A.2d 871 (1975).
Id. Agency is not assumed merely because one person does an act for
another. Walton, supra at 787 (mother, who was not acting pursuant to a
power-of-attorney and had no express authorization when she signed an
arbitration agreement on behalf of her comatose daughter, was not acting as
daughter’s agent, and agreement was unenforceable).
The Facility cites Commonwealth v. Maker, 716 A.2d 619 (Pa.Super.
1998), for the proposition that the principal/agent relationship can be
inferred from facts indicating the intention to create that relationship, such
as acquiescence or failure to disavow. Inferences that Ms. Reilly was her
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mother’s agent for purposes of the Admission Agreement containing the
arbitration clause can be drawn, according to the Facility, from the signed
Admission Agreement itself, the RPA, the 2014 durable power-of-attorney,
the close familial relationship, and Ms. Clementson’s payment for and
acceptance of its services.
Ms. Clementson counters that the court in Maker, supra, found an
agency relationship based upon the conduct of the principal, rather than the
actions of the alleged agent. She argues that the RPA signed by her
daughter did not supply the requisite authority for Ms. Reilly to agree to
arbitration on her behalf, as apparent authority must emanate from the
principal, rather than the agent. The principal must manifest “assent that
another person (the agent) will act on the principal’s behalf subject to the
principal’s control, and the agent agrees to do so.” Wisler, supra at 323-
24. Ms. Clementson maintains that the Facility offered no evidence of any
words or conduct on her part at the time that could be construed as
conferring authority upon her daughter to bind her to the agreement to
arbitrate.
Moreover, Ms. Clementson contends that the 2014 durable power-of-
attorney does not cure that deficiency. Since the later-executed power-of-
attorney did not contain any provision that it was to be retroactively applied,
she maintains it was not retroactive. Twp. of N. Fayette v. Guyaux, 992
A.2d 904, 905 (Pa.Super. 2010). Finally, according to Ms. Clementson,
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agency by estoppel would require a showing that she knew or should have
known that her daughter waived her jury-trial rights. There was no
allegation or showing of such knowledge. Thus, absent a power-of-attorney
or a guardianship, evidence of Ms. Clementson’s conduct at the time, or that
she knew about the arbitration agreement, Walton, supra, negates any
agency relationship. Ms. Reilly signed the RPA, which bound her, not her
mother. It did not create an agency relationship with her mother. She
signed the Admission Agreement in her capacity as the Responsible Person,
a power that did not emanate from her mother.
As the trial court correctly concluded, neither the RPA nor the 2014
durable power-of-attorney created either an express or an implied agency.
Ms. Clementson did not sign the RPA or any other document conferring
authority upon her daughter, and “[a]n agent cannot, simply by [her] own
words, invest [herself] with apparent authority.” Turnway Corp. v. Soffer,
336 A.2d 871, 876 (Pa. 1975). The trial court also correctly noted that the
later-executed power-of-attorney was not retroactive as the powers
designated therein were not explicitly retroactive. Thus, the trial court
properly concluded that Ms. Reilly lacked apparent authority to act as there
was no manifestation by the principal, Ms. Clementson, establishing such
authority.
We note further that the Facility did not allege facts or circumstances,
or adduce evidence from which one could reasonably infer that Ms.
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Clementson consented to her daughter signing the Admission Agreement.
There is no evidence of Ms. Clementson’s mental and physical condition at
the time. Thus, we cannot discern whether Ms. Clementson was mentally
and/or physically incapable of signing the Admission Agreement herself, or
mentally competent to authorize her daughter to act as her agent. In
addition, there is no indication that she was present when the Admission
Agreement was signed, that she knew what it contained, or that she was
provided with a copy.
Finally, we find no agency by estoppel simply because Ms. Clementson
did not disavow the arbitration agreement or because she benefitted from
the services provided. In Petersen v. Kindred Healthcare, Inc., 155 A.3d
641 (Pa.Super. 2017), we considered whether agency by estoppel applied to
compel arbitration where the patient’s daughter signed the relevant
paperwork. The daughter was named as a successor agent on the patient’s
power-of-attorney. On appeal, Kindred, similar to the arguments lodged
herein, claimed that Petersen’s acceptance of medical benefits, the
documents signed by her daughter, and the admission agreement itself,
created an agency relationship binding her to arbitration. We observed,
Here, Kindred’s argument on this issue is misplaced. While
agency by estoppel is essentially a determination of agency by
after-the-fact actions by the principal, Kindred focuses its
argument on the actions of [Petersen’s daughter]. As such, its
claim is fatally flawed.
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In any event, Kindred offered no evidence to demonstrate that
Petersen acted negligently or had any reason to believe that
Kindred was acting upon a mistaken belief as to [the daughter’s]
authority – or lack thereof – under the [power-of-attorney].
Peterson had no knowledge of the circumstances surrounding
the execution of the ADR agreement. She was not present at its
execution, and [her daughter] did not show the ADR agreement
to her after the fact . . . . Kindred never presented the ADR
agreement to Petersen for ratification and there is no basis to
believe that she knew or should have known about the
agreement.
Petersen, supra at 647 (internal citations omitted, emphasis in original).
Since Kindred failed to establish that Petersen was negligent in failing to
correct Kindred’s mistaken belief about her daughter’s authority, we found
that agency by estoppel did not apply. See also Washburn, supra (absent
evidence that decedent knew his wife signed arbitration agreement, no basis
to infer that she was authorized to do so).
Herein, there was no assertion that Ms. Clementson was unable to sign
the Admission Agreement, that she was aware that Ms. Reilly was signing
documents on her behalf, or that she knew or should have known that the
Admission Agreement contained an arbitration clause. The Facility did not
allege or proffer evidence that it later presented it to Ms. Clementson for
ratification. Thus, the record does not support a finding of agency by
estoppel.
In sum, we find no error in the trial court’s finding that there was no
agency, and hence, no binding agreement to arbitrate. The RPA was an
agreement between the Facility and Ms. Reilly personally; she did not
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execute it pursuant to any authority conferred upon her by her mother. By
executing that document, Ms. Reilly agreed to submit the necessary
paperwork to facilitate reimbursement from applicable insurance, to pay any
amounts owing, and to be personally liable for non-payment.
Similarly, the Admission Agreement was an agreement between the
Facility and Ms. Reilly as the Responsible Person. As the Responsible
Person, Ms. Reilly had no authority from her mother to act on her behalf or
bind her to the terms of the Admission Agreement. While "a party can be
compelled to arbitrate under an agreement, even if he or she did not sign
that agreement, if common-law principles of agency and contract support
such an obligation on his or her part[,]” Wisler, supra at 323, there was no
proof of agency herein. There is no evidence that Ms. Clementson
authorized Ms. Reilly to agree to arbitrate on her behalf, and thus, no
agreement to arbitrate that is binding upon Ms. Clementson.
Accordingly, we need not reach the alternative basis for affirmance
advanced by Ms. Clementson, i.e., that the arbitration agreement was an
unenforceable contract of adhesion.5 We observe only that many of the
characteristics of the arbitration agreement held to be conscionable in
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5 The burden of proving unconscionability is upon the party challenging an
agreement, with the ultimate determination to be made by the courts.
Salley v. Option One Mortg. Corp., 925 A.2d 115, 119-20 (Pa. 2007).
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MacPherson v. Magee Mem. Hosp. for Convalescence, 128 A.3d 1209,
1213 (Pa.Super. 2015) (en banc), are not present herein.6
Order affirmed. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/29/18
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6 For instance, the agreement to arbitrate in MacPherson v. Magee Mem.
Hosp. for Convalescence, 128 A.3d 1209, 1213 (Pa.Super. 2015) (en
banc), was a separate document from the Admission Agreement and clearly
identified as an arbitration agreement. Moreover, arbitration was not
mandatory, and the reader was informed that admission to the facility was
not conditioned upon agreeing to arbitrate (“VOLUNTARY AGREEMENT: If
you do not accept this Agreement, the Patient will still be allowed to live in,
and receive services in, this Center.”). Here, by signing the Admission
Agreement, the Resident or her agent agreed to arbitrate, and it is unclear
whether a refusal to arbitrate would result in the denial of admission.
In MacPherson, the jury trial waiver language was in bold type, much
larger than the surrounding type, and thus, conspicuous. Here, the
agreement to arbitrate is located on page 10, in paragraph 20, of a fourteen
page Admission Agreement. It appears under the general designation
“Community’s Grievance Procedure.” The jury trial waiver is not in bold type
or large font.
Unlike the agreement in MacPherson, the Facility retained the right to
choose the arbitration site and unilaterally modify the Admission Agreement
containing the arbitration agreement, arguably making the latter more
favorable to the drafting party. The cost of arbitration is split under the
Agreement herein, unlike the MacPherson agreement where the nursing
home bore all of the costs.
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